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I just noticed you said the same thing a few posts ago. I don't understand how people think equal interest rates for all degrees makes any sense. That would be like offering the same mortgage rate to someone regardless of their credit history.
Why don't we tie student loan rates to the probability of payback? If you are pursuing a petroleum engineering degree from a top-ranked school, pay under 3%. If you are going after a woman's studies degree from a tier-4 school, you should pay 15%. Use student loan rates to hedge the risk of not paying back the loan upon graduation.
Additionally, the government needs to get out of the loan business completely. The more the government tries to get involved, the worse the problem ends up becoming.
So you're going to punish someone for what field of study they choose to go into? What kind of messed up mentality is that?
So you're going to punish someone for what field of study they choose to go into? What kind of messed up mentality is that?
I am not punishing anyone. No one forces you to borrow money for college. That person can wait to go to college until they save up enough money, or they can go part time while working another job. Issuing loans is a business, not a charity. A person who is studying something with a low probability of payback is punishing him or herself. What kind of messed up mentality is it to punish a business just to let someone study art history?
Go to a library and pick up a few history books instead of spending money to learn it.
Given the evidence in Post #22 it may be time to institute price controls on both public and private universities to keep costs, such as extravagant stadiums and coaching salaries, along with general administration overpayment, under control based on the COL or some other measure of societal costs. Prices of textbooks also need to be managed as the monopolistic system has driven textbook costs through the roof. Perhaps mandating that texts be available on line at cost through a electronic download would help.
When the private system has failed to regulate prices do to monopolistic abuses the government must step in to provide the equivalent of a functioning market.
All of the big name university athletic programs are self funded institutions. Those stadiums and coaches, even if offensive, are paid from revenue completely separate from academic funding. That money comes from TV, ticket sales, donations, and licensing sales. None of this money has anything to do with academic funding.
When a university has 5 X the number of applicants for each spot, it is no wonder that costs rise.
I am not punishing anyone. No one forces you to borrow money for college. That person can wait to go to college until they save up enough money, or they can go part time while working another job. Issuing loans is a business, not a charity. A person who is studying something with a low probability of payback is punishing him or herself. What kind of messed up mentality is it to punish a business just to let someone study art history?
Go to a library and pick up a few history books instead of spending money to learn it.
You do realize that a higher interest rate makes it FAR harder to pay back a bill than a lower interest rate, do you not? Whether the person has a high paying job or not. So you're going to raise the rate on say a history major & then when they have a problem paying it back in a timely manner, and yes they're still making payments & working, you're going to point fingers & say "See? I told you that degree was worthless, they can't pay their bill!" What a backwards mode of thinking.
So you're going to punish someone for what field of study they choose to go into? What kind of messed up mentality is that?
I think society and taxpayers do not owe it to every citizen to be able to pursue their college dream in a field with no demand for those graduates.
When the media (and politicians) whine about how American needs to compete with China and (insert country here) they are talking about math, science, and engineering. We don't need any more humanities majors. It is not in our best interest to create college graduates with high debt and no job to repay their loans. In that case, we just created a very expensive unemployed but educated person.
I have 2 nieces that went to private out of state colleges.
They have loans $80-100K and neither are working in their field of study.
Neither can afford a new car or a home for many years to come.
Since the aggregate loan limit is for subsidized and unsubsidized loans is $57,500 for undergraduates federal loans can hardly be THE problem when it comes to setting the aggregate cost of tuition. That doesn't mean that loan and grant subsidies do not provide some incentive for colleges and university to distort the price of a college education but clearly students and their parents are factoring in more than simply costs when making decision about which colleges or universities to attend. There is simply to much competition and too varied a level of costs to argue that any one factor comes into play. As the above example indicates, the loans taken out far exceed what student federal student loans provide and did not dictate the choice of going to more expensive schools than would have been available through a public and local college or university.
You do realize that a higher interest rate makes it FAR harder to pay back a bill than a lower interest rate, do you not? Whether the person has a high paying job or not. So you're going to raise the rate on say a history major & then when they have a problem paying it back in a timely manner, and yes they're still making payments & working, you're going to point fingers & say "See? I told you that degree was worthless, they can't pay their bill!" What a backwards mode of thinking.
Higher interest rates are a disincentive for people to enroll in that degree in the first place. They are a way of equalizing human capital across fields so that there are less shortages and abundances of graduates in different fields of study. The goal should not be to have cheap college for everyone, the goal is to push people into degrees where there is a need. The system I proposed would motivate someone to major in computer science and simply spend weekends reading up on history, instead of majoring in history in the first place.
It isn't a college's fault if you have trouble paying back the loan. I try not to blame the business for a consumer's poor decision. Tell me - if I walked into Best Buy and put a $4,000 flat screen TV on a credit card and then couldn't pay the bill, whose fault is it, mine or my credit card company's? I say it is 100% my fault, your logic would blame the credit card company.
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