7 ms·

What went wrong with federal student loans?

30 points by Bostonian 2y ago

pstrateman 2y ago
Loaning 18 year olds vast sums of money to invest is a bad idea? Who would have guessed. Seriously though, the young borrowers aren't price sensitive so the cost of the things they're buying spikes. The dynamic here is quite simple and obvious (though maybe only in hindsight).
- Loughla 2y ago
  It's not that younger borrowers aren't price sensitive at all. Cost tends to be the first deciding factor, unless the particular student is considering prestige of institution. This is why fewer students are attending small, private, expensive colleges. The dynamic is not that simple. There are a multitude of reasons behind the increase in the cost of postsecondary education. Waving it away as young people just being young people is sort of silly.
- whimsicalism 2y ago
  but why aren’t their parents price sensitive
  - pstrateman 2y ago
    Their parents aren't making the decision. They can borrow the money all by themselves.
    - whimsicalism 2y ago
      i am curious how much borrowing against parents wishes actually occurs
    - ourmandave 2y ago
      Undergraduate dependents of parents can only borrow $31,000 across their entire tenure. First year cap is $5,500. Independent student loan limit is $57,500 total. First year cap $9,500. https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized https://studentaid.gov/understand-aid/types/loans/subsidized...
      - pstrateman 2y ago
        That's only loans directly from the feds. Most people borrow money from private lenders as well.
  - bee_rider 2y ago
    They are a little price sensitive but probably not fully rational, everybody has rose-tinted glasses about their kids’ potential, right?
- joe_the_user 2y ago
  I don't think it's hindsight where the problems could be seen. It's econ 101 that markets can produce rational allocation of resources but only if they are involve people with the information and time to determine the outcome and those people are working with their own money. A system where the state "gives"/"loans" your customers money and then forces them to spend that money on you produces a industry that has neither the discipline of skin-in-the-game markets nor the discipline of state regulation.
joe_the_user 2y ago
No, student loans don't "have problems". They are problems. It's not they were ill-conceived but that they were conceived at all. College education (as well as health care) is an example of an activity that doesn't benefit from being guided primarily by the market.
- whimsicalism 2y ago
  the problem with healthcare in America is not “the market”
  - lesuorac 2y ago
    Do go on.
    - novariation 2y ago
      My guess is they're talking about regional monopolies ? There's generally a misunderstanding from left wing voters — when people say "markets" they understand "crony capitalism and monopolies with regulatory capture" when most other people just mean "fair competition between suppliers". We'll all agree the second option isn't easy to get, but the disagreement often comes from the fact one team thinks it's impossible or even undesirable, and something more radical should be preferred.
    - brightball 2y ago
      Your employer offers health insurance. You go to doctors who bill the insurance company for your services. You paying directly for your services is almost entirely removed from the equation. You even deciding on which insurance company you would like to use is removed from the equation as well because it’s more expensive for you to sign up directly than it is for your company to sign up as well. If you wanted to be a part of a private insurance group with diet and exercise requirements for membership, including annual physicals that could potentially get you a lower rate…but you don’t really get that option. The market doesn’t even get to attempt to provide that option because of how separated the producer and consumer of the service are from the people paying for it. The market is completely removed from the equation. The only person who proposed a plan that would have resolved this problem was Dr Ben Carson fwiw. It was by far the best solution to fixing healthcare in the US that I’ve heard in the last 20 years but instead we got ACA.
outside1234 2y ago
They are bad because they exist. Tuition should be free to those that achieve admission to a public school
- deleted 2y ago
  [deleted]
- bryanlarsen 2y ago
  Tuition is free for a lot of low income students. For example Harvard is free if your parents make less than $150,000. But even with free tuition Harvard is super expensive because it's in a high cost of living area.
  - readyman 2y ago
    The likelihood of being accepted into Harvard when being raised in a family with that total income is extremely low. The environment for studying, focus, discipline, mental health, etc. simply requires more material security.
    - whimsicalism 2y ago
      150k is plenty for getting into Harvard
      - Salgat 2y ago
        I think they're referring to <$150k, specifically low income 20-40k lower class families.
    - giantg2 2y ago
      $150k is about double the US median houshold income. By most definitions, exceeding that number makes you upper class. Of course there are areas that need local adjustments, but for most of the country, $100k-150k is a comfortable upper-middle class income.
  - jasonlotito 2y ago
whimsicalism 2y ago
Loans should not be subsidized and they should only be loanable to the parents. I feel we made a mistake in giving 18 year olds full adulthood. Lower the drinking age, raise the age at which they can take out loans.
