<p>Nah, I actually agree with you, ccddadio. But apparently the powers-that-be here in CA think we are doing great!</p>
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<p>Considering how low interest rates are maybe it is good. :p</p>
<p>All debts should be treated the same. </p>
<p>Also, in one way or the other, the inflaters of the student loan bubble ought to be made to pay as steeply as the believers in the lie. If that means being bankrupted out from under, why not?</p>
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<p>It’s even more silly to make the (outrageous) assumption that us parents are that clueless about the state of education (and the economy in general). </p>
<p>Who do you think is paying a lot of education bills – thru taxes and tuition – today? :rolleyes:</p>
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<p>That is one approach.</p>
<p>That would mean that a kid with no income and no collateral would not qualify for a loan.</p>
<p>Is that what you want?</p>
<p>I’ll tell you what I want. Free trade education or higher education for everyone with a qualifying application, funded by taxes on their later salaries. Programs coordinating on a national level to not crank out more graduates than jobs will open in which the degree is valuable- perhaps 10% to introduce competition and provide flexibility, not the 50 and 500 extra percentage points we’re seeing in many fields today. Innovative new optional programs to motivate students to excel in school without the debt reaper on their heels, using both intrinsic strategies and material rewards. </p>
<p>And the creation of a well-funded intellectual community embedded in universities that will, given the glamorousness today of academia jobs, need to be highly selective, but with good funding will no longer feel the need to be so territorial about the encroachment of practical degree programs into the university. They can be content with offering their wisdom to interested students on the same basis that medieval professors did: show off what’s interesting about the subject and pull in interested people, rather than using the general education system to try and ensure throughput.</p>
<p>From the article in post #1: “The Educational Credit Management Corporation is a nonprofit entity with an exclusive government agreement” — if there are issues with the way things are being handled by this company, perhaps the push should be to persuade Congress to hire a company that operates differently?</p>
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<p>Bay, I get why the powers that be think that CA is doing great - they have to say that to keep their jobs.</p>
<p>What deeply disappoints me is how the media is not able to look at reality and instead they just go with the spin of the politicians.</p>
<p>At the end of the day, history won’t treat the media kindly.</p>
<p>And lest you think me a leftist loose cannon, I think the taxes should only be modestly progressive, or else everyone will flock to easy and/or rewarding low-paying jobs, as too much of their income will be taxed away if they choose something hard and/or glamorless with a high income. But still, student loans are NOT the correct way extend college to everyone who can become better educated and more productive with attendance.</p>
<p>The simple solution to making college loans dischargeable in bankruptcy is to credit-test the borrowers and grant loans only to those with the resources to pay them back (like most forms of debt that aren’t backed by a repossessable asset like a car). One small problem - only a tiny fraction of applicants would qualify, and the students most in need of loans wouldn’t get them.</p>
<p>I do agree that for-profit and non-profit institutions have benefited greatly from easy student loans. In addition to ignoring the credit status of the borrower (which makes some sense, considering who the borrowers are), the institutions making the loans do no due diligence on the borrower’s academic status, the quality of the school, the likelihood of degree completion, and the employment prospects post-completion. Someone with a 500 SAT-V signing up for an English Lit degree from an online school gets the same loan as a CMU CompSci major. If schools shared in paying for the loan defaults created by their students, they might pay a lot more attention to admissions standards, student achievement and retention, and career counseling & placement. (Many schools already do these things, of course, and have low default rates. They shouldn’t be penalized for the failings of other schools.)</p>
<p>the problem, Roger, is that HBCU’s, which serve a low income (and predominatly minority) population, have high default rates. Changing the law relative to default rates is politically untenable.</p>
<p>People frequently mention heavily subsidized universities in other countries as an alternative to the American system, without realizing that the generous subsidy is possible because of restricted access (usually exam-based). IMHO we do not have the political will in this country to limit tax-supported access to higher education only to those who have demonstrated the highest levels of academic ability. We are uncomfortable with denying intellectually ordinary kids access to university, which has come to be seen primarily as a means of upward mobility rather than an educational enterprise. We cannot afford to let every 18-year-old in this country take a free crack at college, with the inevitable results and washouts. Therefore our loan system is an uneasy compromise; we don’t say, “You can’t go to college.” We say, “You can go, but you and your family must assume the economic risk of your possible failure.” I do think that private lenders exploit ignorant people but the government loan limits (Stafford) are pretty reasonable.</p>
