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If only governments could make…laws to restrict the price of University. Or…could limit the maximum loan size thus encouraging Universities to not charge more t

If only governments could make…laws to restrict the price of University. Or…could limit the maximum loan size thus encouraging Universities to not charge more than that.

dantheman 3y ago
They could easily limit the loan size...
treeman79 3y ago
Proper solution is government to stop guaranteeing the loans and to allow people to put them in bankruptcy. Prices will collapse to what people are willing to pay in real time, or save up for.
- rayiner 3y ago
  The government cannot and will not do that, because such a policy would have racially disparate impacts.
  - DesiLurker 3y ago
    Govt can totally do that. but you are right in that only congress can do that via legislation. every policy that effects poor has racially disparate impact so that argument can rally be applied anywhere.
  - philipkglass 3y ago
    There are many things that the government doesn't guarantee loans for. Why is not-guaranteeing for higher education more of a racially disparate action than not-guaranteeing for e.g. vehicle loans?
  - dragonwriter 3y ago
    The government actually can do, and often does, policy with racially disparate impacts. Disparate impact is not a Constitutional limit on government discrimination, its a judicially-created rule in the application of certain statutory anti-discrimination laws. (And the disparate impact rule is politically and legally unpopular with the same faction that currently dominates the Supreme Court and whose members on the Court have shown an unusual willingness to discard precedent, so its quite likely it won’t be a limit on discriminatiom under those statutes much longer, either.)
    - rayiner 3y ago
      I didn’t say it’s a constitutional issue. It’s a political non-starter.
      - dragonwriter 3y ago
        > I didn’t say it’s a constitutional issue. It’s a political non-starter And I said your argument for that is nonsense, since the government does lots that has racially disparate impacts.
    - gottorf 3y ago
      The disparate impact rule is challenging to begin with because literally every policy has a disparate impact, because there is and always will be an uneven distribution of people of whatever cultural or ethnic subgroup they can be divided into in whatever social roles that exist. It should rightly be rid of. There are many other better ways to address discrimination.
      - dragonwriter 3y ago
        > The disparate impact rule is challenging to begin with because literally every policy has a disparate impact “Disparate impact” prohibited by the rule isn't just unequal impact, its unequal impact without sufficient justification (what qualifies for that differs between the employment and housing contexts where the rule is applied.)
- DesiLurker 3y ago
  Right, let the market decide interest rate charged for them based on risk of default. this will also quickly filter out pointless degrees without much carrier prospect because interest rate would be high. right now basically govt has created a fully protected predatory loan that can follow you to your grave. IDK why is this so hard to understand.
- jedberg 3y ago
  That's how things used to be. It means that only rich people can go to college, because they are the only ones who can afford it. Prices can only come down so far. The college still has to pay professors and maintain facilities. There needs to be a middle ground where we support poor but promising students in a way that doesn't inflate prices. I don't know what that solution is.
  - gameman144 3y ago
    > It means that only rich people can go to college, because they are the only ones who can afford it. I hear this a lot, but I don't understand the argument to be honest. If someone is poor today, then they can take an exorbitant amount of debt that they can't discharge in order to attend university. In a world where loans are dischargeable in bankruptcy and the federal government limits subsidizes loans, we'd expect prices to fall somewhat and rates to rise somewhat. It seems like we would still expect the poor student to be able to take on a large amount of debt to attend university, though, no?
