I was out of college for 10 years and starting the process of looking to buy a house when I found out I was in default on my student loans.

I was confused. It turned out there were loans that didn't go into the consolidation package and have never been paid on.

Actually it turned out to be a good thing because I would have bought the house at the top of the market.

Now I'm almost 15 years out of college and I'm still paying off the loans. They did waive some of the accumulated interest and all the penalties.

Sometimes - mostly when I'm making the payments - I regret taking out the loans, but I had fun in college and the loans allowed me to work less.

I only took loans for five semesters and ended up $20K in debt. That was 15-18 years ago.

On another subject with college, I usually just went to the math and economics classes. For the other classes I just read the chapters, borrowed someone's notes and showed up on test days.

I got As and Bs in the classes I attended only on test days. I used to be proud of this, but now I'm thinking I was ripped off.

This is college. I shouldn't be able to read a 3- or 4-hundred level text while watching an action movie the night before a test and get an A on it.

If companies and government departments weren't so rigid about people having a college education, people would not get into this desperate situation. Most college education is horrendously overpriced(by at least a 100 times) and this cartel runs with the connivance of government and the big businesses and people get into the trap because they are desperate for jobs(maybe running small business isn't as easy as a job and people want the easy way out, but that is a different matter altogether). Ultimately, college is one of the most profitable businesses....totally at odds with what it started out as during the days the church and military used to run colleges. Just like the guy who announced scholarships to people to dump college(was it Peter Thiel), if companies and government at least made a start at hiring people without worthless college degrees (in hula hooping or whatever) for the jobs which don't require one, people may actually dump college and go straight to work instead of wasting money on something which they very well know is useless and only serves to make lot of useless bums masquerading as profs rich.
Maybe the short term relief could be to make public the records of jobs that colleges managed to get for their students and the pay of the jobs etc etc(this is short of government intervention). If you want government intervention, then the best way would be to allow only those colleges to run which manage to place 90%(or whatever figure of students) in jobs where the gross pay can pay back at least x%(say 80%) of the entire college expenses(of the full 4 years or 2 years or whatever) in the first year. This would make sure that only those colleges which can place students in good jobs survive and colleges where people fool around and party all the time and mainly focus on taking jello shots off a girls cleavage shut down.

@ Redrajesh:

A wise man once told me, "You can take the best student and put them in the worst school, and they'll still do well. You can take the worst student and put them in the best school, and they'll still be a bad student.". Okay, so the wise man was my dad, but I happen to agree with him. Forcing schools to show numbers is not the answer. Public schools are doing this now. My son is being taught how to pass a proficiency test. I'm not sure that he's really learning as much as I think he should, but the schools have to acheive a certain pass rate to get funding. Once proficiency tests are over, they pretty much just coast for the remainder of the year (it's about a month). Tell me how this is the answer.

@ Redrajesh. Google Griggs vs Duke Power. Companies were sued because of allegedly biased aptitude tests, so they found it easier to require a degree for jobs requiring certain abilities. Minorities underperformed on the aptitude tests, and the big foot of government came down to equalize outcomes because it's just unfair that people who can't do the job don't get it anyway.

The solution is obvious, unfair, and not happening in my lifetime.

Hi Renee,

I know that what I am saying is not the ultimate panacea, but at least it will reduce mushrooming of colleges since they will be under pressure to place their students in jobs which help them pay back the tuition.

Maybe it can be refined to make the colleges collect 90% of their tuition only after the kids get a job and they can have a repayment tenure of at max 3 years. That way, colleges may also reduce their tuition and other expenses and be careful with taking in kids so that the kids can get placed in decent jobs etc etc and you know.....I am just trying to give another direction to this whole college education crap. Here the numbers are market driven(pay in jobs in the government/private sector) and not politically driven. I am sure there can be a lot more variation, but to get out of the student loan deadlock requires action from multiple guys and not just the students.

