Recently playing around with a 529 college saving plan calculator, it told me that for a 5 year old aiming to go to a 4 year private school, I need to save up $600k in the next 13 years. I thought the calculator was broken, but it was simply using the past decade's grow rate for tuition to model the next decade.
Some U.S. Colleges Cut Tuition
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Re: Some U.S. Colleges Cut Tuition
#92Earlier quoted context omitted.
These loans have destroyed any chance that a generation of underprivileged students will achieve financial prosperity. If they go away, the federally subsidized loan programs will likely be phased out over ~5 years or so. The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs.
Just like how private sector health insurance isn't predatory at all huh.
It used to be [1][2] until competition was largely regulated out of existence (much to the benefit of doctors and insurance firms). It might be "private sector", but it sure isn't subject to market forces.
It's no accident that those industries with the most anti-competitive regulations are those with the highest costs and poorest service (which ironically begets more anti-competitive regulation).
Tensions between supplier and consumer are profit opportunities for extant and would-be competitors. That no one is stepping in to reap those profits is a strong indicator of a (state-enforced) anti-competitive environment.
[1] https://theunbrokenwindow.com/2011/05/16/lodge-practice-evil...
[2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1652413/?page=1 A doctor in 1908 complaining that fraternal lodge medical insurance was too cheap:
> the chief aim of many fraternal orders appears to be the exploitation and control of physicians in the interests of the numerical and financial growth of the lodges and mainly at the expense of physicians.
Re: Some U.S. Colleges Cut Tuition
#93> cut its tuition by $10,000 for all new students I find it insane tuition is that high. I finished grad school before 2010, and at least with the smaller state schools I went to, total cost of tuition and books was in the $3k~$5k range. Boutique schools like Vanderbilt were like $25k+ (per semester). I had a friend who got a free ride there for graduate school, and he said it wasn't really that different than our st…
The federal loan influence is not large enough to cause the problem we're in. The real problem is the demand for college is enormous because it's the only way to a semi-decent living these days. If you get rid of federal loans all it will mean is private loans fill in to take its place - people still want good paying jobs, so they'll still pay to go to school.
I think the new no-one-is-responsible approach is to let it all fail so interest groups like the low quality private schools won't exist to have an influence then revive state school funding..
A less drastic approach might be to give schools qualifications for seats in a department as graduates take jobs in their field with the overall lost capacity being redistributed evenly over participating schools. In such a system, the bad schools could finally drop out.
Re: Some U.S. Colleges Cut Tuition
#94> cut its tuition by $10,000 for all new students I find it insane tuition is that high. I finished grad school before 2010, and at least with the smaller state schools I went to, total cost of tuition and books was in the $3k~$5k range. Boutique schools like Vanderbilt were like $25k+ (per semester). I had a friend who got a free ride there for graduate school, and he said it wasn't really that different than our st…
> Federally subsidized student loans need to GO AWAY. The language I'm about to use pains me, but this is an extremely privileged take, or at least naive take, on what these loans do. Removing them will hurt about about a generation of students from the very low to the upper middle class set until the academic employment market adjusts. What do I mean? A simple, pragmatic fact is degree from a name-school, vs. a no-n…
Do you think that granting mortgages to NINJAs (no income, jobs or assets) had any affect on the sharp rise in housing costs leading up to the ‘08 bubble?
Re: Some U.S. Colleges Cut Tuition
#95Earlier quoted context omitted.
Make student loans no longer exempt from bankruptcy. The rationale for making student loans persist through bankruptcy is that students could just declare bankruptcy after graduation, since they probably have no assets. Maybe make the exemption only last 10-15 years. The permanence of student loans means lenders have no qualms against writing loans for people who will likely not be able to pay them off for decades, o…
This is wishful thinking. There is no collateral for a school loan. Banks have to make up for that risk somewhere. Students will have nothing to lose by staging bankruptcy, and banks will stop giving out loans.
> There is no collateral for a school loan.
There is no collateral for credit card loans either.
> Banks have to make up for that risk somewhere.
