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There's no gamble, student loans are guaranteed by the government.

There is no gamble for the lender. For the borrower, they are the worst kind of gamble because they are the loan type that is the hardest possible to discharge in bankruptcy.

OK, so you don't care about efficient allocation of resources.

I don't get it. Why do you think it's not more efficient?

I question this pithy assumption, big-time. And even if it were true, it would still limit education on the basis of access to capital, so it doesn't solve the problem, it simply shifts it a little.

It shifts it to the potential students themselves where it has always belonged. They're quite capable of paying for their own education. And honestly, what other explanation is there for college costs going up much faster than regular inflation
for the last twenty years.

I did the calculation based on that table for the period 1958-1979 (took the 1958-2001 period and divided out by the 1979-2001 period). Tuition inflation (which you might not necessarily consider inflation) was about 6.6% increase per year for the period. "Normal" inflation was 4.6%. That's significantly higher tuition than normal inflation, but nothing compared to the 1979-2001 period which saw 7.37% increase per year for tuition, but only 3.96% normal inflation. The subsidized student loan program started kicking in after a 1965 law. So a portion of the 1958-1979 period is before the start of the federal student loan programs. And there were expansions of the loan programs apparently around 1986.

I've tried looking for better data, but I can say is that there has been a remarkable increase in tuition costs relative to regular inflation at a time when student loans were kicking in. That fits my model of subsidy-driven price increases in education.

Which just reinforces my point that public college education is necessary, and useful, both to individuals and to employers.

Unless it's not up to the task. The US spends considerable sums per student on K-12 education and gets poor results comparable to developed world countries that spend much less per student. I think it's because too many things have higher priority than what the students actually learn.

Now, what's going to keep the same dynamics from screwing up college level public education as well? For example, if in twenty years everyone is required to have a high school diploma and a college degree, yet most such graduates are only comparable in education ability to a high school student who graduated in 1960, how is that a good use of public funds or the time of the students?

This is why I don't buy into the public education thing. It's not working now. So how will extending it, that is, creating the same problem over for college level education, make it better?

This is a non-existent crisis?

There appears to be at least two inaccuracies in this article.

1) Defaulting on Federal Stafford loans do affect the school for a period of time. Schools who participate in Federal Student Aid (FSA) are beholding to a concept of the "Cohort Default Rate". The basic premise is this: The U.S. Department of Education (ED) monitors the number of loans that a school has in default relative to the total number of loans made to the school for a rolling three year period. If this ratio passes a certain point, ED begins applying an ever increasing set of penalties on the school. If the cohort default rate passes a certain point, the school loses its ability to issue FSA. Also, Federal Perkins Loans are subject to this as well, on top of the fact that schools partially fund Perkins loans with their own money.

More information can be gleaned here: http://ifap.ed.gov/DefaultManagement/CDRGuideMaster.html

2) There has been argument for at least the 13 years I worked as a contractor to ED that transcripts are school property. Mark Kantrowitz, noted FSA researcher and commentator, has posted an excellent article on his website describing the subject here: http://www.finaid.org/educators/withholdingtranscripts.phtml

If you read the Federal Education Rights and Privacy Act of 1974 (FERPA), there is one section of the regulations that may be useful as leverage in dealing with a case of withholding transcripts. Mark deals with this section in his article. If you are experiencing this issue, I highly suggest you read the article, as well as the reg itself and make your argument from there. I have semi-successfully made the argument on behalf of clients previously during my time as a contractor, so please note your mileage may vary. The larger schools may offer a compromise (which the reg allows) while the smaller schools may cave in due to how much it'll cost them to offer the compromise.

Good luck.

This means that after 20 years of you making income-based payments, they forgive the remaining debt. In order to qualify for income-based payments, you can be making no more than 150% of the poverty line. In that case, you payments are no more than 10% of your income.

The reality is, there are very, very few people who actually accrue student loans who can't pay them back over 20 years. Not only that, but are living around the poverty line for 20 years.

There are other paths to loan forgiveness in exchange for service. Details are here.

Just because you have a giant endowment doesn't necessarily mean you can write checks off of it. They're likely tied to stipulations regarding their use.

