10 ms·

why not allow them to operate instead of force them out--make them pay for all defaulted loans above 8% -- that might make them work harder to get their studen

why not allow them to operate instead of force them out--make them pay for all defaulted loans above 8% -- that might make them work harder to get their students gainfully employed so they can cover their loans. -- not that I like ITT, I abhor them, and think that Bootcamps are WAY better in terms of quality education and quality of job prospects.

tn13 10y ago
Yes this. The problem here is with the government instead of ITT in my opinion. If you are lending money to someone who is taking significantly more risk it is your fault if the person fails to pay it back and not of the consumer or the business selling the service. In fact it makes sense for the government to do better credit risk analysis for every college-course-student instead of providing loans for any student, college course. The private banking industry already has this system and it makes sense for government to just leverage that.
- cloakandswagger 10y ago
  Why the downvotes? It seems perfectly sensible that the government should be selective about who it loans money to. Even more so than private industry, considering the money they're handing out is from a deficit that productive peoples' taxes pay for.
  - iamdave 10y ago
    I'll entertain the notion, because I have questions and reservations of my own (powered by certain built-in and historical baisies as an American...infer if you will): What would the criteria be to determine loan eligibility for a student fresh out of high school?
    - cloakandswagger 10y ago
      GPA, extra curricular activity, criminal record, intended major, savings, jobs worked and the duration they were held, etc. Of course, none of this is as accurate an indicator as a FICO score which is why student loans are federally guaranteed, otherwise who would offer them? All of this goes to underscore just how destructive the "college for everyone" concept is. The government is making junk loans so that naive young people can pursue useless degrees and graduate directly into crippling debt servitude. Consequently, colleges have transformed into bloated profit machines, happily ratcheting up tuition in response to this inflated demand. Sadly, reform will only happen once this system collapses in on itself.
      - chatmasta 10y ago
        A FICO score is pretty meaningless for someone just graduating high school. They likely don't even have a credit card yet. And for those who do have a FICO score, what if the very reason they're applying to ITT tech is the same reason their score is bad? You also want to avoid "discrimination."
      - cgearhart 10y ago
        > colleges have transformed into bloated profit machines, happily ratcheting up tuition in response to this inflated demand Colleges aren't really "profit machines" though, and growth in tuition hasn't paced enrollment increases, so it is more likely that aid levels are being increased in response to rising tuition, rather than tuition being raised due to increased aid. Interestingly, one of the dominant factors in the growth of personnel costs for colleges is healthcare for employees. Between 1975-2004, enrollment increased by 65% in four-year colleges while cost increased by almost 200% over the same period. [1][2] It's not really a demand-driven phenomenon because colleges have capacity to support the number of students attending, so the marginal cost of accepting additional students is low. The more likely cause is that loans (private or public) turn students into consumers, forcing colleges to compete with each other to attract paying customers. Look at the facilities and amenities provided at German universities (which are 100% publicly funded) compared to public universities in the US. We spend tremendous amounts of money for health centers, gyms, sports, clubs, etc., that require increased spending on construction and administrative support staff. [3] [1] http://nces.ed.gov/programs/digest/d15/tables/dt15_302.60.asp?current=yes http://nces.ed.gov/programs/digest/d15/tables/dt15_302.60.as... [2] https://trends.collegeboard.org/college-pricing/figures-tables/tuition-and-fees-and-room-and-board-over-time-1975-76-2015-16-selected-years https://trends.collegeboard.org/college-pricing/figures-tabl... [3] http://www.demos.org/publication/pulling-higher-ed-ladder-myth-and-reality-crisis-college-affordability http://www.demos.org/publication/pulling-higher-ed-ladder-my...
        cloakandswagger 10y ago
        It seems like a chicken or egg problem. If there were no student loans beyond what you could get from a bank or friends and families, fewer people could afford current tuition costs and colleges would be forced to lower them to attract new "customers". It's Keynesian demand-side stimulus at its core. With the national dialogue focused on how college should be available to everyone, along with unlimited, federally guaranteed student loans, demand skyrockets and prices rise to meet them.
- rbanffy 10y ago
