When mortgage lenders gave out loans they knew people couldn't afford, it was called, "predatory." When the federal government does it with student loans, it needs to be subsidized. Go figure.
So the boomers got to default on THEIR loans, but millennials and zoomers? No we're screwed. A robbery so great it transcended time across generations.
Of course it needed to be subsidized... Of course the banks were subsidized too (they were too big to fail) But your house might have been foreclosed....
It makes me think of a situation I saw many years ago when I was in college. A friend in college found out that his parents planned to pay off the student loan debt of his older brother, who was about to graduate. As soon as this friend found that out, he began to borrow every single penny he could for the rest of the time he was in school, assuming that his parents would pay off his loans as well. He spent thousands of dollars on a car stereo system and other non-educational things. But, unlike the government, his parents were kind of paying attention to where the money was going and when he got close to graduating, they said that they were only going to partially help him because of how he had spent the money. If the government forgives student debt at all, it will likely trigger a lot more borrowing since everyone will assume that this means that there will be still more forgiveness in the future.
No that's a non-sequitar. It doesn't follow cancellation of student debts, will lead to more borrowing that will be forgiven by the government. No, students can begin a career/life free of debt, borrow for a tangible asset like a home, earn money in thier career and pay tax, which can be used to fund higher education. Higher education should be an investment in society. I mean cut the US defence budget in half, should pay for more things that benefit society.
The insane fact that most university/colleges have endowment funds that generate enough returns that every student could attend for free, and still make money on top of that.
That’s not true at all. Even a billion dollar endowment will only on average create 50 million dollars in annual revenue. If 10,000 students are paying net 10K each to the university, they pay 100 million. State universities especially do not have enough endowments to be self-funded.
@@tonydaysog9164 Those numbers are correct (you can open a wiki page for Stanford_University), but misleading. That 15,750 includes all staff including about 1600 working at SLAC, over 1100 maintenance staff, over 1700 administrative and technical staff, and the remainder a group of managerial and professional staff. This last group undoubtedly includes what most people think of as administrators, but it also includes clinical faculty, research faculty, and so forth. If Stanford is like a lot of universities this group probably includes postdocs
@@tonydaysog9164 That 15,750 includes all staff including about 1600 working at SLAC, over 1100 maintenance staff, over 1700 administrative and technical staff, and the remainder a group of managerial and professional staff. This last group undoubtedly includes what most people think of as administrators, but it also includes clinical faculty, research faculty, and so forth. If Stanford is like a lot of universities this group probably includes postdocs
Also put a cap on how much a student can borrow, say $50 000 total. I've heard ridiculous stories about people with hundreds of thousands of dollars of student debt. How on Earth were they allowed to run up that much debt in the first place?
Any degree program that has Engineering or Management in the title. Hell the Architectural Engineering Degree I was working towards was gonna set me back 120k for a 5 year degree. I can agree that there needs to be a cap, but placing it on the amount that a student can borrow isn't going to change the cost. Only require that students and parents pay out to make up the difference or leave you 50k in debt with no degree. A cap would be much better served as a direct limit on how much a degree can cost. Which is something the Federal Government could do with Publicly funded colleges. Setting a cap on the cost of a degree would also force colleges to be smarter with their program offerings and do away with some of the more archaic systems that have be come bloated money pits. I would also suggest basing the capped price on the entry level job position's pay in the current economy. Given the average currently is 25 to 30 dollars an hour, it would seem reasonable that a degree should cost 50 to 60k. And could reasonably be expected to be repaid in full in between 5 to 10 years.
Maybe loan them enough to get through a semester and see how that goes. I used to work for a company that would pay tuition for night classes they wanted, but only if you got As and Bs. Seemed fair.
I teach at a large Canadian university. Half of all our classes are taught by sessional lecturers. In my faculty many of these instructors are paid less than $100 per student they teach. Despite this, students and the Canadian government pay more than $1000 per student to take these classes. Sessionals are exploited and students and the tax payer are ripped off.
Yeah, the aim should be to provide the right incentive structure. Having loan defaults trickle down to the institution is a pretty sensible way of doing it, easier than having all student loans replaced with corporate scholarships.
More videos like this please... Giving us the topic, cover it and then actually provide an answer on how to resolve the issue with what I think some might mistake for comedy at the beginning and possibly near the end there. Thanks!
@Karl with a K I disagree. The solution is simply to not subsidize student loans or their debt... But that's impossible to sell to people who really want welfare. So what's the point in telling people the simple and correct solution when the masses will in fact reject it? The reason you have so much joblessness for those who went to college is because Government funded useless or near useless college degrees. This flooded the market because Government's involvement was a distortion that would have corrected itself long ago before it turned into a much bigger problem.
