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Costs are out of control and university interests are not aligned with student interests in this matter. It seems like federal educational lending should be cap

Costs are out of control and university interests are not aligned with student interests in this matter. It seems like federal educational lending should be capped at some lifetime maximum ($200-300k per student?). The higher ed industry will figure out the cost side of the equation in a hurry when students no longer have unlimited access to credit.

joe_the_user 8y ago
The state should get out of the business of guaranteeing student loans entirely and instead only give grants. The loan guarantee system is exactly what misaligns university and student interests in loans. Universities have no disincentive to give students loans they can't pay back. I don't think a cap would change university behavior - it would only affect a few students, who would be tossed out by the university to make way for the next students.
- candiodari 8y ago
  But the rub is in congressional abuse of accounting practices. A loan guarantee "costs": 1) in reality: the future default rate, times the average loan that gets defaulted on 2) in theory: the past default rate times the average loan amount What's wrong with this: a) default rate : the default rate under very different circumstances: the default rate for guaranteed-by-the-state loans vs the default rate for large-personal-consequences loans b) amount of the loan: average loan amount vs average amount that gets defaulted on. Everyone who's ever had a late credit card bill knows the vast difference here. So congress got to vastly overspend, giving the money to banks (>72% of the dollars spent will be at the banks in the end, according to one study), while pretending to give it to their constituency (students, overwhelmingly democrat), in a way that will drive a wedge between them and republicans for decades ... So of course they did this ! I mean, sure, it will throw a decent number of those people into destitution constantly for decades, but it's not like that's going to make those guys change their vote. Oh, mor... ? M-what ? Oh, morality ? I donate extensively to my self-owned charities ! I mean, let's give credit where credit is due here. Democrat party : I bow to your absolute genius.

joe_the_user 8y ago

The state should get out of the business of guaranteeing student loans entirely and instead only give grants. The loan guarantee system is exactly what misaligns university and student interests in loans. Universities have no disincentive to give students loans they can't pay back. I don't think a cap would change university behavior - it would only affect a few students, who would be tossed out by the university to make way for the next students.

candiodari 8y ago
But the rub is in congressional abuse of accounting practices. A loan guarantee "costs": 1) in reality: the future default rate, times the average loan that gets defaulted on 2) in theory: the past default rate times the average loan amount What's wrong with this: a) default rate : the default rate under very different circumstances: the default rate for guaranteed-by-the-state loans vs the default rate for large-personal-consequences loans b) amount of the loan: average loan amount vs average amount that gets defaulted on. Everyone who's ever had a late credit card bill knows the vast difference here. So congress got to vastly overspend, giving the money to banks (>72% of the dollars spent will be at the banks in the end, according to one study), while pretending to give it to their constituency (students, overwhelmingly democrat), in a way that will drive a wedge between them and republicans for decades ... So of course they did this ! I mean, sure, it will throw a decent number of those people into destitution constantly for decades, but it's not like that's going to make those guys change their vote. Oh, mor... ? M-what ? Oh, morality ? I donate extensively to my self-owned charities ! I mean, let's give credit where credit is due here. Democrat party : I bow to your absolute genius.