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Old 11-15-2022, 03:21 PM
 
Location: Shawnee-on-Delaware, PA
6,973 posts, read 6,057,081 times
Reputation: 13803

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Hear me out. This would be similar to salary caps we see in pro sports.

Federal Stafford loans are for $5.5k the first year and max out at $7.5k in years 3 and 4. I think you can borrow another $7.5k in Year 5. It's the same whether you go to Rinky Dink State or High End U.

What if the Federal Stafford loans were only given to students attending universities whose tuition is under a "cap"? Let's say the cap this year is $50k annual tuition (tuition only, not including all the bells & whistles). So if you enroll at a college where the tuition is $55k you get no Stafford loan. Enroll at a middle-tier $35k institution and you've got an additional $5,500 in Stafford loans toward tuition.

My goal is to find a way of making the high-end universities "find" a way of reducing tuition by $5,500 for needy students so they don't lose them. Yes, I believe high-end universities sincerely want diversity not only by skin color but by economic status.

So instead of the "High End U" student owing an additional $5.5k in loans upon graduation, they get a grant from the endowment. We talked out younger son's middle-tier university into a giving him an additional grant. It wasn't even that hard. They had money laying around, waiting to be given out.

There would be less to pay back, fewer outstanding loans, and less for the taxpayer to worry about. If the system works, we keep reducing the tuition "cap" until we find equilibrium. If it doesn't work, we abandon it. Thoughts?
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Old 11-16-2022, 07:00 AM
 
999 posts, read 332,796 times
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This is very much in line with some ideas I've had as well.

I had suggested capping based on some known figure, such as the in-state tuition rate at public universities. His would likely force private universities to drop prices or dip into their endowment funds to remain competitive. Taking it a step further with your proposal, that would help to keep those in-state rates even lower.
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Old 11-16-2022, 07:06 AM
 
6,417 posts, read 1,616,244 times
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If federal subsidized loans are going to stay, yes, there should be a maximum limit. It's not hard to figure out DTI based on e.g. projected income.

Ideally, the whole thing would be abolished and banks would actually do proper underwriting.
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Old 11-16-2022, 11:37 AM
 
309 posts, read 136,189 times
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Student loans should be financially tied to the college the student is attending. Colleges would not have incentives to promote and offer worthless non-STEM degrees. Essentially colleges would be on the hook to repay / reimburse the Financial Institutions when the PHD in Gender Studies defaults.
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Old 11-16-2022, 01:47 PM
 
Location: Shawnee-on-Delaware, PA
6,973 posts, read 6,057,081 times
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Quote:
Originally Posted by HappyHappy001 View Post
Student loans should be financially tied to the college the student is attending. Colleges would not have incentives to promote and offer worthless non-STEM degrees. Essentially colleges would be on the hook to repay / reimburse the Financial Institutions when the PHD in Gender Studies defaults.

OK but not all non-STEM degrees are worthless and not all STEM degrees lead to middle class status.

My plan does not attempt to predict which students made a great career choice at the age of 17 when they chose their major. Rather, I'm trying to get expensive colleges to lower their costs.
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Old 11-16-2022, 01:52 PM
 
Location: Brackenwood
9,061 posts, read 4,363,679 times
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At some point the DOE needs to recognize colleges and universities are taking advantage of the federal student loan program to jack up tuition rates mostly for the purpose of administrative featherbedding and building lavish facilities that provide marginal benefit to the educational mission. In short, in a best-case scenario it's doing nothing to make access to higher education more affordable; and if anything, is pushing it even further out of reach for those whom the program is intended to benefit.

Caps with ceiling raises tied to inflation might be one way to deal with the issue. Another would be to hold institutions responsible for paying back a percentage of loans their students default on, say, 10 to 20% of the default balance.
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Old 11-16-2022, 05:29 PM
 
999 posts, read 332,796 times
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Another way of reducing overhead and by extension tuition would be for colleges to return to a focus in a particular field, instead of offering a hundred programs just to get students in the door, but being forced to work with whatever qualified instructional staff is available and maybe only pushing 10 students through the program. Nobody wins in that scenario.
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Old 11-17-2022, 12:07 AM
 
Location: Honolulu, HI
20,686 posts, read 6,525,161 times
Reputation: 19260
Yes, there should be a direct cap on federal loans based on what the type of school you go to, what major you study, and how much your projected career field has historically made.

But it will quickly be deemed "discriminatory against underprivileged students" by you know who.

So it will never happen, at least not in the foreseeable future.
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Old 11-17-2022, 07:09 AM
 
1,049 posts, read 389,464 times
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How about more Federal resources to run better state colleges instead of so many high cost for profit private colleges.

Private colleges are simply unaffordable and not cost effective for students. Students need to be educated that paying $70k a year towards a career that starts at $40k just isn't gonna cut it. Should go for a college that costs less than $20k/yr.
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Old 11-17-2022, 08:19 AM
 
Location: Shawnee-on-Delaware, PA
6,973 posts, read 6,057,081 times
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Quote:
Originally Posted by MKTwet View Post
How about more Federal resources to run better state colleges instead of so many high cost for profit private colleges.

Private colleges are simply unaffordable and not cost effective for students. Students need to be educated that paying $70k a year towards a career that starts at $40k just isn't gonna cut it. Should go for a college that costs less than $20k/yr.
Almost nobody pays the full tuition at American colleges. I think wealthy foreign students may pay full retail, but almost everyone else gets some kind of scholarship, grant, or other assistance from the college or a third party. And of course, there are the loans.
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