Ripping Off Young America: The College-Loan Scandal • Hacker News Board

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

#101

Post by twoodfin » Fri, Aug 16, 2013, 6:18 PM UTC

danielweber wrote: post #92

twoodfin wrote: post #90

Earlier quoted context omitted.

How do you avoid the problem of schools only/mostly handing out loans to students with rich parents to cosign? That's the underlying cause of all this conflict: We want the best colleges and universities to be accessible to everyone, and not have existing class distinctions weigh too heavily on the scale.

I can see why we worried about it, but most schools are so leftist they would never come close to only letting in rich kids. I don't think the choice is "lend the kids a whole bunch of money to let them in" vs "don't let them in at all." It's "lend the kids a whole bunch of money" vs "don't lend them a bunch of money, and still let them in." It's possible I'm wrong about this, but we've definitely went too far in the…

Sure, the problem is not the Ivies and top tech schools, most of which have basically committed to paying full tuition for any admitted student who demonstrates they couldn't attend without it.

But for the many excellent schools without massive endowments, the risk of letting in more qualified "Caa3" applicants over "Aaa" applicants could make a substantial difference on the margins.

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

#102

Post by Fargren » Fri, Aug 16, 2013, 6:18 PM UTC

ethanbond wrote: post #12

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…

I agree. Loans aren't at the root of the problem, but they're also a bad solution. An even worse solution is getting rid of loans. The only solution worse than that? Blaming students. This is why, until there's some radical, radical change, I'll always vote for the people perpetuating student loans. I'm not going to be the one that screws an entire generation out of a worthwhile education in the name of "loans are ba…

Free college subsidized by taxes? We have had that in Argentina for a long time, and for some time we had the best education you could get in Latin America. I'll admit nowadays we are pretty much average, but still free. I can't really explain the reasons for the decline in the quality of our education, and it may be related to our lack of monetization.

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

#103

Post by lmg643 » Fri, Aug 16, 2013, 6:19 PM UTC

danielweber wrote: post #46

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…

Part of the reason prices have gone up so much is that credit has become so easy. 50 years ago, if you wanted to go to college, you went, and the prices were reasonable because people could not afford a lot of money for it, and no one would lend it to them. There is almost no downward price pressure on college costs, and there is upward price pressure: since the students don't care about the price, they always want t…

the core problem with college loans is that they are non-dischargeable. this means that no matter what the student's ultimate financial situation (long term unemployed, finances wiped out, etc) they still have to pay down the debt, and it can't be wiped out in bankruptcy.

This stands in contrast to virtually every kind of loan out there, which can be discharged (written off). As a result, there is less risk for the lender to give a loan to any old fool out there, regardless of the major they choose, regardless of the quality of school they go to, etc. anything that might correlate with the ability to pay it back.

you might say, great, they don't discriminate against liberal arts students at no-name schools. and that might be something that suffers if reforms were made. but perhaps that student might be better served if funding were hard to come by. complain now versus complain more later, kind of thing.

the great sin in the student loan market is the online degree mills, which target relatively vulnerable segments of the population, all funded by loans. for example: did you know that online universities cost almost the same as physical ones? that makes absolutely no sense when you think about it, but i don't think many of their students do. online only should be a fraction of the rate.

Perhaps the online university is a market to be disrupted. not unstructured MOOCs, but credentialed degree schools that are a fraction of the cost of current ones. i can see the ycombinator startup already.

and student loans should be dischargeable. it's the only fair thing to do.

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

#104

Post by scott_s » Fri, Aug 16, 2013, 6:19 PM UTC

The NY Times did a seven-part series last year that I felt was a much more thorough and nuanced treatment of the topic: http://www.nytimes.com/2012/05/13/business/student-loans-wei...

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

#105

Post by ianhawes » Fri, Aug 16, 2013, 6:21 PM UTC

I like the name "The Silent Bubble" for this impending crisis because when it bursts, the voices of the millions of Millenials this affects will be drowned out by the constant bitching of the Baby Boomers.

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

#106

Post by eqdw » Fri, Aug 16, 2013, 6:24 PM UTC

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…

> 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.

I grew up in another country and do not really know what the process is for american would-be college students. Could you please explain to me what the process is for getting a student loan?

I'm imagining that it works just like any other loan. "We will give you this much money. We will charge an annual interest rate of x%. Interest will not accrue until you graduate". Is it not like that?

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

#107

Post by apsec112 » Fri, Aug 16, 2013, 6:24 PM UTC

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…

Not to belittle your accomplishment, but you were very lucky to have parents who lived in California, which still has the best public colleges in the US. People whose parents lived in the other 49 states had to either go to a worse (sometimes much worse) school than Cal, or shell out $250K for a private degree.

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

#108

Post by LargeWu » Fri, Aug 16, 2013, 6:25 PM UTC

burntsushi wrote: post #53

ethanbond wrote: post #44

Earlier quoted context omitted.

The overall price of education is the root of the problem, and the price of education has little correlation to the availability of student loans (contrary to popular belief). > Maybe it's time to cap total outstanding student debt to some reasonable expectation of when they can be repaid. I think that's a good start. Kind of resembling a loan-forgiveness mechanism (which there are already a few). It falls into the s…

> The overall price of education is the root of the problem, and the price of education has little correlation to the availability of student loans (contrary to popular belief). Did you read the article? It provided a fairly sound argument supporting the conclusion that the availability of student loans and the price of tuition are quite related.

"Fixing the lending problem might influence the overspending, but fixing the overspending would solve the problem much more directly."

You're missing the point. The overspending is a direct result of the lending problem. Lending is the root cause of the overspending problem. Students choose schools with lots of amenities because it's so easy to get loans, so why not? Because of this, schools have to continue to build plush dorms and state of the art fitness centers in order to keep their enrollment up. This, of course, drives up costs, which is passed on to students via tuition, who just continue to pay for it all with more readily available loans.

A particular university can't just cut spending, because it would put them at a huge competitive disadvantage with everybody else. Only by reigning in lending will costs stabilize.

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

#109

Post by newbie12 » Fri, Aug 16, 2013, 6:26 PM UTC

lmg643 wrote: post #103

danielweber wrote: post #46

Earlier quoted context omitted.

Part of the reason prices have gone up so much is that credit has become so easy. 50 years ago, if you wanted to go to college, you went, and the prices were reasonable because people could not afford a lot of money for it, and no one would lend it to them. There is almost no downward price pressure on college costs, and there is upward price pressure: since the students don't care about the price, they always want t…

the core problem with college loans is that they are non-dischargeable. this means that no matter what the student's ultimate financial situation (long term unemployed, finances wiped out, etc) they still have to pay down the debt, and it can't be wiped out in bankruptcy. This stands in contrast to virtually every kind of loan out there, which can be discharged (written off). As a result, there is less risk for the l…

Student loans are unsecured, so if they could be discharged, the market rate would be akin to a credit card with a huge balance-- 15% to 20% a year in the current interest rate environment. Plus if they could be discharged, such action would become commonplace, a rite of passage at graduation.

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

#110

Post by CoachRufus87 » Fri, Aug 16, 2013, 6:26 PM UTC

Balgair wrote: post #88

My brother now works at a University of California school. He says that the professors are in on the con-game; they know that the kids know that this is all a bubble. Trouble is, everyone involved is tied to the mast. The admins can't find other work for this kind of money, the profs have tenure, the grad students can only otherwise work slinging dope or burgers, and the undergrads have even worse prospects than the…

The problem w/ MOOCs are that many students lack the discipline to successfully finish the class. A blended approach (classroom + online) is the best combination, imo.