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Ripping Off Young America: The College-Loan Scandal

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Re: Ripping Off Young America: The College-Loan Scandal

#61

Post by twoodfin »

ethanbond wrote: post #36
twoodfin wrote: post #24

Earlier quoted context omitted.

This is why, until there's some radical, radical change, I'll always vote for the people perpetuating student loans. Loans for the sake of loans seem to be the key problem here: If students who intended to get a "degree in bullshit" at a gussied up diploma mill faced difficulty finding a loan for that purpose, they might reevaluate their decision. And besides: Who's seriously advocating for the total elimination of s…

And who is going to decide what's a "degree in bullshit" and what's a "gussied up diploma mill?" What metrics would they use? Libertarians tend to like the idea. But short of that, it's difficult to vote for reform that lands between perpetuate-the-problem and screw-an-entire-generation. We can fix the problem of paying for education, but that solution isn't going to be found anywhere near the student loan debate.

And who is going to decide what's a "degree in bullshit" and what's a "gussied up diploma mill?" What metrics would they use?

Surely this isn't that difficult a problem to solve. President Obama thinks his administration could start to address it:

http://www.insidehighered.com/news/2013/02/13/obama-calls-mo...

Re: Ripping Off Young America: The College-Loan Scandal

#62

Post by rmk2 »

MisterWebz wrote: post #33
gxs wrote: post #7

Amazing, perspective is everything. I don't deny that college kids are being taken advantage of. Graduating from a small liberal arts college in South Dakota that no one's ever heard of with a degree is Culture Studies and 80k in debt really is a rip off. The flipside of this coin however is someone like me. My parents are immigrants and I was the first to go to school. To my parents, the fact that someone would be e…

In some countries, you don't even have the OPTION to take out a loan to go to school. That's because in some countries you won't be paying more than 5k to go to a decent college.

So? Where do these "5k" come from? And where do you get money to live and eat?

Either you have parents who can help, then it doesn't really matter whether we are talking about 5k, 25k or 50k (from a structural perspective), or you don't. If you don't have anybody who can help, it doesn't matter whether you cannot come up with 5k, 25k or 50k.

One of the reasons German students protested 600€ a term (1200€ a year) fees was that it furthered the divide between people who could afford university and those who needed loans or other money. If you could already afford it either way, 1200€ didn't make much of a difference either. If you already struggled massively to keep yourself afloat before that, coming up with 1200€ more was sometimes quite impossible.

If you cannot take out a loan (any form of loan), then you are screwed unless you are already privileged enough to study. If you are, 5k, 15k or 50k make little actual difference.

There are, in my opinion, two possible ways: no fees & affordable student loans for living cost OR no loans, and in the latter case, you already exclude based on wealth, so you might as well just charge whatever it is you want or whatever artificial treshhold you would like to enforce.

Re: Ripping Off Young America: The College-Loan Scandal

#63

Post by wil421 »

I know plenty of people in this same situation, degree in psychology, social work, communications and my favorite opera, with a mound of debt accruing. All while they struggle to pay off their debt while working at the same college job they had, working at a restaurant waiting tables or being a barista at Starbucks.

Some of these people are in way over their head and beyond just the government loans. A few of them went to smaller private colleges and accrued well over 150K.

Luckily I was in a technical degree (Information Systems but I didnt graduate from the business school ;-), Math and Science school along with the CS majors) and was able to get a few job offers before settling on what I considered the best one.

Re: Ripping Off Young America: The College-Loan Scandal

#64

Post by rayiner »

toomuchtodo wrote: post #6
rayiner wrote: post #4

Earlier quoted context omitted.

Betting on what instrument? Loans are mostly federal. For what it's worth, the student loan program is solidly in the black for the federal government.

"The U.S. government is forecast to generate $185 billion in profit over the next decade from students and their families under an overhaul of the federal student loan program endorsed by the White House and approved by the Senate on Wednesday. The profit figure, if annually averaged through 2023, would place the U.S. student loan program among the 20 most profitable public companies in the world, according to Fortun…

Honestly, I'm okay with the student loan system, I just think schools need to face tuition caps to be eligible for federal student loans.

My wife and I have substantial student loans from law school. We got good jobs and can afford to pay. Meanwhile, lots of people don't and can't, and rely on the governments very generous and flexible repayment terms. As long as the program as a whole turns a profit, its a cross-subsidy, and I think that's great. People who take student loans should be uniquely willing to pay to spread out the risk.

Re: Ripping Off Young America: The College-Loan Scandal

#65

Post by ebiester »

Zimahl wrote: post #45
jacquesm wrote: post #11

One big problem I have with college loans is that people that sign up for it are not adequately informed on the long term consequences of their action. Since this is a loan for education one would expect that before being allowed to sign for the loan there would be a test that you'd have to pass to be able to apply. That would get rid of a lot of people that find out the hard way that they've borrowed themselves into…

The problem is that the flip-side consequence is dead-end job prospects. It's a greater of two evils - have a disproportionate lack or opportunity or debt. Debt is the easy choice. The only thing kids need to consider is return on investment. A heap-load of debt will rarely get paid off with a humanities or communications degree.

Every time this comes up...

Every time, people have to be reminded that few people start out in communications degrees. Someone makes it to college, trying pre-med. Then they realize that, while not failing, they do not have the grades to make it into medical school, and they don't have an aptitude for the sciences.

So, if they quit at this point, they will have no degree and 20k of debt. The marginal cost:benefit analysis for a social sciences degree is high. We talk about sunk cost fallacies, but the risk profile looks like this:

drop out | 20,000 in debt, 2% chance of job that can pay it off, and a soft limit on class mobility. continue in social sciences | 60,000 in debt, 35% chance of job that can pay it off, and a better chance of staying in the middle class over a career.

