> All of us should be regularly lobbying our lawmakers to make student loans dischargeable by bankruptcy, just like any other loan.
The reason they aren't dischargeable is because what bank in their right mind would give a loan to an 18 year old with no collateral? They only guarantee they get that it will be paid back is the fact that it can't be discharged.
Student loans would dry up overnight if they could be discharged at bankruptcy.
That being said, I actually think that's a good thing, because it would force colleges to charge reasonable tuition rates and also offer scholarships if they want to get the best students.
But barring shifting to a European model of college funding, I don't see the US allowing dischargeable loans, nor do I think they should, because the reality of it is that colleges won't reduce their rates nor increase their scholarships, they would just be completely out of reach of poor and middle class students.
> The reason they aren't dischargeable is because what bank in their right mind would give a loan to an 18 year old with no collateral?
If it's a bad bet for the bank, it must be far worse of a bet for young adults. That's the point -- right now we're essentially suckering millions of naive young adults into a life of wage slavery by giving them a "bet" which they are completely unequipped to evaluate; and many of them are making a bet when they shouldn't.
What you're essentially arguing is, "We have to enslave these people or society wouldn't function". On the contrary: we must not enslave these people; if stop doing it, society will figure out some other way to get things done.
To be clear, I don't think college should be paid for with loans. I agree with you that we shouldn't be enslaving people.
But I also don't think allowing these loans to be discharged in bankruptcy will solve anything (and will arguably make things worse) without systemic changes in the way college is paid for.
I think that they help universities raise tuition as long as the projected lifetime income increase from going to college exceeds the cost of tuition. Which will just allow our unsustainable "tuition rises faster than inflation" trend to last a few more years before it falls apart.
Note that "projected lifetime income increase" is generally overestimated. What we do is compare average income of a college graduate with a high school graduate and attribute the difference to college. However people who could get through college likely would have made more than people who couldn't, even if they hadn't gone to college!
Its also backwards looking, obviously. In the boomer working years, colleges were very selective and a degree was a stealth IQ test along with socioeconomic group membership.
At this point the average IQ of a college grad is very close to 100. I guarantee that within the next 30 to 40 years someone will make the shocking discovery that the presence or absence of a degree has no influence on income, success, or happiness.
At that point the ponzi scheme of higher ed can collapse.
There's nothing wrong with designing and implementing an education system for the top 5% of society and the jobs that top 5% will likely have. There is a big problem with a marketing scam along the lines of every American is a temporarily inconvenienced millionaire.
Surely, my favorite waitress at Dennys is making more money as a waitress than she would as a K12 educator, if she could get hired, which she cannot. The degree does not make her a better person nor a better waitress. It does signal that she's in maybe the top 50% of humanity WRT the skills required to get a degree. She's a somewhat better than average person because of who she is, not a meaningless piece of paper for training she will never use. The point of discussing my favorite waitress is we need "something" to signal in the job market who is in the upper half of potential employees, and $100K of debt and four years of labor seem a huge waste on a civilizational level.
Ironically, income share agreements are increasingly being challenged on the grounds that they violate the 14th amendment (being rather close to the indentured servitude model).
I think the (optics) problem is that it's a "more obvious voluntary fractional slavery program". So it's easy to criticize. Of course, because it's a less obvious voluntary fractional slavery program, non-dischargeable loans are simultaneously harder to criticize and harder for people to see the trap they're walking in to.
I could be okay with income share agreements if they had a (short) time and percentage cap. Otherwise I feel like we'll have the same problem, students will sign agreements that they don't understand, and then end up paying for it for a large part of their life.
Is 10 years short? 20% for 10 years is what it would take for many computer science majors to pay for their degree. And that's ignoring the time value of the money.
I fail to see how an ISA is better than an unforgivable loan, and to be honest, this seems a lot more like indentured servitude/wage slavery without the pretense of a loan. If the investor (Purdue in the article) has to step in and say we won't make more than 2.5x our investment on you, you know the student is being taken advantage of. The problem is that the ISA model is still bound to the private market by virtue of the fact that the investors are private and not public entities. The carrots and sticks that are in place are not there to benefit the student.
I wonder how society would react by making student loans forgivable. Would banks stop giving out loans because there is no collateral? Or would they require a cosigner to rope in an adult with collateral to lose? Would schools get cheaper as a result of people not being able to afford the already high tuition, would they become a status symbol for the mid-upper class who can afford it? It is definitely an interesting thought experiment.
To me, fundamentally the issue is one of alignment of incentives.
Right now, there are students who can come to Perdue who are looking for university as an "investment" in their own future: they want to spend $100k to get more than $100k back over their lifetime. But the fact is, some of those students are studying subjects which will never pay them back for their investment; and others will never make that money back no matter what subjects they study.
So the question is, what incentive does Perdue have with regard to these students, under the "unforgivable student loan" system?
1. From a pure short-term financial perspective, it has an incentive to get as many students in the program as possible.
2. From a reputational point of view, there may be some damage to having lots of students graduate without getting jobs
3. Perdue is made of human beings, many of whom actually have feelings and morals; those people feel much happier when their students' investment pays off, and feel much worse when their students' investments don't pay off.
And the point is, at the moment, for students in the category of people we're talking about, you have #1 fighting #2 and #3. That's always going to be an unstable system where things fluctuate between "terrible" and "not quite so terrible".
Consider the incentives in an ISA system. The incentives are now aligned: Perdue would have a vested interest in the success of their students after graduation: the more money their students make, the higher return they get (up to a point). If a student wants to come in and major in Underwater Basket Weaving, they can say, "Perhaps a degree in in Accounting or Education might be a better choice." And if they do offer Underwater Basket Weaving, they'll be sure to add in classes on the Economics of Underwater Basket Weaving, Advanced Basket Weaving Management, and so on, to make sure that those students are actually prepared to make money after they graduate.
So what you‘re proposing is that a fairer way to paying back tuition is making it essentially free when taking it and then, IF you end up making a lot of money, paying it back with a share of your income?
I can‘t resist the feeling this sounds surprisingly related to the concept of free higher education and a higher, progressive income tax, a pretty revolutionary approach we‘ve been doing with limited success over here in Germany.
Then again, that might just be my naïve European perspective on things and since taxes are theft and free education is just for those commies wanting free things, it‘s surely inappropriate for a free country.
I realize you're being somewhat facetious, but a key difference with ISA is that you don't actually pay the "tax" if you don't go to college. this doesn't make much difference for successful people, since most of them probably went to college anyway. but if you're a lower/middle income person who didn't go to college, it seems sort of unfair to have to pay towards other people gaining an advantage over you in the job market.
What makes you think that "profit motive" or "regulatory capture" will be kinder and more gentle with this approach?
For hundreds and thousands of years Indian farmers had a version of "income sharing". You should research how it went. And please don't respond with "Sure they fucked up but WE will build a better system this time around"
In my mind the problem is the system itself was designed for a world that doesn't exist. When the supply of college degrees was low 50 years ago, sure, it paid to have a degree. But now that it has become commoditized, it's not that valuable. There's no supply / demand pricing mechanism to influence a student's major. The cost of tuition is mainly based on an arbitrary credit hour. No matter how worthless a course is for your future, the price of the class is still the same.
I've read this about socialist countries that have free education. You'll have folks with law degrees driving taxi cabs. It's a waste of resources.
> There's no supply / demand pricing mechanism to influence a student's major.
This is really the most important issue. People are spending tons of money on worthless degrees. If they were getting degrees worth something, we wouldn't even be having these discussions.
Why would having someone who knows the law and drives a taxi make it a waste of resources? Taxi drivers should be uneducated in your view. Why? How does that help society?
Many lawyers need to drive taxis to get by. Being a lawyer doesn't mean instant riches unless you land at a high profile firm directly out of school.
"I never let schooling get in the way of my education."
The problem with your view is you assume the only way to get educated is via academia. There is a lot of education when you become a mechanic, an electrician, a factory worker, a firefighter, etc. That is not academic. You learn on the job. There are also many certification courses for these fields that run outside of traditional college system.
