student debt

"The problem is, “college” isn’t an undifferentiated product. Companies can’t hire enough mechanical engineers, but there’s no bidding war for majors in Fine Arts or Women’s Studies, degrees that cost just as much, but deliver a lot less in terms of employment. In an economically rational market, it would be harder to borrow money to finance fields of study that were unlikely to produce enough income to pay back the loans. But since the federal government subsidizes everything — and makes student loans un-dischargeable in bankruptcy — there’s no incentive for lenders to care, and even less incentive for colleges and universities to care. They get their money up front, after all — just like the people who wrote the subprime loans that fueled the housing crisis.

For serious student-loan reform, we’re going to have to look well beyond the Obama proposal. We need something that aligns incentives with reality."

http://www.nypost.com/p/news/opinion/op ... z1cI0uxhsQ

Do you really want the federal gov't telling students what they can major in?

archer wrote: Do you really want the federal gov't telling students what they can major in?

Where did I or the author say anything remotely resembling that?

neptunechimney wrote:

archer wrote: Do you really want the federal gov't telling students what they can major in?

Where did I or the author say anything remotely resembling that?

She just makes up what she thinks she reads. Just nod your head and move on to others.

archer wrote: Do you really want the federal gov't telling students what they can major in?

Good point. After all the yelling and screaming about getting government out of our lives, this is simply another case in point. Let student loans be handled privately. Get government out of education entirely. Not only would that put a serious bite out of taking out a loan, it would also determine who really wants that college degree. College is not for everyone, but our system tries to make it that way by force. Once the choice is made, the student assumes financial responsibility and what they choose to study is their choice as well. You do not need another person telling you what field of study you ought to choose, especially not the government.

It is interesting to note that college education is free in Germany. Yet, many choose not to get a college degree.

dupe...

Student loan defaults would be cut in half (maybe more) if we didn't allow students to borrow during their first year of college.

The biggest problem with student loan defaults - is college dropouts. A college dropout generally incurs cost - without reaping benefit (even an art major can score a $35,000/yr job --- if they graduate). Most college dropouts drop out during or immediately after the first year.

Student loans used to be guaranteed by guaranty agencies (the feds decided they could do better, though - and took it over --- naturally adding new costs to government).

All loans have an element of risk to them --- I have no issues with providing loans to students with "weak" majors -- it's their choice. Financial aid officers consistently disclose the cost of borrowing to students - so they know what they need to make down the road.

Not a bad idea, BB. For serious students, there are many ways to get to their goal. It need not have to involve a grand and expensive school. Local community colleges, with low cost, the possibility of living at home, while also maybe earning something to finance the cost of college are viable options for example. Yes, avoiding borrowing during that experimental first year is sound advice.

Taking out loans places a huge burden on one's future. Moving into the mundane world of the adult conspiracy is costly. Start up costs for shelter and living on your own can be prohibitive. A student loan on top of a start up salary (assuming you can get a job) adds enormously to the strain.