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re: Barack Obama cracks down on for-profit colleges: Why do it this way?
Posted on 3/14/14 at 8:43 am to BigJim
Posted on 3/14/14 at 8:43 am to BigJim
quote:
Didn't think you could default on student loans? At least not the federal ones (ie the ones that really matter).
You're confusing defaulting and discharging in bankruptcy.
The mere act of not paying is defaulting. Anyone can default.
But, you can't discharge these student loans in bankruptcy.
There have been several legislative attempts to allow non-Federal loans to be dischargeable in bankruptcy. But, the student loan lobby and the for-profit schools spread around enough lobbying money to make sure this will never happen.
This post was edited on 3/14/14 at 8:51 am
1
Posted on 3/14/14 at 8:44 am to a want
quote:So those African American Study, art history and gender study degrees from good ole state u are really paying off for the barista's at Starbucks?
The administration framed the move as a bold step to protect Americans from predatory institutions that leave students with high debt and few marketable skills.
Posted on 3/14/14 at 8:48 am to Scruffy
quote:
What would actually happen is, these colleges would more than likely discard those majors which don't result in sufficient financial returns. As a business, it would be too risky to continue otherwise.
I respectfully disagree. At schools like NYU, you have tons of trust fund kids and kids whose parents are footing the bill major in these bullsh!t programs. Most know that the parents or their trust fund will continue to foot the bill for graduate school.
But, if a poor kid really wants to major in something so f*cking stupid as "Women's and Religious Studies," he/she should be counseled to go to their state university where they wouldn't have to rack up such extraordinary debt.
Posted on 3/14/14 at 8:53 am to MMauler
Yes, these degrees are often called "worthless degrees". If your goal is to earn a living and/or repay student loan debt with a job in your field of study, degrees like Women's studies are worthless.
However, if $ isn't the issue, they may be very rewarding. That's what college used to be...more of an education rather than training. Companies used to hire liberal arts majors all the time BECAUSE of their well-roundednees. That simply doesn't happen anymore.
I might like to get a degree in religions studies after I retire. It wouldn't be "worthless" to me. But then again, I wouldn't be worried about earning a living or repaying a loan.
However, if $ isn't the issue, they may be very rewarding. That's what college used to be...more of an education rather than training. Companies used to hire liberal arts majors all the time BECAUSE of their well-roundednees. That simply doesn't happen anymore.
I might like to get a degree in religions studies after I retire. It wouldn't be "worthless" to me. But then again, I wouldn't be worried about earning a living or repaying a loan.
This post was edited on 3/14/14 at 8:54 am
Posted on 3/14/14 at 8:53 am to MMauler
quote:
You're confusing defaulting and discharging in bankruptcy.
The mere act of not paying is defaulting. Anyone can default.
But, you can't discharge these student loans in bankruptcy.
There have been several legislative attempts to allow non-Federal loans to be dischargeable in bankruptcy. But, the student loan lobby and the for-profit schools spread around enough lobbying money to make sure this will never happen
Ah, you are right, I was confusing the two.
Posted on 3/14/14 at 8:56 am to a want
quote:
However, if $ isn't the issue, they may be very rewarding. That's what college used to be...more of an education rather than training. Companies used to hire liberal arts majors all the time BECAUSE of their well-roundednees. That simply doesn't happen anymore.
this is true, but this was also when college was more reserved for the upper class, at the same time
Posted on 3/14/14 at 9:00 am to doubleb
quote:
Is the government loaning students money so they can have better lives or are they loaning money to gain control over their votes?
FIFY
Posted on 3/14/14 at 9:03 am to MMauler
quote:Are we just talking about NYU here? I am referring to the entirety of the college system.
I respectfully disagree. At schools like NYU, you have tons of trust fund kids and kids whose parents are footing the bill major in these bullsh!t programs. Most know that the parents or their trust fund will continue to foot the bill for graduate school.
Sure, those majors could survive in places where they don't have to rely on student loans and risk would be minimal, but I would bet the number of colleges that would be able to pull that off is a very small minority.
Also, as a side note in reference to NYU, they have the highest amount if student loan debt out if all not for profit colleges in this country, and they are actually number 4 if you include for profit entities. In 2010, that number was $639 million.
Risk > Benefits
quote:And who should counsel this person? It makes no sense for one business to send potential income to a competitor.
But, if a poor kid really wants to major in something so f*cking stupid as "Women's and Religious Studies," he/she should be counseled to go to their state university where they wouldn't have to rack up such extraordinary debt.
This post was edited on 3/14/14 at 9:08 am
Posted on 3/14/14 at 9:06 am to a want
quote:Yes, that used to be the purpose of college, an education to broaden your knowledge.
However, if $ isn't the issue, they may be very rewarding. That's what college used to be...more of an education rather than training. Companies used to hire liberal arts majors all the time BECAUSE of their well-roundednees. That simply doesn't happen anymore.
College also used to be A LOT cheaper, and that brings me back to the true issue here, government backed student loans. If you trace this issue back to the source, that is always where you end up.
Posted on 3/14/14 at 9:06 am to Scruffy
quote:
And who should counsel this person? It makes no sense for one business to send potential income to a competitor.
If that school could potentially be on the hook for the student's default (see my original "solution"), then the school would be well advised to counsel such students accordingly.
