Most scorn of universities and loan programs never seem to address a serious problem: Students taking on debt to fund degrees with little market value, or few job prospects. Racking up $100k to get an interdisciplinary degree in women and gender studies might sound awesome, but not at the cost of a school like NYU.[0] I think schools should be required to press upon students prior to taking out these loans honest and factual statistics about their future job prospects, needs for advanced education, and the average graduates ability to pay back the loan.
I think the colleges should have some skin in the game and be at least partially on the hook if the loan defaults. That should prevent some of the completely egregious price gouging.
At the lower end, they are. If their default rate gets too high, the school loses access to federal funding altogether. Of course, places like NYU have excellent programs with valuable degrees to balance out the defaults among the less valuable degrees. Plus their graduates in those less valuable programs also are far more likely to have wealthy families to support them and certainly have more ability to go on to grad school, resetting their default risk somewhat. So really it's only super scammy, low end, primarily for-profit schools who are at risk of losing their access to federal funds. And even that is a super low bar.
This is really the only path forward: make student debt dischargable. Yes, it will make less people go to college, but too many people going to college is clearly one of the root causes of cyclical skyrocketing costs and increased borrowing.
How would reducing the costs of going to college drive down the number of people going to college?
To clarify what I mean: If student loan debt is dischargeable, that means that taking out a loan for college is actually less risky. We should expect more people to do it, not fewer.
It makes loan itself more risky and thus more expensive. Fewer people will take loans at, say, 22% APR (a good rate for unsecured loan) than at the current rate (3-7%?).
Companies comfortable offering loans to risky candidates will feel far less comfortable doing so.
There is because there is some point where the ratio between amount of money requested, and expected postgraduate earnings for the chosen degree, would make for a bad deal due to the likelihood of default.
It’s less risky for students, but loan providers won’t want to overextend themselves to accomodate institutions who promise students the moon and demand sums they won’t be able to repay to “give” it to them.
Most student loans come from the federal government, and the rates are fixed regardless of risk. So what you and parent are really suggesting is increasing interest rates on student loans, which I totally support. Getting the government out of the student loan business so that the rates can be determined by markets would seem a good first step.
I agree with this. I really think most people are better off being hired and trained on-site for their careers. Students who show tremendous promise make more sense to attend a university, and that should just be federally funded.
If we reduce college attendance drastically, it may be necessary to maintain high end (cutting edge) universities. Otherwise only those with promise and wealth could go.
Because colleges in this hypothetical would serve the common good and the population as a whole would benefit from it's existence. How are you proposing colleges be funded?
They're currently funded many different ways: federal grants, federally subsidized loans, government (both state and federal) subsidized savings accounts, state funds, various scholarship charities, loan forgiveness programs, endowments, etc. Seems like centralizing all that money and decision-making ability into the hands of the President and the U.S. Congress would be a net loss.
I can't say this is true for all Universities, but accounting for inflation, at the University of Washington the cost to educate one student is the lowest it has ever been. So at least at one school they have been working hard at keeping costs down. Unfortunately, we keep reducing state funding to public schools, and the proportion of that cost born by the student is now much higher. Gone are the days that you could work your way through a state college, and it is not because the schools are price gouging.
I agree students shouldn't be taking on the loans they do for worthless degrees but I'd like to add that 17/18 years old is just not old enough to (1) decide what you want to do for the rest of your life and (2) begin taking dozens of thousands of $ in bankruptcy-immune loans to pay for it. There's also the issue of the cost of college being an artificial grossly expensive racket. If the opportunity for moneyed interests to milk kids of every cent because of the kids' and parents' blind desire for collegiate status and opportunity then they will, because this is America.
I agree, but I would say that's not the real problem here. Take the story in the article for example. My guess is that guy majored in English, and he did it because he understands it and likes it.
That should be fine and enough because there is value in English; he's a teacher, he's definitely gonna produce a TON of value over his lifetime for society (and, discussion over fair wages for teachers aside, enough money). More than the $35k debt he graduated with.
Or take the lady who has payed $63k towards her $8k original debt.
The problem here is that the student loan debt market is structured such that this value won't actually pay the debt. If they tie you in with perpetual debt, they can essentially "tax" you for the rest of your life, and because student debt is some sort of exception, there's nothing you can do to default out of it. What corporation wouldn't take the incentive for this essentially free, steady monthly income?
> I think schools should be required to press upon students prior to taking out these loans honest and factual statistics about their future job prospects, needs for advanced education, and the average graduates ability to pay back the loan.
I think schools should be required to justify why imparting a gender studies education costs $100k. Apart from professor salaries (maybe $80k/yr for a public uni in a a major metro area) and classrooms/whiteboard markers/projectors (already paid for, but figure equivalent of $15k/year) what exactly is that money going toward?
We in industry can also help by not valuing the university "name" so highly, and saying so loudly and often. If the job market was kinder to applicants from institutions of lesser-renown, we'd have fewer students willing to go into crazy debt to get into a prestigious school. I acknowledge that software is actually pretty good about this but other industries are not.