I see my sister run into this. She can't advance in her career because she made the decision to drop out. She is intelligent enough to finish a social sciences degree, and intelligent enough to do the work of a college graduate, but she is filtered out of many jobs because of the requirement. ___

Full disclosure: I have a communications degree (CS minor) and am a developer and am not ashamed to say I've used my communication degree to my advantage as a programmer. What I learned about organizational communication and conflict management have helped solve problems.

Re: Ripping Off Young America: The College-Loan Scandal

#66

Post by coffeemug »

ethanbond wrote: post #36
twoodfin wrote: post #24

Earlier quoted context omitted.

This is why, until there's some radical, radical change, I'll always vote for the people perpetuating student loans. Loans for the sake of loans seem to be the key problem here: If students who intended to get a "degree in bullshit" at a gussied up diploma mill faced difficulty finding a loan for that purpose, they might reevaluate their decision. And besides: Who's seriously advocating for the total elimination of s…

And who is going to decide what's a "degree in bullshit" and what's a "gussied up diploma mill?" What metrics would they use? Libertarians tend to like the idea. But short of that, it's difficult to vote for reform that lands between perpetuate-the-problem and screw-an-entire-generation. We can fix the problem of paying for education, but that solution isn't going to be found anywhere near the student loan debate.

The market. Right now, the government loan programs treat all degrees interchangeably. If you introduce market forces into the equation, the lenders will run some basic stat calculations and you'll quickly end up with the following scenario:

1. Useful degrees from good universities will be easy and cheap for good students to fund.

2. Everything else will get harder/more expensive to fund, in proportion to its statistical returns.

That's all you really need to fix the system.

Re: Ripping Off Young America: The College-Loan Scandal

#67

Post by maerF0x0 »

Its interesting to me that they didnt mention the fact that the Gov't is essentially upgrading an asset. It seems to me that people w/ degrees on average earn more. If they on average earn more, their taxes ought to be higher as well. So the student is borrowing money at interest, to upgrade themselves and in turn will also pay the government more money in the long run. Seems like a great deal for the Gov't.

Re: Ripping Off Young America: The College-Loan Scandal

#68

Post by TallGuyShort »

tghw wrote: post #50

What really breaks this is that the current education bubble is essentially unpoppable. Until lenders start losing more by allowing people to default on student loans, they have no incentive to turn down anyone. And with all of that money so readily available, colleges can keep increasing tuition, since the loans will always provide enough students to fill their classes. The problem with fixing this, however, is that…

I agree with this comment so much! The negative stigma of "only" doing high school is so harmful. Take welders for instance. It's an honest job, provides a useful and necessary service. If somebody finds welding interesting enough to occupy them and satisfy their career ambitions, it's a smart decision not to go to college. They will contribute to society just as well for their choice.

Re: Ripping Off Young America: The College-Loan Scandal

#69

Post by jacquesm »

TallGuyShort wrote: post #37
jacquesm wrote: post #11

One big problem I have with college loans is that people that sign up for it are not adequately informed on the long term consequences of their action. Since this is a loan for education one would expect that before being allowed to sign for the loan there would be a test that you'd have to pass to be able to apply. That would get rid of a lot of people that find out the hard way that they've borrowed themselves into…

I learnt how compound interest worked long before high school. I don't mean to sound unsympathetic, but the notion that people who have applied to and been accepted to a university wouldn't be capable of making simple cost/benefit decisions or understand the consequences of a loan should be laughable. The fact that so many people are apparently approaching graduating without yet having thought about the consequences…

> I learnt how compound interest worked long before high school.

Good for you. I don't mean to be unsympathetic either but not everybody has an intuition for numbers.

I know people that have serious problems relating even simple numbers, doing multiplication of anything over two digits (even with the help of pen and paper), you can just forget about compound interest.

That doesn't mean that such people should not be able to apply for loans, it means that the consequences would have to be explained to them in terms that they can understand, not the mathematical equivalent shorthand for those consequences.

I know that to some people the fact that others can't quite handle numbers is a shocking concept but I've seen this on more than one occasion in people that were otherwise functioning just fine and I definitely don't envy their inability to deal with figures.

Re: Ripping Off Young America: The College-Loan Scandal

#70

Post by JPKab »

Zimahl wrote: post #13
ihsw wrote: post #3

It will be interesting to see how Oregon's Pay-It-Forward will pan out, but it will take half a century to get any real data: http://www.huffingtonpost.com/2013/07/03/pay-it-forward-oreg... Ohio has also shown interest: http://www.huffingtonpost.com/2013/07/18/ohio-tuition-plan-o...

Commenting as an Oregonian, it isn't going to solve any problems it just makes college more accessible, allowing students to kick the can down the road. College is still too expensive and costs have risen for no reason. I went to state college in Washington (Washington State, go Cougs) and when I started there tuition was $1300 (semester system, so $2600 per year). My middle-class parents were easily able to cover my…

Wait a minute: Why won't it solve any problems??? If universities are funded by the salaries of their graduates, then 1) they have to ensure that graduates have decent earning potential, so bloated programs which are sending students to flooded markets (I'm looking at you Psychology) will have to shrink drastically while engineering, and god forbid, vocational education would grow, and 2) Colleges will no longer have a magical hat of endless, low interest, risk free (from the college's perspective) debt to draw on from each student. This, and only this, will force them to cut the bloat.

The Oregon program is the only one I know of that both guarantees qualified students can go to college and simultaneously forces the universities to stop endlessly piling bloated expenses onto taxpayer financed debt.

People don't seem to get this: these universities will have a fixed (but growing annually if they properly prepare graduates) cap on their operating expenses, while simultaneously being able to grow their budgets by training students in skills that the market demands.

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