ptero 2y ago
The biggest problem is the fundamental inability of two higher education camps: "education should be free" and "education should be market priced" to agree on anything. It would be better to have a mix: free education slots for students who pass (tough-ish) entrance exams and slots that university can add at market price for students who do not meet the bar. If there are more market price applications than slots schools can select any way they want except on price (i.e., all market rate slots should be priced the same). My 2c.
- hikingsimulator 2y ago
  The main issue with this approach is that it doesn't help people who struggle financially or come from disfavorable backgrounds -- whom federal student loans aimed to help. Some sets of circumstances don't favor score maximization on such tests, whereas being in a high income family favors prior access to education that help get those scores for instance. Ergo you'd not solve a better access to education that way. Similarly, means testing for those slots also has negatives incentives. It's a hard issue to solve.
  - gedy 2y ago
    Offering loans to those who struggle financially is a problem. Offer them scholarships if they have potential, not loans for everyone.
  - whimsicalism 2y ago
    Test scores are one of the primary vehicles for social mobility in modern America. There are other reasons for correlations between affluence and test scores beyond just environmental unfairness.
  - ethbr1 2y ago
    Federal student loans themselves have always expressed the tension in parent poster's dichotomy. On the one hand, we could fund college for only those who need the help. On the other hand, that would be a political shitstorm because people with means wouldn't receive as much (or potentially even any) benefit. So the system now has lots of loopholes and sliding scales, so that everyone gets some benefit and supports it. Replace states with families, and it's the NASA approach to political support. Personally, I think the removal of objective testing is dumb. It may be income/background correlated, but it is objective. You can address the disparities by providing benefit to those who come from disadvantaged backgrounds. More critically, you want a system that doesn't allocate money to 'dumb/lazy but also from an advantaged background'.
autoexecbat 2y ago
There should be a limit on the loan size you can take out. It's wild that you can take out 200k with no collateral
- djbusby 2y ago
  https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2023-2024/vol8/ch4-annual-and-aggregate-loan-limits https://fsapartners.ed.gov/knowledge-center/fsa-handbook/202...
  - ethbr1 2y ago
    >> There are higher Direct Unsubsidized annual loan limits for borrowers enrolled in certain health professions programs, and special loan limits for certain students who are not enrolled in a program that leads to a degree or certificate awarded by the school they are attending. So, more of that, except linked to objective workforce measurements instead of cherry picking professions.
- whimsicalism 2y ago
  this is what happens when the solution to unaffordability is to subsidize demand and credit. see also: Biden’s suggested plan to give thousands to every new home buyer to help address affordability
  - PenguinCoder 2y ago
    You can disparage the idea without the person. > see also: *the* suggested plan to give thousands to every new home buyer to help address affordability Would still get the idea and issue across without the need to mention the 'who'. It does not change the meaning or the concern by adding in the 'who'. If that part was changed to any other name, would it still be a problem?
    - whimsicalism 2y ago
      I mentioned it as Biden's plan because that is the referent of who proposed the plan, not out of some opposition to Biden. [0] It is truly easiest to reference policies by who proposed them. > If that part was changed to any other name, would it still be a problem? I would ask the same of you. Frankly, I don't think I would have gotten a reply like this and downvoted if it hadn't been mentioning the president on an election year. [0]: https://x.com/POTUS/status/1789052799130509325?lang=en https://x.com/POTUS/status/1789052799130509325?lang=en
jasonlotito 2y ago
Everyone in this thread forgot that free education was the norm and worked fine until someone didn't like the "wrong type of people" going to college. The experiment failed. Revet to something that worked, and go from there. Any suggestion otherwise is foolish and ignorant.
- whimsicalism 2y ago
  For the vast majority of history including the 20th century, almost nobody went to college. Takes about how everyone used to have free XYZ are usually ahistorical at best.
  - bee_rider 2y ago
    We shouldn’t try to replicate the experience of people in the vast majority of history. We should try to replicate the experience of the in-group of the US from like 1950-2000. The quality of life for the in-group during the era was anomalously high, and also the US of that were was an incredibly effective country.
    - whimsicalism 2y ago
      Yes, we should try to bring up everyone to the highest standard of living possible. I just have no patience for suggestions that for most people that standard of living was higher in the past and we simply need to return to it. It's false, ahistorical nostalgia for the past. A well known psychological effect that distorts peoples understanding of how much the past actually sucked in reality. People watching shows like Bridgerton always imagine they would be among the nobility.
