7 ms·

1. Infinite supply of loans. Dept of Ed isn't even allowed to deny a loan to a person. 2. Culture since the Clinton era of "everyone should go to college". Mas

by crabasa 11y ago

1. Infinite supply of loans. Dept of Ed isn't even allowed to deny a loan to a person. 2. Culture since the Clinton era of "everyone should go to college". Massive cultural stigma for those who don't. 3. Colleges continue to justify costs based on lifetime earnings delta of people with degrees. Sadly, this data is backwards-looking and not indicative of what today's students should expect. The most heinous thing though is that student loans are exempted from American bankruptcy laws. The gov't will give you a loan, without doing any diligence on your ability to repay, but make it impossible to discharge your debt if you go bankrupt.

blisterpeanuts 11y ago
+1 for the role that guaranteed, subsidized student loans play. University financial counselors are very well versed at helping students obtain the maximum amount of loans, along with an obligatory brochure cautioning them not to over-borrow.
jenshoop 11y ago
Spot on. There's also been an increasing competitive push between universities to deliver "country club-esque" experiences to students, which further drives up cost. (Separately, let's not forget about the chaos of the educational publishing industry and the insane price points they command for modestly updated editions each year.) But I think items 1 and 2 above -- and a lack of education about what loans are and the value of a higher ed degree to the potential student -- are the true culprits here. There's a cultural expectation that all students will matriculate to college, and many high schools measure their success in terms of college attainment. Meanwhile, there's a lack of counseling/education for students, so few know that they're expected to repay loans and fewer explore the options (college and non-college) in front of them, and counselors would be working at cross-purposes with the secondary institution's goals if they advised against attending college. As demand for higher ed continues to grow, for-profit higher ed institutions continue to spring up to suck up federal loans and lower acceptance standards.
- deleted 11y ago
  [deleted]
- at-fates-hands 11y ago
  >> let's not forget about the chaos of the educational publishing industry and the insane price points they command for modestly updated editions each year.) I had a friend of mine who I knew when I was working at Thomson Reuters back when they still had their educational publishing wing of the company. He was in sales and said educational publishing is one of the biggest rackets nobody has heard of. He said he would do his due diligence and meet with professors and educators regularly during the year and let them know what the publishers were doing, but in the end, he said it was always a 50/50 roll of the dice if a professor or school bought the books he had been pitching them since they got the last version of the textbooks they ordered. He said it mainly came down to name recognition, and Thomson had that - but he also said it was similar to how agents woe professional athletes. Lots of perks, free dinners and baseball tickets to the professors making the decisions. He said as a sales person, they had a "client account" card where they could wine and dine clients and had a monthly stipend between 5K-10K specifically for this purpose. He said you'd be surprised how greedy these professors get once they know they can influence what books are going to be purchased for the following year and from what company.
- zo1 11y ago
  >"There's also been an increasing competitive push between universities to deliver "country club-esque" experiences to students, which further drives up cost." That was my impression of University/College. Having only experienced what was shown in movies and the media, I was under the impression that college meant getting your own "apartment with a roommate". Unfortunately, in the non-US university I attended, it meant "4x6" meter room, two beds, two cupboards, two desks, and two-roommates. Then again, the entire year's tuition did only cost about $3500, about 9 years ago.
  - meric 11y ago
    I thought the same too. I didn't even have a room, and travelled to class by train from home.
devbug 11y ago
One argument I've encountered that holds water, at least with regards to being unable to discharge student debt: you can't repossess someone's mind. (Technically you can, but that'd be a messy affair.)
- blisterpeanuts 11y ago
  Not yet, anyway.
- commandar 11y ago
  That could be said for any form of unsecured debt.
- crabasa 11y ago
  That's a terrible argument that I've never heard an actual policy-maker or politician make. Besides, unsecured debts are all around us, credit cards being the most common.
  - slg 11y ago
    But it is much harder to get other forms of unsecured debt. An 18 year old with no job and no credit history is going to have a hard time getting a credit card with a $5k limit let alone a $100k loan. The lack of being able to discharge the loan in bankruptcy needs to go hand in hand with the guaranteed availability of the loan. Instead of changing one of those things, we are are better off coming up with a new system like no upfront tuition and income based repayment plans.
    - crabasa 11y ago
      > An 18 year old with no job and no credit history is going to have a hard time getting a credit card with a $5k limit Wow, citation please? Credit card companies set up pop-up stands and give away free t-shirts to students who apply for their credit cards. The VAST majority of the applications are happily approved. Update: excellent citation kileywm. I guess my perception was a bit dated.
landonshoop 11y ago
