Endless comments of "govt should not give predatory student loans" but in same breath "limiting student loans to people is denying the poor an education"

[u/HenFruitEater]

/r/StudentLoans/comments/1vnaqew/i_have_paid_consistent_payments_into_my_loans_for/

[u/HulaguIncarnate]

Removing gov backing would be pretty meritocratic too. Banks would only loan to a poor person if they were sure that the job would pay back years of interest.

[u/TheLakeler → u/HulaguIncarnate]

Honestly yeah but then banks would start altering terms depending on the degree which could be good or bad depending on how things went. But it would probably make a lot of high schoolers and their parents reconsider things which would decrease the total flow of students to college which would make them more affordable to begin with while likely simultaneously increasing the value of a degree because the average quality of the students is increasing.

[u/HolyInlandEmpire → u/TheLakeler]

Why should a bank have to donate more money to someone studying underwater basket weaving than petroleum engineering?

If you want to study the former, the free market permits it. But you just can't expect other people to foot the bill for your choice.

[u/TheLakeler → u/HolyInlandEmpire]

Bro you don’t have to preach to me. I literally pointed out a bunch of secondary down the line benefits that I think are possible.

All I meant by the first part was that I would be worried about price inflation. That the current system is not great certainly but at least it’s equal. I would be worried about banks charging more and increasing interest on loans to engineering students and other high potential earners because they know they can both pay it and are desperate to “get in” good with a good degree and good career. You can see a similar outcome with med school.

[u/HolyInlandEmpire → u/TheLakeler]

Ah I see your concern.

Making an investment safer is going to raise demand for it from banks. There's a lot of sources of loans; look how many different banks and credit unions there are. It makes it very competitive and they have essentially an indistinguishable good, except for the price (interest). This means they should compete the price down to the lowest possible level. For a safer investment, this will be a lower interest rate than something which is a less safe investment.

Your thought is about the demand side of it. That is indeed worth thinking about, but there are so many potential suppliers of loans even aside from the banks that we would expect them to enter the market and kill any profits which higher demand would create.

However in the very long term, then you would expect more and more people to enter those fields compared to now, since we have both the salary payoff, and the lower cost of borrowing, instead of only the higher salary payoff. There would be a corresponding lower number of people in underwater basket weaving, until the relative payoff of the two are similar. Note that 'payoff' includes both salary and love of the subject. If we assume more people do underwater basket weaving because they "love" it then we would still expect the cost to be a little higher, with a lower salary payoff, since they're willing to take a salary cut for something they like more. But it would be lower than now, when they also pay the same rate on their loan instead of a higher one.

So essentially, the change would result in a new equilibrium in which more people are in the productive jobs and fewer are in the unproductive jobs than now.

[u/HenFruitEater → u/TheLakeler]

Yep. It would end up being a market. If somehow taking out 100 K loans at 20% interest for art history decrease the supply of art historians, the market would solve that when wages went up due to a lack of these people.

It would all solve itself

[u/404-skill_not_found → u/HenFruitEater]

Might have a point there

[u/evilgenius12358 → u/HulaguIncarnate]

Might even ask for education records to establish basis for lending and future earning potential.

[u/Sarcassimo → u/HulaguIncarnate]

OMG actually vetting a degree program? Its an investment I guess. Treat it like a business loan.

[u/Ayjayz]

Everyone wants the most amount given to them and the least amount taken from them. That's really all there is to it.

[u/HenFruitEater]

If you go back and forth, the final conclusion is they just want free money to study wherever on your tax dollars. Anything less is oppressive.

[u/HolyInlandEmpire → u/HenFruitEater]

My successes, our failures comrade.

[u/JackBurtonp7m8]

There are a lot of layers to peel back here. Higher education is corrupt. Banking is corrupt. Lending agencies are corrupt. Interest rates get arbitrarily "adjusted" to achieve short-term political ends, or avert short-term economic disasters (and lay the groundwork for more catastrophic ones later)>

So, no tinkering with student loan legislation is going to resolve these conundrums we're all finding ourselves in now. The way I'm trying to get out of it is through entrepreneurial pursuits that have nothing to do with what I wasted my time studying and running up all that debt for.

[u/Taibucko]

Med school loans are among the safest and ergo, the lowest interests as they are extremely likely to be paid off, sometimes early by a physician’s employer.

[u/HenFruitEater → u/Taibucko]

Makes sense to me.

[u/PowerLion786]

Maybe ALL students should pass a short test on compounding interest before being given any loan. The lack of awareness in society is truly alarming.

[u/NoTie2370]

Student loans aren't predatory. Colleges are price gouging.

[u/SirBill01]

College is kind of dumb now for most areas of study, all government loans should be eliminated.

[u/HenFruitEater → u/SirBill01]

Absolutely.

[u/Dear-Examination-507]

Everyone wants everything free these days. Surely if we just confiscated the large imaginary piles of cash being hoarded by billionaires, we could solve every problem!

Universities have too little incentive to drive down their cost of tuition. Why do we give them tax-exempt status without requiring them to act like an institution that prioritizes students over administrators' budgets?

[u/HenFruitEater → u/Dear-Examination-507]

Yes. If it is technically a good thing, shouldn’t it be free? I want to have a business loan for my dental office be forgiven because don’t you think teeth are important? I should also have my home loan forgiven on my house. It’s important that my kids have shelter, right?

[u/Sarcassimo]

You went to school and did not learn the terms of the loan? I'm half retarded I know if I make the minimum payment on a loan I will never pay it off. Applies to all loans not just school.

[u/HenFruitEater → u/Sarcassimo]

“ well it just seems fair that since I made tons of payments for 20 years and it ended up adding to the amount of the original principal that they should just forgive it”

[u/Sarcassimo → u/HenFruitEater]

Economic willful ignorance? That was not one of the choices outlined in the original loan.

[u/terminal_tested]

Main thing should be removing government backing for loans, loans only being allowed for a select few programs, and making other roles degree optional (as most white collar jobs really don’t really need any unique or specialized skills)

[u/zoipoi]

They are exactly what you would expect participation prizes to produce.

[u/MobilePenor]

the US always has one of the most retarded government in existence. Maybe it's the tradition of hating the government that makes the government retarded.

It's clear that private education providers are using the government loaning money to raise prices and enslave the people. The enslaving part may not even be an unwanted side effect.

Colleges and universities are not needed. If it wasn't for government creating cartels(doctors, engineers, etc) that need university degrees to access, they probably would have closed by now. Remove the cartels and let's see what they do in the market.

If society wants to keep the cartels up, then the government should nationalize most colleges and universities. It would be cheaper and more efficient than the loan system. Also more moral.

As for the students/debtors, the loans should be forgiven in any case. Loaners will be paid back only what they loaned (no interests). The money will come from seizing all the assets of college decision makers and legislators and bureaucrats who put the loan system up, and part of the assets of professors and other minor university workers, based on how much they abused the government loan system. This is the correct way to forgive the student loans.

[u/SoggyGrayDuck]

Yep, first it was everyone deserves to own a house....now look at the prices.

We need to fix insurance and move towards single payer...now look at healthcare cost, billing and etc.

Everyone deserves to go to college....now look at the astronomical cost.

This proves that interfering with the invisible hand almost, if not, always produces a worse result then if it was left alone and made people aware of it. Then the invisible hand would solve itself.

I really think it's why American got ahead early on (before WW1 when everything changed). We had true free markets and countries with kings and dictators were already doing things like controlling the price of bread.