Private student loans have pretty much shriveled to a drop in the ocean of higher-ed financing since they were excluded from the federally-subsidized loan programs (for quite a long time the only “federally-subsidized” loans are direct federal loans), so banks don’t need to do anything; privately-originated loans are only a factor for unaccredited schools whose programs are not eligible for federal loans.
The only lender relevant for federal loans will do exactly whatever federal policymakers decide is desirable, so need to motivate lenders is not a constraint on policy choices.
Re: Some U.S. Colleges Cut Tuition
#96> cut its tuition by $10,000 for all new students I find it insane tuition is that high. I finished grad school before 2010, and at least with the smaller state schools I went to, total cost of tuition and books was in the $3k~$5k range. Boutique schools like Vanderbilt were like $25k+ (per semester). I had a friend who got a free ride there for graduate school, and he said it wasn't really that different than our st…
The federal loan influence is not large enough to cause the problem we're in. The real problem is the demand for college is enormous because it's the only way to a semi-decent living these days. If you get rid of federal loans all it will mean is private loans fill in to take its place - people still want good paying jobs, so they'll still pay to go to school.
> The real problem is the demand for college is enormous because it's the only way to a semi-decent living these days.
There are well-paying jobs that don't require a university degree. Skilled trade jobs exist and are in high demand. Tech careers with IT, networking, software, and hardware exist for those that put in the time, whether that time is on school grounds or at home.
I've known (and currently work with) professional programmers, sysadmins, network engineers, designers, and hardware engineers who don't have formal credentials. All of these people are making six figures in US dollars outside the bay area. They've all put in the time in their domain and in speaking with any of them their expertise is evident.
A major factor in learning these skills is available dedicated time. Middle/Upper-Middle/Upper class kids who are interested in tech can often find available free time to read books, tinker, and acquire hardware/resources (whether through their parents buying it or by tracking down cheap/free hardware (more of a time cost)). The less financially stable a family is, the higher the likelihood that there won't be free time available for academic endeavors and will instead be filled with finding a job to help pay for food/shelter/clothes for themselves and their family. Going to college provides a structured place where dedicated study is expected (and paid for via scholarship or loans). This is an escape hatch for students who didn't have the same opportunities.
Re: Some U.S. Colleges Cut Tuition
#97> cut its tuition by $10,000 for all new students I find it insane tuition is that high. I finished grad school before 2010, and at least with the smaller state schools I went to, total cost of tuition and books was in the $3k~$5k range. Boutique schools like Vanderbilt were like $25k+ (per semester). I had a friend who got a free ride there for graduate school, and he said it wasn't really that different than our st…
> Federally subsidized student loans need to GO AWAY. There's a good argument that its the wrong method to acheive democratization/affordability (I personally prefer a very different approach), but… > They’ve allowed students to enter into debt, Nope, students could enter debt before (and still can outside of) federally subsidized student loans. > the only long term contracts kids under 18 can legally sign, Again, no…
> Nope, students could enter debt before (and still can outside of) federally subsidized student loans.
Source? I’m not aware of any non government lender that would or has underwritten an 18 year old with no collateral and no co-signer. At least not at any single digit interest rate, and definitely not for tens of thousands and maybe hundreds of thousands of dollars.
Re: Some U.S. Colleges Cut Tuition
#98The deal between the government and private colleges is that those private colleges are training our critical workforce and adding net value back into the system by increasing lifetime earnings and economic growth. The government guarantee on debt dollars right now is absolute. Schools get paid no matter what, and have no liability for actually providing an ultimately valuable service. Here’s an alternate arrangement…
> The deal between the government and private colleges is that those private colleges are training our critical workforce and adding net value back into the system by increasing lifetime earnings and economic growth. Source? As far as I can tell, some genius politicians figured out they can lower taxes or keep taxes low by removing and reducing taxpayer funding for colleges, and replacing it with free non dischargeab…
I think the problem is not a lack of funding. Economically, the more you spend on a problem like this, the less you get back for every dollar spent. This isn’t a manufacturing problem where cost decreases with scale. Throwing more dollars at this will just decrease the average outcome per dollar.
A part of the problem is just the notion that everyone should even be going to two or four year university.
