4 ms·

> end federally backed student loans Unfortunately, higher education will be completely opposed to this plan, because they get paid upfront, take on zero risk,

> end federally backed student loans Unfortunately, higher education will be completely opposed to this plan, because they get paid upfront, take on zero risk, and can charge whatever they want. (Yet another example of moral hazard. When the loan cannot be repaid the taxpayers foot the bill. Remember, “gains are privatized and losses are nationalized.”) Also as incredibly flawed as the present system is, I wonder if it provides an avenue to higher education to students that would otherwise have no such path. I propose that the universities should be financially responsible (instead of the federal government) when the student cannot repay the loan. That would provide a strong incentive for universities to have A. the student graduate B. have a manageable amount of debt with respect to future income.

wdn 5y ago
This would be a great idea. However, in those wokism world, it would not work. School are dropping standardize test in the name of fairness (of the skin color).
- deleted 5y ago
  [deleted]
leereeves 5y ago
> I propose that the universities should be financially responsible (instead of the federal government) when the student cannot repay the loan. I suspect there would be widespread opposition to this idea on the grounds that "education is about more than getting a job". If universities were paid based on students' future earnings, would they still teach liberal arts?
- roenxi 5y ago
  If something of value is being lost, let them that see that value pay for it. It is a bit unfair to go to a teenager, set them up with debts in exchange for something that doesn't measurably impact their earnings and turn them loose. The reason they are even in education is because their brain isn't fully formed yet and they have no practical experience. Relying on their judgement of what is a good long-term idea is a bad move.
  - leereeves 5y ago
    > If something of value is being lost, let them that see that value pay for it. Absolutely, but that's not what was proposed above. This quote suggests the usual model in which the government pays for education (which I support, most nations use, and even the US uses for K-12), not the income dependent repayment model proposed by julienchastang.
parsimo2010 5y ago
I agree with you. Of course everyone in higher education would be against it. It would force universities to consider a student's likelihood of repayment, and in doing so it would ruin their enrollment and cost them a bunch of money. Every school would probably have to halve their faculty if they didn't have a federally guaranteed honeypot. It would completely upend the current state of affairs. Imagine how many kids go to University of Alabama strictly because of the football team. Imagine how much enrollment would drop if most of those students couldn't get any more loans because they weren't likely to repay them without federal protections (either going to a different school that provided a better value or exiting higher education completely). Now imagine this going on in some form or other at literally every college/university in America. With all that said about how drastic it would be, I agree with GP that it is the only real solution, and everything else is either temporary or addresses a symptom instead of the cause.
- etempleton 5y ago
  I agree that federal funding, first issued several decades ago, has since not kept up with inflation and l has led to the current state of things. Prospective students, their families, and the schools all responded rationally and predictably. Funding either needs to remain consistent with inflation or slowly phased out. Good schools do worry about repayment of applicants, but not all schools are good or in a financial position to worry about that. What most schools are trying to do right now is rapidly expand their endowments with the hope to be able to consistently and sustainably offer tuition discounts and aid to students. The schools with the largest endowments are already essentially free if your family makes below a certain threshold, however this is only a handful of elite schools. For most schools they have what is called a “discount rate.” That is, the rate of students that receive a discount on the sticker price of tuition. These days most families receive a discount to most schools, which is a pretty dramatic from even 10 years ago when most students paid the full tuition price.
nerdponx 5y ago
> I wonder if it provides an avenue to higher education to students that would otherwise have no such path. Was that not the original purpose?

wdn 5y ago

This would be a great idea. However, in those wokism world, it would not work. School are dropping standardize test in the name of fairness (of the skin color).

deleted 5y ago
[deleted]

leereeves 5y ago

> I propose that the universities should be financially responsible (instead of the federal government) when the student cannot repay the loan. I suspect there would be widespread opposition to this idea on the grounds that "education is about more than getting a job". If universities were paid based on students' future earnings, would they still teach liberal arts?

roenxi 5y ago
If something of value is being lost, let them that see that value pay for it. It is a bit unfair to go to a teenager, set them up with debts in exchange for something that doesn't measurably impact their earnings and turn them loose. The reason they are even in education is because their brain isn't fully formed yet and they have no practical experience. Relying on their judgement of what is a good long-term idea is a bad move.
- leereeves 5y ago
  > If something of value is being lost, let them that see that value pay for it. Absolutely, but that's not what was proposed above. This quote suggests the usual model in which the government pays for education (which I support, most nations use, and even the US uses for K-12), not the income dependent repayment model proposed by julienchastang.

parsimo2010 5y ago

I agree with you. Of course everyone in higher education would be against it. It would force universities to consider a student's likelihood of repayment, and in doing so it would ruin their enrollment and cost them a bunch of money. Every school would probably have to halve their faculty if they didn't have a federally guaranteed honeypot. It would completely upend the current state of affairs. Imagine how many kids go to University of Alabama strictly because of the football team. Imagine how much enrollment would drop if most of those students couldn't get any more loans because they weren't likely to repay them without federal protections (either going to a different school that provided a better value or exiting higher education completely). Now imagine this going on in some form or other at literally every college/university in America. With all that said about how drastic it would be, I agree with GP that it is the only real solution, and everything else is either temporary or addresses a symptom instead of the cause.

etempleton 5y ago
I agree that federal funding, first issued several decades ago, has since not kept up with inflation and l has led to the current state of things. Prospective students, their families, and the schools all responded rationally and predictably. Funding either needs to remain consistent with inflation or slowly phased out. Good schools do worry about repayment of applicants, but not all schools are good or in a financial position to worry about that. What most schools are trying to do right now is rapidly expand their endowments with the hope to be able to consistently and sustainably offer tuition discounts and aid to students. The schools with the largest endowments are already essentially free if your family makes below a certain threshold, however this is only a handful of elite schools. For most schools they have what is called a “discount rate.” That is, the rate of students that receive a discount on the sticker price of tuition. These days most families receive a discount to most schools, which is a pretty dramatic from even 10 years ago when most students paid the full tuition price.

nerdponx 5y ago

> I wonder if it provides an avenue to higher education to students that would otherwise have no such path. Was that not the original purpose?