The biggest problem with government involvement in student loans is the vast amount of money this has thrown into higher education. This has allowed colleges to develop really awful cost structures (read: huge internal bureaucracies), and led to a huge increase in the cost college education. Its a vicious cycle: make easy loans available, costs go up, people then need more loans...

I teach at a large European university. According to the last annual report, less than half of our employees are office and administrative personnel; more than half are teaching staff. Many American universities have staff:teacher ratios of 5:1 or worse. In other words, for every teacher, they have 5 administrators running around.

These are the drones running "equal opportunity" programs, running the gender-diversity programs, restricting students' free speech, making sure there are wheelchair ramps leading to the free-climbing wall, and all of the other useless things mandated by the federal government. Plus the staff reporting on all this, and the staff reporting on the reporting...

Get the federal government out of the education business. Within 10 years (and after lots of screaming), tuition costs will be a fraction of what they are today.

I don't think student loan debt should be allowed to be forgiven of filed bankruptcy on. I'm against bankruptcy in general as a matter of principle. People should be responsible for their own debts, not expect others to foot their bills.

"Too many people in this country seem to be living under the impression that money is Monopoly money with Treasury markings on it."

Actually, acting like it is is the real way to make that happen.

Read a dollar. It's a promise to pay. Pay what?

A dollar is actually a marker, and as money markets should show you, the dollar is NOT just a gray & green thing in a wallet.

It's rapidly becoming fiction. Well, more rapidly than it used to.

Here's how the dollar is actually fictional:

You work for a week and earn $1000.00. Direct Deposit puts it in the bank. Your neighbor goes to the bank to borrow that thousand, promising to pay it back in installments.

The bank shows you it has your thousand. What did it lend?

We work with money because of a general agreement about trading with it. That's all. If enough people corrupt the agreement, it can go away.

Too many people in this country seem to be living under the impression that money is Monopoly money with Treasury markings on it.

Heh. Radwaste beat me to it.

Of course, the single biggest problem is that's exactly what the government sees "money" as.

Mcardle 1, Mcardle 2…

And Burge.

> money is Monopoly money with Treasury markings
> on it.

Reynolds.

The schools should be on the hook for part of the debt. If you want a degree in Art History, fine, but there is an oversupply of people with this degree who will never be able to get a job utilizing it. The schools know this, and they shold not be enabling the borrowing of our money to fund what is basically an expensive hobby.

"I'm sorry, Doctor Jones, but your department has been eliminated because you are churning out too many unemployables." I see no reason for this business to be immune to the laws of supply and demand.

Yes, but "supply and demand" is only the first of civilization's tenets which seems to have escaped the attention of academe...

I mean, I mean, I mean...

OK, you're right. Everything that's wrong with academic life stems from this inability to realize that in this life you have to build stuff for other people, whether you like it or not and whether you like THEM or not.

Any economy that uses tenure as a baseline principle is destined for collapse.

I find myself wondering how successful older unemployed workers were in following the general advice to further their education. Of the several who went back to school that I know, ~none~ found employment through their additional education. (The one possible exception had options for employment in her old field, but ~wanted~ to get a Phd and move over into academic research.)

I like the idea of the schools being on the hook for some of the debt. I also think a % of the 'loan generation fees' should be held in suspension and not received until the loan is paid in full. People have to be smarter about using money for sure, but any change that doesn't effect the group with the most to gain is no change at all.

The law of supply & demand? I guess the students are demanding it so the schools are supplying it. Everything appears to be in working order there. Now whether students should be demanding it is a separate question.

How is it fair for schools to be on the hook for some of the debt?

Because it would stop some of the silliness.

Universities give information about how much their degree is worth - which is usually utter bollocks. I came out with a STEM degree, and of my class of 14, 2 got a job "above" what we'd been told was "average" for our graduates. (And those two were going to super-high cost-of-living places, and were barely above the average.)

Caveat Emptor and all that, but there's no way the university told us the truth.

