Student loan subsidies

• gut

  I throw up a little every time I hear about "making college more affordable". I think I've seen research that shows nearly all that subsidy goes to the colleges and the banks (the latter is a pretty complex argument, but has merit).
  
  It's indisputable that asset prices and investment returns are significantly impacted by interest rates. I know a lot of people agree that the student loan subsidies are a major cause of skyrocketing tuitions.
  
  It's not a huge number, but this is another example of taxpayer dollars ultimately being funneled where it's not needed (the colleges and banks). I do agree it's very difficult to rate the credit risk of these students, and we need the govt to help facilitate the ABILITY to get a student loan. We do not need the govt to subsidize rates (though indirectly they still would, basically the default premium by guaranteeing the loans). It adds no value. Ulimately, what is better - paying a few hundred extra a year in interest, or having to pay back thousands more in inflated tuitions resulting from this?
  
  There would be transition costs that need to be addressed, but theoretically in the long-run students are minimally impacted either way (you're just trading higher loan amounts for the equivalent higher interest payments).
• sleeper

  

  I'm for the elimination of student loans by the government. Get the government out of subsidizing higher education and watch the price plummet.
• gut

  I think the dirty secret here is probably not about giving students a break, but looking at higher defaults (which the govt is on the hook for with its guarantee) if the rates rise. And there's certainly nothing productive about a young grad entering the workforce starting out with a default on their loan hitting their credit.
  
  You can leave the existing stuff in place, and cut rates if need be. But the govt should get out of the student loan biz tomorrow (i.e. no more new ones). Most students have to look to private lenders for the remainder of their tuition/living expenses, anyway. Seller financing works in many industries and there's no reason college's shouldn't be capable of filling in any gaps voided by private funding. Hey, if you're telling me my degree is worth $80k, then put your money where your mouth is let me finance that cost with you. I think that's the proper way to align costs/return. If a college wants to jack-up the tuition, they will have to charge a lower interest rate on their student loans.
• stlouiedipalma

  I remember the old days, where you had to actually go to a bank or S&L and apply for the loan.
• LJ

  

  All the schools do is just treat the gov't loans like free money.
  
  "You can get $35k per year in loans? Well, I think our tution is gonna go up to exactly $35k per year! Imagine that!"
  
  If this "free money" continues, a Bachelor's degree will be worthless then a Master's will be the starting point. All that is going to do is create more debt and make more money for the schools.
• gut

  sleeper;1162421 wrote:I'm for the elimination of student loans by the government. Get the government out of subsidizing higher education and watch the price plummet.

  It would at least better align tuition with the value, in terms of career potential, the degree carries. As an investor, I would charge a much lower rate for students at Princeton than I would for some diploma mill. So tuition at Princeton could easily keep going up because the govt doesn't really need to subsidize Princeton, but tuition at the diploma mills would plummet so people aren't being ripped-off (at least not as much, if you can't go to a half-way decent school you're wasting your money, IMO).
• gut

  LJ;1162432 wrote: If this "free money" continues, a Bachelor's degree will be worthless then a Master's will be the starting point. All that is going to do is create more debt and make more money for the schools.

  That's already the case. The value of a college degree, outside of maybe a top-100 program or so, has already been commoditized. Graduate programs are quickly headed there, as well. But there are so many graduate programs now that you don't really differentiate yourself unless you go to one of the better schools. Only difference mostly is that for people already with a fairly accomplished work history, most of the value in a graduate degree is often just in the credential and it's not worth paying for a top program.
• gut

  LJ;1162432 wrote: "You can get $35k per year in loans? Well, I think our tution is gonna go up to exactly $35k per year! Imagine that!"

  Basically. You see the same thing with housing prices. If you can make a payment of $100, then at a 10% interest rate you take out like $800. But when you cut the interest rate in half, now I can take out like $1300. Supply and demand => college tuitions increase $500.
  
