Should Student Loans be Banned If Students Are Stupid Enough to Take Advantage of Them?

Sunday's New York Times carried the latest story in a never-ending series on how student-loan debt is killing an entire generation's chances to live happy, meaningful lives. As someone who financed my own higher education through the Ph.D. level without parental help (they were willing, just unable, alas), I have a lot of sympathy for kids struggling to pay for a B.A. or more.

But the sob story the Times leads with in "A Generation Hobbled by the Soaring Cost of College" would make Mother Teresa ask some tough questions not of "the system" but of the students who take advantage of cheap money via student loans. Meet Kelsey Griffith, who has wracked up an enormous $120,000 in student loan debt to attend Ohio Northern, a little-known private school in a state known to have some of the very best public universities in the country:

Ms. Griffith, 23, wouldn’t seem a perfect financial fit for a college that costs nearly $50,000 a year. Her father, a paramedic, and mother, a preschool teacher, have modest incomes, and she has four sisters. But when she visited Ohio Northern, she was won over by faculty and admissions staff members who urge students to pursue their dreams rather than obsess on the sticker price.

“As an 18-year-old, it sounded like a good fit to me, and the school really sold it,” said Ms. Griffith, a marketing major. “I knew a private school would cost a lot of money. But when I graduate, I’m going to owe like $900 a month. No one told me that.”

No, Griffith was plainly not a good fit for Ohio Northern. Indeed, it's hard to imagine who would be a good fit for the place if it actually costs $50,000 a year. But it's simply unbelievable that "no one told [her] that" her monthly payments would be $900. If the loan officers she worked with or her school's financial aid advisers didn't, then I'm pretty sure her mother did. After all, as the story points out, Mom co-signed the notes:

“If anything ever happened, God forbid, that is my debt also,” said Ms. Griffith’s mother, Marlene Griffith.

(A word to the wise-in-training: Get into the best college you can and then attend the one that you can best afford. Research consistently shows that it matters little where you end up actually attending, which should give hope to more people than it gives offense.)

The Times story runs through the litany of fears and anxieties about "soaring costs" of college. There's no question that college expenses are rising faster than inflation. There seems to be equally little question that one of the major causes is precisely the massive amount of free and reduced-price money flowing into higher education via expanded federal and state-level grants and expansions of governmentally run lending programs. That's precisely how you create an asset bubble - you pump a lot of extra money into an area of activity that wouldn't otherwise command that level of attention.

After breathless stories about student-loan debt reaching the magical $1 trillion level and kids actually having to work to make their monthly payments, the Times does note that "the average debt in 2011 was $23,300." That's not a back-breaking amount of money - given a range of relevant interest rates on subsidized student loans, it should work out to less than $300 a month over a standard 10-year repayment schedule. Which seems like a pretty good deal for a degree that is likely to raise lifetime earnings by somewhere between a quarter-million and a million dollars. The Times says that "ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education," a statistic that is far higher than other estimates I've seen, which put the figure closer to 40 percent or 56 percent.

After trying to induce tears through stories such as Kelsey Griffith's, the Times comes up short in exploring any good options to address the issue of rising college costs and incidents of ridiculous levels of individual debt taken on by students at nonprofit and "for-profit" colleges (as if all institutions aren't equally money-making ventures). That's likely because the solution that is most obvious - reducing the ease with which students can take out taxpayer-subsidized loans at below-market rates - is unpalatable to the writers and editors at the nation's paper of record (indeed, the paper editorialized that Congress should have permanently lowered Stafford loan rates to 3.4 percent when it had the chance). But that's precisely how you keep bubbles from happening, isn't it? You stop using various subsidies to direct investment into areas where it wouldn't go otherwise.

If that were to happen - and schools such as Ohio Northern were run out of business as a result - we would doubtless be reading tearjerker Times stories about the death of massively overpriced small colleges across this sweet land of liberty.

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  • Rich||

    it's simply unbelievable that "no one told [her] that" her monthly payments would be $900.

    Read the life-altering contract before signing it? That's crazy!

  • wareagle||

    she was not told about the payments by the same people who forced her to attend a pricy private school instead of a more affordable state-run college.

  • Juice||

    I've heard more than once a pundit say something like, "We're saddling our college students with massive debt..."

    Yeah, we all made them take out those loans.

  • R C Dean||

    These loans are made every semester. Each semester's loans would have been just over $100/month to pay off.

    I'm sure that much was disclosed, and probably fairly clearly. Whether anyone was disclosing a running total on the loans, I couldn't say.

    And, once you're in, you take pretty much a total loss unless you get a degree.

    Are these people idiots for taking on so much debt? Of course. Is it the university's fault for not telling them what their total debt would be? I don't see how: there's no way for the university to know until the last loan is taken.

    Quite a racket for the university, really. Still, how hard is it to multiply by the number of semester until you get a degree, to see what your monthly nut is likely to be?

  • John||

    It is the University's fault for telling her to forget the sticker price and pursue her dreams. These universities are non profit. They claim to be doing a public service. Given that, I don't think it is too much to ask that they give their perspective students realistic advice.

  • Mo' $parky||

    Oh come on. Is it a car salesman's fault when he gets someone to buy a car they can't afford?

  • John||

    No. But we don't give the car salesman non profit tax exempt status either. If they want to claim to be nonprofits and public service entities, then they should be held to a higher standard than car salesman.

  • Kwanzaa Cake||

    Do you know for a fact they did not give her that advice and she just ignored it? At any rate, she had to sign for each loan every semester. I would be shocked if each document did not clearly disclose the principal amount of the loan and interest rate. From there, it's not hard to find a loan repayment calculator online and run the numbers. And even beyond that is the plain common sense that you can't borrow $120k for free. To say that the school should have advised her is to say she had no personal responsibility at all to do anything to inform and protect herself.

  • John||

    No. I am saying the school should have advised against her going there. If she still chose to do it, that is her fault. But if the school sold her on what they should have known was a stupid decision, they bear some blame.

    For the third time, if these schools want to be non profit and claim to be public service entities, then they owe their students some service and something beyond what a car salesman would give. Does that excuse her from all responsibility? No. But that is not the point. The point is the school ought to be held to a higher standard of behavior or they should start paying taxes like every other for profit business.

  • sloopyinca||

    For the third time, if these schools want to be non profit and claim to be public service entities, then they owe their students some service and something beyond what a car salesman would give.

    In this case, I think the school did act as a public service, as this woman can now be held up as an example of what not to do with your life. While unfortunate for this foolish woman who either can't or won't figure out how loans work, the ONU is serving the greater good because they are teaching society writ large a lesson in basic economics and ROI. I say "Kudos" to Ohio Northern.

  • Mo' $parky||

    The point here is salesmen are salesmen. They're going to say whatever it takes to get you to buy their product. It's your job as the consumer to say no, not their job to say you can't afford this.

  • John||

    Sure they are Mo. But if the school is just a salesman selling a product for money and profit, then they need to start paying taxes.

    The reason why they don't pay taxes is they claim to be something besides a salesman. They claim to be acting not for profit but in their students' best interests. And selling students products they can't afford is not protecting their interests.

  • sloopyinca||

    The reason why they don't pay taxes is they claim to be something besides a salesman. They claim to be acting not for profit but in their students' best interests. And selling students products they can't afford is not protecting their interests.

    No, they are acting not for profit and in the interests of providing an educational opportunity for students. Whether or not their opportunity is in the prospective student's best interests is completely up to the student to determine.

    Giving someone options, whether for profit or not, is the goal of the school here. Protecting someone else's interests is not part and parcel of being a non-profit. I don't know where you would have gotten that from, John, because it's never been required of any other market that is heavily saturated with non-profits or not-for-profits.

  • John||

    What other markets are saturated with non profits Sloopy?

    If Ohio Northern is in the business of selling education to anyone and everyone they can con into taking it, then they are a business like any other and ought to be taxed so.

    You become a "non profit" not just because you don't make a profit. You get the status because you claim to offer some kind of public service. I can't start a nonprofit custom wheel business. I can only get the status because what I do does something for the general public good, in this case educating students. And that implies a duty to look out for the interests of said students.

  • R C Dean||

    What other markets are saturated with non profits

    About half the hospitals in this country are non-profits.

  • John||

    And hospitals are not held to a higher standard of care towards their charges than say a car dealership?

