Ripping Off Young America: The College-Loan Scandal

But the schools are profiting immensely from the difference between the perceived value of a degree and the actual value. They'll never get into the loan business without being forced.

But I agree they should have some skin in the game. My favorite idea on that end is students should be able to partially default on loans, and the schools should be required to share the loss with taxpayers.

Think of it as a perverse incentive for collusion between the schools and finance providers to milk the students through the mechanism of easier credit.

I was a grad student there in 1999-2000, and the tuition for the year was only a little over $4,000. It's much higher than that now, about $15,000 for the year. That's still relatively low, assuming that you're an academic student. Professional schools can charge what they like ("data science" is 60K!)

It's still possible to get an excellent education for less money. Part of this is that we need a cultural shift as well as an institutional one. Four years of cal is now very expensive (about 60K in tuition). But a lot of immigrants (many in my neighborhood) go to 2 years of community college (while living at home to keep costs down), finish at a UC, and study something with good job prospects. That's not reading poetry by the the leafy glen next to a beautiful old building, but at least it is affordable. I suppose I shouldn't just say "immigrants", I do know california natives who do this to, plenty of them, but it doesn't really fit the traditional middle class notion of "4 years of college, away from the parents".

Also - Cal has a good name, but rankings like US News and World Report haven't helped either. They reward colleges for everything that costs money, but they don't reward colleges for keeping costs under control or for enrolling low income students. Not a single public institution in the USNWR undergrad top 20, including UC Berkeley.

Bill Bennet, the republican and quite conservative former secretary of Education, made some very good points about this in a recent book "is college worth it". His take on it is, if you get into stanford, go. If you are inclined to study petroleum engineering, go (PE used as a stand-in for highly employable majors), even if you go to a small college in South Dakota (though if it's engineering you're studying, state schools are often more prestigious than their private counterparts, especially in the western states).

The danger is in between. Don't go to an unknown third tier school and run up a huge debt studying liberal arts - or, if you do, make sure you double major with something that will lead to better employment.

One thing - I don't want to give the impression that I think a cultural shift is all that is needed. Students do need to turn away from the high-cost model, but the government did play a role in this problem. Unfortunately, making loans available wasn't helpful to many students. By guaranteeing the loans, the government made it possible for students to borrow far more than a private lender would have considered prudent. By changing the bankruptcy laws around student loans, the government created a far more poisonous form of debt for students. And then lastly, by making the money so freely available, the government allowed institutions to raise their prices - so even if students wanted to "just say no" to high prices, institutions knew they could charge this cause someone would take out the loan. In short, the gov't may have ensured that the low cost education that would have been demanded never emerged.

I went to one of the most expensive private not-for-profit schools in the US (top 20 net-cost, going by http://collegecost.ed.gov/catc/#) and had exactly fuck-all for scholarships. I didn't shell out anywhere near $250k.

Are you assuming med school or something? As far as I can tell, the median debt for med school grads from private schools is barely half of $250k. The most expensive I can find still falls short (barely, to be fair): http://grad-schools.usnews.rankingsandreviews.com/best-gradu...