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I don't agree with your premise here. The problem with student loans is that, while they have lessened the pain of writing tuition checks, they have actually created a bigger problem. For since the government began underwriting student loans 40 years ago, college tuitions suddenly began rising at a rate roughly four times inflation. This is not a coincidence. Because, suddenly, people could spread their college education payments out over 20 years, they began to not worry about what the bite would be. And colleges, essentially being business, jacked up their tuitions to what the market could bear.
So what you have on your hands is a classic case of the Law of Unintended Consequences. Government creates a program to make college tuition affordable, and colleges hike tuitions accordingly. The cumulative effect over a forty-year period? Now it's absolutely impossible for a middle-class family to afford a private college without racking up massive amounts of debt, which effectively puts a whole range of colleges out of reach of most people. So instead of making college more affordable, it's made it less affordable with the added bonus of giving new graduates crippling debts.
And while I'm certainly in agreement with you that colleges should not be about job training, the expectation of this level of indebtedness upon graduation almost guarantees that a student has to go into career-driven majors. Otherwise, he will not be able to make the loan payments. So a sophomore choosing a major at an expensive college has to ask this question: Gosh, when I graduate, I'll have roughly $100,000 in student loan debt. Do I choose mathematics or engineering?" See how it works?
I mean, I attended a small liberal arts college in the early 80s and majored in English. My parents had fallen on hard economic times, so I was going to have to pay for the place myself. I worked a full-time job to do it, but I managed to put myself through without incurring student loans. Today, having looked at the tuition of that same college today, there is no way that a student like me could do that.
I completely agree with what you're saying, other than perhaps overstating the effect of student loans on the constantly expanding costs of tution (obviously it's not the only thing that is causing that). I am following the same concept of unintended consequences you stated in applying what would result in cutting student loans. That is, while it may intend to lower tuition costs, and it may do just that, poor and working class students will suffer the most. Under the current scenerio, at least they have a chance to do something they want to do other than what puts a roof over their head. Without student loans, and looking at the time it would take for the tuition market to correct, you are leaving behind many young people who did not have the same chances their older siblings and parents had.
There are problems with many different things in this situation. In my opinion though, it boils down to what America stands for and the fact that we are in the Land of Opportunity, it wouldn't be as such if some were denied a chance at higher education. I do agree that college is not for everyone and 18 is such a young age to make such big, long-term decisions. Perhaps high schools need better prep programs. I think the majority of people see college as not a choice these days, but mandatory. Sure, not many jobs actually REQUIRE the knowledge/skills you retained in those 4 years, but let's be real... they all "require" it. They want the status. If the economy wasn't the way it is, people would be much better off post-grad and the loans would be worth it. That is the way it should be.
I completely agree with what you're saying, other than perhaps overstating the effect of student loans on the constantly expanding costs of tution (obviously it's not the only thing that is causing that). I am following the same concept of unintended consequences you stated in applying what would result in cutting student loans. That is, while it may intend to lower tuition costs, and it may do just that, poor and working class students will suffer the most. Under the current scenerio, at least they have a chance to do something they want to do other than what puts a roof over their head. Without student loans, and looking at the time it would take for the tuition market to correct, you are leaving behind many young people who did not have the same chances their older siblings and parents had.
Right. In a previous post, I do not advocate slashing student loans immediately, instead phasing them out over a period of time. However, I do think that ease of obtaining students loans has been the major driver of cost increases, for easy financing means that larger price increases are easier to swallow. The most famous example of this was the housing bubble. For when the government decided to loosen up lending restrictions for programs such as FMA, FHA, etc., in the mid-90s, increases in home prices no longer tracked with inflation but almost immediately began to increase at multiples of the inflation rate.
However, I do think that ease of obtaining students loans has been the major driver of cost increases...
and until we get back to a stage where the typical college student can afford to pay their tuition
using their own year to year earnings (as once was true) we'll continue to dig even deeper into the hole we're in now.
"Higher education is a business and it provides millions of jobs.
The student will pay the loans back through garnishing their Federal Income Tax Return over the course of their lifetime if necessary.
That's their freedom to choose, and all citizens are treated equally.
