My crazy solution for the student loan crisis

[BenJammin]

Some of my friends from high school are teachers in east Texas and they both work for the same high school. One graduated from the University of North Texas and owes around $35k in student loans and the other graduated from Baylor with $190k in student loans. They were arguing on Facebook about how their student loans are going to take forever to pay off and UNT friend said "I'll get them done faster than you" jokingly. But why?

That's when I came up with this idea: student loan prior authoriziations. If the taxpayer is going to foot the bill for a student to go to a university then shouldn't they do it appropriately? I say set up a system where it's like this: want to major in math so you can be a high school teacher? We'll give you loans to attend UNT, UT-Dallas, UT-Austin, etc. Go to Baylor and you will not qualify for student loans. Go to Rice and you will not qualify for student loans. Want to go to law school? We'll give you loans to attend Harvard, Yale, Stanford, etc. Go to Harding University and you will not qualify for loans. Here's how I would respond to naysayers, specifically my Baylor friend...

Baylor is a better school than UNT and is ranked higher in US News and World Report.

If that is true then why are you at the same place of employment as someone who went to UNT? Shouldn't you have a better job if Baylor is a better school? If you're going to work where UNT grads work then go to UNT. We're not going to give you $150k more for the same outcome.

This crazy idea of mine would force these private schools to lower their tuition. How else are they going to react when the federal government says they won't issue loans to attend your school? Right now a student can get a loan for whatever school they select so universities have absolutely no incentive to keep tuition rates down when they have guaranteed money coming their way.

Alright. Eat me alive.

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[Leper Messiah]

I love the idea.

 

[Digsbe]

It makes some sense, although the true problem is rising tuition and high student loan interest rates. Who's to say the 35k degree program won't be 50k 5 years from now. Tuition is rising far faster than inflation and student loan interest is still 6%+

It's a cash cow for the government, especially when the loans go towards professional students. I'll make the income to payoff my loans, and at minimum the gov will get 40k+ interest off of me.

 

[W19]

Do teachers in TX earn more than 80k/year? That teacher with 190k student loan has committed financial suicide...

 

[deleted158872]

Student loans interest for graduates is 7.6% now :S

Teachers have lots of loan forgiveness options, though..

 

[PharFromNormal]

There are plenty of good ideas but many good ideas start to crumble when you work through them a little more.

If I'm understanding correctly you are asking the government to place some sort of process around which loans can be given to students to be applied for certain degrees at certain institutions.

Right off the bat I'd assume this would eliminate any "undecided" freshman from getting loans? Or is there a select list for that?

Next think of the process, additional overhead to fund this, and maintenance of those criteria. If suddenly a school manipulates their tuition for one major or another how does the government reflect this change?

I'm not saying it's a bad idea at all, IMO loans should function like business loans which is a similar but not called "prior authorization". But I guess we are all very familiar with PAs in our day to day.

 

[BenJammin]

There are plenty of good ideas but many good ideas start to crumble when you work through them a little more.

If I'm understanding correctly you are asking the government to place some sort of process around which loans can be given to students to be applied for certain degrees at certain institutions.

Right off the bat I'd assume this would eliminate any "undecided" freshman from getting loans? Or is there a select list for that?

Next think of the process, additional overhead to fund this, and maintenance of those criteria. If suddenly a school manipulates their tuition for one major or another how does the government reflect this change?

I'm not saying it's a bad idea at all, IMO loans should function like business loans which is a similar but not called "prior authorization". But I guess we are all very familiar with PAs in our day to day.

Undecided freshman go to junior colleges to get their basics. Every university requires math, english, us history, world history, etc right?

 

[deleted158872]

in everywhere except the US, students decide on their majors right out of high school. that is a good idea IMO

 

[Momus]

Do teachers in TX earn more than 80k/year? That teacher with 190k student loan has committed financial suicide...

Science teachers in CA I know of do make 80k/yr.

 

[BMBiology]

^ keeping cost down is the key.

This is how I would change it:

(1) high school:
- require at least a 3.0 GPA in order to get student loans and grants to attend a 4 year university.
- for people with < 3.0: must attend a community college or trade school in order to get federal loans and grants.

(2) community colleges and trade schools should be free or very cheap and pay for by the federal government. In return, they must keep cost down.

(3) If you failed 3 semesters then your college career is over. If you failed 2 semesters in a row then you must withdraw for at least 1 year. Keep in mind the majority of college students currently do not graduate. They should be weed out early before they take on more debt and waste more of their time.

(4) set a max amount you can borrow for undergrad and graduate school. There is already a max amount you can borrow from the federal government for undergrad. If they need more money then they must get it thru the private sector. Students who are doing well and are majoring in something that would allow them to pay back their loans would eligible for more loans

(4) federal and state government should give out more scholarships. This shouldn't be based on financial needs. It should be based on academic achievements

 

[owlegrad]

...Keep in mind the majority of college students currently do not graduate...

I had no idea, that is pretty shocking. I wonder if people taking random classes at community colleges skews that number? Or is it the scam online colleges?

 

[radio frequency]

I had no idea, that is pretty shocking. I wonder if people taking random classes at community colleges skews that number? Or is it the scam online colleges?

