Author Topic: Free college  (Read 4055 times)

SharperDingaan

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Re: Free college
« Reply #40 on: May 08, 2019, 09:01:48 AM »
The reality is that many of these loans are never going to be repaid, even if the borrower is able to.
At the micro-level the stranded debt is a permanent handicap on the debtors borrow capacity and ongoing cash flow. At the macro-level its a permanent brake on tbe economy.

Debt has to be either paid off, or written off.
Most would expect this stranded debt to eventually be written off, the same way that tax cuts are enacted to stimulate an economy out of a recession; but until then ... borrowers are on their own. Life isn't fair, systems are gameable, and some will do very well.

Information asymmetry and sales abuse, have existed in every industry, for centuries. It's part of life.
The Romans called it Caveat Emptor, and put the consequence on the buyers head. https://en.wikipedia.org/wiki/Caveat_emptor

Just a different POV

SD


stahleyp

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Re: Free college
« Reply #41 on: May 08, 2019, 12:28:29 PM »
How about this:

The government gets out of student loans.

All loans would then be private. All loans could also be dischargable in bankruptcy. But the lenders could also charge any rate they see fit since their capital is at stake.

I'd be shocked if colleges costs didn't plummet with this arrangement.
Paul

SharperDingaan

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Re: Free college
« Reply #42 on: May 08, 2019, 02:06:02 PM »
How about this:

The government gets out of student loans.

All loans would then be private. All loans could also be dischargable in bankruptcy. But the lenders could also charge any rate they see fit since their capital is at stake.

I'd be shocked if colleges costs didn't plummet with this arrangement.

Hate to say this, but college/university costs would almost certainly go up - and by a lot. A lot of the costs are fixed costs (building upkeep, taxes, etc) that cannot be cut, and which need to be spread over many bodies to make attendance affordable. You'd also get fewer insitutions, and just a bunch of oligarcs agreeing NOT to compete on price. 'Cause if you have to ask the price to attend .... may we recommend that lessor public college/university around the corner ;)

Ultimately, writing off debt is just a cost/benefit excercise.
Once there's a clear NET benefit it's a no brainer.

SD


stahleyp

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Re: Free college
« Reply #43 on: May 08, 2019, 02:40:19 PM »
How about this:

The government gets out of student loans.

All loans would then be private. All loans could also be dischargable in bankruptcy. But the lenders could also charge any rate they see fit since their capital is at stake.

I'd be shocked if colleges costs didn't plummet with this arrangement.

Hate to say this, but college/university costs would almost certainly go up - and by a lot. A lot of the costs are fixed costs (building upkeep, taxes, etc) that cannot be cut, and which need to be spread over many bodies to make attendance affordable. You'd also get fewer insitutions, and just a bunch of oligarcs agreeing NOT to compete on price. 'Cause if you have to ask the price to attend .... may we recommend that lessor public college/university around the corner ;)

Ultimately, writing off debt is just a cost/benefit excercise.
Once there's a clear NET benefit it's a no brainer.

SD


I'm not so sure they would go up. You can't charge more than what the customers will/can pay. They can charge so much because there is almost unlimited funding (student loans). I think the colleges would stop paying coaches so much, stop with all of these fancy building, etc.
Paul

Cigarbutt

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Re: Free college
« Reply #44 on: May 08, 2019, 06:08:39 PM »
The idea behind student subsidies is to increase access while limiting negative and unintended consequences, the same way home access can be encouraged through various policies including lower financing costs, interest deductibility etc.

There seems to be a clear link in the US between the growing subsidized federal loan assistance and easy credit AND rising tuition costs (both rising much higher than inflation or general GDP growth). People respond to incentives. In the US, in the last 30 years, the number of college employees (non-teaching and highly paid) per student has increased significantly.

It appears that the negative and unintended consequences outweigh the benefits and whether bailouts are considered or not, effective governance would suggest to temper the growth of federal subsidies.

A recent publication by the CBO reveals that the issue is quite mature and it's hard to see how a massive (and public) bailout will be avoided.
https://about.bgov.com/news/student-loan-outlook-is-reversed-showing-31-billion-cost/
A fascinating aspect of the appraisal of the present situation is not that the new loans are showing poor results, it is the fact that previous loans were poor and were simply not regarded as such (interesting parallel with the housing crisis).
Note: the CBO tends to be relatively free of political or ideological contamination but their "forecast" record is nevertheless quite poor and they tend to simply project previous trends into the future.

DTEJD1997

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Re: Free college
« Reply #45 on: May 08, 2019, 06:26:08 PM »
How about this:

The government gets out of student loans.

All loans would then be private. All loans could also be dischargable in bankruptcy. But the lenders could also charge any rate they see fit since their capital is at stake.

I'd be shocked if colleges costs didn't plummet with this arrangement.