I believe in free schooling to teach basic, essential skills like reading, computing, math, etc. I'd even argue for a greater emphasis on financial education in K-12. But college is different.
The college system is very expensive, it's heavily subsidized by the state even in the U.S. If it is not teaching people valuable skills that they will be using in their profession, then it is not serving it's purpose. It costs people resources in the form of taxes.
In the meantime, we live in the information age. Teaching people to teach themselves is probably the most valuable skill we can teach.
> The college system is very expensive, it's heavily subsidized by the state even in the U.S. If it is not teaching people valuable skills that they will be using in their profession, then it is not serving it's purpose.
Education allows one to lead a richer life regardless of ones circumstance. Consider the janitor who took 8 years to get a bachelors degree in classics (after learning English). He admits that now with a degree he’ll probably try to become a janitorial supervisor.
But two things stand out, first there is no shame in a job as a janitor, and second to him the education was an end in itself, not a means to an end.
Since we're on anecdotes, my father was a firefighter who never got a degree at all. Never went into debt. Worked his way up to become Battalion Chief. It's cool the janitor had a passion for classics and wanted to learn about literature. As long as he did that with no expectation that there would be a writing job for him on the other end of that, all's fair in my mind. The guy worked for Columbia, so he probably got free classes as an employee. That being said, these anecdotes aren't sufficient to capture the broad trend which is students going to school to get a degree because they're told that's the thing to do. And for a significant portion of the population, the myth of a degree leading to automatic prosperity persists.
Higher education was never designed for getting a job. Rich families sent kids to be educated. Lately it is a degree factory. But it doesn't mean your father should have been barred if that is how he choose to spend it.
> If it is not teaching people valuable skills that they will be using in their profession
The problem with your view is that it makes the assumption this was, and always has been, the purpose of college. That wasn’t the historical purpose, in particular before the Morrill Act during the Industrial Revolution
> There is a lot of education when you become a mechanic, an electrician, a factory worker, a firefighter, etc. That is not academic. You learn on the job.
This is true for every profession. Is there any job where you pop out of school ready to perform like an expert? Lawyers, doctors, scientists, etc. — all these folks learn to do their jobs on the job, despite their years or decades of training in academia.
> The college system is very expensive, it's heavily subsidized by the state even in the U.S. If it is not teaching people valuable skills that they will be using in their profession, then it is not serving it's purpose.
There is more to life, and to work, than preparing for a profession by learning profession-specific skills.
> Many lawyers need to drive taxis to get by. Being a lawyer doesn't mean instant riches unless you land at a high profile firm directly out of school.
Was once driven by a chap who had a very in depth knowledge of Turkish literature; I spent a good 25min listening to him talk about Orhan Pamuk and Elif Shafak, two writers I had recently read (and liked). Turns out the guy had been a lit professor at tertiary level back in Turkey. And here he was, driving a taxi on a rainy evening in a godforsaken town in the Midlands (UK).
"Society" doesn't figure anything out. If "Society" wanted people to go to college then it would it give it to everybody for free.
People are incentivized to act one way or the other. Less-wealthy people cannot afford college tuition, and the government cannot mandate that banks give away money to extremely risky but ambitious people.
This same problem exists with extending loans in general to risky, low-income individuals. Yes their rates are insanely high, bordering on predatory, but they also have sky high default rates so the alternative is they simply cannot get a loan at all.
This argument is missing one important part. The prevalence of student loans has caused the cost of education to skyrocket, pushing it even further out of reach. So now even people who previously afforded higher education need to get loans. It’s a self-fulfilling system.
They shouldn't get the loan then. Certain types of loans just shouldn't exist. If you know that certain people have a high chance to default then giving them a loan is irresponsible.
> If it's a bad bet for the bank, it must be far worse of a bet for young adults.
That doesn't follow: you could graduate, get your degree, and declare bankruptcy. You're fine, your loan is gone, and the bank regrets their investment.
The bank doesn't want the bet because "bankruptcy" means very different things to the bank and to the student. To the bank it means they lose all their money. For a just-graduated person with minimal assets it's not that bad -- sure you can't get a mortgage to buy a house for a while, but you probably couldn't have afforded that anyway with student loans. You still have the degree, they can't take that (well, https://www.jefftk.com/p/repossessing-degrees).
I would not underestimate the impact bankruptcy plays in someone's life. You would be getting a bankruptcy on your record in the prime of your life (mid-twenties), making it very very difficult to borrow for the next 10 years. You end up starting building credit in your mid to late thirties, and maybe you are able to participate in the modern economy in your forties. It sucks. I lived it.
However, in a world in which it is common for college students to declare bankruptcy immediately after graduating, financial institutions might take advantage of that information and realize that their creditworthiness is much higher than the bankruptcy would predict. Kind of like how the stock price many companies go up after they cut retirement benefits.
This of course will be to the spiral and collapse of the college loan system.
How high is the creditworthyness of someone who is on a repayment plan to service another debt? It is practically zero. Declaring bankruptcy just limits the duration of the mortgage to 7 years. You still have to pay as much back as you can unless you are literally an unemployed hobo on the street for 7 years.
I'm talking about declaring bankruptcy immediately on graduating, at age 21 (not mid-twenties), and it's off your record seven (not ten) years later, at 28.
> For a just-graduated person with minimal assets it's not that bad
It is in fact bad.
You can’t just declare bankruptcy and get a high paying job a year later and have no student debt....
When I looked into personal bankruptcy I was told by my lawyer that it would only make financial sense if there was no way I could pay back the amount owed in the next 7-10 years.
Making a deal and then breaking it can dissuade employers from putting a person in a high trust position. Most business operates on trust, handshakes, and one's word. Contracts are a backup.
Trust is like glass - easy to break, very hard to put back together.
It still doesn’t follow that the bet is bad for the student if it is bad for the bank. As the student you have some degree of control over the result. If you have reason to think you can make it work it might be a good bet. The bank OTOH only sees that X percent of students fail to pay back.
Right, but there's no feedback. Increasing school prices makes loans harder to pay off, not to discharge in bankruptcy. They can either be discharged or not in bankruptcy.
> That doesn't follow: you could graduate, get your degree, and declare bankruptcy. You're fine, your loan is gone, and the bank regrets their investment.
In my early days in Motorsports (late HS?) we had a anesthesiologist in our group, he was the wise elder who had accrued enough money and flexibility in his practice to play around with the young punks and 'show us how its done.'
One day after a tech day before a track event we working and wrenching in his garage and someone asked him how he got into the trade; turns out he was drafted in Vietnam and chose a medic role out of professional interest but also to ensure not being sent into the suicidal combat zones and come back home alive.
He said that it was incredibly typical to do what you just said in the 60-80s and declare bankruptcy like that when you got your MD, mind you this is at a time when it cost a fraction of what it costs today.
But you could also have your entire medical career subsidized by the State and expedited if you're sent on tour faster than anything offered in the civilian World and choose whatever medical school because of the GI bill and do your residency anywhere you wanted due to your status as a veteran.
And then stiff the Bank for any loans you may have accrued and it was accepted and common practice and save while your credit score was fixed.
He was one of the few boomers who openly spoke about how his generation wasn't anymore responsible then the 'entitled' millennial trope and tried to lecture us about it as that was becoming wide-spread by that time. He actually gave advice about the optics of this route that were being skewed to the detriment of his Industry and profession.
Now seeing the shortage of medical workers during COVID are being perilous overworked all over the World turns out he was, reluctantly, right.
Do you know what bankruptcy does? One does not simply declare bankruptcy unless they're willing to have their lives suddenly become much harder and stay that way for a while.
Let's say I've just graduated from college with a degree. I have minimal assets (clothes, computer) and lots of debt (100k in student loan debt). How does bankruptcy work out poorly for me?