All I am saying is given the current cosy relationship that college has with other critical sectors(basically employers and jobs), it takes a person of extreme ability and courage to challenge the status quo and come out successful. It requires some action to break that nexus and give people some real choice so that they do not fall into the college trap. Placing the blame solely on the guys who attend college after taking heavy loans will not help in this situation because most attend college even though they know it is useless and this cartel between college and employers basically forces them into this crappy situation.

> They did waive some of the accumulated interest
> and all the penalties.

Why? To whose benefit? By what excuse? Why was that wealth deemed unimportant?

Hi, it's early and I still have stuff to do, but I hope others will continue to attack Redrajesh's arguments.

The answer to hiring may come from the private sector, like most answers do.

There is a website called "elance" I do all of my hiring out of there.

You register as a contractor, and list your specialties, you then are permitted to take tests through the site to prove your proficiency in those skills. And this shows on your profile when you are seeking contracts.

What baffles me about college is that they have popular culture classes. Is there any class more worthless to the world?

Look the cold hard truth here is that the credentialism that we see so wantonly has occured because regulations and laws prohibit employers from asking most of the questions that they would otherwise choose to ask.

All they have left is a degree.

Let people ask what they want, and let the employment chips fall where they may, and the college requirement will start to shrink.

@MarkD

The solution is obvious, unfair, and not happening in my lifetime.

which means people are still stuck with the college trap. So blaming the guys who take the loans is the wrong way to go about it because they have been cornered into going to college even though it is crap and they know it is crap, but they can't do anything about it(at least in your lifetime).

Then the only way out is for government to put its big foot on colleges...but even that will not work since merit has been relegated to the back seat in hiring.....it is a vicious circle.

But why is the obvious solution unfair? Is it unfair to those who have spent money on college? or am I not getting what you mean?

College loans should be as open to bankruptcy as mortgages or credit cards or anything else. Bankruptcy should be very difficult to get, but it you do get it you should get full relief.

Students are told all their lives that college is essential, by every authority figure in their lives. The college industry then jacks prices up to keep them in perpetual indenture. No, I don't think 18 year old kids are ready for that kind of choice, especially this last generation, which has been raised to believe that adults are their best friends, not stuffy old people to be rebelled against. They never had a chance.

College tuition and fees went up vastly since you and I were in college, Amy. There's no good reason for this, and I don't see why schools with huge endowments, like the Ivies or UMichigan or UT can't either lower thier fees or forgive the debt.

"There's no good reason for this, and I don't see why schools with huge endowments, like the Ivies or UMichigan or UT can't either lower thier fees or forgive the debt."

In general the colleges aren't the ones on the hook for the debt repayment. They already got the money and spent it, much of it on things like fancy buildings and administrative salaries. The outstanding loan balances are owed to various investors, including pension funds, life insurance companies which are expecting the money as part of the funding for benefits they will need to pay, etc etc. Forgiving these loans wouldn't cost the colleges a dime.

Because of this structure, colleges had every incentive to admit as many students as possible, regardless of the benefit to the student or lack of same. As Victor Davis Hanson, the farmer and classics professor, put it:

“Just as coaches steered jocks to the right courses, so too counselors did the same with those poorly prepared but on fat federal grants and loans. By the millennium, faculty were conscious that the university was a sort of farm and the students the paying crop that had to be cultivated if it were to make it all the way to harvest and sale — and thus pay for the farmers’ livelihood.”

See my post Drucker on Education, 1969

"Why have they gone up so vastly? Greed on the part of the colleges? Real costs? Less subsidization by states?"

I think most of the commenters here have touched on at least some of the reasons why, at least tangentially:

First is increased demand -- if companies are looking for degrees (even if only as a crude proxy for qualifications) and teens being told the only reliable road to success passes through college, then the demand will rise.

Second is easy money. If student loans are easy to get (even if they turn out hard to pay back), then universities will be in a position to charge more. As has been stated by previous commenters, once the college has its money, it can spend it on all the nonessential filigree it wants.

Decrease demand or money supply, and I would expect the cost to decrease some, as colleges would be forced to trim costs, or in some cases, close altogether.

M4 wrote:

"College loans should be as open to bankruptcy as mortgages or credit cards or anything else. Bankruptcy should be very difficult to get, but it you do get it you should get full relief."