    - jedberg 3y ago
      The interest rates would be so high that it wouldn't make sense for a promising student to take that loan. If you're a loan company and someone comes to you asking for $100,000, and they have no credit and no family with assets, even with a 4.0 GPA and perfect SATs, they are still a huge risk.
      - gameman144 3y ago
        This seems fine to me. If someone has no assets and no reasonable prospects to pay back $100,000 of debt, then saddling them with $100,000 of debt is a bad idea. Additionally, discharging student loans in bankruptcy should absolutely not be a way to get off scot-free, it's meant as an escape valve. If your options are the terrible downsides of declaring bankruptcy and the terrible downsides of a life in extreme debt, neither option is great, but having the choice is useful.
        3y ago
- dragonwriter 3y ago
  > Proper solution is government to stop guaranteeing the loans and to allow people to put them in bankruptcy. Proper thing is for the government to stop issuing the loans, and instead do need-based grants plus establish cost and quality controls for institutions that wish to be grant eligible, while prioritizing federal institutional funding other than direct student aid for institutions that, whether througj grant eligibility or their own pricing and in-house aid programs, or both, meet set financial accessibility standards.
somewhat_drunk 3y ago
Price controls are one of the few things that economists on both sides of the political aisle agree do not work, and/or have unintended consequences which are worse than the problem they attempt to resolve. https://www.econlib.org/the-consensus-on-price-controls/ https://www.econlib.org/the-consensus-on-price-controls/
- jayd16 3y ago
  I don't think that's a fair take on the suggestion. What if it was something like Medicare where services were tax funded and costs are negotiated but fixed?
- skissane 3y ago
  > Price controls are one of the few things that economists on both sides of the political aisle agree do not work, and/or have unintended consequences which are worse than the problem they attempt to resolve. Australia effectively has price controls on both health and tertiary education. It isn’t perfect but it is hardly terrible. I know the US pharmaceutical industry hates it - the Australian government uses its monopsony power to limit drug prices and hence drug company profits - and is forever lobbying the US government to use trade negotiations to pressure to undermine it (but hasn’t yet succeeded) Universities can charge as much as they want - but if they want students to have full eligibility for government student loans and government tuition subsidies, there is a maximum they can charge. Students want that full eligibility, so for the majority of places they stick to the maximum
- pixelatedindex 3y ago
  Sometimes it feels like economists come up with these ideas in an ivory tower, detached from reality. Any kind of price control seems to make economists very upset, rent control being another example. Reality is that there are so many other factors that it’s probably better to have some sort of price control as a form of regulation, instead of only focusing on supply/demand levers. I’m not an economist so I’m happy to be proven wrong, but the stance of “x,y and z policies need to be implemented so supply/demand is changed to mitigate these issues”, but the reality is that politicians and the business landscape doesn’t incentivize such changes. For example, colleges aren’t incentivized to keep the cost low, housing construction isn’t incentivized because NIMBYs control what can be built where, etc. So when someone says “well the economists don’t agree on that”, it really rubs me the wrong way.
AzzieElbab 3y ago
Easy fix - include education, health care, and housing costs into inflation indices.