What many folks fail to understand is that if money for college isn't easily obtainable, then only the wealthier Americans would be able to attend college."
Cancer, diabetes, mental disorders, obesity, plastic surgery all provide millions of jobs. Is it good public policy to not mitigate those diseases with much cheaper preventative measures because too much money is riding on the line doing it the more inefficient way? And the way college degrees are being funded currently are extraordinarily inefficient. Since the 1970's, the average cost of college has increased by 1100%, if memory serves. Does that mean that college students of today know 1100% more than college students of the 70's? Of course not, I argue that they know LESS than what they did back in the day when college could be paid by working your way through school. Read the book "Academically Adrift" for proof of the total lack of rigor and scholarship going on at American universities.
Furthermore, nations around the world are publicly funding their universities, and not having their graduates burdened with over a trillion dollars in student loan debt. It's plain stupid to have that kind of load on students and families, all because it creates jobs. If this is the model that the US supposedly needs in order to have college graduates, then we should get rid of it just on principle. This is a political question, not a financial one. What is public education, who should have access to it, how is it to serve the public, how is it to be funded. Here in Oregon, we pay nearly $1.5 billion to fund our prisons. We pay less than $700 million to fund our unis. I highly doubt that the public wants that kind of imbalance, but if they don't, then it's up to them to do something about the situation....
They should not completely eliminate them but rather put "stipulations on them."
For example the student must have had a 3.0 in high school a 1100 (out of 1400) on the SAT and maintain a 2.7 in college
This would incentives students to work harder and make them more attractive to schools and employers which would help pay off loans sooner. They should also not loan to students at schools that have a terrible record for gainful employment in the field of study. Finally loaning to students at for-profit should stop. The money is just flowing into the pockets of investors.
I wouldn't go by grades as they don't really tell a consistent story school to school or university to university. Nor even the SAT.
I'd never have made it to college. And I think I had a pretty worthwhile career. In Jr High I was both an honor student and a good athlete. But my dad died while I was a HS sophomore and I was a mess for a couple of years. Plus I had a back injury that kept me out of sports so I couldn't go that scholarship route. I did OK on SATs though partly because I knew my stuff and partly because I was phenomenal at test strategy. I was also working 25-30 hours a week to ensure I could actually pay for school. There are probably thousands like me every year who wouldn't make the grade based on your proposal.
If it came to a point where we'd have to eliminate federal loans and loan guarantees, here's what I'd like to see - complete capitalism via sponsorships, similar to Kickstarter. Tell me why you deserve to go to college. What are you going to do there and what do you want to do when you get out.
Recognizing this is a very simplistic answer, it has numerous merits. People can select who they want to sponsor based on intended majors, already acquired social skills and testimonials (like you'd find on LinkedIn), perhaps video presentations and other projects the applicant wants to put out there... in short it lets the market determine what roles/functions are needed for the future and which people they want to back to fill those roles. And it'll certainly build skills among the applicants - you're going to have to learn to be sociable, present compelling arguments (critical thinking) and be reasonable and rational in your goals.
If I knew a damned thing about coding like Zuckerberg, I'd have built it already.
"Recognizing this is a very simplistic answer, it has numerous merits. People can select who they want to sponsor based on intended majors, already acquired social skills and testimonials (like you'd find on LinkedIn), perhaps video presentations and other projects the applicant wants to put out there... in short it lets the market determine what roles/functions are needed for the future and which people they want to back to fill those roles. And it'll certainly build skills among the applicants - you're going to have to learn to be sociable, present compelling arguments (critical thinking) and be reasonable and rational in your goals."
Simplistic?? It's precisely what we need, imo. You had some tragic things happen to you, and that made it difficult to attend college right out of hs. But why should it be that the best time to attend university is when you're between 17-21 years old? I wouldn't necessarily entrust anyone that age with many things, at that age, a person for the most part isn't ready to participate in their own education. The reason I say that is that so many unis spend billions on advertising, sports and other things in order to lure students to their schools, despite the enormous costs of doing so, and then making the students bear the costs of non academic departments. If a student can't realize that they're paying for things that have nothing to do with education, they shouldn't be there in the first place. The unis realize that many students are way too immature to make proper decisions, so they play up the beer and circus side of college. And a student of 17-22 is for the most part going to be lured by nonsense such as that. Only when they graduate and are several years into trying to find a career that they realize what a waste of time their college experience turned out to be. Too bad, they're on the hook....