There would be nothing to stop students from filing for bankruptcy the day after receiving their degree. Their only asset is their education.

If I were a loans officer and student loans could be discharged by bankruptcy, I would demand some security. If you want a mortgage, I want an appraisal on your house to make sure it is worth the money I am lending. If you want a student loan, I want an appraisal on your education.

If you're studying basket weaving and gender studies, I'll give you a loan you can pay back when you are working at Walmart. I would give a much bigger loan if you are studying Engineering or some discipline that will make it likely that you can get a well-paying job. I will also want to see your grades after each semester before advancing any more money.

You make want to disable the spam filter, Ms. Alkon, as it seems to block the terms commonly associated with this debate.

Then the only way out is for government to put its big foot on colleges.... -- Redrajesh

So, government meddling got us into this mess and your solution to get us out of it is ... more government meddling?

==============================

Federally-guaranteed student loans are the way that society (taxpayers) is making it possible for someone to pursue higher education by offering to pay the lender if the student cannot or will not.

Auto and residential loans are secured with collateral (the vehicle or the residence). Credit cards are "secured" with an interest rate that reflects the cardholder's credit rating and payment history. The lender is responsible for mitigating the risk.

Since an 18-year-old college freshmen has no credit rating and no payment history, society steps in and assures the lender that the applicant is a "good kid" and will pay him back; and if the kid does not, society will make good all or part of the debt.

This is your money folks. You're paying for that dumbass to spend four years shot-gunning beers while pursuing a degree in underwater basket-weaving. This isn't some bank getting scammed, it's you and me.

Do you really want to let some kid spend $35,000 getting a Master's degree in puppetry and then walk away?

==============================

If you want a student loan, I want an appraisal on your education.

If you're studying basket weaving and gender studies, I'll give you a loan you can pay back when you are working at Walmart. I would give a much bigger loan if you are studying Engineering or some discipline that will make it likely that you can get a well-paying job.

Nice try, but I will switch majors after I get the bigger loan.

And if you're thinking a high school transcript will be a useful tool in evaluating whether I really will (or even can) major in engineering, think again. A recent newspaper article on college majors (cannot find to cite) included the story of a young woman who was an honors student in high school with advanced math classes. She entered college with the intent to major in engineering, but switched to psychology when she discovered that even her high achievements in high school had not prepared her for the rigors of an engineering curriculum.

@Steamer, beautifully put. And I would be fine with having things work that way. But then you would have a bunch of people complaining that, "Why should I be prohibited from following my dreams just because I can't afford it?"

We live in a society where people think it is "unjust" if they can't afford something, and further, the government should do something about it.

@Redrajesh, MarkD is saying companies used to be able to offer aptitude tests as a way to screen job applicants. The type of people I mention in my second paragraph then complained that it was "unfair" when they couldn't pass the tests. So the companies resorted to requiring a college degree. MarkD would like to go back to the aptitude tests (I agree) but this would be considered "unfair" by the whining class.

@Crid, I think Terry Gibbs was forgiven those penalties and some of the interest because the loan people screwed up and didn't include all of the loans in the bill. Terry thought the loans were paid off, but it turns out they weren't. Terry could have paid closer attention, but most companies would probably waive your penalties and interest if you didn't make payments on something they didn't even send you a bill for.

Conan wrote:

"Nice try, but I will switch majors after I get the bigger loan."

That's a danger, but if I'm checking your transcript before I advance the money for next semester, you can only get away with it for ½ a year.

My basic point is that if these loans can be discharged by bankruptcy, the process would have to be tightened up. The benefit could be that if there is less money being loaned, the colleges would be competing for students and the cost should come down.

A college education is used as a screening test by employers because previous actual screening tests were deemed discriminatory to minorities. Most jobs don't really require a college education, especially now that many college majors are worthless on the job.

I once worked with a woman in Air Force intelligence who had a degree in Soviet Studies. Although I was a business major, I found out over time that she knew less about Russian History than I did. Any major with the word Studies in it is suspect.