On graduation, unless someone has incredible job prospects, wiping out 100k of debt in exchange for not being able to get a mortgage for 7y is a great deal. At 20k it's not great but still pretty good. I bought a house 7y after graduating from college, and I think this was earlier than most of my cohort.
Additionally, I wouldn't even expect a college bankruptcy to fully preclude getting a home mortgage. With a large down payment the bank isn't actually taking that much risk.
(Except that really I expect that if this law changed loans would require cosigners with good credit)
Correct, the entire market for such loans would pretty much collapse - current yields are comparable to those of commercial real estate or high-yield corporate bonds, with none of the downside protections.
Unsecured personal loans (that are subject to bankruptcy) are a valid asset class, coveted by LendingClub and some banks, but they require solid credit history and carry a higher interest rate, more aggressive repayment schedule, or both.
It’s like this entire thread is from another planet and has no knowledge of the college loan program (student loans used to be dischargeable in bankruptcy like any other loan), its origin or even presidents Obama’s attempts to overhaul it and concerns that it was actually driving up the cost of college.
> “ If it's a bad bet for the bank, it must be far worse of a bet for young adults.“
That’s not a valid implication at all. 18 year olds change their mind all the time, base decisions on impulsive reasons, etc., that comes with immaturity, lack of experience and indecision.
The loan being a bad risk for the bank is a function of youthful impulsiveness and a person without the means to pay it back yet.
It’s not risky to the bank because college itself is risky or fails to deliver wage opportunities. Not saying college cost-benefit is always favorable, just that your implication is wrong.
If it's a bad bet for the bank, that just means it is a bad bet on average and right now. The thing is, a student can know a lot more about themselves than the bank can. A student can make a bet with an extremely high expected return, that the bank would be unable to appropriately risk-price.
The problem with the current system, is we don't force the students to understand the price of the risk. The problem with making them normal loans is that the bank is unable to accurately price the risk. There are middle grounds, but arguments from the extremes seem to carry better.
I once read a setting resource for an RPG system set in a multidimensional university which cut out the middleman and offered its own student loans. Predatory as Illuminati University was, it seems like a better system than what we have now.
The “bank” is us. Almost all student loans are originated by the federal government. It’s a program the government offers to allow disadvantaged people to access higher education.
I agree with what you are saying, except that we shouldn't say students are unequipped to evaluate the "bet" merely for being young and inexperienced. If we wanted to, we could train students to be much better at evaluating such a bet.
But the reason interest-bearing loans were considered immoral for so long, and the reason that nearly every other kind of loan can be discharged through bankruptcy, is that it is too dangerous to allow anyone to offer such a loan. There's nothing magical about student loans that somehow makes them safe, and no amount of training will change that.
This is probably what's going to happen, but only if we take a LOT of human labor out of it. Either that, or accept that every class will be huge (200-500 students) with minimal attention given to students, no office hours, and low-paid labor doing all the grunt work (grading, answering questions)
I see a lot of parallels to medicine here. Both are highly regulated and seen as a "right" we ought to fund. Maybe, but until we achieve greater labor leverage (made even harder by professional credentialing in medicine), there just won't be a way to drive costs down much, so we're stuck with what we have.
College at $60k a semester while an adjunct earns $28k a year and somehow this doesn't result in a 1:1 student:teacher ratio means someone's skimming off a ton of money.
Part of the problem with universities IMO is the accounting for revenue<->expenses isn't at all straightforward. Athletics generate a ton more money than they cost, most people seem fine with that. Research generates no revenue but costs a ton, for some hard-to-quantify but (hopefully?) real benefit to society at large. Tuition is nominally for teaching, which is a big cost center for a university. And, at least in the US, all the costs are split between the national government, the state government (who has the pleasure of educating people who may not live in that state long-term?) and tuition, and various donors and grants.
A system ripe for disruption, if ever there was one.
I have no idea why anyone would say "research generates no revenues" when most universities have systems to spin out viable research and profit from it. Universities quite literally profit financially from patented research funded by taxpayers. The government gets no direct return on this, and the usual argument is that it increases economic activity and raises the tax take - which may be true, but it's still a uniquely privileged position.
But most universities are more about property speculation and bequest farming than they are about education or R&D.
The system is entirely corporatised and often predatory. Professors are only as valuable as the grant income they generate, adjuncts are gig economy labour, students are a barely-tolerated annoyance, and property speculation and "administration" are considered the central mission.
Exactly, why are young students footing a disproportionate load for “society-benefiting research” as part of their tuition? And paying interest for it. That’s amazingly unfair.
For the university, research in the sciences brings in way more money than it costs, and subsidizes a lot of other things. Most professors in physics, chemistry, etc. largely pay their own salaries out of grants.
The kind of knowledge you need to evaluate this is something that is normally taught in college. What high school teaches decision making under uncertainty, along with economic history and statistics?
I mean sure we could try to teach kids this stuff, and I certainly aim to tech my kids, but it's not what's been done in the past at secondary school.
There is no "free market system" here. There's an organised debt slavery racket run for the benefit of parasitic rent-seekers who operate with federal sanction.
College loans have taken point on this for the aspiring middle classes. In a very literal sense this system is the exact opposite of genuine freedom and opportunity.
In high school I took economics, precalculus (which taught exponential growth), and history (which talked about financial crises of the past). The information was taught, but the problem is that there was no class to tie this information into life practice.
Isn't that then a gigantic failure of high school then? If there is one thing we need to prepare students for, isn't it how to start making career decisions?
If that's a goal of high school, then yes, it's a huge failing. There's also a bunch of other useful stuff they don't teach you, like cooking and how to wash your clothes. There's no coherent idea of what school is supposed to be, though. Is it a place to learn a bunch of practical skills? Or a place to read about some interesting ideas? All those things take time and money, and we end up with a school that does a bunch of different stuff with no real plan.
Our town used to have the Mechanics' Academy. A 12-week study program to learn enough math to balance, books, amortize a loan, calculate weights and measures, figure load limits. Graduates were very employable. My Mom's Grandfather was one.
Long ago demolished and turned into a Mall during Urban Renewal.
"If it's a bad bet for the bank, it must be far worse of a bet for young adults."
Not necessarily. Even if it's a good bet for the student, what's to stop them from declaring bankruptcy just after graduation, and before they start their lucrative career? They would then get all the upside, whilst the bank gets zero payments.
Trashing your credit score, with unfortunate consequences for your ability to buy a car, rent accommodation, apply for a mortgage, and avoid predatory debt collectors, sounds like a superbly practical debt management plan.
And if you have a job with decent money, obviously it wouldn't count as outright fraud at all.
But even that is missing the point. These loans are an economic time bomb. They rely entirely on a functioning economy with adequate middle class job opportunities.
If those disappear - if, for example, an unexpected black swan event happens to leaves a smoking crater where GDP growth used to be - banks lose a giant pile of money anyway.
The debt will be sold at cents to the dollar to collection agencies who will hound the victims, and anyone else who gets in the way by sharing an address, or having any form of financial connection - for the rest of their natural lives.
> But barring shifting to a European model of college funding, I don't see the US allowing dischargeable loans, nor do I think they should, because the reality of it is that colleges won't reduce their rates nor increase their scholarships, they would just be completely out of reach of poor and middle class students.
The reality is that the they should be out of reach to poor or middle class students TODAY. They are not serving those people and are actively making their lives worse by saddling them with outrageous debt and no prospect of meaningful employment.
If the US changed bankruptcy it would force the colleges to change as well. Lenders are not going to be sending children into the workforce with zero chance to recoup that loan, and they are not going to want to bloat the college stay to ridiculous proportions.
> The reality is that the they should be out of reach to poor or middle class students TODAY.
That varies so much by student and to bar a whole class of people out of these things is not going to improve their outcomes. While some students are not served with better employment opportunities by going to college and earning a degree - there are many others who are.
Outlawing things to a group of people isn't going to serve them better. It will mean that the entire middle class will be unable to educate into jobs. Educating them about the effort college requires to be successful once you leave would be better.