Had they been on the hook for the long-term, that would change their behavior.

Colleges also worry about keeping kids in school - and the money coming - more than teaching them/training them/giving them needed job skills.

Every year, the cost of tuition goes up 2x the rate of inflation. Without fail. Why? Cause that's how much the government-guaranteed loans go up, every year.

Putting the schools on the hook for getting paid when their graduates do would give the schools an incentive to do what they say they do now. It's a worthy concept, in my opinion, and would utterly cause chaos in the worthless departments.

I don't think that the school should be on the hook for the loan, but it would be wise for the lending institutions to consider the schools' employment rates for recent graduates, according to major. If it were my money, I'd bet on the community college nursing students rather than the private university sociology majors.

I find myself wondering how successful older unemployed workers were in following the general advice to further their education. Of the several who went back to school that I know, ~none~ found employment through their additional education.

I left a career field and went back to school. Got a comp sci degree (graduated in Y2K, how cool is that?) and I've been in that field ever since.

>>"I find myself wondering how successful older unemployed workers were in following the general advice to further their education."

I think that would be an interesting statistic to read, too. I've only known a few people who ever finished, and those both became "professional students". The kind who complete a degree, and then go back to school to get a different one. And then a Masters and then switch to another field.

>>"Colleges also worry about keeping kids in school - and the money coming - more than teaching them/training them/giving them needed job skills."

I find my experience reflects that. One of the requirements for graduation in Florida was to take x amount of summer hours. So they could keep the schools open during the summer. Never mind that none of the amenities were open (no student union, no dorms, no gyms, etc). I disliked college as a furthering of my education. But I did learn who I was there, so it was good for something.

Too many people in this country seem to be living under the impression that money is Monopoly money with Treasury markings on it.

And too many think it comes from the same place, the stack of money that comes with the game.

Too many people don't realize that the government's money comes from the public. Any money the government uses to pay off guarantees on student loans or to directly lend to students who won't be willing and/or able to repay, is money taken from public.

Even those who pay little or no income taxes pay sales taxes, higher prices to pay for corporate taxes, and various agency fees (DMV, etc.).

The schools should be on the hook for part of the debt.

Nope!

It's your job as a potential student to research the school to which you are going and the degree you intend to pursue.

Welcome to your first task as an adult.

If someone else is funding that degree, then it's their job to do the research and assess the risks of the student's inability to repay a loan and/or inability to move out of the basement upon graduation.

And to quit whining when their Minoan Anthropology majoring delicate flower moves home and grows roots on the couch.

Leaving the college on the hook for repayment of a student's loan will force universities to begin assigning majors and courses of study to students. You think in loco parentis has gone too far already? Just wait.

How is it fair for schools to be on the hook for some of the debt?

Because it would stop some of the silliness

So would eliminating low interest easy-to-get student loans. And that wouldn't cost the taxpayers anything.

So would allowing the lender to assign interest rates based on the degree being pursued. The lender could monitor the student's progress and admission to the upper division college and adjust interest rates accordingly: "Mr. Johnson, we're adjusting your interest rate upward. When you applied for your loan, you said you were pursuing an engineering degree, but we were notified that you were admitted to the College of Arts as a junior Medieval Art History major last week. The College of Engineering has never heard of you."

One of the requirements for graduation in Florida was to take x amount of summer hours. So they could keep the schools open during the summer. Never mind that none of the amenities were open (no student union, no dorms, no gyms, etc.)

I did my summer hours at the local junior college.

Eliminating the federal guarantee, and making the loans dischargeable in bankruptcy would sure change the lending landscape! There is just no risk to lenders as it is now. Moral hazard, anyone?

I would think that the Durbin bill would not grandfather-in existing loans, however, because that affects existing contracts. But that wouldn't satisfy anybody except the poor taxpayers who would have to pick up the tab.

So would allowing the lender to assign interest rates based on the degree being pursued.

Hah. Good luck with that one when the Black/Womyn/LGBT Studies programs get wind of their rates and conditions.

