When lenders get more stringent about handing out hundreds of thousands of dollars to teenagers, colleges will automatically have to scale back fees in order to get people to apply. No more 5-star hotel rates for shoebox dorms and cafeteria food. No more multi-million dollar pay packages for administrators and sports coaches. No more textbooks which cost $300 per class and need to be "refreshed" every year to prevent reuse. Prioritize lending for degrees which have a higher earning potential and so a higher chance of paying back. Favor students with a better academic record. Enforce a minimum GPA in order to keep getting funded. Issuing loans is a business, so treat it like a business rather than a social service with privatized gains and public losses.
Conversely, the worst thing you can do for the problem is forgive existing loans. What do you then do when universities jack up tuition even more and students run up a tab of another trillion dollars over the next decade and refuse to pay, knowing that the government will bail them out anyways?
Unfortunately, higher education will be completely opposed to this plan, because they get paid upfront, take on zero risk, and can charge whatever they want. (Yet another example of moral hazard. When the loan cannot be repaid the taxpayers foot the bill. Remember, “gains are privatized and losses are nationalized.”) Also as incredibly flawed as the present system is, I wonder if it provides an avenue to higher education to students that would otherwise have no such path. I propose that the universities should be financially responsible (instead of the federal government) when the student cannot repay the loan. That would provide a strong incentive for universities to have A. the student graduate B. have a manageable amount of debt with respect to future income.
With all that said about how drastic it would be, I agree with GP that it is the only real solution, and everything else is either temporary or addresses a symptom instead of the cause.
I suspect there would be widespread opposition to this idea on the grounds that "education is about more than getting a job".
If universities were paid based on students' future earnings, would they still teach liberal arts?
Was that not the original purpose?
School are dropping standardize test in the name of fairness (of the skin color).
First, I completely get how some people feel this way. It's valid.
However, as someone who's almost paid off their own student loan, I would not feel punished by student loan forgiveness. I would be glad to see it. The money I have repaid is already gone; yes, if I could turn back time knowing it would be forgiven, I needn't have repaid it, but if I could turn back time there are lots of investments or choices I would do differently. Student loan forgiveness would take a huge existential burden off an entire generation. It would do so much for mental wellbeing of so many of my peers. I can't think of something I'd rather see. And the truth is, I've almost paid off my loans because I'm doing alright. I'll be fine.
Now, the fact it got this bad to start with...doing student loan forgiveness without also making serious reforms is just promising it will happen again. But that doesn't mean we shouldn't help people who are suffering today.
Forgiving debt isn't about you, it's about unburdening an entire generation of working people so they aren't forever under the thumb of financial institutions. Undoing federal guarantees is also about rightsizing academia, which has bloated itself on these ever growing loan numbers.
Anybody currently holding student debt is required to pay the US government an interest rate exceeding what the Fed gives banks. Student loan interest a tax on the poor levied by the US government. My wife and I have the same degree from NYU: her parents paid her tuition, I took out loans. Over time I pay more for the same degree because of interest.
Furthermore, we already do wealth redistribution via corporate welfare of all varieties. There's countless subsidy programs for all manner of environmental harmful activities that will pass huge financial burden to my kid. A small fix to loan interest isn't much to ask.
If student loans were made dischargeable in bankruptcy, I don't foresee many people with good jobs quitting those jobs just to declare bankruptcy. Furthermore, that feels like the kind of thing a bankruptcy judge would see right through. Rather, those borrowers will continue to service their debt as per their agreement.
It's the people who are unemployed or underemployed that would be in the position to declare bankruptcy, and them doing so will result in the true value of their loans being made apparent to the bondholders. And for the cases somewhere in the middle, it will help with more voluntary restructuring (due to a real BATNA) which won't involve the courts at all.
In the 80s interest rates on long term treasuries were around 10%, so I imagine student loans were much higher. Very expensive to finance high dollar amounts with those kind of rates. Most of the gains in housing have been due to rates trending lower for decades, for example.
But I'd advocate a more radical change towards shorter term vocational focused programs (e.g. coding bootcamps) to college.