> Outlawing things to a group of people isn't going to serve them better. It will mean that the entire middle class will be unable to educate into jobs. Educating them about the effort college requires to be successful once you leave would be better.
Making it harder to get a student loan is hardly "outlawing" anyone from going to college. Schools would still give scholarships. Plus, tuition would almost certainly go down. Right now they can charge as much as they want because banks are will to lend whatever colleges charge. If all of a sudden people stopped buying their product when they raised the price too high then tuition would come back down to what it was only a few decades ago.
Even if fewer people ended up going to college it wouldn't limit opportunity. If anything it would likely make it easier to get ahead. Fewer jobs would require a college degree - there wouldn't be enough applicants who have one - and we'd likely see alternatives to college become more popular and widely respected, which would give high school grads more options for how to get started with a career.
If you're saying that someone who is below a certain income cannot get a loan - how are they going to go to college? Pull-up them bootstraps and find some more money under the couch cushions? You do know that scholarships are not like a dime-a-dozen, right? It's not like every university waives tuition at middle class incomes.
If you want to limit the cost of college then doing it by putting caps on how much a university can charge could be a more straight forward option than hoping costs come down by limiting loans to those who can't afford the cash option. (e.g. If a university wants state funding then they need to cap their student costs) Even then - loans would still need to happen for people who can't afford much more than their basic housing expenses (if even that - think about kids who get kicked out at 18).
You're speaking in a lot of "if market forces behave the way we all think they should thanks to basic econ like supply and demand" but that's not how things always work in the real world.
Considering ~50% families don't have any retirement savings and don't have an emergency fund, do you really their kids are gonna be able to afford all the expense things associated with college? (Remember - these people just got out of high school! They have likely never had a job and have no money at all)
Do you think colleges wouldn't change if they were going to receive far far fewer applicants at their current sticker prices? I don't mean that to come across as snarky. I'm genuinely curious because your comment seems to be based on an assumption that colleges would not make changes to their operations or tuition if they suddenly had a hard time filling their freshman class.
I think of it as being similar to healthcare. People need education to get jobs in the current economy. (In the same way they need healthcare to stay alive) You might make it so expensive they can't pay it back in any reasonable amount of time but if the choice is job vs no job - people gonna take it. If you remove the ability to even get an education (or healthcare) by saying you can only get it with cash then you're just screwing people over.
Regardless if job requirements change (they only will for a subset that no one cares about and no one is trying to get), you're going to screw people over. The lag time between no-loans and job-requirements dropping is going to be too long. There will be a lot of people who fall into the cracks and will be stuck with the lowest tier jobs because they couldn't afford a cash-only education until it was much less expensive.
Regardless of this - I feel like this is the wrong approach to debate lower costs vs no loans vs whatever-where-a-student-pays-in-the-end. I think 4 year college should be free (no tuition, books paid, stipend or special housing, etc.) given how the world works. I went to college for free due to CH 35 of the VA and it was really the only reason I was able to do it and fully commit to it. I have no problem with having a more educated populace - regardless of what they study. I did study something that came with very gainful employment but that wasn't obvious in the beginning of my studies. I think 4 year college would be less necessary if we had better education from the start - but we're never going to get there in this country.
It depends entirely on the school. Harvard could pretty reasonably jack up their tuition well over $100,000/yr without any real resistance or fall in applications. We wouldn't get cheaper colleges, we'd merely watch as all the 2nd and 3rd tier schools shut down.
Here is an idea: let’s have colleges themselves act as the guarantor for a student loan. This way the incentives are aligned; if the colleges are poor judge of a students talent (and admit too many low performers), or having teaching standards are too weak will stand to lose money when a student cannot secure a job and repay their loans.
You only need to look at historical examples to know that cannot be the case.
Take for example, cars. That's how cars started. Look where we are today.
If tuition stays sky high, it will be because of regulatory requirements (and enabling subsidies) to stay sky high, not because theres no market for education for working class folk
The reason they aren't dischargeable is because what bank in their right mind would give a loan to an 18 year old with no collateral? They only guarantee they get that it will be paid back is the fact that it can't be discharged.
And yet somehow banks were happy to do so until 2005.
Student loans would dry up overnight if they could be discharged at bankruptcy.
That being said, I actually think that's a good thing, because it would force colleges to charge reasonable tuition rates and also offer scholarships if they want to get the best students.
Both of these statements I agree with. The larger the loan, the better the guarantee that banks want.
Every measure that we take to make it easier for students to pay tuition without imposing cost controls results in increases in tuition. The result is that tuition has been growing faster than inflation for many decades, and the trend is unsustainable.
But barring shifting to a European model of college funding, I don't see the US allowing dischargeable loans, nor do I think they should, because the reality of it is that colleges won't reduce their rates nor increase their scholarships, they would just be completely out of reach of poor and middle class students.
This I disagree with. Universities are businesses. The bulk of their customers are able to pay thanks to loan guarantees backed by special government rules. Take away those loan guarantees and the universities will have to figure out how to live without customers, or without charging so much.
That said, you can't get there without creating a crisis that forces universities to make hard choices that they have been avoiding for decades.
> The bulk of their customers are able to pay thanks to loan guarantees backed by special government rules.
Universities are not businesses. Students are not customers. Student tuition was much more heavily subsidized by states, but funding from states to universities has declined in the past few decades. This is the reason for tuition hikes.
In the past, there was an agreement between states and universities: The states will provide a certain level of funding for students, and in exchange the universities will be barred from raising tuition above a very small rate annually. Then some states decided that having a "balanced budget" during all years, including recessions, was better policy than keeping education well-funded. Now recessions cause huge drops in education funding, which are accompanied by removing the limits on yearly tuition hikes.
Because it's generally better to have a more educated population, the federal government picks up some of the slack with grant and loan aid, and banks pick up more slack with private loans to students who otherwise couldn't afford it. Then funding never returns to prior levels.
Stop blaming universities. The blame very clearly lies with states and their asinine balanced budget policies.
Yours is a narrative that universities themselves like to put forth. However it doesn't make sense.
Tuition rises are a long-term trend. As https://www.usgovernmentspending.com/education_spending points out, from the 1950s to the present, the share of GDP spent by government on universities went from 0.4% to 1.7%. With sometimes progress, and sometimes a loss. But the long-term trend is that spending by states has gone up relative to both enrollment and inflation.
Yes, there are recession years where universities blame tuition hikes on cutbacks in state spending. But tuition has outpaced inflation in good years as well. Which suggests that the long-term trend has other causes.
How bad is it? At present average college tuition at a private school is $45k/year. Salaries for the people teaching vary from $40k for a postdoc to an average of $95k for a full professor. Which means that in an average classroom, a handful of students could hire the teacher as a private tutor, give the teacher a pay raise, and themselves save money! This basic fact suggests that it should be possible to teach students for a lot less than we consider normal today.
Now why have caused risen? It turns out that a lot of causes have been proposed, from the cost of buildings going up to an increase in bureaucracy to deal with government regulation. But attempts to quantify all the different factors, such as https://www.nber.org/papers/w21967, find that the biggest single factor is the combination of restricted supply and artificially increased demand (thanks to the availability of loans and financial aid).
You're not even thinking low enough -- I was a math grad student with a $22k stipend at a well-respected engineering school, and I was the lead instructor for three auditorium-sized sections of Calculus and Diff EQ a year (fall, spring, summer).
I'm far from understanding the financials of running a school but something always seemed off to me there. I guess technically our grad student tuition was being paid too, but after the first year that basically amounted to a spot in a cubicle farm and a bi-weekly meeting with my advisor.
"State officials used to brag about the affordability of college, but the costs have ballooned since 2003, even when inflation is factored in.
Less money from state
That year, to help close a budget cap without raising taxes, lawmakers cut the amount of taxpayer money the state sent to universities — an overall 11 percent decrease per student — but removed ceilings placed on tuition so campuses could make up for the lost revenue."
> But tuition has outpaced inflation in good years as well. Which suggests that the long-term trend has other causes.