So would eliminating low interest easy-to-get student loans. And that wouldn't cost the taxpayers anything.

Agreed. But it would also be curtailed - drastically - by pushing back on the schools which have been selling a bill of goods on the unsuspecting students. Yes, the student's fault too. But even though you can't con an honest man, it's not the victims we toss in jail.

I'm good with balancing the system - and I think it stands a far better chance of letting the schools self-correct than the SEXISM AND RACISM AND other -ISMs which will utterly prevent your chosen solution.

Letting the schools work out the math - or take the financial hit - will work far better, and be self-adjusting.

...by pushing back on the schools which have been selling a bill of goods on the unsuspecting students.

You're assuming that students will opt for a different major if they only the school will tell them that a Womyn's Studies major will leave them virtually unemployable.

That they would have pursued a finance or engineering degree.

That the evil school tricked them into taking an easy major with virtually no difficult subjects in it so they could party for two years.

Yeah, right.

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Once you put the onus of repayment on the schools, you give them the authority to dictate majors and courses of study to students.

Are you educating adults or extending high school?

BTW, the school will still direct some students into the Womyn's Studies program, just to stave off charges of discrimination and to keep the tenured radicals on campus from going nuts.

They'll happily pay the bill for that ... from the tuition increases.

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The solution is NOT to relieve the student of some of his obligation.

That won't result in tuition reduction, higher repayment rates, or fewer useless degrees being awarded.

Students will borrow more, figuring the school's on the hook for X% of it, driving up the average loan amount ... and the average default.

Schools will raise tuition to cover the amount of the loans they have to pay, driving up the average loan amount ... and the average default.

The solution is to cap the spigot of easy money. Dry up the well that spews out $2,500-$5,000 per student per semester.

When schools can no longer count on that money and have to charge what students can realistically afford, they'll have to face the reality of their exploding cost structure and how many needless "departments" and "chairs" they have created for tenured radicals and liberal activists.

The schools already dictate majors ... to a degree ... by limiting admissions to higher-level colleges.

However, the admissions are competitive. The schools are admitting students on [mostly] merit.

Once you force the schools to direct students into more "employable" majors, they'll increase the number of students getting admitted to the business or engineering schools by watering down the admissions requirements - and subsequently watering down the curricula in order to graduate more of them.

Do you really want to drive across a bridge designed by an engineer who should have been a Womyn's Studies major ... or, more realistically, a pet groomer?

Do you really want to drive across a bridge designed by an engineer who should have been a Womyn's Studies major ... or, more realistically, a pet groomer?

That's more backing my idea.

Nope - and the college, if they were on the hook for the tuition being repaid in the career after graduation, would have reason to worry, as well.

However, the admissions are competitive. The schools are admitting students on [mostly] merit.

Pull the other one, it has bells on. (I've worked for over 1/2 my career in higher-ed.)

Once you put the onus of repayment on the schools, you give them the authority to dictate majors and courses of study to students.

I wouldn't put it like that, but put like that, that does have some more negative connotations.

But I'd say it's more that the students still can major in whatever they want to - but the colleges won't want to steer kids getting loans into the "Would you like fries with that" careers.

Students will borrow more, figuring the school's on the hook for X% of it, driving up the average loan amount ... and the average default.

I don't see that. It's not that the college is on the hook for it - it's that the part of the payment to the college is in risk.

It's not that Jimmy's going to borrow $10k for school, and the school takes out $2k for him, for a total of $12k, but that tuition is the same, and the school will be paid, if a government-backed loan is taken, over a time period, 10-15 years, and if the kid stops paying, the school stops getting that check, too.

Same amount of loan, but who's at risk changes from the taxpayer with no say in the loan assessment or grant to include the merchants of education.

Right now, the school is paid up front every course period. Once the kid's out (one way or the other), they got their money, hey, have you thought about the Alumni Club?

And it's us poor saps who are paying the loans for the deadbeat kids.