Hear, hear. Agreed on point 2. I believe we are seeing this stigma evolve right before our eyes. College has been improperly marketed. I've mentioned this on other threads, but my view is that college should be used as a forum to learn, not a means to get a job. The reality though is the opposite. The pressure against this reality is mounting. I feel we're nearing the point where one is better off going straight into the workforce to receive on-the-job training instead of pursuing a college degree. In other words, the market forces are starting to take effect. But do we need to fast track this shift in mentality? If so, how? How much do we leave up to the invisible hand to flesh this issue out and how much should the onus lie on third parties (e.g. the end of federal government loan subsidies, corporations, etc)?
eanzenberg 11y ago
>> The gov't will give you a loan, without doing any diligence on your ability to repay, but make it impossible to discharge your debt if you go bankrupt. No due diligence.. guaranteed loan.. cannot be discharged in bankruptcy. Makes sense to me. If the gov't could discriminate on who it loans to for risk assessment then that's a different story.
- Shivetya 11y ago
  that plus they don't necessarily restrict the loans with regards to the education you are receiving. it is one thing to go into a field that is experiencing good growth it is another to enter one that is saturated or quickly saturating. It has always been my belief that if government is going to provide loans it should set limits on the cost of the education it is taking the risk for. It already sets limits on medical care through reimbursement rates, how hard would it be to limit course costs? The means test should be on what you are receiving, not necessarily who is receiving it.
  - kuschku 11y ago
    In Germany, it’s simple: 1. If your parents earn enough to finance you studying, you won’t get a loan 2. The loan is limited to 800$ a month 3. If you fail too many courses, the loan is cancelled. But: 4. You only have to pay back in months in which you earn over 30k€ per year This allows the loans to be a lot less risky. I’d argue this is a much better system than what I read about the US tuition system, especially for the students. (Obviously, the large supply of free governmentally paid universities help drive the price down, too.)
    - jimbokun 11y ago
      "I’d argue this is a much better system than what I read about the US tuition system, especially for the students." As an American, it would be difficult to engineer a worse tuition system than ours.
      - kuschku 11y ago
noonespecial 11y ago
The loans are the key to the whole mess. So long as the loan is guaranteed to all and non-dischargeable through bankruptcy, the cost will tend to rise to match the total expected lifetime earnings the education enables. In short the loan system is transferring the benefits of the education away from the students and allowing the institutions to take it for themselves instead.
- crabasa 11y ago
  The cost will tend to rise to match the total expected incremental lifetime earning, discounted to the present value. Personally, I think we've already passed that point. Would love to see some more research here.
  - fancyketchup 11y ago
    Wait, really? The incremental lifetime earning from a Bachelor's degree is something like 0.5 to 1.5 million dollars[1]. The cost of attending college could double at least once before the ROI goes negative. [1] https://cew.georgetown.edu/wp-content/uploads/2014/11/collegepayoff-complete.pdf https://cew.georgetown.edu/wp-content/uploads/2014/11/colleg...
    - neil1 11y ago
      You're forgetting about opportunity cost and the salary plus job advancement that you could achieve in the time you are in college
      - fancyketchup 11y ago
        The page I cited actually breaks down lifetime earnings by age (a.k.a. "annual income"). It's true that non-college graduates get an earlier start on savings, but the overall trend is that their annual income starts to decline as they get closer to retirement age (they peak in their mid to late 40's). You have to assume totally unrealistic investment gains in the first four years to make up for the $500k less total income.
zxcvvcxz 11y ago
> 3. Colleges continue to justify costs based on lifetime earnings delta of people with degrees. Sadly, this data is backwards-looking and not indicative of what today's students should expect. Not only that, it's downright bullshit. I remember seeing once a comparison. Non college degree average salary: let's say it's 30K. College degree: 40K. Instead of college, take those 4 years and at least $50K of educational expenses and invest in the S&P 500. Do nothing. Earn more over your lifetime that the more sophisticated 40K college graduate. Or better yet, take that 50K, use the plethora of free online learning resources and become an entrepreneur. For a large portion of the population, college is simply not worth it.
- Retra 11y ago
  What 50K? Are you telling me I could've applied for 50K in government-issued student loans and then turned around and spent that on a free online school and started a business?
- CognitiveLens 11y ago
  Actual data from the US: https://cew.georgetown.edu/cew-reports/goodjobsareback/ https://cew.georgetown.edu/cew-reports/goodjobsareback/ of the 2.9 million "good jobs" (i.e. full-time, high paying with benefits) created since 2010, 2.8 million have gone to people with college degrees. It fun to say that you don't need a degree to get a good, high-paying, satisfying job, and there are plenty of anecdotal examples to reference, but the data clearly indicate that the odds are not in your favor if you choose an alternative path, at least in the US. I suspect that software engineering and some related industries might be a little more degree-agnostic, but that's far from the norm.
tn13 11y ago
I totally understand this aspect but what I do not understand is why anyone would ever pay $150K for a media studies degree or a degree in baking. Are Americans that stupid to pursue meaningless education at such price ?
deleted 11y ago
[deleted]

by crabasa 11y ago

blisterpeanuts 11y ago

+1 for the role that guaranteed, subsidized student loans play. University financial counselors are very well versed at helping students obtain the maximum amount of loans, along with an obligatory brochure cautioning them not to over-borrow.