Yes, that state funding doesn't return to prior levels (See my first source)
> Salaries for the people teaching vary from $40k for a postdoc to an average of $95k for a full professor. Which means that in an average classroom, a handful of students could hire the teacher as a private tutor, give the teacher a pay raise, and themselves save money! This basic fact suggests that it should be possible to teach students for a lot less than we consider normal today.
A university is more than its teaching staff. There's research, buildings to maintain, academic support staff and programs, and plenty of other things as well.
> But attempts to quantify all the different factors, such as https://www.nber.org/papers/w21967, find that the biggest single factor is the combination of restricted supply and artificially increased demand (thanks to the availability of loans and financial aid).
One source which happens to ignore many of the factors I mentioned above does not prove your point true. Most importantly, tuition ceilings imposed on universities by state governments. Luckily the paper discusses its shortcomings:
"Given that our model effectively lumps private and public colleges together, it appears that changes in state funding support and changes in other sources of non-tuition revenue largely offset each other. In future work, we plan to disaggregate the model along the public/private dimension."
The source groups private and public colleges together. Private colleges do not receive state funding and therefore would not have to hike tuition in response to lower stand funding. This noise averages out the effect that state funding cuts have on public school tuition rates.
First, you say that figures I gave from the 1950s to the present should be disregarded based on figures from 2008 to the present. Those are not necessarily in contradiction. Particularly not given that the period of fastest rising state funding was the 1950s through the late 1970s.
Second, your argument is absurd on the absolute size of the numbers involved. For example from page 2 of https://www.mhec.org/sites/default/files/resources/mhec_affo... we see that per FTE enrollment from 1992 to 2017 that inflation adjusted state spending went from $8,301 to $7,642 and net tuition per FTE (tuition - financial aid etc) went from $3,361 to $6,572. The in real dollars decrease of $659 per FTE in state spending is only 20% of the real increase for students. Where is the other 80% coming from?
Even in the difficult 2008-2017 period, changes in state spending explains less than 50% of the change.
Furthermore the explanation that you are focused on explains changes in public university tuition only. It does not address why private universities have likewise seen skyrocketing tuition. Given that the trends in private and public tuition have been similar, it is more likely that they have a common explanation rather than unrelated ones.
Next, you're dismissing the source that I gave that looked at a variety of possible explanations and tried to quantify the relative impact at each. And yet you've failed to give sources that examine the possibility of any explanation other than your preferred one. (Which still only explains a small fraction of the rise in cost to students.)
And finally it is obvious that a university is more than just teaching staff. But when the fraction of revenues spent on what is supposed to be a core educational mission is so absurdly small, there is a problem. (In the meantime there are more bureaucrats per student, nicer dorms, and much nicer athletic facilities.)
Yours is a true statement that doesn't contradict what I said. Namely that until 2005, banks were lending to students without protection from non-payment during bankruptcy.
In fact the fact that banks insisted on mitigating their risks with a co-signer is actually supporting evidence FOR what I said.
Is that bad? Humanities departments are already shrinking without any changes because there's just no demand. It doesn't seem entirely unreasonable to me that if you are determined to get a degree in philosophy, which has virtually no job prospects outside of teaching the next generation of philosophy students, you have to go do that at one of a handful of schools that carve out a niche for themselves with a philosophy department.
==philosophy, which has virtually no job prospects outside of teaching the next generation of philosophy students==
Is this true? It seems some tech companies disagree: CA Technologies [1], Y Combinator [2], Google [3]. Is it possible that you are not well versed in what philosophy majors actually study and how well that might translate to a working environment?
If that's the case then the philosophy department should have no trouble bankrolling their program with accessibility for all on a combination of some wealthy kids and some majors who snag a job at well-paying tech companies. Or did you miss the class on inductive reasoning?
Yeah, philosophy was a bad example of a "non-high-earnings" degree.
Sure, there are plenty of whack philosophy programs that lead nowhere. But if you go to a school with a rigorous philosophy program (which doesn't mean only Ivies/Stanford/etc.), you can easily go for a law degree or a finance job afterwards. Rigorous philosophy programs usually involve tons of discrete math and logic classes, and mastering that opens a lot of doors. I only took up reading philosophy material after graduating, but it is very obvious to me that knowing that in school would have helped me with my more theoretical/math-y CompSci classes tremendously.
Not even talking about some other good applications of that degree that I might not be aware of due to not being a philosophy major myself.
As someone who majored in English, I assert that the emphasis on STEM and shift away from the humanities is causing serious problems in our society.
Specifically, having a population lacking in critical reading skills makes everyone more susceptible to propaganda, and less able to critique and assess flawed arguments in writing.
If you want to know why, for example, our political “debates” are shallow circuses of misdirection and name calling, look at the state of the humanities.
Your argument assumes that taking humanities is required to develop critical reading skills.
However attempts to measure critical reading skills, for example in standardized tests such as the GREs, consistently find that STEM majors are better at critical reading than humanities majors!
Secondly, critical reading is not the only required skill for critiquing and assessing potentially flawed arguments. Quantitative reasoning is also needed. For example you can't assess public policy questions about COVID-19 without quantitative reasoning. However STEM courses are far more likely to teach quantitative reasoning than humanities courses.
This critique of your argument is brought to you by someone with a STEM degree.
I think one of the major reasons you see this is that if you're going to go to college and come out with debt that takes you 20 years to repay, crippling you financially while you do [1], any reasonably smart person is going to ensure that they come out with skills that will justify that. If you want people to feel like they have the resources to spend on humanities, it needs to be cheap enough to justify it.
And the truth is, there's no effing reason for a humanities course to put you into that kind of debt. Cheap (often free!) books, a room to meet in, and some small groups for slightly-focused discussion among the students shouldn't be costing on the order of a thousand-dollars per credit hour (per student!) over the course of your compounding-interest loan. It's a terrible value for the money; if it wasn't for the credential nobody would be doing it because if you just want the knowledge/wisdom there are far cheaper ways to get it.
The meat of the below quote: you dropped a hundred and fifty grand on a fuckin’ education you coulda got for a dollar fifty in late charges at the Public Library.
Quoting the whole thing:
"""
CLARK: There's no problem. I was just hoping you could give me some insight into the evolution of the market economy in the southern colonies. My contention is that prior to the Revolutionary War, the economic modalities—especially in the southern colonies—could most aptly be characterized as agrarian pre-capital—
WILL: [interrupting] Of course that's your contention. You're a first year grad student. You just got finished reading some Marxian historian, Pete Garrison probably, you’re gonna be convinced of that until next month when you get to James Lemon, then you’re gonna be talking about how the economies of Virginia and Pennsylvania were entrepreneurial and capitalist way back in 1740. That's gonna last until next year, you’re gonna be in here regurgitating Gordon Wood, talkin’ about, you know, the Pre-revolutionary utopia and the capital-forming effects of military mobilization.
CLARK: [taken aback] Well as a matter of fact I won't, because Wood drastically underestimates the impact of —
WILL: "Wood drastically underestimates the impact of social distinctions predicated upon wealth, especially inherited wealth..." You got that from Vickers, Work in Essex County, Page 98, right? Yeah I read that too. Were you gonna plagiarize the whole thing for us—you have any thoughts of—of your own on this matter? Or do—is that your thing, you come into a bar, you read some obscure passage and then you pretend, you pawn it off as your own—your own idea just to impress some girls, embarrass my friend?
[Clark is stunned]
WILL: See the sad thing about a guy like you is in about 50 years you’re gonna start doing some thinking on your own and you’re gonna come up with the fact that there are two certainties in life. One, don't do that. And two, you dropped a hundred and fifty grand on a fuckin’ education you coulda got for a dollar fifty in late charges at the Public Library.
"""
The point is to demonstrate that if a fictional character in a work of fiction does X and it works out, that does not serve as evidence that a real person doing X will work out in reality.
Do you understand the distinction between "does not serve as evidence" and "serves as evidence against"?