There are *a lot* of possible ideas between the current system & "total forgiveness & free college for everyone" and most of them are much better than we currently have. I like the idea of a "delayed income share" scheme: no money upfront, but once you graduate the clock starts ticking, at 5 years post-graduation you start paying 10% of your income to your university & you do so for 10 years, after which you are done. This gives young people 5 years in which they have a degree but no student debt to experiment, start businesses, & choose jobs they actually like, and it directly incentivizes universities to both teach usable skills & help alumni get decent jobs.
I don't know why so many folks are on the "make student loans bankruptable" bandwagon. That process was abused, which is why it was abandoned. Students got valuable degrees, got good paying jobs (or were well on their way), and filed bankruptcy, because that was FAR better than 30 years worth of loan payments. You can't repossess a college degree. This would be like filing bankruptcy because you can't pay your mortgage, but you get to keep the house. Home buyers would file bankruptcy before the ink was dry on the closing paperwork.
I find it odd that no one address the fact that Congress sets the interest rates on these loans. We just focus on that it is the college and banks fault
I dont think this video captures how absurdly expensive college has become. In the 1970s, going to UMich out of state GRADUATE school was only 5000 a year in todays dollars. Today, UNDERGRAD is 27,000 a year.
Pretty much all the new increases in tuition have gone to admin, with professor salary increases barely outpacing inflation. Whereas admin:student ratio has gone up 20000% and admin pay has gone 10x.
That would be true, if the government had not perpetuated the lie that everyone needs to go to college and made student loans laughably easy to get. The government (as representative of the taxpayer) created this mess and now it can solve it.
@karlwithak1835 I have a degree, so I guess I do understand how this works. They’re “unemployed” in their industry because many degrees are not worth the price tag. Political science, journalism, gender studies…? There’s not a massive need for these professions, and even less of a need for people to spend 4 years in college for it
Greed IS the reason tuition goes up. They charge whatever the market can afford. The more the gov't makes money available, the more they'll try to get. And if you did put the college 'on the hook' for half, they'd simply adjust prices upward to account for their potential losses, knowing that the gov't will be sponsoring their 'half'. Simply doubling the prices and they'd be covered. If you want to drop the prices, stop the guaranteed loans, first. Then remove ANY employment requirement to have a 'degree'. Make the applicant pass a test (or several) to get the job/certificate, etc. Then the college would have to teach MORE than you could learn on your own. Or people wouldn't waste their time and money.
I live in a town with the university and I see the sickening waste. Get rid of the tenure and all the useless administration. It would also help if selfish children could be told no when it comes to their frivolous degrees. Good luck with that art history degree.
Government: Let's solve student debt by encouraging future students to borrow MORE and allow universities to charge MORE! Let's ignore "public" schools with zillion dollar endowments, generous active donor bases and state support that are charging residents $600 a credit to sit in a 400 person class.
AND all the left leaning university departments and professors are fine with having more and more of the work being done by low paid adjuncts. Where is the money going!!
Why is there a student loan “crisis”? 1) Government sought to make college “affordable”. As a result, tuition rose faster than inflation. 2) Students, and often their parents, don’t understand how any loans, especially student loans, work ... which colleges, banks, and credit card companies appreciate. 3) Many college students shouldn’t even be in college. 4) Many degrees either don’t increase a graduate’s income potential or prepare a grad for a career with few opportunities. 5) Colleges spend too much money on things or employees that have nothing to do with education. As usual, government created a crisis and now wants to solve a problem they created.
I have not always been a fan of the solutions to the problems put forward by this channel, but this one of if not the most thought provoking suggestions for a solution on this channel. While I think the idea that the economic benefit ascribed to a degree program doesnt necessarily indicate how useful it will be, it is definitely better than the incentives universities have to act like a hotel and keep upcharging for ever increasing amenities.
Here's an idea... We should just raise the k-12 academic standards by focusing on the actual mandate rather than the random BS teachers and administrators are pushing. We already HAVE "free education" - but don't take advantage of it.
They really should. They're just diploma mills nowadays. I mean they haven't contributed a single thing to progress since the 50's when that one guy transplanted the first heart.
Sadly, Andrew is making a very astute observation. Universities have dramatically raised tuition while at the same time the ratio of professors to administrators precipitously declined. There are now deans of diversity, equity and inclusion, etc. The university overhead to manage student financial aid is enormous.
@@petelee2477 In what job are you not trained? How long do you want training to be? A company shouldn't have to spend more than a month training a new employee.
A major problem with colleges is the absolute lack of accountability. They offer courses where they convince students that the major has economic value when they actually don’t. They force students to take classes that have absolutely no purpose in your major (economics class for a nursing degree). Colleges also select C grade students to attend classes with the belief that the student will drop out of college within a few months. Until we address these issues there will be no real reform. I also think the colleges should the the funders of the loan. They lend the student the money and receive payments from the student when it comes due. If the student can’t pay the loan back, the college doesn’t get their money. This is the best way to make the colleges accountable
The reason that student loans are NOT discharged with bankruptcy -- in the 90s really smart poor kids would go $100,000 in debt for a medical degree or law degree then declare bankruptcy and keep all of their future earnings. I am an Economist and paid Sallie Mae $66,000 at 8.125% so very salty about this topic!
