Not a bad thing, but I feel like many public institutions at the bottom end of the scale aren't much better, just a little cheaper. There is a whole rung of public 4-year universities where the modal outcome is working a job that doesn't require the degree you paid a lot of money for.
California bans ITT tech from accepting new students
231–240 of 325 posts
Re: California bans ITT tech from accepting new students
#232Earlier quoted context omitted.
I'm not going to claim it is an epidemic, but I know a few people in this boat. Generally speaking they are able to get by with a few life hacks: Cohabitate rather than marry, work jobs under the table, and/or be the stay-at-home parent.
Why would they allow their student loans to default in such a situation instead of enrolling in an income based repayment plan? If they have 0 income, they would have a payment of 0 dollars, still get their tax refund, and have their loans forgiven after a some time on the plan.
Not all federal loans allow income-based repayment. For instance, parent PLUS loans aren't eligible, nor are other loans made to or through parents. Moreover, there are tons & tons of private loans (often with high interest rates) pushed at these places, and none of those need to offer income-based repayment.
Re: California bans ITT tech from accepting new students
#233Earlier quoted context omitted.
GPA, extra curricular activity, criminal record, intended major, savings, jobs worked and the duration they were held, etc. Of course, none of this is as accurate an indicator as a FICO score which is why student loans are federally guaranteed, otherwise who would offer them? All of this goes to underscore just how destructive the "college for everyone" concept is. The government is making junk loans so that naive yo…
Any data on how good FICO scores are at predicting default rates? In my limited experience, my own credit report is rarely accurate... and from what I understand, that is quite common. So I wonder how a score calculated on inaccurate information could possibly be a great indicator of default rates?
No data except to postulate that if FICO scores had no correlation to default rates then the entire credit industry would fail.
What is inaccurate about your FICO score? Maybe it results in false negatives (meaning your score is low when it should be high), but if the opposite was true across the board (bad borrowers getting high scores) then the credit industry would collapse.
Re: California bans ITT tech from accepting new students
#234One aspect of ITT and its ilk is that the students often only sign up so they can take out "education" loans for living expenses, with the class work as a very secondary concern.
That's not unique to ITT.
Re: California bans ITT tech from accepting new students
#235Earlier quoted context omitted.
Like in UK? Where everyone gets a student loan from the government, but no university(and that includes Oxford and Cambridge) is allowed to charge more than 9k(roughly $12k) a year? You also don't start paying back until you have a job that pays more than a certain amount per year, and you have 40 years to pay it off - if you don't, it's forfeit.
To be fair, if you make your minimum payments on federal US loans for 25 years, the loan is forgiven (although you are taxed on the amount forgiven). The income based repayment or the public service option means that you may never even touch the principal and still have your loan forgive .
I love federal student loans for many reasons, but I don't get why there are so many people in these comments talking about federal loans as if they're representative! The max you can get from the feds is $5,500 the first year, $6,500 the second, etc. if you are a dependent. Your parents can get more through a PLUS loan (not eligible for income-based repayment) or you can get more in certain cases when your parent was denied a PLUS loan (weird).
So if you're at a place that costs $30,000 in tuition, as many do, when you max out your federal loan and your parents max out the PLUS loans you need to go into the private market. None of those loans offer public service options or IBR as part of a standard deal.
The post to which I'm responding explicitly mentions federal US loans -- thank you. Lots of other folks here are not making that crucial distinction.
Re: California bans ITT tech from accepting new students
#236One of the things that's very interesting to me is how information asymmetry helps drive people to these kinds of companies. I don't know everybody's story, but when I was just out of high school, there was no chance (I believed at the time) that I'd be able to go to a traditional school. I had bad grades, my family was poor and nobody in my family had gone to university except for my father, who had quickly abandone…
Was it the Art Institutes International? My mother taught typography and design there and I could tell you some stories! It, and schools like it, are very intentionally set up as funnels for government school loan programs. There were some good teachers there that did their best, but the corporate side was a pit of snakes. The labs were all outfitted with 5 year old technology, the teachers were paid peanuts, but eve…
No, it was a Computer Learning Center.
Re: California bans ITT tech from accepting new students
#237Earlier quoted context omitted.
This is in part because the federal government has decided that student loans from private banks were too expensive and so the government themselves should offer them cheaper, for great justice. As such, the private student-loan sector in the US is no longer a going concern, and no student loans accurately price risk - a neat little wealth transfer to buy votes from students. It's also a scary credit bubble; apparent…
Can you point out a country where a private student-loan sector is working well? One thing the government does that the private sector won't is prioritise the needs of society over financial results. Say, for instance, that "teachers" and "nurses" were underperforming groups of student-loan takers. Private sector would say "OK, stricter controls on student-loans for those!" Meanwhile the government would say "OK, but…
"One thing the government does that the private sector won't is prioritise the needs of society over financial results."
Getting young people into more debt does not prioritize the needs of society.
If you want to prioritize the needs of society, provide young people a tuition free, or at least very low cost, education. Current system only really benefits scam operations like ITT.
Re: California bans ITT tech from accepting new students
#238Earlier quoted context omitted.
Almost all universities public and private in the US are 501(3)(c) nonprofit organizations. (Some public ones are more or less an extension of the government and don't count) For-profit universities ... aren't. They're owned and operated by for-profit companies, the accreditation is usually terrible and in no way comparable to other universities, and they deceive students into thinking they'll be getting something si…
So, this seems to me like a problem that is almost perfectly amenable to market solutions. University has poor standards? Don't hire their graduates, or at least, don't weight their qualifications as heavily. I don't understand why you think Government action - that is, force - is necessary here. Or is it that you think they are defrauding their students by calling themselves Universities?
Accreditation organizations are private. Vetted by the Department of Education, but still private organizations.
It's just an external audit, and there's nothing at all wrong with that. These for-profit organizations are defrauding students by providing very low quality and very expensive educations, all the while passing the low quality standards set by a broken accreditor.
Market solutions don't work when the target audience are young people investing a huge chunk of their lives in education. If a new brand of coffee and it's horrible, you can just try a different brand. A college student doesn't have the same luxury.
Re: California bans ITT tech from accepting new students
#239Earlier quoted context omitted.
> The same sort of practice whereby used care salesmen will tell you what you need to pay per month without ever making it clear what the total cost is. The instructor of my accounting class was a former used car salesman. He said that his customers didn't want to hear about total cost, they were only interested in the monthly payment. He'd try to explain, and they'd cut him off and go for whatever had the lowest mon…
they'd cut him off and go for whatever had the lowest monthly payment What if this were a rational decision? For a person with low disposable income and no savings choosing the lowest monthly payment is the most rational decision.
Well, it seems like the most rational decision. Whether or not it is, I guess, depends very much on the persons situation.
For example, if you need to buy a car now (eg because you rely on it for work or something and can't wait to buy), then sure, it might very well be. On the other hand, if that's not true, then saving the monthly payment until you can buy it outright is much more rational (and cheaper). I understand that many people can't do that, however.
Re: California bans ITT tech from accepting new students
#240Why can't there be such thing as a good for-profit school? We buy the highest quality smartphones from Apple and Samsung after all - I don't see a lot of non-profit phones or government phones.
Phones tend to be a repeated purchase that people are quickly able to assess costs and benefits of and optimize. It thus more closely approximates the rational choice model under which free markets are efficient.