7 ms·

The Long Road to the Student Debt Crisis

54 points by prostoalex 7y ago

Havoc 7y ago
Unlike houses students can't walk away though? And they're more resilient in a way - being young & on a upward trajectory. The whole thing seems a touch more diabolically evil in a way.
tptacek 7y ago
The statistics in this article aren't especially useful, and could easily have been made more so by breaking debt down by attainment. Students that leave postsecondary without a 4-year bachelor's degree on average apparently owe less than $10k; with a bachelor's, less than $25k; with a graduate degree, $45k. Roughly 1/3 of all borrowers drop out, implying (I think?) that the majority of debt is held by people who complete degrees, a substantial minority of whom obtain graduate degrees. If the student debt crisis is about rescuing people for whom college was of no benefit (for instance, because they attended a for-profit school and didn't obtain a bachelor's degree --- the overwhelming majority of low and middle SES quartile students at for-profit colleges do not), the intervention needed to solve that problem is radically different and less expensive than "forgiving all student debt".
- rayiner 7y ago
  The last point is key. There are so many options that provide relief for those who need it most that don’t bail out New York Times journalists who paid $150,000 for a Columbia English degree or big firm lawyers who paid $250,000 for a Columbia law degree. And given how much of the debt is subject to income-based repayment, there is also a set of options for bringing relief to those who don’t qualify to cap their loan payments at 10% of disposable income.
  - tptacek 7y ago
    Though it'd be fair to point out that this article gets income repayment caps wrong, calling out the downsides without noting the fact that they also make large debts for the middle class more tenable.
  - seniorivn 7y ago
    There is also a free and fair option, just let people go bancrupt on their student loans. We've already seen politicians bailing out loans to help their reach friends, but saying it's all for the people. Don't let history repeat itself
    - nerfhammer 7y ago
      student loans are typically not dischargeable in bankruptcy
      - Retric 7y ago
        That’s based on laws that can change at any time. IMO, people should be able to discharge them in bankruptcy around 15 to 20 years after graduation. This is in line with the “total and permanent disability” escape method which has minimal impact on the larger student loan market. https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/disability-discharge https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell...
        bradleyjg 7y ago
        There isn't much of a student loan market. The overwhelming majority of student loans are made by the government with no underwriting and the rates set arbitrarily.
        Retric 7y ago
        The market is on the other end. Loans are constantly resold after being issued, which is why people regularly get new student loan processors.
        bradleyjg 7y ago
        I don’t believe that’s the case. My understanding is that the government holds on to the loans but hires servicers to interact with borrowers. These servicing contracts are subject to competitive bids and that’s why people regularly get new processors.
  - bradleyjg 7y ago
    The trap with income based repayment is that after 20 or 25 years worth of payments less than the accruing interest the original principal plus all the capitalized interest is forgiven, but that forgiven debt is taxable income to the borrower. So the borrower has replaced a debt to the department of education to one to the IRS.
    - mikepurvis 7y ago
      Surely the taxes on that income are considerably less than what was forgiven? If nothing else, this seems like an argument for permitting the recipient of this particular kind of windfall to break it up across a few years, possibly retroactively.
      - bradleyjg 7y ago
        When the lender is the government and the forgiveness is an intended and advertised part of the program from loan origination, I’d argue it isn’t meaningfully a windfall. Further, I’d argue that the borrower isn’t the main beneficiary of these student loan programs. Rather they are intended to, and do, enable monstrous cost growth in private de facto for-profit universities.
burke_holland 7y ago
Interesting that there is no mention here of the drastically inflated number of administrators in colleges as compared to say 30 years ago. “literally nobody knows who these people are or what they are doing” https://www.forbes.com/sites/carolinesimon/2017/09/05/bureaucrats-and-buildings-the-case-for-why-college-is-so-expensive/ https://www.forbes.com/sites/carolinesimon/2017/09/05/bureau...
- golemiprague 7y ago
  It is fake jobs for women who didn't study anything useful and this phenomena is spilling into the rest of the economy. We hoped that the influx of women to higher education will help the economy but it is only a burden, the return on the money we spend on their education is abysmal, it hurts the whole economy and is part of the reason this debt crisis was created in the first place. Women almost don't start new businesses and they don't create jobs. Most innovations, technical jobs, dangerous jobs, physical jobs and creative jobs are done by men. Women fill up mostly secretarial roles with fancy names in the private sector. Those roles don't really need any education and it is a total waste of 3 or 4 years just to signal secretarial capabilities to employers. Armies around the world can figure this out with half a day test and can teach those jobs in 3 months max. The rest of the women work in care taking type of jobs in the public sector, funded mainly by our taxes. We wouldn't need those jobs had those women stayed at home and took care of their kids, their elders, their house and gardens. The education system is a good example of industry overrun by over educated women that is deteriorating and stagnating because there are not enough men to push it forward. So I think the first step we need to take is limit higher studies only for women who are exceptional and are willing to actually study and work in something productive. That's in itself will reduce the amount of people in the system and will solve a lot of the financial issues. There are also many men who don't have to be there, but the numbers are much lower.