  • R C Dean||

    If they are adequately represented legally, I would say . . . no.

    The duty of care, laws against misrepresentation, etc., draw no distinctions between for-profits and non-profits.

  • sloopyinca||

    If Ohio Northern is in the business of selling education to anyone and everyone they can con into taking it, then they are a business like any other and ought to be taxed so.

    There's the fallacy in your argument. They aren't in the business of selling anything. They are in the business of providing an educational opportunity. The fact that they help their willing consumers find funding that will enable this is completely beside the point.

    There are plenty of colleges and universities out there. This student voluntarily applied here and was accepted. She then was told what the tuition and fees were and voluntarily agreed to accept those terms to go to school there. She then sought out the Financial Aid Department's assistance in helping her meet those needs. They gave her options on how to pay her tuition and fees (cash, check, credit card or get loans). Once she voluntarily chose which avenue of payment she wanted, she was given a contract, which she was free to review, to sign telling her what the repayment terms were. She agreed and signed them.

    Jesus Christ, John. How can you think for a second the school bears any responsibility when she sough them out at every step in the process?

  • John||

    They are in the business of providing an educational opportunity.

    And GM is in the business of providing you the opportunity to buy a car. If they don't want to be responsible for looking at their students as something besides a cash cow, then they should be taxed.

  • ||

    They are in the business of providing an educational opportunity.

    Educational Opportunity =/= Guaranteed Favorable Outcome.

  • Randian||

    Educational Opportunity =/= Guaranteed Favorable Outcome.

    That really isn't relevant to the conversation. The point John is making here is that the universities benefit from the public's largesse. If the universities are going to bamboozle clueless 17-year-olds into hocking their lives, then the universities are not serving a public purpose and they can go hang, AFAIAC.

  • ||

    If the universities are going to bamboozle clueless 17-year-olds into hocking their lives, then the universities are not serving a public purpose and they can go hang, AFAIAC.

    Then just nationalize them and be done with it. Any other "rights" would you like to pull out of thin air, since the freedom to fail is no longer an option?

    I'm in complete agreement with Sloopy's position otherwise.

  • Randian||

    GM, I am going to be nice about this, but learn to read. I never said word one about nationalization or positive rights, and if you can find where I did, I'll give you $100.

  • sloopyinca||

    Bull shit, John. They are not in the "opportunity" business. They are in the product business. And their product happens to be college courses at $x per class + room and board (if applicable). Now I have no problem with taxing them the same as any other business, but to say for a moment they bear an ounce or responsibility for a decision their consumer voluntarily makes (actually, the consumer makes several voluntary decisions to get to the point of borrowing money, free from coercion), is to say we will no longer hold people responsible for their decisions because there was another party involved that didn't have to do business with them.

    Holy fuck, John. Is there no such thing as personal responsibility anymore? First it was the banks. Then the automakers. Now, we want to forgive the idiots that took out too much money to get a useless fucking degree. Well fuck that, because all you really do is punish the people who properly planned for their education, made more responsible decisions and/or lived up to their contractual obligations.

  • Randian||

    Look, sloop, if you sell alcohol to a guy who is transparently drinking himself to death, I can think you're a total shitbird and should be morally shunned without saying the law should do anything about it.

    Libertarianism is not libertinism.

  • sloopyinca||

    Look, sloop, if you sell alcohol to a guy who is transparently drinking himself to death, I can think you're a total shitbird and should be morally shunned without saying the law should do anything about it.

    If I sell to a guy who is drinking himself to death, then I am selling to someone who is mentally impaired and incapable of making rational decisions. Helping someone get student loans so they can go to the school of their choice is nowhere in the same ball park. Hell, it isn't even the same fucking sport.

  • Randian||

    That's interesting. So you do admit that in some circumstances, selling to someone who may not be in possession of their full mental faculties is a moral breach.

    So tell me again why you chose 18 as your ethical drawing line?

  • Randian||

    Is there no such thing as personal responsibility anymore?

    Sure, but why isn't that a two-way street? As stated within the thread, car dealers, credit card companies, and even (probably) pay day loan companies won't lend you money without at least some proof of your ability to pay it back, especially if you're a newly minted 18-year-old without a job.

    And yes, at 18, you are a legal adult and you should be held responsible for what you signed and otherwise decided to do. That doesn't mean I cannot hold the manipulative fucks who prey on the mentally weak morally responsible.

  • sloopyinca||

    Sorry, but to call kids entering college "mentally weak" does not excuse them from their decisions. Fuck all of that. Colleges cost money to varying degrees. Virtually every kid in America (I'd wager at least 95%) could find a cheaper alternative than the education path they have chosen. If their choice puts undue hardship on them in the future: boo-fucking-hoo. Blaming a college's Financial Aid Department for helping this kid finance their dream is utter bullshit, be it morally or otherwise.

    I respect you, but I vehemently disagree on this.

  • Randian||

    OK, well, I guess the guy who sells crack to the mother who has five starving children isn't somehow responsible for the choice he's making?

  • sloopyinca||

    Now you're getting the point. No, he bears zero responsibility for selling a product to a willing consumer.

    Who the fuck are you to tell people what is in their best interests? Who the fuck are you hold a vendor responsible for the decisions of consumers?

    Do you think tobacco companies should be liable for anyone who smokes and gets cancer? Do you think Miller, AB and Coors should be responsible for everyone who gets cirrhosis from drinking too much? Do Del Monte and Tyson bear responsibility for hunger because they charge too much for their product? How about holding automakers and oil companies responsible for cars and gas prices cutting into average people's disposable incomes more than they need to?

    Daily Kos is right around the corner. Your argument will get a warmer reception with the griefers and blame-gamers over there. Personal responsibility is anathema to them, and appears to be with you as well today.

  • Randian||

    Alright, I respectfully submit you need to actually read what I write instead of attacking strawmen. The only way libertarianism works is if our business institutions have a certain set of responsibility. I would submit as well that responsibility is extremely profitable and in the business's rational self-interest. I wouldn't hire you as a loan officer if all you're going to say to me is "hey, he's free and 18 - let's give him a loan!" That's foolishness and reckless.

  • sloopyinca||

    Alright, I respectfully submit you need to actually read what I write instead of attacking strawmen.

    You mean strawmen like comparing helping a kid adult get student loans to selling booze to someone drinking to the point of killing himself? Or strawman like comparing helping a kid adult get student loans to selling crack to a mother of five starving kids?

    Those strawmen?

  • Randian||

    It's a moral analogy. The State is not going to take care of us. That much is apparent. When community standards fail, the State steps in to force us all to live up to expectations.

    Like I said before, it is interesting to me that you're letting the State define the terms of your morality. What's so magic about age 18, ethically speaking? The state says you're an adult, so you go in lockstep with them?

  • sloopyinca||

    Hardly. I'm just a firm believer in personal responsibility. And someone, anyone, who voluntarily enters into a transaction is solely responsible for living up to their agreed-to terms. Period. Full stop.

    I don't ascribe to collective guilt or mutual responsibility when both parties are willing and only one does not live up to their contract. There is no such thing as coercion when it comes to student loans being written. None.

  • Randian||

    Again, I never said I supported abrogation of the contract. I don't assess morality solely on the criteria of whether the agreement was voluntary.

    If a husband browbeats and cajoles his wife into having a threesome or an "open marriage", facially she has to consent. But if he was able to "succeed" because his wife is weak-willed and he's domineering, well, fuck that guy, morally speaking.

    Ditto with a racist business owner. He should have the right to be a racist. That doesn't mean I can't tell him he's a morally bankrupt prick.

  • sloopyinca||

    . I wouldn't hire you as a loan officer if all you're going to say to me is "hey, he's free and 18 - let's give him a loan!" That's foolishness and reckless.

    If the government is guaranteeing the loan, how is it foolish and/or reckless? I would call this kind of loan writing good business, unless of course I held a gun to the head of the signatory. That would be coercion and it would be wrong.

  • Randian||

    If the government is guaranteeing the loan, how is it foolish and/or reckless?

    Gosh, I dunno. Ask Countrywide why that would be.

  • sloopyinca||

    Apples and oranges. Those could be discharged in bankruptcy. Student loans can't.

    Try again.