Many benefits to that, but shorter also means easier to switch professions if you feel you've made a mistake. Due to duration and financial commitment, college is hard to swallow twice through.
Really just need somebody in a position of power to advocate for this kind of radical change in education, to shift public perception and culture.
It's only useful to talk about interest rates in the 80's in the context of fighting inflation. In other cases, it's a cherry-picked number.
1) We've dumbed down public education to the point that college has become a near necessity just to function in society - or certainly to get a job in a society with over the top education requirements.
2) We would need to provide a "third way" where those skill paths that don't really belong in universities can be met. We'd need to further fix decades of telling our kids that they have to go to university and instead convince them that they will do just as well being welders and plumbers.
3) We'd need to accept as a society that there are worthwhile skill areas that just aren't profitable to higher education. For example, I'd argue society benefits from anthropologists and classicists, but if I'm being realistic I acknowledge that widely and cheaply available student loans make departments like these possible. So it brings up some uncomfortable truths about the society we want to be if loans are only available to those departments and future professions most likely to yield a profit - for the uni or the individual.
but the third way already exists? ie. vocational schools, community colleges, and apprenticeships. it's just that they're not as prestigious as university, and people go with university because they want the best.
Is it bad that some people have high student loan balances? Yes. But is it so bad that it's a crisis? I don't see why.
These loans generally have generous repayment terms, including income-based repayment, forbearances, etc. And the average balance is about $36k, which happens to be less than the average price of a new car sold in the past few years. A college education for the price of a car -- it's not the end of the world. There will always be some people who borrow too much, but the only way to prevent that is to get rid of loans altogether -- getting rid of Federal loans will simply push students towards private loans which are much worse.
What part of this situation is going to cause an economic crisis?
The problem isn't that "some people have made bad choices" it's that we are lending money to people they will not be able to pay back. When people default on their loans what happens to the lenders who are ultimately fed backed banks?
I don't think blanket forgiveness is a good approach partly because of unfairness to those without loan balances and partly because it would drive up the cost of education, but I would like to see some programs to reduce the burden of education expenses that both those who owe money for loans and those who don't would be eligible for.
there are maximums on the total that can be lent under federally organized and subsidized student loan programs. last i checked that was around $60k for an undergraduate degree. they are not the cause of outsized student debt.
> and make the loans dischargeable in bankruptcy
non-dischargability of private student loans (i think was a rider on a budget bill under bush ii) opened the borrowed money spigot which then allowed cost of attendance to accelerate into high six digits territory unchecked.
professional schools like law, medicine and business have typically been powered by these sorts of loans. whether or not fully grown adults should be allowed to make big bets on themselves like that is debatable. (i'd argue that there's something of an information asymmetry. people looking to enter new fields don't know how they work and higher education brands are often seen as highly trustworthy institutions where acceptance is the main hurdle and financing would be fair and reasonable given the acceptance bar has been cleared.)
it is pretty clear, however, that encouraging it in high school seniors for undergraduate degrees is ethically problematic.
But students choose NYU over those schools…
Liberal arts education in universities is a disaster. 10% of the students are actually passionate about it, take it seriously and go on to contribute to the society. Rest of them are rich kids who are out there to party.
We need to push students to think about their career choices before picking them.
A more focused system could be much more economical and societally beneficial.
You can always elect to "broaden" your education on the side, but should not be the baseline path. Most would not be willing to pay for the extracurriculars, if you gave them the choice.
I am sorry people, what the fuck is going on over there, slavery-lite? The bank's job is to access risk, if I want to get a loan that will knee-cap me for the rest of my life I might as well go to the Mob.
Real solutions would be cost control or changing our economy so that useless degrees are no longer a requirement/advantage
I like history, however I also have to eat so I majored in CS and am content with reading books about history. If some rich kid wants to get phd in Classical Greek History or English Civil War era history and not be able to use that degree to get a job, let him. It is no difference than if someone wanted to buy a lambo. The rich people can buy it if they want to show off, but the government shouldn't subsidize poor people to get lambos. Some degrees are luxury goods.
I can probably get the same knowledge as any of those "luxury" degrees by my self via free books or videos online. Them going thru the motions to get the degree, which there are few jobs for, is therefore a luxury and should not be subsidized.