- Ididntdothis 7y ago
  This is the crazy thing about discussions like cost of education or health care. Where does the f....ing money go? Nobody seems to know or care.
mnm1 7y ago
> After years of projecting big profits from student lending, the federal government now acknowledges that taxpayers stand to lose $31.5 billion on the program over the next decade, and the losses are growing rapidly. Most civilized countries offer free or close to free education for their young population instead of trying to profit off of this segment of the population that barely knows what it wants out of life. If they can do it, I'm sure we could. How about bailing out the people for one and ending this for profit loan system once and for all? How about investing in the future generations of Americans for once instead of trying to profit from them? Or we could continue on the path we're on and see just how much worse things get for the masses here. I wonder just how much they will put up with.
- germinalphrase 7y ago
  I have yet to hear about a realistic plan to remove and replace. Anyone have recommended reading?
- tlear 7y ago
  Free education only works when you have a selection system where you are tested and then put where you fit(shoveling dirt, laying bricks, trade school, college, university). In US any graduate from HS can go do 4 year degree in “something”. Try that in Germany or Netherlands.
  - de_watcher 7y ago
    Well, if he's not capable to receive that education then why he's trying to borrow money for something he can't handle?
    - creato 7y ago
      Among other reasons why this would be unlikely to work in the US: there would almost certainly be a racial disparity in who qualifies for higher education, and that would be a political disaster.
    - tlear 7y ago
Aaronstotle 7y ago
I think a lot of the student debt crisis is self-inflicted. No one is forcing you to attend a 4 year straight from high-school, go to a community college and then transfer to a state school/4 year. (I spent 3 years at a CC, but I graduated from a UC and paid off my student loans within a year) Yes, college is expensive, but there is an existing alternative that everyone seems to forget about and it boggles my mind.
- bonoboTP 7y ago
  And that is studying in Europe.
- uwuhn 7y ago
  I did 2 years at CC before going to a UC too. I don't think people are forgetting about it. There are many reasons people choose larger loans instead of transferring, most of which are unreasonable in hindsight once they enter the workforce.
- bsanr2 7y ago
  Drop-out rates are much higher at community colleges, particularly for low-income and minority students. This is kind of a privileged statement to make. Also, the UC system is one of the few that retains a robust CC-to-university pipeline, so it's not fair to compare the opportunities available in California to those in a lot of places in this country, particularly when so many who would take advantage of what you did are priced out of housing.
- jseliger 7y ago
  No one is forced to take out any kind of debt; the issue is that typical debt is secured by an asset or dischargeable in bankruptcy. If you make severe mistakes with credit cards, you'll declare bankruptcy and the credit card companies will suffer. This imposes some market discipline on lenders. Banks are (ideally) not eager to make mortgages to people who are likely to become insolvent. Yes, I know about the Great Recession and this was part of the problem. Severe student loans can be incurred starting at age 18 and aren't dischargeable. That's why they're uniquely pernicious. It's typically not possible to fuck up your financial life for decades via most debts, but it is with student loans. We don't know ourselves and the future is unpredictable, and that's why bankruptcy exists. Taking it out of the equation empowers predatory lenders and institutions.
omegant 7y ago
Honest question, why are Universities becoming so expensive? Is because these credits are available? Was estudying a degree cheaper before the credits?
- katmannthree 7y ago
  Short answer: Because they can. Longer answer, according to the universities: Because modern students demand more than just classes, they also want social services (on-site counseling, bias incident response teams, etc). Longer answer, according to a cynic: Because universities are more or less guaranteed the money from the federal government, they've grown to spend the money on inflated administration. As costs go up the government allows students to borrow more and more to cover the costs, and universities find ways to jack up their prices to match the money on the table. While the government loaning poor students money to better themselves with an education is a great thing in theory, I think it's what directly lead to the current situation. I don't want to turn this into a long post against capitalism, but I think that the unfettered capitalistic worldview we have here in the US is the root problem.
  - bluedino 7y ago
    A project will grow to fill the timeline, and departments will grow to fill the budget
    - hinkley 7y ago
      The bureaucracy is expanding to meet the needs of the expanding bureaucracy. -Oscar Wilde (And Civ IV)
  - mooselumps 7y ago
    > I think that the unfettered capitalistic worldview we have here in the US is the root problem. It seemed to me like the government subsidizing the market in stark contrast to unfettered capitalistic principles is the root of the issue. Perdue’s income sharing plan mentioned in the article seemed really interesting off the cuff. I think it would have been really beneficial had I been required to create a pitch deck to get financing for my education.
TYPE_FASTER 7y ago
Why have the costs for healthcare and higher education been rising so rapidly? This article seems to blame government money and people wanting higher ed, but it doesn’t back up any of its claims.
