I believe the system we have in Australia works decently. The government discounts 10% for those who pay upfront, or you can take out a loan against the government (called HECS). No payments need to be made on this loan until you reach a certain level of income upon which it is taken out as an addition to your taxes. There's also no real interest, as it's set to the inflation rate.
Fixing Student Loans: Let’s Give Colleges Some ‘Skin in the Game’
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Re: Fixing Student Loans: Let’s Give Colleges Some ‘Skin in the Game’
#12I believe the system we have in Australia works decently. The government discounts 10% for those who pay upfront, or you can take out a loan against the government (called HECS). No payments need to be made on this loan until you reach a certain level of income upon which it is taken out as an addition to your taxes. There's also no real interest, as it's set to the inflation rate.
Re: Fixing Student Loans: Let’s Give Colleges Some ‘Skin in the Game’
#13Why wouldn't universities just rase rates 10% to cover their projected liability? This would obviously only exacerbate the problem and hasten the fall, but that does appear to be how independent actors work.
Exactly my thought. This is a huge difference compared to mortgages; with mortgages the originator gets perhaps 2%(?) of a good loan but with student loans the "originator" gets a very large share.
The skin in the game effective tells a mortgage originator that if one loan in five goes bad they lose all their revenue(!) but the same message to universities would be that if one loan in five goes bad they have to raise their prices by 2% to compensate.
Re: Fixing Student Loans: Let’s Give Colleges Some ‘Skin in the Game’
#14I believe the system we have in Australia works decently. The government discounts 10% for those who pay upfront, or you can take out a loan against the government (called HECS). No payments need to be made on this loan until you reach a certain level of income upon which it is taken out as an addition to your taxes. There's also no real interest, as it's set to the inflation rate.
I think so too. Not to mention that in Australia, university fees seem to be a lot lower than in the US. For instance, my four year B. Engineering (Hons) from one of Australia's top five universities will have cost me about $25,000 when I finish it at the end of the year...
Re: Fixing Student Loans: Let’s Give Colleges Some ‘Skin in the Game’
#15Makes me think of this article: http://www.petapixel.com/2011/09/02/us-gov-sues-the-art-inst... "Last month, the US Department of Justice filed a massive lawsuit against the company behind the schools, Education Management Corporation, accusing it of fraudulently collecting $11 billion in government aid by recruiting low-income students for the purpose of collecting student aid money. Whistleblowers claim that studen…
The problem is the economic game of getting a college org stable.
In the USA that missing budget shortfall that states do not fund for a college is made up by the college raising their prices to students. Considering most state's income taxes are lower than the fed gov's the Fed must have skin in the game by funding ,more of that budget shortfall directly rather than the edu loan charades.
Re: Fixing Student Loans: Let’s Give Colleges Some ‘Skin in the Game’
#16Am I the only one thinking that charging huge amount of money for education is a net loss for society?
Professors need to be paid, buildings maintained. Historically, Western educational institutions had no state support.