If we're going to be forgiving loans, we shouldn't be giving them out in the first place. Otherwise, we're going to be in the same spot in one generation's time.
Just stop guaranteeing them, let students default on them. All these guaranteed loans that can't be discharged allows academic institutions to ratchet up the price. Let them calculate risk and price them accordingly.
The guarantee is the only reason the loans are made. Otherwise, you're lending a lot of money to someone with no income and no assets, and no one will want to make that loan.
They'd actually have to underwrite on the basis of the value of a degree -- yeah, no one is going to lend money to the same people who wouldn't be able to repay their loans after graduation. That's good!
This is a slippery slope though. This effectively turns universities into career-training centers. Eventually enrollment in less-profitable subjects, like dance and art, will decrease, forcing colleges to drop it from their programming.
Then suddenly we have a society that does not appreciate art or dance or whatever other subjects were dropped.
This is the slippery slope - creditors get to decide what others know and learn and pay attention to. Knowledge is no longer widely available - the experts (professors) might still teach at a college, but will be forced to either pivot or leave when the university slashes their programs. They could teach privately or for free, but I am guessing the number of students who they would normally teach drops significantly.
This is not a problem. Tooo many kids graduate with degrees in which they cannot find decently paying jobs, so they end up in a different field altogether. Why have that initial non-starter in the first place and place them into a career that has better potential in the first place?
Once there are too few people in the arts, demand will incentivize more people to get into that field.
Moreover, don't we currently have a problem where we don't have enough students going into STEM?
Is this really a problem though? Wouldn't arts programs simply move to being something offered to and studied by those wealthy enough to do so? I'm genuinely curious.
> Eventually enrollment in less-profitable subjects, like dance and art, will decrease, forcing colleges to drop it from their programming.
If this is the goal, then the far simpler solution is for the government to explicitly budget a set number of grants for the most promising students in those fields to study specific subjects that supposedly have social value but low economic returns.
It certainly doesn't make sense to subsidize loans for hundreds of marginal students to study "business administration" or "hospitality" at a tier four regional college to get one brilliant dance major at Carnegie Mellon.
Far more efficient for the government to say "we have 800 fully funded dance scholarships, 4000 art history scholarships, 2000 classics scholarships, etc. We're going to assign these scholarships to the most promising graduating high school students in these fields. And the scholarships will only be paid for top-tier universities that have demonstrated consistent excellence in these areas."
That would by far subsidize a much higher level of cultural discourse at a tiny fraction of the cost of the current student loan system.
> This effectively turns universities into career-training centers.
Isn't that the case already? Aren't most university students looking to increase their career prospects? Wasn't that the whole point of telling generations of kids to go to college, so that they'll get better jobs?
If the program turns out successful students, I don't see why not? If the program turns out unmarketable skills, sure, charge through the roof and steer kids away from a useless degree.
Why not? I'm a university employee. Grad student, so maybe skewed a bit (are we talking about more permanent administrative employees? They I guess have different interests, since they aren't transient like me).
1) I'm going to, absent some massive political shift, vote for Democrats for the rest of my life anyway. So, they don't really have to play for my vote.
2) Playing around with boring stuff like tweaking market forces around by changing how loans work is sufficiently indirect that blame can probably be dodged.
3) We're all aware that the current system is pretty bad, a new solution that at least purports to be an attempt at something better can be sold to me pretty easily.
3a) Keep in mind that, at least in the STEM departments, the instructors are there for essentially irrational reasons -- they could make much more money in industry. At least some of the motivation is to produce interesting science and help students, paycheck be damned. Changes that hurt the last while helping the first two will probably be accepted with only minimal grumbling as long as they aren't too painful.
+1. Defaults exist for a reason - they force the lender to think about whether someone can pay off a debt or not, and we got here by giving everyone a loan, whether they could pay it off or not.
This create market driven dynamics in which degrees basically are tailor made for industry. This approach disincentivizes pure research for scientific purposes.
In any case, if there is a specific need for specific research, I'm sure the gov can figure out a way to incentivize particular useful tracks which the market ignores. Grants programs, etc.
Companies value people who can apply the scientific method (experimental design, data gathering, data analysis, etc). They hire people who have acquired this specific knowledge often through grants. Whether these subsidies lead to application of the specific knowledge gained through the grant underwriting process is debatable. Companies will hire people who studied something that requires the scientific method for which there is maybe no market, and make them apply that approach to things for which there is a market.
A future where universities looked more like community colleges situated next to research institutes, rather than weirdly blending the two, could be neat.
Have people really interested in teaching rather than research teach the 100/200-level courses. The scientists next door can teach seniors and juniors, and show up for guest lectures.
> This create market driven dynamics in which degrees basically are tailor made for industry. This approach disincentivizes pure research for scientific purposes.
