The U.S. would do itself a huge favour by allowing student debt to be bankruptable. College prices can rise infinitely because there is an unlimited supply of AAA+ debt to feed it. Drop that rating to reality and investors don't buy the debt, loans don't get originated, demand for college at $250k dries up.
Used to be. Doctors and lawyers would go through a decade of school on loan and then discharge it all and start a lucrative practice. That's part of how we got here.
Purely anecdotal, but I have a friend who went to veterinary school. The school had a literal class teaching all vet students to use IBR forgiveness to get their debt discharged.
It's not quite as abusive as what could have happened when student loans were dischargeable in bankruptcy- it takes 20 years and you're taxed on the forgiveness- but I thought it was quite perverse that the institution charging towering sums of money is teaching the students in blanket fashion how to avoid paying it off.
>The only "news article" [1] I can find that references this mentions 0.3% of student loans were discharged through bankruptcy in 1977 [2].
It actually says something much stronger - it says that 0.3% of the value of all federal student loans given before 1977 had been discharged through bankruptcy, not in 1977. In 1977 wouldn't make sense because the amendments making it impossible to discharge student loan debt through bankruptcy were made in 1976.
Just because someone talked about potentially doing it doesn't mean it's true either. If it was three quarters of all 20 year old's would have quit school and worked on their band full time.
Some time ago I was dating an American med student - filing bankruptcy was basically her plan once she is done with studies and residence. She mentioned it's fine to take a hit for ~7 years as she won't be earning much during that time period, and then it should pick up quickly.
It's been effectively impossible to do that since 1976, so while that may have been her plan, I'm not certain she would have been able to follow through.
Can you substantiate this claim? "Doctors and lawyers who strategically go bankrupt to avoid paying student debt" sound like made up boogeymen... boogeymen who perfectly justify parts of the US' 2005 bankruptcy reform.
(I think) I'm a fan of getting rid of subsidized loans for education.
It has only made the cost of education go up rather than make college affordable.
But on the flip side, what can be expected from people with no ability to afford college at the new price?
Ive been told over and over that my personal situation working full time on the midnight shift and going to college is 'unrealistic' for everyone to do.
So whats the solution? Get rid of the loans until college cut the cost? What happens to the first few years of lower and middle class kids who cant afford to go to college?
The solution is to stop orienting our society around institutional learning. We have a global information network. We need to orient society around individual learning, not academia.
Kids living at home and taking (mostly) pre-programmed online courses should be the norm. It is vastly cheaper, and can deliver more consistently better results.
I like this mentality, but there needs to be education around fact finding and logic. (Formerly the scientific method, but I think that got hijacked with PhD politics)
Me and my brother are building a dishwasher but he seems to jump into solutions rather than determining the necessary inputs and equations to prove them outputs will meet our design specifications.
And my brother is an engineer.
In a few weeks/months I feel like I can learn any subject with enough googling and hard work. However, without this ultra critical mindset, I can imagine a child would get lost among too much information.
> but there needs to be education around fact finding and logic.
I picked up that mentality while being involved with the family farm as a young child.
The elementary and secondary systems came of age when the vast majority of the population also had significant involvement in agriculture. One would imagine that kind of thinking would be pushed at those early school levels, long before one reaches the typical post-secondary age, but you are suggesting that is not the case. It may have been assumed that one would already pick that up at home given the circumstances of the time and we haven't looked back since?
Has college become the replacement for agrarian exposure in our modern urbanized society?
The problem is credentials. If you have a college degree in X, you can prove it to me. If you lived at home and took pre-programmed online courses, I need a way of determining whether you actually know what those courses should have taught you.
Of course, a college degree doesn't really tell me that, either. If you can solve this problem, you could make online education superior to college education (at least in terms of value to an employer).
> The problem is credentials. If you have a college degree in X, you can prove it to me. If you lived at home and took pre-programmed online courses, I need a way of determining whether you actually know what those courses should have taught you.
There is already an approach that addresses this: competency-based degree programs.
My guess is the meme that higher ed is something you only do between 18-22 will disappear.
Also the meme that all blue collar jobs require a higher ed degree, such as bartender, waitress, secretary, day care worker, receptionist, all of that will go back to "high school grad" as a job req.
Of course with prevailing long term trends, "having a full time job" or "having medical care" will soon be a luxury few will experience.
At state schools, the sharp increase in tuition costs over the last decade have had just as much to do (if not more) with a corresponding decrease in state funding. State legislatures all over this country -- starting with the 2008 recession but never quite stopping -- have cut support to these institutions. Often schools raise tuition in response, because many of them have mandates to serve X number of in-state students or have Y programs or perform research at threshold Z.