arielP55 7y ago
I'm just going to reply a dead comment that I saw while using the HN app that shows dead comments by default. Looks like that comment got downvoted for some reason. >It is fake jobs for women who didn't study anything useful and this phenomena is spilling into the rest of the economy. We hoped that the influx of women to higher education will help the economy but it is only a burden, the return on the money we spend on their education is abysmal, it hurts the whole economy and is part of the reason this debt crisis was created in the first place. Women almost don't start new businesses and they don't create jobs. Most innovations, technical jobs, dangerous jobs, physical jobs and creative jobs are done by men. Women fill up mostly secretarial roles with fancy names in the private sector. Those roles don't really need any education and it is a total waste of 3 or 4 years just to signal secretarial capabilities to employers. Armies around the world can figure this out with half a day test and can teach those jobs in 3 months max. The rest of the women work in care taking type of jobs in the public sector, funded mainly by our taxes. We wouldn't need those jobs had those women stayed at home and took care of their kids, their elders, their house and gardens. The education system is a good example of industry overrun by over educated women that is deteriorating and stagnating because there are not enough men to push it forward. So I think the first step we need to take is limit higher studies only for women who are exceptional and are willing to actually study and work in something productive. That's in itself will reduce the amount of people in the system and will solve a lot of the financial issues. There are also many men who don't have to be there, but the numbers are much lower. I think even though your point appears very inflammatory at first glance, I think your point raises a deeper problem. The issue of why are we subsidizing poor value majors. So in an ideal world any major that doesn't have much value would automatically get culled as its graduates won't find jobs but with guaranteed federal loan money that's not happening. So tomorrow, I could go and setup a "department of crystal healing and contemporary perspectives on it" and I'll start getting the federal loan dollars from my students. The only way I see to fix this, is to make loans dischargeable via bankruptcy to bring this negative feedback pathway back into the pricing of courses ecosystem.
jartelt 7y ago
I understand that one is privileged to some extent to have been able to pay off student debt. But, I can't help but think it could be problematic to cancel all student debt and in effect penalize all those who worked hard to save and pay off their debt. Only a couple years ago it was advantageous to pay off your student debt quickly to avoid interest. Now it seems beneficial to pay the monthly minimum only and hope that the debt gets forgiven by the government at some point... Does any one know if any of the Democratic candidates have talked about this issue?
- headcanon 7y ago
  Not based on direct evidence, but based on the candidates' rhetoric and Democrats' typical platform goals, I'm thinking they will prioritize forgiveness for low earners, similar to how they limit write-offs for student loan interest payments to incomes below a threshold (I think it was 80k last year? I don't remember). So if you're already in a place to pay it off without struggling, I'm betting your life won't change that much. I'll just be happy to see my loans gone. If I end up paying it off in 5 years and find out it all would have been forgiven regardless, C'est la vie.
systematical 7y ago
So the government increased the cost of college by getting involved?
hashberry 7y ago
Student loans can also be used to pay rent and meals, and living in an urban center is increasingly expensive. My alma mater is tearing down old dorms and building pricey new ones instead of making student life as affordable as possible.
ineedasername 7y ago
The story makes some very good points, but completely misses two other reasons that tuition costs have risen so much faster than inflation: 1) State aid has dried up considerably. Public colleges used to get a a huge amount of their budget from the state. However, cutting funding to higher education has always been more politically palatable when tightening the belt than other areas. When I was in college, the funding was roughly 50%. Now it's about %25, and in inflation adjusted dollars is significantly lower than 20 years ago. 2) For at most of the past 20 years, there's been an arms race amount colleges competing for students. In that pursuit, enormously expensive new facilities from dorms to rec centers have ballooned capital expenses, covered primarily by bind issues that have interest to be paid and therefore necessitate higher tuition. To make ends meet. These two items, along with easy financing, represent the three legged stool on which massive tuition and increased and student debt sits.
- jfengel 7y ago
  Any idea where this arms race comes from? Were the colleges holding classes with empty seats because they couldn't get enough students? One would like to think that this would allow new schools to materialize that opt out of that race to the top, though of course the overhead is very high. I've been watching Signum University, an online-only school, work its way to accreditation over the past several years, and they're nowhere close. (A big bolus of cash would probably help; they're trying to do it with only small-donor donations.) I feel like college has become not-worth-it in the three decades since my degree, though unfortunately that's not true: even with the ballooning costs it's still a net positive. It just seems as if they're raising prices to absorb as much of that net positive as they can, and in doing so the people on the left side of the return curve go from positive to negative. Since the schools get theirs up front, that's pure positive for them.