  • Randian||

    Bankruptcy has nothing to do with whether it was a wise decision on Countrywide's part to make the loans. Most of the lost value of those ridiculous home loans is not because of bankruptcy - it's because a bubble burst.

    So, like I said, if you were going to say to me "hey, it's a government loan! What can go wrong?" you would be fired, and rightly so, because that's reckless business.

  • Randian||

    I agree with John on this, too. The University says that it is trying to make a person a "whole person" or a "total student".

    they aren't in the business of selling anything. They are in the business of providing an educational opportunity.

    Those are the same thing. "Wal*Mart isn't in the business of sales - they just provide an opportunity to purchase housewares."

    The universities bear moral responsibility, at a minimum. If they are supposed to be eleemosynary institutions, then they need to get their costs under control and accept responsible patrons. If they are going to be commonplace sales institutions, then they can start coughing up taxes and get off the public dole.

    As it stands, they get it both ways, and screw that.

  • sloopyinca||

    In a sense, your statement about Wal*Mart is correct. They are a marketplace that people enter freely to spend their own money. Nobody here is clamoring for Wal*Mart to pony up for someone's credit card bills when they buy more crap there than they should. Why the hell do it for colleges and universities?

    Again, I have no problem taxing them the same as any other business, but to say they bear any responsibility for a voluntary transaction is the same as saying TARP and the Auto Bailout are just dandy.

  • Randian||

    Again, not legally responsible, morally responsible. And the Wal*Mart analogy breaks down a bit because a credit card company would never extend a card to an 18-year-old without a job, and Wal*Mart won't sell you a damn thing without cash, check, or credit card. However, the universities will sell you something even if you haven't worked a day in your life, something they know you're going to go into six figures worth of debt for.

    Again, I am not calling for a windfall profits tax or something like that, but in human endeavors, it is not enough for one side of the transaction to sit back and go, "well, it's not my responsibility to assess the propriety of my customer base", when any credit-lending institution would do exactly that, and where university mission statements REQUIRE them to do exactly that.

  • T||

    And the Wal*Mart analogy breaks down a bit because a credit card company would never extend a card to an 18-year-old without a job, and Wal*Mart won't sell you a damn thing without cash, check, or credit card.

    I was 16 years old and a bank gave me a $6000 dollar limit Visa Gold card based on my part-time job at Toys-R-Us back when minimum wage was $3.35 an hour. So don't think banks are all that fucking smart, either.

  • Randian||

    $6000, not $60000. And you had to pay that back every month, not rack up four years' worth of "kick the can down the road" debt.

    I would humbly submit that it is strongly ironic that there are libertarians here letting State set our ethical boundaries. The law needs to draw lines - the legal system cannot operate otherwise, and sometimes those lines are overinclusive or overexclusive. That's life. However, just because the State says that you're an adult at 18 doesn't mean that we, as libertarians, have to set our ethical and moral compasses in lockstep with the State.

    For example: sloop, you're pro-life, and your proper response to the assertion that "birth is when we become rights-having beings" is "what's so magical about that line?" I would say apply the same reasoning to 18-year-olds and you start to understand the moral opprobrium people place on the universities.

  • Nephilium||

    I'd say there's an easy way to correct both Sloopyinca, Randian, and John's complaint:

    Allow student loans to be discharged through bankruptcy. At that point, the lender will do quite a bit more due diligence in making sure the person can pay the loans back.

  • sloopyinca||

    ^^This^^

    The fact that the debt cannot be discharged caused most of it, and that wasn't at the behest of the universities.

    I'll accept blaming the colleges, government and lenders responsible for the spike in rates, however I cannot pass on the responsibility from the decision-maker (be it the student or their parent) to the one offering them options. Nobody ever put a gun to these peoples' heads. They all chose their school in a marketplace with myriad options, many of them cheaper. If it causes them hardship in the future, that problem is theirs and theirs alone.

  • ||

    Allow student loans to be discharged through bankruptcy.

    No. Uncle Sam will not eat those costs on federally guaranteed student loan, and I refuse to pay for that.

  • ||

    However, the universities will sell you something even if you haven't worked a day in your life, something they know you're going to go into six figures worth of debt for.

    This is the fault of university how? Is there no caveat emptor in your view on the part of student?

    No one forced the student to enroll, and I see no moral obligation nor culpability of the university to the student after either completion or attrition of a given course of study any more than a police officer has a moral duty to protect someone, regardless of age.

  • Randian||

    Doc, would you continue to prescribe oxycontin to someone who is clearly addicted, assuming that it was legal? Why or why not?

  • ||

    Doc, would you continue to prescribe oxycontin to someone who is clearly addicted, assuming that it was legal?

    Yes. "Addiction" is a subjective DX, and often mis-DX'd and I have to assume that the patient is clearly in need of the RX, as a default position. Just because someone is "addicted" does not negate an acute or chronic PX DX.

  • Randian||

    No matter what? Doesn't matter if you think they're lying to you to get the drug?

    What if they were selling it, then?

  • sloopyinca||

    What if they were selling it, then?

    That transaction would be between the two parties voluntarily engaging in that transaction. I would imagine if the patient returned to doc (I know this would be the case for me) prior to the pills in the prescription being used according to my instructions, he would no0t give him any more until the time determined by the # of pills in the first bottle.

    How is doc responsible for the willful conduct of the individual getting the scrip? WTF is wrong with you today? Did you take too many oxycontin?

  • ||

    I would imagine if the patient returned to doc (I know this would be the case for me) prior to the pills in the prescription being used according to my instructions, he would no0t give him any more until the time determined by the # of pills in the first bottle.

    Correct, which fulfills both my legal and contractual duty to my patient within the confines of law for which I am legally accountable as physician.

  • Randian||

    Correct, which fulfills both my legal and contractual duty to my patient within the confines of law for which I am legally accountable as physician.

    You're supposed to be going beyond that, GM, especially as DO. I think in your heart you know I'm right.

  • ||

    You're supposed to be going beyond that, GM, especially as DO. I think in your heart you know I'm right.

    TAO, you gave me a very compelling argument that police officers do not, and it is true as per The Constitution, have any moral authority to prevent the beating and/or murder of a suspect. That argument made so angry I nearly punched my computer (which doesn't happen often), but I am forced to concede that argument you made is correct. I see no difference between those officers and a university, unless you then concede officers have a moral duty to intervene.

    As an aside, this student loan debacle, along with every other positive right being shit tonne heaped on us is why I am leaving for UKR.

    I am now in the full position of completing my pathology supplementation, doing the cases that I can, finish my goddamned VISA process, and flee.

    I'm so tired of the JerseyPatriots, Sandra Flukes, and pretty much any other moocher of the world bitching that they weren't given a guaranteed favorable outcome. I like you TAO, and will miss you when I go offboard, but I'm not budging on this one. Since it's my medical license and livelihood on the line, I will decide when I will be going beyond what boundary I need to help my patients and protect my interests.

    It's so, so ironic I have to go to a former Iron Curtain territory in the former Soviet Union to find more freedom than the USA. Irony, she is not without a sense of humor, I suppose.

  • Randian||

    I think it was a legal argument, not a moral argument. Not all things that are legal are moral, not all immoral actions should be illegal, and sometimes the moral action is actually illegal.

    I don't think this is terribly controversial.

  • ||

    I think it was a legal argument, not a moral argument.

    It was, but I was arguing a moral impetus to intervene, which you rejected on legal grounds, and the correct argument.

    I don't think this is terribly controversial.

    It's one part of the whole. By itself, probably not, if it was the only issue. But it's not: it's a horrible microcosm of a much larger problem. It's like a death by a thousand cuts, yet no one wants to stop cutting (except spending).

    This particular issue is an acute symptom of larger disease.

  • ||

    No matter what?

    As the default position, yes, unless there are specific cues that would persuade me otherwise.

    Doesn't matter if you think they're lying to you to get the drug?

    Yes, it does. However, the default position stands; I am not a police officer, nor a moral guardian.

    What if they were selling it, then?

    With concrete proof that they were, then I would cease prescribing (this has happened IRL) to them, as they have broken the doctor/patient relationship and agreement that they follow my orders as directed.

  • Randian||

    This is the fault of university how? Is there no caveat emptor in your view on the part of student?

    Please note that morally, both parties can be responsible.