This is pretty good, but you are leaving out one important step: end ALL government backed student loans. Lots of colleges would close, it would cut down on a lot of "fluff" degrees, but in the end, schools and state governments would come up with new, innovate ways for qualified students to go to college and the cost of college would plummet.
I worked in food service and hospitality for twenty years. Many of the of the people I hired had associates or even bachelor degrees unable to find work in their various fields but 60 or 70 thousand dollars in student loans with no hope or desire of repaying them
All of this and yet every single person with student loan debt was not forced to spend so much money on a useless degree. I had no say in your bad decisions. I have 3 degrees. 2 technical and 1 bachelor. No I didn't come from a rich family. I had to work my ass off and pay back what I borrowed. I made good choices. I only borrowed what I needed and doubled up classes during the summer which is about half the price as a normal semester and got done quicker and started to work.
Good ideas here, but here is a simpler plan: The Federal Govt has no constitutional authority to make or do anything with student loans. Get them out of student loans, and the problem will correct itself.
gaaaaaah. Every other nation takes a financial interest in their youth. The US is responding to China and Finland and Viet Nam. To withdraw, is a non-starter.
I went through a 4-year carpentry apprenticeship and spent my years as a journeyman carpenter. My son is a soldier in the US army to obtain the GI Bill. What a slap in the face to all of us sensible citizens to pay for someone partying for 4 years and taking on a useless b******* degree.
When I was in high school and in the military I was told by my teachers and by my superiors that without a college degree I would be dead in the water and get low paying jobs followed by a life of misery. Well 30 years later I have been a complete success in life without a worthless degree!! My teachers and military superiors failed to mention that any student loan was to start being paid upon graduation. Even worse they both failed to mention that without experience your degree would not help you get a job!! I did attend a junior college though. I became a truck driver and the course that I took only took two months to complete and I was taught how to drive; how to load; and how to maintain my vehicle. That $2,575.00 was the best investment of my life!! I am so glad that I did not listen to my teachers or my military superiors and that I as an intelligent "humanoid" chose my own path and destiny in life!! Even as a veteran because I was not a minority I was not eligible for state or federal assistance!! I pulled myself up by the bootstraps and made myself better!! I owe no debt to anyone!! My last point as a United States tax payee is this; why should I flip the bill for some 21 year old's poor decision making and falling into a trap that they got themselves into? NO SYMPATHY GIVEN HERE!! YOU TOOK OUT THE LOAN AND MADE THAT INVESTMENT SO BE A GROWN-UP AND PAY IT BACK!!!!!!!! THIS APPLIES TO WOMEN OR A MINORITIES!! STOP BLAMING EVERYONE ELSE AND GET OUT THERE AND DO SOMETHING ABOUT IT!!!!!
Andrew Heaton remains the shining gem in Reason's extensively bejeweled crown. Snuffy's isn't paying him enough for the ammoun of positive press he brings them. EAT AT SNUFFY'S!
Who could have ever thought that expanding credit to purchase goods or services could have ever resulted in price increases? Man oh man, this economics thing sure is tricky.
"So what are the reasons other than greed?" -- "Every time funding goes up schools find a way to capture more of that money". I dunno that sounds like an extension of greed still. Definitely in the same family as greed, maybe a bit less overt.
Went to my brother in laws dorm and was shocked at how opulent a lifestyle he had there. It was a life of luxury and they are definitely paying for it.
I believe a "no-nonsense " school would attract both customers and professors. No gender studies or activist programs. Just rigorous education at a lower cost.
I would say that one thing absolutely criminal with the operation of the loan companies has been that they have been able to borrow money from the fed at virtually 0% while kids are having to borrow at 7+%. That same kid could probably go finance a corvette for less! Since these colleges and universities have provided a substandard product (it didn't perform as advertised for money it costs) they should also be subject to a class action lawsuit for the government to recover these funds.
End the student loan program, then we can can talk about forgiving the debt that is out there. It's dishonest to solve a problem while the problem still exists.
Sad part is, NEITHER of the two parties are willing to consider these options. One of them doesn’t even want to talk about it period but would rather try to make it WORSE for students.
The whole idea was to "fix a problem" where lenders would make decisions based on the likelihood of the borrower paying back the loan. That is, to convince lenders to issue loans regardless of financial history, academic history, choice of school, choice of major, or any other indicator of probable success of failure. The people who did it knew exactly what they were doing, but put on blinders and did it anyway. And here we are.
If you let people include student loans on bankruptcy people who are otherwise credit worthy will declare bankruptcy just to get out of the loans. Your "solution" just incentivizes other unwanted behavior.