A GPA varies by school, private, public, etc.
kids in disadvantaged situations often have less support & less extra curricular opportunities. Also less opportunity for AP/IB which i think some colleges use as a GPA 'bump'
I did find research that shows the correlation to college GPA and high school GPA is way more than ACT. research says ACT doesn't predict success (defined as college GPA).
But that's part of my point in that GPA in college doesn't mean a ton from my perspective and doesn't factor in a bunch of way more important things like social, leadership, and the connections you can make by being born into it or ideally new opportunities from college that you couldn't get growing up.
in terms of strict future earning there is also research to back this up. The 2nd link says even IQ was only 1-2% bump in $.
I would guess that colleges and banks that use that type of strict minimum standard score would tend to discriminate against bright kids in difficult circumstances. Similar to not lending in D zip codes, which tended to be black (funny how that grade aligns).
https://www.k12dive.com/news/high-school-gpa-5-times-more-li... https://www.forbes.com/sites/theyec/2020/10/19/do-college-gr...
Pricing the risk of an 18 year old trying to get through school is a crap shoot, so banks just won't do it. That effectively shuts out kids from poor backgrounds. I know I wouldn't have been able to go to school without loans, and saving money for a few years wouldn't have been an option because of my area/family.
Current laws were made to solve a problem. Now we know that they create a new problem. Let's try something new rather than reverting back to the old problems.
You could divide it up into 4 equal parts for all I care: if someone has paid back at least 25% of their loan, and get want to declare bankruptcy, they should be allowed to do so, but the taxpayers shouldn't pick up the whole check. The bank should definitely eat some of it, and the university should take a financial hit as well.
I agree, the government should have no place in this whatsoever.
> and make the loans dischargeable in bankruptcy
Toss personal responsibility out the window? No, sorry, someone who wasn't financially prudent and _chose_ to attend a college that was obscenely expensive should be putting in 15 hour days until their loans are paid back in full. Why should society or the banks bear any responsibility here?
So restructuring of the loan program has to be in conjunction with other education and access reforms
I’m a big fan of the proposal that people should be able to pay down student loans pretax just as easily as investing in a 401k.
IMO, structure the payment as a mandatory 5% of your paycheck until it’s paid off.
> In total, then, only 25 of the approximately 1,100 schools across 102 conferences in the NCAA made money on college sports last year
1. Forgive all loans, or 2. Never receive any federal funding ever again
"Arbitrary and Capricious means doing something according to one’s will or caprice and therefore conveying a notion of a tendency to abuse the possession of power. In U.S this is one of the basic standards for review of appeals."
However, the US is approaching a situation where the student loan problem will be an "everyone" problem, not just a borrower - I believe a ~$1.6 Trillion debt burden is a significant enough drag on the economy to be felt by everyone, and will be more painful not only for borrowers who can not pay but also non-borrowers who are indirectly affected.
The money that could have been used to pay for housing, services, etc, will instead go to student loans. If I was a local business owner, I would think about that. If you are homeowner, imagine what the price of you home could be if buyers did not have student loans.
I hope people realize this soon.
If you're implying that this debt should be cancelled, note that it doesn't go away if the President decides to cancel it. It just gets passed on to the broader tax base in the form of more national debt.
The reason student loans are a problem for the US is that the government keeps on pumping money into higher education but has no incentives for them to control costs. Universities have fairly inelastic supply, so they can swallow up most the money the government pumps in. Cancelling student loans would just exacerbate this.
A country that can afford trillions in tax cuts for the very rich, financial stimulus, and defence spending can easily afford a one-off loan jubilee.
The real reasons this won't happen are political. Loans are a slaver's whip, and financial freedom is a horror that can't be tolerated for those who live below decks and need to be available to work on demand.
Student loans end up in the same place whether they are cancelled or the borrower can't pay back - unpaid and eventually written off.
IIRC the fed puts it at more like 30%. But your point stands.
I like your rhetoric of the liberal POV as actually conservative - "trickle down". But it's not working.
Then expensive programs that don’t have a career path to support them will have trouble getting students needing financial aid.