That's the way it is now, many of those who get the best grades and test scores get the most scholarships.
Those who are the best athletes get the most scholarships.
Those who serve active duty in the military pay for and get paid for their college benefits under the GI Bill.
Those who qualify to join the National Guard can have a percentage of their loans forgiven yearly.
Become a teacher in a distressed urban or rural school system and a percentage of loans are forgiven yearly.
Some employers pay college costs.
ROTC pays college costs.
Those who come from the most neediest families receives more grants and tuition discounts which can also be based on grades.
Most private universities offer $10,000 yearly discounts to virtually everyone that needs it.
There's a lot of economic opportunity in this country to go to college.
Just because many folks need to borrow Federal money to go to college doesn't mean that our system is broken.
Quite the opposite, America has the best schools and more opportunity than any other country in the world.
Freedom has its price, and Federal student loans are one of them.
Federal loans are a form of a user fee, federal loans are a form of a user fee, federal loans are a form of a user fee...
Blame the states and private institutions for the higher costs.
The Federal government provides a way to hurdle the high costs and to break down economic barriers.
The Federal loans create educational opportunities that the states, and public and private schools themselves simply can't provide.
"There's a lot of economic opportunity in this country to go to college.
Just because many folks need to borrow Federal money to go to college doesn't mean that our system is broken.
Quite the opposite, America has the best schools and more opportunity than any other country in the world.
Freedom has its price, and Federal student loans are one of them."
Sorry, but that just isn't the case. If America has the best schools, then explain why we have H1-B/L visas, which are ways for employers to fast track college educated professionals from around the world to come to the US and work here without the usual wait periods? If our colleges were that great, then why the rush to get foreigners? And our system is broken because of the large amount of corruption and graft that goes on with the student loan programs. Just one example would be what happened with Columbia University which had to pay a $1 million dollar fine for their part in steering their students to loans which were the worst in terms of the students but which provided kickbacks to the school. That is only one of many examples of that kind of corruption.
And again, I would suggest that you read the book "Academically Adrift" before you go any further. The authors showed that nearly 1/2 of college students who had been in college for two years had learned nothing in the time they had attended, nearly 40% of students had learned nothing in four years. Further, most students spent the bulk of their time socializing or sleeping, they spent less than 8 hours per week studying and rarely wrote papers. Over 2300 students took part in this study, and the only way the authors had access to the students was if they pledged not to reveal the universities that took part in the study. The university administrators and the FED government participate in this manner of nonsense, and the only way this continues is if students are allowed to take on more debt in order to go to schools which have no academic rigor. No country benefits from this lack of scholarship or indebtedness, and underscores why American business are off shoring their professional careers or importing foreign college grads. The escalating cost of college in no way signifies an increasing quality of education. That is why the system is broken, you pay many times more than prior college grads and get no better, if not worse, college education. That's a scam....
I don't buy the premise that the availability of student loans is driving the cost of higher education. Such loans are the "egg" not the "chicken". They are a response to the high cost of education, not the cause. My son started college this year and we were offered loans at 7%. No thanks. Also, they start accruing interest immediately. The parent loans have to be paid starting immediately. The student portion is payment deferred until after college. But, they start accruing interest immediately. They are no panacea.
However, without government guarantees they would not exist. Which lending institution is going to give someone an unsecured loan that can be dismissed through bankruptcy? Good luck with that!
Let's not forget that at least half the cost of going to college these days is room/board/other expenses. Private housing in proximity to campus is generally just as expensive as university housing and people have to eat no matter what. Student health insurance is cheap. Something like $215 per semester. And you can opt out if you have other coverage.
Most importantly college is optional. No one forces you to go if you do not see the value.
And the problem with private loans has been that the private banks have been acting like loan sharks, obscuring from students how much the payments would be once they graduate, and not disclosing details that students need to know in order to compare different loans offered and make the best decision. This is why the gov't is involved. If private lenders could be trusted, it wouldn't be necessary to provide an alternative. But they've proven themselves untrustworthy.
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