  If the payment has no causal relation with the services acquired via the loan, yes. Unfortunately what we seem to have here is a company selling the means to pay the loan one needs to take to pay for those means and, considering the reports on the quality of the services rendered, those means are being fraudulently misrepresented.
- euyyn 10y ago
  Well, that's exactly what the Federal government did. "If you want a student loan, you can't enroll in ITT, as it's too high risk".
  - cloakandswagger 10y ago
    That's what the government of the state of California did, not the Federal government.
    - dragonwriter 10y ago
      The federal government banned new students with federal financial aid from enrolling in any ITT program or campus. Then, the California state government banned all new student enrollment at ITT campuses in California.
  - deleted 10y ago
    [deleted]
- fennecfoxen 10y ago
  This is in part because the federal government has decided that student loans from private banks were too expensive and so the government themselves should offer them cheaper, for great justice. As such, the private student-loan sector in the US is no longer a going concern, and no student loans accurately price risk - a neat little wealth transfer to buy votes from students. It's also a scary credit bubble; apparently we learned nothing from FMAE and FMAC and just blamed big evil banks for following the perverse incentives. Hilarity ensues.
  - semi-extrinsic 10y ago
    Can you point out a country where a private student-loan sector is working well? One thing the government does that the private sector won't is prioritise the needs of society over financial results. Say, for instance, that "teachers" and "nurses" were underperforming groups of student-loan takers. Private sector would say "OK, stricter controls on student-loans for those!" Meanwhile the government would say "OK, but we really need more teachers and nurses in society, so we'll keep giving them student loans like today." This is of course a fictional example, but you get the point.
    - SamReidHughes 10y ago
      If we need these people in society, let their salaries increase. There is no reason to prefer debt ridden graduates paying higher interest rates at lower salaries with government soaking up the cost of defaults to the benefit of employers and their direct customers.
      - st3v3r 10y ago
        Yes, because everyone has that perfect negotiating power to do so. There are no school districts that are struggling or can only afford to pay so much for teachers, and hospitals that can't afford higher salaries for nurses. The "invisible hand" is not what should be guiding society. The "invisible hand" has declared that it's more worthwhile to be a Kardashian than it is to be a teacher or nurse.
Klinky 10y ago
Would they do that or just become more aggressive at debt collection?
- BinaryIdiot 10y ago
  Maybe? But I'm not sure what good it'll do them. When someone can't get a job they're not exactly going to be paying back debt faster, even if they wanted to. I can't see how them being more aggressive could really help the situation much if at all.
  - Klinky 10y ago
    If most of their income is from guaranteed loans, then they are likely considerably less aggressive right now than they could be. Debt collection can also lead to wage garnishments. Never underestimate the desire to extract as much blood from a turnip as possible.
- dredmorbius 10y ago
  In economic policy, the Federal Reserve has as its mandate controlling inflation and unemployment. Inflation is exogenously measurable, but unemployment isn't. Rather than have the Fed measure unemployment, a seperate government agency, the Burea of Labor Statistics, does. Hence: the Fed doesn't measure what it manages. Forbidding ITT from pursuing collections, leaving that to an industry which has experience with loans (banks), and instead, leaving it to modify what it can control -- the control, the recruitment of students and instruction standards -- might result in a successful incentives alignment. You'd have to police and very heavily penalise any kickbacks or covert communications between ITT and lenders.
rebel 10y ago
That is an incredibly clever solution. Could you go a step further and reward schools who have a lower default rate as well? Having an institutions incentives aligned with the students sounds like the first step to solving this.
holtalanm 10y ago
I wouldn't go as far as saying bootcamps are better. My experience with Bootcamp grads has been pretty lackluster to say the least. They get taught the absolute basics with a "guarantee" for employment after, but not many tech companies will take someone with no education, no experience, and only a light grasp on the basics of programming. My town has been getting a lot of Bootcamp grads lately applying for jobs in the tech sector. According to a friend, his company interviewed a bunch of them and didn't find any of them met their requirements in the least. My opinion of bootcamps is that they are little better than something like ITT. High cost, very little reward. You'd be better off teaching yourself.
st3v3r 10y ago
They've already had several chances to better themselves. They haven't, and so they don't deserve another chance.

