Please read the below post and at the very least address it when you reply.

The student loan system feels broken because the incentives are backwards. Colleges get paid up front, students take all the risk, and tuition keeps rising whether graduates succeed or not.

What if we flipped that?

Instead of tuition and loans, students would agree up front to pay a fixed percentage of their income after graduation (say 20%) for a fixed number of years — the same number of years it took them to graduate. Yes, this is modern day indentured servitude, but it aligns all parties and gets a much more solid outcome.

Graduate in 3 years → pay for 3 years
Graduate in 4 years → pay for 4
Take longer → you pay longer

No upfront tuition. Schools only get paid if graduates earn.
If a graduate can’t find work, the school is obligated to help place them. Payments would be tied to tax-reported income, with a reasonable minimum to prevent intentional non-work (20% of that universities starting salary). If the job the university helps you find pays less, you only owe 20% of what you actually earn.

Military service would fully cover the obligation — education in exchange for service.

What this changes:
Colleges suddenly have real skin in the game, and will try to cut costs radically.
Finishing efficiently is rewarded, not penalized. No more 8 year degrees…
Employment outcomes matter more than branding. Colleges would partner with employers to ensure students get harder.

Would some programs shrink? Probably. But that’s kind of the point. If a degree can’t support itself through outcomes, why should an 18-year-old carry the risk alone?

I feel the schools themselves should be the ones financing the education. That would stop them admitting unqualified students to struggle 2 years before quitting. Also encourage degrees that actually prepare graduates for the best chance of success.

quote:

Originally posted by ridewv:
That would stop them admitting unqualified students to struggle 2 years before quitting.

2 years?

Try 2 semesters.

Enroll. Get a buttload of loans. Show up. Party. Fail everything in the fall semester. Get put on academic probation. Keep partying. Fail everything again. Get kicked out at the end of the spring semester. Now they're saddled with a year's worth of student loan debt for tuition, fees, room/board, etc. yet with nothing to show for it.

That was the path taken by a decent number of freshmen back when I was in college 25 years ago, and I don't expect it has gotten any better in the intervening decades.


Edit: Looks like it did improve, slightly.

A quick Google suggest that the freshman retention rate at my college in 2001 was 81%. So basically 1 in 5 entering Freshman wouldn't make it past their first year.

It currently stands at 86%. So slightly better, but still roughly 1 in 7 won't make it past the first two semesters.

And how about Universities actually offering courses that translate over into real world job skills? That would make paying for an education make sense!

There is no question that the proliferation of student loans, particularly of the non-federally guaranteed private type, has directly driven the increase in spending by universities to build infrastructure and other incentives to attract paying students, which in turn has increased costs because the load is being carried by debt.

As a parent with two kids currently enrolled as undergraduates who has taken zero loans (full tuition and R&B paid in full in cash), the ship has already sailed for my family, but there is a reckoning coming. Parents and students are starting to ask the right questions and not longer as willing to simply pay whatever it costs to get a piece of paper.

Get the govt out of the student loan business first the most part. These institutions make a fortune, many have large endowments, and yet they are treated like section 8 recipients.

As for students and incentives. Fuck that. Fuck that completely. It is hand holding, gold star giving, and no responsibility upbringings that got us here.

You can blame the colleges and govt for making it easy to go into debt and you wouldn’t be wrong. No one ever forced anyone into a student loan. Ever. Out of state enrollment, study abroad, retarded degrees that would never get a job outside of academia. All that need to be gone. Or much tighter controlled via purse strings. Apply some form of banking common sense to student loans. People without jobs can’t get mortgages, stupid people with zero potential shouldn’t get college loans. Those people should have to do it the hard way. Pay as you go.

Quit taking student loan responsibility off of those who signed up for student loans.

There are Income Sharing Programs that let you learn and then pay a percentage of your pay after working.

Link

quote:

Originally posted by pedropcola:
Get the govt out of the student loan business first the most part. These institutions make a fortune, many have large endowments, and yet they are treated like section 8 recipients.

It’s a fact that government subsidies raise the price floor of the product being subsidized. People don’t care how much money is going into the seller’s pocket (colleges and universities); they only see the money coming out of their pockets.

quote:

Originally posted by reloader-1:
The student loan system feels broken because the incentives are backwards. Colleges get paid up front, students take all the risk, and tuition keeps rising whether graduates succeed or not.

What if we flipped that?

Instead of tuition and loans, students would agree up front to pay a fixed percentage of their income after graduation (say 20%) for a fixed number of years — the same number of years it took them to graduate. Yes, this is modern day indentured servitude, but it aligns all parties and gets a much more solid outcome.

Graduate in 3 years → pay for 3 years
Graduate in 4 years → pay for 4
Take longer → you pay longer

No upfront tuition. Schools only get paid if graduates earn.
If a graduate can’t find work, the school is obligated to help place them. Payments would be tied to tax-reported income, with a reasonable minimum to prevent intentional non-work (20% of that universities starting salary). If the job the university helps you find pays less, you only owe 20% of what you actually earn.

