4 ms·

>Policy circles are hotly debating right now how to overhaul the entire system. No guaranteed federal loans would fix everything. This means tuition loans coul

>Policy circles are hotly debating right now how to overhaul the entire system. No guaranteed federal loans would fix everything. This means tuition loans could then be discharged and the lender would be more discerning about loaning to a student heading to some boutique private college with sky-high tuition and ending up with a humanities degree.

Retric 7y ago
Discharable loans would also increase interest rates by about 2%. That’s 100$ a month for 60k worth of loans, which makes them even harder to pay back.
- macspoofing 7y ago
  The key here is that you wouldn't get a loan to a college that won't provide you a useful degree for the tuition rate they charge the student. You want the lender to be discerning and not give out bad loans. Right now, the entire industry assumes students are not price conscious and you only need to sell them on the college experience instead of the price and value of the degree. Having said that, the government can always provide grants to make things more equitable.
  - LoSboccacc 7y ago
    and once profitability gets in the lenders' equation you'll see lot of art colleges and similar reduce their tuition costs to match their value in the job market
  - vegetablepotpie 7y ago
    >you only need to sell them on the college experience instead of the price and value of the degree. I think this is a good point because the problem with college recruiting is that they simultaneously advertise that they are an experience and a good investment, while shrugging off the responsibilities of being a good investment. I disagree with the idea that financial institutions should be in the business of determining what a “useful degree” is because a Debian Developer I know has a degree in philosophy. He does development because he happens to like programming and the mission of the project. He doesn’t need a CS degree and I think him having a philosophy degree let’s him bring something unique to the table. Education is abstract enough that you can’t put it into discrete boxes. If you tried Universities would become business schools. Borrowing money for college isn’t bad if the loans are low. College is expensive because of ballooning administration. Federally subsidized loans arguably gave an incentive for this. The right policy is to give Universities a disincentive to adding overhead.
    - deleted 7y ago
      [deleted]
learc83 7y ago
Loans aren't federally guaranteed anymore. They are made directly by the government.
- macspoofing 7y ago
  Ooof. That's worse, but the equation is the same. The lender does not evaluate the value of degree given the loan amount. That's the market distortion taking place, and why administrative costs (and consequently cost of education) has skyrocketed.
scarface74 7y ago
How “discerning” could you be when making loans to teenagers with no income and no credit history? The only thing that would happen is that the banks would force all loans to be co-signed. Guess who is statistically unlikely to get loans in that scenario?
- macspoofing 7y ago
  >How “discerning” could you be when making loans to teenagers with no income and no credit history? Very. They may very well take into account your grades and SAT score to determine feasibility of repayment. >The only thing that would happen is that the banks would force all loans to be co-signed. They may and why shouldn't they? This will deter expensive colleges and push students to cheaper alternatives like trade schools, community colleges and state schools. What's wrong with that? >Guess who is statistically unlikely to get loans in that scenario? People who can't pay back loans? I don't follow your point. Are you saying that loans should be made without consideration of feasibility of repayment?
  - rayiner 7y ago
    All of the policies you propose would have a disproportionate impact on black and Hispanic students, who generally come from families with less means to qualify for credit. Policies that disproportionately channel these students to trade schools and community colleges is a political non-starter.
    - macspoofing 7y ago
      What are you really trying to say? That black and Hispanics families are disproportionally a higher risk of defaulting but should still get loans they cannot afford? Is that your argument? Loans are not grants nor gifts. You're not doing anyone a favour by giving them a loan they cannot afford to repay. There are other ways to subsidize education rather than distorting the lending market.
      - ak217 7y ago

Retric 7y ago

Discharable loans would also increase interest rates by about 2%. That’s 100$ a month for 60k worth of loans, which makes them even harder to pay back.

macspoofing 7y ago
The key here is that you wouldn't get a loan to a college that won't provide you a useful degree for the tuition rate they charge the student. You want the lender to be discerning and not give out bad loans. Right now, the entire industry assumes students are not price conscious and you only need to sell them on the college experience instead of the price and value of the degree. Having said that, the government can always provide grants to make things more equitable.
- LoSboccacc 7y ago
  and once profitability gets in the lenders' equation you'll see lot of art colleges and similar reduce their tuition costs to match their value in the job market
- vegetablepotpie 7y ago
  >you only need to sell them on the college experience instead of the price and value of the degree. I think this is a good point because the problem with college recruiting is that they simultaneously advertise that they are an experience and a good investment, while shrugging off the responsibilities of being a good investment. I disagree with the idea that financial institutions should be in the business of determining what a “useful degree” is because a Debian Developer I know has a degree in philosophy. He does development because he happens to like programming and the mission of the project. He doesn’t need a CS degree and I think him having a philosophy degree let’s him bring something unique to the table. Education is abstract enough that you can’t put it into discrete boxes. If you tried Universities would become business schools. Borrowing money for college isn’t bad if the loans are low. College is expensive because of ballooning administration. Federally subsidized loans arguably gave an incentive for this. The right policy is to give Universities a disincentive to adding overhead.
  - deleted 7y ago
    [deleted]

learc83 7y ago

Loans aren't federally guaranteed anymore. They are made directly by the government.

macspoofing 7y ago
Ooof. That's worse, but the equation is the same. The lender does not evaluate the value of degree given the loan amount. That's the market distortion taking place, and why administrative costs (and consequently cost of education) has skyrocketed.

scarface74 7y ago

How “discerning” could you be when making loans to teenagers with no income and no credit history? The only thing that would happen is that the banks would force all loans to be co-signed. Guess who is statistically unlikely to get loans in that scenario?

macspoofing 7y ago
>How “discerning” could you be when making loans to teenagers with no income and no credit history? Very. They may very well take into account your grades and SAT score to determine feasibility of repayment. >The only thing that would happen is that the banks would force all loans to be co-signed. They may and why shouldn't they? This will deter expensive colleges and push students to cheaper alternatives like trade schools, community colleges and state schools. What's wrong with that? >Guess who is statistically unlikely to get loans in that scenario? People who can't pay back loans? I don't follow your point. Are you saying that loans should be made without consideration of feasibility of repayment?
- rayiner 7y ago
  All of the policies you propose would have a disproportionate impact on black and Hispanic students, who generally come from families with less means to qualify for credit. Policies that disproportionately channel these students to trade schools and community colleges is a political non-starter.
  - macspoofing 7y ago
    What are you really trying to say? That black and Hispanics families are disproportionally a higher risk of defaulting but should still get loans they cannot afford? Is that your argument? Loans are not grants nor gifts. You're not doing anyone a favour by giving them a loan they cannot afford to repay. There are other ways to subsidize education rather than distorting the lending market.
    - ak217 7y ago