  • sloopyinca||

    Please note that morally, both parties can be responsible.

    Only if your concepts of free-will and personal responsibility are fucked up.

  • Randian||

    That's a circular argument. "You assertions about personal responsibility are wrong, and they're wrong because they're wrong fucked up!"

    OK.

    That transaction would be between the two parties voluntarily engaging in that transaction.

    Not all voluntary transactions are moral, ethical, or even wise (obviously). Saying that ethics stops when voluntariness begins is a piss-poor ethical system.

  • sloopyinca||

    Then my advice to you would be not to engage in any transactions you think would be immoral and leave everybody else to do the same.

  • ||

    Please note that morally, both parties can be responsible.

    But not legally. Which is more important, the legal imprimatur or the moral impetus?

  • perlhaqr||

    I thought we were generally opposed to taxes, here.

  • VG Zaytsev||

    Oh come on. Is it a car salesman's fault when he gets someone to buy a car they can't afford?

    Will any auto dealership let an 18yo kid with no job drive off in a $50,000 car?

  • Mo' $parky||

    If the kid's mom co-signed the loan I would have a hard time believing they wouldn't.

  • Brett L||

    Well, sure. But as Dave Ramsey always points out about co-signing, the lender is getting you to co-sign because they don't believe the primary borrower will repay them. And they lend money for a living. Feel free to co-sign as long as you understand that you'll be paying the loan.

  • Randian||

    If a private loan agent made that loan, he ought to be fired if it doesn't work out. Of course, due diligence doesn't happen with federal loans, and neither do the firings. That's your problem right there.

  • Drake||

    If the federal government co-signs the loan, it would be automatic.

  • Red Rocks Rockin||

    If the kid's mom co-signed the loan I would have a hard time believing they wouldn't

    Maybe--maybe not. A $50,000 co-signed loan at an auto dealership is going to be done at a usurious rate, given the 18-year-old's lack of credit history. It's a lot more likely that the car dealership will make the parent take the loan outright rather than risk a default on the loan.

    The big difference between a car purchase and student loans is that the dealership won't just give an 18-year-old $50K at 4% interest for 20-30 years. And there's no provision that there will be a government payoff on the remaining balance of the car loan after 25 years in "government service."

    For all the shit that car dealers get for pushing car purchases that people can't afford or don't really want, they're a lot more honest and responsible about their business dealings than colleges, by far.

  • Randian||

    Further concur. The schools should actually be turning people down, but they don't do that, because they don't give a shit if you can pay it back. They don't give a damn about making sure you have a job.

  • Brandon||

    "The schools should actually be turning people down, but they don't do that, because they don't give a shit if you can pay it back."

    No, they don't do that because the government won't allow them to filter people based on ability to pay.

  • Randian||

    I am sure that they're begging not to be thrown into the briar patch too.

  • ||

    "These universities are non profit."

    The school may be non-profit but it's employees still get paid to do their job. The individual who told her to forget the sticker price no doubt makes a living by convincing people to attend Ohio Northern.

  • Brett L||

    I went through the student loan process for grad school before deciding that free tuition + small stipend + side job was the way to go. The disclosure you are forced to sit through is far more thorough than the disclosure for buying a car or a house. These people who take huge amounts of loans for undergraduate education make decisions based on a future income that has nothing to do with the reality of the situation.

    I'm not sure what the solution is, as 18 year olds probably lack the necessary experience to make realistic projections about their future finances. But, the idea that they weren't told upfront what the cost was at each re-up is a lie.

  • Amakudari||

    And, once you're in, you take pretty much a total loss unless you get a degree.

    You could always transfer to a cheaper school.

    I mean, my mom's inability to support me was a key factor in choosing which school to attend. I got scholarships and worked through the year, and now I've been through undergrad and grad at two good schools without debt or bankrupting my folks. My last roommate attended via the GI Bill. For every 18 year-old making stupid decisions and receiving no decent advice from his parents or school, plenty are making sound decisions.

    Also, the worst year for just-out-of-college student loan defaults was 1990, where it was 20% (today it's 9%). It's hardly a new problem.

  • ||

    I'd like to see some stories about Predatory Educators. You know, those evil institutions that prey on the stupid and sucker them into 120K in debt.

  • Adam330||

    They're doing those- this is one, although mild.

    What's interesting is how the media changes the predatory story in the student loan arena v the housing market. In the housing market, the issue was 'predatory lenders' that gave loans with egregious terms to people knowing they couldn't afford them. In student loans though, the lender is the federal government (directly now, indirectly up until a couple years ago), and the media wouldn't dare call the federal government a predatory lender for giving students loans at low interest rates and with egregious terms (like no discharge in bankruptcy, huge penalties, etc.). Also, non-profit universities are pretty much out, because, you know, they're non-profit and therefore good. So the villian becomes the for-profit colleges, which are luring in students to line their own pockets. Quite amazing.

  • wareagle||

    doing a story on predatory education would require taking a hard look at the public sector which, by and large, runs colleges and universities. Those schools annually raise tuition, something virtually no business can do on a similar whim. They do it because the know the federally-subsidized loan program will cover price hikes.

    Such a story would have to ask just how economically clueless higher ed really is, why it believes itself exempt from market pressures that govern virtually every other product or service, and why - other than private schools - it should be subsidizing itself.

  • Bobarian||

    The point of the story should be that they (institutes of higher education) are exempt from market pressures, because the gubmint is creating this automatically funded bubble.

  • NotSure||

    A lot of university professors support governments imposing price controls when things get too expensive and the people suffer, I wonder if they support price controls on univesity costs ?

  • Red Rocks Rockin||

    I imagine they would, in principle--lower tuition would mean more students to brainwash with their cultural Marxism. But in reality, they'd balk because it would mean cuts to a lot of griefer departments and administrative positions that they support.

  • Brandon||

    Of course they do. They think that new construction should be limited, athletics should be eliminated, and every department except theirs should take a 10% budget cut.

  • Red Rocks Rockin||

    They don't believe all athletics should be eliminated. They'd be perfectly happy to see all the men's sports go, just not the women's.

  • wareagle||

    once again, the point is missed. It's not student loans, per se, it is the notion that universities can defy basic laws of economics by raising their prices annually by whatever figure they choose and everyone pretends not to notice.

  • Fist of Etiquette||

    Without normal market forces to keep costs in check, universities are free to bloat their administrative staff and charge ridiculous tuitions for it. Personally, I can't wait for this bubble to burst.

  • John||

    It is the beauty of getting people to buy now and pay later. They are no better than furniture rental companies.

  • R C Dean||

    I think you're going to see the mid-tier schools dropping like flies.

    The top-tier schools will be OK, although they will likely take some hits. The bottom-tier schools will take casualties, but I expect most of them to make it.

    The real wild card is online education.

  • John||

    I think even the top tier schools are going to drop. At this point, what does Harvard produce beyond bureaucrats, journalists and lawyers? The market for all of those is about to or already has crashed. Now that the business model of the big New York Law firm is dying, just how many people are going to spend 50K a year going to Harvard Law?

    And worse than that, where does that leave the ghetto Ivys like Cornell and Brown. Just who other than someone who is independently wealthy or going for free would go to Brown these days?

  • ||

    At this point, what does Harvard produce beyond bureaucrats, journalists and lawyers?

    Connections.

  • John||

    But connections to what? The dying legacy media? Big law firms that are going the way of the Buffalo?

    And the whole "connections" thing is a bit overrated. Most of the people who have all of these connections had them before they went to Harvard. If you are Mitt Romney, you could go to Michigan State and still had the same connections.

  • sarcasmic||

    Who does the average politician or ceo stuff surround themselves with?

    College buddies.

  • John||

    No sarcasmic, the average politician surrounds himself with the idiot sons and daughters of his big donors.

  • sarcasmic||

    he average politician surrounds himself with the idiot sons and daughters of his big donors.

    Who are often people they went to college with, or who attended the same college.

  • John||

    Very few politicians went to the Ivy's sarcasmic. They mostly went to state universities.

    And you don't get donors because you were fraternity brothers with them. You get donors by promising to pay them off once you are elected.

  • sarcasmic||

    Very few politicians went to the Ivy's sarcasmic.

    When you get to the very top, most indeed did. I was thinking president and cabinet level politicians and their crapitalist corporate cronies.
    Quite often they indeed are fraternity brothers, or alumni of the same school.

