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Do you think it would be best to start denying loans for education for worthless degrees?

• toomuchtodo 10y ago
  I think the government should fund education directly, with tuition being free to students. Right now, we have this joke where schools can raise rates as much as they want, because you must have a degree to be competitive (inelastic demand). Combined with cheap, government-backed lending, its a disaster. Its a long-term payday loan, no more, no less. At least when the money flowed without discretion for housing, you could walk away from your house.
  • pkaye 10y ago
    How does switching from cheap loans to free tuition change anything? The costs will still be out of control. With housing it is secured against the value of the house but with education there is nothing.
    • toomuchtodo 10y ago
      If you pay for it directly, you control the costs. No different then single payer healthcare. Also, credit card and personal loan debt is unsecured; we don't prohibit that from being discharged in bankruptcy. Student loan debt is the only debt that can't be discharged.
      • pkaye 10y ago
        Then why don't student use a credit or personal loan to pay for their education?
        • toomuchtodo 10y ago
          Because they don't have enough credit history to do so. You can get a credit card for a few thousand dollars with no credit history. Not tens of thousands of dollars. The problem isn't the debt type. The problem is the government needs to use its regulatory authority to enable cost controls on education.
      • pkaye 10y ago
        And that is the difference between a credit card/personal loan and a education loan. The student doesn't have enough history. Nothing stops anyone from forming a business that gives students a loan with is dischargable in bankruptcy except that business may have a tough time staying solvent.
      • pkaye 10y ago
        I can't reply to you post below but do agree that cost control is the key. But giving free tuition is not the answer to cost control. It needs to be something more.
        • toomuchtodo 10y ago
          > But giving free tuition is not the answer to cost control. It needs to be something more. Why? Why would education be no different than any other sunk cost, like a military or transportation infrastructure?
          • pkaye 10y ago
            In most other spending, the government tends to negotiate. There are requirements on the bidder and the bidder with the lowest bid wins. Example of cost control. What do propose as a similar mechanism in education?
    • dikdik 10y ago
      Was your high school outrageously expensive???? I went to one of the best in my state, it was public and free (minus book rental fees).
      • zaroth 10y ago
        Why do you think your high school education was free?
        • dikdik 10y ago
          Taxes? Ya'know the same way we used to fund most of higher education. But we've cut a large portion of tax funding for higher ed in the last several decades. The job market requires more skills and education (apparently) and for whatever reason government officials have decided to make it more difficult for citizens to acquire those skills.
          • toomuchtodo 10y ago
            > The job market requires more skills and education (apparently) and for whatever reason government officials have decided to make it more difficult for citizens to acquire those skills. "Bootstraps"
      • namlem 10y ago
        My public high school was extremely expensive. Public schools are paid for by property tax in the US and taxes in my home town were extremely high. Most of that went to fund the extremely competitive and highly ranked school system.
• loeg 10y ago
  Yes!
• yardie 10y ago
  What's a general education degree worth? I ask because a lot of state schools won't even put you into a degree program until your 2nd or 3rd year. We're asking teenagers to make lifelong commitments knowing they don't have enough knowledge or experience to do so. I think the president has it almost right. Deny student loans to worthless colleges. The degree is a byproduct since it is the coursework that counts.
  • intopieces 10y ago
    >Deny student loans to worthless colleges Deny student loans to all for-profit colleges. They only exist to suck up GI bill money anyway. Mandate a gap year between high school and college: minimum age for attendance ought to be 19, barring a few exceptions. Many of my friends have gone on to be perfectly successful, but only after deciding after the first year that college is not for them. Too late; they already had loans. Had we all taken a year to truly ruminate on what we want to do, we'd all ended up a lot better.
• a-priori 10y ago
  One private-sector approach would be to fund education with equity instead of debt. Lenders can agree to fund a student's tuition in exchange for X% of their income for some fixed number of years Y after graduation. The lenders can choose X% and Y, within reasonable limits. After that period expires, no matter how much has been paid, the student has no further obligations. The average cost of a 4-year undergraduate degree in the United States, including room and board, is around $76k. A lender might agree to pay this in exchange for 20% of wages for 10 years after graduation. The median income for fully-employed people with undergraduate degrees in the United States is $56k per year, so assuming the student earns that the lender gets a total return of $112k, or 47% ROI, over ten years. That's roughly the same as debt with an interest rate of 4.7% percent, which is similar to what lenders are charging these days. The difference is that this scheme shifts the risk to the lender, where it should be: banks are experts of credit risk assessment. Since lenders only get paid when the student does, their interests are better aligned. If you graduate and end up making a very high salary, they get a lot of money (and so do you of course); if you can only get minimum wage jobs, the lender doesn't make a profit. So they actually has an incentive to ensure the students earn more money after graduation to maximize their own return. Lenders would probably start competing with each other on job placement programs and whatnot. It also puts the burden of the cost of education on the lenders, not the students. Lenders here have more bargaining power with schools, so they'd be better able to apply downward pressure on tuition fees.
  • pkaye 10y ago
    What control does the lender have except to deny the equity deal? In the end they will pick those students with higher rate of return.
    • dozzie 10y ago
      Well, that was the whole point of the idea, wasn't it? Less loans for worse-paying fields would mean less people pursuing them, and this is where supply and demand curve kicks in, lowering prices of studying in these fields.
  • nradov 10y ago
• damptowel 10y ago
  Student debt should be abolished, its a huge brake on the economy, only serving finance, which at this point in the debt supercycle is draining real productivity.