Why The Student Loan Market Is Insane • Hacker News Board

Re: Why The Student Loan Market Is Insane

#31

Post by alkonaut » Thu, Jun 12, 2014, 11:22 AM UTC

It should be in the public (government) interest to have Young adults date start and thus complete their degrees as early as possible in life.

It's also presumably in the public interest that as many as possible are included in the pool eligible for qualified jobs (you want the top students to be doctors, not the children of rich parents).

Social mobility is also a factor, if university studies are expensive that will severely limit social mobility.

The conclusion is this: higher education should be free, and governments should not only ensure that it is, but that the free education holds at least the same quality as non-free (perhaps surprisingly this is already the case in many countries with free higher education).

Even without tuition fees, housing, food and books are expensive, so grants or cheap loans are still necessary.

The solution in Sweden and many similar countries is to have state guaranteed (I.e subsidized) loans where there is no private entity wanting a premium for the risk of lending money. The result is that anyone can afford taking loans to study, and it usually pays off very quickly.

Re: Why The Student Loan Market Is Insane

#32

Post by logicchains » Thu, Jun 12, 2014, 11:23 AM UTC

I think an important step to take would be allowing lenders to discriminate based on students' course of study, considering the massive effect it has on students' ability to pay back their debt. Such a change would, all other things being equal, reduce interest rates for STEM degrees and increase those for arts, thus potentially increasing the number of STEM students to the benefit of the wider economy.

Re: Why The Student Loan Market Is Insane

#33

Post by jasonlfunk » Thu, Jun 12, 2014, 11:31 AM UTC

beloch wrote: post #3

Parts of this article bother me. Let's say that banks could set rates based on risk and this did force lower quality colleges to reduce their tuition. Those colleges would bring in less revenue and program quality would likely suffer, possibly resulting in a feedback loop. Meanwhile, ivy league universities that are funded primarily by endowments would be able to raise their tuition without burdening their students,…

You are right. This is exactly how a free market works. A bad school starts losing money and either changes or closes. If the Government insured or backed all the loans, bad schools have no market incentive to change.

Re: Why The Student Loan Market Is Insane

#34

Post by bayesianhorse » Thu, Jun 12, 2014, 11:32 AM UTC

aianus wrote: post #9

Swizec wrote: post #8

Earlier quoted context omitted.

And yet in much of Europe (or at least where I'm from), colleges where you pay tuition are considered substandard whereas colleges without tuition are considered high quality. Mostly to do with the expectation that if you pay tuition they will make bloody certain you get that degree, whereas colleges without tuition fail some 50% of their students. Hell, Universities don't even want to accept tuition-based colleges u…

This just seems bizarre to me. How can state funded schools compete for good professors with rich private schools?

Because, for one thing, the private schools aren't richer. And for another, the best teachers in advanced and specialized subject are academic researchers who prefer proven institutions over newer, profit-oriented institutions.

Running private schools is difficult, and I know of several cases where German private schools are causing all sorts of grief to paying students.

Re: Why The Student Loan Market Is Insane

#35

Post by bayesianhorse » Thu, Jun 12, 2014, 11:37 AM UTC

Tuition rates don't reflect the cost or even the value of the education, in many senses of the word "value", but rather they have a strategic aspect to them which justifies the high rates.

Tuition rates are essentially "costly signals". Those who have a degree are so sure of themselves, and had other people believing in them so strongly, that they were able to finance even the highest cost. This system both guarantees the elite students go to elite schools and that employers can sort applicants by school and degree.

Problem is, this kind of equilibrium in the modern economical world tends to blow up in the faces of the "players" at some point.

Re: Why The Student Loan Market Is Insane

#36

Post by rsynnott » Thu, Jun 12, 2014, 11:45 AM UTC

aianus wrote: post #9

Swizec wrote: post #8

Earlier quoted context omitted.

