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That will push college prices even higher.
by xyzzyz 8y ago
That will push college prices even higher.
- kamarg 8y agoCan you explain why that is to me? I would think that if the expected return on college loans drops significantly, fewer large loans would be given out that can be passed on to universities which would see less demand for their product and would need to lower their prices accordingly.
- Mountain_Skies 8y agoThe universities aren't on the hook for student loan defaults so they don't care about the expected return for the borrower or the lender. If students borrowed from the schools directly, then the admissions process along with university spending patterns would be vastly different. The only thing we have that is remotely close to this is schools giving out scholarships to students who have great potential to be high earners who later donate back to the school.
- l9k 8y agoA startup called Lambda started teaching (online) for free in exchange for a percentage of the new graduate's salary. This is called Income Sharing Agreements (ISA). https://www.nytimes.com/2019/01/08/business/dealbook/education-student-loans-lambda-schools.html https://www.nytimes.com/2019/01/08/business/dealbook/educati...
- sjg007 8y agoThere are plenty of mechanisms to counter this. One is direct funding of colleges as we did before via state and Federal funding. Another is to establish a feedback loop where loan guarantees and funding for the institution are a function of their students default rate: that way if the education doesn't lead to jobs then the school gets less money.
- vondur 8y agoThat will lead to universities only accepting students that would get jobs after graduation, which would probably kill many majors that don’t have high employment rates.
- sjg007 8y agoNah.. right now the risk is born uniformly across all tax payers. We should make the school responsible for some of it.
- gowld 8y agoWhich is... fine? We don't need millions of people learning unproductive things for excessive prices. Obvious people who can afford to learn something for fun can do so, and knowledge that is socially valuable but not economically valuable can be supported by government or private patrons who see the social merit. Both are better than duping kids into huge loans.
- xyzzyz 8y agoNot really; most university graduates can find jobs relatively easily. Unemployment among young diploma-holders in the US is very low, and the diploma premium to income is high, though of course varies by the major. What will rather happen is that less-well-paying majors will become cheaper.