Why are colleges so expensive ? Have you been to any Universities lately it's not even college classrooms anymore they are entire cities! They keep building and expanding real estate on the students dime. It does not cost $40,000 to obtain a BA degree it does however cost that much to keep funding the upgrade to universities real estate projects. When I have kids they are going to community college paying out of pocket or a trade school, the rest of the needed certificates or training they can learn online or in the workplace.
Short story: government has a huge 'unlimited' bucket of money and the universities are trying to get as much of it as they can. Which someone will have to pay back.
Another thing I've seen that seems promising is that instead of paying back the principal+interest, the student borrower agrees to pay a fixed percentage of their income to the issuer for a fixed number of years after graduating. This percentage would be based on the degree the person actually gets, so the issuer can offer lower rates to people going for high value degrees that are safer bets for repayment, but if someone does go to college and end up in a low paying job anyway they aren't saddled with a debt that's impossible to pay back, since their actual repayment amount is just a percentage of their smaller income. This effectively also caps the amount any issuer would be willing to loan, since a person will only agree to so much of their income going to the loan and there's only so much average income the issuer can expect their borrowers to make.
But what about dropouts? What about useless degrees? Your idea sounds reasonable but I think money should be lend only to useful degrees in STEM and economics.
@@sergioesamayoa True. 40% of college debtors dropped out. We need employers to stop demanding degrees for most work, no matter how mundane the task. Of course we can't force them to do that however.
@@sergioesamayoa How dropouts are handled would probably depend on the lender, but in theory a dropout hasn't taken out as much money since they didn't pay for some years of tuition so they have a smaller percentage of income owed to the lender. The percent of income owed would be based on the degree sought, so degrees that tend to pay more would require a smaller percentage of income since they are less risky to the lender.
When mortgage lenders gave out loans they knew people couldn't afford, it was called, "predatory." When the federal government does it with student loans, it needs to be subsidized. Go figure.
Bingo
So the boomers got to default on THEIR loans, but millennials and zoomers?
No we're screwed.
A robbery so great it transcended time across generations.
I’m down for it being subsidized-just parts of it. You know… degrees in engineering, etc. But for woman’s studies? Nah.
Of course it needed to be subsidized... Of course the banks were subsidized too (they were too big to fail) But your house might have been foreclosed....
@@MH-eu1dr not even for e degree in engineering.
Andrew Heaton is a national treasure.
Apparently, he needs a little more bourbon
he has a great last name 🤣
there's the praise, juan has the bourbon...who's got the chocolate? oh wait he said that didnt work =(
I came to the comments to post exactly this. But then it had already been posted by someone else.
Damn you, Heaton! Foiled again!
For the love of god. Someone buy this man a friend. Or create him a robot.
This is the best Andrew Heaton video I've seen all hour.
I've missed Heaton. First time I've seen him in a while
Yes more Heaton is always a win
It makes me think of a situation I saw many years ago when I was in college. A friend in college found out that his parents planned to pay off the student loan debt of his older brother, who was about to graduate. As soon as this friend found that out, he began to borrow every single penny he could for the rest of the time he was in school, assuming that his parents would pay off his loans as well. He spent thousands of dollars on a car stereo system and other non-educational things. But, unlike the government, his parents were kind of paying attention to where the money was going and when he got close to graduating, they said that they were only going to partially help him because of how he had spent the money. If the government forgives student debt at all, it will likely trigger a lot more borrowing since everyone will assume that this means that there will be still more forgiveness in the future.
Exactly. You smart.
No that's a non-sequitar.
It doesn't follow cancellation of student debts, will lead to more borrowing that will be forgiven by the government.
No, students can begin a career/life free of debt, borrow for a tangible asset like a home, earn money in thier career and pay tax, which can be used to fund higher education.
Higher education should be an investment in society. I mean cut the US defence budget in half, should pay for more things that benefit society.
@@royboy4571 Dumb
@@ВеликийХвостатый Really, what's dumb ?
Enlighten me with your take, Einstein.
@@royboy4571
"We cannot solve our problems with the same thinking we used when we created them."
- Albert Einstein
Honestly an extreme couponing degree would pay for itself pretty quickly
You don't think Germanic Slapping is profitable?
@@michaelsmith6818 depends on which end of the slap you're on
Zombie film critic might be useful to make the walking dead or the last of us suck abit less.
Pretty sure its offered as a minor in CA state colleges.
I need a degree in applied napping
The insane fact that most university/colleges have endowment funds that generate enough returns that every student could attend for free, and still make money on top of that.
Havard U's endowment is 53 Billion $$$.
That’s not true at all.
Even a billion dollar endowment will only on average create 50 million dollars in annual revenue. If 10,000 students are paying net 10K each to the university, they pay 100 million.
State universities especially do not have enough endowments to be self-funded.
Free to someone means that someone else is paying for it as well as the student having no skin in the game will not work as hard for the degree.