    Is it a blanket rule that applies to everyone? No. But I never said that.
    You just assumed that I did because it makes for an easy straw man to knock down.

  • ||

    In DC, I've found school choice plays little-to-no role in the rampant cronyism. If you're a dude or an ugly chick, it's how quickly you figure out the rules to the game and how well you play it. For hot chicks, well, it's self-explanatory once you realize DC is Hollywood East.

  • John||

    Kristen,

    I had lunch with a friend from high school last week. She is a housewife out in Kansas City now. And she is and was very attractive. When she got out of college she took a job on the Hill. She lasted two weeks before she quit. She apparently didn't realize out of college how the game worked for attractive young women on the Hill.

  • ||

    Yep...I figured out the game my junior year of college when I studied abroad and visited all the Embassies/Consulates in the country I was in. Those people were ALL dicks. All of them. I tried the game for a few years after college, but my heart wasn't in it and I stepped out of it and joined a technical field over 10 years ago and never regretted it for a minute, layoffs and all.

  • Adam330||

    The business model of the big NYC law firm is dying? Huh? Despite what you may have heard, HLS grads still get $160k gigs (plus a bonus) first year out of school. Partners in these firms pull in over $1M a year, easy. It's the firms and lawyers down the food chain that are hurting, not those at the top.

  • John||

    Those firms are dying. See e.g. Dewey LeBeuf. Business will not pay $500 an hour for document review that can be farmed out to Bombay for $5 an hour. And they are not going to pay that for services of mid level associates that can be provided at half the price in house. The only thing they are going to pay that kind of money and a lot more is for the services of a very select few super star partners.

    That model is dying. You are going to see the few really productive partners breaking off and forming very high earning small firms and the majority of the grunt work that the associates have been making $160 a year on going to cheaper alternatives.

  • sarcasmic||

    Businesses are also finding, with regards to outsourcing to India, that you get what you pay for.

  • John||

    True enough sarcasmic. But whether it is Bombay or Oklahoma City, there has got to be a cheaper way to handle most legal issues than paying big law firm rates. Some problems really do require the services of the top partners at those places. But most do not.

  • The Craig||

    I used to work for a Big 4 accounting firm that is outsourcing what used to be incoming staff work to India. The first two years, the quality of work was pretty bad. Right before I left though, the work was a lot better.

    Businesses know what they are getting, and it is better value.

  • Broseph of Invention||

    We tried farming out our patent drafting and prosecution work to India, but the level of English, writing, and technical knowledge required was too high, and we ended up having to do too much review. However, I think that will change, and basic activities like prior art searches are moving overseas. With any luck, though, the intellectual property system will collapse before that ever happens.

  • Adam330||

    There have been firms like Dewey that have fallen apart before. Nothing new. Dewey's problems are linked to poor management. Likewise, clients have been bellyaching over high hourly rates and the billable hour for decades, but the model persists.

  • John||

    Sure it persists. But it is not what it was even 10 years ago. And every year it gets weaker. The model is insane Adam. It makes no economic sense. And the market will kill it sooner or later.

  • Adam330||

    I'm not sure you understand the dynamic that leads big companies to hire elite firms. It's usually for really big litigation, really big transactions, or dealings with important regulators. In any of those cases, a screw-up is really costly (securities class actions, suit by a merger partner, etc.) Even if there is a screw-up, management is usually protected so long as they can show they made reasonable calls. And a great way to do that is to hire an elite law firm to do the transaction/litigation for you. If you hire Sammy's Litigation for $50 an hour, instead of Cravath, Swaine, and Moore, and Sammy's messes it up, then you have to defend that decision. If you hire Cravath, and Cravath messes up, well then, you hired the best, and you don't need to explain yourself to anyone.

  • Kwanzaa Cake||

    It makes economic sense for a small subset of big ticket litigation and large corporate deals. Those matters will always be around are will continue to fuel the largest firms. But it does seem to be the case that for more routine work, companies are increasingly looking for better economic deals. This has hurt young lawyers the most as firms have scaled back hiring even as profits continue to go up. At my shop we used to hire over 60 law students every summer. Last few years, we are down to 12 per year even though the firm itself is doing very well.

  • Adam330||

    Precisely, and I bet all of the 12 are from the top 10 schools (if you're at an elite firm). In the past, at least a few of those 60 probably came from lower ranked schools. So, the changes are hurting those down the food chain, not the HLS grads.

  • Adam330||

    The other situation is where the field of law is particularly specialized, which is the case in many regulatory areas. There are only a hundred or so lawyers that are actually competent to do that work. As the regulatory state grows and grows, there are more and more of those specialized areas where companies need high-priced advice.

  • Randian||

    I think as a general trend, John is much more right than Adam here. BigLaw firms have paid first-year associates money not to show up to work. They have laid off entire classes of associates. The paradigm of "get a job in the summer and then get hired and paid while you pass the bar" is completely busted. And, yes, the HLS grad may be pulling 160K, but that simply isn't going to be the rule. Most clients are going to look to paralegals, foreign document review centers, cheaper domestic operations centers (like Orrick's in WV), etc.

  • Broseph of Invention||

    Also, I can't speak for most places, but at our company we're moving a lot more work in house, with only specialized work farmed out, like Adam said above. It's meant lower salaries and lower cost locations, but we're hiring and have reasonable work hours, which is all that most law grads care about.

  • Spoonman.||

    Having the Cornell Engineering degree is very, very helpful to me.

  • Rhywun||

    Heh, I got in to a ghetto Ivy but went State instead. Boy am I glad I did because my career has nothing to do with what I studied.

  • sarcasmic||

    raising their prices annually by whatever figure they choose

    That's not entirely true. They raise their prices by whatever figure the people who administer student loans decide the maximum borrowable amount will be.

    It's loans that are driving the cost of education, not the other way around.

  • wareagle||

    It's loans that are driving the cost of education, not the other way around.

    which is why govt administering loans in the first place is stupid on a nuclear level, since most universities are creatures of the state.

    I wonder how much of this began with Pell Grants - free money to "deserving" students who were free to finish school or not while pumping up the diversity numbers.

  • RPR2||

    where's Liz Warren and her CFPB? Oh that's right, she's one of the predators soaking up a million dollars a year.

  • plu1959||

    You got it.

  • John||

    Her father, a paramedic, and mother, a preschool teacher, have modest incomes, and she has four sisters.

    Then maybe she should have gone to community college on scholarship. Not everyone has the money to go to a private college, just like not everyone gets an Aston Martin for graduation.

  • perlhaqr||

    But I waaaaaaaaaant it!

    ---

    Come to think of it, that $120k might have actually bought her an Aston Martin.

  • Mo' $parky||

    Listen Veruca, you just can't buy the Oompa Loompas.

  • John||

    +100

  • JW||

    I want to lay some blame on the parents for raising such a short-sighted moron, but I'm all for letting my kids learn the hard way if they can't be bothered to take my advice and counsel, since they know so much at such a tender age. Maybe that's the case here, but that's fuckuva lesson in hard knocks.

  • Mo' $parky||

    Going by the fact that the mother co-signed the loans, she knew full well what her daughter was getting into and didn't stop her. I'll be happy to tell my daughter she's out of her mind if she thinks I'm going to co-sign a loan that big.

  • JW||

    I missed that nugget, so if the mom co-signed, then it's becoming clearer where the stupid comes from.

  • perlhaqr||

    Given that the mother apparently co-signed on the loan, I think your first instinct is probably correct.

  • ||

    This particular issue, based upon my recent conversations with liberal friends, is one where I think libertarians can make a lot of hay trying to get our finer viewpoints recognized. However we need slightly more concise and well-worded talking points than given above. In the liberal language of "don't be an unfeeling asshole" (accounting for the typical liberal butthurtedness). Thoughts on how to do so?

  • Rich||

    "At the risk of being perceived as an unfeeling asshole, ...."

  • Broseph of Invention||

    Having an unfeeling asshole enables you to less painfully take advantage of some premium service prices, if that's your business.

  • R C Dean||

    In lib-speak:

    (1) Universities are large, sophisticated organizations. Probably even corporations.

    (2) Lower-income students are not equipped to understand the burden they are taking on.