      - bee_rider 2y ago
        I definitely agree there, the past is quite bad for most people in most places in most times, compared to now.
- vladgur 2y ago
  Can you point me to more info on “free college” of the past? I know that for this immigrant few years off the boat, federal grants and deferred interest loans was what gave me access to education that would otherwise put a huge burden on my family at the time. Granted this was for an engineering degree at a public university and amounted to no more than 10-20k as opposed to 200k for an art degree at a private art college that we often read about
drewg123 2y ago
We stopped sufficient investment in public, post secondary education. I attended SUNY Buffalo in the late 80s / early 90s. I found some old bills when cleaning out my attic several years ago. Tuition was $1,350/yr. At that time, the minimum wage was $3.35/hr. So one could theoretically work a minimum wage job over the summer for 10 weeks and pay for tuition (403 hours). Today the tuition is $10,782 and the min. wage is $14.20. So a student today would need to work nearly 2x as long (760 hours) to pay for tuition. I'm not trying to single out the SUNY system. I think the problem is nationwide. I think a lot of this is driven by the fact that people are more mobile. When its your kids went to, and grandkids going to the school down the street, then you are more likely to support higher taxes to pay for it. But when you live in a different state from your grandkids, and your tax dollars will not benefit your family, you're much less likely to want to subsidize the education of other peoples grandkids.
- vladgur 2y ago
  I place less blame on taxpayers and more blame on exploding administration costs. On other hand, my alma matter - University of California system - cost $4500 per year in in-state tuition alone when I graduated in 2000 when minimum wage here was around $5 and it’s under $15000 today when minimum wage is $15.50 So it appears that people in California do support public education fairly consistently. This is one of the positive outcomes of crazy taxation regime we have here. I am of course ignoring the 800lb gorilla of college affordability - housing costs. Those are craZy here in Nimbyland
  - giantg2 2y ago
    I think CA public funding "dropped" from 30ish% in the 70s to 15ish% more recently. However, enrollment and costs have gone way up. The only way to keep it up is to increase revenues, decrease cost, or cap enrollment. None of those have much support. So the increased cost goes to the student.
  - riku_iki 2y ago
    Base on this figure, the main business lines of UC today are hospitals and sales: https://lao.ca.gov/reports/2023/4684/4684-fig1.png https://lao.ca.gov/reports/2023/4684/4684-fig1.png
BurningFrog 2y ago
The big problem in higher American education is the cost explosion. If costs were half the current level, which they were fairly recently, this would be a very manageable problem.
bee_rider 2y ago
There’s no real downward pressure on the amount of money loaned out to students, other than the ability of teenagers to do due diligence and plan ahead. Exempting student loans from normal bankruptcy was a really stupid move. Of course if you treat this one type of loan as some special thing where the lender doesn’t assume any risk, the lender won’t take any care about how they make the loans. And the price of a degree would never have been able to grow out of control like this if students were given loans appropriate to their ability to pay them. I mean, I think education should be heavily subsidized as well, but let’s start by not perturbing the market in the most harmful way possible.
- whimsicalism 2y ago
  The government is just producing moral hazard left and right by subsidizing credit demand. It's even worse in mortgages.
  - bee_rider 2y ago
    Yes I consider myself somewhere on the democratic socialist/social democrat border but I wish policy makers would at least start by looking at what pressures their policies will apply in our mostly capitalist system. The market works fine for lots of things as long as you don’t break it.
supernova87a 2y ago
Oh, I thought the article was going to talk about the fiasco with the FAFSA application redesign. In which case my observation was going to be, people in charge of things at the top lately seem to have almost zero idea of what actually needs to happen at the working level of their organizations. It seems to be a general theme these days in government, business, a lot of things.
- giantg2 2y ago
  A large part of that seems to be because we filled middle management with "yes" men. The real concerns get candy coated before it ever reached the authorities. It also seems the people at the top actually believe their PR, like that a college education is the primary key to a good life.
supernova87a 2y ago
Education is clearly a path to increased prosperity for many people, and they will pay a lot for education to try to distinguish themselves. And when it's nearly an expectation, it's not a completely voluntary purchase (like healthcare), so demand is quite inelastic and people will pay what is charged. (And also it is a spending choice at quite an early age when people are not great at thinking about whether taking on debt is a smart choice, etc) My theory is that as our society matured, people/companies/institutions gradually figured out that education was something that they could extract value ($) from and take a cut out of. (Whether that is just blatant profit, or using the money to invest in education-related things, or even less insidious semi-reasonable employment of lots of people in that industry to benefit off of it. A gradual creeping up of somewhat well-intentioned desire to turn it from classes in just-good-enough lecture halls into polished buildings that need endowments and administrators to oversee.) The problem is when goods that are pretty mandatory to succeed in life get turned to the for-profit market to be solved, of course prices will go up. What we are increasingly failing at is to offer enough seats at high quality educational institutions at affordable prices. That's how you get out of this.