> In 2017, state and local governments spent $297 billion, or 10 percent of state and local direct general spending, on higher education. Higher education was the third-largest source of state and local direct general spending in 2017, roughly equal to spending on health and hospitals.
> At the post-secondary level, the United States spent more than the average (1.5%) for OECD countries on total government and private expenditures at 2.6%. Only three other countries spent 2% or more of GDP on post-secondary education. Those countries were Canada at 2.4%, Australia at 2%, and Chile at 2%.
https://www.urban.org/policy-centers/cross-center-initiative...
https://www.investopedia.com/ask/answers/020915/what-country...
Re: Some U.S. Colleges Cut Tuition
#99Earlier quoted context omitted.
Bankruptcy tanks your credit rating for years. Most of a decade, ~7 years IIRC. If student loans could only be cancelled via bankruptcy after 10-15 years, that would mean students trying to cancel their loans through bankruptcy would be doing it in their early to mid 30s assuming they graduated at 21 years of age. Their credit scores would be ruined until their 40s at least. Few people would pursue this route just to…
What problem does that solve, then? Wow, you can be bankrupt, and never be able to buy a house or car. How is that a solution? It's the same problem as now - "you can't get a house/car because your loan makes you unable to afford it." This doesn't solve the problem. See, it's just a garbage solution thrown out because it "sounds" good but on inspection it's just BS.
I'm not sure what I'm failing to explain.
It's not feasible to make student loans able to be eliminated via bankruptcy without restriction, since students could just go through bankruptcy right after graduation and plan around being unable to get a mortgage or car loan until they're 30. If you graduated with a degree in CS, and landed a six figure tech job it'd still make sense financially to go through bankruptcy and save potentially hundreds of thousands of dollars in student loans, even though you could easily pay it off over several years. This let's the student exploit the lender.
The status quo of making student loans not cancellable through bankruptcy makes it so that lenders can act in a predatory manner and issue loans to go to ineffective institutions that don't improve earning potential. They know students won't be able to pay for decades, but they don't care because the student is stuck with the debt and has no way of getting rid of it. This lets the lender exploit the student.
Allowing student loans to be resolved through bankruptcy after 10-15 years is enough time so that most graduates have assets, and are probably looking for a mortgage on a home in the near future. Going through bankruptcy at 30 or 35 is a much bigger deal than doing so at 21. In this situation, the student can't easily exploit the lender. But at the same time the lender still has the potential for loss if they try to loan to a student studying basket weaving at a university with a 98% acceptance rate.
The easier it is to eliminate a student loan the easier it is for a student to exploit the lender, and take the loan intending to go through bankruptcy. The harder it is to eliminate a student loan, the easier it is for banks to write loans they know students can't pay off. The optimal spot is somewhere in the middle, where the student has an escape valve - but one that is only feasible to take if you have no significant assets by the time you're 30 or 35. If the lender is worried that a student debtor won't have enough assets by 30-35 to make bankruptcy a bad option, then they will think twice about issuing the loan.
Re: Some U.S. Colleges Cut Tuition
#100We need to just move past the college model. They’re just expensive certification programs at best, in terms of utility. The actual teaching/learning (which I feel they do a bad job of) and the testing/certifying can be separated from each other and democratized (opened up to competition, made more available). The current costs of college are ridiculous, and a minor 10% tuition cut from the $70K/year cost mentioned i…
Top tier colleges (and even state colleges) teach a lot more than what is inside of a book. They teach interpersonal skills, social skills, work ethic, self care, professional networking, etc. I think it is misconception that these schools are respected because they teach the subject matter better, or that they provide no value outside of the lecture hall. If anything, >50% of the value is outside of the lecture hall…
> They teach interpersonal skills, social skills, work ethic, self care, professional networking, etc.
Judging by the amount of screaming children we've seen exit these institutions, they're either not teaching those things, or are doing an extremely poor job at it.
The coddling companies have to do for new grads entering the workforce is a testament to the lack of interpersonal skills, social skills, work ethic, self care, etc. that they gained while away at these institutions of higher learning.