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> Federally subsidized student loans need to GO AWAY. The language I'm about to use pains me, but this is an extremely privileged take, or at least naive take,

> Federally subsidized student loans need to GO AWAY. The language I'm about to use pains me, but this is an extremely privileged take, or at least naive take, on what these loans do. Removing them will hurt about about a generation of students from the very low to the upper middle class set until the academic<>employment market adjusts. What do I mean? A simple, pragmatic fact is degree from a name-school, vs. a no-name school, is a differentiator to a student who knows what they're doing. This is especially true with grad schools where it's professionally-focused on the outcome. NYU Law vs. CUNY Law. UMass Dartmouth CS vs. BU CS. You're buying a network and a door opener with the latter. One resume gets you an informational interview, a priv'd coop/internship, an alumni network and so on, and the other has an uphill battle. For many underpriv'd students, that network-buy is life changing. I wish it wasn't the case, but pretending that it isn't is damaging. This is just the way of things at the moment. By getting rid of fed-sub'd loans, you: - take away motive-neutral funding route for your cheap but no-name undergrad -> good grad school -> good new career - open only profit-motive funding routes from private loan companies, which.... this never works out well for consumers. - open this priv'd route of good schools to increasingly only the elite. I'd agree with the point that a cheap state school for undergrad, a "known" school for grad school funded by however one can get it funded makes more financial<>career sense, but that nuance didn't exist in your argument.

pclmulqdq 6y ago
These loans have destroyed any chance that a generation of underprivileged students will achieve financial prosperity. If they go away, the federally subsidized loan programs will likely be phased out over ~5 years or so. The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs.
- rconti 6y ago
  >The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs. [Citation needed] We already know who the "good bets" are. They're the rich kids. And if you think "income sharing" and the private sector will drive rates down from a federally-subsidized ("predatory") rate, well, I don't know what to say. I certainly don't think burying underprivileged students under a mountain of debt at graduation is a good thing. I'd very much like to see costs come way down, and I do agree that doing something about the loan system is a piece of the puzzle. But the reason the underprivileged are taking on this debt is that they're attempting to move up, in a way that avoiding debt by avoiding higher education will never achieve. Unfortunately, higher education has become the only way to hang on to an otherwise-falling standard of living; wage stagnation despite increasing education level.
  - ishjoh 6y ago
    An alternative to the current system which would be very disruptive and allow for a lot of experimentation and alternatives would be to have state level or national level certification exams that would need to be passed to obtain a degree. The exams could then also show percentiles, so even if you were self taught you could be ranked against Ivy League students. Cons to this approach would be the same issues that exist with standardized testing today. Emphasis on only learning to the test, high stress make or break testing (although this already exists with the SATs and other exams). I'm sure there are also a number of other cons.
    - deleted 6y ago
      [deleted]
  - bko 6y ago
    > [Citation needed] Pretty much all private student loan borrowers pick off the "good bets". Because the government rate is the floor. This was Sofi business model. I remember looking at their securitizations and most were graduate school loans for top schools( Wharton, Harvard, Columbia, etc). It wouldn't be rare for an entire securitization of thousands of loans to have no loans even 30 days delinquent. And they paid back quickly too. > Investors received a financial return and borrowers received rates lower than the federal government offered. The company sought to minimize defaults by focusing on low-risk students and graduates https://en.wikipedia.org/wiki/SoFi https://en.wikipedia.org/wiki/SoFi
  - imtringued 6y ago
    You can trivially add the inefficiency you so desire by letting the government only cover part of the loan up to a set amount. If the government only guarantees loans up to 30k you can still get an additional 30k loan at your own risk to pay for a 60k degree.
- Nbox9 6y ago
  This is hyperbolic. There are plenty of people with underprivileged backgrounds and student loans that have achieved financial prosperity.
  - evilduck 6y ago
    But it's not a guarantee that as a mostly unqualified and unemployable high school kid that they can predict the economy and job market 4-5 years ahead of time and if they just take on a crushing amount of debt for an education that they will become financially prosperous or even qualified to work in a given field with just a bachelors. Oh, and we provide almost no social safety nets should they fail and the debt can't be discharged. Yeah people roll these dice and win, but plenty of people roll the same dice and lose.