jmpman 2y ago
When I went to college, I stayed in a dorm that was built in 1930. The classrooms I was taught in were built in the 1960s. They were all built on state land, and paid for before I started in the late 90s. The teachers were paid a modest salary, roughly 2-3x the salary of an elementary school teacher. Fast forward 30 years. The same dorms are still housing the students. The same classrooms are still instructing the students. The teachers are still paid a modest salary, proportional to an elementary school teacher, and yet - the costs have skyrocketed?? Yes, they built a new student center, and computer labs, but those were built just a few years after I graduated, and the prices hadn’t dramatically increased. Today, the prices have tripled. The money is going somewhere, and I’m certain some simple graphs would reveal the cause. After all the people complaining about the skyrocketing costs, I’ve yet to see these charts. Where are the investigative reporters? I expect to find wasteful hiring and departments full of non-student facing faculty, whose salaries aren’t paid for by grants. I expect to find not just one IT department for the university, but an IT department for each college. Even the residence life had a 10 person IT department back when I attended, and I remember being horrified at the waste. These organizations have likely grown. I expect to find the sports organization, including basketball and footballs are no longer a revenue engine, but have grown to be a parasite through creative accounting. I expect the non revenue generating sports, which were a questionable destination of funds back when I attended, have grown. Why was I, as a student, funding a world class swimming team? I never attended a match. My tuition included an invisible “tax” to fund these athletics. Instead of pushing to roll back the finances to the pre-2000 levels, the university continues to raise rates, and the students continue to attend, because the loans continue to get approved. So, when I hear politicians asking for student loan forgiveness, without asking the hard questions on why these costs have skyrocketed, and putting a system in place to roll back these hikes, I’m disgusted. It does nothing to solve the problem. Cap the loan amounts, retroactive to inflation adjusted from 2000. The universities will quickly have to figure out if they really need a synchronized swimming team, or three website designers for the dorm web page.
underseacables 2y ago
No Limits, interest, and letting universities charge exorbitant costs without carrying any of the responsibility.
Octokiddie 2y ago
1. Flood the higher ed market with low-quality federally-guaranteed loans. 2. Witness the explosion of enrollment in low-quality colleges and universities. 3. Notice the spillover effect of (2) into every corner of higher education, in the form of higher tuitions everywhere. 4. Watch as (2) leads to ludicrous debt burden on college grads. 5. Wring hands about out-of-control cost of college, leading to higher demand for loans. Rinse and repeat year after year. What would happen if federal student loans were phased out across the board?
throwawaycities 2y ago
Feature not a bug. Student loans were designed to do exactly what they did (very successfully): 1. Allowed Universities to exponentially increase tuition/room & board costs that would have otherwise been unaffordable by the market; and 2. Indebted millions of 18-22 years olds for the next 40 years of their lives or their entire working lives until they were eligible for social security at age 62. Perhaps what wasn’t anticipated was the job market and economy failing so miserably that borrowers wouldn’t be able to service their loans and default in mass, although this slowly occurred over 30 years so the writing was on the wall but like most disasters it was (and still is) ignored. Eventually things would turn so bad economically that student loan borrowers would in mass return home after college until their mid 30’s, forego marriage and children.
incomingpain 2y ago
>This led to rising enrollment of relatively disadvantaged students, but primarily at poor-performing, low-value institutions whose students systematically failed to complete a degree, struggled to repay their loans, defaulted at high rates, and foundered in the job market. In the USA, reverse discrimination was found to be criminal. Some universities implemented illegal systems to continue doing this which turned out to be extremely abusive to minorities. Politicians still wanted to get minorities educated, and so they not only did this, but they also set it such that you can't bankrupt the debt. What was the effect? Univerisity risk greatly reduced and so tuition has been climbing every year since. You now have a cohort of people who in their prime years are paying down debt and not investing, not taking risks at entrepreneurship. They are also hit with so much debt that it might be decades before they truly start their life. The college-apprentice path simply by not having tremendous debt is by default going to be the safer path.

