How America's universities became debt factories

Broadly, it’s the same issue that all jobs have: it’s cheaper to hire pre-trained professionals than to hire and train.

https://www.abi.org/newsroom/chart-of-the-day/price-changes-...

Political solution to this is very unlikely unless there's a major stress in the system that, at least temporarily, takes out the one piece of the price growth puzzle.

Yes but I'm conflicted on this for a couple reasons.

The second part, became less true for anyone graduating after 2004 or so.

Where I still get -vexed- are the people I know who, about to hit or are into their 30s, start in a program for (or, wind up finishing with) a non-marketable degree as their first degree.

And the best example I can think of, was a specific not-colleague that started in some sort of program because they wanted to get into prostetics (I warned them about 3d printing upsetting the industry, they yelled at me for raining on their parade,) the 3d printing paradigm shift, surprise surprise, caused an upset into the marketability of their program, and they shifted into, at least last I was on speaking terms with them, women's studies.

I think part of the reason for the second half however, is an odd balance of 'younger people can be naive' and it's better to have them think that and finish than drop out a year or two because their major isn't panning out, i.e. switch to something else.

I say -that-, mostly because I know a lot of folks in my school would wash out from Engineering into Business or something else and while it's possibly not 'ideal', finishing some semi-useful degree is better than dropping out with some percentage of the full debt and nothing to show for it. I will note that almost everyone I saw 'leave' an engineering/CS/STEM type major flipped to something that was still, on some level, marketable.

> 3) Have next-to-zero standards for public funds used in grant and loan programs for college education, meaning people can take out loans for any sort of degree program at almost any sort of institution

This is a large blowback effect of various laws to prevent discrimination/etc against historically ethnic universities and programs. Unfortunately it's led to the 'Underwater Basket Weaving' meme.

> 4) Hold these debtors to standards that aren't applied to other types of debtors. You cannot discharge them through bankruptcy, it's very difficult to renegotiate, and SCOTUS has said that the chief executive of the note-holding institution (in this case, the President of the United States) cannot use discretion in deciding who he gets to forgive for loans.

Well, there's the 'flip' side, which ironically, due to all the other arms of the Kraken, contributes to the problem.

They are difficult to negotiate but have various outlying circumstances, i.e. IBR and time periods associated with that, certain discharge conditions (I have a colleague who's student loans were completely forgiven because she had ADA paperwork and they neither offered her a reasonable accommodation nor warned her when she started said program, at least -that- part of the system worked,) and the lovely 'indentured servitude with extra steps' Nonprofit forgiveness program, where if you work for a nonprofit long enough, you can get a discharge.

But then, you do get all these folks that 'wash out' into non-marketable degrees, they keep working at Starbucks or low paying jobs so they get the IBR, what does that do to the rest of the system though? it puts a fuckton of stress on it that we see in the rates.

All of that said, I feel like there's a 'number' where the loan should just be treated like any other debt. e.x. oh you've got $4000 in student loan debt and $50,000 in other debt? Fine wash it too. Or 'hold' the degree till it gets paid back, IDK.

Nobody can do this. It’s not part of basic financial literacy. A few people who make careers out of investing or real estate attempt it and many of them fail.

If you are a normal person, you find a house that needs your basic needs in a decent area that you can afford and you buy it. You don’t try to throw darts at a board to figure out if the housing market is going to crash or the fed is going to lower rates. If you could reliably predict these things it’s your day job.

> manage your savings

Simply putting your savings into a savings account pr even under a mattress is more than most Americans do and is self-evident. Are there more optimal places? Maybe but if it matters to you you have the time to figure it out; Americans are doing well to accumulate 500 in emergency savings anywhere. Worrying about 5% interest money markets vs maybe an index fund for some portion is pointless at that level. (Ed - median emergency savings is 5k. This doesn’t require management.)

> plan your retirement

This becomes important as you approach retirement age, sure. Until then all you need to worry about is stuffing away as much money as you can because of that “compound interest” thing.

> self-employed for a year and correctly identify what is tax deductible and what isn’t

There’s a public website for the IRS where this is all laid about, but even Americans with easy standard taxes pay an accountant because they don’t want to add a few numbers together and look at a tax table.

> recognise when you are being sold a bad financial product.

If you are worried about “financial products” and you’re not at retirement age, all you need to know is “it’s a scam” or you’re very rich.

"Make student loans dischargeable in bankruptcy again.

Tie lending terms to the value of the degree.

Impose risk-sharing requirements on educational institutions – Schools would face financial penalties or need to contribute to a risk-sharing pool if their graduates default at high rates."

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Sounds reasonable. Making people who were either faithful repayers or non-borrowers in the first place, pay for the bad or unlucky choices of a few is obvious bad and unfair policy.

There are always situations where people who make mistakes have them forgiven but pay a price. I think the public would accept something like that, but not a program where the debts are forgiven outright.

Schools need to take a haircut and repay some of the bad debt themselves, just like a bond default does not result in the bondholders receiving 100% of what's owed them.