There doesn't seem to be any schools operating in that way, today as far as I'm aware, there also doesn't really seem to be any legal barriers to overcome. So, why not? I certainty agree the current system is entirely corrupt just another LBJ disaster.

You know what's funny is they made the loans non-dischargeable in 1976, why would they do such a thing? What sort of people would take advantage of bankruptcy in that way?

If schools loan money to unqualified people that's on the school, same as a bank,

If the school has problems with poor assistant professors that can't teach well or hardly speak English and students fail or drop out that's on the school.

As it is now the schools are guaranteed their money regardless so why improve?

quote:

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.

There are few $100k/year jobs for graduates. Mostly, only engineering jobs pay that kind of money. Most kids would probably be in your middle category, obligating the school to find them a job. I'm not opposed to the idea of schools helping kids find jobs.
For the third category, the kid who parties for 4 years, doesn't find a job, and refuses the job placement... who picks up the tab?
Sure, you can say not dischargeable in bankruptcy... but why would he/she even care?
There are plenty of people like this.

I also submit to you that schools would not go for this idea.

I don’t know about the cap, but actual tuition for 4 years is $6,500x4=$26,000.

Room and board is another story. There’s a lot of Florida universities, going local, and living with the parents can cut down the room and board. None of the local schools offer Geology, so my oldest paid $12,200 his freshman year. He learned how to cook for himself last summer, got a much nicer dorm with a kitchen and is on track to spend $11,200 for two semesters room and board including eating out on three separate one week field trips this year.

He’s double majoring in Geology and Chemistry and should be done with both next year. This is possible because he took college classes at the local community college in high school and received his Associates of Arts degree along with his high school diploma. The 65 college credits were free.

USF gave him more scholarship money than FSU and UF didn’t offer him any. He could have been done with just the Geology degree this summer. All in his bachelors degree would have been about $20,000 including hotel rooms, airline tickets, and other expense for the field trips.

My senior high school daughter has been accepted to FSU and UF so far. She got better grades and test scores than my son, so they are offering her more money. She could have her bachelors degree in two years and spent between $15,000 and $18,000 total including room and board.

Neither are using federal financial aid, no Pell grants, no loans.

I’m just using my kids and Florida schools because it’s what I know. College doesn’t have to be detrimentally expensive, at least in Florida.

Outside of my kids, the least academically successful kids on my son’s high school swim team got a full ride scholarship. Rumor was she got a 550 on the SAT, total, not on each section. My niece and nephews in Ohio got full ride scholarships two for sports and one for grades, test scores, and being an awesome person. None of my kids’ friends are paying full price. One of her classmates from like the second and third grade signed to play hockey for Princeton.

Even of a kid isn’t the highest scoring or most athletic, go back to the first sentence in this post; $6,500 per year for tuition. A kid can earn that each summer, stay home, work part time to contribute, and graduate debt free. My youngest son is not on track to follow his brother and sister. He’s 15 and earned more money washing cars and doing pressure washing than the other two combined.

I have no doubt that he’ll be able to afford to go to college if he chooses, which is a good segue to:

RogueJSK hit the nail on the head. I remember a meeting with someone from the public schools when Geology boy was in first grade. This woman said, “And of course we all want our kids to go to college.” My first thought was, “No we don’t.” Every kid should most definitely not go to college.

Cap student loans. People that haven’t figured out how to pay for undergrad without a mountain of debt probably aren’t able to understand how that mountain of debt will be a millstone around their necks.

quote:

Originally posted by PASig:
It broke the day the government took over most student loan financing in this country.

It was even before that.

Guaranteed student loans put the taxpayer on the hook, even before the government took over all direct lending.

The problem is government involvement in education. We were promised that the Department of Education would be closed. We can't even get that much.

The feds raise the amount a student is allowed to borrow and the schools follow suit by raising tuition and fees by even more. The feds guarantee the loans so the schools have no incentive to anything other than admit more students and cash the checks. Unqualified students drop out? The school already got paid. The feds are on the hook for the money. Only higher education loans an 18yr old with no job and no collateral six figures with no questions asked.

Cost of attendance at my alma mater, an excellent public school, is now $45k/yr. It was $15k/yr 25 years ago. The increase far surpasses inflation and wage growth.

Remove the fed guarantees. Put the schools on the hook for their admissions decisions. Bring vocational training back to high schools. Stop telling everybody they have to go to college. The trades are a viable path. Stop requiring degrees for jobs that don’t need one.

quote:

Originally posted by pedropcola:
I read your idea and responded. You just didn’t like the response.

Govt involvement absolutely has raised prices and lowered the entry bar.

Let capitalism sort this out. It would be fairly quick and fairly painless.

No need to overthink this.

I agree with you that capitalism needs to sort this out. Why not remove the government from the equation entirely?

If I am providing a service that will benefit you, shouldn’t my compensation be based on that benefit?

I’m in favor of eliminating any third party loans entirely, this is a contract between the school and the student. If you do it using my proposal, if you do it using loans issued and backed by the school, the net outcome is the same.

quote:

I agree with you that capitalism needs to sort this out. Why not remove the government from the equation entirely?

There's your answer.

If you do that, different schools will experiment with different ways to attract students. Some may even offer something similar to your proposal. Let the schools figure out how to attract students and how to get paid, like any other free-market business or service.