54 points by prostoalex 7y ago

Unlike houses students can't walk away though? And they're more resilient in a way - being young & on a upward trajectory. The whole thing seems a touch more diabolically evil in a way.

tptacek 7y ago

The statistics in this article aren't especially useful, and could easily have been made more so by breaking debt down by attainment. Students that leave postsecondary without a 4-year bachelor's degree on average apparently owe less than $10k; with a bachelor's, less than $25k; with a graduate degree, $45k. Roughly 1/3 of all borrowers drop out, implying (I think?) that the majority of debt is held by people who complete degrees, a substantial minority of whom obtain graduate degrees. If the student debt crisis is about rescuing people for whom college was of no benefit (for instance, because they attended a for-profit school and didn't obtain a bachelor's degree --- the overwhelming majority of low and middle SES quartile students at for-profit colleges do not), the intervention needed to solve that problem is radically different and less expensive than "forgiving all student debt".

rayiner 7y ago
The last point is key. There are so many options that provide relief for those who need it most that don’t bail out New York Times journalists who paid $150,000 for a Columbia English degree or big firm lawyers who paid $250,000 for a Columbia law degree. And given how much of the debt is subject to income-based repayment, there is also a set of options for bringing relief to those who don’t qualify to cap their loan payments at 10% of disposable income.
- tptacek 7y ago
  Though it'd be fair to point out that this article gets income repayment caps wrong, calling out the downsides without noting the fact that they also make large debts for the middle class more tenable.
- seniorivn 7y ago
  There is also a free and fair option, just let people go bancrupt on their student loans. We've already seen politicians bailing out loans to help their reach friends, but saying it's all for the people. Don't let history repeat itself
  - nerfhammer 7y ago
    student loans are typically not dischargeable in bankruptcy
    - Retric 7y ago
      That’s based on laws that can change at any time. IMO, people should be able to discharge them in bankruptcy around 15 to 20 years after graduation. This is in line with the “total and permanent disability” escape method which has minimal impact on the larger student loan market. https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/disability-discharge https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell...
      - bradleyjg 7y ago
        There isn't much of a student loan market. The overwhelming majority of student loans are made by the government with no underwriting and the rates set arbitrarily.
        Retric 7y ago
        The market is on the other end. Loans are constantly resold after being issued, which is why people regularly get new student loan processors.
        bradleyjg 7y ago
        I don’t believe that’s the case. My understanding is that the government holds on to the loans but hires servicers to interact with borrowers. These servicing contracts are subject to competitive bids and that’s why people regularly get new processors.
- bradleyjg 7y ago
  The trap with income based repayment is that after 20 or 25 years worth of payments less than the accruing interest the original principal plus all the capitalized interest is forgiven, but that forgiven debt is taxable income to the borrower. So the borrower has replaced a debt to the department of education to one to the IRS.
  - mikepurvis 7y ago
    Surely the taxes on that income are considerably less than what was forgiven? If nothing else, this seems like an argument for permitting the recipient of this particular kind of windfall to break it up across a few years, possibly retroactively.
    - bradleyjg 7y ago
