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At 18 YO, the only thing the student would really have to suggest they would be a good investment is their GPA. What do you think about requiring students to submit SAT scores prior to receiving a loan? I personally think this is the most logical solution. By sending everyone to college on a loan, including those who are not qualified, all we are doing is driving up the costs for those who should be going to college. What is the drop out rate today, around 50%? That's insane, and that is largely why college is too expensive.
I actually think we should be following the model of countries like Germany. The government will pay for your college if you prove to be college material in HS. No money wasted on sub performing students who would be better served in a vocational track or something else. Now jobs that don't require a college degree are requiring them because everyone is running out to get one. Heck, my boss was throwing around the idea of requiring a college degree for apprentices. When I worked in an office around 2008, the company required a college degree for the admin assistant, and the one that left the job just had a HS diploma. This is crazy.
That is mainly due to the recession. There are not producing that many more graduates these days. The excessive costs and loans mostly come from lower quality schools. I think the simple fix would just be to cap undergrad loans. Say at $40k for undergrad and you can only take out $10k a year.
The simplest way to eliminate the student loan problem is to allow bankruptcy if the student could not find employment in their chosen field. In other words treat a student loan just like any other unsecured transaction.
One effect would be the elimination of most of the online for profit scams.
But you also have to admit that this would significantly dry up the student loan market, making it less available to people. Picture this: you have money and want to lend it out. One of your choices is a 17 yr old pimply kid, who wants to major in computer science, and it will take him 4 years, and a 120ish credits before he has any income with a hope to start paying you back. How risky do you view that?
I see why they have limited student loans from bankruptcy, but there has to be a compromise. Bottom line is - college is an excellent investment for most people who embark on it. So we need to make sure there are ways for people to pursue it.
Parent to College Freshman: "Sure, dear, go ahead and get a degree in Archaic Basket Weaving. If you can't find a job in your "field" all will be forgiven".
Perpetual Collegian to College Freshman: "Dude, you can stay in Academia forever and never work. Just borrowing more and more money and attend a few classes in some stupid subject each semester. You can take a great trip for Spring Break every year with no penalty. PARTY ON!"
Yeah, let's give students MORE opportunity to get degrees that make them unemployable. No abuse of such a system would EVER take place.
there is a cap on how much a student can take for undergraduate loans. The party doesn't last forever, and there are definite penalties to not being able to repay.
The thing you missed is that if student loans were dischargeable it would force lenders to do real risk analysis just like any other loan industry (mortgage or car loans). And if this were the case, no lender would loan money to a student wanting to major in basket weaving. Thus there would be no standing student debt problem - the debt would either be repaid, or discharged through bankruptcy, the latter one would be minimal because no bank would loan to a student who has little chance of repaying back. And it would also put downward pressure on college tuition prices because there wouldn't be any easy money available to students. Yes, the adjustment would be rough, but in the end I think it will be for the best. Those from the wealthy families with disposable money would still be able to major in art and humanities on their own dime, everyone else would either have to major in something practical or go into trades. Win win for everyone.
unless this lowered the cost of certain fields of study, it's not a win-win for everyone. Why do we want only wealthy children studying art and humanities? Yes, we have too many people going into those fields right now, but does that mean that we don't want people studying to become archeologists, geologists, art curators, etc.? Plus, we'd turn into a society of people taking classes that don't round them out as productive members of society, just productive members within certain fields.
I'm not saying you're wrong - just saying, it's not as black and white as you painted it. There's societal benefits to people getting general courses in college as well as specific professional courses of study.
No bank or similar financial institution that has to answer to shareholders would lend an 18 year old with zero credit history a dime. Only the government would make student loans since they don't give a damn about their shareholders... the taxpayers. And since it's FOR THE CHILDREN, they'll continue to lend to any and all comers regardless of major. When has government money made anything cheaper? Why would any kid pay back the loans? Borrow 100K for school, "look" for a job in your field while spending a couple years not working too hard at some job and then write off the whole adventure. Then miraculously find a job in your field and proceed to buy a car, an iPhone and take a nice vacation with no debt to hold you back. Win win for the student. Lose lose for the taxpayers stuck paying their bill.
