… because it doesn’t go far enough!
Economists have found that most of the benefits of subsidized federal student loans went to colleges, which used the money to overpay administrators (how do we know they’re overpaid? look at the quit rate!).
Colleges seem to charge students however much they think a family can cough up. When the Feds added guaranteed and/or subsidized loans, colleges just raised their prices. Students did not receive a better education because they paid more. The extra money was used for more administrative bloat and higher salaries for existing administrators.
Instead of merely forgiving student loans that haven’t yet been paid off, what would be fair is if the government admitted this was a welfare scheme for universities and, in addition to forgiving unpaid loans, refunded all payments made under these ill-advised programs.
Readers: Is it time to admit that the government helped universities fleece American families and give back the stolen money?
Related:
- “How Unlimited Student Loans Drive Up Tuition” (Forbes, 2017)
- “Credit Supply and the Rise in College Tuition: Evidence from the Expansion in Federal Student Aid Programs” (New York Fed, 2015-2017): “We estimate tuition effects of changes in institution-specific program maximums of about 60 cents on the dollar for subsidized loans and 15 cents on the dollar for unsubsidized loans. The subsidized loan effects are robust to placebo tests and the inclusion of a large number of additional controls. Consistent with the model, we find that even when universities price-discriminate, a credit expansion will raise tuition paid by all students and not only by those at the federal loan caps because of pecuniary demand externalities.”
Say, approximately 50% of all student loan funds are not for tuition but for living expenses. Living expenses must be paid whether one is a student or not, and should be removed from any discussion on student loan forgiveness.
Nobody forced anyone to take a loan… and, frankly, the “top schools” are overrated. After a few years nobody looks at what school the job candidate has attended, the work record is more important.
That’s probably why Individual-1 mentions the time he spent at Wharton in the sixties so often.
You really started seeing this in the late ’80’s. Perfectly good and credible local colleges (like, for example Kean College in New Jersey) decided they needed to become Universities and do everything much bigger, more globally, and the marketing and everything else changed to match. They haven’t changed that much, I don’t think anyone in New Jersey is much smarter than they were, but things are a lot more expensive.
Kean College was always a good local alternative for people who needed a nice place to study, but it’s been a huge expansion, vastly expensive. Are there even any teacher’s colleges any longer? Do they exist?
I know you’ve done extensive work on the tremendous inflation of having a $220 million dollar school when compared to the long-term value for the students it purports to serve. I read a lot of your work there, and you asked a lot great questions that should have made people think several times, not just twice. I think so much of it is needless expense piled on top of vanity and tremendous amounts of marketing effort. Lincoln could have improved a lot of things instead that would have had much more value to everyone in Lincoln, but spending the money was more important. I’m sure it will be a gorgeous school. But what is the long-term value to people? Will anyone in Lincoln be educated better? Really?
If you take the article in the Atlantic at face value, all of our efforts at higher education at vast expense to educate people who really understand their backgrounds are stricken. Many fewer people, none of them “experts”, doing lots of different jobs and learning as they go. The world has apparently changed tremendously.
https://www.theatlantic.com/magazine/archive/2019/07/future-of-work-expertise-navy/590647/
The article asks a lot more questions than it answers, which is what I found most striking. It doesn’t give any answers to its own questions, it just provides examples. It’s a social experiment. We are moving very rapidly into a world where nobody really knows anything very well and everyone is just repurposed according to whimsy.
I really should provide an example from my own life. When I was in 3rd grade, one of my teachers saw my early writing and liked what I had to say based on some of the ideas I was expressing, but they were rendered in a terrible, cribbed penmanship that just looked awful. Real “chicken scratch” kind of stuff. I don’t mind admitting that at all.
So she decided that it would be better for me to really understand letter forms and practice my cursive writing for a full month, and to motivate me, she moved me from the front of the class to be back of the room and she gave me a lot of worksheets to complete, which I practiced every day. At the same time she moved one of the more troubled students in the class so that he sat next to me, and we worked together. He was Black. His family had lots of problems. We worked together for that month and I really did come to understand the letter forms I was writing. He improved by a quite a bit also. I helped him and I distinctly remember that he didn’t understand the hand movements necessary to write well. I didn’t feel like I was being punished, I thought it was good for both of us.
Part of my difficulty writing in longhand was because I’m left handed and writing on spiral bound sheets was more difficult for me, so I didn’t pay as much attention to my letter forms as I would otherwise. So she forced me to practice them carefully, perhaps out of some sense that they would matter to my life some day. Today I have wonderful penmanship. I’m no calligrapher, but I write pretty well with ink and paper. Nice stuff. I have my own style and it looks good, and it’s very legible. But what does that matter today? I can’t think of the last time anyone looked at my writing and said: “Wow, that’s really nice penmanship you have there.” It just never happens. She meant well, and I don’t regret doing it, but how often does it help me? 0.0% of the time, as far as I can tell.