If only governments could make…laws to restrict the price of University. Or…could limit the maximum loan size thus encouraging Universities to not charge more than that.

dantheman 3y ago

They could easily limit the loan size...

treeman79 3y ago

Proper solution is government to stop guaranteeing the loans and to allow people to put them in bankruptcy. Prices will collapse to what people are willing to pay in real time, or save up for.

rayiner 3y ago
The government cannot and will not do that, because such a policy would have racially disparate impacts.
- DesiLurker 3y ago
  Govt can totally do that. but you are right in that only congress can do that via legislation. every policy that effects poor has racially disparate impact so that argument can rally be applied anywhere.
- philipkglass 3y ago
  There are many things that the government doesn't guarantee loans for. Why is not-guaranteeing for higher education more of a racially disparate action than not-guaranteeing for e.g. vehicle loans?
- dragonwriter 3y ago
  The government actually can do, and often does, policy with racially disparate impacts. Disparate impact is not a Constitutional limit on government discrimination, its a judicially-created rule in the application of certain statutory anti-discrimination laws. (And the disparate impact rule is politically and legally unpopular with the same faction that currently dominates the Supreme Court and whose members on the Court have shown an unusual willingness to discard precedent, so its quite likely it won’t be a limit on discriminatiom under those statutes much longer, either.)
  - rayiner 3y ago
    I didn’t say it’s a constitutional issue. It’s a political non-starter.
    - dragonwriter 3y ago
      > I didn’t say it’s a constitutional issue. It’s a political non-starter And I said your argument for that is nonsense, since the government does lots that has racially disparate impacts.
  - gottorf 3y ago
    The disparate impact rule is challenging to begin with because literally every policy has a disparate impact, because there is and always will be an uneven distribution of people of whatever cultural or ethnic subgroup they can be divided into in whatever social roles that exist. It should rightly be rid of. There are many other better ways to address discrimination.
    - dragonwriter 3y ago
      > The disparate impact rule is challenging to begin with because literally every policy has a disparate impact “Disparate impact” prohibited by the rule isn't just unequal impact, its unequal impact without sufficient justification (what qualifies for that differs between the employment and housing contexts where the rule is applied.)
DesiLurker 3y ago
Right, let the market decide interest rate charged for them based on risk of default. this will also quickly filter out pointless degrees without much carrier prospect because interest rate would be high. right now basically govt has created a fully protected predatory loan that can follow you to your grave. IDK why is this so hard to understand.
jedberg 3y ago
That's how things used to be. It means that only rich people can go to college, because they are the only ones who can afford it. Prices can only come down so far. The college still has to pay professors and maintain facilities. There needs to be a middle ground where we support poor but promising students in a way that doesn't inflate prices. I don't know what that solution is.
- gameman144 3y ago
  > It means that only rich people can go to college, because they are the only ones who can afford it. I hear this a lot, but I don't understand the argument to be honest. If someone is poor today, then they can take an exorbitant amount of debt that they can't discharge in order to attend university. In a world where loans are dischargeable in bankruptcy and the federal government limits subsidizes loans, we'd expect prices to fall somewhat and rates to rise somewhat. It seems like we would still expect the poor student to be able to take on a large amount of debt to attend university, though, no?
  - jedberg 3y ago
    The interest rates would be so high that it wouldn't make sense for a promising student to take that loan. If you're a loan company and someone comes to you asking for $100,000, and they have no credit and no family with assets, even with a 4.0 GPA and perfect SATs, they are still a huge risk.
    - gameman144 3y ago
      This seems fine to me. If someone has no assets and no reasonable prospects to pay back $100,000 of debt, then saddling them with $100,000 of debt is a bad idea. Additionally, discharging student loans in bankruptcy should absolutely not be a way to get off scot-free, it's meant as an escape valve. If your options are the terrible downsides of declaring bankruptcy and the terrible downsides of a life in extreme debt, neither option is great, but having the choice is useful.
      - 3y ago
dragonwriter 3y ago
> Proper solution is government to stop guaranteeing the loans and to allow people to put them in bankruptcy. Proper thing is for the government to stop issuing the loans, and instead do need-based grants plus establish cost and quality controls for institutions that wish to be grant eligible, while prioritizing federal institutional funding other than direct student aid for institutions that, whether througj grant eligibility or their own pricing and in-house aid programs, or both, meet set financial accessibility standards.

somewhat_drunk 3y ago

Price controls are one of the few things that economists on both sides of the political aisle agree do not work, and/or have unintended consequences which are worse than the problem they attempt to resolve. https://www.econlib.org/the-consensus-on-price-controls/ https://www.econlib.org/the-consensus-on-price-controls/

jayd16 3y ago
I don't think that's a fair take on the suggestion. What if it was something like Medicare where services were tax funded and costs are negotiated but fixed?
skissane 3y ago
> Price controls are one of the few things that economists on both sides of the political aisle agree do not work, and/or have unintended consequences which are worse than the problem they attempt to resolve. Australia effectively has price controls on both health and tertiary education. It isn’t perfect but it is hardly terrible. I know the US pharmaceutical industry hates it - the Australian government uses its monopsony power to limit drug prices and hence drug company profits - and is forever lobbying the US government to use trade negotiations to pressure to undermine it (but hasn’t yet succeeded) Universities can charge as much as they want - but if they want students to have full eligibility for government student loans and government tuition subsidies, there is a maximum they can charge. Students want that full eligibility, so for the majority of places they stick to the maximum
pixelatedindex 3y ago
Sometimes it feels like economists come up with these ideas in an ivory tower, detached from reality. Any kind of price control seems to make economists very upset, rent control being another example. Reality is that there are so many other factors that it’s probably better to have some sort of price control as a form of regulation, instead of only focusing on supply/demand levers. I’m not an economist so I’m happy to be proven wrong, but the stance of “x,y and z policies need to be implemented so supply/demand is changed to mitigate these issues”, but the reality is that politicians and the business landscape doesn’t incentivize such changes. For example, colleges aren’t incentivized to keep the cost low, housing construction isn’t incentivized because NIMBYs control what can be built where, etc. So when someone says “well the economists don’t agree on that”, it really rubs me the wrong way.

AzzieElbab 3y ago

Easy fix - include education, health care, and housing costs into inflation indices.