tn13 10y ago

Yes this. The problem here is with the government instead of ITT in my opinion. If you are lending money to someone who is taking significantly more risk it is your fault if the person fails to pay it back and not of the consumer or the business selling the service. In fact it makes sense for the government to do better credit risk analysis for every college-course-student instead of providing loans for any student, college course. The private banking industry already has this system and it makes sense for government to just leverage that.

cloakandswagger 10y ago
Why the downvotes? It seems perfectly sensible that the government should be selective about who it loans money to. Even more so than private industry, considering the money they're handing out is from a deficit that productive peoples' taxes pay for.
- iamdave 10y ago
  I'll entertain the notion, because I have questions and reservations of my own (powered by certain built-in and historical baisies as an American...infer if you will): What would the criteria be to determine loan eligibility for a student fresh out of high school?
  - cloakandswagger 10y ago
    GPA, extra curricular activity, criminal record, intended major, savings, jobs worked and the duration they were held, etc. Of course, none of this is as accurate an indicator as a FICO score which is why student loans are federally guaranteed, otherwise who would offer them? All of this goes to underscore just how destructive the "college for everyone" concept is. The government is making junk loans so that naive young people can pursue useless degrees and graduate directly into crippling debt servitude. Consequently, colleges have transformed into bloated profit machines, happily ratcheting up tuition in response to this inflated demand. Sadly, reform will only happen once this system collapses in on itself.
    - chatmasta 10y ago
      A FICO score is pretty meaningless for someone just graduating high school. They likely don't even have a credit card yet. And for those who do have a FICO score, what if the very reason they're applying to ITT tech is the same reason their score is bad? You also want to avoid "discrimination."
    - cgearhart 10y ago
      > colleges have transformed into bloated profit machines, happily ratcheting up tuition in response to this inflated demand Colleges aren't really "profit machines" though, and growth in tuition hasn't paced enrollment increases, so it is more likely that aid levels are being increased in response to rising tuition, rather than tuition being raised due to increased aid. Interestingly, one of the dominant factors in the growth of personnel costs for colleges is healthcare for employees. Between 1975-2004, enrollment increased by 65% in four-year colleges while cost increased by almost 200% over the same period. [1][2] It's not really a demand-driven phenomenon because colleges have capacity to support the number of students attending, so the marginal cost of accepting additional students is low. The more likely cause is that loans (private or public) turn students into consumers, forcing colleges to compete with each other to attract paying customers. Look at the facilities and amenities provided at German universities (which are 100% publicly funded) compared to public universities in the US. We spend tremendous amounts of money for health centers, gyms, sports, clubs, etc., that require increased spending on construction and administrative support staff. [3] [1] http://nces.ed.gov/programs/digest/d15/tables/dt15_302.60.asp?current=yes http://nces.ed.gov/programs/digest/d15/tables/dt15_302.60.as... [2] https://trends.collegeboard.org/college-pricing/figures-tables/tuition-and-fees-and-room-and-board-over-time-1975-76-2015-16-selected-years https://trends.collegeboard.org/college-pricing/figures-tabl... [3] http://www.demos.org/publication/pulling-higher-ed-ladder-myth-and-reality-crisis-college-affordability http://www.demos.org/publication/pulling-higher-ed-ladder-my...
      - cloakandswagger 10y ago
        It seems like a chicken or egg problem. If there were no student loans beyond what you could get from a bank or friends and families, fewer people could afford current tuition costs and colleges would be forced to lower them to attract new "customers". It's Keynesian demand-side stimulus at its core. With the national dialogue focused on how college should be available to everyone, along with unlimited, federally guaranteed student loans, demand skyrockets and prices rise to meet them.
rbanffy 10y ago
If the payment has no causal relation with the services acquired via the loan, yes. Unfortunately what we seem to have here is a company selling the means to pay the loan one needs to take to pay for those means and, considering the reports on the quality of the services rendered, those means are being fraudulently misrepresented.
euyyn 10y ago
Well, that's exactly what the Federal government did. "If you want a student loan, you can't enroll in ITT, as it's too high risk".
- cloakandswagger 10y ago
  That's what the government of the state of California did, not the Federal government.
  - dragonwriter 10y ago
    The federal government banned new students with federal financial aid from enrolling in any ITT program or campus. Then, the California state government banned all new student enrollment at ITT campuses in California.
- deleted 10y ago
  [deleted]
fennecfoxen 10y ago
This is in part because the federal government has decided that student loans from private banks were too expensive and so the government themselves should offer them cheaper, for great justice. As such, the private student-loan sector in the US is no longer a going concern, and no student loans accurately price risk - a neat little wealth transfer to buy votes from students. It's also a scary credit bubble; apparently we learned nothing from FMAE and FMAC and just blamed big evil banks for following the perverse incentives. Hilarity ensues.
- semi-extrinsic 10y ago
  Can you point out a country where a private student-loan sector is working well? One thing the government does that the private sector won't is prioritise the needs of society over financial results. Say, for instance, that "teachers" and "nurses" were underperforming groups of student-loan takers. Private sector would say "OK, stricter controls on student-loans for those!" Meanwhile the government would say "OK, but we really need more teachers and nurses in society, so we'll keep giving them student loans like today." This is of course a fictional example, but you get the point.
  - SamReidHughes 10y ago
    If we need these people in society, let their salaries increase. There is no reason to prefer debt ridden graduates paying higher interest rates at lower salaries with government soaking up the cost of defaults to the benefit of employers and their direct customers.
    - st3v3r 10y ago
      Yes, because everyone has that perfect negotiating power to do so. There are no school districts that are struggling or can only afford to pay so much for teachers, and hospitals that can't afford higher salaries for nurses. The "invisible hand" is not what should be guiding society. The "invisible hand" has declared that it's more worthwhile to be a Kardashian than it is to be a teacher or nurse.