Military service would fully cover the obligation — education in exchange for service.

What this changes:
Colleges suddenly have real skin in the game, and will try to cut costs radically.
Finishing efficiently is rewarded, not penalized. No more 8 year degrees…
Employment outcomes matter more than branding. Colleges would partner with employers to ensure students get harder.

Would some programs shrink? Probably. But that’s kind of the point. If a degree can’t support itself through outcomes, why should an 18-year-old carry the risk alone?

Colleges should be underwriting those loans.

quote:

Originally posted by rscalzo:

Colleges should be underwriting those loans.

Did you read what I proposed?

There are no loans now, in the proposal. Colleges are now underwriting the tuition for students, with the 20% yearly salary repayment for the same number of years that it took you to graduate.

What are your thoughts?

quote:

Originally posted by Rey HRH:
There are Income Sharing Programs that let you learn and then pay a percentage of your pay after working.

Link

I probably should have done more research, your link was not the right one but I did find this:

https://www.lendingtree.com/st...-agreements-schools/

Only problem is most of these are defunct, and only cover tuition after government aid is exhausted. I’m eliminating government aid entirely, and loans for that matter.

Step 1, go to JC, because of cost. Step 2, stay in state, and go to a state University for bachelors. This would fuck over all the private institutions over time and put them out of business. I can still go to an accredited state university in my metro for my MBA, and the pricing is still reasonable.

Rogue’s post above is accurate. Private unis, yes their prices are ridiculous. Well I wouldn’t pay $100k for a Kia either (nor any car). These kids want to live “their best life” at 18. The majority of them say this bullshit. So like Rogue outlined, they go to college (many out of state with out of state tuition which is sky high), party, charge Spring Break vacations. They charge the latest phones, laptops, ie devices, take out school loans, then don’t commit to it nor look at any of it like debt, a balance to manage. I did, and graduated with several degrees owing a whopping $17k in student loans. But then again I worked all through college. These kids today want their asses tickled with feathers and believe me they don’t want to work. We have a rental house on my street, and the owners are from Kali (big surprise there), and rent to local college students. They tried to have yet another party a few months ago, last semester. I called the PD, and several neighbors were out there complaining when I told them I called the PD. After the Police got done with them several of these renters came to talk to us. I had mentioned something to the effect of hey if you had a got damn job, you wouldn’t have time for this bs. They both mentioned decent or high paying jobs were too hard to get. IE, neither were willing to be a barista, waiter (I waited tables in high school and immediately after), work at Walmart or whatever. They both had this entitlement of having a well paying job. I looked at both of them and said “many fast food jobs now pay $15 an hour, that’s a $30k a year job as a college student. That’s not bad at all.” When I mentioned the $30k they both looked at me like that was pay for someone shoveling pig shit for a living and beneath them. And there is your problem today, entitlement.

Entitlement was there when I was in college 25 years ago. When I partially left the music business and managing a record store, to work in my college degree related field I took a big paycut. I was working doing dial up ISP support for $10 to get my foot in the door and so I wouldn’t get lowballed when I graduated. I ended up tripling that pay during my 5 years in college so I was making excellent money before I even got my bachelors. The people I was in college with said “Owe you got a job, where/how much?” When I told them how much they shit all over it. Several comments “I have a 3.8 GPA. When I graduate I’m not taking less than $45k or $50k.” Now mind you, this was 25 years ago. By the time I graduated I had almost quadrupled what I made from start to finish over a 4 or 5 year period. Same exact kids running their mouth upon graduation came to me, knowing where I worked and asked if I could get them an interview. I asked each, do you have any experience? Each replied with their GPA and I had to break the news to each, that my employer and manager wouldn’t even give you an interview with no experience. Back in the day college kids would take internships, and bust ass, period, to get experience. Today these kids want everything handed to them on a silver platter. This narrative that college is robbing you priced is just that a narrative and bullshit. If you think about college like a home loan or something, it’s still extremely manageable. You just need the cut out the narratives that you need to Animal House party, go on elaborate spring break vacations. You are there to learn. Stay in State, work. You can either bust ass like many of us did, and hustle, or you can do nothing, get on your social medias and whine like a bitch and complain that the government should forgive your student loan debt.

As someone who busted my ass doing 100-120 hour weeks during college, well when you are young, you can do this. I have no remorse for these kids, none. Dealers charge ADM (additional dealer markup) on vehicles and you know what? If nobody would pay this rob your ass fee, nobody would have to. Supply and demand has not changed. If a university, especially out of state and private universities have raised their prices, well if people would refuse to pay that, and the College’s coffers hurt, they’d have to drop their tuition fees. If people keep paying it, well supply and demand. State university schools are still affordable. I’ve checked here for my MBA for many years. It’s not unreasonable. I even dimed it out so that it could be free for me, via tuition reimbursement at my employer, but I’d have to stretch it out over 4 years. So tired of hearing about this nonsense.