Stanford University: 15,750 administrators, 2,288 faculty members, and 16,937 students
That's more staff than students!
Wow ... is this true? Link footnote?
@@tonydaysog9164 Those numbers are correct (you can open a wiki page for Stanford_University), but misleading. That 15,750 includes all staff including about 1600 working at SLAC, over 1100 maintenance staff, over 1700 administrative and technical staff, and the remainder a group of managerial and professional staff. This last group undoubtedly includes what most people think of as administrators, but it also includes clinical faculty, research faculty, and so forth. If Stanford is like a lot of universities this group probably includes postdocs
@@tonydaysog9164 That 15,750 includes all staff including about 1600 working at SLAC, over 1100 maintenance staff, over 1700 administrative and technical staff, and the remainder a group of managerial and professional staff. This last group undoubtedly includes what most people think of as administrators, but it also includes clinical faculty, research faculty, and so forth. If Stanford is like a lot of universities this group probably includes postdocs
This should be required viewing for all high school students
Also put a cap on how much a student can borrow, say $50 000 total. I've heard ridiculous stories about people with hundreds of thousands of dollars of student debt. How on Earth were they allowed to run up that much debt in the first place?
Medical school. But no I see where you are coming from. It’s crazy how much someone getting a theater arts degree is allowed to borrow.
Any degree program that has Engineering or Management in the title. Hell the Architectural Engineering Degree I was working towards was gonna set me back 120k for a 5 year degree. I can agree that there needs to be a cap, but placing it on the amount that a student can borrow isn't going to change the cost. Only require that students and parents pay out to make up the difference or leave you 50k in debt with no degree. A cap would be much better served as a direct limit on how much a degree can cost. Which is something the Federal Government could do with Publicly funded colleges. Setting a cap on the cost of a degree would also force colleges to be smarter with their program offerings and do away with some of the more archaic systems that have be come bloated money pits. I would also suggest basing the capped price on the entry level job position's pay in the current economy. Given the average currently is 25 to 30 dollars an hour, it would seem reasonable that a degree should cost 50 to 60k. And could reasonably be expected to be repaid in full in between 5 to 10 years.
Interest x time in default
Maybe loan them enough to get through a semester and see how that goes. I used to work for a company that would pay tuition for night classes they wanted, but only if you got As and Bs. Seemed fair.
Exactly put the schools on the hook!
Bring back Heaton!
You nailed it! Thank you! The more you give, the more they take and the more they feel entitled to MORE.
When the government gets involved in paying for things it always drives the price up. Exact same problem with healthcare costs.
I could use this kind of video more often. Perhaps even mostly weekly.
I teach at a large Canadian university. Half of all our classes are taught by sessional lecturers. In my faculty many of these instructors are paid less than $100 per student they teach. Despite this, students and the Canadian government pay more than $1000 per student to take these classes.
Sessionals are exploited and students and the tax payer are ripped off.
I love that Andrew Heaton is Andrew Heaton.
I went to college (which I paid for myself) and then spent 30 years working in my college dropout husband's business.
If government could refrain from solving problems for a few years, we wouldn't have any problems left to solve.
Dam Andrew Heaton for speaking so much truth and making so much sense! He’s never going anywhere if he keeps this up
Novel idea. Don’t borrow money you can’t pay back. You’re welcome
I'm a professor in procrastination! Here are the top ten reasons to keep my university tenure: 1.
Andrew Heaton is looking more and more like Dr Strange these days.
In more ways than one.
If only companies actually trained their staff. Then college would be completely unnecessary.
Man we should get these videos every week, or if that’s too hard, mostly weekly.
we got an OG fan here lolz
Yeah, the aim should be to provide the right incentive structure. Having loan defaults trickle down to the institution is a pretty sensible way of doing it, easier than having all student loans replaced with corporate scholarships.
Very solid, thank you
I went to a community college and HBCU to get an engineering degree. I worked 30+ hours every weekend for 6 years to pay for it.
More videos like this please... Giving us the topic, cover it and then actually provide an answer on how to resolve the issue with what I think some might mistake for comedy at the beginning and possibly near the end there.
Thanks!
Andrew makes statistics fun.
Of course the simple, libertarian answer is to get government out of education, but he provided a more temperate answer here.
@Karl with a K I disagree. The solution is simply to not subsidize student loans or their debt... But that's impossible to sell to people who really want welfare.
So what's the point in telling people the simple and correct solution when the masses will in fact reject it?
The reason you have so much joblessness for those who went to college is because Government funded useless or near useless college degrees. This flooded the market because Government's involvement was a distortion that would have corrected itself long ago before it turned into a much bigger problem.
