In short the loan system is transferring the benefits of the education away from the students and allowing the institutions to take it for themselves instead.
That is by far the most concise summary I've ever read of the nature of the problem.
Would you say that the same thing is true to a lesser extent in the housing market? It's not as bad, but there's a huge amount of loan subsidy there that's driving the price of housing crazy.
The recipients have become the schools, deriving all of the benefits with no risk. The originators have escaped their traditional role as gatekeepers and risk takers. That leaves the students for all of the risk to concentrate on while they receive few of the benefits.
Essentially becoming sharecroppers of their own minds.
Personally, I think we've already passed that point. Would love to see some more research here.
The incremental lifetime earning from a Bachelor's degree is something like 0.5 to 1.5 million dollars[1]. The cost of attending college could double at least once before the ROI goes negative.
[1] https://cew.georgetown.edu/wp-content/uploads/2014/11/colleg...
https://news.ku.edu/2015/06/19/ku-study-gives-more-accurate-...
But these studies are all flawed because they are based on historical data when 4-year degrees were scarcer. In an era when many graduates can't get a job or end up with one that does not require a degree (i.e. barista) it's obvious that their ROI prospects are grim.
> But these studies are all flawed because they are based on historical data when 4-year degrees were scarcer. In an era when many graduates can't get a job or end up with one that does not require a degree (i.e. barista) it's obvious that their ROI prospects are grim.
I don't think that's at all obvious. We are rapidly approaching the moment [1] when over half of the U.S. population has some sort of college degree, and already 2/3rds have at least "some college" education.
Applying to a front-line retail job with a Bachelor's degree no longer marks you as desperate and over-qualified. You are assuming that an employer will hire a person with only a high school diploma when she can just as easily hire a person with an associate's or bachelor's for the same wage. That will put downward pressure on wages for those without a college degree.
It may very well be the case that sending "everyone" to college does nothing more than depress the wages of those with only a high school education. However, that is not an argument against the positive ROI of college. Spending $100k to avoid $200k in lost wages is still a positive return.
Finding a job with a B.A. or B.Sc. may be difficult, but finding a job with only a high school diploma is even more so.
[1] https://en.wikipedia.org/wiki/Educational_attainment_in_the_...
You have to assume totally unrealistic investment gains in the first four years to make up for the $500k less total income.