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The US doesn’t have a student debt problem. It has a college tuition crisis

Dave_BerryDave_Berry 492 replies2569 threadsCC Admissions Expert Senior Member
"There’s a rousing call in the US to cancel student-loan debt, and to effectively blow up our current system in its entirety.

The issue was taken to Capitol Hill this week, where advocates for better borrower protection made their case before the House Financial Services Committee to debate what to do about this $1.6 trillion problem.

But there’s no such thing as a student loan crisis without its root cause: the college tuition crisis.

Comedian Hasan Minhaj, who was among the advocates attending the hearing, asked, 'Why can’t we treat our student borrowers the way we treat our banks?'

That’s a fair question. In the last 30 years, tuition costs at public universities have increased by 213%. Among US News-ranked private institutions, more than 100 private colleges now charge at least $50,000 for tuition." ...

https://qz.com/1707593/were-thinking-about-the-student-debt-crisis-all-wrong/
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Replies to: The US doesn’t have a student debt problem. It has a college tuition crisis

  • kelsmomkelsmom 15591 replies99 threadsRegistered User Senior Member
    edited September 12
    The article says: "It needs to be made very clear to students what they will be paying in student loans every month upon graduation—before even taking out that loan to begin with ... Schools are in a unique position to deliver this information to students and families, right at the time when they make the decision to sign on the dotted line. School financial aid offices have up-to-date information on students’ federal student loans. "

    Guess what? The federal government has this information, too ... and it would cost much less to have them set up a site where students could (would have to?) go before borrowing. Because if you add this to all the other federal requirements on financial aid offices, the result will be increased (rather than decreased) tuition. It would take staff resources to do this. Add the need to collect information on earnings for each major, and the regulatory costs climb ... if the school has to "make" students look at that info & verify that they did so, there is more staffing needed.

    The article further states: "And private lenders have pre-established pipes into college financial aid offices, through which this information can be easily shared." Yeah, no. Sorry, but schools are not actually in cahoots with private lenders. I should know, having worked in financial aid offices for years.

    I believe, from talking with students, that some undergraduate schools are adept at making a 17 year old feel that borrowing a lot of money (including private loans) is no big deal; however, I don't think the proposal will solve that. Once the family has decided they are going to do whatever it takes to make sure little Susie gets to go to their dream school, I think it's too late. I don't know the answer, but I don't believe more regulations is the answer.
    edited September 12
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  • coolguy40coolguy40 2203 replies3 threadsRegistered User Senior Member
    They call themselves non-profit or public institutions, but that's BS. College education is big business and these organizations are really just large corporations. Many of them have football teams 3x the size of any NFL team. College football is the only sport other than world cup soccer that can consistently draw 100,000 fans for a home game.
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  • lookingforwardlookingforward 34200 replies378 threadsRegistered User Senior Member
    Major college debt comes from the decision to pay with loans. The colleges don't force you to take on major debt, borrowers make that decision. There are lower priced colleges.

    Now, someone will come and point out that very poor families can't afford even a local cc. But imo, the improvement we need is in those who think they can "pay Tuesday, for a hamburger today."

    If colleges halved their costs, would families not still take massive loans?

    I like M2CK's idea. But would also be happy if student loans were capped much lower. Think of the later cash flow.
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  • KnowsstuffKnowsstuff 4249 replies17 threadsRegistered User Senior Member
    So will people that paid back their students loans get a refund or some tax credits? I paid back $300,000 with good old fashion hard work and bought a house earlier in the process (against like everyone's advice) and it appreciated rapidly. We used the equity at that time to pay off the loans.

    Sorry, I don't feel bad when someone takes out $200,000 for a job making $30,000 and will most likely never pay back the loans.

    The parents are to blame since they let it happen and /encourage it. No 18 year old knows what any of this means until they graduate.It all seems promising and everyone will get a job until they don't.

    I met a medical rep that just graduated. She wanted to consider going back to school for physician assistant. She just started as a medical rep for a really good young company. She has room to grow. So I asked her why she is working for the company and she said, "I just graduated and need to get my student loans under control." She went to a local public, Illinois State. She has a good job that has room to grow and she really likes the sector. I told her she made a great decision.

    The more the price of admission goes up the more federal money will be paid out. There is nothing in place to stop the rise of tuition. Some schools will freeze tuition.

    It is a big problem that needs to be fixed no doubt.

    Also it seems the pay back of loans is really targeting the for profit schools and the low income kids that go there. I read somewhere that this is the sector with the most loans to payback.

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  • dropbox77177dropbox77177 266 replies0 threadsRegistered User Junior Member
    Just as in health care and housing, two other sectors in which the government has become too entrenched, there will be no solution to the debt-tuition spiral.

