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Another idea, indirectly related, is to simply stop treating all university degrees equally. The whole reason student loans are so broken right now is because

Another idea, indirectly related, is to simply stop treating all university degrees equally. The whole reason student loans are so broken right now is because they cannot be dismissed, so lenders are incentivized to lend with reckless abandon. In the worst case scenario the loan converts into a lifetime rent on an individual that automatically adjusts for inflation. On the other hand, the idea behind creating special rules for student loans is easy to see. By removing any risk in lending, that 'reckless abandon in lending' removes any real up front financial barrier to education and investing in your society's education is as good as investing in your society. The problem here is people are then using this to get degrees that are more recreational than productive. In high school kids are taught that the key to a good life is to get a college degree. And so many people, who are otherwise unmotivated or unambitious, simply choose easy and interesting degrees. The 'soft' degrees absolutely have a purpose, but a person coming from no means choosing to major in a soft degree is not going to meaningfully change their expected earnings. All they're going to do is remain a person of no means who is now also deep in debt that can never be dismissed. So the idea is to maintain the current system, but restrict lending just to degrees that are statistically likely to 'substantially' effect a student's expected earnings. When you remove the illusion of 'any degree is fine' you start to bring the connection between education and earnings back to reality. And you also push students towards a path of greater capability which is not only good for themselves, but also for the nation as a whole.

analog31 9y ago
In my view, this idea runs the danger of creating a planned economy, with characteristic boom-bust cycles and scams. The choice of which degrees to fund has to be made on either past data or some sort of current fad. The list of preferred degrees will of course create competition to get into those programs, but it may also encourage colleges to create watered-down or even fake disciplines that can absorb more students. Hypothetical example: Assuming that computer science is on the "hot list," a low-tier college creates a fluff degree in Computer Technology Studies, that gains access to loan money but leads to marginal employment prospects. Closer to home, the K-12 schools in my locale have a new program that creates career tracks at the high school level. The first track that has become available is health care. Granted, it sounds like a good idea, what can possibly go wrong?
- SapphireSun 9y ago
  "...with characteristic boom-bust cycles and scams." 2008 called, I told them you're available.
- indubitable 9y ago
  Measurements could be organic and self adjusting. In other words schools are required to accurately assess the average earnings, including nonearners, of each and every degree. Degrees above some rate, adjusted for location, qualify for funding - others do not. It could be on a scale rather than binary. Too many health care workers, funding for more pursuing it is completely organically reduced. Another cool feature is that this further aligns the motivation of schools (who greatly benefit from 'reckless lending') and students. Reckless lending is only possible when the degrees being pursued are provably valuable.
  - analog31 9y ago
    There still has to be a lag. When investment is a reaction to growth, and growth is a reaction to investment, you've got practically the perfect recipe for cyclic behavior. Also, you can't just switch on college majors by switching on funding. The pipeline for some fields is years, for instance arguably for math intensive fields, or some performing arts such as playing the bassoon. Here are the majors you can study. I hope you got interested in math 10 years ago, or learned to play the bassoon.
- jmcqk6 9y ago
  >a planned economy, with characteristic boom-bust cycles and scams. You can cut the word "planned". Evidence shows that this is a natural part of economies with pretty well understood reasons related to the credit cycle.

analog31 9y ago

In my view, this idea runs the danger of creating a planned economy, with characteristic boom-bust cycles and scams. The choice of which degrees to fund has to be made on either past data or some sort of current fad. The list of preferred degrees will of course create competition to get into those programs, but it may also encourage colleges to create watered-down or even fake disciplines that can absorb more students. Hypothetical example: Assuming that computer science is on the "hot list," a low-tier college creates a fluff degree in Computer Technology Studies, that gains access to loan money but leads to marginal employment prospects. Closer to home, the K-12 schools in my locale have a new program that creates career tracks at the high school level. The first track that has become available is health care. Granted, it sounds like a good idea, what can possibly go wrong?

SapphireSun 9y ago
"...with characteristic boom-bust cycles and scams." 2008 called, I told them you're available.
indubitable 9y ago
Measurements could be organic and self adjusting. In other words schools are required to accurately assess the average earnings, including nonearners, of each and every degree. Degrees above some rate, adjusted for location, qualify for funding - others do not. It could be on a scale rather than binary. Too many health care workers, funding for more pursuing it is completely organically reduced. Another cool feature is that this further aligns the motivation of schools (who greatly benefit from 'reckless lending') and students. Reckless lending is only possible when the degrees being pursued are provably valuable.
- analog31 9y ago
  There still has to be a lag. When investment is a reaction to growth, and growth is a reaction to investment, you've got practically the perfect recipe for cyclic behavior. Also, you can't just switch on college majors by switching on funding. The pipeline for some fields is years, for instance arguably for math intensive fields, or some performing arts such as playing the bassoon. Here are the majors you can study. I hope you got interested in math 10 years ago, or learned to play the bassoon.
jmcqk6 9y ago
>a planned economy, with characteristic boom-bust cycles and scams. You can cut the word "planned". Evidence shows that this is a natural part of economies with pretty well understood reasons related to the credit cycle.