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Applicant A: I am a straight A student going for a Bachelors into Master program for Feminist Lit of the 18th Century.
Applicant B: I am a straight B- student going to school for mechanical engineering.
Applicant A will be accepted and need to furnish the money or get a scholarship.
Applicant B will be accepted and get student loans.
Schools and/or loan officers will take the wages for the perspective student at completion of their academic career into account before dispensing funds.
Bingo.
Colleges need to shutter the programs graduating Future Baristas of America. Graduates would be wise to sue the colleges offering worthless degrees to get the ball rolling.
Schools and/or loan officers will take the wages for the perspective student at completion of their academic career into account before dispensing funds.
The problem is good careers today are gone tomorrow. Sure, give the B student the loans. He'll come out at make 50k. But 3 years down the road he could be completely at the mercy of labor arbitrage or disruption in the industry.
The more likely thing is we will all have generic degrees, aside from some sciences, because no one knows which careers offer an ROI. There are quite a few careers that are only help up by regulation, lawyer and doctor to name two. Lawyer is in the toilet as we speak with many unable to pay back the loans.
The problem is good careers today are gone tomorrow. Sure, give the B student the loans. He'll come out at make 50k. But 3 years down the road he could be completely at the mercy of labor arbitrage or disruption in the industry.
The more likely thing is we will all have generic degrees, aside from some sciences, because no one knows which careers offer an ROI. There are quite a few careers that are only help up by regulation, lawyer and doctor to name two. Lawyer is in the toilet as we speak with many unable to pay back the loans.
Doctors can still get a good job just about anywhere. That's healthcare in general. However smart people are choosing something other then HC because of the media and political vilification in the last few years plus the outrageous amount of nonsense bureaucracy that makes it unappealing.
Lawyers, yep. But if you looked at the numbers put out by places other then the law schools people would have known that.
I'm going to bet a STEM graduate is going to find a job that pays well a hell of a lot faster then a liberal arts track.
The student loan bubble will be the catalyst for the next financial crisis. As more and more students default on their loans, we will see a repeat of the 2008 financial crisis. We will probably have to do another national bank bailout to avoid going into another Great Depression.
What happens to college tuition after the bubble burst is secondary. My guess is that many universities will have to start cutting out useless majors as policies are put into place to promote students going into only marketable fields. Banks are going to fund that loan for a degree in Star Wars history.
be careful with your predictions about college tuition.
For most colleges, tuition is the biggest source of revenue that keeps these colleges going. Their budget is already quite tight. If the bubble bursts, there could be declining enrollment, which would put these colleges further in crisis.
Across many states, there are talks about certain campuses closing down, as there is simply not enough enrollment and money to sustain it.
However, that doesn't mean that the tuition will be lower. It probably means fewer programs and smaller programs, a smaller percentage of the population receiving higher education. Colleges have also talked about the idea of differentiating tuition based on majors. So if you want to major in something marketable, there is still plenty of demand, and tuition will remain high. So if you don't have money, then you choose only the affordable majors.
Likewise, faculty salaries might differentiate. Those who teach in marketable programs receive better pay, and those in less marketable programs receive less, and these programs may not exist.
So it's going to be complicated.
This seems typical of the mindset in the university environment these days. Subsidize useless, basket weaving degrees in programs where there are few potential job prospects. Yet penalize those doing the responsible thing like actually selecting majors based on them actually preparing them for JOBS. Utterly and completely back-asswards. IF there were to be differing costs, common sense would dictate that degrees that people are taking for fun, rather than an education that will provide a future, should be more expensive and useful ones less so.
2) If the loans are going to sink us then why is there a default rate built into the interest rate the student pays?
3) The ratio of mortgage debt to student loan debt is 12:1
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