Once you take government out of the equation, the experimentation will begin.

quote:

Originally posted by chellim1:
For the third category, the kid who parties for 4 years, doesn't find a job, and refuses the job placement... who picks up the tab?
Sure, you can say not dischargeable in bankruptcy... but why would he/she even care?
There are plenty of people like this.

I also submit to you that schools would not go for this idea.

That’s the entire point, this part is no different than today. That third student would have a non-dischargeable loan that can be recouped through wage garnishment.

During the admission process, you are vetting students and selecting those that pushed themselves in high school and are setting themselves up for success. Johnny or Jane Party Animal should be excluded during that process, and if not the school is still protected.

I went to a rather prestigious and expensive Univerity, which allowed me to get into a very competitive field at the graduate level. I worked and paid one third of my undergraduate career, my parents paid a third and I got a loan which I paid off when I reached the age of 40. The government paid for my graduate education but got it all back when I was forced to work for the goverment for a few years. I just checked. The University I attended is now 86 grand per year.
It was imorpant to have quality faculty. Even the football team was forced to take difficult classes.

No, I don't think the 20% solves anything.

Back in the day, nearly 50 years ago for me, universities appealed for different reasons than today. Back then, a student might have a particular career goal and would seek a college or university with the best reputation for career success. So, the school had a strong motivation to educate for success.

Another kind of student was motivated but perhaps didn't have a specific profession in mind. Back then, having a four year degree meant something. It was already waning a bit, but having any degree opened doors otherwise closed.

Thus schools needed to show their graduates succeeded in order to attract new students.

Since credit was hard to come by, the education had to also be a good value. Tuition for my daughter was 10x what it was for me at the same private university! The school had become very luxurious from when I graduated to when she attended. (She came to her senses and transferred to the state U and graduated debt free.)

But our society changed over time to where everybody believed they must go to college or university. And many of them were unserious except to party and hook up. THey weren't flipping burgers like I did to pay tuition, so they feel no pressure to accomplish anything or to get value out of their expenditures.

quote:

Originally posted by chellim1:

quote:

I agree with you that capitalism needs to sort this out. Why not remove the government from the equation entirely?

There's your answer.

If you do that, different schools will experiment with different ways to attract students. Some may even offer something similar to your proposal. Let the schools figure out how to attract students and how to get paid, like any other free-market business or service.

Once you take government out of the equation, the experimentation will begin.

I rarely see an answer that effectively answers and ends a discussion, but this one has to count as such. You and I are absolutely in agreement, and this is the best possible solution.

I began investing for my kids college education when they were born. I dollar cost averaged into mutual funds every month. As a result I wrote the checks for the total amount. My youngest still has a sizable amount left. I also paid for two cars.
No borrowing whatsoever.

Nailed it!

quote:

Originally posted by ridewv:
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 PASig:
It broke the day the government took over most student loan financing in this country.

As others have said, as long as the gubment is underwriting something, prices go up. When I graduated, my total student debt was between $2500-3000. But my student loan was administered by a local bank, and was just like a typical consumer loan.

My sons went to the same university as me. However, tuition for them was almost 650% more. And ironically, they went to a private liberal arts college before the university - It was cheaper to send them to that private college than it was to send them to the public land-grant university.

My older son is a pharmacist, but his student debt is over $100K AFAIK. My younger son in an Army officer, and had an Army scholarship for his tuition, but he still has some student debt as well.

Years ago I was speaking with a friend thirty years older than. He told his kids they could attend whatever college they wanted as long as they paid for it.

Yes, I read your entire post. So are you going to start up a University and try this out? Who is going to force all the money making learning institutions to do this?

There is no way this will ever be implemented.

Let’s play this out…

The average in state tuition with room and board is just over $27,000. So let’s say our student does what he is suppose to do and graduates in 4 years. That will leave him with a debt of over $108,000

Let’s assume a very generous loan rate of 5% APY and keep it simple that would add approximately $21,000 to the principal for a total of approximately $129,000

Now let’s say our graduate lands a great job and starts on the higher end of the average salary for a recent grad of $65,000. 20% of that salary is only $13,000 per year or a total of $52,000 for for years of payments.

So what happens to the remaining $77,000?

quote:

Originally posted by smlsig:
Let’s play this out…

The average in state tuition with room and board is just over $27,000. So let’s say our student does what he is suppose to do and graduates in 4 years. That will leave him with a debt of over $108,000

Let’s assume a very generous loan rate of 5% APY and keep it simple that would add approximately $21,000 to the principal for a total of approximately $129,000

Now let’s say our graduate lands a great job and starts on the higher end of the average salary for a recent grad of $65,000. 20% of that salary is only $13,000 per year or a total of $52,000 for for years of payments.

So what happens to the remaining $77,000?

You are including room & board - my proposal has nothing to do with that. That’s a separate issue entirely, colleges have turned into luxury all-inclusive resorts as well.

My idea is focused on tuition, and the incentives that are completely misaligned right now between universities, their bloated admin budgets, and tuition, as well as poorly prepared students.

Originally posted by smlsig:

quote:

So what happens to the remaining $77,000?

https://www.youtube.com/watch?v=BAjxn2US7J8