30 points by Bostonian 2y ago

Loaning 18 year olds vast sums of money to invest is a bad idea? Who would have guessed. Seriously though, the young borrowers aren't price sensitive so the cost of the things they're buying spikes. The dynamic here is quite simple and obvious (though maybe only in hindsight).

Loughla 2y ago
It's not that younger borrowers aren't price sensitive at all. Cost tends to be the first deciding factor, unless the particular student is considering prestige of institution. This is why fewer students are attending small, private, expensive colleges. The dynamic is not that simple. There are a multitude of reasons behind the increase in the cost of postsecondary education. Waving it away as young people just being young people is sort of silly.
whimsicalism 2y ago
but why aren’t their parents price sensitive
- pstrateman 2y ago
  Their parents aren't making the decision. They can borrow the money all by themselves.
  - whimsicalism 2y ago
    i am curious how much borrowing against parents wishes actually occurs
  - ourmandave 2y ago
    Undergraduate dependents of parents can only borrow $31,000 across their entire tenure. First year cap is $5,500. Independent student loan limit is $57,500 total. First year cap $9,500. https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized https://studentaid.gov/understand-aid/types/loans/subsidized...
    - pstrateman 2y ago
      That's only loans directly from the feds. Most people borrow money from private lenders as well.
- bee_rider 2y ago
  They are a little price sensitive but probably not fully rational, everybody has rose-tinted glasses about their kids’ potential, right?
joe_the_user 2y ago
I don't think it's hindsight where the problems could be seen. It's econ 101 that markets can produce rational allocation of resources but only if they are involve people with the information and time to determine the outcome and those people are working with their own money. A system where the state "gives"/"loans" your customers money and then forces them to spend that money on you produces a industry that has neither the discipline of skin-in-the-game markets nor the discipline of state regulation.

joe_the_user 2y ago

No, student loans don't "have problems". They are problems. It's not they were ill-conceived but that they were conceived at all. College education (as well as health care) is an example of an activity that doesn't benefit from being guided primarily by the market.

whimsicalism 2y ago
the problem with healthcare in America is not “the market”
- lesuorac 2y ago
  Do go on.
  - novariation 2y ago
    My guess is they're talking about regional monopolies ? There's generally a misunderstanding from left wing voters — when people say "markets" they understand "crony capitalism and monopolies with regulatory capture" when most other people just mean "fair competition between suppliers". We'll all agree the second option isn't easy to get, but the disagreement often comes from the fact one team thinks it's impossible or even undesirable, and something more radical should be preferred.
  - brightball 2y ago
    Your employer offers health insurance. You go to doctors who bill the insurance company for your services. You paying directly for your services is almost entirely removed from the equation. You even deciding on which insurance company you would like to use is removed from the equation as well because it’s more expensive for you to sign up directly than it is for your company to sign up as well. If you wanted to be a part of a private insurance group with diet and exercise requirements for membership, including annual physicals that could potentially get you a lower rate…but you don’t really get that option. The market doesn’t even get to attempt to provide that option because of how separated the producer and consumer of the service are from the people paying for it. The market is completely removed from the equation. The only person who proposed a plan that would have resolved this problem was Dr Ben Carson fwiw. It was by far the best solution to fixing healthcare in the US that I’ve heard in the last 20 years but instead we got ACA.

outside1234 2y ago

They are bad because they exist. Tuition should be free to those that achieve admission to a public school

deleted 2y ago
[deleted]
bryanlarsen 2y ago
Tuition is free for a lot of low income students. For example Harvard is free if your parents make less than $150,000. But even with free tuition Harvard is super expensive because it's in a high cost of living area.
- readyman 2y ago
  The likelihood of being accepted into Harvard when being raised in a family with that total income is extremely low. The environment for studying, focus, discipline, mental health, etc. simply requires more material security.
  - whimsicalism 2y ago
    150k is plenty for getting into Harvard
    - Salgat 2y ago
      I think they're referring to <$150k, specifically low income 20-40k lower class families.
  - giantg2 2y ago
    $150k is about double the US median houshold income. By most definitions, exceeding that number makes you upper class. Of course there are areas that need local adjustments, but for most of the country, $100k-150k is a comfortable upper-middle class income.
- jasonlotito 2y ago

whimsicalism 2y ago

Loans should not be subsidized and they should only be loanable to the parents. I feel we made a mistake in giving 18 year olds full adulthood. Lower the drinking age, raise the age at which they can take out loans.