Klinky 10y ago

Would they do that or just become more aggressive at debt collection?

BinaryIdiot 10y ago
Maybe? But I'm not sure what good it'll do them. When someone can't get a job they're not exactly going to be paying back debt faster, even if they wanted to. I can't see how them being more aggressive could really help the situation much if at all.
- Klinky 10y ago
  If most of their income is from guaranteed loans, then they are likely considerably less aggressive right now than they could be. Debt collection can also lead to wage garnishments. Never underestimate the desire to extract as much blood from a turnip as possible.
dredmorbius 10y ago
In economic policy, the Federal Reserve has as its mandate controlling inflation and unemployment. Inflation is exogenously measurable, but unemployment isn't. Rather than have the Fed measure unemployment, a seperate government agency, the Burea of Labor Statistics, does. Hence: the Fed doesn't measure what it manages. Forbidding ITT from pursuing collections, leaving that to an industry which has experience with loans (banks), and instead, leaving it to modify what it can control -- the control, the recruitment of students and instruction standards -- might result in a successful incentives alignment. You'd have to police and very heavily penalise any kickbacks or covert communications between ITT and lenders.

rebel 10y ago

That is an incredibly clever solution. Could you go a step further and reward schools who have a lower default rate as well? Having an institutions incentives aligned with the students sounds like the first step to solving this.

holtalanm 10y ago

I wouldn't go as far as saying bootcamps are better. My experience with Bootcamp grads has been pretty lackluster to say the least. They get taught the absolute basics with a "guarantee" for employment after, but not many tech companies will take someone with no education, no experience, and only a light grasp on the basics of programming. My town has been getting a lot of Bootcamp grads lately applying for jobs in the tech sector. According to a friend, his company interviewed a bunch of them and didn't find any of them met their requirements in the least. My opinion of bootcamps is that they are little better than something like ITT. High cost, very little reward. You'd be better off teaching yourself.

st3v3r 10y ago

They've already had several chances to better themselves. They haven't, and so they don't deserve another chance.