There are *a lot* of possible ideas between the current system & "total forgiveness & free college for everyone" and most of them are much better than we currently have. I like the idea of a "delayed income share" scheme: no money upfront, but once you graduate the clock starts ticking, at 5 years post-graduation you start paying 10% of your income to your university & you do so for 10 years, after which you are done. This gives young people 5 years in which they have a degree but no student debt to experiment, start businesses, & choose jobs they actually like, and it directly incentivizes universities to both teach usable skills & help alumni get decent jobs.
I don't know why so many folks are on the "make student loans bankruptable" bandwagon. That process was abused, which is why it was abandoned. Students got valuable degrees, got good paying jobs (or were well on their way), and filed bankruptcy, because that was FAR better than 30 years worth of loan payments. You can't repossess a college degree. This would be like filing bankruptcy because you can't pay your mortgage, but you get to keep the house. Home buyers would file bankruptcy before the ink was dry on the closing paperwork.
I find it odd that no one address the fact that Congress sets the interest rates on these loans. We just focus on that it is the college and banks fault
I dont think this video captures how absurdly expensive college has become. In the 1970s, going to UMich out of state GRADUATE school was only 5000 a year in todays dollars. Today, UNDERGRAD is 27,000 a year.
Pretty much all the new increases in tuition have gone to admin, with professor salary increases barely outpacing inflation. Whereas admin:student ratio has gone up 20000% and admin pay has gone 10x.
You forgot rock climbing walls in the student centers... lol
If your degree isn’t worth enough to pay for itself, I don’t see why I should pay for it either.
That would be true, if the government had not perpetuated the lie that everyone needs to go to college and made student loans laughably easy to get. The government (as representative of the taxpayer) created this mess and now it can solve it.
not the clearest phrasing, but I got there, so... eh
@@KalonOrdona2 trying to balance shortness and clarity, but I see what you mean. I edited it a bit
@@williamfoster2681 gotcha, nice. cheers, mate!
@karlwithak1835 I have a degree, so I guess I do understand how this works. They’re “unemployed” in their industry because many degrees are not worth the price tag. Political science, journalism, gender studies…? There’s not a massive need for these professions, and even less of a need for people to spend 4 years in college for it
I agree with your plan broadly. I do think that requiring schools to foot some of the bill is a good idea.
"...and compel public universities to reconsider how many degrees they pass out with the word 'studies' at the end..."
I see what you did there :) :D
Greed IS the reason tuition goes up. They charge whatever the market can afford. The more the gov't makes money available, the more they'll try to get.
And if you did put the college 'on the hook' for half, they'd simply adjust prices upward to account for their potential losses, knowing that the gov't will be sponsoring their 'half'. Simply doubling the prices and they'd be covered.
If you want to drop the prices, stop the guaranteed loans, first. Then remove ANY employment requirement to have a 'degree'. Make the applicant pass a test (or several) to get the job/certificate, etc. Then the college would have to teach MORE than you could learn on your own. Or people wouldn't waste their time and money.
Simple: Forgive all student loans then end all government funding of universities
I live in a town with the university and I see the sickening waste. Get rid of the tenure and all the useless administration. It would also help if selfish children could be told no when it comes to their frivolous degrees. Good luck with that art history degree.
eliminate student loans altogether and tuition will drop like a rock in water
And... make tuition a tax deductible expense!
Government: Let's solve student debt by encouraging future students to borrow MORE and allow universities to charge MORE!
Let's ignore "public" schools with zillion dollar endowments, generous active donor bases and state support that are charging residents $600 a credit to sit in a 400 person class.
AND all the left leaning university departments and professors are fine with having more and more of the work being done by low paid adjuncts.
Where is the money going!!
the problem is that morr expensive school have more prestige
This seemed like a perfectly reasonable solution at the time, it likely was not executed well or thought through thoroughly
If I was president Andrew Heaton would be my press secretary. Every other decision I would make would be terrible
Why is there a student loan “crisis”? 1) Government sought to make college “affordable”. As a result, tuition rose faster than inflation. 2) Students, and often their parents, don’t understand how any loans, especially student loans, work ... which colleges, banks, and credit card companies appreciate. 3) Many college students shouldn’t even be in college. 4) Many degrees either don’t increase a graduate’s income potential or prepare a grad for a career with few opportunities. 5) Colleges spend too much money on things or employees that have nothing to do with education.
As usual, government created a crisis and now wants to solve a problem they created.
Love me some Heaton.
I have not always been a fan of the solutions to the problems put forward by this channel, but this one of if not the most thought provoking suggestions for a solution on this channel. While I think the idea that the economic benefit ascribed to a degree program doesnt necessarily indicate how useful it will be, it is definitely better than the incentives universities have to act like a hotel and keep upcharging for ever increasing amenities.
Here's an idea... We should just raise the k-12 academic standards by focusing on the actual mandate rather than the random BS teachers and administrators are pushing.
We already HAVE "free education" - but don't take advantage of it.
Universities need to give back the loan money they stole. No bailouts!
They really should. They're just diploma mills nowadays. I mean they haven't contributed a single thing to progress since the 50's when that one guy transplanted the first heart.
