5 ms·

I meant as in, student loans (whether private or public) have a maximum mandatory monthly repayment rate of, say, 10% of the individual's monthly income. So le

by ep103 9y ago

I meant as in, student loans (whether private or public) have a maximum mandatory monthly repayment rate of, say, 10% of the individual's monthly income. So let's say I took in $1000 before taxes this month. The highest my minimum monthly payment can be on my student loans (total) is $100. That puts pressure back on the university to keep their tuition rates in line with what can actually be repaid, ie, the actual financial value of the degree itself. Not saying this is the ideal solution, it just shows how much of a canard the parent poster's answer is. There are plenty of solutions to this issue, depending on what we want to do.

cableshaft 9y ago
This puts zero pressure on the actual university to do anything with tuition. The universities aren't the ones loaning the money or counting on your repayments. That's handled by private or government subsidized lenders. It's not a solution at all.
- ep103 9y ago
  Perhaps we misunderstand each other. The vast majority of people who take out federal financial aid, also take out private loans, because it is very difficult (if even possible anymore) to cover tuition costs with federal loans. If private loan repayment rates were capped, then private institutions would have a very, very strong incentive not to loan student loan rates larger than a certain amount to students, depending on the major and university. Quite frankly, a student asking for 200k for an english degree at Drexel would be denied. Why? Because Drexel isn't known for its english program. Average salary of a Drexel graduating English major is, let's guestimate, 50k a year for the majority of their lifetime. At 50k a year, at a 10% rate, the bank isn't going to get its funds back for 40 years, before interest. If the average age of death/retirement in this country is in the early 70s, the student will literally die of old age or retire before finishing repaying the loan. Now students will be unable to attend financial unviable options. The university will understand that if it raises its tuition beyond a certain level, it will be unable to support its english department, because no sane bank would back the loans required to graduate. Again, the above is a very contrived example with BS numbers. And I'm not suggesting that the above is the way we would want to fix the issue. But it could work, and it certainly puts pressure on the universities.
  - gehwartzen 9y ago
    It seems like an even better solution then would be if there were no private or government lenders and the universities themselves had to write the loan. There would certainly be an incentive to only give loans that would be repayed. Also if loans were not repayed the university could simply rescind the degree.

by ep103 9y ago

cableshaft 9y ago

This puts zero pressure on the actual university to do anything with tuition. The universities aren't the ones loaning the money or counting on your repayments. That's handled by private or government subsidized lenders. It's not a solution at all.

ep103 9y ago
Perhaps we misunderstand each other. The vast majority of people who take out federal financial aid, also take out private loans, because it is very difficult (if even possible anymore) to cover tuition costs with federal loans. If private loan repayment rates were capped, then private institutions would have a very, very strong incentive not to loan student loan rates larger than a certain amount to students, depending on the major and university. Quite frankly, a student asking for 200k for an english degree at Drexel would be denied. Why? Because Drexel isn't known for its english program. Average salary of a Drexel graduating English major is, let's guestimate, 50k a year for the majority of their lifetime. At 50k a year, at a 10% rate, the bank isn't going to get its funds back for 40 years, before interest. If the average age of death/retirement in this country is in the early 70s, the student will literally die of old age or retire before finishing repaying the loan. Now students will be unable to attend financial unviable options. The university will understand that if it raises its tuition beyond a certain level, it will be unable to support its english department, because no sane bank would back the loans required to graduate. Again, the above is a very contrived example with BS numbers. And I'm not suggesting that the above is the way we would want to fix the issue. But it could work, and it certainly puts pressure on the universities.
- gehwartzen 9y ago
  It seems like an even better solution then would be if there were no private or government lenders and the universities themselves had to write the loan. There would certainly be an incentive to only give loans that would be repayed. Also if loans were not repayed the university could simply rescind the degree.