5 ms·

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 offe

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.
    - SamReidHughes 10y ago
      > The "invisible hand" has declared that it's more worthwhile to be a Kardashian than it is to be a teacher or nurse. What you propose is to guide society by deliberately lowering the pay of teachers and nurses even more. So are you saying that the invisible hand is right? That a Kardashian should be expensive (which reduces how many are available) and that teachers should be cheap (meaning we can afford more of them)?
      - st3v3r 10y ago
        "What you propose is to guide society by deliberately lowering the pay of teachers and nurses " No, I'm not. So your response has lost all credibility right there.
        SamReidHughes 10y ago
        I proposed increasing their pay, or letting it increase, and you disagreed, so how are you not proposing to lower their pay? If you want more teachers, you can either increase budgets to pay them more, or you can use some artifice to increase the supply of teachers so that wages get suppressed. You implied having more teachers would be nice, with your comment about Kardashian. So your own views here are self-contradictory.
        st3v3r 10y ago
        No, you didn't. You proposed using the "invisible hand of the free market". I told you why most of us wouldn't trust that idea.
        SamReidHughes 10y ago
        The text you're quoting is nowhere in this thread... Look, teacher pay is in control of the government, not the market. And nurse pay and nursing demand has already had demonstrable impact on students' selection of what to study. (You can observe this by looking at the real world.) Is there a particular hypothesis that you're arguing against? Is it that increasing pay won't attract students to the line of study? Do you disagree with the equation (Teaching Budget) = (Teacher Pay) * (Number Of Teachers) in a material way? In fact I ... wait a second. Me: > I proposed increasing their pay, You: > No, you didn't. Me (upthread): > let their salaries increase. Well now, looks like I did. (You can observe this by looking at the real world.)
- eru 10y ago
  Working well can also mean that the sector doesn't exist when it shouldn't. But to give an example: lots of people in lots of countries traditionally get support from their families for education and are expected to help out their parents financially later in life. This kind of financing never even hits the markets---but on the other hand, parents are probably the people knowing their kids the best.
- jimbokun 10y ago
  "One thing the government does that the private sector won't is prioritise the needs of society over financial results." Getting young people into more debt does not prioritize the needs of society. If you want to prioritize the needs of society, provide young people a tuition free, or at least very low cost, education. Current system only really benefits scam operations like ITT.
  - eru 10y ago
    People who can get into uni already mostly made it into middle class. If you want to subsidize anything, do early childhood care.
- tn13 10y ago
  India. A hell lot of Indians (29K last year) come to USA for their Masters degree. These kids borrow loans from Indian banks at 10% to 12% APR do their M.S. and then pay that loan back quickly. Even though MS is significantly less risky you need to factor in the huge gap between value of that in money in USA v/s India. Market signals works pretty strong here. Stanford can charge you whatever they want while the F1 visa factory college charge a modest 10K for a 2 year M.S.

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.
  - SamReidHughes 10y ago
    > The "invisible hand" has declared that it's more worthwhile to be a Kardashian than it is to be a teacher or nurse. What you propose is to guide society by deliberately lowering the pay of teachers and nurses even more. So are you saying that the invisible hand is right? That a Kardashian should be expensive (which reduces how many are available) and that teachers should be cheap (meaning we can afford more of them)?
    - st3v3r 10y ago
      "What you propose is to guide society by deliberately lowering the pay of teachers and nurses " No, I'm not. So your response has lost all credibility right there.
      - SamReidHughes 10y ago
        I proposed increasing their pay, or letting it increase, and you disagreed, so how are you not proposing to lower their pay? If you want more teachers, you can either increase budgets to pay them more, or you can use some artifice to increase the supply of teachers so that wages get suppressed. You implied having more teachers would be nice, with your comment about Kardashian. So your own views here are self-contradictory.
        st3v3r 10y ago
        No, you didn't. You proposed using the "invisible hand of the free market". I told you why most of us wouldn't trust that idea.
        SamReidHughes 10y ago
        The text you're quoting is nowhere in this thread... Look, teacher pay is in control of the government, not the market. And nurse pay and nursing demand has already had demonstrable impact on students' selection of what to study. (You can observe this by looking at the real world.) Is there a particular hypothesis that you're arguing against? Is it that increasing pay won't attract students to the line of study? Do you disagree with the equation (Teaching Budget) = (Teacher Pay) * (Number Of Teachers) in a material way? In fact I ... wait a second. Me: > I proposed increasing their pay, You: > No, you didn't. Me (upthread): > let their salaries increase. Well now, looks like I did. (You can observe this by looking at the real world.)
eru 10y ago
Working well can also mean that the sector doesn't exist when it shouldn't. But to give an example: lots of people in lots of countries traditionally get support from their families for education and are expected to help out their parents financially later in life. This kind of financing never even hits the markets---but on the other hand, parents are probably the people knowing their kids the best.
jimbokun 10y ago
"One thing the government does that the private sector won't is prioritise the needs of society over financial results." Getting young people into more debt does not prioritize the needs of society. If you want to prioritize the needs of society, provide young people a tuition free, or at least very low cost, education. Current system only really benefits scam operations like ITT.
- eru 10y ago
  People who can get into uni already mostly made it into middle class. If you want to subsidize anything, do early childhood care.
tn13 10y ago
India. A hell lot of Indians (29K last year) come to USA for their Masters degree. These kids borrow loans from Indian banks at 10% to 12% APR do their M.S. and then pay that loan back quickly. Even though MS is significantly less risky you need to factor in the huge gap between value of that in money in USA v/s India. Market signals works pretty strong here. Stanford can charge you whatever they want while the F1 visa factory college charge a modest 10K for a 2 year M.S.