    (3) A large, sophisticated organization taking advantage of lower-income people is a Bad Thing.

    (4) It gets worse when the large, sophisticated organization gets the assistance of the government (via loan guarantees and the especially onerous terms of student debt) to take advantage of lower-income people.

    (4) Why would any decent person take the side of large, sophisticated corporations, in cahoots with the government, against lower-income students?

  • ||

    I think that works as lib speak but does not accomplish the end task - get libs to understand the problem is the government giving the loans in the first place. Because my knee-jerk-lib response to the above is "the government should just issue loans at zero percent and force the universities to eat the cost if students default".

  • NotSure||

    Sometimes being the "unfeeling asshole" is necessary. Telling people uncomfortable truths like money does not grow on trees is better than pretending that problems will all sort themselves out.

  • ||

    "Our economy, which is not a free market, makes college both artificially expensive and artificially important."

  • BakedPenguin||

    I went to crappy state schools. The one private school I attended only because they gave me ~ 80% tuition remission.

  • John||

    No school is crappy. It is the students that are crappy. You can learn anywhere.

  • T||

    Au contraire. Schools (also teachers) can aid you tremendously in learning, or they can actively retard your understanding. If they're making it harder for you, it's a crappy school.

  • John||

    Maybe when you are ten. But in college, you learn on your own. And plenty of teachers get in your way at the "good" schools too. If you don't have the capacity and the curiosity to educate yourself by that age, you have issues.

  • wareagle||

    it's a fair bet the obstacles to true learning are much greater at the so-called good schools because the indoctrination is much more deeply rooted. Chances of a professor at one of those schools actually having had real job experience in the field where he claims expertise are not big.

  • T||

    Seriously? Some things are complicated, and having somebody around to explain it helps, even if you're motivated to learn it yourself. I'm pretty sure learning DiffEq and Thermo would have been a hell of a lot harder if I had to puzzle it out myself.

  • John||

    True. That is why you have a book. And also, it doesn't take a world expert to teach you DiffEq. If you have a book and someone who can answer your questions, you ought to be able to learn it.

  • VG Zaytsev||

    The truth is that you can find better explanations for most things on you tube than in a classroom.

  • Brett L||

    Some of us had to learn those subjects in the pre-YouTube era. You had to hope for a good prof or a good book. Barring that, maybe one of your classmates was a polymath who could understand what was going on and tow you through the homework.

  • Drax the Destroyer||

    +100. I wish I had a tenth of the resources now available online when I was in school only 10 years ago. Maybe I would've stopped drinking and fucking to learn something...naaahhh, probably not.

  • Broseph of Invention||

    When you get to college teachers become a resource, rather than the principal means of learning. So they have value in the same way a good textbook has value, but they certainly don't define the education you'll receive.

  • sarcasmic||

    You assume the primary purpose of school is to learn. It's not. The primary purpose is to meet people.
    Later in life as these friends and acquaintances become politicians and corporate leaders, they can open doors for you that are not available to other people.
    The difference between a "good" school and a "crappy" is the kinds of people you will meet, and the doors they can open for you later in life.

  • John||

    That is a myth sarcasmic. I know plenty of people who went to such schools. And if you are from an average or lower class background, you don't make the connections. They don't let you into the club no matter what the admissions office tells you. Sorry, the Mitt Romneys and John Kerrys of the world still have it all over you in the connections department.

  • sarcasmic||

    Sorry, the Mitt Romneys and John Kerrys of the world still have it all over you in the connections department.

    The wealthy send their kids to elite schools so they will meet children of other wealthy people and make connections that they will use for the rest of their lives.

    I understand that they don't let little people on scholarships into their club.

    However the point remains that the purpose of attending those schools is connections.

  • ||

    Even back 20 years ago when I was applying for schools, I was encouraged to "not pay attention to the cost". So I didn't. I applied to a bunch of high cost schools. Got accepted. And then I got dick for financial aid.

    So I went to a state school, worked nights, weekends, and summers, and didn't owe a cent when I graduated.

    These modern day student loan debtors don't get any sympathy from me. The 23K average...that seems manageable. Anything beyond that and you'd better have an MBA or something similarly marketable to show for it.

  • John||

    I think a lot of it is class snobbery. "I couldn't go to community college with those people" kind of thing. It is just stupid. But most 18 year old people are stupid. That is why you have parents.

  • ¿Ex Nihilo?||

    I couldn't go to community college with those people.

    Most 4-year colleges will accept credits from community colleges. I tell my kids to do the first two years at community college to get the basics out of the way and then go on the the 4-year college for your major. Cuts down on the $s spent.

  • sarcasmic||

    That's what I did.

  • Mo' $parky||

    My daughter will graduate from high school next year. I've already started telling her that this is the way to go.

  • Brett L||

    Every dollar they don't owe after college is about $1.25 they can spend moving to where they want and living the way they want.

  • Broseph of Invention||

    First attending a community college can also help ease a kid into the real world. College was a big enough adjustment for me, let alone moving away from home for the first time around people I didn't know. Breaking it into two year steps would have probably helped. On the other hand, most people have settled into their groups by their junior year of college. Still better to do your soul searching before it costs $20K/year.

  • JW||

    So I went to a state school, worked nights, weekends, and summers, and didn't owe a cent when I graduated.

    I largely did the same, but took out some student loans, -$20K in total. Good luck doing that today.

    WTF H and R? You can't use the "less than" symbol without the site thinking you're tagging text? Oh, and the ampersand is a verboten symbol now, too? Jebus fucking wept.

  • Mo' $parky||

    You mean you couldn't type in the text?

  • Mo' $parky||

    HA, cool.

  • Broseph of Invention||

    No kidding. I started college in 2002, when tuition was $8500/year for everything. Since then, salaries in my major have remained stagnant, but the costs of attendance sure haven't.

  • VG Zaytsev||

    Even back 20 years ago when I was applying for schools, ...
    So I went to a state school, worked nights, weekends, and summers, and didn't owe a cent when I graduated.

    Twenty years ago tuition was about 20% of what it is today. Decades of subsidized debt has led to the situation where it is almost impossible to work your way through school anymore.

  • ||

    I understand. And I can accept the 23K average as being a given. But after 40K, if you'd not doing a serious cost/benefit analysis, you're nuts.

  • para_dimz||

    The free trade proponent community said college was going to be necessary for economic stabilty and one price for the benefits of free trade. The supply of customers for colleges went up, so did the price. Maybe when the student signed for the loan the economy wasn't looking so rotten as it is now that they are graduated. Maybe some things have changed in four years. Maybe that's why Obama is in his last half year on the employment rolls, too. I think this article whacks the kids for doing what adults told them to do. Then the adults pulled the rug out from under them. I think the banks' mishandling of their end of the economy, the governments' part and the free trade economy we have set up shortchanged them, for the time being at the least. I think they should default enmasse and teach the lenders to lend less promiscuously.

  • John||

    They should have never set up a system where the loans were not dischargable in bankruptcy. Every other loan is. To make these non dischargable is to invite over lending.

  • GW||

    They did this because lots of students were graduating, and then declaring bankruptcy immediately.

    Financially, it's a brilliant move. You're now making money with your expensive degree, you have no debt, and in just a few years, your credit is restored. Beats paying out the ass for the next 30 years for your JD.

  • John||

    Then make it dischargable after 10 years. But you can't make it nondischargable. That takes away all of the risk from the lender. The lender has to assume some risk. Otherwise there is no check on lending.

  • sarcasmic||

    Otherwise there is no check on lending.

    But wasn't that the point? To get everyone into college?
    Just like the point of giving anyone a mortgage was to get everyone into a home?

    Intentions trump results.

  • ||

    But wasn't that the point? To get everyone into college?
    Just like the point of giving anyone a mortgage was to get everyone into a home?

    Bingo. You are familiar with the term "indentured servitude", no?

    Also, see: "Buying votes" and "Government Expansion".

    Government will always, always, create a an impossible problem, if for no other purpose, for it's own sake and to justify "fixing the problem." And bilk taxpayers for it because "Fuck you, that's why!"

    Lather. Rinse. Repeat.

  • wareagle||

    when the govt is the lender and the govt (usually) controls where the loan money will be spent, what risk exactly are expecting to be assumed? Govt knows no risk.

