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Comment by PKop | Hacker News Reader

Removing loan guarantees, and forcing students to scrutinize the value of the degree they are pursuing will improve the problem of students blindly doing what they've been told to do.

If they don't suffer the consequences of buying a useless degree, why wouldn't they keep doing it?

Any possible improvement of the status quo is going to involve pain. Certainly universities themselves could start feeling some of it, as they are complicit in accepting the guaranteed money without any incentive to more selectively filter either: the students getting the loans, or the quality of degrees they are receiving, or both.

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I come from a country where my education was paid for by other people's tax money. I studied the subjects where my curiosity was greatest, and though I don't work in that field now, I do rely on things I learned through my college experience almost every day, and they make me better at my current job. Overall they make me a better contributor to the world around me, and I also have this feeling of gratitude that my world class education was not entangled with crushing debt, plus, you know, the playing field is at least somewhat more level at home than here in the US. You get the grades, you go to college. You don't have to evaluate the pros and cons of large amounts of unsecured loans. It's astonishing to me how things have turned out in the US. Ireland is far from perfect but we do pretty ok at affordable, accessible higher education.

I am from the US and the government also paid for my education entirely, no strings attached. I could have studied Byzantine erotica if I had wanted. This is not a US vs world issue.

The Average student loan debt post graduation in the US is $40k now, so I'd say it's a hell of a lot bigger problem in the US than the rest of the modern world.

I was not clear that I was responding in part to parent's idea about "useless" degrees not being worth money. I'm glad your education was such. ... But I also seem to have the impression that this is not the norm in the US- that you have to pay out of pocket or with loans for the most prestigious schools? In Ireland you compete with other students academically but not financially. At least in theory. Like I said, not perfect. If free higher education is available, why do 18 year olds take on large debts to pay for it?

As you say, it is academic competition that leads to what American teens call the "free ride".

> If they don't suffer the consequences of buying a useless degree, why wouldn't they keep doing it?

So when you are young and still have no degree nor experience in life you should be punished if you choose wrong. Unless you are rich, then if you choose wrong you have a second opportunity.

Shouldn't some of the burden be on the institutions offering the degrees? They have the money, they have the knowledge, they have resources, they should suffer a good part of the consequences of offering bad degrees.

Aren't the students with a degree that doesn't offer financial stability already punished? Aren't their dreams of having a career already broken? Isn't adding the burden of debt over that just cruelty for the benefit of for-profit education institutions?

The deeper problem is that we link education with employment and leave it at that.

Vocational and apprenticeship programs are excellent ways for people to learn useful skills while remaining gainfully employed.

> Vocational and apprenticeship programs are excellent ways for people to learn useful skills while remaining gainfully employed.

And the other way around is also true. There is value in people educated on arts or science even if they don't get a job directly related to it.

You are right that the link education-employment is in fact is wrong, I will say it is quite elitist. It presumes that people in jobs that don't require especial skills should not get a high education and at the same time that only people with a degree should have skilled jobs. And that's not true.

There might be a "value" in it but why shouldn't they pay for it?

> There might be a "value" in it but why shouldn't they pay for it?

It is called an investment. Society invests in an individual education because in the long run that individual is going to be able to contribute more positively to society, returning a greater value than the initial investment. A better educated society takes better decisions, is more creative, adapts faster to change... Why shouldn't countries invest in its own future?

If citizens have to pay for that education maybe they are not going to be able to afford it, or just are not going to do that investment because they lack the education to understand the benefits. The situation becomes a loss for the individuals, but also for the country.

To treat education as an expense is a mistake. That same happens with, for example, infrastructure. If you treat it just as an expense, why do the government build roads? The reality is that a country without infrastructure is as badly prepared as one without educated citizens.

It is called an investment. Society invests in an individual education because in the long run that individual is going to be able to contribute more positively to society

My CS education at an unknown state college costed 10-25% of what a liberal arts degree costs from a "prestigious" private college. So why should I pay for people who want a liberal arts degree that is not as valued by society? If we made large student loans harder to get, colleges would have to adjust. Maybe even to the point of making a liberal arts degree cost less than a computer science degree.

> If we made large student loans harder to get

That's a different discussion. The problems is that the White House is removing protections for the people that already have that big loans. Easy to get loans and harsh penalties for defaulting is the worst of the combinations.

Making student loans harder to get is a good solution to reduce the burden of debt and even to reduce prices. But at the same time it makes education to become a privilege of the wealthy. So it has an important downside.

