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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 accur

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.
  - cgearhart 10y ago
    > ...colleges would be forced to lower them to attract new "customers". This is categorically false. Schools would maintain whatever price point achieved equilibrium with the market's ability to pay. It would not necessarily require any school to reduce their prices. > ...demand skyrockets and prices rise to meet them. But that doesn't make any sense in the context of the higher education market..."supply" is neither fixed, nor constrained (within reason). Schools could easily expand their supply to accommodate additional students because there is actually an over-abundance of adjunct labor (rather than full-time faculty) in most fields that are trained and available to teach classes now, at much lower costs than traditional tenured faculty. The costs of providing education have actually fallen during the same period that the costs of running a college have risen. It's not being driven by "demand" from prospective students -- cost growth is being driven by competition between schools. Schools also can't choose to compete on price because the availability of "free money" in the form of loans makes students less price sensitive. Instead, schools end up competing based on maximizing overall "quality of life" factors within a fixed price.
ensignavenger 10y ago
Any data on how good FICO scores are at predicting default rates? In my limited experience, my own credit report is rarely accurate... and from what I understand, that is quite common. So I wonder how a score calculated on inaccurate information could possibly be a great indicator of default rates?
- cloakandswagger 10y ago
  No data except to postulate that if FICO scores had no correlation to default rates then the entire credit industry would fail. What is inaccurate about your FICO score? Maybe it results in false negatives (meaning your score is low when it should be high), but if the opposite was true across the board (bad borrowers getting high scores) then the credit industry would collapse.
  - ensignavenger 10y ago
    I'm not sure there is 'no correlation'. But I don't trust the credit industry to not do stupid things... My credit report often has accounts that aren't mine listed. Balances can be wrong for months. Accounts occasionally show late payments that were on time. The dates are often wrong (sometimes by years) for items, and then little things that are used to verify my identity by many companies can be quite wrong, like past addresses.
dragonwriter 10y ago
> All of this goes to underscore just how destructive the "college for everyone" concept is. No, it shows how destructive the US policy response to that concept is, not how destructive the concept itself is. Neither difficult-to-discharge loans without substantial cost or quality controls, nor an extensive role for private, for-profit institutions are demanded by the "college for everyone" concept. > Consequently, colleges have transformed into bloated profit machines, happily ratcheting up tuition in response to this inflated demand. I don't think its true that "colleges have transformed into bloated profit machines", so much that "colleges that are bloated profit machines have expanded and taken a larger market share".

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.
- cgearhart 10y ago
  > ...colleges would be forced to lower them to attract new "customers". This is categorically false. Schools would maintain whatever price point achieved equilibrium with the market's ability to pay. It would not necessarily require any school to reduce their prices. > ...demand skyrockets and prices rise to meet them. But that doesn't make any sense in the context of the higher education market..."supply" is neither fixed, nor constrained (within reason). Schools could easily expand their supply to accommodate additional students because there is actually an over-abundance of adjunct labor (rather than full-time faculty) in most fields that are trained and available to teach classes now, at much lower costs than traditional tenured faculty. The costs of providing education have actually fallen during the same period that the costs of running a college have risen. It's not being driven by "demand" from prospective students -- cost growth is being driven by competition between schools. Schools also can't choose to compete on price because the availability of "free money" in the form of loans makes students less price sensitive. Instead, schools end up competing based on maximizing overall "quality of life" factors within a fixed price.

ensignavenger 10y ago

Any data on how good FICO scores are at predicting default rates? In my limited experience, my own credit report is rarely accurate... and from what I understand, that is quite common. So I wonder how a score calculated on inaccurate information could possibly be a great indicator of default rates?

cloakandswagger 10y ago
No data except to postulate that if FICO scores had no correlation to default rates then the entire credit industry would fail. What is inaccurate about your FICO score? Maybe it results in false negatives (meaning your score is low when it should be high), but if the opposite was true across the board (bad borrowers getting high scores) then the credit industry would collapse.
- ensignavenger 10y ago
  I'm not sure there is 'no correlation'. But I don't trust the credit industry to not do stupid things... My credit report often has accounts that aren't mine listed. Balances can be wrong for months. Accounts occasionally show late payments that were on time. The dates are often wrong (sometimes by years) for items, and then little things that are used to verify my identity by many companies can be quite wrong, like past addresses.

dragonwriter 10y ago

> All of this goes to underscore just how destructive the "college for everyone" concept is. No, it shows how destructive the US policy response to that concept is, not how destructive the concept itself is. Neither difficult-to-discharge loans without substantial cost or quality controls, nor an extensive role for private, for-profit institutions are demanded by the "college for everyone" concept. > Consequently, colleges have transformed into bloated profit machines, happily ratcheting up tuition in response to this inflated demand. I don't think its true that "colleges have transformed into bloated profit machines", so much that "colleges that are bloated profit machines have expanded and taken a larger market share".