Hate to say this, but college/university costs would almost certainly go up - and by a lot. A lot of the costs are fixed costs (building upkeep, taxes, etc) that cannot be cut, and which need to be spread over many bodies to make attendance affordable. You'd also get fewer insitutions, and just a bunch of oligarcs agreeing NOT to compete on price. 'Cause if you have to ask the price to attend .... may we recommend that lessor public college/university around the corner ;)

Ultimately, writing off debt is just a cost/benefit excercise.
Once there's a clear NET benefit it's a no brainer.

SD

SD:

Once again, I don't think you fully understand the situation "on the ground" in the USA.

Here is a prime example:

Cooley Law Skool is consistently ranked at OR near the bottom of USA law schools in terms of quality.  Outcomes for their graduates is almost universally catastrophically bad. The cost of tuition is approximately $52k per year.

Yale Law School is consistently ranked AT the top OR very close to it.  One of the best law schools in the USA.  Outcome for their graduates is almost universally good.  Quite the opposite of Cooley.  The cost of tuition at Yale Law School is approximately $62k per year.

So a skool ranked hundreds of spots lower than the top law school is only 15% less in tuition.  Is the education provided by Cooley 85% of the value?  Is it 50% of the value of Yale?  10% of the value of Yale?  1% even?

There is effectively no price competition among the USA law schools.

While not as extreme for undergraduate, it is quickly becoming that way.

Take government backed loans out of the equation and you will see low and mid ranked skools lower their cost structure and tuition drastically.  You will also see them coming back to competing on price, quality too maybe?

Schools are charging what they are because that is what they can get.  The worst skool in the country can charge ALMOST as much as the best....

Finally, top ranked schools can charge whatever they like.  They can charge $1/per year or $100k per year.  They have multi BILLION dollar endowments and don't have to charge anything for tuition if they want.  The true top could also charge $100k per year because wealthy parents will pay it.
« Last Edit: May 08, 2019, 06:27:58 PM by DTEJD1997 »

SharperDingaan

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Re: Free college
« Reply #46 on: May 09, 2019, 04:42:52 AM »
Assume current state: 300 schools charging 100K for a program; annual revenue of 30M/yr. Student loans widely available.
Assume future state: 120 schools (60% less) charging 200K for a program; annual revenue of 24M/yr. Private loans only and less annual revenue, evidence that reform works.

With no student loans, schools have to deliver to attract students.
Students cant afford the cost, student volumes decline, and there is widespread school closure (bad apples leaving the system).

The 'best' schools at delivering have too many students applying to them. To cull the herd, admission standards are raised, and fees increased; but there is VERY limited expansion. To get in you have to be a A+ student, rich, AND compete agaiinst the BEST in the world. 'Cause that 'best' school with just 1000 seats is essentially auctioning them to the highest 'acceptable' bidder. Higher incomes for the few that get to go. Great!

Problem is that you're a A+ student, but can't afford to go. You may also be an A+ student in the USA, but are just not good enough to compete against your global competitor. Yes, you may be 'smarter', but they are more mature; they get the position, you don't. Maybe you win a private scholarship, but there are very few of them, and very strong competition.Getting rid of public student loans, is ALSO getting rid of public grants, bursaries, and scholarships. Oops.

Point is this isn't a black/white fix. At best we can maybe write off loans when benefits exceed costs, and/or not make them available until the student is more mature (21); neither of which is popular.

SD







stahleyp

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Re: Free college
« Reply #47 on: May 09, 2019, 06:41:30 AM »
I think a fairly good amount of students shouldn't even be in college anyway. I don't think the answer to the best system is that "more students in the system the better." A little over half of people who start college actually finish. That's a huge waste of resources.

https://www.gatesnotes.com/Education/Georgia-State-University

So the closing of a bunch of schools sounds like a good thing to me - even if the remaining schools increase tuition.
Paul

LC

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Re: Free college
« Reply #48 on: May 09, 2019, 08:50:54 AM »
The only schools that close will be the ones who cannot adjust their cost structure to kids bringing in 2/3 or 1/2 of prior revenue.

And other schools will pop up with a more rational cost structure.

I don't think your analogy of how the best schools will respond is realistic. Harvard, MIT, etc...they already take their pick of students. They already have the highest standards in the world.

It's like, what would happen if the entire global population shrunk 6 inches. Well, now instead of being 7 ft tall you're only 6.5 ft tall - but you're still the tallest in the world and going to the NBA regardless.
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DTEJD1997

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Re: Free college
« Reply #49 on: May 30, 2019, 10:26:05 PM »
Hey all:

Another shocking article about corruption in kolleges!

Turns out grade inflation has been going on for decades.  Now it is really getting out of hand.

Interesting how it winds up hurting the poor & disadvantaged the most.

PLEASE SEE:

https://reason.com/2019/05/26/make-school-hard-again/