I totally think the students filling in their gaps through community colleges skews their numbers. I knew plenty of students who never graduated community college (sometimes they were returning students with previous degrees), but instead used it to leapfrog to a PharmD...

 

[Hillo]

They did decide to take out those loans...

I'm for easy-to-get loans.

 

[el_duderino]

I had no idea, that is pretty shocking. I wonder if people taking random classes at community colleges skews that number? Or is it the scam online colleges?

If I recall, CC is a big part of it. However, only about a third of people who enroll in a 4-year program finish in 4 years. If you extend it to six years, then that number climbs to a bit above 50%.

edit:
"59 percent of first-time, full-time students who began seeking a bachelor's degree at a 4-year institution in fall 2007 completed the degree at that institution by 2013."

 

[confettiflyer]

I'm just thinking of the size of the bureaucracy needed to handle applications to this student loan program by schools, the process of redress, the federal rule making process, the first appeals process, the second appeals process, litigation needed to defend against lawsuits and appeals, as well as the continuous monitoring of job markets, college rankings and individual majors to ensure that loans go to the right student, in the right major, at the right school, at the right time.

Not to mention the imposition of outright government control of the labor market by establishing labor quotas via the student loan funding mechanism. I know some of us hate this boom/bust cycle thing...but that's just the sign of a healthy and nimble economy.

Such a program would also make funding at some universities wholly unpredictable. The loan made to the engineering major one year goes away next year because market conditions changed. Try strategically planning university resources around that!

But I think the idea has merit...just the mechanism needs to be refined. Like...just cut the top line limit for borrowing and reduce the cost of high value STEM degrees to something reasonable via funding. Make the maximum aggregate loan amount the running average of some equation like (2/3 x public school average tuition nationally + 1/3 private school average tuition nationally).


tl;dr = too much gov't needed to enforce this mechanism, but the idea sounds good.

 

[Ackj]

If I recall, CC is a big part of it. However, only about a third of people who enroll in a 4-year program finish in 4 years. If you extend it to six years, then that number climbs to a bit above 50%.

edit:
"59 percent of first-time, full-time students who began seeking a bachelor's degree at a 4-year institution in fall 2007 completed the degree at that institution by 2013."

I'm among the 41%. Started fall 07, do not have a bachelors. So there's another confounder

 

[deleted158872]

Community colleges are going to free soon.
Now make public colleges free or very low tuition.
Then private colleges will be forced to compete and lower their prices substantially.

 

[BMBiology]

Community colleges are going to free soon.
Now make public colleges free or very low tuition.
Then private colleges will be forced to compete and lower their prices substantially.

Not if the private college has a roof top pool and students can borrow as much as they want.

 

[deleted158872]

Ivy Leagues already are offering FREE tuition for all students whose parents make less than $125k/year. Compete with that, state schools!

 

[BMBiology]

Ivy Leagues already are offering FREE tuition for all students whose parents make less than $125k/year. Compete with that, state schools!

They don't have to because they know most people can't get into these Ivy Leagues.

 

[deleted480308]

If people are dumb enough to sign up, they owe the money.

The answer to escalating tuition is to stop government loans at all. The private market would offer funding for degrees likely to pay back and the dramatic drop in available money for useless degrees and over expensive ones would cause schools to trim waste.

 

[Digsbe]

My BS program required 136 semester credit hours, you'd have to take 17 hours a semester to graduate on time (max allowed was 18 hours) and we also were required to do a research internship. I did 2 summer semesters in order to graduate on time, took me 4 years total. I picked one of the hardest majors at my school, which was a good decision academically but probably not practically. With an academic scholarships, state grant, and PELL grant (I come from a broke family) I only had to take out 25k for my undergrad at a private school (I also commuted from home, so that saved money on living expenses). I don't see how someone can spend 190k on a bachelors.

 

[fewaopi]

My rule of thumb is that when I or someone else has thought up of an idea, then someone else has already thought of that too lol. No one is a real genius.

You also have to remember that Fed gov't makes money on these students too.

Your intro bio, chem, math, writing classes can be done thru MOOCs or online. It'd be nice if there was a way to do these types of courses online instead. Then students can set their schedule and work at the same time to save up, or find what they want to do by shadowing, volunteering, etc. Then transfer to a college to finish credits in your specialized major.

Online MOOCs are growing but no one really finishes them or accepts them. Starbucks recently partnered with a school that does. I think that's the path forward. Biology, chemistry is the same no matter what school you go to, it's the people you're surrounded by that makes it hard, competitive. MOOCs would help level the playing field. County schools too.

Scholarships for academic achievements instead of need was mentioned. As someone who got scholarships for academic merit instead of need, I can't exactly agree with that. Rich, wealthy, more educated people qualify for scholarships at state schools than your URM, poorer background students. The ones more vulnerable pay a higher sticker price because they weren't raised in a background that gives them the qualifications to get scholarships by academic merit. Some I know had to work to pay rent for families, or raise siblings, or didn't have access to tutors/prep. All that takes time away from them and puts them at a disadvantage to get awards by merit. The best way is to make college affordable for everyone so no one needs scholarships. Part of the reason schools offer more "scholarships" is because they jacked the price so much more they have more "money" to dole out.

 

[farmadiazepine]

This is an amazing idea. I like it a lot! This will change the entire system.