Obama Takes On College Cartel

Discussion in 'General Distance Learning Discussions' started by Kizmet, Aug 23, 2013.

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  1. Kizmet

    Kizmet Moderator Staff Member

  2. AV8R

    AV8R Active Member

    I read about it yesterday on various news sites but didn't think it was worth commenting on because it's not a very good solution. Whatever Obama studied at Occidental, Columbia, and Harvard, it certainly wasn't economics. If he had, he might understand (maybe) that the more money the government throws at higher education, the higher the costs are going to be. The main culprit in the increasingly higher prices we are seeing is a direct result of the availability of so much "easy money" made available to students in the form of loans and grants, regardless of their ability to repay them after graduation. In a way, today's student loans are a type of subprime loan for kids who are aren't savvy enough to know any better.
     
  3. LearningAddict

    LearningAddict Well-Known Member

    I love how these high-ranking government puppets pretend to care, and then show an artificial ferocity towards problems and sectors they helped create and maintain. They've done the same thing against banks, terrorist groups, healthcare. New year, different target, same deception. Wash, rinse, repeat.

    I'm not fooled.
     
  4. FJD

    FJD Member

    I have to disagree with your point about "easy money" from the government driving up prices. If you look at borrowing limits for undergrads, the most a typical freshman student could borrow from the Stafford program is $5,500, and no more than $23,000 over the first four years, and a lifetime aggregate of $31,000.

    So, I'm having trouble understanding how this accounts for rapidly rising tuition costs. The feds will only let you have so much. $2750/semester does not really go that far. Now, the private student loan industry will step in and loan you more. That's where you hear those horror stories of the $200K BA. But that's not the government's doing.

    I don't purport to be an expert on the tuition market, and I'm interested to hear more about the relationship you're talking about.

    Undergraduate Loan Questions - How much can I borrow under a Stafford Loan
     
  5. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Independent students, and dependent students whose parents can't get PLUS loans, can borrow up to $45,000 in Direct Loans and Direct Subsidized Loans. In addition, poor students can borrow up to $5,500 a year in Federal Perkins Loans, to a maximum total of an additional $27,500. So that's as much as $72,500 for a Bachelor's degree without even getting to private loans.
     
  6. FJD

    FJD Member

    Not quite "easy money" given the circumstances required to qualify for those additional sources. I would guess most would not so qualify. For example, getting classified as an independent student is difficult for those under 24 (I know from experience as a self-supported undergrad.).
     
  7. FJD

    FJD Member

    I use the Stafford program example because it's the largest and most freely available government student loan source, the "easy money" people are really talking about when they're making their point.
     
  8. AV8R

    AV8R Active Member

    Apparently it's "easy enough." I have never read one single article about someone complaining about not qualifying for student loans. I do, however, read about students drowning in student loan debt almost on a daily basis.
     
  9. AUTiger00

    AUTiger00 New Member

    It's pretty easy to qualify for loans beyond the Stafford program. My father passed away when I was a teenager and left our family with a moderately large amount of money from his investments, his company and his insurance policy. My mother's salary wasn't very high so I qualified for all kinds of loans when I went off to college. I'm sure changes have been made since the late 90's/early 2000's, but I was able to borrow the entire amount of my education every year from the government (not a single private loan) because from what I recalled they seemed to only be interested in income (i.e. salary), not net worth. The money my father left me was invested and we were able to get a larger return from that investment than what the APR on the loans was so it made sense to borrow the money as opposed to paying out of pocket. We'd pay the interest assessed on the non-Stafford loans every year but didn't touch the principal until I was out of school. Same went for grad school, I didn't take any private loans, but I took every cent the Fed would loan me because it made more financial sense. The program definitely needs to be revised. There is absolutely no reason I should have been able to borrow the amounts I was allowed to.
    Also, I hope Obama backs off. Anything that dumb SOB "takes on" ends up costing citizens more than before he got involved.
     
  10. foobar

    foobar Member

    I can't speak for private universities but the main culprit in higher prices at public universities has been an enormous disinvestment in higher education by state legislatures.

    Forty years ago, it was not not unusual for a state to fund as much as seventy percent of a public university's budget with the remainder coming primarily from tuition. Today that number is often below twenty percent with strings attached and numerous unfunded mandates. Higher tuition of course, makes up the difference.

    State legislators are often guilty of drastically cutting the state allocation to their universities and simultaneously (and cynically) castigating universities for "failing to reign in costs" or for "grossly overpaying faculty" to draw attention away from their role in tuition increases. University administrators aren't really in a position to call out their legislators on this. Legislators are known to get even with those that expose their cynical little schemes.

    My university can demonstrate flat operating expenses over the past decade, even in the face of enrollment growth and inflation. Tuition, however has increased drastically with such increases closely tracking reductions in state funding.

    The role of "easy money" is to make demand for a college education relatively inelastic. Students are still able to attend in spite of significantly higher tuition because of the availability of loans.
     
  11. ryoder

    ryoder New Member

    I didn't qualify for subsidized student loans due to my parents' income. My skin color and gender also precluded me from receiving many scholarships.
    I was only able to borrow around 1700 per year in subsidized loans if I recall correctly.
     

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