Good, there is nothing wrong with all that. Degrees should exist so people find jobs in the real world. Research can be funded by the government itself. Absolutely no need for government backed student loans in either cases. People who want to go to private universities can get a regular bank loan, that's how it works in the rest of the world. The US system is unique and predatory.
Pure research for scientific purposes is done by Ph.D. students and is already funded by research grants. Student loans are not part of the equation here.
Universities are tax exempt, and highly profitable. Many have endowments over $1 billion [1]. Yet, the average cost in state is $10,000 per year, and almost $30,000 if out of state. For comparison, the tuition at Oxford College, one of the most prestigious institutions in the world, is $12,000 per year.
Student loans may be considered even predatory [2], adding to the injury.
There should be a better mechanism to allow people to go to college in the US, without subjecting them to half a lifetime of debt.
Are you complaining about the massive amount of not-really-loans given to small and not small during COVID?
Right? You're vociferously complaining about that frequent game played by corporations with outsized lobbying abilities to get loans that aren't really ever expected to be paid? How much was that in the grand scheme of printing money by the fed, a billion?
Or are you angry about little poor people getting a pittance of money in the grand scheme of things?
It is so strange how much people shrug off corporate handouts, but get up in arms when poor folks get a pittance from the government.
Edit: my tone was a bit harsh, probably because I get this knee jerk reaction.
It's probably because corporations are like gods. You can't kill them. They are omnipresent. With data hoovering, they are some form of omniscient. They are tireless, sleepless, don't require air, water, or food. The modern way to kill a corporation is probably so serpentine that it puts the best D&D plot to kill a god to shame. They don't technically have a physical body. They have servants, followers, a clergy, and power. They can cast "summon army of retainer lawyers" and send you to hell.
Who are we to question if the god of money hands the god of cars magic printed-but-never-actually-printed numbers that aren't based in something?
I think most people who'd like to get rid of the loans would also like to provide additional help to make college less elitist. Easy loans are just the local optimum we need to get out of.
If it only becomes for the rich, that's a problem. If it only is for those who can earn merit scholarships (plus a smattering of rich flunkies to pay the bills), is that necessarily a problem?
Plus, colleges and universities will think twice about increasingly charging an egregious amount for tuition if people aren't willing to buy their product no matter the price.
Maybe for the bottom schools but there are enough rich parents to pay/cosign a loan for like the top 50 schools and I highly doubt they would reduce tuition/spending and risk hurting their rankings.
Who cares about the top 50 schools? I went to Hofstra University, graduated with no debt (worked while going there and commuted by bus!) and I did just fine. I’ll be damned if I’ll subsidize someone else’s 4-year country club experience at a “top school”. Noting terrible will happen if only kids with rich parents went to them.
If you can earn $53k plus living expenses in after tax dollars all while going to school then you are not the typical college student. Someone would be subsidizing your education if you get out of that debt free.
No matter how many loans or funding you get, it'll always be impossible for everyone to go to the top 50 schools, unless you simply outlaw all schools outside of the top 50.
That is not the point. The point is that kids whose parents cannot pay/cosign a loan can currently get into the top 50 schools but without the government backing the loans, none of them would likely be able to get in at all leaving the top schools only for rich kids.
Nope, that is not how unsecured personal loans work. Those depend on your credit which most students don't have much/any and your debt-to-income which is normally infinite for students because they don't work.
They were cancelled because it turns out the schools were scams. So it was a situation where the students got into a lot of debt, and got nothing(like an education or a worthwhile diploma) in return.
Do you think the schools aren't punished for being scams, and they're just free to keep scamming students? And debt relief helps the debtor, not the original receiver of the funds.
> On August 25, 2016, the U.S. Department of Education banned ITT Tech from enrolling students who receive federal aid. The Department also doubled the surety funds that ITT Tech was required to have, and to produce those funds within 30 days. Stock markets reacted with a punishing 35% drop, which triggered a halt in trading, raising concerns about whether ITT Educational would be able to survive this latest decision.[73] On September 6, 2016, ITT Tech ceased operations and closed all of its locations, issuing a statement that attributed the closing to the Department of Education's actions.[28]
I don’t know the Us system at all but it sounds like what they are doing are rewarding public service workers (eg teachers?) or charity workers which likely don’t get paid well by cancelling their debt after a set time period of otherwise good behaviour.
Which sounds equitable to me, although I’ll never understand why high school is free but university isnt.
I agree in theory. If the U.S. were a company dedicated to profit for its shareholders, then it certainly shouldn't give out bad loans.
However, since the U.S. is a country dedicated to the benefit of its citizens then it's absolutely okay to provide loans as a form of social welfare, and accept a higher than normal rate of default. After all, providing these loans instead of the market was the entire point of the exercise.