jenshoop 11y ago

Spot on. There's also been an increasing competitive push between universities to deliver "country club-esque" experiences to students, which further drives up cost. (Separately, let's not forget about the chaos of the educational publishing industry and the insane price points they command for modestly updated editions each year.) But I think items 1 and 2 above -- and a lack of education about what loans are and the value of a higher ed degree to the potential student -- are the true culprits here. There's a cultural expectation that all students will matriculate to college, and many high schools measure their success in terms of college attainment. Meanwhile, there's a lack of counseling/education for students, so few know that they're expected to repay loans and fewer explore the options (college and non-college) in front of them, and counselors would be working at cross-purposes with the secondary institution's goals if they advised against attending college. As demand for higher ed continues to grow, for-profit higher ed institutions continue to spring up to suck up federal loans and lower acceptance standards.

deleted 11y ago
[deleted]
at-fates-hands 11y ago
>> let's not forget about the chaos of the educational publishing industry and the insane price points they command for modestly updated editions each year.) I had a friend of mine who I knew when I was working at Thomson Reuters back when they still had their educational publishing wing of the company. He was in sales and said educational publishing is one of the biggest rackets nobody has heard of. He said he would do his due diligence and meet with professors and educators regularly during the year and let them know what the publishers were doing, but in the end, he said it was always a 50/50 roll of the dice if a professor or school bought the books he had been pitching them since they got the last version of the textbooks they ordered. He said it mainly came down to name recognition, and Thomson had that - but he also said it was similar to how agents woe professional athletes. Lots of perks, free dinners and baseball tickets to the professors making the decisions. He said as a sales person, they had a "client account" card where they could wine and dine clients and had a monthly stipend between 5K-10K specifically for this purpose. He said you'd be surprised how greedy these professors get once they know they can influence what books are going to be purchased for the following year and from what company.
zo1 11y ago
>"There's also been an increasing competitive push between universities to deliver "country club-esque" experiences to students, which further drives up cost." That was my impression of University/College. Having only experienced what was shown in movies and the media, I was under the impression that college meant getting your own "apartment with a roommate". Unfortunately, in the non-US university I attended, it meant "4x6" meter room, two beds, two cupboards, two desks, and two-roommates. Then again, the entire year's tuition did only cost about $3500, about 9 years ago.
- meric 11y ago
  I thought the same too. I didn't even have a room, and travelled to class by train from home.

devbug 11y ago

One argument I've encountered that holds water, at least with regards to being unable to discharge student debt: you can't repossess someone's mind. (Technically you can, but that'd be a messy affair.)

blisterpeanuts 11y ago
Not yet, anyway.
commandar 11y ago
That could be said for any form of unsecured debt.
crabasa 11y ago
That's a terrible argument that I've never heard an actual policy-maker or politician make. Besides, unsecured debts are all around us, credit cards being the most common.
- slg 11y ago
  But it is much harder to get other forms of unsecured debt. An 18 year old with no job and no credit history is going to have a hard time getting a credit card with a $5k limit let alone a $100k loan. The lack of being able to discharge the loan in bankruptcy needs to go hand in hand with the guaranteed availability of the loan. Instead of changing one of those things, we are are better off coming up with a new system like no upfront tuition and income based repayment plans.
  - crabasa 11y ago
    > An 18 year old with no job and no credit history is going to have a hard time getting a credit card with a $5k limit Wow, citation please? Credit card companies set up pop-up stands and give away free t-shirts to students who apply for their credit cards. The VAST majority of the applications are happily approved. Update: excellent citation kileywm. I guess my perception was a bit dated.

landonshoop 11y ago

Hear, hear. Agreed on point 2. I believe we are seeing this stigma evolve right before our eyes. College has been improperly marketed. I've mentioned this on other threads, but my view is that college should be used as a forum to learn, not a means to get a job. The reality though is the opposite. The pressure against this reality is mounting. I feel we're nearing the point where one is better off going straight into the workforce to receive on-the-job training instead of pursuing a college degree. In other words, the market forces are starting to take effect. But do we need to fast track this shift in mentality? If so, how? How much do we leave up to the invisible hand to flesh this issue out and how much should the onus lie on third parties (e.g. the end of federal government loan subsidies, corporations, etc)?

eanzenberg 11y ago

>> The gov't will give you a loan, without doing any diligence on your ability to repay, but make it impossible to discharge your debt if you go bankrupt. No due diligence.. guaranteed loan.. cannot be discharged in bankruptcy. Makes sense to me. If the gov't could discriminate on who it loans to for risk assessment then that's a different story.

