Good Lord. There are two issues with college tuition:
The first problem is people are not shopping around for a college education. There are thousands of incredible colleges around the USA that will give you the same or better education as a pricey school on the coasts.
I did my easiest credits at Bulter County Community, then Wichita State University, before finishing up at Kansas State University. I only took on about $8k of debt for a degree in Information Systems (computer science with an emphasis in business classes) from their engineering school (which is one of 24 schools that has a nuclear reactor on campus). K-State itself was a hoot to go to, it's a great little school in a swanky town isolated by 2 hours of prairie grass.
The second problem is people are paying way too much for a nearly useless degrees that some colleges offer. You can get a degree in "music therapy" or "insurance administration", both of which a motivated individual could also get on-the-job training for.
Somewhere there should be a list of "Degrees you should not get if you're going to pay more than $x for" to help bright-eyed high school kids make good decisions.
It is remarkable that you cannot declare bankruptcy from student debt. We have essentially decoupled the price of college from the expected return.
>In Miami, a law firm working for Transworld brought a lawsuit last year against Antonio Fuentes, seeking payment on a $13,356 student loan. With interest and fees, Mr. Fuentes now owed $25,322.31, according to the complaint.
>“Many judges take the attitude: ‘I paid my student loans. You ought to pay yours. Don’t give me this nonsense about technicalities.’”
That judges are even allowed to do this is awful. Why should this person have to go through the arduous and expensive appeals process just to get justice administered correctly?
I'm rarely one to advocate for legislating solutions to problems but forcing schools be responsible for more of the communication with student/customer/debtor when it comes to loaning money, collecting payments and handling defaults would really cut down on the number of student loans that aren't paid back on schedule.
If the school is responsible for the overhead cost of that communication they will have a strong incentive to make their students capable of paying back their loans or accessing the various deferment/income based repayment options in order to avoid the cost of collections.
A work study student who hates their minimum wage job will be a lot more helpful to a debtor who received a payment due and is calling the 1-800 number on it because they are confused than some random person in a call center that's an Nth level subcontractor for some bank that owns the debt.
A work study student who hates their minimum wage job will be a infinity more helpful to a debtor who is in default and is calling the 1-800 number on it because they are confused than some random person in a call center who makes a commission based on how they handle the account in question.
If the school was responsible for the cost of communicating with the debtor a lot fewer loans would make it into default in the first place.
I suspect these guys are not the only debt collectors operating this way, but the whole thing is shameful. Talk about an industry crying out for more stringent regulation.
I think this is another situation where you can look at the models in the UK, Europe, other similar countries to find solutions.
If I grew up in the US and could have managed it, you can study in Germany as a foreigner for free. Other countries like Aus have a system where your loan is interest free and indexed with inflation, and you start paying it off after you make about $35k per year as a percent of income.
I just had an idea this morning for how to fund universities that I think could solve many of the issues associated with student loans. The idea is that instead of students paying tuition, they would sign contracts to pay a fraction of their income for several years after graduation, e.g. 1% of income for 15 years (perhaps with a cap). Enforcement could be difficult, but this would much better align incentives with the desired result, i.e. to educate! It would also incentivise universities to help alumni get and hold high paying jobs.
Starting such a university would require a lot of startup capital, but it would become self sustaining in less than a decade.
Imagine a world without ever inflating funny money, where people only buy what they need instead of junk.
Kind of interesting how the housing and student loan bubbles were both caused by initiatives to bring access to minorities. I wonder if that has predictive power.
Slavery is illegal.
Letting people enslave themselves however is not.
An indentured servant or indentured laborer is an employee (indenturee) within a system of unfree labor who is bound by a signed or forced contract (indenture) to work for a particular employer for a fixed time. The contract often lets the employer sell the labor of an indenturee to a third party. Indenturees usually enter into an indenture for a specific payment or other benefit, or to meet a legal obligation, such as debt bondage. On completion of the contract, indentured servants were given their freedom, and occasionally plots of land. In many countries, systems of indentured labor have now been outlawed.
When you are enslaved by the monetary system... well... You made that choice