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That completely shifts the blame to bureaucracies, and that isn't fair. Loans are where they are because students prefer newer dorms, amenities, programs, and r

That completely shifts the blame to bureaucracies, and that isn't fair. Loans are where they are because students prefer newer dorms, amenities, programs, and research opportunities. Student competition leads to prestige, leads to demand from employers for graduates from a specific institution. It is a self-reinforcing dynamic. The fact student loads have special bankruptcy treatment is bad. But absent Sallie Mae (or Navient, whatever it is now) students would be paying whatever Harvard or Stanford asked, and that would determine pricing for the next tier of schools.

vorpalhex 5y ago
Students don't usually get a choice of dorm, it's often a lottery program. Research is usually grant funded.
- throwaway5752 5y ago
  Students tour campuses and look at facilities, including dorms, and that factors into their decisions. Research may be funded. But research salaries are high as are facility costs and upkeep. There are numerous costs to support a top tier research program and maintain it that are not covered by grants.
malfist 5y ago
It's a little rich to blame 18 year olds for college costs skyrocketing don't you think? Of course students prefer newer dorms, amenities, programs and research opportunities. But asking someone who might have been getting $5/week allowance to figure out how much a newer dorm is worth when the prices are in the 10s of thousands is an impossible task. They don't know how much money is worth. And then to tell them that they can't discharge it in bankrupcy because they knew what they were getting into is very much bullshit. And I don't say all this because I have student loans. I was very lucky, I went to a state college with a full tuition scholarship. But I've seen a lot of my peers struggle with student loans because teenagers don't understand fiscal policy, and shouldn't be expected too.
- simplestats 5y ago
  It's a simple economic argument. If students care only about quality, Universities will only care about it also. And improving quality leads to higher price.
- throwaway5752 5y ago
  The demand for top tier education drives prices, just like the financing structure for loans for that education drives prices. Excluding one or the other is a false choice. Maybe if risk of default were factored into loans that would change the trajectory of the tuition cost curve. But taking away agency the consumers in the model doesn't lead us to the insights we need to actually fix the underlying problem. I have a vested interest in this problem. But saying popular things for upvotes isn't going to change the underlying problem of how to allocate scarce resources. I disagree with you on "teenagers don't understand fiscal policy, and shouldn't be expected too.". This isn't fiscal policy. This is a pretty straightforward introduction to being an adult and budgeting. I went through it, too. A mortagage was harder and more daunting. Rental terms on apartments were more predatory. The fact that people even discuss bankruptcy to discharge student loan debt is a horrible sign, given how much of ones' life potential one i throwing away to recover prime loan eligibility. Also, "And then to tell them that they can't discharge it in bankrupcy because they knew what they were getting into is very much bullshit." - what part of where I wrote, "The fact student loads have special bankruptcy treatment is bad" is unclear?
  - joshgrib 5y ago
    I'm not trying to make it black-and-white, there's certainly some degree of personal choice weighing in here - but it's not the core issue and it's probably a distraction. When we realized cigarettes were bad it was partially about informing people, but the main thing was to change marketing laws so you could make sure that wasn't undoing all the good info. If I give you two loan options with bad terms and you have to choose one, then that is a fiscal policy thing and your choice is ultimately pretty inconsequential. You may be slightly better off than the person who made the other choice but the bad policy is affecting both of you. Ultimately it's both a policy and a personal choice thing, but as with most society-wide issues the personal choice aspect falls away pretty quickly and we need to get realistic and figure out what a solution is instead of just blaming individuals.
namelessoracle 5y ago
They care so much about dorms and the food programs that schools have to mandate that the student live on campus and pay for on campus food their first year!
joshgrib 5y ago
This is an institutional problem and they should be blamed though. It doesn't really matter what students "prefer", if a bank doesn't do their due diligence and a student isn't able to repay their loan, then the bank should be losing that money as a bad investment. They won't give a $1M mortgage loan to buy a 50k lot, and likewise won't give it to someone that doesn't seem like they could pay it back. I do think there's value in people getting degrees that don't pay well - but then you shouldn't be getting a loan to do so. > students would be paying whatever Harvard or Stanford asked I don't think this is true - people simply can't go to a school they can't afford and people don't have infinite money. We gave the banks the freedom to tell children that they will indeed be able to pay back loans that they often cannot, so it's the bad actions of one organization(banks) enabling another(school). Ivy league schools may be like Veblen goods where increased prices also increase demand - but that can't be true for all schools and we've seen tuition increases across the board. The solution that seems best to me is to first fix the bankruptcy issue - if someone can't pay back a loan that is a risk the bank is accepting by giving the loan, just like any other loan. I think that alone would probably have enough of a chilling effect that way less people would be able to attend colleges at first and they would be forced to lower tuition rates. That would correct the market going forward, but it doesn't really help people that already fell victim to this system. That seems like it could be remedied by either making interest rates 0 or capping total interest to some amount relative to the principal (e.g. the total amount can never grow to more than 110% of the principal). Similar to healthcare, I don't think education shouldn't be profitable in the short term - it's a long term investment a society has to make in itself so you can't really track it as an individual investment in any one person. If someone else becomes a doctor I'm still benefitting from that so it makes sense that I'd pay into some of the cost to educate that person. Unfortunately in the US at least we seem to be totally unable to do anything without a short-term and concrete path to profit regardless of the amount of good it would do.
- sokoloff 5y ago
  > won't give [a student loan] to someone that doesn't seem like they could pay it back I wonder what groups of people might be harmed by such a policy, but I would bet it won’t be middle and upper class families who are willing to co-sign for loans.