I too am left-handed and I agree it was a pain to write on those spiral notebooks.
I think what that experience may have taught you at an early age was the ability to adapt and overcome obstacles that others never encounter. That ability required higher levels of concentration and attention to detail.
@Rg: My dad is also left handed and he was hit with rulers, no kidding, it hurt him. He learned all about radio electronics from a man who was a quadriplegic. He used to buy groceries for that man and help him with household chores, and in exchange he learned about electronics from someone who had nothing but time to talk and teach. My father used to build things for the guy who couldn’t do it for himself.
There are some things you can change and others that you cannot. If anyone had demanded I try to switch my handedness it would never have worked – I knew I was left handed the first time someone asked me to pick up a pencil. It wasn’t something I ever had to wear on my sleeve, and I’m hesitant to recount that story. It has made me think much more about what is innate and what isn’t. We need to make sure that we always value the individual, their liberty and freedom, in that order. If we don’t, we’re in big trouble.
Perhaps the real solution is that the rich stop supporting a broken University system, and pay professors to record their classes and put them online with syllabi and curricula. Computer science is leading the charge with sites like Pluralsight leading the charge. $40 a month gets you pretty much all the training you need to get an entry level job in programming with a rich curriculum and deep knowledge in classes. A colleague of mine tells me it’s better than taking University programming classes. At $40 a month, why bother with the University? Just need to move it to other disciplines, like finance and accounting.
Why only student loans? Why not car loans, mortgages, credit card debt, etc.?
Because the federal government didn’t back loans of those types, thereby artificially driving up the costs charged to consumers.
Also there was a lot of bad mortgage forgiveness during the last crash, the banks took full advantage of it.
Why only the student loans? If you are willing to fight Trump’s regime you will get paid in full: whatever you want. Just like yakuza.
The first step would be to claim that you self-identify as a sexual assault victim gang-raped by the whole Trump’s cabinet. The more ridiculous the lie the better (the DNC has learned from Goebbels how to make noise). They will cover your legal fees and you may earn a nice fee, just like the fake Kavanaugh accuser who didn’t remember yet didn’t forget.
Elizabeth Warren wants to have it both ways, free college and also preserve the lavish salaries paid to college staff (e.g., herself at $430+k for teaching one class).
Yeah but nobody calls her out on that, so it doesn’t exist.
Still remember when Bill Clinton expanded us to $20,000/year for 1 of the programs. Rent & tuition instantly went up. Otherwise, the lion kingdom was rolling in dough. A very generous future lion was going to pay it off by some unknown means.
If Warren, Sanders or anyone else get their way to pass such a legislation, please, please, please, make sure it is retroactive to at least 2 years. Why? I want to make sure that my 2 kids, who are paying their student loan, to get back what they paid already. And I will be happy and accept it if such loan forgiveness does not include on-campus housing and meal plan cost. Am I asking for too much?
What do you want, reparations for being privileged?
Oh c’mon man. IIRC, George is from Syria, hardly a playboy’s land. His privilege is his unwillingness to immediately blame the others for any hardship.
Oh come on Phil, Bernie says the rich will pay for it and the rich as we know is anyone who makes more than me, so I am in favor of that (it is no skin off my nose) and do you really expect that Jake or Ashley will ever make enough money as a barista or accosting people on the street on behalf of Planned Parenthood to repay the $400K tab for four years of grievance studies at Oberlin? I mean that is a big number especially when you add on compound interest. It is just not possible for them ever to get out from under their debt unless the rich pay their fair share of Jake and Ashley’s tuition.
People should look at the number of courses and degree programs. If we don’t need specialization, why do we have so many degree programs?
‘Cause program administrators want to be paid too, and they prefer to earn a high salary for their most prominent skills, such as being a pious SJW. Why earn a (sexist) math PhD if you can earn $300+K for telling those ignorant eggheads what to think of good gender/bad gender?
What about all those families like ours who SAVED for two generations for our kids to attend college? Forgiving student loans is a slap in our faces. My father in law paid $225 per month, per child for 18 years for the 3 grandkids to have their college tuition-free. We cash flowed their dormitory and living expenses, and will for 3 more years. One child went to a private college and we spent about $125,000 of our personal wealth for him to attend an elite business school. All 3 will graduate without student debt. Our middle child graduated in 3 years, and used some of her savings to start graduate school. So I’m sorry, our family sacrificed for generations to make sure our children would graduate debt free, and Bernie and Elizabeth will ensure that those sacrifices were made in vain. We should have traveled the world, had expensive hobbies and cars, and enjoyed our lives instead.
My mortgage self-identifies as a student loan. Will Warren’s reparations pay for it too?
I have been away for a while recuperating from a hurricane (just got wifi on Tuesday after 9 months), but I see we are still screwed.