Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Student Loan Bubble is Starting To Burst

cnbc.com

Post reply on HN
Print view View original

251–260 of 289 posts

Re: The Student Loan Bubble is Starting To Burst

#251

Post by superuser2 »

ctdonath wrote: post #244
beachstartup wrote: post #239

Earlier quoted context omitted.

the charge is that the school management knows damn well that a full third won't do the work, and admit them anyway, getting their monies and putting them into debt. the issue is that public money is being used for this scheme, not that there's anything wrong with taking money from idiots in general.

Statistically you're correct, but objectively you can't identify which students won't do the work - ergo, you can't discriminate who to enroll (heavy on the consequences of involving the word "discriminate"). The government would come down hard on any school which says "you pass all the enrollment criteria, but we have a nagging feeling you won't complete the degree so we're not letting you in." Hence the argument th…

> "The government would come down hard on any school which says "you pass all the enrollment criteria, but we have a nagging feeling you won't complete the degree so we're not letting you in."

No it wouldn't. Admission to selective schools isn't based on criteria, it's competitive among the other applicants in the pool for a limited number of slots. Counselors routinely state that the vast majority of their applicants are academically qualified; students are selected based on interestingness (communicated through essays & recommendations), extracurricular talents, race, gender, and other factors. Sometimes even virtuosos are rejected because there are already enough virtuosos with that particular talent in the university.

As far as I know, it is only very low-end schools in the US that run admission solely off of standards.

Re: The Student Loan Bubble is Starting To Burst

#252

Post by Shivetya »

kilroy123 wrote: post #34
msandford wrote: post #16

It's really too bad that the laws surrounding student loans make them artificially cheap. You can't get rid of college debt through bankruptcy so you're basically saddled for life. Normally the interest you pay is the combination of three things: 1. The (inherent) time value of money 2. Expenses the lender incurs to keep up with the debt 3. The average default risk of those taking the loans Student loans only price i…

A large part of the problem is all the shitty for profit schools. They get students to take out large government backed loans, then are defaulting, since they can't actually get a job. I knew several people I grew up with who went to these schools. They took out huge loans, 10k plus, and they never landed any kind of job with their "certificates" / degrees. [1] Half of all defaults are from these kind of schools. [1]…

Considering the budgets of most schools, which ones aren't for profit? Really?

When even state schools spend money on facilities, staff, and materials, not directly toward educating the student, they are for profit.

Re: The Student Loan Bubble is Starting To Burst

#253

Post by superuser2 »

Shivetya wrote: post #252
kilroy123 wrote: post #34

Earlier quoted context omitted.

A large part of the problem is all the shitty for profit schools. They get students to take out large government backed loans, then are defaulting, since they can't actually get a job. I knew several people I grew up with who went to these schools. They took out huge loans, 10k plus, and they never landed any kind of job with their "certificates" / degrees. [1] Half of all defaults are from these kind of schools. [1]…

Considering the budgets of most schools, which ones aren't for profit? Really? When even state schools spend money on facilities, staff, and materials, not directly toward educating the student, they are for profit.

Money going back into the institution and improving research, attracting better staff, buying supplies, building facilities, and improving the quality of life is not profit, it's reinvestment in the organization.

Further, as easy as it is to be offended by brand-new facilities, you'll find that 1) many are paid for by oustide grants and the money never could have gone towards reducing tuition, and 2) those that are paid for with students' money amount to pocket change per student.

A for-profit college educates students as cheaply as possible (in terms of cost to the institution, not price to the student) to maximize the amount of surplus the owners can pocket.

Re: The Student Loan Bubble is Starting To Burst

#254

Post by jack-r-abbit »

kalleboo wrote: post #210
jack-r-abbit wrote: post #162

It is amazing the number of comments that talk about the problems of defaulting on loans and then place the blame in all sorts of places other than the people defaulting on loans. Unless you were forced at gun point to sign loan papers (or other scandalous things transpired), there isn't a lot that can convince me you are not solely responsible for your loan. I don't care if it is for an education, a house, a car or…

Because simply blaming it on the people signing the loans isn't productive, it's just a statement of the status-quo with no solutions (shaming people isn't going to change anything).

Blaming it on the people signing the loans is productive if it makes people see they need to cover their debts. Nobody said anything about shaming anyone. The only shameful thing is trying to blame others and not taking responsibility for your decisions.