Yes, like paying for buildings or funding Departmental Chair, etc. All things that tuition would be paying for if the money wasn't endowed. If endowments are not used towards university education, what good are they?

It's becoming more expensive because costs have gone up, more people are attending (in general due to population increases, more people are "college age" than before but also enrollment goes up when the economy goes down).

1. College tuition inflation has been going up 2x to 4x the rate of inflation since the early 80s good or bad economy. http://www.finaid.org/savings/tuition-inflation.phtml. So don't blame "the economy".
2. Are you actually arguing that the AVERAGE tuition per student should go 2x to 4x over the rate of inflation because more people are entering college? Education, like all other information fields, benefits from economies of scale. What is actually happening is that universities are gouging students because of the rise of demand.

Second, the economic depression has been on for a while now and wiped out emergency funds and other savings they'd accrued. There was a lot of money lost in investments that are now worthless, largely thanks to the gambling by our financial industry, but not exclusively.

They were jacking up the cost of tuition well before their investments were wiped out, and would still jack them up even if they weren't. And there are 63! universities whose endowments are > 1 Billion dollars. http://mbd.scout.com/mb.aspx?s=192&f=2495&t=7127853.

Finally, just because information is easier to come by doesn't mean it's all valuable. The more information there is, the more work involved in organizing the useful bits from the shit.

Our economy is a web of interconnections. It's not at all as simple as you make it sound.

Are you kidding me? Really? Yea, the universities are spending tens of billions sifting through information to present just the interesting points to students? Have you actually been to a class the past 15 years? You are lucky to actually be taught by a professor rather than a TA who barely speaks English and is making less than minimum wage. And while I'm sure "womyn's studies" may have changed a great deal there hasn't been much change in Calculus, Physics, Chemistry, etc. I would bet a lot of money that the vast majority of professors barely change their curriculum from year to year.

You are being duped by an industry even greedier than any corporation. They prey on people's dreams, take all the money they possibly can, and don't care if you spent 150K on a degree that is worthless. Universities should be forced to back student loans--if a student defaults it is the university who is responsible. Instead of holding them accountable, people like you are part of the problem by being their apologists.

A lot of mileage can be gained by targeting spending that changes peoples' behavior in adverse ways, such as subsidized educational loans and financial assistance, and mandated employer health insurance. Sure, it's nice to have better educated people and the security of health insurance, but these expenses increase faster than GDP (much less inflation) and are unsustainable in the long run.

Which, of course, is an outright lie.

Who is deliberately saying a falsehood here? What is the falsehood? The growing cost of education is a established fact.

For almost everyone, publicly funded medical care will actually more than pay itself back from increased productivity; also, pre-emptive medical care lessens the need for those expensive procedures by acting as maintenance.

Why would you think that would be true? The US isn't implementing one of the relatively cheap health care systems that other countries use. It is massively subsidizing health insurance and continuing the Medicare program. In other words, greatly increasing demand for health care without changing the supply side any. That's a recipe for increasing the rate at which health care costs increase.

Finally, having lots of people without education or healthcare creates a very unstable situation. People with nothing to lose but their chains are dangerous. When they finally realize that they have the entire world to win, they aren't going to play by your rules anymore. Better make sure they have stakes in your game while you still can.

Yea yea yea. I've heard that before. So when are the solutions going to address the problem? I notice a lot of people coming out of college with massive debt and useless degrees (assuming they managed to graduate!) that no one respects. Looks like student loans have unintended consequences. I see poor people making job choices solely on the basis of health insurance benefits. That's after a couple of generations of health care "improvements" by the US government.

The same goes for a lot of other attempts to improve the well-being of the poor. Minimum wage threw a lot of people out of work in the US in this last recession. Where will the teenagers or the ex-convicts work when they aren't worth $7.25 per hour? Public housing has been shown responsible for a great increase in intercity crime and the crippling of an entire inner city generation.

Here's my take. These laws and spending don't break chains, they forge them.

Sort of.