Now in fact it is possible to learn from self-directed study. But your odds of learning are massively better when you get to ask questions, test your understanding by talking with others, and have your ability to explain your understanding graded.
Which means that, on average, people get more value out of going through a book in a classroom setting than they get by reading it on their own.
Whether that is enough value to justify tuition is another story entirely...
Well, that just because it's in a movie doesn't mean it's true.
Few people would get to any sort of level of understanding of that sort of material just by reading it, and just because a movie genius can do it doesn't mean it's easy.
If we replaced all those examples with engineering textbooks, wouldn't it be the exact same, if it not, why? We learn he's an untrained math prodigy later on in the movie, so he doesn't need any education. It would appear a STEM education is a waste as well.
So in order to understand something, you need to a.) and then b.) have someone tell you how to think about what you read? While paying them? You can't wrestle with deep and complex topics unless someone tells you how to think?
Not at all, but having someone who can provide context sure helps with a lot of works - often these works are building on centuries or millennia of thought that they may assume you're aware of and that help place the arguments.
Again I ask, given that textbooks exist, can you make the argument that STEM is any different?
As a STEM major at a large public university, my classmates and I decided that at a meta-level, STEM majors learned how to learn new and complicated things quickly in order to get good grades in classes. Also, as a STEM major, I found attending class less than helpful most of the time. I do remember spending quite a lot of time in either a computer lab or in the library fighting my way through problems. Math, physics, chem, programming. Attending lectures was largely someone regurgitating either slides or a textbook.
I assumed this was true for most people in STEM majors in college, no?
I didn't realize we were in violent agreement. I posted a fun quote from a movie I like that was relevant to the parent. You replied with a touch of snark and I felt compelled to defend myself from your comment. And now here we are. Heh.
>Specifically, having a population lacking in critical reading skills makes everyone more susceptible to propaganda, and less able to critique and assess flawed arguments in writing.
1. Humanities does not teach any sort of critical thinking more than other classes, and if anything I found my STEM classes to teach more critical thinking because of more formal systems of proof or statistics needed to back a point.
2. A very large percentage of the population doesn't go to college. If we wait to teach the basic skills in college, it is already too late. This type of thinking needs to be taught in grade school.
>If you want to know why, for example, our political “debates” are shallow circuses of misdirection and name calling, look at the state of the humanities.
Why wouldn't this be a symptom of the market? There is money to be made in controversy and click bait, and that applies just as well in politics.
I am not following your argument, is your first and second sentence connected?
why is a mathematican less likely to be able to critique and assess a flawed argument compared to an English major? why is an English major less likely to fall for propaganda compared to a computer science major?
Are universities in the US being used as an expensive stand-in for the failing k-12 education system? At least the basics of that kind of critical reading is something that the english classes in high school should teach.
You don't have to look very hard at all to find people who are participants in and cheerleaders for those debates who have degrees in the humanities. Most journalists, for example.
Funny, I was exposed to more propaganda in university than anywhere else. Are you saying that only humanities majors are educated enough to recognize propaganda?
> Specifically, having a population lacking in critical reading skills makes everyone more susceptible to propaganda, and less able to critique and assess flawed arguments in writing.
Do I need to point out all the flaws in this sentence or can you critically read your own writing?
> If you want to know why, for example, our political “debates” are shallow circuses of misdirection and name calling, look at the state of the humanities.
Would you agree that the majority of politicians are lawyers, or at the very least non-STEM majors? What you're claiming then, is that humanities majors create and participate in "shallow circuses of misdirection and name calling"
Is it not the case that most people still do not go to university? Then what is having a few humanities majors going to change?
Political debates are a circus because the political system was designed in a different era that didn't have reality shows and endless mind melting entertainment.
Psychology and the social sciences have another explanation: Politics is mostly about how people feel and has little to do with how or what people think.
Considering that humanities majors tend to believe in socialism does not burnish their critical reading skills and resistance to propaganda.
The reality of the history of socialism is one of failure.
And yes, I do understand that everyone thinks that those who disagree with them are ill-informed and susceptible to propaganda, and those who prefer socialism will think that of me :-)
20% of Norway's GDP comes from oil pumped out of the ground and flows to the government. It's enough to cover the deficits of socialism. The others keep enough of a free market to keep things afloat, but are not known for being economic powerhouses. None have tried communal food production yet, for good reason.
> Should college be a trade school or should it stick to it's roots of broadening one's horizons?
The term "liberal arts" means "free arts". The root of this term is that Athenian society was composed of a small class of free families and everyone else was a slave owned by those families. The free families were wealthy enough to afford a liberal education for their free sons.
We have robots instead of slaves now. We, as a society, can afford to provide a liberal arts education to everyone. In fact, we already do, for grades 1-12. I think the main issue is that that education fails people who could progress through it faster (and those who need more time in certain areas).
The problem is that universities are neither trade schools nor a place to broaden your horizons. It is a way to get a credential that you can use to signal your worth on the job market.
If testing your skills was done outside of school GRE-style, would all these people who pay many thousands of dollars to get a diploma pay so much? I really doubt it.
It brings up the old joke about being a philosophy major:
"Two things to do with a Phd in Philosophy: 1. Teach. 2. Pose the question: ‘But do you know why you want fries with that?’"
College is an investment that costs hundreds of thousands of dollars. When you invest that much money, you should expect a ROI. If you can't even put roof over your head or eat with that investment, then it is really hard to say it was a good idea.
Philsophy majors are a common target for ridicule, but the fact of the matter is that corporations go out of their way to hire Philosophy majors to be problem-solvers of various types because they essentially have a degree in critical thinking.
You realize that there are different kinds of applied critical thinking, yes?
Someone that's good at critically analyzing software doesn't make them good at being able to understand why users might be drawn to a product. Nor does it make them able to design UI that won't frustrate the average user.
Humanities doesn't have a monopoly on critical thinking, but you'd be a fool to believe that it doesn't aid critical thinking. The best software engineers I've worked with were those that came from other professions whom could apply other ways of approaching a problem compared to others.
To put it bluntly, if you hire a bunch of engineers they will design a lightbulb that no one can figure out how to screw in.
I meant that if employers were looking for people who were adept at critical thinking and software developers didn't fit the bill (the original posters implication) that there was a category of people who would be even more adept at it than philosophers. Sorry if I was unclear.
As a Philosophy major who has succeeded in tech, I think tech would be better off with more humanities people involved. Writing code isn't the hard part, when you are solving big problems.
> If my school didn't have a philosophy major, it wouldn't have a philosophy department, and I would never have had those classes.
I went to an engineering school, the only majors were X Engineering, Business, and Nursing. Somehow, we had professors for the humanities classes, so I don't think a major is a requirement.
Philosophy is great, but it's not something you need to go into debt for. Did you learn anything in those classes that you couldn't have learned on your own via books and free lectures on YouTube, etc?
Anything you learn in college can be learned from a book or YouTube. The value of college is the curation the professor provides and the people you are doing it with.
>>Anything you learn in college can be learned from a book or YouTube.
That which can be learned by one-way communication from a book or video are not all that can be learned. Through dialogue and practice one may learn techniques of proofs in math classes, lab techniques in science classes, how to write and edit papers in humanities classes. All the practice that drama, art, or music majors do amplifies what they learn from their books. And so on.
The NFL wouldn't hire college football players who got all their learning from books or YouTube.
This is the basic idea behind an Income Share Agreement, or ISA, where the student pays for the education out of their future. Don't make money == school doesn't get paid! This would be a nice solution to the current educational mess we are in.
Student loans should absolutely be dischargeable. It will force tuition to drop to something affordable. It's advertised as a ticket to a good job and that's just false.
Clearly both would happen, right? Harvard doesn't set their prices based on loans, they wouldn't care. Some mid-rank colleges would disappear, and some would adapt to serve the new market.
Well perhaps I should have said, they don't have to. Right now they need not bother to charge at all. And how they set the sticker price is only a small part of the picture anyway, since they gather near-perfect information about your parents ability to pay (or to donate!) before anything gets agreed.