  • Emmerson Biggins||

    Or let credit reporting agencies keep permanent records. I'd always prefer someone who has demonstrated a lifetime of honesty over someone who started right out of the gates by gaming the system. Sounds like it'd be an especially good marker for distinguishing between honest lawyers and dishonest lawyers.

  • Bryan C||

    "They did this because lots of students were graduating, and then declaring bankruptcy immediately."

    The correct solution would be to make the university a mandatory cosigner, responsible for the balance of the loan if the student declares bankruptcy.

  • Randian||

    I like this idea a lot.

  • Red Rocks Rockin||

    Yep. I've made this point on similar threads before. The universities have no incentive to keep costs down because they get the money no matter what. Make them part of the risk group and you'll see colleges get much less expensive, but much more exclusive in their admissions.

    And it should be that way, anyhow. I don't give a rat's ass that a bunch of low-IQ losers would end up not getting the chance to go $40K into debt before they're 22. The world needs ditch-diggers too, and far too many schools are giving a bunch of third-tier trash the false impression that they're actually intellectually capable of running anything without it breaking down into chaos.

  • sloopyinca||

    Do you people have any concept of personal responsibility?

    Seriously. Make a school responsible for loans they didn't directly provide but helped the recipient find? And that makes them responsible for whatever the student does after graduation.

    Guy graduates and decides to be a hermit so he goes BK? Fuck you school, pay me. Guy gets in a horrible accident that racks up medical debt and he can't pay so he goes BK? Fuck you school, pay me. Guy gets drunk and causes accident killing someone and loses lawsuit forcing him to BK? Fuck you school, pay me.

    Am I going insane here? Aren't we the ones who are for personal responsibility? What the fuck, is it April Fools Day and this is an elaborate troll on me? What is wrong with you fucking people?

  • ||

    The correct solution would be to make the university a mandatory cosigner, responsible for the balance of the loan if the student declares bankruptcy.

    Only, only, if successful graduation has taken place, and demonstrable evidence can be provided that the graduate is actively seeking employment and with full means testing actively utilized.

    You flunk out, fuck you. If you don't complete for any reason (including medical), university is off the hook for the balance and relieved of fiduciary responsibility.

  • R C Dean||

    I think they should default enmasse and teach the lenders to lend less promiscuously.

    You are aware, of course, that the lenders won't be affected at all by a mass default, yes? That most of those loans are not just guaranteed, but owned, by the government?

  • ||

    That most of those loans are not just guaranteed, but owned, by the government?

    Precisely. If they are forgiven or made dischargeable, John Q. Taxpayer is picking up the tab. Government, like any other creditor, hates to lose money. So fuck you and pay up student loansters.

    No one forced you or twisted your arm to accrue debt to attend college.

  • ||

    But when she visited Ohio Northern, she was won over by faculty and admissions staff members who urge students to pursue their dreams rather than obsess on the sticker price.

    IOW, the people who will benefit from the loan without sharing the risk. Scummy.

    [T]he Times does note that "the average debt in 2011 was $23,300." That's not a back-breaking amount of money

    That statistic is silly. The problem is that students graduating right now are graduating with backbreaking debt. That statistic is the average of every outstanding balance in existence, including all the people with 6 months to go before they pay off their loans.

    A much more useful statistic would be the average loan balance of students at graduation, which gives a much clearer picture of what the burden currently is.

  • R C Dean||

    Last year, graduating seniors carried about $25K in debt, on average.

    http://money.cnn.com/2011/11/0...../index.htm

  • Randian||

    Still not a very good measure. It looks like the statistics take into account those who take those tiny loans for like 1,000. The burden for those who are borrowing their way through is way, way up.

  • ||

    The burden for those who are borrowing their way through is way, way up.

    Who forced them to attend college?

  • Randian||

    No one. But that really is irrelevant, right? This is going to be your problem whether you like it or not. In much the same manner we at least held irresponsible loan officers responsible for the housing meltdown, so too should we hold the universities and government loan officers responsible. The plain and simple truth is the universities are selling something they know a great number of their customers will not pay back. That's a reckless business practice, and in a true free market, it would be punished accordingly. If we're going to have federal loans (which I want to get rid of altogether), it needs to be tied to demonstrable performance results. Are your graduates getting jobs in their field? Are they employed or (as is frequently the case in graduate stats) underemployed?

  • ||

    But that really is irrelevant, right?

    It's the entire premise on which this house of cards is based, and I see no difference between this and Fannie Mae and Freddie Mac. What these oh so brilliant people were sold was the notion that higher ed. is a "right", with no restraints on cost, coupled with the notion that college would guarantee a favorable outcome. It's greed, simply put.

    May I also remind you that housing lenders and banks were forced to comply with insane lending standards to which no one in their right mind would acquiesce.

    Uncle Sam owns those loans now, and he wants his money, and I don't want to pay for other's fuck ups.

    The plain and simple truth is the universities are selling something they know a great number of their customers will not pay back.

    Fine. Let the bailout commence then, and spare everyone the trouble of mental masturbation.

  • Randian||

    I never said anything about bailouts. My $100 bet stands.

    May I also remind you that housing lenders and banks were forced to comply with insane lending standards to which no one in their right mind would acquiesce.

    Partially true, mostly untrue. Fannie/Freddie incentivized reckless business practices, but there were dumb shits on the other side of the transaction who decided to go ahead and be lured by those incentives.

    People are not automatons. Just because government tells you to go jump off a bridge doesn't mean you do it, and just because government says you can collateralize your 2.5% ARM into a CDS that FNM will underwrite doesn't mean you should be a dipshit and do that either.

  • ||

    I never said anything about bailouts.

    And $500 says that I never accused of saying that you did.

    It is the logical conclusion to this conundrum, either with or without mass defaults and student loans dis-chargeable in bankruptcy.

    My premise is students, by in large were intentionally promised something that, from an actuarial POV, was destined to fail. By design.

    Fannie/Freddie incentivized reckless business practices, but there were dumb shits on the other side of the transaction who decided to go ahead and be lured by those incentives.

    And either one of two things happened:

    A) They failed (e.g. Countrywide, et al.)

    B) They were bailed out (Large Banks).

  • The Other Kevin||

    There is absolutely no incentive for universities to lower their prices. Thanks to government telling everyone they *need* to get a degree, they have more students than they can fit in classrooms. Plus they have the government offering cheap loans. That's a recipe for "charge whatever they hell you want."

  • JW||

    Research consistently shows that it matters little where you end up actually attending, which should give hope to more people than it gives offense.)

    The one lesson that was drilled in to my head is that where you go to college matters for your first job, and that's it. Related, the law firm I worked for some years ago only recruited from the Tier 1 schools, so yeah, it can matter where you go.

    You may not get a better education, but it opens certain doors that would otherwise be closed to you.

  • VG Zaytsev||

    There was an article in the Atlantic a month or so ago written by a college president that admitted he raised tuition every year because his college's competitors were doing so and it would reflect badly on his college if their tuition was substantially lower.

    Think about the hundred different ways that dynamic is fucked up.

  • John||

    I read a similar article a while back on Carnigie Mellon. Up until about 30 years ago Mellon was a very reasonably priced university. It was an excellent science and engineering school and charged half the price of its competitors at Cal Tech or MIT.

    At some point they decided to become more "elite" and that meant raising tuition to show how elite they were. And now Mellon is one of the more expensive schools in the country.

  • Adam330||

    I think law school is a particularly special case. The elite schools are really the only ticket into the elite high paying firms. That's not true is most (maybe even any other) industries.

  • wareagle||

    and they are "elite" in what way? I lived in NC for about 20 years and pretty sharp folks were coming out of historically black NC Central, from private schools like Duke and Campbell, and from UNC.

  • Adam330||

    The elite law schools are the 10 or 15 that are considered elite in the legal industry. I don't know whether that's justified or not, but there is a group (HLS, YLS, SLS, CLS, UC, NYU, UVa, UM, etc.) that are considered elite. I'm not saying that graduates of other schools aren't sharp, just that they face a serious uphill battle in getting hired at the elite law firms.

    The elite firms are those that pay $160k plus to their first year associates.

  • John||

    And only a very small number of those hires ever make partner. And then they are out pounding the pavement.