And yet in much of Europe (or at least where I'm from), colleges where you pay tuition are considered substandard whereas colleges without tuition are considered high quality. Mostly to do with the expectation that if you pay tuition they will make bloody certain you get that degree, whereas colleges without tuition fail some 50% of their students. Hell, Universities don't even want to accept tuition-based colleges u…

This just seems bizarre to me. How can state funded schools compete for good professors with rich private schools?

In Ireland, for instance, the rich third level institutions are the state ones; they get reasonable funding from the state, they have donations, they have intellectual property license fees, and so forth. The private ones are mostly targeted at people who can't get into their preferred course at a proper university (the private ones are normally not universities themselves), so they're smallish, and addressing a small market. In particular, they typically do no research.

Re: Why The Student Loan Market Is Insane

#37

Post by aianus » Thu, Jun 12, 2014, 12:01 PM UTC

pjc50 wrote: post #19

aianus wrote: post #9

Earlier quoted context omitted.

This just seems bizarre to me. How can state funded schools compete for good professors with rich private schools?

Nobody becomes a professor for the money.

I didn't become a software engineer for the money, either. But if someone offered me twice the money to do the same thing, I'd move.

Re: Why The Student Loan Market Is Insane

#38

Post by icebraining » Thu, Jun 12, 2014, 12:05 PM UTC

ploxiln wrote: post #6

beloch wrote: post #3

Parts of this article bother me. Let's say that banks could set rates based on risk and this did force lower quality colleges to reduce their tuition. Those colleges would bring in less revenue and program quality would likely suffer, possibly resulting in a feedback loop. Meanwhile, ivy league universities that are funded primarily by endowments would be able to raise their tuition without burdening their students,…

College tuition has been rising much faster than inflation for probably 20 years now. That together with your example of Canada shows that it's still quite possible to offer a good education at a lower price. If you want to help the poorer schools out, it's probably better to just give them money. It seems probable to me that the political desire to give every student a full loan to any college (for equality!) is one…

College tuition has been rising much faster than inflation for probably 20 years now.

Actually, not really. The average price students actually pay has only increased $320 in the last 12 years (from $12650 to $12970). That probably doesn't even cover inflation.

What has been rising much faster is the sticker price, but few students actually pay that.

http://www.npr.org/blogs/money/2012/05/11/152499671/figuring...

http://www.npr.org/blogs/money/2012/05/22/153316565/the-pric...

Re: Why The Student Loan Market Is Insane

#39

Post by ceejayoz » Thu, Jun 12, 2014, 12:10 PM UTC

Paul_S wrote: post #28

doctorKrieger wrote: post #25

Earlier quoted context omitted.

oh you must be joking, i'm graduating from top1 polish university and even the professors are saying the quality of education is piss poor -but well whan can you expect when the TA's are getting paid around 1500 zloty (500$) and the professors are grabbing ~4000zloty (a bit more than 1000$). But there are parts in which you are right - the graduation rate is 30% and the quality of education in paid unis is even worse…

The problem with leaving the country is that your very good degree is now almost worthless. I got mine (from a good technical uni) issued in English, I even wrote my thesis in English. Not a single employer wanted to look at it. Yet, I earn the same as my colleague with a PhD from a local uni. Turns out no one cares about degrees in software engineering. Maybe it's different in your industry.

Software engineering is probably one of the specialties better suited for an apprenticeship-style program rather than a degree-based one.

Re: Why The Student Loan Market Is Insane

#40

Post by 6d0debc071 » Thu, Jun 12, 2014, 12:12 PM UTC

aianus wrote: post #37

pjc50 wrote: post #19

Earlier quoted context omitted.

Nobody becomes a professor for the money.

I didn't become a software engineer for the money, either. But if someone offered me twice the money to do the same thing, I'd move.

Sure, but it's not clear you'd be doing exactly the same thing. I imagine teaching in an institution that's trying to retain its students so that they can suck more money out of them vs teaching in an institution that has that as less of a concern could be quite different.