This source does not have any information related to loans availability correlating with tuition prices. Are you making the assumption that tuition hikes can only be caused by loan availability?
I disagree a bit. The big name schools can get away with charging their current prices, but small schools would radically re-think. No more football stadiums, fancy dorms, etc. People still need to get educated. The rest of the world has universities with sensible pricing - only the US is an anomaly.
It’s not really a choice. Those schools tend to have very expensive, high maintenance campuses. I suppose they could also let all the buildings deteriorate but then they risk being closed against their well due to safety concerns.
In truth, the costs of these schools results from a ratchet effect. Wealthy donors buy the fancy buildings which the schools are then stuck maintaining. It’s a classic case of a white elephant [1].
It's not uncommon for organizations to have to downsize due to changing economic conditions.
In fact, when people ask why colleges are paying administrators 6-7 figure salaries while classes are taught by lecturers making a fraction of that, they say they need to compete with private industry for top talent. I would hope that an administrator making $300,000+ can come up with a more creative plan for what to do with high maintenance buildings than just "let them deteriorate".
or the small schools find a way to make education more cost effective. i'm sure there are tons of businesses that would be happy to give you an online education for cheap if it were legally allowable.
Universities don't hike prices for the sake of extracting more money from students. They do so because it's the only way to make up for the enormous cuts in funding from states, which have historically provided the bulk of revenue that universities see.
>The reason they aren't dischargeable is because what bank in their right mind would give a loan to an 18 year old with no collateral?
Why is that a bad thing? This pushes choosing a good degree from something entirely on the 18 year old to something the market is deciding, by calculating the risk of a default, and removes much of the penalty from making a bad call from the 18 year old. Yes, not everyone will qualify for a loan, but if the bank who is interested in making money off loans decides your plan isn't worth a loan (and this bank has plenty of money to loan, so it can invest in many and aim at averages) thinks you are too likely to not get a good job and will default... maybe you should consider what that means.
And it puts downward pressure on college prices, like you mention.
>they would just be completely out of reach of poor and middle class students.
There aren't enough colleges to survive on just upper class students. So either the colleges will go out of business or they will have to learn how to be in reach of the rest of the population.
The fact of the matter is that by making the loans non-dischargeable, lenders loosen their purse strings since risk of default is much lower. And colleges being on the receiving end of these loans are naturally going to move their prices upward to capture the increase.
Going back to the way things were in 1998 would go far in bringing down the astronomical tuition increases we see year after year.
I've always thought it would make sense to have all the involved parties take a hit if a student loan can't be repaid.
For example, the loan could be split four ways. To qualify for discharging the remaining balance in bankruptcy, we could require that you've already paid at least 25%, the bank can eat 25%, the university can eat 25%, and Uncle Sam can cover the rest.
If we don't force all the parties to share some of the consequences, we're basically pushing universities to charge as much as possible, banks to lend as much as possible, and 18 year old kids to enter into lifetime contracts of potentially crippling debt.
>colleges won't reduce their rates nor increase their scholarships, they would just be completely out of reach of poor and middle class students.
If you let that run its course for a couple years then either the employers will have to relax their degree requirements or colleges will have to relax their price requirements. It'll be a game of chicken.
Do employers have degree requirements? A 1970 SCOTUS case put strong constraints on what employers could require, at least with respect to high school diplomas. The same logic would apply to college degrees. Unless a direct link to a job (not just a general linkage) could be demonstrated, if there is a de facto racial discriminatory effect (and there would be, just from different rates of graduation from college) then the requirement would be illegal.
I've been waiting for someone with a bone to pick against higher education to file a lawsuit over this. It could devalue college degrees.
Or maybe they won't. Chronic underemployment has been a thing since at least 2008. Given a reality where there are simply more people than jobs that need doing, shutting the poor out of the education system seems like just another way to increase wealth inequality.
Think of all of the bureaucrats in the colleges that will lose their jobs.
Also think of all of those low and middle class students who we'll turn down since we're not willing to do wealth redistribution with our endowment (<scoff>, that's the government's job).
I find this attitude disturbing. The only things stopping real change in America are people who don't want it to happen and people who have been tricked into believing it can't.
I want real change, I just don't believe this is the change that makes sense.
Changing the way colleges are paid for would make sense. Capping tuition would make sense. Making you pay a portion of your income back to the college for the rest of your life (or maybe just 20 years) would make sense.
But allowing student loans to be discharged in bankruptcy would do more harm than good without other systemic changes.
If you are getting a degree that doesn't have good job prospects then you should pay for it out of pocket, only the rich should try for it (rich can mean middle class with a good job taking a second degree for fun). If you take a loan that means you expect the value of the degree is worth more than the loan amount over time. If you can't find such a job paying enough to make it worth it, then you should declare bankruptcy.
If the only value of the degree is it makes you well rounded, then universities should ensure that only enough people start down the path using loans as their are tenured positions expected to be open in 10 years. If there is industry demand elsewhere then meet it.
I don't know how to solve the problems of someone declaring bankruptcy as soon as they finish their degree though.
What you're essentially asking for is to create two separate classes of people. Your idea would result in us regressing back to the idea of 'philosopher kings' and I would hope I shouldn't need to argue why that's a bad idea.
People should be able to get an education no matter their social standing. It shouldn't be tied to this idea of job prospects because commodification of education is a sham.
If educacation doesn't have some sort of monetary value what is the point? Entertainment is a valid answer, but it should be in different bucket.
I did not not in any way say that some people shouldn't be able to get an education. I said if the education isn't valuable they shouldn't get one, but there are many valuable education paths to take.
Why does everything need a monetary value? If someone wants to be an artist, that doesn't necessarily come from a world of wanting to make money from their art.
And who defines whether or not an education is valuable? Teachers don't have very good job prospects (low pay means they're less valuable), do you think it would be a really good idea to restrict who can become a teacher to only the reasonably well off?
Teachers should not be paying full price at Harvard (I don't know if Havard even offers a teaching degree), there is value in a teaching degree but only enough for the much cheaper state schools.
I have no problem with people wanting to be artists. The world needs art. However I have a problem with someone spending more than they can afford on anything. Want an art degree, first get a job and save up as art will never pay the bills (there are exceptions that prove this rule). Once you can afford to live (that is eat and a tiny home: the minimums) go ahead and get whatever luxury you can afford. Some get an art degree, some a nice car, some collect stamps, you can have a family. I don't care much what you choose so long as you are not beyond your means.
To put it a different way, if you are making an investment then it needs to be a good investment with a return on investment. If you are not making an investment that is fine but then you need to be careful not to destroy your future on bad choices.
I got a liberal arts degree that by all accounts should have left me with terrible job prospects but I ended up going straight into a lucrative career path with just my BA. I know music majors who went into consulting and English majors who went to work for Goldman Sachs. Yes, they were exceptional people. None of us were rich.
Would you have gotten that great job without the education? If no, then it was valuable and you should pay for it. (we can perhaps question if it was worth the cost, but that is a different analysis and much more complex). I'm referring to those who get an education that doesn't help them get a better job.
We treat education as a public good. Employers don't have to pay for their employees' educations, and employees can take their skills around with them.
Given that banks know their customers need employees they would get around to giving loans out to keep the supply of talent coming.
There would just be far less waste if student loans were dischargeable.
Maybe not the best word to use. Education is not a private good, like that offered by a medieval guild which required the learner to work for some period for the guild like an indentured servant.
> Student loans would dry up overnight if they could be discharged at bankruptcy.
No, more likely they would be priced - both in amount lent and interest rate - according to the value of the "asset" they're purchasing. There's a reason why home mortgage and car loan rates are 3-4% while random credit card rate is 16-25%.
One is used to purchase something that has long term value and may be used to create value or enable you to make money while the other one is used for Netflix and Big Macs.