Re: The Student Loan Bubble is Starting To Burst

#255

Post by bradleyjg »

mjmahone17 wrote: post #203
bradleyjg wrote: post #180

Earlier quoted context omitted.

I have a different perspective. Rather than thinking it's remarkable that they could do that back then, I think it's a disgrace that we can't do that today. Harvard's tuition back then adjusted for inflation is around $18,700. Assuming 10 classes a year an using an average class size of 40 students (which is what Harvard reports), that's a budget of $74,800 per class. You should be able to run a college on that, even…

Harvard could afford to charge nothing for any of its students. However, by having a form of price discrimination where they gouge the wealthy, they then get to subsidize their low-income students, so that they don't have to miss out on as many of the non-economic opportunities that their classmates engage in, and still provide all the amenities (nice gyms, libraries, clubs and activities) that the upper-class studen…

With thier endowment Harvard could provide gyms, which aren't that expensive in the grand scheme of things, without gouging anyone. There is no good reason for an obstensible charitable non-profit to be engaging in tactics suited to an 19th century railroad monopolist. Also not every legal adult whose parents are wealthy have access to those resources.

Furthermore, you are letting them completely off the hook for exploding expenses. Check out the administrator to student ratio changes from 1960 to today. College payrolls are now stuffed to the gills with deanlings and deanlets with no educational purpose whatsoever.

Re: The Student Loan Bubble is Starting To Burst

#257

Post by bradleyjg »

chris11 wrote: post #209
bradleyjg wrote: post #180

Earlier quoted context omitted.

I have a different perspective. Rather than thinking it's remarkable that they could do that back then, I think it's a disgrace that we can't do that today. Harvard's tuition back then adjusted for inflation is around $18,700. Assuming 10 classes a year an using an average class size of 40 students (which is what Harvard reports), that's a budget of $74,800 per class. You should be able to run a college on that, even…

I've had the impression that Harvard is very affordable for most applicants. They limit parental contribution to 10% at $150,000/yr, and require no parental contribution at less than $65,000/yr. And they do not bundle loans in there financial aid packages. http://ofr.harvard.edu/site/policies-issues/financial-aid/ So that seems to me to say that if a family is in the bottom half of average household income, Harvard i…

No families attend Harvard, just individual adults. Adults whose parents by-and-large are under no legal obligation to support them.

Re: The Student Loan Bubble is Starting To Burst

#258

Post by api »

kilroy123 wrote: post #34
msandford wrote: post #16

It's really too bad that the laws surrounding student loans make them artificially cheap. You can't get rid of college debt through bankruptcy so you're basically saddled for life. Normally the interest you pay is the combination of three things: 1. The (inherent) time value of money 2. Expenses the lender incurs to keep up with the debt 3. The average default risk of those taking the loans Student loans only price i…

A large part of the problem is all the shitty for profit schools. They get students to take out large government backed loans, then are defaulting, since they can't actually get a job. I knew several people I grew up with who went to these schools. They took out huge loans, 10k plus, and they never landed any kind of job with their "certificates" / degrees. [1] Half of all defaults are from these kind of schools. [1]…

Bubbles beget exactly this kind of opportunism. During the housing bubble there were builders who slapped up houses so poorly that they had to be demolished years later.

Re: The Student Loan Bubble is Starting To Burst

#259

Post by api »

everettForth wrote: post #17

No, it's not. Not even close, and this is really terrible reporting. It's unfortunate that so many young people are carrying large amounts of student loan debt, but there is no sign of a "bubble" bursting any time soon. I don't even understand how the notion of a "student loan bubble" makes sense, since people don't "speculate" on college like they speculate on real estate. There are so many things wrong with the ide…

I agree -- it is nothing like the housing bubble. It's worse.

What's really happened is that a college degree has been transformed into a very expensive writ of indenture that is required to get a job. This undermines the fundamental value not only of college but of the job itself. Why go to college to get a good job if a good job does not actually pay off in the end. You don't actually earn anything from the good job-- you just maybe make a dent in the writ of indenture you had to purchase to get it.

That's horrible. It undermines the entire economy. It undermines the entire reason for participating in the economy.

Re: The Student Loan Bubble is Starting To Burst

#260

Post by Tloewald »

The problem with student loans is that they drive up the cost of education by reducing the perception of up-front cost. The solution is to abolish them and let the market deal with it. Universities can switch over to being athletic clubs and government funded think-tanks or something.

It boggles the imagination that NYU charges something like $60,000 tuition per student per year on top of all its other sources of revenue.

Post reply on HN