<p>I am not suprised about this. Since the bailout, banks have, IMO, really made a successful attempt to become more stringent in their lending practices. When the govt bailed out Wall Street, that in turn was suppose to help Main street, but the banks made it more difficult for small businesses and people to re-group. I’m conflicted as to if this is a good thing. I’m all for trying to drive the costs of college down, but it’s not just the banks. With the government willing to give families a Parent Plus loan with very loose credit requirements the full amount for COA minus scholarships and Govt student loans, why would colleges lower their costs?</p>
<p>“why would colleges lower their costs?”</p>
<p>Since we are the consumers, another question is: How do we want colleges to lower their costs? Lower faculty and staff salaries? Cut capital improvements? Increase class sizes? What do we want them to do?</p>
<p>^ that would be dependent on the school.But The school I am familiar with is NYU. Their expansion plan, recruitment methods for faculty,(Mega loan packages for 2nd homes in Hamptons, FireIsland and then forgiveness as an ex.),research cost drives the tuition up. The FA is comparatively poor for students. The government is beginning to take notice of these things. The schools are getting funding and the govt wants more of the money to go to students and student services. maybe there should be some sort of Oversight or Ombudsman involved.</p>
<p>My understanding is that many schools have far more bloated bureaucracies/administrators than they have in the past, which leads to lots of increased costs. Of course, College Presidents these days pay themselves like they are the CEOs of large, for profit corporations, and that attitude and philosophy works its way downward.</p>
<p>For a private school like NYU I’m not sure what can be done as far as oversight. Even Public U’s are mostly funded by private tuition/contributions. Its private enterprise, and as long as students will pay, the universities will keep raising prices, until they stop filling seats.</p>
<p>Institutions’ government funding (for student loans, research, etc.) can have strings attached, requirements to be met.</p>
<p>Vonlost, agreed.
<a href=“http://wallstreetonparade.com/2013/06/nyus-gilded-age-students-struggle-with-debt-while-vacation-homes-are-lavished-on-the-universitys-elite/[/url]”>http://wallstreetonparade.com/2013/06/nyus-gilded-age-students-struggle-with-debt-while-vacation-homes-are-lavished-on-the-universitys-elite/</a></p>
<p>One bank pulls out of the market, another tries to increase market share.</p>
<p>[Wells</a> steps up student-loan business as other banks exit | CharlotteObserver.com](<a href=“http://www.charlotteobserver.com/2013/09/06/4292661/wells-steps-up-student-loan-business.html#.Uiuvt8Z4ySo]Wells”>http://www.charlotteobserver.com/2013/09/06/4292661/wells-steps-up-student-loan-business.html#.Uiuvt8Z4ySo)</p>
<p>I agree it should be more difficult to get excessive student loans. Part of the problem is many families think Jr will graduate with a top job and be able to help pay back those loans. If your child does graduate with a high paying job then things may work out just fine and the loans were a good investment. However, if your kid doesn’t get a good paying job, or worse yet, doesn’t even finish, guess what - you still owe the money.</p>
<p>Too much emphasis is placed on getting into schools rather than paying for them. It is so easy to get sucked into the trap of “needing” to go to the expensive school since it will be so much better for job prospects, networking, etc. D’s friend, who is paying full price at a very expensive school, and mom told me that they are now taking out a lot of loans and it is only the second year, now is deciding she may want to work in a non-profit. Mom was aghast saying “no way” not with these loans!! Now that she has started, it is hard to go back to the lower priced schools. There were probably several schools that she would have qualified for significant major merit scholarships but she didn’t even apply. </p>
<p>I know there was disappointment in our household when some of the elite schools my D was accepted had less than desirable financial packages, but in retrospect she is very happy with her lower priced choice!</p>
<p>I think the Stafford loan breakdown needs to change to encourage those that are struggling to make use of their CC’s first.</p>
<p>Students who go the CC route should be able to something like the following:</p>
<p>Year one: borrow nothing
Year two: borrow nothing
Year three: borrow $15k
Year three: borrow $15k</p>
<p>For the low income person, once they’ve transferred, a Pell Grant, a $15k loan, and some WS, some summer earnings could likely cover most/all of an instate public in many states. States that have higher COA’s for instate schools may have some state aid to help as well.</p>
<p>Whatever your opinion about appropriate debt burdens and college costs, the premise of this thread and the CNBC article – that banks exiting the student loan market is a sign a bubble is bursting – doesn’t hold water:</p>
<p>Per the Washington Post regarding JP Morgan Chase leaving the market:</p>
<p>“The decision follows a period of turmoil in education finance sparked by the overhaul of the federal student loan program in 2010. The government captured a majority of the market by choosing to lend directly to students, leaving a limited role for private lenders.”</p>
<p>The private market itself has shrunk because the federal government cut out the middleman for a significant chunk.</p>
<p>Exactly. Add in the income-based repayment plans, and many grad students who used to borrow private loans are choosing Grad PLUS, instead.</p>