3 ms·

Well, there is a pretty large existing population of college grads who cannot afford to spend much because of the existing debt. Most proposed regulation (that

Well, there is a pretty large existing population of college grads who cannot afford to spend much because of the existing debt. Most proposed regulation (that I think has no chance of passing) talks about new loans. Immediately lowering rates on existing loans would actually give millennial more spending money. As for tuition skyrocketing, I think that will slow down or even reverse soon. Colleges thought that they could raise rates now, and expect the economy to catch up with higher salaries later. That didn't happen. In fact the opposite happened: the economy tanked, and a bunch of people were left with lots of debt and jobs that can't support it. I think the market will correct itself, especially as online/remote education becomes more prevalent, state schools show that your earning potential is not really linked to the prestige of your school's name anymore, etc.

wvenable 11y ago
I disagree, I think the desperation for jobs will increase demand on colleges and universities and the availability of student loans make that possible. Colleges have been able to, and will continue to, charge whatever students can be loaned.
- BEEdwards 11y ago
  So unlike every other service colleges are special and the more people looking to do it the more expensive it is. It isn't possible to open more colleges and create competition. That wouldn't work in this case, because as stated unlike every other good or service in the world colleges are special and don't work like that. Glad we cleared that up, now we can just do nothing about the problem.
  - rhino369 11y ago
    It's not just special, there are social pressures that totally distort rational thinking. People (parents, teachers, advisors) tell kids to go to the best school they can. There is a ton of hype about attending the "Right school for you" etc. There are rankings and all sorts of other stuff. Schools distort true cost through murky financial aid processes. Then the gov't continues the scam by calling loans "financial aid." Plus the customers are 17 year olds whose most expensive purchase before this was saving up for that really cool concert that one time. And now they are borrowing tens of thousands (sometimes hundreds). It's also impossible to judge the worth of college. It's just a mess. We shouldn't be giving kids and young adults that much rope to hang themselves with. The government should institute price controls for anyone using federal loans. 30k tuition is a total scam.
    - BEEdwards 11y ago
      I don't think we disagree in principle, but in detail. I fundamentally disagree that "Schools distort true cost through murky financial aid processes. Then the gov't continues the scam by calling loans "financial aid."" That argument says that there is essentially free money just by charging more, no increase in services. If that where true the amount of money to be made would force more colleges to be opened. Couple that with the fact that public colleges are much cheaper than their private counterparts and community colleges are cheaper still and I don't know exactly where this argument comes from. There is a lot of high cost options which loans unfortunately do cover, but to blame the price distortion on the availability of the loans seems backward. Private K-12 schools are just as outrageously priced with no loans available to fund them. I think there is a stigma (depending on your area maybe justified) around public educational institutions, which allows profiteers to do their thing. Instead of fixing the underlying problem, we throw money at it. Which is the American way.
  - morgante 11y ago
    > So unlike every other service colleges are special and the more people looking to do it the more expensive it is. Uh, what? Are you being sarcastic? Because it's pretty much a basic rule of economics that if demand for a good increases its price will increase (at least until new supply is introduced).
