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Student Loans Are A Drag On The Economy

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Re: Student Loans Are A Drag On The Economy

#131

Post by specialist »

nirnira wrote: post #81

Why are student loans so high, the market so ridden with defaults, and the price of education so high? I think (well, I'm a little more certain than that) the answer is basic economics. Here's my take: You (America) have a government that offers discount loans - i.e. loans with poor prospects/low interests rates - in the hope of driving a higher allocation of capital to education than would occur in a pure private le…

I have no idea what you're talking about. You can't analyze the current situation while ignoring the past and the changes (privatization) that have happened.

Tuitions went up in the US because the govt has progressively withdrawn subsidies.

Student loans amounts grew to match. Also, student loan writing was privatized, and collections have been given real teeth.

I work in higher ed at a "public" university, which is quickly becoming a private institution, meaning that the admin is planning to be 100% tuition supported within a few years. So now we're "competing" for the best (highest tuition paying) students.

This is exactly the kind of bubble (price inflation running ahead of real value) that occurs when public goods are privatized.

Re: Student Loans Are A Drag On The Economy

#132

Post by lawnchair_larry »

Glyptodon wrote: post #18

Meh. This is (mostly) the students' and the families' who abet their stupid decisions fault. If you go to an in-state community college and then matriculate to an in-state university in my state the total cost of college is (~$4500 for 2 years of CC living at home + ~$25000 for 2 years of closest to home in-state school) ~$30000 + the cost of living at home. Meanwhile people continue to whine about sending their kids…

Ah, you're in the "Got Mine" syndrome phase. I suspect you'll understand when you're older.

You'd do well to recognize that your own complex set of circumstances has very little to do with the people who things did not work out well for.

Re: Student Loans Are A Drag On The Economy

#133

Post by lawnchair_larry »

res0nat0r wrote: post #74
judk wrote: post #44

Earlier quoted context omitted.

Because when there are fewer jobs than candidates, artificial distinctions are used to judge them, and rent seekers exploit that to extract all the economic surplus. This is basic stuff, people. If everyone is going to college, everyone should know this.

I wouldn't call a quality of education difference between MIT and ITT tech artificial.

Neither did he, so what's your point?

Re: Student Loans Are A Drag On The Economy

#134

Post by lawnchair_larry »

thesimpsons1022 wrote: post #127
existencebox wrote: post #57

Earlier quoted context omitted.

At this point; I'd accept "more than not at all." Anecdotes ahead, proceed with caution: Very average PA public school; had a "home ec" course, in which we did hilariously outdated calculations on things like interest vs compound interest. Not a single mention of what I'd call "practical economics"; e.g. actually balancing a real budget (which, FWIW, I've heard is becoming more a thing in certain districts), calculat…

why is it the schools job to teach their finances? I see school as more academic, while personal matters like that should be taught at home.

Are you kidding? What home?

Oh, you mean the people who the banks gave giant loans to that it turned out nobody could afford and put everyone into foreclosure? Or their kids, who signed their life away to bankruptcy-proof loans on a degree they never finished, and can't get a job good enough to pay it back?

Have you seen what passes for a parent?

Yes, let's have those people teach their kids personal financial management.

Re: Student Loans Are A Drag On The Economy

#135

Post by lawnchair_larry »

crucifiction wrote: post #39
higherpurpose wrote: post #7

So stop letting the government guarantee the loans. Watch how the prices fall once only a small fraction can afford to take a $200,000 loan to pay for their college, afterwards. US colleges have been spoiled. That's why prices are so high.

More likely, you will just see the proportion of foreign students increase dramatically. College these days is already mostly made up of semi-rich kids from America and actually-rich kids from China. With loans at least some middle class American kids get a shot.

Already starting. Universities are intentionally marketing how great it is to have diversity to soften the backlash.

Re: Student Loans Are A Drag On The Economy

#136

Post by danielweber »

tzs wrote: post #99
nirnira wrote: post #81

Why are student loans so high, the market so ridden with defaults, and the price of education so high? I think (well, I'm a little more certain than that) the answer is basic economics. Here's my take: You (America) have a government that offers discount loans - i.e. loans with poor prospects/low interests rates - in the hope of driving a higher allocation of capital to education than would occur in a pure private le…

> And again, because humans and humans, colleges, which in America have little government oversight as to pricing, raise their pricing. Why? Because people will still pay it. For whatever reason, colleges are able to bank on their prestige and identity, on the promise of access to important social circles, and so pure pressure for price is diluted Harvard could double its price, and still have no trouble filling ever…

> How do your theories explain their costs being so much lower than what the market would bear?

All those schools could surely fill their seats entirely if they doubled price tomorrow. But there would be a social backlash. They still consistently raise prices faster than inflation.

How many of Stanford's class of 2018 qualifies for that free room-and-board because the families are in the bottom half of families? Since financial aid is just price-discrimination, Stanford isn't leaving that much money on the table.

Re: Student Loans Are A Drag On The Economy

#137

Post by [deleted] »

crucifiction wrote: post #39
higherpurpose wrote: post #7

So stop letting the government guarantee the loans. Watch how the prices fall once only a small fraction can afford to take a $200,000 loan to pay for their college, afterwards. US colleges have been spoiled. That's why prices are so high.

More likely, you will just see the proportion of foreign students increase dramatically. College these days is already mostly made up of semi-rich kids from America and actually-rich kids from China. With loans at least some middle class American kids get a shot.

[deleted]

Re: Student Loans Are A Drag On The Economy

#138

Post by [deleted] »

crucifiction wrote: post #39
higherpurpose wrote: post #7

So stop letting the government guarantee the loans. Watch how the prices fall once only a small fraction can afford to take a $200,000 loan to pay for their college, afterwards. US colleges have been spoiled. That's why prices are so high.

More likely, you will just see the proportion of foreign students increase dramatically. College these days is already mostly made up of semi-rich kids from America and actually-rich kids from China. With loans at least some middle class American kids get a shot.

[deleted]

Re: Student Loans Are A Drag On The Economy

#139

Post by danielweber »

snogglethorpe wrote: post #112
joezydeco wrote: post #56

This is an interesting NPR Planet Money podcast where they try to break down why Duke's tuition costs $60,000/yr (and Duke claims that the actual cost of a student is really $90,000/yr). http://www.npr.org/blogs/money/2014/02/26/283018555/episode-... One of the most interesting points is that colleges are in a unique inverted position when it comes to price vs. demand. Cutting their tuition price would actually decre…

> You can grind your teeth at the rest of the podcast where the administrators claim a lot of this cost is building amenities and facilities that students now expect out of a high-tier college like all-single dorms, a myriad of cafeteria options, and 24/7/365 library and IT staffing. I've seen a fair number of universities in the U.S. and other similarly developed countries, and one of the most striking differences I…

When your customers are price-insensitive, it becomes stupid to not go all out on amenities.

Re: Student Loans Are A Drag On The Economy

#140

Post by eruditely »

thesimpsons1022 wrote: post #127
existencebox wrote: post #57

Earlier quoted context omitted.

At this point; I'd accept "more than not at all." Anecdotes ahead, proceed with caution: Very average PA public school; had a "home ec" course, in which we did hilariously outdated calculations on things like interest vs compound interest. Not a single mention of what I'd call "practical economics"; e.g. actually balancing a real budget (which, FWIW, I've heard is becoming more a thing in certain districts), calculat…

why is it the schools job to teach their finances? I see school as more academic, while personal matters like that should be taught at home.

This post is why ITT we all lose.
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