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The Great College Loan Swindle

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Re: The Great College Loan Swindle

#31

Post by indubitable »

Overtonwindow wrote: post #17
indubitable wrote: post #13

The lead of this article is very hyperbolic. Even if a person competely defaults and allows default judgement against them, the maximum allowed penalty is a garnishment of 15% of income after tax. On a salary of $18,000 that would be at most $2,700 or $225 a month. That will be a never ending payment, but it's hardly time to go seppuku. Aside from the hyperbole, I do think the article has a fair point. And there's a…

Default would tank your credit score and possibly jepordize future job, housing, and banking opportunities. Even if it's brutal, I think it's better to avoid default if at all possible.

Completely agreed which is why I think it's bizarre that the loans cannot be dismissed. Bankruptcy has similar effects and lasts for 10 years! The reason I mention it is he was talking about $471/month with 0 principal progress on a salary of $18,000 was driving him to literal suicide. At that point taking the 15% and consequences is undoubtedly a better solution.

Re: The Great College Loan Swindle

#32

Post by protomyth »

jimhefferon wrote: post #7
rbcgerard wrote: post #4

Earlier quoted context omitted.

I think the OP’s point is that the money a college spends per student does not equal the tuition sticker price (it may be higher or lower), and the average price incurred (cash tuition + debt incurred) for the student is often less then the sticker price...

Yes, thanks. I know that the pricing situation is nuts, everyone knows it is nuts (I'm a prof, but not at all involved in admissions or financial aid). The model is to list a large sticker price and give a lot of that back. My college's web site is an example. https://www.smcvt.edu/admissions/financial-aid-and-tuition/t... (I understand that all schools in the US have to have such a page.) It lists the bottom-line su…

All accredited colleges in the US are required to provide tuition information - we had to put a ‘Net Price Calculator’ on our website. There are actually a bunch of student notices required by the government and accreditation groups.

Re: The Great College Loan Swindle

#33

Post by readams »

LanceH wrote: post #18
finaliteration wrote: post #3

Earlier quoted context omitted.

> As the price of college he lists the sticker price, not the price after whatever deal is worked out (it is often quite significantly less). I’m not sure to which “deals” you are referring. When I went to college I paid the sticker price for tuition and then some (for housing, books, administrative fees, etc.). I feel like this is another harmful myth that scholarships and grants significantly lower the cost of coll…

Are you sure you didn't have a $500 something in there, so they could claim 95% receive financial aid? I did. Of course sticker price takes into account that they're granting virtually everyone $500. This was the game in the early 90's; I'm sure it has grown since then.

Loans count as financial aid in their view

Re: The Great College Loan Swindle

#34

Post by readams »

Because of government loan guarantees, the cost of tuition will eventually rise to match the entire net present value of the expected lifetime earnings premium. This could easily be in the millions.

Also, we can expect income-based repayment to become the norm, since most will not be able to afford the payments

Re: The Great College Loan Swindle

#35

Post by Clubber »

empath75 wrote: post #29
watwut wrote: post #12

Earlier quoted context omitted.

Quoting the article: "Going to college doesn't guarantee a good job, far from it, but the data show that not going dooms most young people to an increasingly shallow pool of the very crappiest, lowest-paying jobs. There's a lot of stick, but not much carrot, in the education game. [...] the squeeze on the un-degreed grows tighter, increasing further that original negative incentive: Don't go to college, and you'll be…

I didn’t go to college and I’m making 6 figures as a software developer. I’d say half the people I work with never went to college either.

What is your point here? Bill Gates was a college drop out and he's wealthy, but so are some lottery winners.

Re: The Great College Loan Swindle

#36

Post by stult »

empath75 wrote: post #27
Overtonwindow wrote: post #15

Most scorn of universities and loan programs never seem to address a serious problem: Students taking on debt to fund degrees with little market value, or few job prospects. Racking up $100k to get an interdisciplinary degree in women and gender studies might sound awesome, but not at the cost of a school like NYU.[0] I think schools should be required to press upon students prior to taking out these loans honest and…

I think the colleges should have some skin in the game and be at least partially on the hook if the loan defaults. That should prevent some of the completely egregious price gouging.

At the lower end, they are. If their default rate gets too high, the school loses access to federal funding altogether. Of course, places like NYU have excellent programs with valuable degrees to balance out the defaults among the less valuable degrees. Plus their graduates in those less valuable programs also are far more likely to have wealthy families to support them and certainly have more ability to go on to grad school, resetting their default risk somewhat. So really it's only super scammy, low end, primarily for-profit schools who are at risk of losing their access to federal funds. And even that is a super low bar.

Re: The Great College Loan Swindle

#37

Post by hkmurakami »

wolfgke wrote: post #26
Joe-Z wrote: post #25

Earlier quoted context omitted.

One can, but we're talking about 18-year-olds fresh out of high school here.

But the parents are surely not 18 years old and just out of highschool.

I mean this is why you have Asian immigrant parents insisting that the only acceptable areas of study are premed, prelaw, and (more recently) engineering. Some will refuse to pay for tuition unless their children agree.

(I think there's a famous anecdote by Bobby Jindal where his father told him that he could be anything he wanted to be -- any kind of doctor that is)

Heavy-handed? Yes. Effective? Also yes.

Re: The Great College Loan Swindle

#38

Post by KGIII »

readams wrote: post #34

Because of government loan guarantees, the cost of tuition will eventually rise to match the entire net present value of the expected lifetime earnings premium. This could easily be in the millions. Also, we can expect income-based repayment to become the norm, since most will not be able to afford the payments

I'm kind of fond of the idea of people paying a percentage of their income after they get their degree and for X number of years.

I think that's a fantastic idea. For needed professions, it could be X - Y number of years. Inexpensive and attainable education would be a good thing, I should imagine.

Re: The Great College Loan Swindle

#40

Post by nprecup »

empath75 wrote: post #27
Overtonwindow wrote: post #15

Most scorn of universities and loan programs never seem to address a serious problem: Students taking on debt to fund degrees with little market value, or few job prospects. Racking up $100k to get an interdisciplinary degree in women and gender studies might sound awesome, but not at the cost of a school like NYU.[0] I think schools should be required to press upon students prior to taking out these loans honest and…

I think the colleges should have some skin in the game and be at least partially on the hook if the loan defaults. That should prevent some of the completely egregious price gouging.

I can't say this is true for all Universities, but accounting for inflation, at the University of Washington the cost to educate one student is the lowest it has ever been. So at least at one school they have been working hard at keeping costs down. Unfortunately, we keep reducing state funding to public schools, and the proportion of that cost born by the student is now much higher. Gone are the days that you could work your way through a state college, and it is not because the schools are price gouging.
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