  I think another negative externality forms which is to push the value/opportunity to the higher tier programs. You've made college more affordable, and we've been preaching the value for years (even though, aside from technical degrees, college does little to prepare you for the job - companies teach you what you need to know)...So you have many more students in the pool and, assuming the same relative overall quality, demand and competitiveness for the top schools increases and their prices go up at premium rates. Then you get the double negative of a huge pool of students simultaneously devaluing the degree from an "also-ran" while also driving prices higher thru increased demand.
  
  I think Santorum was trying (and failing miserably) to make this point. We've made it more affordable and encouraged a lot of people to get a degree who will get little to no value out of it. Pretty much always and everywhere, when something is easier and cheaper to do, you get increased risk taking. And now we have a growing issue of the fallout of students who bet big and lost.
• sleeper

  

  LJ;1162432 wrote:All the schools do is just treat the gov't loans like free money.
  
  "You can get $35k per year in loans? Well, I think our tution is gonna go up to exactly $35k per year! Imagine that!"
  
  If this "free money" continues, a Bachelor's degree will be worthless then a Master's will be the starting point. All that is going to do is create more debt and make more money for the schools.

  I have to agree with this. A Bachelor's degree doesn't even feel like an accomplishment anymore.
• jmog

  sleeper;1162465 wrote:I have to agree with this. A Bachelor's degree doesn't even feel like an accomplishment anymore.

  Especially from OSU...
  
  Seriously though, if you aren't getting a BS in something useful, aka you can actually make a career out of it, like engineering, education, sciences, business, etc then you are going to have to 'pay the price' of living poor for a long time paying back your student loans.
• sleeper

  

  jmog;1162475 wrote:Especially from OSU...
  
  Seriously though, if you aren't getting a BS in something useful, aka you can actually make a career out of it, like engineering, education, sciences, business, etc then you are going to have to 'pay the price' of living poor for a long time paying back your student loans.

  I would say business degrees are even becoming more and more useless, especially marketing. I would only do engineering, math, or science based majors. If you really have an interest in art history or philosophy, double up on your classes and get a dual degree with something relevant.
  
  I really enjoyed psychology at school. I ended up with a degree in Finance and Economics, but took almost enough psychology classes to get a minor. Why students are too stupid to realize that a degree in psychology is worthless and that going to grad school and getting your PhD to teach it are long odds in themselves. You go to college to get a job and bang co-eds, nothing more nothing less.
• jmog

  sleeper;1162485 wrote:I would say business degrees are even becoming more and more useless, especially marketing. I would only do engineering, math, or science based majors. If you really have an interest in art history or philosophy, double up on your classes and get a dual degree with something relevant.
  
  I really enjoyed psychology at school. I ended up with a degree in Finance and Economics, but took almost enough psychology classes to get a minor. Why students are too stupid to realize that a degree in psychology is worthless and that going to grad school and getting your PhD to teach it are long odds in themselves. You go to college to get a job and bang co-eds, nothing more nothing less.

  I agree with you about plain jane business, you have to go into something usefull like business finance, international business with minors in specific languages like Japanese, Chinese, Spanish, Portuguese etc...languages that are used in developing worlds.
  
  Some people really don't know how well a pure math degree can do getting into the actuarial sciences and working as risk assessment specialists for insurance companies.
  
  It is not for me, but it definitely is a good living. $50-60k first day out of college and in 5-10 years EASILY making 6 figures.
• gut

  I tend to agree about the utility of a business degree for many people (at least relative to other "useless" degrees).
  
  But some of the top jobs actually favor liberal arts candidates, and math/physics/engineering are appealing as well (those are often the smartest people, or at least they get something out of the program as far as really strong logic skills).
  
  Companies hire a lot of degree types for your run-of-the-mill business jobs in marketing/acctg/finance. There's pretty much nothing they can't teach you on the job. Some of those top jobs actually dislike business majors because you've been taught or indoctrinated in way that's not how they operate.
  