      When the lender is the government and the forgiveness is an intended and advertised part of the program from loan origination, I’d argue it isn’t meaningfully a windfall. Further, I’d argue that the borrower isn’t the main beneficiary of these student loan programs. Rather they are intended to, and do, enable monstrous cost growth in private de facto for-profit universities.

burke_holland 7y ago

Interesting that there is no mention here of the drastically inflated number of administrators in colleges as compared to say 30 years ago. “literally nobody knows who these people are or what they are doing” https://www.forbes.com/sites/carolinesimon/2017/09/05/bureaucrats-and-buildings-the-case-for-why-college-is-so-expensive/ https://www.forbes.com/sites/carolinesimon/2017/09/05/bureau...

golemiprague 7y ago
It is fake jobs for women who didn't study anything useful and this phenomena is spilling into the rest of the economy. We hoped that the influx of women to higher education will help the economy but it is only a burden, the return on the money we spend on their education is abysmal, it hurts the whole economy and is part of the reason this debt crisis was created in the first place. Women almost don't start new businesses and they don't create jobs. Most innovations, technical jobs, dangerous jobs, physical jobs and creative jobs are done by men. Women fill up mostly secretarial roles with fancy names in the private sector. Those roles don't really need any education and it is a total waste of 3 or 4 years just to signal secretarial capabilities to employers. Armies around the world can figure this out with half a day test and can teach those jobs in 3 months max. The rest of the women work in care taking type of jobs in the public sector, funded mainly by our taxes. We wouldn't need those jobs had those women stayed at home and took care of their kids, their elders, their house and gardens. The education system is a good example of industry overrun by over educated women that is deteriorating and stagnating because there are not enough men to push it forward. So I think the first step we need to take is limit higher studies only for women who are exceptional and are willing to actually study and work in something productive. That's in itself will reduce the amount of people in the system and will solve a lot of the financial issues. There are also many men who don't have to be there, but the numbers are much lower.
Ididntdothis 7y ago
This is the crazy thing about discussions like cost of education or health care. Where does the f....ing money go? Nobody seems to know or care.

mnm1 7y ago

> After years of projecting big profits from student lending, the federal government now acknowledges that taxpayers stand to lose $31.5 billion on the program over the next decade, and the losses are growing rapidly. Most civilized countries offer free or close to free education for their young population instead of trying to profit off of this segment of the population that barely knows what it wants out of life. If they can do it, I'm sure we could. How about bailing out the people for one and ending this for profit loan system once and for all? How about investing in the future generations of Americans for once instead of trying to profit from them? Or we could continue on the path we're on and see just how much worse things get for the masses here. I wonder just how much they will put up with.

germinalphrase 7y ago
I have yet to hear about a realistic plan to remove and replace. Anyone have recommended reading?
tlear 7y ago
Free education only works when you have a selection system where you are tested and then put where you fit(shoveling dirt, laying bricks, trade school, college, university). In US any graduate from HS can go do 4 year degree in “something”. Try that in Germany or Netherlands.
- de_watcher 7y ago
  Well, if he's not capable to receive that education then why he's trying to borrow money for something he can't handle?
  - creato 7y ago
    Among other reasons why this would be unlikely to work in the US: there would almost certainly be a racial disparity in who qualifies for higher education, and that would be a political disaster.
  - tlear 7y ago