I'm waiting to see how things shake out in the next couple weeks. Many colleges require freshman deposits on May 1st. We don't know a) how many are coming back into physical session in the fall and b) how many parents will tolerate paying for an online degree. The next 12 months could crash the system.
> Bankruptcy isn't a magic "Get Out Of Jail Free" card.
Except that it is in this case. The order of operations is:
1. Take out student loan
2. Graduate
3. Get a job, spouse, mortgage, and new car
4. Declare bankruptcy to discharge student loans
5. Profit
The order of steps 3 and 4 are critical. Your car and house are collateral for their respective loans, so they don't go away when you declare bankruptcy. Since you have a house and new car, you typically don't need good credit for the 5-7 years it takes before people will start loaning you money at reasonable rates again.
This isn't some theoretical pattern. It's what people actually did. Especially doctors, because they could often qualify for nice mortgages while still in residency ("doctor loans").
The US dug themselves into a hole in the 70s when they disallowed bankruptcies on school loans.
That opened up a flood of money to 18 year olds going to college, which in turn led to the colleges massively expanding their offerings.
Colleges in the US don't just educate. They are also the minor league sports programs for most sports in the US, and they provide luxury benefits like gyms and movie theaters and so on.
They can't go back now. They can't just stop doing all the sports with all the fancy equipment they bought, they can't just get rid of all the luxury housing and movie theaters and so on.
I think the US also did some strange things like giving GIs free tuition (not necessarily a bad thing) then artificially supporting those GIs by requiring a college degree as gatekeeping for bureaucratic jobs. If you look around places where there's lots of bureaucracy (like washington dc) there's tons of strange billboards and the like on public transit advertising graduate school (MA and PhD) targeted at beaurocrats that need to check off that box for a pay/rank/retirement increase. IIRC one of them was called "Graduate School", as in you would go to a graduate school called "Graduate School".
In any case not-in-DC it's more focussed on the BA segment of the population, but artificial gatekeepering is a thing (even in tech! I know many candidates that I wanted to hire but were turned down because they didn't have a BA in CS)
Anecdotally, I think its worse in the public sector. I know several public school teachers who have gotten graduate degrees for the sole purpose of getting a raise. Its not like a private company where you can get a bigger raise by impressing your boss.
Most school districts have what’s known as a “step and lane” salary schedule for teachers. These grids specify how much raises are worth. Teachers earn a “step” increase for each additional year of experience, with many teachers peaking with the highest “step” at around age 55.
Teachers can also earn more by having more education (those are the “lane” increases). Some districts pay teachers holding a master’s or doctoral degree a premium, while others move teachers into a higher pay column when they earn a certain number of credit hours of professional development.
Isn't this why the cosigner exists on student loans? Basically the cosigner is the one with collateral, capable of meeting the terms of the loan. While IANAL, my understanding of reading a master promissory note for student loans is that basically the debt falls to the cosigner should the primary be unable to meet the financial obligations in any way (after wage garnishing, etc).
Surely some kind of middle ground is possible? Something like, "student loans aren't dischargeable for 15 years after you receive them."
That would eliminate the possibility of a quick "tactical bankruptcy" after college, while also allowing students who made an unwise financial deal when they were 18 not to spend their whole lives paying off debt.
But isn't the reason for the sole existence of college loans that there aren't any regulations controlling the private education industry? More availability for loans means the schools can charge more for tuition.
Just like the whole american privatized healthcare; the sky is the limit... to what they'll charge you.
Here’s a lifehack: Attend college in Europe then move to USA for that high paying job.
Works really well. Cheap to free education, better skills because you’re not just living the college life and professors have little incentive to make it easy. It’s great.
Hell you don’t even have to fully graduate to get most of the benefit.
If you're never going to pay European taxes, that seems like an unethical life hack. And if enough people actually do this, I wouldn't be surprised if European universities start raising their foreign students tuition.
Some countries like Germany (which generally costs 500 Euro/semester, except in 1 state) give you an 18(?) month visa post-graduation to allow you to get a job in Germany. This particular visa actually puts you on the same hiring level (at least theoretically) as German citizens.
Of course, knowing German fluently would be critical to be "on the same level" as German citizens.
So, most likely you are not going to be evading the taxes, at least in places like Germany. It is almost always better to get your first job post-graduation in Germany if you have a German diploma anyways.
Some states already require foreign students to pay 500€ each semester and others will follow. On top of that you will have to guarantee that you can support your life in Germany, meaning you are not eligible for any kind of government support if things get tough or you lose your job.
Going there thinking everything will be provided is wrong and the COVID-19 crisis will get a lot of foreign students into deep trouble as they lose their jobs and can't support themselves.
A lot of EU countries are not issuing standard/typical/normal visas at all. You can most likely forget getting a student visa altogether. At this point, you cannot even legally enter the EU (Schengen zone + more) without being an EU citizen or resident, unless you are a third-national humanitarian aid worker or diplomat, basically.
Depends where you go. I know we had some Chinese students in my college, they paid €10000 a year, compared to the Irish students who paid €3000 a year.
As far as I've heard, US colleges are on the order of $10000+ per semester.
There's also a point about sticker price vs. actual price. Anyone actually paying six figures for a Bachelor's degree is not only getting fleeced by an expensive school, but also can probably afford it (no need-based scholarships or grants?) and is also not very smart (no merit-based scholarships or grants?).
It depends on the country and sometimes the institution and program. Here is a price list from a Swedish university with the approx. USD amounts being between $10,000 to $30,000 depending on the program:
I think they should for the same reason you point out. The cost of school has gone up due to the endless supply of loan money mixing with demand.
That cost will go waaaaaaay down if the loan money dries up, potentially back to the point where it was when “working your way through college” was possible.
Most student loans are guaranteed by the Federal govt. There is no risk for the lender. They just operate as a middle man basically. There was legislation to move all loans to the Dept. of Education and do away with Navient etc... but you know elections happened...
Former professor (community college), father of three, two still paying tuition.
Here's my take:
Students should be ineligible for loans until they complete one semester of college. Colleges should make that semester a "boot camp": Varied, challenging, intellectual curriculum, forced work-together times (a study-hall "lab"), and so on. The problem I have is that a helluva lot of students who go to college right out of high school are there for the wrong reasons. They aren't applying themselves intellectually- any growth they get will be, if not despite their behaviors, at least accidental.
I don't want free tuition/subsidized loans/etc. in the current situation. And I totally believe that society should make an investment- hell I've dedicated my life to it- but it's a careful investment. I want those young adults to come away from college with real intellectual growth. At least they should be able to read and think critically.
And making college free in the USofA will make college costs increase (unless you think the US military spending is under control).
Having an onboarding boot camp, where you have to learn to study and take it seriously or you don't get to stay, would help the First Year Experience folks (who would run it), the professors (yay!), the students, the parents who would otherwise be throwing their money away, even high school teachers. It might make enrollment drop-at least initially- but it seems like that's an issue now anyway so it might be a good time for it.
It's a sure thing for the bank. Most of the loans are guaranteed by the federal government.
Student loans only changed to be non-dischargable in the 70s and 80s, driven by certain professions (especially medical) and costs associated with them.
Why even have this as a private thing. In other countries this works fine as a public loan offer by the state (which also helps to keep fees reasonable).
America had dischargeable student loans before the early 2000s, and the education banking system did not implode from that. I think the student loan system would be fine with bankruptcy of student loans too after much gashing of teeth.
The reason they aren't dischargeable is because what bank in their right mind would give a loan to an 18 year old with no collateral? They only guarantee they get that it will be paid back is the fact that it can't be discharged.
Student loans would dry up overnight if they could be discharged at bankruptcy.
That being said, I actually think that's a good thing, because it would force colleges to charge reasonable tuition rates and also offer scholarships if they want to get the best students.
But barring shifting to a European model of college funding, I don't see the US allowing dischargeable loans, nor do I think they should, because the reality of it is that colleges won't reduce their rates nor increase their scholarships, they would just be completely out of reach of poor and middle class students.