OK, as a father of a young child I'm self interested here but I have an idea. Just brainstormed it so go easy, it's green.

So I want to save for my child's education. Finance it the old fashioned way*. But I'm losing 14% per quarter on the retirement side. How about government guaranteed returns on investment for college savings? Like the pre-paid state college programs, but simpler. It's still a taxpayer subsidy (double since it comes off gross to begin with), but wouldn't the incentives be better?

Then again, why bother saving if it won't help my kid get ahead since all outcomes are flattened anyway? Like MarkD said, the real answers are ugly.

Also, how about a fee structure like gas stations had in the 80's: One price for cash, another for credit?

I don't expect it to actually happen though, since it cuts out the middlemen, and they either have lobbyists, or they are an actual branch of the government.

*I know it seems impossible, and with triple digit inflation it may well be. But you start out paying the better part of a thousand a month (or more) for daycare/pre-school. When they turn 6 and school goes free, invest those same funds in college savings.

@ Redrajesh,

I feel your pain. I am still paying on student loans for my three kids. In total, they cost more than my house.

The source of this problem is government meddling. More government won't fix it.

It comes down to the idiocy of believing that all people are the same. They are entitled to the same rights under the law, but they differ in talent, ambition, creativity and work ethic. This is unfair, so we embark on a political crusade to ignore the obvious, lest someone's feelings be hurt.

It's as unfair as George Clooney being better looking than I am, and worthy of the same amount of government intervention. None.

It's funny that none of the Lefty commentators advocating for this idea can recognize how fundamentally regressive it is.

Realistically the Federal government can't 'forgive' most student debt. It can only forgive the debt that it holds. Modifying the terms of the unsubsidized debt will require payment by the Federal government - or the unprecedented and market destroying act of somehow legislating that private holders must relinquish or forgive this debt.

If the Feds buy this debt, that means that taxpayers will be paying it, along with the debt service for borrowing to purchase the debt. Which means that a lot of people who make less than college grads will be paying off these loans. Why should poorer taxpayers be subsidizing the past education of richer ones?

"if these loans can be discharged by bankruptcy, the process would have to be tightened up."

Exactly, and that would be the point: to force lenders to be more strict in their standards. If standards are not met, then they can't pass the losses to us taxpayers. But it would have the same "discriminatory" effect as tighter admission standards so the whining would continue.

Like Mark said, it all started with Griggs v. Duke Power. I'm a Boomer and plenty of my classmates went straight to work for business pre-Griggs, without going to college. I went straight to work at the Post office, after taking an aptitude test. I believe the federal govt can still give tests.

I believe the federal govt can still give tests.

Interesting point.

In much the same way, smoking is illegal in all bars and restaurants in Iowa. But the casinos, which make a lot of money for the state, don't have to ban smoking.

Maybe we should make high schools prove that their graduates are capable of getting jobs too? No, that wouldn't work. Students are mandated by law to attend school to a certain age. After that point, it is a CHOICE. Not all people are cut out for college, and not all people should go. My brother didn't go to college, and he's doing quite well for himself. He was never into the whole "learning things from a book" thing. He tried it for a semester, realized it wasn't for him, and decided not to go further into debt for something that he didn't want or need to do. I, on the other hand, enjoyed school, and I excelled at it. I went to college, he did not. I have student loans that I'm paying for, he does not. We are both doing equally well at our chosen careers. It's about personal choices and consequences for those choices. I don't feel sorry for myself because I have loan debt. I signed on the dotted line and I will repay the loan. Maybe if we didn't live in a country where EVERY little league team got a trophy, even if they lose every game, kids would be more competitive. They would learn that there are some things that you're just not good at, and try to find something they can succeed at, instead of deciding they're going to be a brain surgeon because Mommy told them they could be whatever they wanted when they grew up...

@ Redrajesh. Google Griggs vs Duke Power. Companies were sued because of allegedly biased aptitude tests, so they found it easier to require a degree for jobs requiring certain abilities.

MarkD for the win.

I was confused. It turned out there were loans that didn't go into the consolidation package and have never been paid on.