ptero 2y ago

The biggest problem is the fundamental inability of two higher education camps: "education should be free" and "education should be market priced" to agree on anything. It would be better to have a mix: free education slots for students who pass (tough-ish) entrance exams and slots that university can add at market price for students who do not meet the bar. If there are more market price applications than slots schools can select any way they want except on price (i.e., all market rate slots should be priced the same). My 2c.

hikingsimulator 2y ago
The main issue with this approach is that it doesn't help people who struggle financially or come from disfavorable backgrounds -- whom federal student loans aimed to help. Some sets of circumstances don't favor score maximization on such tests, whereas being in a high income family favors prior access to education that help get those scores for instance. Ergo you'd not solve a better access to education that way. Similarly, means testing for those slots also has negatives incentives. It's a hard issue to solve.
- gedy 2y ago
  Offering loans to those who struggle financially is a problem. Offer them scholarships if they have potential, not loans for everyone.
- whimsicalism 2y ago
  Test scores are one of the primary vehicles for social mobility in modern America. There are other reasons for correlations between affluence and test scores beyond just environmental unfairness.
- ethbr1 2y ago
  Federal student loans themselves have always expressed the tension in parent poster's dichotomy. On the one hand, we could fund college for only those who need the help. On the other hand, that would be a political shitstorm because people with means wouldn't receive as much (or potentially even any) benefit. So the system now has lots of loopholes and sliding scales, so that everyone gets some benefit and supports it. Replace states with families, and it's the NASA approach to political support. Personally, I think the removal of objective testing is dumb. It may be income/background correlated, but it is objective. You can address the disparities by providing benefit to those who come from disadvantaged backgrounds. More critically, you want a system that doesn't allocate money to 'dumb/lazy but also from an advantaged background'.

autoexecbat 2y ago

There should be a limit on the loan size you can take out. It's wild that you can take out 200k with no collateral

djbusby 2y ago
https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2023-2024/vol8/ch4-annual-and-aggregate-loan-limits https://fsapartners.ed.gov/knowledge-center/fsa-handbook/202...
- ethbr1 2y ago
  >> There are higher Direct Unsubsidized annual loan limits for borrowers enrolled in certain health professions programs, and special loan limits for certain students who are not enrolled in a program that leads to a degree or certificate awarded by the school they are attending. So, more of that, except linked to objective workforce measurements instead of cherry picking professions.
whimsicalism 2y ago
this is what happens when the solution to unaffordability is to subsidize demand and credit. see also: Biden’s suggested plan to give thousands to every new home buyer to help address affordability
- PenguinCoder 2y ago
  You can disparage the idea without the person. > see also: *the* suggested plan to give thousands to every new home buyer to help address affordability Would still get the idea and issue across without the need to mention the 'who'. It does not change the meaning or the concern by adding in the 'who'. If that part was changed to any other name, would it still be a problem?
  - whimsicalism 2y ago
    I mentioned it as Biden's plan because that is the referent of who proposed the plan, not out of some opposition to Biden. [0] It is truly easiest to reference policies by who proposed them. > If that part was changed to any other name, would it still be a problem? I would ask the same of you. Frankly, I don't think I would have gotten a reply like this and downvoted if it hadn't been mentioning the president on an election year. [0]: https://x.com/POTUS/status/1789052799130509325?lang=en https://x.com/POTUS/status/1789052799130509325?lang=en

jasonlotito 2y ago

Everyone in this thread forgot that free education was the norm and worked fine until someone didn't like the "wrong type of people" going to college. The experiment failed. Revet to something that worked, and go from there. Any suggestion otherwise is foolish and ignorant.

whimsicalism 2y ago
For the vast majority of history including the 20th century, almost nobody went to college. Takes about how everyone used to have free XYZ are usually ahistorical at best.
- bee_rider 2y ago
  We shouldn’t try to replicate the experience of people in the vast majority of history. We should try to replicate the experience of the in-group of the US from like 1950-2000. The quality of life for the in-group during the era was anomalously high, and also the US of that were was an incredibly effective country.
  - whimsicalism 2y ago
    Yes, we should try to bring up everyone to the highest standard of living possible. I just have no patience for suggestions that for most people that standard of living was higher in the past and we simply need to return to it. It's false, ahistorical nostalgia for the past. A well known psychological effect that distorts peoples understanding of how much the past actually sucked in reality. People watching shows like Bridgerton always imagine they would be among the nobility.
    - bee_rider 2y ago
      I definitely agree there, the past is quite bad for most people in most places in most times, compared to now.
vladgur 2y ago
Can you point me to more info on “free college” of the past? I know that for this immigrant few years off the boat, federal grants and deferred interest loans was what gave me access to education that would otherwise put a huge burden on my family at the time. Granted this was for an engineering degree at a public university and amounted to no more than 10-20k as opposed to 200k for an art degree at a private art college that we often read about