    Personally, I think it is better to take on debt than to commit real capital, although financial aid and merit money is better than either. The chances of a ridiculous bailout are not zero.
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  • SOSConcernSOSConcern 3846 replies8 threadsRegistered User Senior Member
    Parents do need to plan and budget for college, and their young adults need to be realistic about their options.

    A mom who is making a very low wage where I work signed a parent loan for the first semester, but now knows she can do no more. She just didn't have the backbone to say no all along the way even though she knew it was not affordable for 4 years. Her son has very good commuting options, he just wanted the flagship school experiences. He received a small 'courtesy' scholarship - he didn't meet the threshold for some good automatic in-state scholarship (IDK if he wasn't aware of preparation for ACT/SAT or if his GPA wasn't at the level required). I do expect he won't be able to register for 2nd semester because the money won't be there.
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  • ucbalumnusucbalumnus 78266 replies690 threadsRegistered User Senior Member
    edited September 14
    While I agree that costs are too high, we do have a student loan problem.

    I belong to another paying for college group and it astounds me how many middle/modest/low-income parents will not say “no” to their kids about borrowing/co-signing loans for “dream schools”.

    Perhaps the parents have a hard time letting go of the belief that there is plenty of opportunity to get ahead for most people ( https://news.gallup.com/poll/228914/majority-satisfied-opportunity-ahead.aspx ) when reality is that most new adults' opportunity in terms of education and career will be mostly constrained by parental financial circumstances and choices, which the parents may have a hard time admitting to their own kids.

    Imagine a parent who, over the years, told the kid "do well in school, so that you can go to a good college and prepare for a good career", but then in 12th grade turns around and tells the kid that there is only enough money to have him/her commute to the community college and then transfer to the local non-flagship state school, rather than attend any of the "good colleges" mentioned previously (that the kid has the academic credentials to have a reasonable chance of admission), or even the state flagship.
    edited September 14
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  • ucbalumnusucbalumnus 78266 replies690 threadsRegistered User Senior Member
    Just as in health care and housing, two other sectors in which the government has become too entrenched, there will be no solution to the debt-tuition spiral.

    Increases in Pell grants (currently around $6k, and which increase about as fast as CPI inflation, slower than college cost inflation) and federal direct loans ($5.5k-$7.5k, not increasing) are hardly the cause of undergraduate tuition inflation at colleges where tuition is already many times that and increasing at a rate much more rapidly than CPI inflation.

    On the other hand, professional school programs can be eligible for much greater levels of government loan debt.
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  • foobar1foobar1 211 replies2 threadsRegistered User Junior Member
    Some of the data the author of the article is requesting about net price and expected salary after graduation is already published on the Department of Education websites College Scorecard or College Navigator.
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  • mom2collegekidsmom2collegekids 84105 replies1025 threadsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    Major college debt comes from the decision to pay with loans. The colleges don't force you to take on major debt, borrowers make that decision. There are lower priced colleges.

    Now, someone will come and point out that very poor families can't afford even a local cc. But imo, the improvement we need is in those who think they can "pay Tuesday, for a hamburger today."

    If colleges halved their costs, would families not still take massive loans?

    I like M2CK's idea. But would also be happy if student loans were capped much lower. Think of the later cash flow.


    The very poor family student would have to be in a rare state with very high costs in order not to afford a local CC. And if so, then the option can be online college from a school that charges low online tuition. A Pell grant would cover most instances, and in some states, also get a state grant.

    Rarely ever is it necessary to take on large debt for undergrad.
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  • mom2collegekidsmom2collegekids 84105 replies1025 threadsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    edited September 18
    I like M2CK's idea. But would also be happy if student loans were capped much lower. Think of the later cash flow.


    My only reason for suggesting that fed loans have the following option....
    The distribution of fed loans should have options:

    If a student goes to a CC for 2 years and only borrows, say, $1k for each year, then he/she should be able to borrow $15k/yr for junior and senior years.

    .....Is because I’ve seen too many students waste their borrowing during frosh/soph years of CC and then be short of funds to transfer. And, because providing that borrowing-option-choice would inspire students with limited funds to consider a community college for two years so that they could borrow more for the FAR-LESS-RISKY junior and senior years.

    The largest percentage of defaulters of loans are students who never even got to junior year of college. Someone who makes it to junior year, and has $15/yr borrowing power, is more likely going to finish school.
    edited September 18
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  • MYOS1634MYOS1634 41891 replies451 threadsRegistered User Senior Member
    I like that idea. That's a huge problem with CC - what do you do afterwards if you can't afford to move to the 4-year.
    Nevertheless, all public universities should (automatically) be free tuition for students who qualify academically and financially.
    -- some hard working, advanced students or students who prepared for difficult majors may not have classes to take at the CC they can commute to! Yes it's a small subset of students whose parents can't/won't pay (not just lower income but also divorce situations) and are ready to start at a 4-year they can't commute to, but then it shouldn't be too expensive, it's a good investment in the state's brightest, and it's just the right thing to do.