Are you saying student loan reduces house price? Sound like a win.
I don't personally have a lot of sympathy for people who do a liberal arts degree at NYU though. At least I knew I'd be able to pay this all back with some high degree of certainty.
I'm a self-taught developer who's thought about maybe attending a school part-time, and they have an awesome makerspace here, so I figured why not try one of their non-matriculated programs?
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Even as a senior developer making a higher end salary for New York City, I found it unaffordable.
It absolutely blew my mind because new grads wouldn't make this kind of money for years out of school.
If someone nearing the later parts of the degree's "ideal career" can't afford it, how is someone supposed to afford it with interest?!
Liberal arts teaches people to deal with the problems that cannot be solved with algorithms or engineering, nor yield to the precise objective methods of science - which is the vast majority of them in the world, including the most critical ones, and even in IT. In fact, algorithms, engineering, and science are all ultimately subordinate to the other issues - ultimately, they are products of human nature. Those are some of the same issues about which many tech leaders like to advertize brazen ignorance, never a sign of good judgment!
And not coincidentally, looking around our society, those are our biggest problems by far - we aren't suffering from a lack of algorithms (and other tech), we have far more than ever. Perhaps if more people at Facebook studied the humanities, they wouldn't make such obvious errors with their truly brilliant technologies - errors bizarrely elementary to people who understand these things. Technology is power, and power is orthogonal to good decisions and good outcomes. I suspect that the fact that the knowledge in humanities and social sciences conflicts with power - again, a bizarrely elementary situation - is why so many powerful people try to ridicule and destroy the reputation of liberal arts. I'm afraid that in IT they have too willing an audience - a population widely ignorant of and often uncomfortable with non-technical issues - and that we and the public have disarmed ourselves of all our protection againt the corruption of power and tyranny (many even celebrate corrupt personal power) - dropping our far superior weapons simply because the powerful pointed them and laughed.
I watched William Shakespeare's play Julius Caesar the other day. The issues of today were addressed brilliantly, and on a level no data could describe or express - one function of art going back to ancient Greece and probably through human history, to hold up a mirror. If more SV engineers would watch it and learn from that and the rest of the humanities, the world would be in much better hands. Heck, just studying Shakespeare would be a start.
...
P.S. In employment, most well-paying jobs are outside IT and completely non-technical (if you can't think of any, you are a bit lost in the IT bubble). And more importantly, life is not all about work; there are more important things - wars aren't fought over job skills. Families aren't workplaces. Freedom in Hong Kong and peace in Ukraine aren't dependant on algorithms. Wages and markets, even, are dependant on politics.
No offense but you're arguing against some thought you have of me in your head not any of my actual stances on liberal arts. My only point is that if you're going to go to an expensive college then the trade off better be worth it otherwise there are far cheaper alternatives (reading is free mostly!) to get that value.
Do you have recommendations for self-study to gain a broader appreciation for the types of problems they can solve and the approaches taken to solve them?
> most well-paying jobs are outside IT and completely non-technical (if you can't think of any, you are a bit lost in the IT bubble)
The ones I can think of typically require graduate / professional degrees or some sort of on the job training program. I don’t know what the employment prospects are for fresh liberal arts grads. I’ve seen some survey data that puts liberal arts grads at below the university average. There are problems with the survey data, but it’s the only information I’ve seen for early career salaries.
The other set of data I’ve seen says mid-career liberal arts graduates out earn everyone else. The issue I take with that data is the liberal arts grads in that data set are more educated in that they go on to earn JD, MBA, MPP, and other professional degrees. The second issue I have with it is the people are older and from a time when undergrad business degrees weren’t common. I have seen some arguments made that business degrees took up a lot of liberal arts students when they became more common at the undergrad level.
In the interest of gaining a more comprehensive understanding, it would be great to know what jobs I’m blind to.
Thanks!
Visual and Performing Arts 17%
Social Sciences 14%
No surprise then.
But alas, when you come from a normal family, it's hard to justify $50k-$80k/yr tuition - especially if you're not connected, or have backup plans.
Relief for NYU students though seems pretty far-fetched.
