Student Loans WTF over

[Waitone]

Whatever happened to scholarships?  When I headed to college there was a thriving eco-sphere of scholarships for which to compete.  I got 4 years of college on scholarship.  When my kids went to finance their educations scholarships were few and far between.  Both worked their way through.

I guess this is another example of goobermint forcing out the private sector.  There is no need for government to be in the college loan bidness.

[MicroBalrog]

s. For example, I think everyone here would accept history and archaeology as having significant academic, social, and intellectual value; the fact is it has limited market value. In these cases, such a degree should not be funded by large amounts of debt. Again, in the current situation, the college is incentivized to sell as many History degrees to as many as they can possibly pack into the stadium lecture hall, regardless of the students ability to repay, and regardless of the job prospects in the discipline of history.

What I'm trying to tell you is that while there's precious few jobs actually marked HISTORIAN JOB, there's tons of jobs where a genuinely-educated individual in any liberal arts discipline may apply themselves. The whole 'genuinely educated' part is key here.

Now I have so far not needed student loans, and my entire debt is standing at $600 (which is an ordinary loan), but this is due to me not living in America.

If I understand correctly, the United States Constitution does not provide the government any authority to fund colleges, except perhaps military research, academies, and perhaps colleges located in Federal territories such as Washington, D.C. However, Abraham Lincoln built a pile of colleges, so I might be wrong.

Therefore, it seems to me that the Constitutionally-appropriate path would be to end college grants and loan guarantees (excepting, again, those made for the purpose of constitutionally-appropriate research and training potential Federal employees, but these would be vanishingly-small percentage of the stuff that exists today). States could still fund state colleges if they felt it would further their purposes (some state constitutions protect a 'right' to education, for instance).

A college could, in this circumstance, either be a for-profit college and pump out law degrees and MBAs, or a 'respectable' non-profit corporation and turn out history degrees, or any combination thereof.  Many colleges have their own endowments that allow them to do things that are not necessarily profitable.

However what we must divest ourselves of is the idea that everybody must attend college, and that college is a magic prosperity-stick. It is not.

[birdman]

I may be biased, but science and engineering degrees should be economically incentivized, either through low interest rates privately (as their ROI is high) or through guaranteed need scholarships (like MIT does).

They are the real value-add fields in a functioning economy.  Take MIT, if you look at companies founded by its graduates, it would form one of the top-20 country economies on earth (IIRC)...now that is a value add.  Lawyers compete against other lawyers in a zero sum game (for the most part) with institutional blessing--their value add is only positive due to negative value add of other lawyers (or laws, enacted by politicians, who are mainly lawyers), so it's still zero sum.

There are two sources of real economic growth, generation of new IP (new ideas that make valuable products out of less valuable inputs), and the actual supply chain of those materials and delivery of product.  Everything else is shuffling money.

When china is turning out more engineers than the rest of the world combined (almost) and their economy is booming...why is it so hard for folks to grasp the cause/effect relationship.

[MicroBalrog]

When china is turning out more engineers than the rest of the world combined (almost) and their economy is booming...why is it so hard for folks to grasp the cause/effect relationship.

The economy is booming, therefore there's a need for more engineers?

[birdman]

The economy is booming, therefore there's a need for more engineers?

Yes.  Also, the creating of more engineers yields a higher performing economy (IMHO, the high tech boom of the 80/90's is the result of more children born in the early 60's through late 70's being motivated to become scientists and engineers.  The glut of MBA and lawyers now is the result of the 80's finance and law sector boom.

[MicroBalrog]

I doubt seriously that "give government backing to my favored department at the university" is a legitimate economic strategy.

Makattak may correct me.

[drewtam]

Whatever happened to scholarships?  When I headed to college there was a thriving eco-sphere of scholarships for which to compete.  I got 4 years of college on scholarship.  When my kids went to finance their educations scholarships were few and far between.  Both worked their way through.

I guess this is another example of goobermint forcing out the private sector.  There is no need for government to be in the college loan bidness.

The scholarships are still there. As I recall there are more than ever. But that's the rub. Combined with loans, the influx of money/demand for the college supply has caused a sharp rise in prices, well beyond inflation. Some have called it a bubble. I'm not entirely convinced "bubble" is the right description since this debt is a much smaller portion of private debt.

Anyway, it is my understanding that the rise in prices have pretty much wiped out the targeted benefit of low interest loans and scholarships.

What I'm trying to tell you is that while there's precious few jobs actually marked HISTORIAN JOB, there's tons of jobs where a genuinely-educated individual in any liberal arts discipline may apply themselves. The whole 'genuinely educated' part is key here.

What I am trying to tell you is that is a high(er) risk strategy that will not work for everyone. For some degrees, that strategy will only work for a very small fraction of graduates. And the risk feedback (aka "moral hazard") either needs to be built into the interest rate (by allowing loan default) or built into the college risk (by putting colleges on the hook).
I am not aware of other good options. [Gov't rationing of degrees per year is not a good option.]

However what we must divest ourselves of is the idea that everybody must attend college, and that college is a magic prosperity-stick. It is not.

Agreed.
Another dynamic in the US, is that law and court precedent has been set so that companies cannot perform intelligence exams on applicants. So the employers use other legal proxies: quality of resume, complex interview questions, college degree and grades. At one time in the US, the credential WAS a magic prosperity stick because it was one hiring standard that the applicant had passed. --> So then everyone gets loans and scholarships, colleges water down their quality while increasing prices, companies get wise to the garbage in/out, and graduates are left holding the bag for massive debt that can't be discharged. The magic prosperity stick has lost its mojo.