- atom-morgan 11y ago
  I would say that's what's happening right now and it can't last much longer. Eventually people will realize the debt isn't worth it and universities will be contract.
  - wvenable 11y ago
    The problem is when you have a flooded labor market any education becomes a differentiator. So whether the debt is or isn't worth it becomes a question of whether or not you want a middle-class job.
- wtvanhest 11y ago
  The student loan problem is one of the most challenging problems. My undergrad is probably thought by most on HN to be a diploma mill (UCF) - University of Central Florida. But, UCF has done something really special. They said screw it and they worked really hard to keep tuition low. The median Tuition is just $6,368. That low tuition + easy Florida scholarship money has worked well for the University as the acceptance rate has fallen below 50% (That is comparable to many universities in the top 100 globally). I think UCF's bet that they need to compete on price is going to work in their favor. The biggest downside is massive class sizes, but that is made up for with more online learning and better lecturers. When someone asks me where I would go, I tell them pick one: Really, really prestigious or cheap and decent. UCF does not provide the opportunities that Harvard does, but it will still beat out an unknown liberal arts college charging $200,000 for 4 years. https://www.washingtonpost.com/local/education/with-54000-students-and-growing-u-of-central-florida-storms-higher-ed/2015/09/20/0db73380-4cbd-11e5-bfb9-9736d04fc8e4_story.html https://www.washingtonpost.com/local/education/with-54000-st...
  - vonmoltke 11y ago
    > My undergrad is probably thought by most on HN to be a diploma mill (UCF) - University of Central Florida. Who the hell thinks UCF is a diploma mill?
    - wtvanhest 11y ago
      There are multiple definitions. No one thinks UCF is illegitimate, but it is a large university which pumps out a ton of students and some people here question any school which isn't a top ten university.
  - morgante 11y ago
    > I tell them pick one: Really, really prestigious or cheap and decent In reality, there is really only one criterion: affordable. The really elite universities will make themselves affordable if you can get in, and if you can't then you're better off going somewhere cheap. There's no point in paying for the expensive middle. Hopefully, this will do more to eliminate degrees as a (useless) hiring signal.
krschultz 11y ago
s/millenial/millenials that have not yet paid off their student loans/ It would have been fun to galavant around Europe for fun instead of paying off my loans, but I guess I'm the sucker for being responsible. I'm totally fine with people being able to refinance their loans to market rates, if those rates happen to be negative then good for them. I'm annoyed by this prevailing view that everyone with student loans are unemployed and can't pay them back. I know plenty of people with lots houses, cars, and taking vacations that haven't paid off their student loans yet. Outstanding balance left is not a good measure of the loan's burden or the circumstances under which the student took out the loan.
- ihsw 11y ago
  I think it's safe to say that people are generally irresponsible, all things considered. As for how to handle the mountain of student loan debt -- inflation used to work as a soft form of debt relief but banks screw with people by jacking up private student loan interest rates in lockstep. We need something stronger -- actual debt relief.
  - krschultz 11y ago
    Insisting that we need debt relief is not an argument. It's not self evident to me why we need to invalidate principal on loans. I like the idea of inflation a hell of a lot more because it benefits me as someone that paid off my loans ($80k!) in full. We can't seem to do it via monetary policy, but if you give me the choice between helicopter money and student loan debt relief, I'm going with helicopter money every time.