vorpalhex 5y ago

Students don't usually get a choice of dorm, it's often a lottery program. Research is usually grant funded.

throwaway5752 5y ago
Students tour campuses and look at facilities, including dorms, and that factors into their decisions. Research may be funded. But research salaries are high as are facility costs and upkeep. There are numerous costs to support a top tier research program and maintain it that are not covered by grants.

malfist 5y ago

It's a little rich to blame 18 year olds for college costs skyrocketing don't you think? Of course students prefer newer dorms, amenities, programs and research opportunities. But asking someone who might have been getting $5/week allowance to figure out how much a newer dorm is worth when the prices are in the 10s of thousands is an impossible task. They don't know how much money is worth. And then to tell them that they can't discharge it in bankrupcy because they knew what they were getting into is very much bullshit. And I don't say all this because I have student loans. I was very lucky, I went to a state college with a full tuition scholarship. But I've seen a lot of my peers struggle with student loans because teenagers don't understand fiscal policy, and shouldn't be expected too.

simplestats 5y ago
It's a simple economic argument. If students care only about quality, Universities will only care about it also. And improving quality leads to higher price.
throwaway5752 5y ago
The demand for top tier education drives prices, just like the financing structure for loans for that education drives prices. Excluding one or the other is a false choice. Maybe if risk of default were factored into loans that would change the trajectory of the tuition cost curve. But taking away agency the consumers in the model doesn't lead us to the insights we need to actually fix the underlying problem. I have a vested interest in this problem. But saying popular things for upvotes isn't going to change the underlying problem of how to allocate scarce resources. I disagree with you on "teenagers don't understand fiscal policy, and shouldn't be expected too.". This isn't fiscal policy. This is a pretty straightforward introduction to being an adult and budgeting. I went through it, too. A mortagage was harder and more daunting. Rental terms on apartments were more predatory. The fact that people even discuss bankruptcy to discharge student loan debt is a horrible sign, given how much of ones' life potential one i throwing away to recover prime loan eligibility. Also, "And then to tell them that they can't discharge it in bankrupcy because they knew what they were getting into is very much bullshit." - what part of where I wrote, "The fact student loads have special bankruptcy treatment is bad" is unclear?
- joshgrib 5y ago
  I'm not trying to make it black-and-white, there's certainly some degree of personal choice weighing in here - but it's not the core issue and it's probably a distraction. When we realized cigarettes were bad it was partially about informing people, but the main thing was to change marketing laws so you could make sure that wasn't undoing all the good info. If I give you two loan options with bad terms and you have to choose one, then that is a fiscal policy thing and your choice is ultimately pretty inconsequential. You may be slightly better off than the person who made the other choice but the bad policy is affecting both of you. Ultimately it's both a policy and a personal choice thing, but as with most society-wide issues the personal choice aspect falls away pretty quickly and we need to get realistic and figure out what a solution is instead of just blaming individuals.

namelessoracle 5y ago

They care so much about dorms and the food programs that schools have to mandate that the student live on campus and pay for on campus food their first year!

joshgrib 5y ago

This is an institutional problem and they should be blamed though. It doesn't really matter what students "prefer", if a bank doesn't do their due diligence and a student isn't able to repay their loan, then the bank should be losing that money as a bad investment. They won't give a $1M mortgage loan to buy a 50k lot, and likewise won't give it to someone that doesn't seem like they could pay it back. I do think there's value in people getting degrees that don't pay well - but then you shouldn't be getting a loan to do so. > students would be paying whatever Harvard or Stanford asked I don't think this is true - people simply can't go to a school they can't afford and people don't have infinite money. We gave the banks the freedom to tell children that they will indeed be able to pay back loans that they often cannot, so it's the bad actions of one organization(banks) enabling another(school). Ivy league schools may be like Veblen goods where increased prices also increase demand - but that can't be true for all schools and we've seen tuition increases across the board. The solution that seems best to me is to first fix the bankruptcy issue - if someone can't pay back a loan that is a risk the bank is accepting by giving the loan, just like any other loan. I think that alone would probably have enough of a chilling effect that way less people would be able to attend colleges at first and they would be forced to lower tuition rates. That would correct the market going forward, but it doesn't really help people that already fell victim to this system. That seems like it could be remedied by either making interest rates 0 or capping total interest to some amount relative to the principal (e.g. the total amount can never grow to more than 110% of the principal). Similar to healthcare, I don't think education shouldn't be profitable in the short term - it's a long term investment a society has to make in itself so you can't really track it as an individual investment in any one person. If someone else becomes a doctor I'm still benefitting from that so it makes sense that I'd pay into some of the cost to educate that person. Unfortunately in the US at least we seem to be totally unable to do anything without a short-term and concrete path to profit regardless of the amount of good it would do.

sokoloff 5y ago
> won't give [a student loan] to someone that doesn't seem like they could pay it back I wonder what groups of people might be harmed by such a policy, but I would bet it won’t be middle and upper class families who are willing to co-sign for loans.