Shivetya 11y ago
that plus they don't necessarily restrict the loans with regards to the education you are receiving. it is one thing to go into a field that is experiencing good growth it is another to enter one that is saturated or quickly saturating. It has always been my belief that if government is going to provide loans it should set limits on the cost of the education it is taking the risk for. It already sets limits on medical care through reimbursement rates, how hard would it be to limit course costs? The means test should be on what you are receiving, not necessarily who is receiving it.
- kuschku 11y ago
  In Germany, it’s simple: 1. If your parents earn enough to finance you studying, you won’t get a loan 2. The loan is limited to 800$ a month 3. If you fail too many courses, the loan is cancelled. But: 4. You only have to pay back in months in which you earn over 30k€ per year This allows the loans to be a lot less risky. I’d argue this is a much better system than what I read about the US tuition system, especially for the students. (Obviously, the large supply of free governmentally paid universities help drive the price down, too.)
  - jimbokun 11y ago
    "I’d argue this is a much better system than what I read about the US tuition system, especially for the students." As an American, it would be difficult to engineer a worse tuition system than ours.
    - kuschku 11y ago

noonespecial 11y ago

The loans are the key to the whole mess. So long as the loan is guaranteed to all and non-dischargeable through bankruptcy, the cost will tend to rise to match the total expected lifetime earnings the education enables. In short the loan system is transferring the benefits of the education away from the students and allowing the institutions to take it for themselves instead.

crabasa 11y ago
The cost will tend to rise to match the total expected incremental lifetime earning, discounted to the present value. Personally, I think we've already passed that point. Would love to see some more research here.
- fancyketchup 11y ago
  Wait, really? The incremental lifetime earning from a Bachelor's degree is something like 0.5 to 1.5 million dollars[1]. The cost of attending college could double at least once before the ROI goes negative. [1] https://cew.georgetown.edu/wp-content/uploads/2014/11/collegepayoff-complete.pdf https://cew.georgetown.edu/wp-content/uploads/2014/11/colleg...
  - neil1 11y ago
    You're forgetting about opportunity cost and the salary plus job advancement that you could achieve in the time you are in college
    - fancyketchup 11y ago
      The page I cited actually breaks down lifetime earnings by age (a.k.a. "annual income"). It's true that non-college graduates get an earlier start on savings, but the overall trend is that their annual income starts to decline as they get closer to retirement age (they peak in their mid to late 40's). You have to assume totally unrealistic investment gains in the first four years to make up for the $500k less total income.

zxcvvcxz 11y ago

> 3. Colleges continue to justify costs based on lifetime earnings delta of people with degrees. Sadly, this data is backwards-looking and not indicative of what today's students should expect. Not only that, it's downright bullshit. I remember seeing once a comparison. Non college degree average salary: let's say it's 30K. College degree: 40K. Instead of college, take those 4 years and at least $50K of educational expenses and invest in the S&P 500. Do nothing. Earn more over your lifetime that the more sophisticated 40K college graduate. Or better yet, take that 50K, use the plethora of free online learning resources and become an entrepreneur. For a large portion of the population, college is simply not worth it.

Retra 11y ago
What 50K? Are you telling me I could've applied for 50K in government-issued student loans and then turned around and spent that on a free online school and started a business?
CognitiveLens 11y ago
Actual data from the US: https://cew.georgetown.edu/cew-reports/goodjobsareback/ https://cew.georgetown.edu/cew-reports/goodjobsareback/ of the 2.9 million "good jobs" (i.e. full-time, high paying with benefits) created since 2010, 2.8 million have gone to people with college degrees. It fun to say that you don't need a degree to get a good, high-paying, satisfying job, and there are plenty of anecdotal examples to reference, but the data clearly indicate that the odds are not in your favor if you choose an alternative path, at least in the US. I suspect that software engineering and some related industries might be a little more degree-agnostic, but that's far from the norm.

tn13 11y ago

I totally understand this aspect but what I do not understand is why anyone would ever pay $150K for a media studies degree or a degree in baking. Are Americans that stupid to pursue meaningless education at such price ?

deleted 11y ago

[deleted]