Posted on 3/14/14 at 9:13 am to MMauler
quote:I believe we'll end up simply disagreeing.
If that school could potentially be on the hook for the student's default (see my original "solution"), then the school would be well advised to counsel such students accordingly.
Even the state schools you reference require student loans. Their student bodies are also much greater than the NYUs of this country. Therefore, even if the amount is smaller and the percentage of the student body defaulting is smaller, the number that those colleges would be on the hook for would still be an exorbitant amount.
In a time where colleges are strapped for income and budgets are shrinking, I don't see how your proposal would bear fruit.
Every action has a reaction and you cannot expect the colleges to go without making changes to account for income lost.
Posted on 3/14/14 at 9:14 am to Scruffy
quote:
College also used to be A LOT cheaper, and that brings me back to the true issue here, government backed student loans. If you trace this issue back to the source, that is always where you end up.
Oh, I agree with you. IMO gov. backed student loans should be tied to current needs. Right now we should offer more loans/grants for engineering majors...not so much for Art History.
Posted on 3/14/14 at 9:19 am to a want
quote:
a want
Welcome back my old friend, you have been missed.
Posted on 3/14/14 at 9:20 am to a want
quote:If we have government backed student loans, why do we need Pell Grants? The really really poor get to go for free, but the moderately poor have to get a loan? Makes no sense to me.
gov. backed student loans
Also. an interesting note from wiki:
quote:
For the 2010–2011 school year, 7 of the top 10 colleges by total Pell Grant money awarded were for-profit institutions.[5]
Posted on 3/14/14 at 9:22 am to Scruffy
Let's consider a situation with a student body like LSU's.
LSU has about 30k students, both grad and undergrad.
Let's say 10% defaulted on their loans. The annual cost to attend is about $19k (tuition, room/board, books, expenses), so about $80k over 4 years.
So, we have 3000 students who default on their loans. How much are you gonna to penalize LSU?
50% - $120,000,000
25% - $60,000,000
10% - $24,000,000
Yes, that is a very rough hypothetical situation, but no matter how you slice it, the burden is great.
You cannot expect the college to avoid making substantial changes.
Stop attacking the colleges. They aren't the problem. The student loan system is.
LSU has about 30k students, both grad and undergrad.
Let's say 10% defaulted on their loans. The annual cost to attend is about $19k (tuition, room/board, books, expenses), so about $80k over 4 years.
So, we have 3000 students who default on their loans. How much are you gonna to penalize LSU?
50% - $120,000,000
25% - $60,000,000
10% - $24,000,000
Yes, that is a very rough hypothetical situation, but no matter how you slice it, the burden is great.
You cannot expect the college to avoid making substantial changes.
Stop attacking the colleges. They aren't the problem. The student loan system is.
Posted on 3/14/14 at 9:28 am to Scruffy
quote:
Every action has a reaction and you cannot expect the colleges to go without making changes to account for income lost.
I would expect them to change.
I would also suspect that if Federal student loans weren't so readily available to anyone who applies, then demand for these schools would go down and many would be forced to lower their outrageous tuition.
Tuition at most schools has gone up dramatically - much more than the rate of inflation. Part of the problem is the ready availability of federal and private student loans. Just like the housing situation between 1997 and 2007, the availability of cheap money for those who will never be able to afford the product, creates an inflated price.
Posted on 3/14/14 at 9:29 am to MMauler
quote:It seems we are on the same page.
Tuition at most schools has gone up dramatically - much more than the rate of inflation. Part of the problem is the ready availability of federal and private student loans. Just like the housing situation between 1997 and 2007, the availability of cheap money for those who will never be able to afford the product, creates an inflated price.
Posted on 3/14/14 at 9:33 am to a want
a want, MMauler & Scruffy
Posted on 3/14/14 at 9:37 am to Scruffy
quote:
LSU has about 30k students, both grad and undergrad. Let's say 10% defaulted on their loans. The annual cost to attend is about $19k (tuition, room/board, books, expenses), so about $80k over 4 years.
I would never suggest making schools pay on the "first" default.
I would put good money on the fact that these for-profit scam schools have a greatly inflated default rate over the typical state institution.
While I have NO IDEA what the real numbers are, let's just say that a school like LSU has a 10% default rate. I would guess that an on-line diploma mill probably has a greater than 50% default rate. Why? Because who is going to hire these people with pay that would allow them to pay off the ridiculous amount of loans it takes to buy one of these worthless degrees.
So, if the above numbers are anywhere near accurate, let's put a default rate of 20%. Once a particular school reaches that default rate, they are on the hook, dollar-for-dollar, for these defaulted loans.
Obviously, we would need data to set the appropriate default rate.
Posted on 3/14/14 at 9:45 am to MMauler
quote:7 of the top 10 colleges by total Pell Grant money awarded were for-profit institutionsIt looks like a great deal of the government free money is going to the for-profit schools, no defaults with Pell Grants.
I would put good money on the fact that these for-profit scam schools have a greatly inflated default rate over the typical state institution
quote:If the schools became responsible for loan defautls after someone earned a degree, guess what would happen? Their entrance requirements would go up and the amount of degrees offered would decrease greatly.
Once a particular school reaches that default rate, they are on the hook, dollar-for-dollar, for these defaulted loans.
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