If you look at http://www.finaid.org/calculators/finaidestimate.phtml and select the "Institutional Methodology" (which is what the elite schools use), 4 person family, 1 person in college, MD as the state, 55 for older parent's age, $120k AGI, $18k federal tax paid (it's about the right ballpark for that AGI given no weird deductions), $120k for father's earned income, $20k in a rainy-day savings account, zeroes for everything else for the parents except home equity, but assume the house is paid off so there's $300k of home equity. Assume the student also lives in MD, is 18, and has no money at all.

Estimated family contribution: $40103 per year.

While this is only 2/3 of "sticker price" if you include room and board and other things they estimate at Harvard, say, it's more than the yearly Harvard tuition.

Note that $300k is about 50% below median for the close-to-DC counties of Maryland, by the way. And that the home equity number is influenced by how much your home is assessed at, not anything tangible. So it can just drop when the housing market drops.

Had this family, or just the student actually had any savings, they would be paying a good bit more (12% of parent assets; 20% of student assets; both per year).

Now things are definitely changing; ten years ago I could have made the income way lower and gotten similar numbers, but now there are some income cutoffs below which the institutional methodology no longer considers assets. Which means that it may well be worth it to quit your job or get a much lower-paying one as your kids go to college, depending on the state of your home loan and your bank account.

Of course if I modify the example to have zero home equity the EFC drops to $25230....

All of which says that the only people who pay sticker for the elites are those who are stupid or uncaring about money enough to have actually saved some money and to still have jobs while their kids are in college.

Whether this is a good incentive system is an open question.

Seems like a maximum of 400k is a rather limited amount of life insurance if you're planning to simultaneously cover your lost income for your spouse and also plan to put your kid(s) through schools that could cost upwards of $100k/year 18 years from now (with the current rates of college tuition inflation). Are there other options that service members have in addition to SGLI?

Peace Corps. Volunteers may apply for deferment of Stafford, Perkins and Consolidation loans and partial cancellation of Perkins Loans (15% for each year of service, up to 70% in total). Volunteers make a real difference in the lives of real people with two years of service in more than 70 developing countries. Contact the Peace Corps at 1111 20th St., NW, Washington, DC 20526 or call 1-800-424-8580 or 1-202-692-1845.

Load Forgiveness Programs

I always wondered how my life would have changed if I had gone this route. I have this romanticized vision of working in dangerous, tropical climates with hot, altruistic babes with advanced degrees. I find a nice one and after a few years toiling away at toughest job we ever loved, we enter private industry and are bowled over by the size of our first paycheck. And since we were have a large portion of our loans out of the way and are accustomed to spartan living, we start building a roc sized nest egg. The naivete of youth.

Until a president has the balls to say that doctors, hospitals and parms are EXTORTING the American public and make laws to stop them it will not change.

Disclaimer: My wife is a doctor

Okay, let's just take a quick look at some numbers:
From the UAW a UAW represented assembler makes $25.63/hour straight time. This translates to over $53k/year assuming no OT. To my knowledge (quite possible wrong) to obtain this job, you need only a high school diploma. They report post inflation annual raises (from '92-'02) of 1.28%. Average college costs ~$20k (average of public and private, exclude out of state) and is rising by 7% each year. In 1999 med school cost ~$18k (again taking a conservative average), I couldn't find numbers for the annual increase, but given the costs we incurred, 7% is a reasonable number again. Books add even more, to the tune of ~$4k across the first two years. Let's look at a doctor's income stream vs. a UAW assembler assuming they are the high school class of 2003:

First year out of high school, -20k vs. $53k
second, -21.4k vs. $53.7k
third, -22.9k vs. $54.4k
forth, -24.5k vs. $55.1k
Onto medical school we go!
1st year, -25.6k (no inflation for books) vs. 55.8k
2nd year, -27.2k vs. 56.5k
3rd year, -27k (assume no more books) vs. 57.2k
4th year, -28.9k vs. 58.7k
Time for residency, pay based on my wife's:
1st year, 31k vs. 59.5k
2nd year, 31.5k vs. 60.2k
3rd year, 32k vs. 61k

OK, now our doctor is ready to go out and start making real money....where do they stand finacially?