(The best part is when the politicians who voted for the cut in funding turn around a year later and say why are you raising tuition?!)
This is a vicious cycle, and it only serves one class of people: students who are born into well-off families who can afford tuition at these rates out of pocket. Those who aren't have to take out larger and larger loans just to attempt to complete a degree. It's really sad, because it doesn't need to be this way.
Likewise healthcare. The fact that insurance companies exist who will pay for a $250000 procedure guarantees that those prices continue. If the customers of healthcare (patients) were the payers, those ridiculous prices would vanish.
It's almost like our health system consists of a small collection of companies playing fast and loose with each other's money, trying to extract as much from each other as possible, and the output of all of this graft (not including co-pay and deductible) is average healthcare at sky-high prices.
Who is going to lend tens of thousands of dollars to an 18 year old with no income, no assets, and no credit?
So, just to be clear 18 year olds getting tens of thousands in dischargeable loans is ridiculous, but 18 year olds getting tens of thousands in non-dischargeable loans makes total sense?
I mean, I understand why if you are a person making money off student loans, the latter is a great situation to have. But for anyone else, I'm not sure I agree that it's something we should fight for.
> I mean, I understand why if you are a person making money off student loans, the latter is a great situation to have. But for anyone else, I'm not sure I agree that it's something we should fight for.
But when a student needs a loan to pay for their education, the person lending money is more important than everyone else. If you are not going to incentivize lending money for college debt and instead going to add risks (of not getting paid back because discharging loans is now easy), then you will have less loans in the first place.
The HN reality distortion field is all kids will use their Stanford CS degree to work in tech for huge salaries. The reality is at least half of kids don't use their degree anyway. My waitress at the local restaurant isn't any better at waitressing because she has small mortgage sized student debt; in a hypothetical world where she couldn't get that education degree paid for, she'd merely be a happier less stressed waitress, which probably would result in better life for everyone.
The concept of everyone should go to college is extremely Boomer; they're dying off and their beliefs are dying off with them. Likewise just wait until "Real estate only goes up!" dies out. Or watching TV pro sports being taken seriously as a hobby. Then you factor in demographic replacement; if most young kids are not native, they will not have legacy native beliefs. It doesn't matter what white hippies held dear in 1970, if a significant fraction of the kids are not legacy demographic. Demographic elimination means cultural elimination and nothing says "white boomer" quite like "Everybody gotta go to college"
A high school diploma used to be a signal that you were a reasonably educated person who could read and add things and manage to get by in most low or medium skill jobs. Today it doesn’t even signal that you are a barely functional adult. That’s sadly what college has become: the semi reliable signal that a person has even a remote chance of contributing to society. I wish there were signals that didn’t cost thousands of dollars but I don’t see any.
This the the parent comment argument. No unlimited credit, no unbounded high prices.
Alternatively cap un-bankruptable dept to a reasonable amount, say 15k/yr or something. It's pretty much how it works here in Quebec Canada and very few students end up with more than 40k CAN in un-bankruptable dept.
The supply/demand equation for college is broken precisely because student loans are can’t be discharged. Every student essentially has an infinitely deep pocket to borrow against so colleges continue to raise prices.
Sure, loans help increase prices just as with cars and housing. But the supply/demand equation is still the same. A high number of high school graduates want those few freshman seats at top colleges and are willing to pay X over the next 10-20 years to attend. College prices will rise until they hit that number. The structure of the loan (interest rate, terms, etc.) is factored into the value of X.
The problem comes when the actual value of graduating from a top college does not equal the expected value. That's where you get people making poor economic decisions (or when they don't read the interest rate on the loan). The people who have to pay $5k/month in student loans, but make $20k/month at their job are getting the deal they expected. But the people who knew they'd have to pay $5k/month but can only find a $8k/month job are having buyers remorse.
You can't compare student loans to car/housing loans. If I only make $50k/yr, there is no bank on the planet that will give me a loan for a $300k ferrari.
If I make a poor economic decisions, and choose to buy a ferrari, I'd also have to a find a bank willing to support my poor economic decisions. Naturally any bank will not take me seriously how much I plead with them on my ability to pay them back. That changes if I the bank is guaranteed by the government to get their money bank.
How much would a Toyota Corolla cost if the government was willing to fully back any car loan? Why wouldn't Toyota charge $500,000 for a Corolla if banks didn't care if their borrowers couldn't pay that amount back?
The short of it is people who would normally be completely priced out of a college education are now enabled by banks who give them fiscally irresponsible loans because they know the government is guaranteed to pay them back, whether or not the borrower can pay or not. If these loans didn't exist, there would be fewer people willing to pay $50k and schools would be forced to lower prices or go defunct.
