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Presumably if the average earnings of "people who obtained a philosophy degree" is higher than those who trained as a chef, then lenders would be willing to pay

Presumably if the average earnings of "people who obtained a philosophy degree" is higher than those who trained as a chef, then lenders would be willing to pay more for that education. That seems like a trivial thing for lenders to track and learn over time.

thaumasiotes 5y ago
We're not talking about the lenders investigating the value of making a loan. We're talking about the student investigating the value of obtaining a degree. >>> Look, I’m not against choosing whatever degree you want. But fiduciary responsibility is doing even a tiny bit of research to see the LTV of that degree.
- chii 5y ago
  > talking about the student investigating the value of obtaining a degree Under a system where there was no gov't guarantee, the students won't be the bottlenecks - the lending institutions would be. And any loans that a student _could_ obtain under that scheme would necessarily be profitable to the lender, and thus the lender gets to do the research. The students could too - but whatever the students find, if that doesn't match up with the lender's own research/analysis, the loan won't happen.
  - thaumasiotes 5y ago
    So what? We're talking about bad behavior by the students. The question is how the students would avoid this bad behavior. Where do lenders come into it?
    - chii 5y ago
      > The question is how the students would avoid this bad behavior. they would avoid bad behaviour by the lenders not enabling it. The lender's incentive must align with the student's incentive - getting a paying job that a degree would enable.
      - thaumasiotes 5y ago
        But lenders aren't interested in this question at all. We've already covered this: - A philosophy major -- the degree -- is a poor investment on the part of the student. - A philosophy major -- the student -- is a good investment on the part of the lender. The incentives of the lender and the student are not aligned. It doesn't matter what the philosophy student wants to spend his borrowed money on -- he's creditworthy! If you loaned him money for gambling he'd still pay you back. So how does the creditworthy prospective student determine which degrees are valuable and which aren't?
        chii 5y ago
        > So how does the creditworthy prospective student determine which degrees are valuable and which aren't? valueable to who? If the student is credit worthy, then they can pay back the loan, which means they aren't making a bad decision to study something they want to. The current status quo with the gov't backed loans is that uncredit-worthy students still gets loans, which results in the situation you tried to describe - someone borrowing to get an education with which they cannot repay the loans. If that student wasn't backed by the gov't guarantee, noone would have lent, or would've only lent some small amount that is likely to be repaid.
        thaumasiotes 5y ago
        I've now spent many, many comments asking the same question: (1) eric4smith suggested students should put in some amount of effort to determine the value of obtaining a degree. How are they supposed to do that? So far I've gotten four responses completely ignoring the question, even though I restate it every time. Why are you commenting in my thread, if you have so little interest in listening to anything I'm saying, or even in discussing the only topic I've ever brought up?
        chii 5y ago
        > students should put in some amount of effort to determine the value of obtaining a degree. How are they supposed to do that? Fine, i will answer that, even though it is irrelevant. Because no matter what the value that is determined by the student, the linchpin is the lenders' willingness to bet on the repayment. A student can value the degree financially, by looking at the post-graduation salary, and potential career progression, discounted by some probability of not making it. Salary information is readily available for common professions. A student can also value in part their interest and passion - a degree in history might not bring money in a career, but gives the student personal satisfaction. Therefore, the student would value the degree higher than the same degree being valued by a financial lender.

thaumasiotes 5y ago

We're not talking about the lenders investigating the value of making a loan. We're talking about the student investigating the value of obtaining a degree. >>> Look, I’m not against choosing whatever degree you want. But fiduciary responsibility is doing even a tiny bit of research to see the LTV of that degree.

chii 5y ago
> talking about the student investigating the value of obtaining a degree Under a system where there was no gov't guarantee, the students won't be the bottlenecks - the lending institutions would be. And any loans that a student _could_ obtain under that scheme would necessarily be profitable to the lender, and thus the lender gets to do the research. The students could too - but whatever the students find, if that doesn't match up with the lender's own research/analysis, the loan won't happen.
- thaumasiotes 5y ago
  So what? We're talking about bad behavior by the students. The question is how the students would avoid this bad behavior. Where do lenders come into it?
  - chii 5y ago
    > The question is how the students would avoid this bad behavior. they would avoid bad behaviour by the lenders not enabling it. The lender's incentive must align with the student's incentive - getting a paying job that a degree would enable.
    - thaumasiotes 5y ago
      But lenders aren't interested in this question at all. We've already covered this: - A philosophy major -- the degree -- is a poor investment on the part of the student. - A philosophy major -- the student -- is a good investment on the part of the lender. The incentives of the lender and the student are not aligned. It doesn't matter what the philosophy student wants to spend his borrowed money on -- he's creditworthy! If you loaned him money for gambling he'd still pay you back. So how does the creditworthy prospective student determine which degrees are valuable and which aren't?
      - chii 5y ago
        > So how does the creditworthy prospective student determine which degrees are valuable and which aren't? valueable to who? If the student is credit worthy, then they can pay back the loan, which means they aren't making a bad decision to study something they want to. The current status quo with the gov't backed loans is that uncredit-worthy students still gets loans, which results in the situation you tried to describe - someone borrowing to get an education with which they cannot repay the loans. If that student wasn't backed by the gov't guarantee, noone would have lent, or would've only lent some small amount that is likely to be repaid.
        thaumasiotes 5y ago
        I've now spent many, many comments asking the same question: (1) eric4smith suggested students should put in some amount of effort to determine the value of obtaining a degree. How are they supposed to do that? So far I've gotten four responses completely ignoring the question, even though I restate it every time. Why are you commenting in my thread, if you have so little interest in listening to anything I'm saying, or even in discussing the only topic I've ever brought up?
        chii 5y ago
        > students should put in some amount of effort to determine the value of obtaining a degree. How are they supposed to do that? Fine, i will answer that, even though it is irrelevant. Because no matter what the value that is determined by the student, the linchpin is the lenders' willingness to bet on the repayment. A student can value the degree financially, by looking at the post-graduation salary, and potential career progression, discounted by some probability of not making it. Salary information is readily available for common professions. A student can also value in part their interest and passion - a degree in history might not bring money in a career, but gives the student personal satisfaction. Therefore, the student would value the degree higher than the same degree being valued by a financial lender.