> a solid, practical job.
ffs
Edit to be a bit less flippant: As a holder of a “solid, practical job” for over a decade I definitely feel there should be more to life and don’t fault those who aspired for more than just practicality at the age of 17/18.
Definitely a worthwhile policy to pursue.
The NYU Tisch School of the Arts is widely considered one of the best film schools in the world. I'm sure it graduates plenty of starving artists, but certainly also a disproportionate number go on to be incredibly successful compared to the same degree from your standard community college. It should still be less expensive.
Take a look at some of the alumni: https://en.wikipedia.org/wiki/List_of_NYU_Tisch_School_of_th...
Pay cash for school, live modestly - no bailout.
Get a loan for school, use cash for immodest lifestyle - free money!
If college loans are a problem, then the cost of college is the real problem. Let's not use government to selectively reward individuals based on how they paid rather than the price they paid.
I oppose any student loan reform or student loan bailouts for this reason. Do not believe the magician's misdirection, focus on the real issue.
For several years the press has reported "government bailout for student loans is coming" and you add to this historically low interest rates. And then we are surprised when people take out lots of student loans and defer repaying them as long as possible. And now the press uses that as evidence of why we need a bailout.
Do you have evidence of this? Most students I know who have borrowed are struggling. Many can't afford books, housing, food. People are living on ramen.
> free money
Loans aren't free money. Do we say the same about loans to wealthy people and corporations?
I think there is often (I don't know about you) a bias against students or the poor as inherently untrustworthy or just unworthy, and therefore credit to them will just be used for bad things. That is, the issue is the preconceived notions, not the economics or policy.
> If college loans are a problem, then the cost of college is the real problem. Let's not use government to selectively reward individuals based on how they paid rather than the price they paid.
Education is essential to the general welfare. We can't wait for the perfect system and lose another generation of talent to waste (not developing) or bankruptcy; we need to address that is happening now.
Many people that didn't borrow money are also struggling. No reason to make the existence of a loan a pre-requisite to receive a bailout. Why isn't the fact that you paid for college sufficient? Why is the conversation only about debt?
> Loans aren't free money
Yes, bailing out student loans is free money. That is the conversation we are having.
And considering only bailing out student loans without a provision for reimbursing students with similar backgrounds that didnt finance college or did but paid off loans early is incredulous. There is no reason the solution to the price of college is to selectively bail out people that choose not to repay their student loans and ignore everyone else.
Bailouts just look like rewarding poor decisions...
I'm getting real tired of hearing these sob stories about not being able to pay for rent and food and being saddled with a lifetime of debt because you make very poor decisions
We need to stop literally underwriting (as taxpayers) bad decisions. And private banks that do underwrite such decisions need to face the possibility of bankruptcy in some form (maybe not quick and easy bankruptcy after 2 years, but something).
Who is responsible for drinking the poison?
I agree that we don't prepare high school kids for real life. We're too busy focusing on their feelings and building a generation of weak minded fools that will never be fully functional adults.
I also agree that we need government out of the edu loan business. It is a poison pill and just enriches the self-serving class that operates these schools.
The greatest mistake was allowing them to lobby and sell the American people the BS that a college degree is required to live a good life. There are endless examples of that not being the case.
People are more thirsty than ever for college.
This is one of the things I got most wrong about the Pandemic (the other being they wouldn't dare attempt a third lockdown).
[edit] I guess also the explosion of the chinese upper middle class should also be a big factor.
While I agree, there is a clear benefit to the student, and to society (through the student's productivity), in learning from the best teachers with better resources, and in a community of the most brilliant people (which tend to become very expensive). I want public health professionals that come up with brilliant solutions to our problems. Anyone in any profession I think would choose that avenue of skill acquisition over the discount option. People in finance go to NY, people in IT go to SV, etc., for good reasons.
That said, it is a matter of degree. NYU seems to be near one pole of extra cost. If you are in California, for example, there are at least two public universities that are considered better than NYU.
That advice doesn’t seem to have percolated through to the hoi polloi yet though.
(And the bigger questionn: people who aren't on HN are hoi polloi? Wow. What does that make us? And it's so easy to get an HN account ...)
Sounds like a very low ROI degree.
