Student Loan Bubble Is Creating Millions Modern Day Serfs

[SteveFoerster]

Originally Posted by MDrenter223

Take away the bankruptcy exception and no one will lend to a women's studies major.

We let anyone study anything. The free market would do no such thing.

You seem to be assuming that that degrees in area studies, sociology, etc., are actually 100% useless. Given that such graduates do in fact find jobs, I don't think that's defensible.

You also seem to be assuming that all colleges and universities would fail to adapt to a free market for lending to be able to keep offering such programs. I seriously doubt that. Institutions already use popular majors to subsidise less popular ones. And philanthropy has always been an important component of university funding, and whether we like it or not, there are people with money to give who support those sorts of majors.

So that, along with tuition rates in general being much lower with a free market for student loans, makes me expect the end result would be somewhat fewer students majoring in those things, but hardly none at all.

Originally Posted by redguard57

Actually you are advocating a Soviet style solution. You want to take choice out of the equation for students and let an outside entity - lenders - make decisions for them.

No, the idea is that people have all the choice they want -- and the accountability for the consequences of that choice. There's a big difference.

Originally Posted by redguard57

The part of the student loan problem that's really damaging are the borrowers that don't graduate.

The part that's damaging is that the huge artificial supply of money to students to pay tuition leads tuition rates to skyrocket. That's why killing Title IV would ultimately be a net good thing.

[redguard57]

There's no way to make college that much cheaper. We already have bare-bones, stripped down colleges where teaching is the primary mission. They are called community colleges. They are cheap because they are subsidized by their states & localities. Take that away and they get more expensive.

The reason tuition has been skyrocketing is because states have divested in their public universities, making them more like private universities with tuition to match.

The operating costs of a college are between 9000 and 14000 per student. https://www.luminafoundation.org/fil...and_Prices.pdf

It's impossible to do it much cheaper. To get cheaper than that, you'd have to let videos do the teaching or something. That's been tried, several times including MOOCs most recently, and failed.

We're looking at baseline costs to educate a person of around $9000 a year. Maybe $7500 if we really cut all the fat & sacrifice some quality by paying faculty & staff less.

The idea that eliminating student loans would reduce the cost of college is silly. Community colleges provide the best argument against it -- it's quite possible to pay for community college out of pocket with a halfway decent job or totally with grant forms of aid. In fact only 17% of community college students use student loans. 50% use grants. http://www.aacc.nche.edu/Publication...s_A_Primer.pdf

Yet community college tuition has gone up, despite loans not being a majority part of their income stream.

Average published tuition and fees at public two-year colleges and universities increased by 14% in 2015 dollars over the five years from 2010-11 to 2015-16, following a 13% increase between 2005-06 and 2010-11.

https://trends.collegeboard.org/coll...selected-years

What eliminating student loans would do, would simply cause the institutions to shrink down to the size where they can reliably & sustainably find students with the ability to pay. The macro-economic effect of this would be negative, since they'd lay off faculty and staff to whatever level necessary. We'd just have fewer people going to college, the net result would probably be a high youth unemployment like what Europe has -- they subsidize their colleges but quite severely limit their enrollment. Their youth unemployment is around 20% in the Euro zone while in the U.S. is around 10%.