Miscellaneous > Not at the Dinner Table

Student loan debt: What's the deal with that?

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CrossEyed7:
Definitely, and that's one of the reasons I don't support calls for universal forgiveness. The government stepping in and paying off all the loans would bail out both the banks and the students, maintain the status quo, and keep the schools off the hook. I say we apply the 10% rule to Sallie Mae, tell them if they want more than that they can take some from the schools, and start moving away from the paradigm of sending everyone to private colleges automatically (tone down the grants a bit and get the schools to scale back accordingly).

CrossEyed7:
A prominent conservative commentator finally suggests doing something. (Full column)


--- Quote ---Now, not so much: "One of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence. Until the early 1970s, less than 11 percent of the adult population graduated from college, and most of them could get a decent job. Today nearly a third have college degrees, and a higher percentage of them graduated from non-elite schools. A bachelor's degree on its own no longer conveys intelligence and capability."

This is a simple case of inflation: When you artificially pump up the supply of something (whether it's currency or diplomas), the value drops. The reason why a bachelor's degree on its own no longer conveys intelligence and capability is that the government decided that as many people as possible should have bachelor's degrees.

There's something of a pattern here. The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle class people go to college and own homes, then surely if more people go to college and own homes, we'll have more middle class people.

But homeownership and college aren't causes of middle-class status, they're markers for possessing the kinds of traits -- self-discipline, the ability to defer gratification, etc. -- that let you enter, and stay in, the middle class.

Subsidizing the markers doesn't produce the traits; if anything, it undermines them. One might as well try to promote basketball skills by distributing expensive sneakers.

Professional basketball players have expensive sneakers, but -- TV commercials notwithstanding -- it's not the shoes that make them good at dunking.

[...]

For higher education, the solution is more value for less money. Student loans, if they are to continue, should be made dischargeable in bankruptcy after five years -- but with the school that received the money on the hook for all or part of the unpaid balance.

Up until now, the loan guarantees have meant that colleges, like the writers of subprime mortgages a few years ago, got their money up front, with any problems in payment falling on someone else.

Make defaults expensive to colleges, and they'll become much more careful about how much they lend and what kinds of programs they offer. China, which has already faced its own higher education bubble, is simply shutting down programs that produce too many unemployable graduates.

--- End quote ---
I still think the 20-Over-20 plan, or a combination of it and this, would be better, as this plan puts the schools on the hook for a lot, bails the students out more than mine would, and also would destroy the credit ratings of a generation (which would hurt the economy over time, though probably not as much as doing nothing would).

Luigison:
You may be interested in this:  http://www.skillshare.com/student-debt?tXFd&utm_campaign=student-debt

"The Project on Student Debt recently reported that, on average, a graduating member of the class of 2010 had $25,250 in debt (and the average amount of student debt is up 5 percent from 2009). For this reason, we’re giving away $5,000 worth of relief to help someone pay off their student loans."

"It’s clear education needs to transform, which is why Skillshare’s mission is to democratize education and make it affordable and accessible to every single person on this planet. The future belongs to the curious."

http://www.skillshare.com/

bobman37:
I see what you did.

+1 entry, sir.

BP:
I was replaying BioShock and came to the audio diary by Frank Fontaine where he comments, "Dese poor sad saps. Dey come ta Raptcha thinkin' they all gonna be captains o' industry. But they forget dat somebody's gotta scrub da toilets." And it reminded me of this college situation. It's sad but true, everyone can't be all that. Only a few make it to the top, and that means you've got a high chance of being wedged somewhere underneath.

So I am saying that this can only end in one way, with a bunch of nerds shooting lightning out of their hands

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