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<p>How is this any better, or really any different, than the current loan system, in which it’s assumed that you will pay your loans with your future earnings? “Later salaries” are never, ever a sure thing. No one can predict what the job market will want in 10 years. Your proposal displays an unrealistic amount of faith in the predictions of government economists. I’m old enough to remember lots of people chasing the market with their degrees who ended up not getting the jobs they were certain they’d walk into upon graduation. It’s not that simple.</p>
<p>Let me try to some up what I have read here:</p>
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<li>Predatory lending. We have lenders who are willing to lend however much is necessary to non-creditworthy (unemployed) people because THEY CANNOT LOSE! Risk-free lending, sounds like the real estate bubble to me, (Houses will always go up in value- those people didn’t remember 1980s) This makes a situation that is just asking to take advantage of people. Just try to get a loan for anything other than school with no credit… If you really think that its only the borrower at fault, you don’t understand, you have colleges saying “oh yeah its worth it go for it”, creditors begging to give out loans and children hoping to make their lives better thinking "oh yeah I’ll have a great job no worries to pay it back…<br></li>
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<p>Think maybe a lender or college might lie a bit??? If so we need better laws to protect the consumer, not the business.</p>
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<li>College used to be affordable. -When I went to Penn State in the early 1980s it was $900 PER YEAR! ( Penn was 7500 and I got less aid to go there so I went to PSU) At that time it was just 7.5% of the average workers salary of $15K. That’s when 90% of PSU budget came from the state now the state gives less than 10% and tuition is 16K. Current avg worker’s salary is 44K that makes PSU AN ASTONISHING 40% of an average workers salary PER YEAR!!!</li>
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<p>3 The goods (education) purchased with the credit may be hyped by the seller. Seems similar to an unscrupulous used car salesman selling a little old lady car telling her that its worth 10,000, lending her the money to buy it as well. Then she finds out it was only worth 5000, She has recourse, suing for fraud, a student HAS NONE!!! </p>
<p>Think maybe we need laws to protect the buyer, not the business???</p>
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<li>Laws for credit and borrowing are stronger for buying a car. Look at the disclosures when you purchase an automobile. Also look at all the info available for the VALUE of a car. You can find depreciation amounts, future values, maintenance costs, reliability etc. You know the value of the car but not the value of a particular College, its all smoke and mirrors, guessing and anecdotal information, yet a lender will give you whatever you need, because there is NO RISK to them!</li>
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<p>Maybe the lenders and colleges should have the student sign a disclosure that they understand the college makes no guarantee that their education is worth anything? This may stop some students or at least make colleges take some responsibility for their marketing.</p>
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<li>There are ways to be frugal but colleges sell themselves as better matters, making it hard for the consumer ( student) to know the facts. The purchaser ( student) SHOULD DEMAND IT!. Community colleges that do a good job preparing someone for a college education. Succeed at this level and then finish your degree. GO to a cheaper school, does it matter? The colleges cannot and have never attempted to prove it, they don;t have to, the lenders will LEND YOU WHATEVER YOU WANT.</li>
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<p>I was just trying to make people understand the real dynamics of the college bubble, its not just borrowers not paying obligations, its unscrupulous marketing of a college’s value and lenders taking advantage of un-sophisticated borrowers as well</p>
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<p>Exactly what laws would you propose to protect buyers from someone giving them a loan that they may not be able to afford or protect them from not knowing what the value of their education is?</p>
<p>The ONLY way to “protect” the buyer, in this case a teenager, is not to give them a loan in the first place.</p>
<p>btw: jsaab, the "lender’ is the federal government in most cases, i.e., us.</p>
<p>I need money badly.</p>
<p>As I mentioned in my post, perhaps better disclosure laws, where a college will need to directly say, “we make no guarantee that you will ever earn enough with our education to pay these loans” could be a start and at least have those interested in attentding asking themselves ( and the school) tough questions</p>
<p>Another law would be you can excuse the loans by bankruptcy, then the loans would no longer be no-risk to the underwriters and bankruptcy DOES have harming ramification for the borrower so it is not taken lightly. Also there is no reason for a lender to re-negotiate terms of a loan since no matter what they are getting paid (no Chapter 7 for borrowers, no other debt has these protections, what makes it so important for college borrowers?)</p>
<p>The federal government is the grantor or guarantor of the loans, liek an underwriter, the LENDER is the one who owns the loan which are in the public sector.</p>
<p>Can someone tell me the exact moment that the need to take personal responsibility vanished from society. Because it came way after I came of age. We need laws to protect ourselves from ourselves. Its a shame that I can still purchase a 64 ounce Big Gulp because it could lead to obesity.</p>
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<p>Not anymore. Educ loans were nationalized ~4 years ago. A few private lenders still exist, but those loans are not backed by the Treasury.</p>
<p>Federal loans-R-US.</p>
<p>Terrifying. Thanks for revealing.</p>