Reason is a voice of sanity crying out in the wilderness, but nobody wants to listen.
LOL best line: "new and exotic breeds of administrators"
Sadly, Andrew is making a very astute observation. Universities have dramatically raised tuition while at the same time the ratio of professors to administrators precipitously declined. There are now deans of diversity, equity and inclusion, etc. The university overhead to manage student financial aid is enormous.
Love this guy. Spot on
Give this man his own show again!
Instead of making college free, lets just improve the very flawed 12 years of education that is already free.
The real problem is companies refusing to train their workers.
@@petelee2477 In what job are you not trained? How long do you want training to be? A company shouldn't have to spend more than a month training a new employee.
Fun fact: during the Middle Ages Narwal horns was the most profitable export from Greenland. They were marketed as Unicorn horns to gullible monarchs.
A major problem with colleges is the absolute lack of accountability. They offer courses where they convince students that the major has economic value when they actually don’t. They force students to take classes that have absolutely no purpose in your major (economics class for a nursing degree). Colleges also select C grade students to attend classes with the belief that the student will drop out of college within a few months. Until we address these issues there will be no real reform.
I also think the colleges should the the funders of the loan. They lend the student the money and receive payments from the student when it comes due. If the student can’t pay the loan back, the college doesn’t get their money. This is the best way to make the colleges accountable
The reason that student loans are NOT discharged with bankruptcy -- in the 90s really smart poor kids would go $100,000 in debt for a medical degree or law degree then declare bankruptcy and keep all of their future earnings. I am an Economist and paid Sallie Mae $66,000 at 8.125% so very salty about this topic!
This is pretty good, but you are leaving out one important step: end ALL government backed student loans. Lots of colleges would close, it would cut down on a lot of "fluff" degrees, but in the end, schools and state governments would come up with new, innovate ways for qualified students to go to college and the cost of college would plummet.
I worked in food service and hospitality for twenty years. Many of the of the people I hired had associates or even bachelor degrees unable to find work in their various fields but 60 or 70 thousand dollars in student loans with no hope or desire of repaying them
All of this and yet every single person with student loan debt was not forced to spend so much money on a useless degree. I had no say in your bad decisions. I have 3 degrees. 2 technical and 1 bachelor. No I didn't come from a rich family. I had to work my ass off and pay back what I borrowed. I made good choices. I only borrowed what I needed and doubled up classes during the summer which is about half the price as a normal semester and got done quicker and started to work.
Good ideas here, but here is a simpler plan: The Federal Govt has no constitutional authority to make or do anything with student loans. Get them out of student loans, and the problem will correct itself.
gaaaaaah. Every other nation takes a financial interest in their youth. The US is responding to China and Finland and Viet Nam. To withdraw, is a non-starter.
If companies actually bothered to train their workers we wouldn't even need college.
@@Redmenace96 We aren't every other nation.
We have been creative and prosperous by not being every other nation.
Fire all DEI administrators.
I went through a 4-year carpentry apprenticeship and spent my years as a journeyman carpenter. My son is a soldier in the US army to obtain the GI Bill. What a slap in the face to all of us sensible citizens to pay for someone partying for 4 years and taking on a useless b******* degree.
It would be a breath of fresh air if reason talked about family court…
When I was in high school and in the military I was told by my teachers and by my superiors that without a college degree I would be dead in the water and get low paying jobs followed by a life of misery. Well 30 years later I have been a complete success in life without a worthless degree!! My teachers and military superiors failed to mention that any student loan was to start being paid upon graduation. Even worse they both failed to mention that without experience your degree would not help you get a job!! I did attend a junior college though. I became a truck driver and the course that I took only took two months to complete and I was taught how to drive; how to load; and how to maintain my vehicle. That $2,575.00 was the best investment of my life!!
I am so glad that I did not listen to my teachers or my military superiors and that I as an intelligent "humanoid" chose my own path and destiny in life!! Even as a veteran because I was not a minority I was not eligible for state or federal assistance!! I pulled myself up by the bootstraps and made myself better!! I owe no debt to anyone!!
My last point as a United States tax payee is this; why should I flip the bill for some 21 year old's poor decision making and falling into a trap that they got themselves into?
NO SYMPATHY GIVEN HERE!! YOU TOOK OUT THE LOAN AND MADE THAT INVESTMENT SO BE A GROWN-UP AND PAY IT BACK!!!!!!!!
THIS APPLIES TO WOMEN OR A MINORITIES!! STOP BLAMING EVERYONE ELSE AND GET OUT THERE AND DO SOMETHING ABOUT IT!!!!!
Andrew Heaton 2024!
Today I learned narwhals are drowning in student loan debt. Won’t anyone think of the narwhals?! NARWHALS SHOULD GET FREE COLLEGE!