Well, not quite that bad, but close. Kids of parents who can cosign would get loans (upper middle class, upper class). Kids who pick high-paying majors would likely get some loans (finance, engineering, etc). Not necessarily fields we want to push EVERYONE into, but that'd be the only way to get a college degree probably.
but your second point i agree with. anyone who was smart would do that, discharge their $100k in loans, then get a job. there's a happy medium somewhere here.
It really would only impact lesser quality schools. Top 100 schools turn away a ton of kids who want to pay the current rates and the ones that graduate have only around $15k in debt.
It also would not be simple at all. It would not just go by major. It would have to go by quality of school and student. In the end you'd only have rich kids going to school because no one would be loaning an 18 year old any money who has no current income. A much simpler solution is just an undergrad cap on loans. Let's say $30k is the max you could take for undergrad.
$30K total? or per year? If it's per year, the current cap on loans for undergrad falls somewhat close to that anyways. If it's total, I don't see why you come up with $30K. I took more than that for my 4 year degree, and my degree has paid for itself quite well. I'm almost done paying my loans off also. So why should I have been prevented from getting the degree I got?
You may think this would drive down prices, but people need to look at what goes into the costs of a university. What exactly do you want cut from university spending? Nearly 75% of their expenses are employee compensation. You want universities to not have libraries? Dorms? What?
At 18 YO, the only thing the student would really have to suggest they would be a good investment is their GPA. What do you think about requiring students to submit SAT scores prior to receiving a loan? I personally think this is the most logical solution. By sending everyone to college on a loan, including those who are not qualified, all we are doing is driving up the costs for those who should be going to college. What is the drop out rate today, around 50%? That's insane, and that is largely why college is too expensive.
I actually think we should be following the model of countries like Germany. The government will pay for your college if you prove to be college material in HS. No money wasted on sub performing students who would be better served in a vocational track or something else. Now jobs that don't require a college degree are requiring them because everyone is running out to get one. Heck, my boss was throwing around the idea of requiring a college degree for apprentices. When I worked in an office around 2008, the company required a college degree for the admin assistant, and the one that left the job just had a HS diploma. This is crazy.
this model can exist in Germany because companies in Germany also pay for kids to be educated and trained for specific jobs, mostly, manufacturing. It's not 1 thing that makes us different from them, it's a variety.
States continue to cut funding to education. States used to believe in this as an investment in the residents of their state. It's getting less and less so as we become obsessed with cutting spending at every level.
$30K total? or per year? If it's per year, the current cap on loans for undergrad falls somewhat close to that anyways. If it's total, I don't see why you come up with $30K. I took more than that for my 4 year degree, and my degree has paid for itself quite well. I'm almost done paying my loans off also. So why should I have been prevented from getting the degree I got?
You may think this would drive down prices, but people need to look at what goes into the costs of a university. What exactly do you want cut from university spending? Nearly 75% of their expenses are employee compensation. You want universities to not have libraries? Dorms? What?
Average debt at a top 100 school is around 15k. 30l in loans plus a part time job would get it done. 50k would be fine though as a limit. Very few schools would be worth 50k for undergrad.
Average debt at a top 100 school is around 15k. 30l in loans plus a part time job would get it done. 50k would be fine though as a limit. Very few schools would be worth 50k for undergrad.
I am not sure what you are trying to convey here. Have you earned a degree recently or have kids in college?
The maximum a student can borrow for an undergrad education via federal loans is around $27K,
the parents must borrow the rest.
But, nothing stops them from getting a cosigner and seeking private funding. Which results in debt with no taxpayer exposure.
Discover Financial Services aggressively offers student loans and their underwriting process is substantial.
A typical public university costs about $25-30K a year. Here is an average school in the heartland:
2013-2014 New Undergraduate Estimated Expenses
Tuition and fees $13,009
Room and meal plan (multiple occupancy, 7-day unlimited meal plan) $9,624
Total institutional expenses $22,633
Estimated additional personal expenses: Books and supplies $996
Miscellaneous $3,641
Estimated cost of attendance (in-state) $27,270
Last edited by shaker281; 06-04-2013 at 10:57 PM..
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