drewg123 2y ago

We stopped sufficient investment in public, post secondary education. I attended SUNY Buffalo in the late 80s / early 90s. I found some old bills when cleaning out my attic several years ago. Tuition was $1,350/yr. At that time, the minimum wage was $3.35/hr. So one could theoretically work a minimum wage job over the summer for 10 weeks and pay for tuition (403 hours). Today the tuition is $10,782 and the min. wage is $14.20. So a student today would need to work nearly 2x as long (760 hours) to pay for tuition. I'm not trying to single out the SUNY system. I think the problem is nationwide. I think a lot of this is driven by the fact that people are more mobile. When its your kids went to, and grandkids going to the school down the street, then you are more likely to support higher taxes to pay for it. But when you live in a different state from your grandkids, and your tax dollars will not benefit your family, you're much less likely to want to subsidize the education of other peoples grandkids.

vladgur 2y ago
I place less blame on taxpayers and more blame on exploding administration costs. On other hand, my alma matter - University of California system - cost $4500 per year in in-state tuition alone when I graduated in 2000 when minimum wage here was around $5 and it’s under $15000 today when minimum wage is $15.50 So it appears that people in California do support public education fairly consistently. This is one of the positive outcomes of crazy taxation regime we have here. I am of course ignoring the 800lb gorilla of college affordability - housing costs. Those are craZy here in Nimbyland
- giantg2 2y ago
  I think CA public funding "dropped" from 30ish% in the 70s to 15ish% more recently. However, enrollment and costs have gone way up. The only way to keep it up is to increase revenues, decrease cost, or cap enrollment. None of those have much support. So the increased cost goes to the student.
- riku_iki 2y ago
  Base on this figure, the main business lines of UC today are hospitals and sales: https://lao.ca.gov/reports/2023/4684/4684-fig1.png https://lao.ca.gov/reports/2023/4684/4684-fig1.png

BurningFrog 2y ago

The big problem in higher American education is the cost explosion. If costs were half the current level, which they were fairly recently, this would be a very manageable problem.

bee_rider 2y ago

There’s no real downward pressure on the amount of money loaned out to students, other than the ability of teenagers to do due diligence and plan ahead. Exempting student loans from normal bankruptcy was a really stupid move. Of course if you treat this one type of loan as some special thing where the lender doesn’t assume any risk, the lender won’t take any care about how they make the loans. And the price of a degree would never have been able to grow out of control like this if students were given loans appropriate to their ability to pay them. I mean, I think education should be heavily subsidized as well, but let’s start by not perturbing the market in the most harmful way possible.

whimsicalism 2y ago
The government is just producing moral hazard left and right by subsidizing credit demand. It's even worse in mortgages.
- bee_rider 2y ago
  Yes I consider myself somewhere on the democratic socialist/social democrat border but I wish policy makers would at least start by looking at what pressures their policies will apply in our mostly capitalist system. The market works fine for lots of things as long as you don’t break it.

supernova87a 2y ago

Oh, I thought the article was going to talk about the fiasco with the FAFSA application redesign. In which case my observation was going to be, people in charge of things at the top lately seem to have almost zero idea of what actually needs to happen at the working level of their organizations. It seems to be a general theme these days in government, business, a lot of things.

giantg2 2y ago
A large part of that seems to be because we filled middle management with "yes" men. The real concerns get candy coated before it ever reached the authorities. It also seems the people at the top actually believe their PR, like that a college education is the primary key to a good life.

supernova87a 2y ago

Education is clearly a path to increased prosperity for many people, and they will pay a lot for education to try to distinguish themselves. And when it's nearly an expectation, it's not a completely voluntary purchase (like healthcare), so demand is quite inelastic and people will pay what is charged. (And also it is a spending choice at quite an early age when people are not great at thinking about whether taking on debt is a smart choice, etc) My theory is that as our society matured, people/companies/institutions gradually figured out that education was something that they could extract value ($) from and take a cut out of. (Whether that is just blatant profit, or using the money to invest in education-related things, or even less insidious semi-reasonable employment of lots of people in that industry to benefit off of it. A gradual creeping up of somewhat well-intentioned desire to turn it from classes in just-good-enough lecture halls into polished buildings that need endowments and administrators to oversee.) The problem is when goods that are pretty mandatory to succeed in life get turned to the for-profit market to be solved, of course prices will go up. What we are increasingly failing at is to offer enough seats at high quality educational institutions at affordable prices. That's how you get out of this.