- krisgee 6y ago
  Just like how private sector health insurance isn't predatory at all huh.
  - tw25495259 6y ago
    It used to be [1][2] until competition was largely regulated out of existence (much to the benefit of doctors and insurance firms). It might be "private sector", but it sure isn't subject to market forces. It's no accident that those industries with the most anti-competitive regulations are those with the highest costs and poorest service (which ironically begets more anti-competitive regulation). Tensions between supplier and consumer are profit opportunities for extant and would-be competitors. That no one is stepping in to reap those profits is a strong indicator of a (state-enforced) anti-competitive environment. [1] https://theunbrokenwindow.com/2011/05/16/lodge-practice-evil/ https://theunbrokenwindow.com/2011/05/16/lodge-practice-evil... [2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1652413/?page=1 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1652413/?page=1 A doctor in 1908 complaining that fraternal lodge medical insurance was too cheap: > the chief aim of many fraternal orders appears to be the exploitation and control of physicians in the interests of the numerical and financial growth of the lodges and mainly at the expense of physicians.
- michaelt 6y ago
  > The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs. Maybe. Or maybe the the costs and loans will remain huge - but now with parents as co-signers, and only available to people whose parents are homeowners with good credit.
yowlingcat 6y ago
> this is an extremely privileged take, or at least naive take, on what these loans do > For many underpriv'd students, that network-buy is life changing. I think that the belief that federally subsidized student loans need to /not/ go away is in and of itself a naive take -- about as naive as believing you can "buy" access to a network. These students you are talking about are not buying a network -- they are buying a signal and a brand. But the signal and the brand don't necessarily unlock access to the network, nor the presumed career opportunities that should unlock. And why should it? After all, if universities wanted explicitly justify the expenditure in careerist terms, they'd offer the ISA-style funding arrangements that most reputable code academies offer. But they don't. You should ask yourself why that's the case, and why for many of these underpriv'd students you mention, this is a very expensive lesson they learn the hard way. You should ask yourself what happens when the student slips through the cracks and ends up with no job and a ton of debt. You should ask yourself if the whole thing is a scam -- because if this scenario doesn't make you imagine it might be one, I don't know what will.
armenarmen 6y ago
Do you think that granting mortgages to NINJAs (no income, jobs or assets) had any affect on the sharp rise in housing costs leading up to the ‘08 bubble?
- yardie 6y ago
  > Do you think that granting mortgages to NINJAs (no income, jobs or assets) had any affect on the sharp rise in housing costs leading up to the ‘08 bubble? While NINJAs certainly didn't help with the situation leading up to the GFC in 2008. Let's make one thing abundantly clear. Subprime mortgages did not cause the crash. They were just the tipping of a series of shitty monetary policies. The majority of mortgage defaults came from investors and the upper middle class [0][1]. People with really good jobs, lots of credit, and every resource to walk away from a sinking ship. The bubble was caused by lawyers, doctors, Wall Street, and people just like you or I. The ones who could talk their way into taking out $200k-1mm loans from a bank based on having good enough credit. [0] https://www.tuck.dartmouth.edu/news/articles/the-role-of-the-middle-class-in-the-mortgage-crisis https://www.tuck.dartmouth.edu/news/articles/the-role-of-the... [1] https://www.nytimes.com/2010/07/09/business/economy/09rich.html https://www.nytimes.com/2010/07/09/business/economy/09rich.h...
andrewjl 6y ago
> The language I'm about to use pains me, but this is an extremely privileged take, or at least naive take I think the take outlined later in the post is the privileged take. Sure those who are lucky enough to be accepted into a school with an alumni network, name recognition, can leverage those connections. But at what cost? Paying off debts until mid to late 40s? It's certainly life changing as you say, but more of an "out of the frying pan and into the fire" type of change. Worse still is many of these students have no warning of this (legalese in promissory notes isn't a fair warning) and once they sign the dotted line, no recourse. They won't be buying home, won't be starting families, and will be restricted in any type of career growth that doesn't translate into higher incomes. But yes, they will enjoy great informational interviews. Finally this post completely leaves out those who attended for-profit schools who provide none of the benefits listed and really have no business signing their students up for a lifetime of debt peonage.

