I'm increasingly taking an outside view on debt, one that finds the entire idea of a 20+ year debt obligation *on something you cannot even insure* not just irresponsible, but frankly repulsive. Once you start looking, you find *so much* normalized madness
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Please do educate me. What’s the difference between gov student loan vs a school extending line of credit? Just curious.
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If you came to a school and said, "I'd like to take out $250,000 from you for a social working degree" a school would say, "No, we'll never make our money back." If you come to a school and say, "I got $250k of loans from the gov, will you take it" the school says, "Yes"
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Thank you though I feel I may be missing something. Ie if the fee is $250k and gov pays 75% and rest you have to come up yourself, how is that driving Uni fees down? The only time I see Uni fees going down is if gov negotiates and provides subsidies than passing cost to students?
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It's not that the gov pays 75%, it's that only 75% of their tuition dollars can come from the government, then other 25% need to be paid out of pocket. They have to cater to people able to pay out of pocket, which forces them to drop prices
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... or allow student loan debt to be discharged in bankruptcy
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Yes this too
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This does the exact opposite. If tuition is $10k and students qualify for $10k in federal funds they are at 100% and will blow the 90/10 rule. So what can they do? Raise tuition to comply. Rule drives up cost. Plus Institutions cannot limit what student borrows. No control.
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It's not per student, it's of overall student body. What % of students are using federal funding vs their own funds
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Yeah I understand that but my point was to provide an example. Remember these are not elite schools that attract high income students or students with parental financial support. The math still works the same and it drives up the tuition rate.
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Or make it apply to all universities. Or set price caps as a condition of federal assistance.
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ONLY? Also, from what I understand the other 10 comes from parent retirement savings, Parent PLUS loans, grandparents leveraging their retirement savings/homes. Who thinks this is right? Let's flip it to the 10/90 rule and stop welfare for collegiate institutions.
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The other 10 has to come from other than Title IV federal financial aid. PLUS is federal. Also, it was initially 85/15 when enacted in ‘92 industry pressure (for profit lobbyists) successfully got the law changed to 90//10 in ‘98
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Incidentally, other federal (non-title IV) sources count toward the 10%. The largest one being veterans benefits which is why the rule hasn’t had much effect.
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Was on the hill just today talking about this very this with
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Non-profits should have to do the same. They'd invest a lot more in career development and curate the curriculum much better with such a rule in place.
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They should also be required to keep ~20% on their own books (no securitization) and have last claim on payments.
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Want to tip the whole boat over? Eliminate federal student loans entirely.
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