very dramatic. the funny thing is that this guy thinks he's telling us something new. we've been riding that bus for years. https://www.forbes.com/sites/stephenmcbride1/2019/10/22/the-end-of-college-is-coming/#40e7f117410f
LOL But seriously, federal student loans started out as a good intention, but like many things in the government good intentions often lead to bad consequences. What do you guys think would happen if we instantly stopped student loans? Colleges would obviously need to drop prices to enroll any students, but what other consequences would there be?
Except that he isn't talking to Degreeinfo. He's talking to the readers of Forbes. People who attended traditional colleges, for whom the state of the current higher education system might come as disturbing news. Everybody is "just some guy" (or gal), aren't they? Even ostensible authority figures (like university professors). Especially when what they are saying is obviously opinion. Readers/students/voters always need to keep their wits about them and practice some critical thinking. Colleges wouldn't lower their prices. Many of them can't, since their anticipated revenue is already committed to faculty and staff pay and benefits. So lots of kids would suddenly drop out. Most of them probably wouldn't find jobs. (Many probably wouldn't look very hard.) Colleges would lose their goose that lays golden eggs. Their shrieking would be deafening. We can be pretty certain that their administrators and faculty wouldn't accept pay or benefit cuts, even in the face of widespread layoffs. Just look at other highly unionized industries. There might be labor actions. But if there was a university professor strike... would anybody in the real world even notice? If it lasted for an extended period of time, we might start seeing shortages of skilled workers in particular job categories. Many more colleges would be closing, which would be sad to see in my opinion.
The first thing that would happen would be a lot of small schools would close. There are many schools that, without the student loans and the federal financial aid, would have no operating budgets at all. I'm OK with this, on some level. Realistically, the aid is just serving as welfare. Those small colleges provide jobs, sometimes the only jobs, to people in often rural locales. If, say, Wells College shut down because they couldn't rely on tax dollars coming in to keep the lights on, the effects would be severe for that region. A major employer in a rural area would be gone, the constant flow of students would no longer bring outsiders with pockets full of cash to spend at the few local businesses there. It would be economically hard. Multiply that out times every tiny college in the middle of nowhere. The remaining schools would need to adjust accordingly. Some schools have such big endowments they might just be able to reorg and go tuition free and hope for more private philanthropy. If your kid got a free Harvard education, you might be feeling mighty generous. And if your kid goes off and becomes the next Bezos, s/he might be feeling VERY generous to his/her alma mater. The smaller but still well endowed schools would probably struggle. They would need to realign their programs. Schools that had nonsense MBAs of no consequence would probably scramble to find a niche that made sense. Using more local examples, Ithaca College has a very respectable music program. People come from far and wide to go there for it. They might end up shutting down some other programs and really doubling down on music and drama, for example. This would also probably set degree inflation back somewhat. In the long run it might be better for everyone. But it would suuuuuuuuuuck for a lot of communities until things recovered.
Private lenders--already a significant part of funding higher education--would step in. Some schools would offer their own loans--or broker them. Some schools would close and some students wouldn't enter or continue. But here's one: what if Pell Grants were cut off?
Hillsdale College and Grove City College, both in rural areas, both thrive without participating in Title IV. GCC worked with a bank to set up a loan pool fund, which apparently offers better interest rates and lower default rates than comparable institutions that participate in Title IV. What if they were? Why wouldn't it be the same thing, that students would get private funding and keep on going?
It's a bit off-topic but we have noted in the past that Hillsdale offers some interesting online courses https://online.hillsdale.edu/
Perhaps. But lots of students use Pell Grants in lower-cost situations and have to borrow little, or no, money. Also, because it's a grant, not a loan, and because it's based on financial need, a Pell Grant can help students get into schools they could not otherwise afford. More than half of students at for-profit schools use Pell Grants; it's about half that at not-for-profit and public schools. I have to think it would have a different effect, but I'm not sure what.
When you lower admission requirements the demographic you're targeting is likely low income and or first gen college students.
The whole point of a loan is that you can't afford that thing now but expect to be able to afford it in the future. Students should be able to repay loans whether they started out working class or middle class. Otherwise, then it's not student loans that are the real problem, it's that they studied something that didn't make sense, or their institution did a poor job of preparing them for what comes after.