  Acctg & finance carry some technical aspects with them, as well, that has some value. But if you really want to maximize your options, a math or engineering degree (maybe with a business minor) is the way to go. Oddly enough, a lot of engineers I've known don't like engineering, but it's easily the best foundation. Lots of mgmt and sales jobs out there that practically require a technical background.
• jmog

  gut;1162551 wrote:I tend to agree about the utility of a business degree for many people (at least relative to other "useless" degrees).
  
  But some of the top jobs actually favor liberal arts candidates, and math/physics/engineering are appealing as well (those are often the smartest people, or at least they get something out of the program as far as really strong logic skills).
  
  Companies hire a lot of degree types for your run-of-the-mill business jobs in marketing/acctg/finance. There's pretty much nothing they can't teach you on the job. Some of those top jobs actually dislike business majors because you've been taught or indoctrinated in way that's not how they operate.
  
  Acctg & finance carry some technical aspects with them, as well, that has some value. But if you really want to maximize your options, a math or engineering degree (maybe with a business minor) is the way to go. Oddly enough, a lot of engineers I've known don't like engineering, but it's easily the best foundation. Lots of mgmt and sales jobs out there that practically require a technical background.

  Most companies I have worked for I would say that 90% of the sales force have engineering degrees, 90% of the project managers have engineering degrees, and 90% of the companies management has engineering degrees.
  
  So you are correct, I would say that at any given time roughly 1/3 of people with BS degrees in engineering are actually doing engineering work.
  
  Please tell me though, because I am interested, what 'top jobs' favor liberal arts candidates?
• sjmvsfscs08

  If they wanted to make college more affordable they'd stop requiring so many useless, and expensive, GECs. 80% of those things are a fucking waste of time.
• sleeper

  

  sjmvsfscs08;1162631 wrote:If they wanted to make college more affordable they'd stop requiring so many useless, and expensive, GECs. 80% of those things are a fucking waste of time.

  Steve jobs disagrees. Are you saying Steve Jobs, perhaps the greatest CEO ever, is wrong?
• sjmvsfscs08

  sleeper;1162635 wrote:Steve jobs disagrees. Are you saying Steve Jobs, perhaps the greatest CEO ever, is wrong?

  Yes.
• jmog

  sjmvsfscs08;1162638 wrote:Yes.

  I disagree as well, I did two BS degrees, one in engineering and one in math and I still believe the GenEds were worthwhile classes..ok, except for maybe the PhysEd ones (I mean come on, bowling?).
  
  I definitely become much more 'educated' and 'well rounded' with classes like logic, philosophy, humanities, western culture, english, history, etc.
  
  Now, honestly, with doing 2 degrees and not having much extra 'time' I most certainly took a few of them that I already knew the subject well. For instance, my history GenEd I took US Government which barely was more information given than highschool government class.
  
  I took logic well after already having logical proof classes in my math degree.
  
  I took a latin america culture class since I had some of that in high school spanish and college spanish (minored in spanish).
  
  Even with that, I will still contend that a good portion of the GenEds are usefull.
• sleeper

  

  Geneds expose you to things you may not even realized existed. We can be thankful that Steve Jobs took a calligraphy class, fell in love with, and then started one of the most successful companies of all time.
• LJ

  

  sjmvsfscs08;1162631 wrote:If they wanted to make college more affordable they'd stop requiring so many useless, and expensive, GECs. 80% of those things are a fucking waste of time.

  Then go to a tech school like DeVry. Places like that exist for this very reason. It's also one of the reasons that they are not very highly regarded.
• FatHobbit

  

  LJ;1162658 wrote:Then go to a tech school like DeVry. Places like that exist for this very reason. It's also one of the reasons that they are not very highly regarded.

  I agree 100%. if you don't want a well rounded education go to a school that specializes. But understand that companies value people more who are well rounded, not specialized.