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How America's universities became debt factories

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Re: How America's universities became debt factories

#141

Post by spencerchubb »

lenerdenator wrote: post #89

1) Move most good careers that do not require a college degree out of the country for the benefit of shareholders 2) Tell everyone born between 1980 and 1995 that they'll be unable to compete in the global marketplace if they don't get at least some post-high school education, and imply that the mere presence of a degree will help instead of having a specific type of degree 3) Have next-to-zero standards for public f…

Unless I missed it in the article, I don't think the author mentioned one of the biggest factors. The big lenders in America are effectively extensions of the US government, and the government guarantees over 90% of loans.

That means there is no risk (for the lender) to give out student loans. The taxpayers take on the risk

Re: How America's universities became debt factories

#143

Post by gruez »

crazygringo wrote: post #88
gruez wrote: post #81

Earlier quoted context omitted.

>In Europe, they have a simpler system. Education is paid for from taxes. If a student does well, they pay for it via taxes. If they don't, then they aren't crippled by debt. That's all well and good for the student, but what about for taxpayers/governments who's funding that education? >And likewise it sets up universities to, as you say, "cut courses with poor returns." Like for example "teaching", because school t…

> That's all well and good for the student, but what about for taxpayers/governments who's funding that education? We can say the same thing about K-12 education -- it's just something we choose to fund collectively, because that's the kind of society we want to be. But also, progressive taxation means that the rich fund it more than the poor. So the general idea is that if law school and medical school are expensive…

>We can say the same thing about K-12 education -- it's just something we choose to fund collectively, because that's the kind of society we want to be.

But in K-12 education, the taxpayer/state has strong control over what's taught. In the last few years there's some latitude by the students, but nothing close the panoply of programs offered by universities. If education is state funded, but only for programs with proven ROI (eg. STEM), I'd be fine with that.

Re: How America's universities became debt factories

#144

Post by [deleted] »

ivewonyoung wrote: post #105
ben_w wrote: post #56

Earlier quoted context omitted.

> If we overdo on it, we get socialism. And we know how it always ends. First, no, we have some high-visibility examples of dictators claiming to be socialists , several of whom had purges of other internal opponents who said socialism was a different thing to what they were doing. We don't point to the "Democratic People's Republic of Korea"* or "The Democratic Republic of Congo" then say of Democracy (or of republi…

There have been a lot of socialist countries that were proper and strong democracies, notably India. The result? Hundreds of millions in abject poverty in India until socialism was given up in the 90s, and is slowly recovering.

[deleted]

Re: How America's universities became debt factories

#145

Post by brigadier132 »

closeparen wrote: post #94
mchusma wrote: post #41

Earlier quoted context omitted.

But…the whole point is that it is NOT a market. If student debt is dischargeable and the government guarantee is removed or dramatically reduced, pretty much all problems are “solved”. Universities will have to start focusing on ROI. Universities that provide a poor ROI will shut down. Universities will need to reduce costs for traditional coursework, cut courses with poor returns, add courses with higher returns. Th…

Trade schools should definitely focus on ROI, and a lot more people should attend them. The idea of the public university is to bring a traditionally aristocratic practice - the devotion of several years of one’s young life to not-necessarily-practical intellectual pursuits - to the middle class. I think our civilization would lose something worthwhile by returning this practice to the exclusive domain of rich famili…

> The idea of the public university is to bring a traditionally aristocratic practice - the devotion of several years of one’s young life to not-necessarily-practical intellectual pursuits - to the middle class

The entire idea that spending 4 years learning useless knowledge is somehow valuable is completely mistaken bullshit.

Aristocrats could get away with it because they were rich but there is 0 evidence this practice brought fundamental value to them or society other than serving as an expensive status signal.

Re: How America's universities became debt factories

#146

Post by freitzkriesler2 »

lenerdenator wrote: post #89

1) Move most good careers that do not require a college degree out of the country for the benefit of shareholders 2) Tell everyone born between 1980 and 1995 that they'll be unable to compete in the global marketplace if they don't get at least some post-high school education, and imply that the mere presence of a degree will help instead of having a specific type of degree 3) Have next-to-zero standards for public f…

[dead]

Re: How America's universities became debt factories

#147

Post by Avicebron »

paulcole wrote: post #139
scoofy wrote: post #110

Earlier quoted context omitted.

You forgot the most important part. The people agreeing to these debts, by definition , do not have an education in complex debt instruments that cannot be discharged. Taking our a vast loan to study English literature might seem unwise, but it’s something I could definitely see a starry eyed 17 year old deciding to do.

I took out around $20k in loans to study literature starting in 2001. Graduated in 2005. Rent was $150 a month. Played a lot of poker and disc golf. Studied and learned a bit. Had a 75% scholarship to help with tuition. Had a $300/semester book stipend as part of that and just bought penny books off Amazon (one of the benefits of an English degree) and pocketed the difference. Basically for 5-8% or so of my (estimate…

I'm trying to figure out if you missed a 0 at the end of your rent...

Re: How America's universities became debt factories

#148

Post by jimbob45 »

tway_GdBRwW wrote: post #48
mchusma wrote: post #41

Earlier quoted context omitted.

But…the whole point is that it is NOT a market. If student debt is dischargeable and the government guarantee is removed or dramatically reduced, pretty much all problems are “solved”. Universities will have to start focusing on ROI. Universities that provide a poor ROI will shut down. Universities will need to reduce costs for traditional coursework, cut courses with poor returns, add courses with higher returns. Th…

> Universities will have to start focusing on ROI. In Europe, they have a simpler system. Education is paid for from taxes. If a student does well, they pay for it via taxes. If they don't, then they aren't crippled by debt. The problem with the ROI approach is it still places too much burden on the student, and, well, life happens. Say you major in comp sci (or some other high-paying field) but shortly after graduat…

Say you major in comp sci (or some other high-paying field) but shortly after graduation something happens which prevents you from working in the field. Sucks to be you.

And if you’re a nurse or a police officer or a teacher or a lawyer and you lose your license under specious circumstances, it really sucks to be you.

Re: How America's universities became debt factories

#149

Post by spencerchubb »

andreyk wrote: post #13

Seems like a good overview, but I do find this bit unclear: "But why don’t market forces correct these issues? The answer lies in the unique shield that non-dischargeable student loans provide to educational institutions and lenders. In a normal market, if a product consistently fails to deliver value, consumers stop buying it. Producers either improve or go out of business. But in the world of higher education, this…

Sure there may competition among suppliers. When you artificially inflate demand, the price will still go up. One does not negate the other

Re: How America's universities became debt factories

#150

Post by huuhee3 »

anovikov wrote: post #106
amelius wrote: post #71

Earlier quoted context omitted.

> Who's fault it is that they are dumb? They are young. And therefore there is an asymmetry in information.

That, probably can and should be fixed. Set a minimum age for someone to take a college loan to say 21. Otherwise, a parent takes it and it's subtracted from a parents' social security check before it does from kid's. Then people will think twice. Maybe that's fair.

Good idea. I think kids in high school should also be shown some real stats about monetary outcomes from different degrees. Not BS marketing material from educational institutions, but actual statistics. The whole society would benefit if number of students in different fields would roughly match labor market demand.
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