Ripping Off Young America: The College-Loan Scandal

>That's why I didn't tell you to read the blog. I told you to look at the sources

If you're fast and loose with stats and terms you can prove anything. As I read the post, I was struck by the way the writer weaved in disparate studies, terms, and references. I'm very sure there is quite a bit nuance in her claims and because this was written by someone with such a huge conflict of interest (her position literally exists to further private college interest and would she would never, ever argue something that would be counter to those interests), I have to ignore it. There's only 24 hours in a day, and because I don't have the energy to fact check her, I have to dismiss it.

>Most importantly, a simple increase in demand: Students need to do something to give them an edge in the job market. The safest way to do that is still, by far, to go to college.

That's your guess??!?!?! Of course kids want to go to college, just like all kids want a luxury car and fly first class everywhere, so no, demand isn't a great answer. If tuition is high, and you don't have money and you can't get a loan, you don't go to college. Responsible lenders certainly wouldn't lend to everybody, regardless of credi score or repayment ability, but they do. Does that not sound like it could be a problem?

What I don't understand from your perspective is how you can not even imagine that $1.2 trillion in outstanding federally back loans (with around half of it NOT being repaid) would not contribute to the increased tuition costs?!? That's over a trillion dollars that may otherwise have been available if the private lenders had to take on all the typical lending liabilities. That's over a trillion dollars to divvy up between all the colleges and universities (and lenders)! It's insane that tuition outpaced all other costs, including medical costs which are crazy. It looks clear as hell that there is a huge market distortion happening.

one of the possible way would be to follow the French model, where all secondary education(university-and-higher level) is free, but is agonizingly difficult to pass. If I remember correctly, the French universities fail 75% of first-year and second-year students in yearly exams, with only one chance to re-take the exam; in other words, you get only three shot of writing an yearly exam, which you must pass twice within 2 years. Only when you prove yourself worthy(of national investment) and get to the third year do you get the respect you deserve. If you fail twice in your area before the third year? Too bad, you can't study your degree in any school from the country and have it paid by the country, ever.

It's rather harsh 'weedout' system that may be unfair in some regard, but the point is that you only let those who are dedicated enough to climb up, to walk home with a diploma which they deserve.

Nowadays it seems as though the diploma isn't a sign of distinction, but a norm; in other words there are simply too many university graduates. This should change, in my opinion. Someone mentioned the era of baby-boomers, and I partially agree; back then, entering the job market with a college diploma meant that you were promised a prospect for a house, a car, and a life with a backyard: the middle-class American life.

A point I'd like to make is that in the era of baby-boomers, a college diploma was worth it because there hadn't been many with higher education. Besides, what parent wouldn't want his/her children to have a worse life than him/her? If you spent your twenties to forties with the benefit of diploma, or have watched others' life with the benefit, wouldn't you want your children to live with the diploma, the promise you hadn't got?

This resulted in a vastly high supply of college/university graduates; and as the law of supply-and-demand dictates, the value of diploma has now been in steady decline. The problem isn't that the university is too expansive; it's that the university education is too expansive compared to the benefits it promises.

If I were to suggest the solution to this problem, I would suggest to make diploma really, really worth it. We already have mandatory weedout courses in computer science: Generally one with pointers or operating system, the one most kids without the aptitude simply can't pass. Reduce the number of graduates we produce, either by capping it, or making the graduation impossible without the aptitude or dedication.

Is it unfair to some people? Yes, to the slackers who treat university as a away-from-parents paradise with fun and booze. Liberal arts or English majors shouldn't be made fun of because of their life choice, but should be respected for their dedication to the studies. If you ask me, I'd say there are simply too many kids graduating with Lib. Arts major who don't deserve a tenth of the elaborate philosophy.

This war was won when the special interests slipped in certain changes to the barkruptcy code circa 2005. Prior to that, student loans could (like any other) be discharged. The government (not wanting to fund poor students) basically created these "off balance sheet" funding mechanisms through their extensions of loan guarantees. Again, this is very much the same thing that was done with the credit g'tees for the Mortgage GSAs.

What's even worse, is that the money just goes right to the colleges inflated overheads. No student ever "sees" the money from the loans. In this case, the cost of the schools just keeps going up so that the loans remain ~80pc of the cost of a degree. Now, how much money is in the Harvard Endowment? Stanford? Princeton? Massive amounts growing far in excess of inflation, and all Tax free. Why are these places even allowed to charge fees for tuition??

> I have no evidence for what I'm trying to argue, and I don't have the time to read any conflicting evidence, so I'm going to just keep spouting BS because it's easier to remain convinced.

Okay, forget I linked to the blog post. Here are sources.

U.S. Department of Education National Center for Education Statistics, Dec. 2001, Study of College Costs and Prices 1988-89 to 1997-98, Vol. 1

National Commission on the Cost of Higher Education, February 1998, Straight Talk about College Costs & Prices

Government Accountability Office, May 2011, Federal Student Loans: Patterns in Tuition, Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan Limit Increase

Sandy Baum, Policy Analyst for the College Board, New York Times, Feb. 3, 2010

Bridget Terry Long, Education Economist, Harvard University, Testimony, Senate Finance Committee hearing “College Tuition Pricing and Federal Financial Aid: Is There a Connection?” Dec. 5, 2006

What I don't understand is how you think it matters what I "can imagine." It doesn't. You're hounding me for an answer that I never said I have. You are way too eager to find conclusions which may not even exist. You don't have evidence to back those conclusions. You don't want to find evidence to back them up. You don't read evidence that conflicts with your conclusions. And then you act like I'm stupid for not arriving at a conclusion (because, spoiler alert: there isn't one, yet).

I never said it "doesn't sound like a problem." I said that there's no evidence that availability of funding increases tuition. Until you provide something beyond gut feeling, to combat the statistics that contradict you, it's not worth talking about.