wvenable 11y ago

I disagree, I think the desperation for jobs will increase demand on colleges and universities and the availability of student loans make that possible. Colleges have been able to, and will continue to, charge whatever students can be loaned.

BEEdwards 11y ago
So unlike every other service colleges are special and the more people looking to do it the more expensive it is. It isn't possible to open more colleges and create competition. That wouldn't work in this case, because as stated unlike every other good or service in the world colleges are special and don't work like that. Glad we cleared that up, now we can just do nothing about the problem.
- rhino369 11y ago
  It's not just special, there are social pressures that totally distort rational thinking. People (parents, teachers, advisors) tell kids to go to the best school they can. There is a ton of hype about attending the "Right school for you" etc. There are rankings and all sorts of other stuff. Schools distort true cost through murky financial aid processes. Then the gov't continues the scam by calling loans "financial aid." Plus the customers are 17 year olds whose most expensive purchase before this was saving up for that really cool concert that one time. And now they are borrowing tens of thousands (sometimes hundreds). It's also impossible to judge the worth of college. It's just a mess. We shouldn't be giving kids and young adults that much rope to hang themselves with. The government should institute price controls for anyone using federal loans. 30k tuition is a total scam.
  - BEEdwards 11y ago
    I don't think we disagree in principle, but in detail. I fundamentally disagree that "Schools distort true cost through murky financial aid processes. Then the gov't continues the scam by calling loans "financial aid."" That argument says that there is essentially free money just by charging more, no increase in services. If that where true the amount of money to be made would force more colleges to be opened. Couple that with the fact that public colleges are much cheaper than their private counterparts and community colleges are cheaper still and I don't know exactly where this argument comes from. There is a lot of high cost options which loans unfortunately do cover, but to blame the price distortion on the availability of the loans seems backward. Private K-12 schools are just as outrageously priced with no loans available to fund them. I think there is a stigma (depending on your area maybe justified) around public educational institutions, which allows profiteers to do their thing. Instead of fixing the underlying problem, we throw money at it. Which is the American way.
- morgante 11y ago
  > So unlike every other service colleges are special and the more people looking to do it the more expensive it is. Uh, what? Are you being sarcastic? Because it's pretty much a basic rule of economics that if demand for a good increases its price will increase (at least until new supply is introduced).
atom-morgan 11y ago
I would say that's what's happening right now and it can't last much longer. Eventually people will realize the debt isn't worth it and universities will be contract.
- wvenable 11y ago
  The problem is when you have a flooded labor market any education becomes a differentiator. So whether the debt is or isn't worth it becomes a question of whether or not you want a middle-class job.
wtvanhest 11y ago
The student loan problem is one of the most challenging problems. My undergrad is probably thought by most on HN to be a diploma mill (UCF) - University of Central Florida. But, UCF has done something really special. They said screw it and they worked really hard to keep tuition low. The median Tuition is just $6,368. That low tuition + easy Florida scholarship money has worked well for the University as the acceptance rate has fallen below 50% (That is comparable to many universities in the top 100 globally). I think UCF's bet that they need to compete on price is going to work in their favor. The biggest downside is massive class sizes, but that is made up for with more online learning and better lecturers. When someone asks me where I would go, I tell them pick one: Really, really prestigious or cheap and decent. UCF does not provide the opportunities that Harvard does, but it will still beat out an unknown liberal arts college charging $200,000 for 4 years. https://www.washingtonpost.com/local/education/with-54000-students-and-growing-u-of-central-florida-storms-higher-ed/2015/09/20/0db73380-4cbd-11e5-bfb9-9736d04fc8e4_story.html https://www.washingtonpost.com/local/education/with-54000-st...
- vonmoltke 11y ago
  > My undergrad is probably thought by most on HN to be a diploma mill (UCF) - University of Central Florida. Who the hell thinks UCF is a diploma mill?
  - wtvanhest 11y ago
    There are multiple definitions. No one thinks UCF is illegitimate, but it is a large university which pumps out a ton of students and some people here question any school which isn't a top ten university.
- morgante 11y ago
  > I tell them pick one: Really, really prestigious or cheap and decent In reality, there is really only one criterion: affordable. The really elite universities will make themselves affordable if you can get in, and if you can't then you're better off going somewhere cheap. There's no point in paying for the expensive middle. Hopefully, this will do more to eliminate degrees as a (useless) hiring signal.

krschultz 11y ago

s/millenial/millenials that have not yet paid off their student loans/ It would have been fun to galavant around Europe for fun instead of paying off my loans, but I guess I'm the sucker for being responsible. I'm totally fine with people being able to refinance their loans to market rates, if those rates happen to be negative then good for them. I'm annoyed by this prevailing view that everyone with student loans are unemployed and can't pay them back. I know plenty of people with lots houses, cars, and taking vacations that haven't paid off their student loans yet. Outstanding balance left is not a good measure of the loan's burden or the circumstances under which the student took out the loan.

ihsw 11y ago
I think it's safe to say that people are generally irresponsible, all things considered. As for how to handle the mountain of student loan debt -- inflation used to work as a soft form of debt relief but banks screw with people by jacking up private student loan interest rates in lockstep. We need something stronger -- actual debt relief.
- krschultz 11y ago
  Insisting that we need debt relief is not an argument. It's not self evident to me why we need to invalidate principal on loans. I like the idea of inflation a hell of a lot more because it benefits me as someone that paid off my loans ($80k!) in full. We can't seem to do it via monetary policy, but if you give me the choice between helicopter money and student loan debt relief, I'm going with helicopter money every time.