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The reason for this problem is so transparent it's laughable: easy access to borrowed money naturally creates inflation in the target market until heavy borrowi

The reason for this problem is so transparent it's laughable: easy access to borrowed money naturally creates inflation in the target market until heavy borrowing becomes the norm. It happens again and again throughout history. The only way to be truly on the risk-free side of this one though is to own a school. As a principle, I would downsize or mortgage my house before I'd send my children into the world as debt slaves. For their part, there are plenty of state-funded schools where tuition is 10K/yr or less. The whole thing is backwards: these lenders and schools are businesses and should be marketing and selling you their product, not forcing you to "apply." If foreigners have the means to pay non-resident costs to attend our public schools, then I see no problem at all selling them an education. Giving them grants in lieu of citizens is just bad practice. Lending them money is bad risk management.

orofino 14y ago
This is subjective, but I think you're wrong. Having debt isn't a bad ting, crippling debt is of course, but I graduated with over 40k in debt and it forced me learn things like prioritization and budgeting. It also gives you a sense of urgency about finishing school. Most parents aren't saving enough for their own retirement as it is. They should NOT be going further into debt for their kid's college. The kids can get loans for school, the parents can't get loans for retirement. Parents should save as much as they reasonably can to help kids through college, but the child needs to shoulder some of the burden as well.
- OldSchool 14y ago
  I see your point. Students having some 'skin in the game' is very valuable. I find the rules surrounding the debt far more disturbing than the average amount carried by graduates, which really only amounts to the cost of one typical family car. When you read about people falling on hard times and their debt being tripled by collection agencies with no way out because of bankruptcy laws, its hard not to view it as one more lobbyist-created situation that favors the banking industry.
cpursley 14y ago
"I would downsize or mortgage my house before I'd send my children into the world as debt slaves." Absolutely. I wish there was a tactful way to tell my parents this but its largely useless after the fact. My parents bought a huge McMansion "for the kids" with all the upper middle class trimmings and neglected to save a single dime for college. And so all four of their children will be paying off student loans for a decade or more.
randomdata 14y ago
> these lenders and schools are businesses and should be marketing and selling you their product It seems the problem is that they have been able to market it too well, making large swaths of the population believe they only way to a good life is through formal post-secondary education. That put pressure on the government to institute easier access to money for education so everyone has the option to choose to have a good life. Now, the economic fundamentals are finally starting to shine through the marketing cloud. Not only through the issues of ballooning loans, but also in the realization that not everyone can live the dream sold. It is economically impossible. It should be self-correcting though. As the costs over returns start to pile up, people will start to shy away from education. The demand will wane, leading to a return of lower, more reasonable, prices for those who are actually interested in academics, not just a job ticket. It is just unfortunate for those who are caught in the current bubble.
tzs 14y ago
> The reason for this problem is so transparent it's laughable: easy access to borrowed money naturally creates inflation in the target market until heavy borrowing becomes the norm. If that theory is correct, college costs should be much higher than they are now. Schools should be raising the price (which should shrink the applicant pool) until they are just filling their classes. Another problem with that theory is that college costs went up fairly regularly before money was easily borrowed. I'm not sure that they are going up any faster in this age of easy borrowing than they were before.
- OldSchool 14y ago
  The applicant pool hasn't shrunk due to costs precisely /because/ of the ease of borrowing and because of ever broadening acceptance of borrowing as a part of college life. College cost are already much higher than they should be by historical standards. I think if you examine public university tuition rates since 1990 you'll find they have far outpaced inflation. I'd estimate 3x-5x is typical, while the purchasing power of the dollar would dictate ~1.5x over that time period. The only other areas that show comparable excess are health care, energy, and the almost purely debt-driven housing market.

orofino 14y ago

This is subjective, but I think you're wrong. Having debt isn't a bad ting, crippling debt is of course, but I graduated with over 40k in debt and it forced me learn things like prioritization and budgeting. It also gives you a sense of urgency about finishing school. Most parents aren't saving enough for their own retirement as it is. They should NOT be going further into debt for their kid's college. The kids can get loans for school, the parents can't get loans for retirement. Parents should save as much as they reasonably can to help kids through college, but the child needs to shoulder some of the burden as well.

OldSchool 14y ago
I see your point. Students having some 'skin in the game' is very valuable. I find the rules surrounding the debt far more disturbing than the average amount carried by graduates, which really only amounts to the cost of one typical family car. When you read about people falling on hard times and their debt being tripled by collection agencies with no way out because of bankruptcy laws, its hard not to view it as one more lobbyist-created situation that favors the banking industry.

cpursley 14y ago

"I would downsize or mortgage my house before I'd send my children into the world as debt slaves." Absolutely. I wish there was a tactful way to tell my parents this but its largely useless after the fact. My parents bought a huge McMansion "for the kids" with all the upper middle class trimmings and neglected to save a single dime for college. And so all four of their children will be paying off student loans for a decade or more.

randomdata 14y ago

> these lenders and schools are businesses and should be marketing and selling you their product It seems the problem is that they have been able to market it too well, making large swaths of the population believe they only way to a good life is through formal post-secondary education. That put pressure on the government to institute easier access to money for education so everyone has the option to choose to have a good life. Now, the economic fundamentals are finally starting to shine through the marketing cloud. Not only through the issues of ballooning loans, but also in the realization that not everyone can live the dream sold. It is economically impossible. It should be self-correcting though. As the costs over returns start to pile up, people will start to shy away from education. The demand will wane, leading to a return of lower, more reasonable, prices for those who are actually interested in academics, not just a job ticket. It is just unfortunate for those who are caught in the current bubble.

tzs 14y ago

> The reason for this problem is so transparent it's laughable: easy access to borrowed money naturally creates inflation in the target market until heavy borrowing becomes the norm. If that theory is correct, college costs should be much higher than they are now. Schools should be raising the price (which should shrink the applicant pool) until they are just filling their classes. Another problem with that theory is that college costs went up fairly regularly before money was easily borrowed. I'm not sure that they are going up any faster in this age of easy borrowing than they were before.

OldSchool 14y ago
The applicant pool hasn't shrunk due to costs precisely /because/ of the ease of borrowing and because of ever broadening acceptance of borrowing as a part of college life. College cost are already much higher than they should be by historical standards. I think if you examine public university tuition rates since 1990 you'll find they have far outpaced inflation. I'd estimate 3x-5x is typical, while the purchasing power of the dollar would dictate ~1.5x over that time period. The only other areas that show comparable excess are health care, energy, and the almost purely debt-driven housing market.