pclmulqdq 6y ago

These loans have destroyed any chance that a generation of underprivileged students will achieve financial prosperity. If they go away, the federally subsidized loan programs will likely be phased out over ~5 years or so. The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs.

rconti 6y ago
>The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs. [Citation needed] We already know who the "good bets" are. They're the rich kids. And if you think "income sharing" and the private sector will drive rates down from a federally-subsidized ("predatory") rate, well, I don't know what to say. I certainly don't think burying underprivileged students under a mountain of debt at graduation is a good thing. I'd very much like to see costs come way down, and I do agree that doing something about the loan system is a piece of the puzzle. But the reason the underprivileged are taking on this debt is that they're attempting to move up, in a way that avoiding debt by avoiding higher education will never achieve. Unfortunately, higher education has become the only way to hang on to an otherwise-falling standard of living; wage stagnation despite increasing education level.
- ishjoh 6y ago
  An alternative to the current system which would be very disruptive and allow for a lot of experimentation and alternatives would be to have state level or national level certification exams that would need to be passed to obtain a degree. The exams could then also show percentiles, so even if you were self taught you could be ranked against Ivy League students. Cons to this approach would be the same issues that exist with standardized testing today. Emphasis on only learning to the test, high stress make or break testing (although this already exists with the SATs and other exams). I'm sure there are also a number of other cons.
  - deleted 6y ago
    [deleted]
- bko 6y ago
  > [Citation needed] Pretty much all private student loan borrowers pick off the "good bets". Because the government rate is the floor. This was Sofi business model. I remember looking at their securitizations and most were graduate school loans for top schools( Wharton, Harvard, Columbia, etc). It wouldn't be rare for an entire securitization of thousands of loans to have no loans even 30 days delinquent. And they paid back quickly too. > Investors received a financial return and borrowers received rates lower than the federal government offered. The company sought to minimize defaults by focusing on low-risk students and graduates https://en.wikipedia.org/wiki/SoFi https://en.wikipedia.org/wiki/SoFi
- imtringued 6y ago
  You can trivially add the inefficiency you so desire by letting the government only cover part of the loan up to a set amount. If the government only guarantees loans up to 30k you can still get an additional 30k loan at your own risk to pay for a 60k degree.
Nbox9 6y ago
This is hyperbolic. There are plenty of people with underprivileged backgrounds and student loans that have achieved financial prosperity.
- evilduck 6y ago
  But it's not a guarantee that as a mostly unqualified and unemployable high school kid that they can predict the economy and job market 4-5 years ahead of time and if they just take on a crushing amount of debt for an education that they will become financially prosperous or even qualified to work in a given field with just a bachelors. Oh, and we provide almost no social safety nets should they fail and the debt can't be discharged. Yeah people roll these dice and win, but plenty of people roll the same dice and lose.
krisgee 6y ago
Just like how private sector health insurance isn't predatory at all huh.
- tw25495259 6y ago
  It used to be [1][2] until competition was largely regulated out of existence (much to the benefit of doctors and insurance firms). It might be "private sector", but it sure isn't subject to market forces. It's no accident that those industries with the most anti-competitive regulations are those with the highest costs and poorest service (which ironically begets more anti-competitive regulation). Tensions between supplier and consumer are profit opportunities for extant and would-be competitors. That no one is stepping in to reap those profits is a strong indicator of a (state-enforced) anti-competitive environment. [1] https://theunbrokenwindow.com/2011/05/16/lodge-practice-evil/ https://theunbrokenwindow.com/2011/05/16/lodge-practice-evil... [2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1652413/?page=1 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1652413/?page=1 A doctor in 1908 complaining that fraternal lodge medical insurance was too cheap: > the chief aim of many fraternal orders appears to be the exploitation and control of physicians in the interests of the numerical and financial growth of the lodges and mainly at the expense of physicians.
michaelt 6y ago
> The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs. Maybe. Or maybe the the costs and loans will remain huge - but now with parents as co-signers, and only available to people whose parents are homeowners with good credit.

yowlingcat 6y ago

> this is an extremely privileged take, or at least naive take, on what these loans do > For many underpriv'd students, that network-buy is life changing. I think that the belief that federally subsidized student loans need to /not/ go away is in and of itself a naive take -- about as naive as believing you can "buy" access to a network. These students you are talking about are not buying a network -- they are buying a signal and a brand. But the signal and the brand don't necessarily unlock access to the network, nor the presumed career opportunities that should unlock. And why should it? After all, if universities wanted explicitly justify the expenditure in careerist terms, they'd offer the ISA-style funding arrangements that most reputable code academies offer. But they don't. You should ask yourself why that's the case, and why for many of these underpriv'd students you mention, this is a very expensive lesson they learn the hard way. You should ask yourself what happens when the student slips through the cracks and ends up with no job and a ton of debt. You should ask yourself if the whole thing is a scam -- because if this scenario doesn't make you imagine it might be one, I don't know what will.

armenarmen 6y ago

Do you think that granting mortgages to NINJAs (no income, jobs or assets) had any affect on the sharp rise in housing costs leading up to the ‘08 bubble?

yardie 6y ago
> Do you think that granting mortgages to NINJAs (no income, jobs or assets) had any affect on the sharp rise in housing costs leading up to the ‘08 bubble? While NINJAs certainly didn't help with the situation leading up to the GFC in 2008. Let's make one thing abundantly clear. Subprime mortgages did not cause the crash. They were just the tipping of a series of shitty monetary policies. The majority of mortgage defaults came from investors and the upper middle class [0][1]. People with really good jobs, lots of credit, and every resource to walk away from a sinking ship. The bubble was caused by lawyers, doctors, Wall Street, and people just like you or I. The ones who could talk their way into taking out $200k-1mm loans from a bank based on having good enough credit. [0] https://www.tuck.dartmouth.edu/news/articles/the-role-of-the-middle-class-in-the-mortgage-crisis https://www.tuck.dartmouth.edu/news/articles/the-role-of-the... [1] https://www.nytimes.com/2010/07/09/business/economy/09rich.html https://www.nytimes.com/2010/07/09/business/economy/09rich.h...

andrewjl 6y ago

> The language I'm about to use pains me, but this is an extremely privileged take, or at least naive take I think the take outlined later in the post is the privileged take. Sure those who are lucky enough to be accepted into a school with an alumni network, name recognition, can leverage those connections. But at what cost? Paying off debts until mid to late 40s? It's certainly life changing as you say, but more of an "out of the frying pan and into the fire" type of change. Worse still is many of these students have no warning of this (legalese in promissory notes isn't a fair warning) and once they sign the dotted line, no recourse. They won't be buying home, won't be starting families, and will be restricted in any type of career growth that doesn't translate into higher incomes. But yes, they will enjoy great informational interviews. Finally this post completely leaves out those who attended for-profit schools who provide none of the benefits listed and really have no business signing their students up for a lifetime of debt peonage.