Why doesn't anyone blame the colleges for the insane prices? Glad I dropped out after a year. I did alright.
We missed you Andrew heating and college and universities are a racket
y'all deserve so many more views and likes
Great video. One of the best explainers on the issue I've seen
More Heaton Fewer Lorenz!
“the government outlawed it after precipitating the problem it outlawed” is a common trend
Andrew Heaton remains the shining gem in Reason's extensively bejeweled crown. Snuffy's isn't paying him enough for the ammoun of positive press he brings them.
EAT AT SNUFFY'S!
Who could have ever thought that expanding credit to purchase goods or services could have ever resulted in price increases? Man oh man, this economics thing sure is tricky.
Happy to see Bragg here with my boy Andrew
Love this dude.
GD, the existential crisis and decline into nihilism was so, just so excellent. 10/10 realism.
"So what are the reasons other than greed?" -- "Every time funding goes up schools find a way to capture more of that money". I dunno that sounds like an extension of greed still. Definitely in the same family as greed, maybe a bit less overt.
Went to my brother in laws dorm and was shocked at how opulent a lifestyle he had there. It was a life of luxury and they are definitely paying for it.
Probably including some kind of math.. great line
I believe a "no-nonsense " school would attract both customers and professors. No gender studies or activist programs. Just rigorous education at a lower cost.
I would say that one thing absolutely criminal with the operation of the loan companies has been that they have been able to borrow money from the fed at virtually 0% while kids are having to borrow at 7+%. That same kid could probably go finance a corvette for less! Since these colleges and universities have provided a substandard product (it didn't perform as advertised for money it costs) they should also be subject to a class action lawsuit for the government to recover these funds.
I love when Heaton explain government mostly weekly.
End the student loan program, then we can can talk about forgiving the debt that is out there. It's dishonest to solve a problem while the problem still exists.
Nice.
I'm not sure how forgiving student debt would benefit wealthy households over poor households as wealthy people don't take out loans to go to college
Well done with the research! It's a damn racket, and we need to change it!!!
Sad part is, NEITHER of the two parties are willing to consider these options. One of them doesn’t even want to talk about it period but would rather try to make it WORSE for students.
The whole idea was to "fix a problem" where lenders would make decisions based on the likelihood of the borrower paying back the loan. That is, to convince lenders to issue loans regardless of financial history, academic history, choice of school, choice of major, or any other indicator of probable success of failure.
The people who did it knew exactly what they were doing, but put on blinders and did it anyway. And here we are.
If you let people include student loans on bankruptcy people who are otherwise credit worthy will declare bankruptcy just to get out of the loans. Your "solution" just incentivizes other unwanted behavior.
Why are colleges so expensive ? Have you been to any Universities lately it's not even college classrooms anymore they are entire cities! They keep building and expanding real estate on the students dime. It does not cost $40,000 to obtain a BA degree it does however cost that much to keep funding the upgrade to universities real estate projects. When I have kids they are going to community college paying out of pocket or a trade school, the rest of the needed certificates or training they can learn online or in the workplace.
I like this guy
Great presentation. Seems that universities need more skin in the game, with regards to the success of their graduates.
But how would that actually work?
If the banks evaluate student loans like they do for other loans there would be less student loans. Colleges would have to readjust tuition. 💡
Please... please run for office Andrew.
Short story: government has a huge 'unlimited' bucket of money and the universities are trying to get as much of it as they can. Which someone will have to pay back.
Another thing I've seen that seems promising is that instead of paying back the principal+interest, the student borrower agrees to pay a fixed percentage of their income to the issuer for a fixed number of years after graduating. This percentage would be based on the degree the person actually gets, so the issuer can offer lower rates to people going for high value degrees that are safer bets for repayment, but if someone does go to college and end up in a low paying job anyway they aren't saddled with a debt that's impossible to pay back, since their actual repayment amount is just a percentage of their smaller income. This effectively also caps the amount any issuer would be willing to loan, since a person will only agree to so much of their income going to the loan and there's only so much average income the issuer can expect their borrowers to make.
But what about dropouts?
What about useless degrees?
Your idea sounds reasonable but I think money should be lend only to useful degrees in STEM and economics.
@@sergioesamayoa True. 40% of college debtors dropped out. We need employers to stop demanding degrees for most work, no matter how mundane the task. Of course we can't force them to do that however.
@@sergioesamayoa How dropouts are handled would probably depend on the lender, but in theory a dropout hasn't taken out as much money since they didn't pay for some years of tuition so they have a smaller percentage of income owed to the lender. The percent of income owed would be based on the degree sought, so degrees that tend to pay more would require a smaller percentage of income since they are less risky to the lender.
@@Vaelosh466
Actually there are a lot of dropouts, near 40% and the money they owe is high because interest.
In a 2nd thought:
I will buy a $2,000,000 house and tell to the bank:
"I will pay based on my income, now I earn 0 so I will pay you 0"