Interdisciplinary degree in women and gender studies are a minisculle percentage of all degrees out there. So is antropology.
If you want to make the argument that students are mostly picking wrong degrees, make it with one that is actually prevalent. Not the one that is fashionable among rich kids you personally despise.
but also, if every single student majored in computer science, the market value of that degree would plummet. it's not like everyone will be rich if everyone does the same thing. also, a society without variety would be a sad thing.
If you do some kind of investment (say, in stocks of some company), you first read up on investment, the market this company works in, products this company is planning etc. in particular if you go in debt for this investment.
So why can't one simply expect from grown-up people to do the same for the degree that ones planes do get?
The parents may be more experienced, but they are, for the most part, just as naive.
They grew up in a world where a bachelor's degree - any bachelor's degree - virtually guaranteed at least a middle class lifestyle, if not an upper middle class one. Many of them can't fathom the idea of graduating from college and then not being able to find a job that pays a living wage. Especially the ~2/3 of them who don't hold bachelor's degrees themselves.
> Many of them can't fathom the idea of graduating from college and then not being able to find a job that pays a living wage.
It is not only about finding a job (I believe with a "sensible" degree you will always find one), but about finding a job that pays well enough so that beside the costs of living (which are enormous in some regions) also the college debts can be paid back in a reasonable time.
There is no workable definition of "sensible" here. A number of my friends graduated with journalism degrees in 2007. They couldn't find jobs in journalism. This probably seems obvious to you now, that journalism is not a "sensible" degree, but in 2002-2004 when we were choosing schools and degrees, every major city had two or more competing newspapers with healthy entry level hiring. The world changed. That happens. It is happening to some set of degrees right now, but we don't yet know what they are. Maybe computer science degrees will not be "sensible" in 2021.
My point is just that a solution to this problem that requires teenagers and their parents to accurately predict the future of a complex society is not actually a solution at all.
On the other hand, I don't think you can ignore the financials. It's not about "useful vs useless." All courses of study are useful. People are getting saddled with piles of debt that they can't manage, though, and US law doesn't allow you to declare bankruptcy from your student loans, so people can potentially end up screwed for life. Against that kind of a backdrop, to blithely charge students whatever tuition they're willing to pay, regardless of whether or not they can expect to be able to pay it, is heartless.
So then the question arises, how do you increase the chances that nobody gets shackled with unmanageable debt for life? Changing the earning power conferred by different majors is a possibility. But, capitalism being what it is, that's going to require either changing the demand for those skills, or changing the supply of people who have those skills. It's hard to imagine how the former can be managed without some sort of government subsidy.
There are myriad ways you could affect the supply side, though. Doing something to put universities on the hook for how much their students earn, such as having students pay a % of their income to their alma mater for a decade or two in lieu of all or part of their tuition, would certainly do it. Universities would hopefully respond by starting to limit the number of seats available in departments that feed into less lucrative career paths right quick, in order to make sure that every department is financially sustainable. That would, in turn, reduce the supply of people with those skills, which would translate into an upward trajectory in how much it costs to hire someone with those skills.
But what is that kind of approach, if not a distinctly capitalist riff on the idea of "delineating useful vs. useless degrees"?
I keep wanting to reply to your comment because it's a good one that seems like it deserves more than just an upvote. But I also don't want to take the time to write the kind of response you deserve. So I'm leaving this meta comment just to let you know you weren't shouting at the wind and to thank you for your thoughts, which I found very interesting.
I mean this is why you have Asian immigrant parents insisting that the only acceptable areas of study are premed, prelaw, and (more recently) engineering. Some will refuse to pay for tuition unless their children agree.
(I think there's a famous anecdote by Bobby Jindal where his father told him that he could be anything he wanted to be -- any kind of doctor that is)
This is also the kind of environment that I am used to. Even though university education is mostly free in Germany, there are still costs of living etc. Thus there exist quite some children whose parents are quite hesitant to pay for the education of them if they don't agree with the degree course that the child chooses - even though by law they are typically required to pay.
Parents are required to support their children into their adulthood in Germany? That doesn't sound likely, but then, I'm not German.
Edit: found a reference that says parents must support children until they are 21 or have a profession to support themselves (presumably whichever is sooner -- I hope!).
> Parents are required to support their children into their adulthood in Germany? That doesn't sound likely, but then, I'm not German.
> Edit: found a reference that says parents must support children until they are 21 or have a profession to support themselves (presumably whichever is sooner -- I hope!).
if the child studies at a university, the parents have to pay for them until it gets its master's degree (which is typically much longer than up to the 21 years of age). There are exceptions, such as if the parents can prove that the child does not concentrate on his studies or if it changes the degree course "too often" etc. But assume that the normal case is that the parents have to support the child up to master's degree.
Neither of my parents went to college. I actually missed filling out FAFSA my first year because I didn’t even know it existed. I took the SAT late for a similar reason (I knew it existed but I though you take it your senior year of high school). The parents of first generation college attendees are ill equipped to help. Their advice was effectively go to some college at all costs.
[0]. https://mobile.nytimes.com/2010/05/29/your-money/student-loa...