Higher education student loans should come from/through the university the student wishes to attend. No longer should the U.S. tax payor be responsible for this. Once the institution becomes it’s own bank, the scrutiny of the student’s academic ability as well as the potential loan repayment of the degree chosen, would be analyzed to a much greater extent than currently happens. This hyper scrutiny would cause two things to happen immediately: 1) students would be protected from attempting to attend an institution that they are academically unsuited for which leaves them in worse shape by the very high probablilty of dropping out with no degree leaving them with a massive debt load and 2) could potentially cause the degree offerings to be culled, especially those that are not economically viable.
Whole heartedly agree with this. If they do keep the student loan program, it should cap out at the cost of community college to get a basic AA degree for 2 years…to make sure students can handle higher education and act as a proving ground for moving on to advanced degrees. Basic skills with an AA can be affordable and many people don’t need more than that for their jobs. After that, let the schools/universities use some of their endowment money to fund education loans…they need to put skin in the game. As you stated, this will help them focus on getting a return on their investment (ROI)… or if you get a private loan through a bank, that you have to show “collateral” just like any other loan…which will be based on your grades, degree sought, prospect for job and repaying the loan. This may also have the added effect of lowering costs of education because it would make higher education schools more accountable for what they are teaching and cause them to streamline their operations, like a business. It will also keep them in tune with the market place and what jobs are needed and keep them abreast of new technology and new business ideas and trends…instead of teaching outdated and antiquated ideas (except as a form of history or what was previously done).
This also goes along with financial literacy being taught in schools…and not just at high school…this should start in grade school with simple math lessons. This way when people are taking out money to invest in their future, they know what they are signing up for…and what it will really cost them.
In an effort to make it both feasible and fair, college loans could be handled by a federal program that makes responsible loans at a very low interest rate, removing the profit gouging private lenders. The rate would simply cover the cost to administer the program, nothing more. Current public and private loans demand unrealistic interest rates, the interest far outpacing the actual loan amount.
I know that involving a federal program has many negative impacts, after all it would be a federal program. Colleges, left to their own policies, however, can be worse than the federal government.
The US Military academies graduate students after four years with a useful and quality degree. Colleges left to their own devices extend timelines and requirements adding to overall costs, with no guarantee that the degree obtained will be of any value in many cases.
I’m sure there is a way, as well as a need, to reform college funding to make it equitable for all without the taxpayers having to foot the bill.
I have thought about this for some time and believe the proposal is very similar to what I was thinking. The proposal is almost the same. I would say that each university can set their own price (tuition), but students can only opt in to loans from this university (no third party). The current endowments would be enough at many universities to self support the program with no federal money and would be the seed money. Any repayments plus interest only add back to the endowment fund and is self supporting (plus wealthy donors and still provide if they wished to reduce the tuition costs).
Students would be required to repay the university based on a standardized loan boiler plate agreement we could establish. If the student fails to obtain or find work in the field of studies, then the university failed in the education of the student. If the salary of the job does not provide enough to support the principle plus any interest then that is on the university to either rework the loan or waive it at their discretion. The maximum monthly payment any student is required to pay is 10% of the job’s salary. If the loan requirements are above this (low salary) then the university’s tuition costs were too high to support the salary required to repay the loan. If a student drops out without finishing, that is on the student and repayment follows them at the discretion of the school.
All this prevents universities pushing higher tuitions and degrees which do not support the job or loan repayment. Taxpayers are no longer responsible and all the universities must stand behind their education of the student or they eat the tuition costs for failing the student.
Any incoming freshman would be given a forecast of salaries for various degrees and how many years it would take to repay the university for their education. For example, my daughter wanted to get a social services degree from a pricey university. Based on using 10% of her after tax income, it would have taken 40 years at zero percent interest to pay back the education cost. This was either a bad degree to get or the university was over charging. But then the student would understand and look for a different university or a different degree. (In her case, she found a lower cost university (65% lower - and a school better suited in that same degree).