jmpman 2y ago

When I went to college, I stayed in a dorm that was built in 1930. The classrooms I was taught in were built in the 1960s. They were all built on state land, and paid for before I started in the late 90s. The teachers were paid a modest salary, roughly 2-3x the salary of an elementary school teacher. Fast forward 30 years. The same dorms are still housing the students. The same classrooms are still instructing the students. The teachers are still paid a modest salary, proportional to an elementary school teacher, and yet - the costs have skyrocketed?? Yes, they built a new student center, and computer labs, but those were built just a few years after I graduated, and the prices hadn’t dramatically increased. Today, the prices have tripled. The money is going somewhere, and I’m certain some simple graphs would reveal the cause. After all the people complaining about the skyrocketing costs, I’ve yet to see these charts. Where are the investigative reporters? I expect to find wasteful hiring and departments full of non-student facing faculty, whose salaries aren’t paid for by grants. I expect to find not just one IT department for the university, but an IT department for each college. Even the residence life had a 10 person IT department back when I attended, and I remember being horrified at the waste. These organizations have likely grown. I expect to find the sports organization, including basketball and footballs are no longer a revenue engine, but have grown to be a parasite through creative accounting. I expect the non revenue generating sports, which were a questionable destination of funds back when I attended, have grown. Why was I, as a student, funding a world class swimming team? I never attended a match. My tuition included an invisible “tax” to fund these athletics. Instead of pushing to roll back the finances to the pre-2000 levels, the university continues to raise rates, and the students continue to attend, because the loans continue to get approved. So, when I hear politicians asking for student loan forgiveness, without asking the hard questions on why these costs have skyrocketed, and putting a system in place to roll back these hikes, I’m disgusted. It does nothing to solve the problem. Cap the loan amounts, retroactive to inflation adjusted from 2000. The universities will quickly have to figure out if they really need a synchronized swimming team, or three website designers for the dorm web page.

underseacables 2y ago

No Limits, interest, and letting universities charge exorbitant costs without carrying any of the responsibility.

Octokiddie 2y ago

1. Flood the higher ed market with low-quality federally-guaranteed loans. 2. Witness the explosion of enrollment in low-quality colleges and universities. 3. Notice the spillover effect of (2) into every corner of higher education, in the form of higher tuitions everywhere. 4. Watch as (2) leads to ludicrous debt burden on college grads. 5. Wring hands about out-of-control cost of college, leading to higher demand for loans. Rinse and repeat year after year. What would happen if federal student loans were phased out across the board?

throwawaycities 2y ago

Feature not a bug. Student loans were designed to do exactly what they did (very successfully): 1. Allowed Universities to exponentially increase tuition/room & board costs that would have otherwise been unaffordable by the market; and 2. Indebted millions of 18-22 years olds for the next 40 years of their lives or their entire working lives until they were eligible for social security at age 62. Perhaps what wasn’t anticipated was the job market and economy failing so miserably that borrowers wouldn’t be able to service their loans and default in mass, although this slowly occurred over 30 years so the writing was on the wall but like most disasters it was (and still is) ignored. Eventually things would turn so bad economically that student loan borrowers would in mass return home after college until their mid 30’s, forego marriage and children.

incomingpain 2y ago

>This led to rising enrollment of relatively disadvantaged students, but primarily at poor-performing, low-value institutions whose students systematically failed to complete a degree, struggled to repay their loans, defaulted at high rates, and foundered in the job market. In the USA, reverse discrimination was found to be criminal. Some universities implemented illegal systems to continue doing this which turned out to be extremely abusive to minorities. Politicians still wanted to get minorities educated, and so they not only did this, but they also set it such that you can't bankrupt the debt. What was the effect? Univerisity risk greatly reduced and so tuition has been climbing every year since. You now have a cohort of people who in their prime years are paying down debt and not investing, not taking risks at entrepreneurship. They are also hit with so much debt that it might be decades before they truly start their life. The college-apprentice path simply by not having tremendous debt is by default going to be the safer path.