Am I the only one detecting the Lake Wobegon effect?

College tuition and fees went up vastly since you and I were in college,

How silly. Tuition and fees went up vastly because students are learning vastly more now than then.

Oh. Ummm. Uhhh ...

I totally agree that if you borrow the money, you should pay it off. Period.

That said, why do the first two years of college have to essentially be a repeat of high school? We learned all this stuff already, why are we learning it again? Oh, I know, because the COLLEGES WANT MONEY.

And don't even get me started on the ridiculously overpriced textbooks.

Again, you borrow it, you repay it, but I also think we need to start looking at college education in general. There are a lot of things that should probably be changed. A LOT.

Then again, if you go $30,000 in debt for a Liberal Arts degree, don't cry to me when you can't get a job. And before you all jump on me, my first degree was a B.A. in English. Later I got a B.S. in Accounting. So no, I'm not playing holier-than-thou. I'm still paying off the English degree while I was smart enough to get the company I was working for to pay for the Accounting degree, which is turning out to be a lot more useful. I don't regret the English degree, but the debt is kind of a bummer. Still, it's my responsibility. Would I do it again? Probably. But I'm not crying that someone else should foot the bill for me to follow my bliss.

"Why have they gone up so vastly? Greed on the part of the colleges? Real costs? Less subsidization by states?"

Amy, youre asking the wrong question, should be asking why wouldn't it?

If I run a buisness which has increased demand and customers who don't actually pay for it, or at least not directly. why wouldn't I jack up the price?
My competition? There are more than enough suckers, I mean students, and as long as I don't raise it too much more than they raise it, I'm golden.
My reputation? Neither customer nor payers, care about the universitys reputation. Employers rarely care.

With practically any other buisness, your wallet determines how high a buisness can charge, not so with universities.
As to where the money goes, it's not a question if a university has cultural/diversity center, but how many cultural centers? Every special interst group gets their own one.

@Renee
Students are mandated by law to attend school to a certain age. After that point, it is a CHOICE

When walmart wants people who scan at the checkout counter and mop the floors to have a college degree(no matter if it is in hula hooping or basket weaving), it ceases to be a choice.

When any business wants a guy who keeps track of expenses and revenues to have an accounting degree which costs 100 times the pay they are offering (even though he will use only 0.1% of accounting in that job), it ceases to be a choice.

@Redrajesh:

I don't know where you live, but my local Walmart does not require a college degree to be a cashier OR a janitor. While it does seem crazy that a company may want an accounting degree before you are turned loose with their finances, I kind of agree that its a good idea. As far as the price of attaining that degree...can you honestly say that you can't get an accounting degree for a reasonable price? Try a state school or the ever-dreaded community college. The biggest fallacy being sold to young people is that WHERE you go to school is important. Probably true in a small fraction of employers, but not across the board. I work for a Fortune 500 company and they don't care where your degree is from, they want to know that you can do the job. Period. I'm sorry, I just don't see that you've made any valid points anywhere on this board. Try again, and we'll go from there...

Two things -

First, no high school is going to prepare someone for the rigor of an engineering degree. Either you have the intensity and the chops, or you don't.

Second, around here, McDonalds requires a bachelor's if you want to be a manager. Why?

Because they can't give you a simple reading and math test without getting sued. Since a high school diploma is no longer a guarantee that you can read and add, they had to bump it to college. Now that college degrees in Advanced Bullshit are a dime a dozen, I imagine it'll take a master's to get beyond the counter at McD's.

Brian,

Are you sure about that? I worked for an inventory company for a couple of years, and you aren't even hired unless you pass a timed math and spatial test.

This job got government kickbacks, I mean subsidies, for hiring undesirables (made for some interesting co-workers), so surely those tests can't be illegal?

Pretty sure. Unless you can prove to the satisfaction of the court that the test is for skills that are required for the job, you're hosed.

I have a customer that gives a math test to all applicants, but they must be able to add and subtract to do the job, so it's legal.

If they didn't have to actually use math, then it would be discriminatory.

Which is asinine.