> So why should I pay for people who want a liberal arts degree that is not as valued by society?

Is not as valued by society or is not as valued in the job market? This are two different things. I can earn more than a doctor thanks to my long experience as software engineer, but I will not jump to the conclusion that I'm more valuable to society than a doctor (or a janitor for example). I have meet too much people with high salaries that do more damage than good to companies to believe that "salary" is a measure of "been valuable".

At the time I went to the state college I went to. People were paying for school almost completely out of pocket working minimum wage jobs and staying at home with their parents.

A pell grant plus a minimum loan can pay for someone to go to a two year college. In my state, if they work hard enough during the first two years, get a 3.0 GPA they can get their tuition paid at any state college to finish their four year degree.

Of course they can get all four years paid if they did well in high school. But students are still racking up debt to go to private schools and go out of state.

Why should lenders not be punished for financing the useless degree? After all the availability of easy financing drives up the price of the useless education.

Remember, the "moral hazard" spoken of in financial bailouts is that the lenders aren't being punished for taking bad risks.

I agree. A little bit more demand constraint for taking out debt for degrees that provide little opportunity return would be great. Would save a lot of people from great stress.

I wish I would have been turned down for the loans that paid for my MFA. I'll be paying $450/month until I'm in my 10th year of retirement on that loan. But then again, the school that I went to would probably not exist if it weren't for these loans (Graduate Art School). Considering the caliber and notoriety of the graduates of this university, national culture would suffer as a result of these regulations.

I have to agree that somehow the risk and the student's motivation and achievement are inversely related though there was never any inquiry into my records in the process outside of verifying that my university was on the up-and-up.

But beneath this is a more fundamental question. Why can't we as a country afford the things that are important (our health, our education and our homes) when we make so much more than the developing world where they have the same basic needs? What have we actually gained (aside from creature comforts) from our high incomes as it relates to living our lives. We're borrowing money to pay for almost everything and then paying the interest the rest of our lives.

Much like the housing collapse, banks have been mandated to finance to people that can't afford it for student loans. The blame doesn't solely lay with the banks. The government is at least equally to blame.

That banks were "mandated" to finance people who couldn't afford housing is nothing more than a conservative talking point. The risky loans that banks took on -- no doc loans, interest only loans, negative amortization loans, sub prime high interest loans -- were "non conforming". "Non conforming loans" by definition were not government backed loans.

People who were taking advantage of those loans generally fell into a few categories. Investors who were buying real estate to flip. People who were getting houses appraised at more than they were worth and were illegally getting cash out and people with money that were buying over priced houses to live in but to sell later.

If they don't suffer the consequences of buying a useless degree, why wouldn't they keep doing it?

Why shouldn't the lender also assume part of this risk?

Why is their recoupment guaranteed (student loans can't be dissolved in bankruptcy)?

Why are they always likely to be bailed out (prove me wrong by showing a student loan lender that went into bankruptcy)?

Lenders need to do more due diligence and stop lending to students that are more likely to have problems with payback. The entire liability should not be assumed by the borrowers and co-signers.

The lender actually assumes most of the risk. In the case of a default, there's not generally much or any assets for them to go after to liquidate.

I don't think that is true. You can temporarily avoid repaying the loan, but you can never be absolved of it via a bankruptcy declaration (whereas most other loans will effectively disappear). Student loans are repayable as long as you are alive, you can only get a temporary pause in repayment, at most. Hence, the lender is guaranteed repayment as long as the borrower or consigners are alive.

Give me an example of a useless degree.

One could question the utility of the degrees not received by these folks:

http://www.businessinsider.com/top-100-entrepreneurs-who-mad...

Maybe 'unnecessary' is a better word, or maybe define usefulness as needed utility per time and money.

I'm sorry, this is bullshit. What's the role of government? To provide services for the benefit of it's citizens. How does it do that? by collecting taxes. That's how infrastructure gets built, that's how we have schools, hospitals and other public services. At least that's how it should be. Student loans should be subsidised by government, no matter what subjects the students pick, and citizens should pay taxes to support that. This makes for a better, more integrated society over all. Here in Sweden education is free, child care and medical expenses are minimal, and student loans have an interest rate of around 1%. Also, you pay back your loan as a percentage of earnings, so the more you earn the more you pay. This is the contract of society, or at least it should be. Everyone benefits.

> If they don't suffer the consequences of buying a useless degree, why wouldn't they keep doing it?

Degrees aren't like, say, sodas or toilet paper rolls, a frequently repeated purchase, in any case.

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