Or they could just become more selective and only loan to people with good prospects of repaying. Maybe they’ll look at your major, maybe discourage private universities.
The problem with "good prospects of replaying" / full-knowledge lending (and what the system was originally intended to prevent) is that the best lendees are wealthy students from socioeconomic groups with good employment prospects.
I'm not one to toot on the SJW train, but it's likely inefficient (and certainly unjust) if we encode existing economic biases into our primary method of access to educational capital.
I agree with everything you said, but doesn't lending money to the group of people that are less likely to make repayment puts them in a worse place? Instead of being in a socioeconomic disadvantage, they now also have a loan that they can never payback. It honestly feels predatory and sounds like payday lending or one of those "more credit = more cash in your wallet" ads.
I'm really sad that in this view, access to credit is equated to access to education. Sure, in a first degree thinking the goal is achieved, but at the end of the day education is a means to an end rather than an end in itself. Lending people money to attend unaffordable institutions can't be the best way to fix the problem.
>I agree with everything you said, but doesn't lending money to the group of people that are less likely to make repayment puts them in a worse place?
Not if loan terms aren't designed to court default, which they often seem to be. Doesn't it seem backwards to require that the people least likely to be able to pay, pay higher interest rates?
> Doesn't it seem backwards to require that the people least likely to be able to pay, pay higher interest rates?
I mean, yes. But on the other hand if the ability to payback the loan (risk of default) isn't taken into account these loans might not exist at all (not necessarily a bad thing). Eventually the risk-adjusted rate hits usury limits and loans start disappearing.
(Of course we still get things like payday loans, credit cards, student loans, etc., but these are legal loopholes that should be closed.)
University degrees are not actually that expensive to obtain. You go in-state, live cheap, and, if you’re poor, apply for scholarships. Loans are really only necessary if you’re obtaining a graduate degree or if you’re going to an elite school. I think loans would be available to most people in either circumstance.
Comparing that to my alma mater (Johns Hopkins), a private university, your loans work out to more than my total cost for tuition for four years (2004-2008). Even looking up their current rates, the average four year tuition after student aid is ~130k. Without any student aid, it hits ~$200k.
Compare that to UMBC right up the road. Full-time tuition for a year is under $12k, plus a few thousand in books and fees leaves you at less than half of your private schools number less financial aid. And everyone gets aid if you're instate in MD.
Go to public schools, live at home, get out with little debt. It's really not a difficult choice, and it gets even easier if you know about the existence of community colleges.
Stop anchoring impressionable kids to ridiculous tuition numbers.
Edit: the highest average in-state tuition is Vermont with just over $17k. If you're willing to go to a state school, you can do it for under $80k for 4 years.
Hah, no kidding. For what its worth, I grew up in a family that moved often, and was not technically in-state anywhere. If I had known that my family would also move to Maryland, College Park would have been probably where I would have aimed for. Younger siblings attended there, and with the Maryland scholarships essentially graduated debt free.
I realize now that I wasn’t explicit, but implied by “in state” is going to a public university (since those are typically where in state tuition is different than out of state tuition).
Really this would have been great to know from my high school advisor to be able to convince my parents to let me consider other types of universities.
The flip side of dischargeable loans going largely to the currently entrenched is that those most victim of non-dischargeable loans are the ones most in need of protection.
School in the US is already funded by the people in the immediate area, meaning that poor families have worse schools. Also wealthy families wouldn't need student loans anyway.
That wouldn't make much sense, many students aren't accepted into a major until a year or two into their education.
"Intended major" would also be a poor choice, as I think we all know many people who intended to go into one field and ended up in a completely different one.
I did know a guy who was on a neighboring-state subsidized grant for a nuclear engineering major... and only taking classes in humanities while summering abroad in France.
Not sure how that ended for him, but hopefully poorly?
(The program was originated as that state didn't have a NucE program, so found it cheaper to pay them to go somewhere else than run its own)
It's called Academic Common Market, and it only offers in-state rates to out of state students. (There's no direct scholarship or money, although sometimes unrelated scholarships are also awarded.) It's not really subsidized any more than regular in-state tuition, since it's a reciprocal program between states.
Because he faffed around France for multiple years while choosing not to pursue the major expected by the program that helped fund his attendence in the first place?
I've got no sympathy for someone who deliberately makes unethical choices.
> Well you won’t switch your major if your loan depends on it.
I'm not sure what this has to do with anything I said.
If you're referring to my second statement, I met many people in school who intended to go into engineering or computer science or medicine and had to change their career path once it was clear they weren't going to make it through the first year of introductory classes. I doubt I was alone in seeing that happen.