-$83k vs. $567.9k

Most of my wife's medical school friends enter residency with school loan payments to the tune of $1,200/month, basically a second mortgage. So now our doctor gets to go to work. Care to guess how much this doctor is going to get paid for seeing a child on medicaid? $7. Yes, that is right, they will get the princely sum of $7 to see that child for a 15 minute visit. That will probably not cover the cost of the people they must hire to file the paperwork to get paid. That works out to $28/hour while our assembler is now earning $29.48/hour (this is an inflation adjusted number, that means the real number will be much higher since 1% inflation is pretty darn low!). Who was it that was extorting whom? Does that auto worker go to work every day knowing that they could get sued and have everything except their house taken from them (my wife was threatened with lawsuits 3 times as a medical student for Pete's sake! Care to guess how much her malpractice insurance premiums are estimated to be? Over $20k/year.)? Yes, doctors can get paid well, but I would say in many respects they have earned it a lot more than others.

I'm sorry for this rant, but people who just spout off like doctors in general are super greedy really irk me (for obvious reasons). The people you need to be more concerned with are the insurance companies (basically profit generating machines from my perspective) and the lawyers (who make my wife live in constant fear that we will have everything taken away from us someday...oh wait, we get to keep the house and its mortgage).

I can't speak to the particular people you spoke with at your particular institution, but I can tell that the Federal need analysis formula:

o in no way takes into account whether you are going full or part-time to school (though you must be at least half-time to receive federal aid)

o uses age to determine whether parents should contribute to the cost of education for unmarried, non-veteran, non-orphan/ward of the court students--this actually benefits older students, as no parent contribution decreases the amount a student is expected to provide on his own

o uses age to determine an "asset protection allowance"--meaning that the older you are, the more money the government says you, the student, can hang on to without being expected to contribute a percentage of it to your education, again, benefiting the student, whom the governemt assumes is saving for retirement as he ages

o does not take into account whether you attend a two-year, four-year, technical, trade, proprietary, or hairstyling school.

Here's federal financial aid in a nutshell. Your school determines your cost of attendance (COA) which includes tuition, fees, books, and living expenses (at your school's discrection). Your FAFSA determines how much you and/or your parents are expected to contribute out of pocket before federal loans and grants (unfortunately, the bulk of federal aid is in the form of loans--fortunately, those are at around 4% at the moment). That number is called your estimated family contribution. The difference between that cost of attendance and your contribution is referred to as "need." So need = COA - EFC. A school's financial aid office may meet that need with federal loans or grants, (and/or with its own money in the form of tuition waivers or scholarships; or loans from banks that aren't part of the federal programs, but those aren't federal).

The EFC formula's not top secret, you can look at it in detail here. You also have access to every piece of information the federal government publishes for aid officers, as a citizen. There's detail, but none of this should be beyond the reasoning of someone reading/posting to Slashdot.

Being somewhat familiar with it, I fail to see how you can say the federal financial aid system favors the traditional student. If the financial aid office where you start out seems to not care about you, perhaps you should find a school that suits your academic needs and has one that does.

One other good sources of information about financial and and scholarships are finaid.org. And whatever you do DO NOT UNDER ANY CIRCUMSTANCES PAY ANYONE A FEE TO FILL OUT A FAFSA. DO NOT UNDER ANY CIRCUMSTANCES PAY TO BE ELIGIBLE FOR A SCHOLARSHIP. I cannot emphasize that enough.

You're getting into a "who started it" argument. So don't forget what happend thousands of years ago to the Hittites, Amorites, Canaanites, Perizzites, Hivites and Jebusites. These poeple lived peacefully in that area until the Iraelites showed up. God told Israel to "completely destroy them ... as the LORD your God has commanded you." (Deuteronomy 20:17). Sounds like an historical record of diety-advocated genocide to me.

Perhaps "war reparations" should be paid to any remaining Hivites that managed to escape the slaughter. Let's see, the interest on 1 shekel at 1% annual interest for 4000 years is roughly 20 quintillion times it's original value! So even if a shekel is worth 1 millionth of a US dollar, they still deserve 20 trillion dollars for every shekel taken from the Hivites. Time to pay up!