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The Student Loan Bubble is Starting To Burst

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Re: The Student Loan Bubble is Starting To Burst

#281

Post by mncolinlee »

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…

Actually, the price increases are most likely not caused simply by the availability of loans.

In the case of public schools, the evisceration of public subsidies has left them operating as public schools in name only. Even in my very liberal state, state support for colleges and universities was cut in half as a share of budgets over two decades. Most states fared worse. At the same time, medical insurance costs for faculty and staff have been increasing by ten percent per year on average, causing this expense to crowd out other necessary costs.

In the case of private schools, the rising cost of public schools has contributed at least as much to their ability to charge more. For profit schools seem to be able to get away with ridiculous claims, leaving graduates jobless and defaulting on large loans. However, they would not be able to justify their prices if public schools were too much cheaper.

Re: The Student Loan Bubble is Starting To Burst

#282

Post by canvia »

Universities should issue the loans themselves so that they have an incentive to deliver a quality, useful education that has value in the marketplace to guarantee their repayment.

Or make the education free and a % of each graduate's future earnings (up to some max $ amount or limit it to 20 years after graduation) are paid back into the endowment to fund future students.

Re: The Student Loan Bubble is Starting To Burst

#283

Post by afterburner »

muzz wrote: post #188
afterburner wrote: post #163

Hey, maybe tuition will go down if loans aren't as readily available...?

Not sure why you'd think that at all

Because if people can't afford to go (as in, can't get the money at all), demand goes down, universities lower tuition to attract more people? It's not perfect or necessarily what would happen, but it could happen.

Re: The Student Loan Bubble is Starting To Burst

#284

Post by crpatino »

coldpie wrote: post #225
drcode wrote: post #14

Earlier quoted context omitted.

The solution is simple and obvious: All of us who have already paid off our loans are going to fund government-arranged loan forgiveness/reduction programs to those who over-leveraged their education. (I wish I was joking...)

I'm okay with it, although that's quite a lot of inefficiency to achieve the end-goal of free higher education.

If making education free was the goal, why not stop messing up with student loans and provident students with scholarships. Every course you flunk or take incomplete, you pay out of your own pocket. Every course you pass you receive a partial (or total) refund based on the final grade. And if you keep your GPA above a threshold, you receive an living allowance about 3x-4x minimum wage (based on the number of credits you take).

This way students would get a free higher education... at least those that make at least some actual studying.

Re: The Student Loan Bubble is Starting To Burst

#285

Post by smm2000 »

kenster07 wrote: post #206

MOOC couldn't have come at a better time.

MOOCs are solution for highly motivated students who are generally able to get accepted by traditional universities, ace classes and graduate with little to no debt. They are not the solution for sub-par students who go to for-profit universities, could not get a job afterward and could not repay loans.

I consider myself reasonably motivated, graduated with almost perfect GPA and I still struggle to complete MOOCs. It's just too difficult to force yourself to study without outside pressure and peer support.

Re: The Student Loan Bubble is Starting To Burst

#286

Post by Toenex »

dnautics wrote: post #277
Toenex wrote: post #215

Earlier quoted context omitted.

Sorry which school did you go to? ;)

Uchicago math. Can't handle non integral mantissas or when they are greater than 6. At work, I do mostly biology, where everything is 1, 2, or 5 - close enough. One sig fig is par for the course, anything else would be an overoptimistic lie.

I do mostly biology, where everything is 1, 2, or 5

As an engineer working in medical imaging this I loved!

Re: The Student Loan Bubble is Starting To Burst

#287

Post by dnautics »

Toenex wrote: post #286
dnautics wrote: post #277

Earlier quoted context omitted.

Uchicago math. Can't handle non integral mantissas or when they are greater than 6. At work, I do mostly biology, where everything is 1, 2, or 5 - close enough. One sig fig is par for the course, anything else would be an overoptimistic lie.

I do mostly biology, where everything is 1, 2, or 5 As an engineer working in medical imaging this I loved!

I'm only half joking. I'll make a buffer solution, recipe calls for 2.4 grams per liter of sodium phosphate monobasic. Ok, 2 is close enough; I'm making 500 ml, that's half, so I'll round down to 1 gram, etc etc etc.

Re: The Student Loan Bubble is Starting To Burst

#288

Post by dnautics »

cloverich wrote: post #186
rayiner wrote: post #126

Earlier quoted context omitted.

No, for-profits are a problem. They account for 10-13% of students, but 25% of student loans, and 50% of defaults. They have no academic standards, because they have no concern for academic reputation in the way traditional institutions do, and can seek to enroll the largest possible classes without worrying about keeping up GPA/SAT medians.

Am i the only person that see's those types of numbers, and correlates them with the type of students the school attracts - the student who did not - or could not - enter into an accredited 'regular' university? Which is not to say that should necessarily impact the degree of scrutiny those schools receive. But perhaps worth considering - if they are serving students who are likely to get no education at all , is it…

these students are worse off. Because now they have a useless degree, some sunk time, and debt. But I think non-profits can be just as bad if not even worse, because the degree is still useless, there's just as much sunk time, and even more debt (since many nonprofits are more expensive than for-profits).

Re: The Student Loan Bubble is Starting To Burst

#289

Post by tsotha »

BrandonMarc wrote: post #270
tsotha wrote: post #187

Earlier quoted context omitted.

Or you'd just tell your employer you had to give it up in a default. He's not going to care whether or not you still have your official slip of paper.

But your future employer may care about indications of your character and future behavior while under their employ. I've heard of companies running credit-history checks to discern whether a prospect is a risk of embezzlement. I'm not saying the judgement / assumptions would be correct, but it's quite possible some employers would act this way all the same. Therefore it's a big incentive to pay your money back.

But presumably if the employer cares about defaults it won't matter whether or not you get your degree since the default will show up on your credit record.
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