Hey umm I know this is a forum, but there’s an actual proposal in the first post.

Do any of you want to perhaps read it and let me know what you think?

First, there is no United States university system.

Annual tuition as in two semesters worth at any Florida public university is around $6,500. That’s completely doable without students loans. Anyone who can’t probably would be successful going to college.

Students that are likely to be successful in college, the ones with good grades in high school, good SAT/ACT scores, and 75 hours of work and/or community service hours will pay about a fourth of that.

Out of state tuition is around $22,000 a year which is in the ballpark for a lot of other states’ instate tuition.

If your state’s public universities cost more, I’d ask why? Maybe your state school is better than Florida’s. US News ranks UF 7 and FSU 21. In the top 25 public universities, tuition at all the other schools is more. A few only 50% more, some double, but most are triple!

Oh, UF and FSU graduation rates % are in the 80s for four years and in the 90s for six.

I’m not sure student loans are the issue.

quote:

Originally posted by trapper189:
I’m not sure student loans are the issue.

Oh, the massive push for decades for every single kid to go to college definitely factors into this too.

I was part of that generation, where all the teachers, parents, and other adults my entire life insisted that you simply must to go to college and get a degree if you ever hoped to be successful in life.

As another example... The school district where I was a SRO for a few years actually had this as their district motto in the mid-to-late 2000s: "Every student, college bound."

Every student! How asinine. Not every kid is suited for college, nor do they need to be.

Thankfully, that is changing (slowly). There's much less of an emphasis on "college for everyone" lately, and increasing acceptance that going to technical schools or even just entering the workforce is a much better option for a good chunk of young adults.

But decades of that ridiculous dogma has certainly contributed to the mess of a college tuition/student loan problem we have now, along with the dearth of skilled tradesmen that we're now experiencing.

quote:

Originally posted by trapper189:

Annual tuition as in two semesters worth at any Florida public university is around $6,500. That’s completely doable without students loans. Anyone who can’t probably would be successful going to college.

Great answer, and I agree with you. In Florida, State school tuition is capped by the Florida Legislature. It is extremely reasonable, $48k for 4 years (not counting living expenses).

A person could reasonably work and attend school for four years at these prices, which is why Florida is doing so well economically.

Would you advocate for this approach in other states, as opposed to the proposal?

quote:

Instead of tuition and loans, students would agree up front to pay a fixed percentage of their income after graduation (say 20%) for a fixed number of years — the same number of years it took them to graduate. Yes, this is modern day indentured servitude, but it aligns all parties and gets a much more solid outcome.

Graduate in 3 years → pay for 3 years
Graduate in 4 years → pay for 4
Take longer → you pay longer

No upfront tuition. Schools only get paid if graduates earn.
If a graduate can’t find work, the school is obligated to help place them. Payments would be tied to tax-reported income, with a reasonable minimum to prevent intentional non-work (20% of that universities starting salary). If the job the university helps you find pays less, you only owe 20% of what you actually earn.

From the student's perspective:
Great idea!
Go to college, and see how it goes.
If I can't get a job, I don't pay. Party on!

From the University perspective:
No way!
Professors are paid upfront, for teaching.
If the student learns something useful, or not, is up to the student.

Who would pick up the slack when the students don't pay? Would schools close? Or would the taxpayers be called upon to keep them afloat?

Chellim, you are still on the hook for paying the school, just like today.

If you do not find a job, the cost is 20% of the median student graduate salary for the school, times the number of years.

Here is an example, with three students:

Student 1: Graduates in 4 years, finds $100k/year job. Pays $20k/y for 4 years, total cost of $80k

Student 2: Graduates in 4 years, cannot find job. College finds $50k job for student, Pays $10k/y for 4 years, total cost of $40k

Student 3: Graduates in 4 years, doesn’t want to find job. Rejects college placement job of $50k. Owes 20% of median salary (let’s say $60k) for the 4 years, which is $12k/y, total cost is $48k. Just like today, this loan is not dischargeable in bankruptcy.

I read your idea and responded. You just didn’t like the response.

If you decide to take loans and go to college that is and should be 100% on the student. No incentives, no possible payback if I get a job schemes. No. You buy an education and you pay, preferably as you go.

JC for 2 years is downright cheap. Then stay in state. Do that and effectively there is no wa6 you would be one of those idiots with a worthless degree and a 6 figure debt.

Govt involvement absolutely has raised prices and lowered the entry bar. You want a loan you get a loan. Big gov is providing the loan so colleges have raised prices beyond any similar metric in any other discretionary field of spending. It’s Somali daycare without children.

Let capitalism sort this out. It would be fairly quick and fairly painless. More workers, less college staff, degrees in fields that matter, and smaller bills.

No need to overthink this.

It broke the day the government took over most student loan financing in this country.