It's not a perfect system, and ending the government guarantees are a damn good idea, but that will impact the curriculums of those that shriek the loudest.

I just think that if we're going to have government-backed loans, that the schools accepting them can take their payment out over time as well - as the loans are repaid, they can get the back 50%. That would give them much more reason to self-police and introspect more than just demanding more more more loans.

I just think that if we're going to have government-backed loans....

That's your first mistake ... basing everything on that assumption right there.

Take away the "if we're going to have government-backed loans" assumption and seek free market solutions.

And it's us poor saps who are paying the loans for the deadbeat kids.

It's not a perfect system, and ending the government guarantees are a damn good idea, but that will impact the curriculums of those that shriek the loudest

Someone proposed a few years ago a law that would halt loans to schools that crossed a certain threshold default rate.

Predictably, the merchants of diversity screamed that a program like that would unduly penalize poor and minority students who attended so-called colleges that tended to have higher default rates.

They screamed louder when it was pointed out that those very schools they were defending were mostly proprietary trade schools that prey upon the naivete of the poor and minority students, leaving them woefully undereducated, unskilled, and now heavily in debt.

The proposal died in committee (if it ever made it that far).

I don't see this as necessarily a bad thing.

If private lenders knew that the student could potentially default, there were be less loans given out.

As of now, private lenders know they have you on the hook for the rest of your life whether you are pursuing art, history, women studies, or barber college...therefore, don't care really about what you are studying or how you perform.

If they knew you could possibly default, then more care would be given to the loan application and entire process to prevent those defaults.

The bill doesn't intend on letting government loans disappear after bankruptcy. Now, if only it included a provision for repayment after bankruptcy for the subsidies lenders are receiving for providing those private student.

Quite frankly I'm hoping for the U.S. default to happen, soon.

Until then. we are all living in a dream.

College students can't win.

The people hit hardest by the economic downturn aren't deadbeat kids who spent 4 years studying LGBT history. They're people without college degrees.

People with college degrees are still seeing reasonable employment rates, and the employment situation looks better the more educated you are. But if they want a shot at a job that isn't going to be automated within the next 20 years, they need a college degree.

Most professional jobs won't even interview you if you don't have a degree. Whether you need a degree to do the job is irrelevant. You need a degree for anyone to give you a chance. Also, colleges offer chances for networking that high school and vocational schools don't, and in many ways are taking the place of vocational schools. My local colleges offers a degree in massage therapy.

In the first few years after graduation, graduates are likely under a mountain of debt, and they have people bitching that they should be self-sufficient adults with their own homes and starting their own families instead of moving out at 30 and having kids at 40. Never mind that the low-paying jobs people tend to get straight out of college aren't enough to pay off the minimum payments on the loan and an apartment or house and the expenses of having a family. Yet they're still better off than people with no degrees.

We're going to be in a sad state when the middle and working classes can't get a higher education.

From Walter Russell Mead's blog (http://blogs.the-american-interest.com/wrm/2011/12/07/how-to-ruin-your-life/):

...here is a sure-fire way to make yourself miserably unhappy in your twenties.

First, enroll in a college that you cannot afford, and rely on large student loans to make up the difference.

Second, spend the next four years having as good a time as possible: hang out, hook up, and above all, take plenty of “awesome” courses.

Third, find teachers and role models who will encourage you to develop an attitude of enlightened contempt for ordinary American middle class life, the world of business, and such bourgeois virtues as self-reliance, thrift, accountability and self-discipline. Specialize in sarcasm and snark.

Fourth, avoid all courses with tough requirements, taking only the minimum required number of classes in science, math and foreign languages.

Fifth, never think about acquiring marketable skills.

Sixth, when you graduate and discover that you have to repay the loans and cannot get a job that pays enough to live comfortably while servicing your debts, be surprised. Blame society. Demand that the government or your parents or evil corporations bail you out.

Hat tip to Crid for the original link that led me to this.