If you're interested in getting an advanced education in the healthcare field, you might as well either get an MD (to make the advanced degree worth it) or go to a less expensive city and become a PA, DPT, or OT at a public university.
Out of all of the options in healthcare, MPH at NYU seems like the most excessive waste of money.
Many graduates from the top MPH programs go onto leadership and management positions - for these programs, my experience is that there is a significant focus on the leadership aspect layered with specialist knowledge in policy, epidemiology, biostatistics, health care administration, etc. Many MPH programs will offer subspecialties like that - so you get, for example, an MPH in biostatistics or epi rather than a generic MPH without a focus.
Pay can vary greatly. Some MPH graduates will work in non-profits and others will wind-up running clinical trials at big pharma. You can imagine the kind of salary range those very different job types cover.
I would be extremely cautious about making a ROI judgement of the MPH. I know MPH grads who have worked as direct advisors to US senators, MPH grads who write biostats software, and MPH grads who help run rape crisis centers in underserved communities. There are also combined programs for MD/MPH linking up a school of medicine at a university with its MPH program. Those grads are often looking to lead research efforts or county-level health departments.
More generally speaking, I think you aren't wrong about NYU being an "excessive waste of money" but I don't think that has much to do with the degree in question. I have met too many successful people with "low ROI" degrees just in the software industry to feel confident about judging these programs in general. Which, of course, is very different than saying it is a good idea to rack up $157,000 in debt (like the student FTA) for any program from any school.
I'm sorry these students chose a different path, but there's no way the rest of us should take care of their terrible decisions. If you want to mandate some super low interest rate, then I'm fine with that, but just having the government pay off their loans is extremely offensive.
If these people got into NYU in the first place then they're almost certainly from more well off families. They don't need the help.
Teaching a kid how to be wise with their money is unbelievably valuable. Just teaching kids how to spend and save their money can point them in the right direction when making a huge financial decision for college.
I had the experience of managing, saving, and earning my own money as a kid, and when the time came to go to college, I had the choice between a more expensive school and my local state school. I chose my local state school, got basically the same education, and was able to pay off my debt in a year after graduating. I'm at a good spot professionally so it didn't end up mattering if I went to the more expensive school.
For so many reasons, we cannot do loan forgiveness. This is not a one-time problem with a one-time solution. It would present a huge moral hazard to do it once with a naive expectation it wouldn't need to be done again in a few years. Plus, it amounts to a giveaway to people who are by definition elite, which is political suicide. I get that the people paying student loans feel like it is a crushing debt they can never seem to escape, but college graduates earn significantly more, on average, so they are the least deserving of a handout.
But if we use our educations, we know that popular trends are an exceedingly poor means of understanding the world - it's hard to think of more dangerous, less reliable signals. Popular trends are astrology, witchcraft, conspiracy theories, lynchings, etc.
Thinking about it just a little, probably anyone serious would much rather learn personally from the world's leading experts in the field, with every resource (labs, research libraries, etc.), and among brilliant, hardworking, serious classmates. Or would you be happy learning from just any person, with uneven resources and among people of questionable talent and motivation? In our industry, you want to learn software development from Google Fellows or the local front end shop? If the latter seems sufficient, or if you just want to hang out and take some classes like high school, I agree: Don't waste money on a top school (unless you do it cynically, just for the status and connections). If you're serious, I don't see how there is any question.
I do agree that there's a bit of a mismatch - many people see college as High School Part II, just with harder classes and more personal independence - and colleges seem to cater to that. Not enough students conceive of what college really is, which is understandable given their high school backgrounds and lack of experience in the world: K-12 is all they know and they are experts in it with deeply engrained perspectives and habits after 13 years. The colleges need to help them see that it's a different world, and far wider and greater possibilties. Optimally, IMHO, college should wait for about 5-10 years of real world experience; how can you study the world without ever having experienced it? But as with anything, we have to work with imperfect institutions, systems, and people.
[0] And that fits the general trend of degrading anything that stands in the way of elite power.
In other words, stop going to NYU. It's a bad investment of time or money.
https://www.wsj.com/articles/nyu-college-graduate-parent-stu...