    I work in government with a large number of Harvard, Standford and Yale graduates. That was unheard of 10 years ago Adam. Now they seem to be the minority. Right now in the legal profession, my secure government job is pretty high on the food chain. That is how bad it has gotten.

  • Randian||

    Complex MA and international contract/business firms will stick around. The rest is going to be cheap generalism or expensive boutiques.

  • Adam330||

    I don't think it's new for Harvard, Yale, Stanford grads to be in government, at least at certain agencies. DoJ, DoS Office of Legal Advisor, White House Office of Counsel, staff of Congressional committees, GAO, and a number of others have traditionally drawn a ton of top school grads. If you're in a more run-of-the-mill agency, then I agree that would be new, but a lot of firms took extraordinary measures in the last few years. I'd certainly wait a couple years before drawing any conclusions.

    And sure, most associates don't make partner. It's been that way for a long time and I haven't claimed otherwise.

  • John||

    Run of the mill agencies. LOL

    And yes Harvard grads have always infested White House Office of Counsel. And generally fucked everything they touched up. There is a really good history to be written of the snobbery and incompetence of the hacks in that office towards military attorneys post 9-11. The fact that they had never so much as thought about the law of armed conflict before 9-11 didn't stop them from saving us from the experts who had.

  • shamalam||

    Isn't the current Supreme Court composed entirely of Harvard graduates? Every fucking one of them?

    There ought to be a 50 year moratorium on Ivy league supreme court nominees. Isn't "diversity our strength"?

  • Amakudari||

    All Harvard and Yale, yes (although Ginsburg transferred to Columbia with her husband's work in NY).

  • kinnath||

    So what kind of degree do you get from a little-known, private college that will get you a job that can pay off 120K in student loans?

    They need to put a process in place that automatically expels anyone that signs a loan contract without a rational plan to pay the loan back. Its a good indicator that the "student" is immature or an idiot. Either way, the student needs to be off flipping burgers for a year before they get another chance to sign a new student loan contract.

  • GW||

    It's obviously not a math degree.

  • Drax the Destroyer||

    I think it said she was a marketing major...so, she should be able to make 3 cents more an hour over the underwater basket weavers.

  • ||

    "As an 18-year-old, it sounded like a good fit to me, and the school really sold it," said Ms. Griffith, a marketing major. "I knew a private school would cost a lot of money. But when I graduate, I'm going to owe like $900 a month. No one told me that."

    Why, pray tell, is this dumbucketfuckery my responsibility to clean up?

  • Proprietist||

    I went to one of these small, overpriced private liberal arts colleges. I surely wouldn't have gone there without large quantities of scholarships. I also studied business and computer science (unlike all my friends, who studied philosophy, creative writing and anthropology) - because I knew I'd have some student loans and would want to be financially secure enough to pay them back.

    I guess they must have pretty wealthy parents to pay $30K a year for a degree in a field that leaves most of them unemployed or doing restaurant work five years after graduation. I've only got a thousand or so left to go on my loans and have paid back twice the monthly bill toward the principal, thanks to proper career planning.

  • Proprietist||

    And my greatest fear is that the day after I pay the last dollar on my student loans will be the day Obama forgives student loans.

  • John||

    That is why I haven't totally paid mine off.

  • T||

    I'm reasonably certain that when he makes that announcement, you'll make too much money to qualify. I'll take bets right now that student loan forgiveness will be means-tested, and if you can afford to pay them off, you'll be required to.

  • nicole||

    Yes, T. For those of us who are already getting screwed on writing off the interest on our taxes, I'm sure we'll get screwed here too. It will be fun. I will have to hate all my friends.

  • Red Rocks Rockin||

    I'd say that's the wrong approach. Yeah, there might be a general jubilee on all this. But I just paid off my loans in January, and I can't tell you how good it feels to not have that burden on my shoulders anymore.

    I'm taking practically the entire month of July off to go road-tripping with my girlfriend, and that wouldn't have been possible if I was still paying these off.

  • Spartacus||

    There's no question that college expenses are rising faster than inflation.

    The question is: expenses for who? I can't speak about private colleges, but the public universities in my state (Florida) have seen a net reduction in per-student revenue of over 20% in the past five years. Student tuition is going up because the subsidy from the state is going down even faster. My university is "charging" significantly less than it was a few years ago; the real difference is that the share of costs paid by the student has gone from under 25% to almost 50%. I'm a bit surprised that libertarians are so upset about this.

    As for competition, Peterson's Guide lists over 200 colleges and universities in Florida. There are over 1 million students enrolled altogether; the largest university's market share is a bit over 5%. If that doesn't count as a competitive marketplace, you're going to have to be more specific about what definition you are using.

  • Brett L||

    "Student tuition is going up because the subsidy from the state is going down even faster."

    This is true, but for the five biggest universities, tells almost none of the story. Yes, the flat subsidy is going down, but Bright Futures students account for something like 92% of the in-state students. So the "share of costs paid by the student" is essentially zero at these institutions. The state has just manipulated the accounting because it is easier to keep Bright Futures (money for FL kids who make good grades in HS!) funded than the universities' general fund (lazy tenured professors!).

  • Randian||

    I would love to come visit your planet. Seriously, every university I have ever heard of has increased in price from 33% - 100%, especially the grad schools.

  • Brett L||

    You misread. Revenue is down, prices are up. Of course, the other thing he doesn't tell you is that the public university tuition changes in FL have to be approved by the Board of Governors, so they aren't free to compete on price.

  • Spartacus||

    The price to the student is up, the price to the taxpayers is down. Whether this is good or bad depends on which group you identify with.

    You're right that the universities are not free to compete on prices, but that is not because of the Board of Governors; they supported the most recent attempts by UF and FSU to have more tuition flexibility. The Legislature has to authorize any potential tuition increases as part of the state budget process. Universities are not able to go outside the window set by the legislature.

    And regarding your other comment: the assertion that Bright Futures is somehow easy to increase is simply wrong. The main reason the legislature went to the "differential tuition" system several years ago was because bright futures was ballooning like Medicaid. If the legislature raises tuition, bright futures has to pay for it. If the university raises tuition, that is considered "differential tuition" and bright futures (i.e. the state) doesn't pay for it. This is why the legislature often does not raise tuition, but authorizes universites to charge a differential. They then budget based on the assumption that universities will adopt the max differential allowed, and cut general revenue accordingly. The overall cost of bright futures may go up if the number of students using it increases, but the per-student allocation stays the same.

  • daveInAustin||

    I wish the NY Times (and even perhaps Reason) would do the arithmetic and realize that the budget deficit of $1 trillion puts an $10k of debt on every American family every year if they have a kid in college or not.

  • Amakudari||

    That's okay because we owe it to ourselves. Unlike, uh, student loan debt, or something.

  • Romulus Augustus||

    Lots of kids select the small colleges - Swarthmore, Denison, Oberlin - because they are small and the teaching experience is more intimate. You actually get to know your profs because there aren't 400 kids in the lecture hall. These kids don't want to get lost in the huge impersonalized state U's. An acceptable substitute seems to be attending the satellite campuses of the state U's: Penn State Abington,
    UT Permian, etc. You get the big school name and degree along with the small setting and lower costs.

  • Randian||

    This is pretty much a myth (that I used to believe). Yes, a few of your common core classes at Big U have 1,000 students crammed into the lecture hall, but even then, they have break-out sessions. The lecture is maybe once a week. Once you get into your second and third year and you start specializing in your major, class size is not much different.

  • Amakudari||

    And many of those lecture classes don't benefit from individualized attention. They're establishing the basic concepts that everyone needs to know, and after that you're just as well off hitting the books, asking the prof some questions during office hours, meeting with a TA, etc. Everything specialized that I studied at UNC was taught in a class of a dozen or so.

  • Spartacus||

    This is true, and is one more advantage to using community colleges for the first two years. You avoid a lot of the big freshman lectures, and can then transfer at the start of your junior year.

  • plu1959||

    Why was the lede buried in the next-to-last graph?

  • enoriverbend||

    "admissions staff members who urge students to pursue their dreams rather than obsess on the sticker price"

    Yeah, you know, that happened to me at the Ferrari dealership. I muttered about getting a Camry instead, but they convinced me to pursue my dreams. Now I have a $6,178/month car payment. No one told me that! I don't know how I'm going to pay that off and keep going to Bora Bora for a month every year too!

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