Aaronstotle 7y ago

I think a lot of the student debt crisis is self-inflicted. No one is forcing you to attend a 4 year straight from high-school, go to a community college and then transfer to a state school/4 year. (I spent 3 years at a CC, but I graduated from a UC and paid off my student loans within a year) Yes, college is expensive, but there is an existing alternative that everyone seems to forget about and it boggles my mind.

bonoboTP 7y ago
And that is studying in Europe.
uwuhn 7y ago
I did 2 years at CC before going to a UC too. I don't think people are forgetting about it. There are many reasons people choose larger loans instead of transferring, most of which are unreasonable in hindsight once they enter the workforce.
bsanr2 7y ago
Drop-out rates are much higher at community colleges, particularly for low-income and minority students. This is kind of a privileged statement to make. Also, the UC system is one of the few that retains a robust CC-to-university pipeline, so it's not fair to compare the opportunities available in California to those in a lot of places in this country, particularly when so many who would take advantage of what you did are priced out of housing.
jseliger 7y ago
No one is forced to take out any kind of debt; the issue is that typical debt is secured by an asset or dischargeable in bankruptcy. If you make severe mistakes with credit cards, you'll declare bankruptcy and the credit card companies will suffer. This imposes some market discipline on lenders. Banks are (ideally) not eager to make mortgages to people who are likely to become insolvent. Yes, I know about the Great Recession and this was part of the problem. Severe student loans can be incurred starting at age 18 and aren't dischargeable. That's why they're uniquely pernicious. It's typically not possible to fuck up your financial life for decades via most debts, but it is with student loans. We don't know ourselves and the future is unpredictable, and that's why bankruptcy exists. Taking it out of the equation empowers predatory lenders and institutions.

omegant 7y ago

Honest question, why are Universities becoming so expensive? Is because these credits are available? Was estudying a degree cheaper before the credits?

katmannthree 7y ago
Short answer: Because they can. Longer answer, according to the universities: Because modern students demand more than just classes, they also want social services (on-site counseling, bias incident response teams, etc). Longer answer, according to a cynic: Because universities are more or less guaranteed the money from the federal government, they've grown to spend the money on inflated administration. As costs go up the government allows students to borrow more and more to cover the costs, and universities find ways to jack up their prices to match the money on the table. While the government loaning poor students money to better themselves with an education is a great thing in theory, I think it's what directly lead to the current situation. I don't want to turn this into a long post against capitalism, but I think that the unfettered capitalistic worldview we have here in the US is the root problem.
- bluedino 7y ago
  A project will grow to fill the timeline, and departments will grow to fill the budget
  - hinkley 7y ago
    The bureaucracy is expanding to meet the needs of the expanding bureaucracy. -Oscar Wilde (And Civ IV)
- mooselumps 7y ago
  > I think that the unfettered capitalistic worldview we have here in the US is the root problem. It seemed to me like the government subsidizing the market in stark contrast to unfettered capitalistic principles is the root of the issue. Perdue’s income sharing plan mentioned in the article seemed really interesting off the cuff. I think it would have been really beneficial had I been required to create a pitch deck to get financing for my education.

TYPE_FASTER 7y ago

Why have the costs for healthcare and higher education been rising so rapidly? This article seems to blame government money and people wanting higher ed, but it doesn’t back up any of its claims.