    To answer the thread's question, it's a false dichotomy: right now the is had BOTH a student debt problem and a college tuition crisis.

    I'd be in favor of something unlikely to be popular, but it'd be: wipe out undergraduate debt *right now* and through 2022 ( or whatever date when the problem MUST be solved.)
    College costs are a huge problem for many families, even those who aren't "just saying yes to anything", and debt is dragging down the economy (esp. Wrt big purchases - some sectors are slowing, you can see effects.)
    So: Clean slate for everyone right now (undergraduate only). Think of it as a cleanse of sort for a dysfunctional system. Yup, unfair for those of us who didn't benefit but I really believe we need a reset (/reboot) from current practices so we can proceed with something better (also, in 1920, 40-year old women didn't say "*I* didn't get to vote, why should you?", Nor WW1 veterans when WW2 vets got the GI Bill...)
    But ..... Concomitant to this "clean slate", put everything on the table and make the system work differently. A mix of M2CK's idea, Tennessee Promise, Cal Grants, and I'm sure there are other great ideas.
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  • 1NJParent1NJParent 1375 replies35 threadsRegistered User Senior Member
    edited September 18
    The only ways to control prices are through effective competition, or in the absence of it, regulation. With higher education in this country, there's neither, just like in healthcare. Tuition has been rising, on average, at 3x the inflation rate in the last 30+ years. Just like healthcare, it's simply unsustainable. As in healthcare, higher education isn't structurally suitable for effective competition. Almost all full-pay NYU students would have gladly gone to Princeton or Harvard for lower tuition alone, but they can't.
    edited September 18
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  • dropbox77177dropbox77177 266 replies0 threadsRegistered User Junior Member
    edited September 18
    Nevertheless, all public universities should (automatically) be free tuition for students who qualify academically and financially.
    As a practical matter, with over $22T in debt at the Federal level, and Federal deficits of $1T+ stretching as far as the eye can see, this will not happen.

    Besides, any scheme like that will inevitably require governments to tell substantial numbers of people that they are simply not smart enough to go to college, something that is politically impossible in the United States. And if the admissions decisions were simply left to the public universities, but with funding by the public, then it would just be a free for all.
    edited September 18
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  • MYOS1634MYOS1634 41891 replies451 threadsRegistered User Senior Member
    Flagships are already telling lots of people they can't attend. Lots of kids are denied by universities. Far from being impossible, it's the norm every Spring.
    And universities can't admit everyone.... Even I they did, students could only attend one university. Yield management systems would continue working.
    It's unrelated to the government.
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  • twoinanddonetwoinanddone 22994 replies17 threadsRegistered User Senior Member
    edited September 18
    In my day, fed interest rates were something like 2% and were subsidized while in college.

    Well in my day the interest rate was 9%. I think the national direct loan was 5% but the amount was very limited.
    edited September 18
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  • ucbalumnusucbalumnus 78266 replies690 threadsRegistered User Senior Member
    edited September 18
    Nevertheless, all public universities should (automatically) be free tuition for students who qualify academically and financially.
    As a practical matter, with over $22T in debt at the Federal level, and Federal deficits of $1T+ stretching as far as the eye can see, this will not happen.

    Repealing the deficit-expanding tax cuts mostly for big business and the super-rich would help reduce the budget deficit. But apparently giveaways for big business and the super-rich are more important than ensuring that kids' opportunities to become economic and social contributors to their potential are not limited by up front educational costs and parental money circumstances and choices, as employers increasingly require higher educational credentials for entry level jobs.
    edited September 18
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  • dropbox77177dropbox77177 266 replies0 threadsRegistered User Junior Member
    edited September 18
    Repealing the deficit-expanding tax cuts mostly for big business and the super-rich would help reduce the budget deficit. But apparently giveaways for big business and the super-rich are more important....
    The share of GDP that can be taken in by the Federal government through taxes has basically been invariant since WWII, although aggregated with state and local taxes, the overall tax burden on the people had steadily grown until the Y2K crash and has oscillated since then. No change in tax policy is going to fix the debt/deficit problems. Hauser's Law will not be repealed.

    This site has some nice looking charts of overall tax revenues as percent of GDP: https://www.usgovernmentrevenue.com/revenue_history

    In particular, chart 3.23 on that page shows how income tax has basically been flat at 10% of GDP since 1940. Didn't matter what the marginal rate was. That will not change. Neither will the relentless growth in social spending as the population ages.
    edited September 18
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