They are only willing to pay X because X=Y+Z, where Y is what they can afford and Z is the max loan they can get. If they couldn’t get that loan Z, market forces would cause college costs to approach Y.
There are only so many rich parents. Either (1) schools will close down, or (2) schools will lower prices. I'm willing to bet that the answer will be (2) for the vast majority of schools. Schools will not opt to stay open with 60k/yr tuitions and 0 undergrads.
> Who is going to lend tens of thousands of dollars to an 18 year old with no income, no assets, and no credit?
Since the elimination of the Federal Family Education Loan program in 2010, there has been only one legally-possible lender for Federally-guaranteed student loans.
And they aren't a for-profit corporation, or an entity that evidences much concern for babalncing spending and revenue.
It would require huge political will to go against the existing system. I'm excited about Lambda School (https://lambdaschool.com). If they are successful, there should be lots of investors trying out similar models and destroying the existing system.
One problem here is that, at least in my humble opinion, education should ultimately be (or trend towards becoming) a basic human right. Repackaging debt as wage garnishment while making job placement easier makes the job market more efficient, certainly. I can understand why people are excited. It doesn't fix the underlying structural issues in the American education system.
I agree. I think the US system is terrible. We should not stop providing public education merely because someone achieves the age of 18 or 12th grade. But I don't see how it can be fixed politically.
In a functioning education system (which the US system arguably isn't), 12 years of schooling is more than sufficient to produce a well rounded person capable of being a productive and engaging member of civil society. It is not clear to me what the societal benefit is beyond that.
I can agree that college is becoming a band-aid to make up for the serious problems found in earlier years. To the point that, in recognition of this, many now call people who have not graduated from college 'uneducated', which is pretty sad when you think that 12 years of completed schooling hasn't provided an education. But the solution for healing a wound isn't to provide a more affordable band-aid. It is to address what is causing the wound in the first place.
It need not be a difficult fix politically. Nobody, who isn't emotionally or financially invested in college being a band-aid, is going to argue against educating our youth in the K-12 system. The only roadblock is getting someone to think about the issue, as the advertising done by the colleges has left us believing that education simply isn't provided any other way other than through colleges.
Do you think that this special value of 12 years will be the proper amount of public education forever? It seems to me that as robots and software take more of the lower valued jobs, we will need to expect more education for a citizen to be able to contribute. Institutions will have to adapt.
12 years of schooling is more than sufficient. That does not mean that 12 is the magic number exactly. But yes, I believe that <=12 will remain sufficient for public schooling forever. Not to be confused with education. There is no timeframe on education. Education never stops.
Robots and software actually make the world simpler. When we were an agrarian society, farmers had to know how to do basically everything imaginable to be able to be productive. It took a lifetime of training, starting as soon as you were old enough to walk, in order to learn the ropes and take in the deep knowledge passed from generation to generation. Industrialization simplified contributions so that one only had to specialize, negating the need to be there from birth. The information revolution simplified things further still. Now we have teenagers who are starting highly successful software businesses after spending a few months in front of a computer. The next revolution, whatever it may be, will only make contributions even more accessible, just as each time before.
I like that optimism. I can also imagine a future where anybody can contribute. But I know plenty of people right now who are wondering if they should get a master's degree instead of stopping at a bachelor's degree in order to get a job that can pay off their education debt.
> The U.S. would do itself a huge favour by allowing student debt to be bankruptable.
Student loan debt is dischargeable in bankruptcy, it's just more difficult than other unsecured debt.
But the US would do better to just stop having federal student loans at all, in favor of need-based and service-based grants, rather than tweaking the terms under which loans are dischargeable.
It wouldn’t make much of a difference because the vast majority of student loans are issued by the federal government and not underwritten.
This seems to come up fairly often. I don’t think many people are aware of the enormous size of the state banking sector in the US between educational loans and continued dominance of the residential mortgage market.
This is true. About fifty percent of federal financial assets are student loans (which terrifies me).
However on the margin it would make a huge difference. The most expensive programs require a mix of federal loans and federally subsidized loans. There are a few changes the federal government could make to not back loans data clearly show are going to be bad, and if those loans aren’t federally subsized they’re not happening. Or, perhaps, worst case scenario the interest rate becomes extreme.
Actually, I'm a fan of accountability, so no. What should happen is the easy loans should be eliminated altogether, which would get Wall Street out of higher ed and return things to a more sane basis. These schools ran away so hard with all that money and put up outrageous numbers of buildings and ran other expensive projects that have led to out of control costs and diminishing returns for actual students.
Bill Clinton presided over the changes that led to this mess. I know many of you are too young to know that, but Bill Clinton was not a great leader of the USA, he was a manipulator, interested in maximizing gains for his politically connected allies.
