[RandomInteger4]

That would be a good thing, not a bad thing. It would force colleges to conform to the rules of capitalism, making the market for education sane again.

Student loans should not be handed out as easily as they currently are.

[ethbro]

> Student loans should not be handed out as easily as they currently are.

I would argue that 'student loans should not be handed out as equally as they currently are' -- in that loan terms are independent of major selection (and career prospects).

By all means continue to mandate that loan terms be familial-wealth blind (and institution-blind), but allow lenders to differentiate with rates on the basis of area of degree earned.

It's a lagging indicator, but it's insane that we specifically break market signals between the actual job market and the primary methods by which students finance their education.

If someone wants to get a degree in medieval plant philosophy, then they can bloody well self-finance that.

[wgerard]

> but allow lenders to differentiate with rates on the basis of area of degree earned

This makes little sense in the current system, where many students don't even declare a major for their first year (or two, sometimes). They'd be halfway through college by the time they were able to know which degree they'll earn.

Intended major is just as bad of a metric. I think we all know many people who intended to go into one major and ended up in another.

[true_religion]

You can maintain the interest rate based on choosing your intended major, but if you choose another your rate changes.

It’s just an ARM loan, but with adjustments based on your one decisions instead of the greater economy.

[wgerard]

So I’ll double major in biology and something else I’m actually interested in, say my intended career is medicine (even though it’s not), and maintain my low interest rate for four years (or even longer)?

[ethbro]

One would hope that calendar time paying post-graduation >> time paying pre-graduation. ;)

[wgerard]

They're 20 year loans.

I'd be hard-pressed to think of a single person that wouldn't tell an unverifiable lie to get a lower interest rate on 20% of their loan lifetime.

Doubly so for loans with compound interest (as some private student loans are).

[dragonwriter]

> By all means continue to mandate that loan terms be familial-wealth blind (and institution-blind),

Student loan terms (private and public) are blind to neither of these factors.

> but allow lenders to differentiate with rates on the basis of area of degree earned.

Lenders outside of the federally guaranteed system are allowed to do this, as well as to consider all of the other factors you suggest loans should “remain” blind to. The only lender inside the federally-guaranteed system is the federal government itself (and it is also not blind to the factors you suggest it should remain blind to, since both are factors already.) Further any argument for major sensitivity is a much stronger argument for much additional weighting by institution, since all the market factors that apply to majors also apply to institutions.

[ethbro]

(Clarification: I'm talking about the US loan program)

> Student loan terms (private and public) are blind to neither of these factors.

They are negatively blind, in that I cannot charge someone with family wealth in excess of $1M a lower rate than someone with negative family wealth. Correct me if I'm wrong.

> Lenders outside of the federally guaranteed system

I'm limiting these statements to the federal loan system, because that where a huge chunk of debt is created.

> The only lender inside the federally-guaranteed system is the federal government itself

Apparently this was changed in 2010? Prior to that, this was absolutely not the case via FFELs [1].

> and it is also not blind to the factors you suggest it should remain blind to, since both are factors already

See clarification about positive vs negative blinding.

> Further any argument for major sensitivity is a much stronger argument for much additional weighting by institution, since all the market factors that apply to majors also apply to institutions.

Not intrinsically. The problem with allowing rate sensitivity is making it outcome-sensitive while avoiding it becoming pre-existing wealth-sensitive.

I think everyone would feel it's unfair if Harvard loans charged 2% interest, while Community College loans charged 25%, because the acceptance demographics and underlying default rates supported that difference.

[1] https://en.m.wikipedia.org/wiki/Federal_Family_Education_Loa...

[dragonwriter]

> They are negatively blind, in that I cannot charge someone with family wealth in excess of $1M a lower rate than someone with negative family wealth. Correct me if I'm wrong.

Private student loans (which, like federally guaranteed loans, have reduced bankruptcy dischargeability since 2006) have no such restriction.

Federal loans do have such a restriction, but that obviously doesn't exist to influence lender behavior, if it ever did, since the entity imposing the rule is also the only lender now permitted to issue such loans.

[mschuster91]

The problem is that, trades aside, higher education is a must for earning money that one can actually live on.

The US needs public funding for universities. It's not impossible - Germany's universities are all free of charge, most even for foreigners.

[rayiner]

The U.S. spends basically the same amount of public money on universities as Germany: https://data.oecd.org/eduresource/public-spending-on-educati.... 0.91% of GDP versus 1.0% of GDP. That works out to about $550 per man, woman, and child in the U.S. versus $450 in Germany.

[pbhjpbhj]

How's the spread of spending per student for that money in each country I wonder (across subjects and colleges).

[toasterlovin]

Attending a state university as a resident is actually well within reach for almost everyone. And people who can’t afford it usually qualify for financial aid and grants. The problem is that too many people overspend on higher education. And most people are only able to do this with access to humungous student loans.

[linuxftw]

Right, the problem is higher education is required. Reform secondary education so higher education is not required, and only fund public institutions that give people additional skills to help 'live on.' As long as public money is subsidizing 4 years of 'drama camp' or whatever it those kids do, we should be investing in people that want to do actual work for a living.

[Mirioron]

Free of charge universities usually means stricter limits on access. Only some subset of people will essentially have the opportunity to attend.

[paul_f]

Even with free tuition, you still have to pay for living expenses, which are often much higher than tuition at an in-state school.

[rayiner]

Yes, and this is why Sweden has about the same median student debt as the US ($25,000).

[anoxor]

A whole lot of bootcamp coders making a few hundred thousand may disagree with that or people who started profitable businesses without degrees.