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Higher Ed is being propped up by a second tier of consumer credit that basically lends extraordinary amounts of money for almost no interest, never allows defau

Higher Ed is being propped up by a second tier of consumer credit that basically lends extraordinary amounts of money for almost no interest, never allows defaulting and can be paid back over essentially your entire lifetime. Were it not for education lending, we would not see these prices.

secabeen 3y ago
I have not seen data that supports this claim. At the least, there is a strong correlation between cuts in state support for public higher ed, and increases in tuition. In the 60's many states paid 100% of the cost, and tuition was free. Room and Board in college towns is also high, as part of the overall housing affordability issues. If unlimited education lending were a factor, we would see these increases in expenditures, but we don't. Costs are higher, but tuition increases are driven by changes in the revenue mix. https://fivethirtyeight.com/features/fancy-dorms-arent-the-main-reason-tuition-is-skyrocketing/ https://fivethirtyeight.com/features/fancy-dorms-arent-the-m...
anonymouskimmer 3y ago
Yes, we would, we would just have fewer colleges. And some of the ones we do have might have contractual arrangements with corporations that funnel students into jobs at those corporations (possibly by contractually binding the students into a job at those corporations for a defined period of time). There are both pros and cons to that sort of apprenticeship arrangement. It would be bad, though, if the apprentice also had to monetarily pay part of the cost of attending college.
FireBeyond 3y ago
> for almost no interest Federal student loans start at 5.5 and go to over 8% interest.[1] Private student loans start at 5% and go to 17%.[2] I'm not sure where you get "almost no interest" from. [1] https://studentaid.gov/understand-aid/types/loans/interest-rates https://studentaid.gov/understand-aid/types/loans/interest-r... [2] https://www.nerdwallet.com/m/loans/student-loans/private-student-loans https://www.nerdwallet.com/m/loans/student-loans/private-stu...
- QuarterReptile 3y ago
  Your numbers support parent's argument. It's an unsecured loan to 18 year olds, given in identical fashion at institutions where non-graduation rates are substantial. Those rates should clearly be higher than the rates for Americam mortgages, which, after all, have down payments and are secured by the most privileged asset in the history of the world.
  - FireBeyond 3y ago
    If they weren't protected from discharge, they would be. That's why the rates are lower, because there's no loan maturity, it just keeps generating interest until it is paid off. If the argument is "student loan interest rates should be higher" then 1) they should be dischargable, and 2) I'm not sure I'd agree. Though I'd hope that that (and falling applications to schools) would have a downward pressure on tuition rates, I'm skeptical that would happen. So now student loans just become more expensive, and less attainable.

secabeen 3y ago

I have not seen data that supports this claim. At the least, there is a strong correlation between cuts in state support for public higher ed, and increases in tuition. In the 60's many states paid 100% of the cost, and tuition was free. Room and Board in college towns is also high, as part of the overall housing affordability issues. If unlimited education lending were a factor, we would see these increases in expenditures, but we don't. Costs are higher, but tuition increases are driven by changes in the revenue mix. https://fivethirtyeight.com/features/fancy-dorms-arent-the-main-reason-tuition-is-skyrocketing/ https://fivethirtyeight.com/features/fancy-dorms-arent-the-m...

anonymouskimmer 3y ago

Yes, we would, we would just have fewer colleges. And some of the ones we do have might have contractual arrangements with corporations that funnel students into jobs at those corporations (possibly by contractually binding the students into a job at those corporations for a defined period of time). There are both pros and cons to that sort of apprenticeship arrangement. It would be bad, though, if the apprentice also had to monetarily pay part of the cost of attending college.

FireBeyond 3y ago

> for almost no interest Federal student loans start at 5.5 and go to over 8% interest.[1] Private student loans start at 5% and go to 17%.[2] I'm not sure where you get "almost no interest" from. [1] https://studentaid.gov/understand-aid/types/loans/interest-rates https://studentaid.gov/understand-aid/types/loans/interest-r... [2] https://www.nerdwallet.com/m/loans/student-loans/private-student-loans https://www.nerdwallet.com/m/loans/student-loans/private-stu...

QuarterReptile 3y ago
Your numbers support parent's argument. It's an unsecured loan to 18 year olds, given in identical fashion at institutions where non-graduation rates are substantial. Those rates should clearly be higher than the rates for Americam mortgages, which, after all, have down payments and are secured by the most privileged asset in the history of the world.
- FireBeyond 3y ago
  If they weren't protected from discharge, they would be. That's why the rates are lower, because there's no loan maturity, it just keeps generating interest until it is paid off. If the argument is "student loan interest rates should be higher" then 1) they should be dischargable, and 2) I'm not sure I'd agree. Though I'd hope that that (and falling applications to schools) would have a downward pressure on tuition rates, I'm skeptical that would happen. So now student loans just become more expensive, and less attainable.