arielP55 7y ago

I'm just going to reply a dead comment that I saw while using the HN app that shows dead comments by default. Looks like that comment got downvoted for some reason. >It is fake jobs for women who didn't study anything useful and this phenomena is spilling into the rest of the economy. We hoped that the influx of women to higher education will help the economy but it is only a burden, the return on the money we spend on their education is abysmal, it hurts the whole economy and is part of the reason this debt crisis was created in the first place. Women almost don't start new businesses and they don't create jobs. Most innovations, technical jobs, dangerous jobs, physical jobs and creative jobs are done by men. Women fill up mostly secretarial roles with fancy names in the private sector. Those roles don't really need any education and it is a total waste of 3 or 4 years just to signal secretarial capabilities to employers. Armies around the world can figure this out with half a day test and can teach those jobs in 3 months max. The rest of the women work in care taking type of jobs in the public sector, funded mainly by our taxes. We wouldn't need those jobs had those women stayed at home and took care of their kids, their elders, their house and gardens. The education system is a good example of industry overrun by over educated women that is deteriorating and stagnating because there are not enough men to push it forward. So I think the first step we need to take is limit higher studies only for women who are exceptional and are willing to actually study and work in something productive. That's in itself will reduce the amount of people in the system and will solve a lot of the financial issues. There are also many men who don't have to be there, but the numbers are much lower. I think even though your point appears very inflammatory at first glance, I think your point raises a deeper problem. The issue of why are we subsidizing poor value majors. So in an ideal world any major that doesn't have much value would automatically get culled as its graduates won't find jobs but with guaranteed federal loan money that's not happening. So tomorrow, I could go and setup a "department of crystal healing and contemporary perspectives on it" and I'll start getting the federal loan dollars from my students. The only way I see to fix this, is to make loans dischargeable via bankruptcy to bring this negative feedback pathway back into the pricing of courses ecosystem.

jartelt 7y ago

I understand that one is privileged to some extent to have been able to pay off student debt. But, I can't help but think it could be problematic to cancel all student debt and in effect penalize all those who worked hard to save and pay off their debt. Only a couple years ago it was advantageous to pay off your student debt quickly to avoid interest. Now it seems beneficial to pay the monthly minimum only and hope that the debt gets forgiven by the government at some point... Does any one know if any of the Democratic candidates have talked about this issue?

headcanon 7y ago
Not based on direct evidence, but based on the candidates' rhetoric and Democrats' typical platform goals, I'm thinking they will prioritize forgiveness for low earners, similar to how they limit write-offs for student loan interest payments to incomes below a threshold (I think it was 80k last year? I don't remember). So if you're already in a place to pay it off without struggling, I'm betting your life won't change that much. I'll just be happy to see my loans gone. If I end up paying it off in 5 years and find out it all would have been forgiven regardless, C'est la vie.

systematical 7y ago

So the government increased the cost of college by getting involved?

hashberry 7y ago

Student loans can also be used to pay rent and meals, and living in an urban center is increasingly expensive. My alma mater is tearing down old dorms and building pricey new ones instead of making student life as affordable as possible.

ineedasername 7y ago

The story makes some very good points, but completely misses two other reasons that tuition costs have risen so much faster than inflation: 1) State aid has dried up considerably. Public colleges used to get a a huge amount of their budget from the state. However, cutting funding to higher education has always been more politically palatable when tightening the belt than other areas. When I was in college, the funding was roughly 50%. Now it's about %25, and in inflation adjusted dollars is significantly lower than 20 years ago. 2) For at most of the past 20 years, there's been an arms race amount colleges competing for students. In that pursuit, enormously expensive new facilities from dorms to rec centers have ballooned capital expenses, covered primarily by bind issues that have interest to be paid and therefore necessitate higher tuition. To make ends meet. These two items, along with easy financing, represent the three legged stool on which massive tuition and increased and student debt sits.

jfengel 7y ago
Any idea where this arms race comes from? Were the colleges holding classes with empty seats because they couldn't get enough students? One would like to think that this would allow new schools to materialize that opt out of that race to the top, though of course the overhead is very high. I've been watching Signum University, an online-only school, work its way to accreditation over the past several years, and they're nowhere close. (A big bolus of cash would probably help; they're trying to do it with only small-donor donations.) I feel like college has become not-worth-it in the three decades since my degree, though unfortunately that's not true: even with the ballooning costs it's still a net positive. It just seems as if they're raising prices to absorb as much of that net positive as they can, and in doing so the people on the left side of the return curve go from positive to negative. Since the schools get theirs up front, that's pure positive for them.