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Comment by hueving | Hacker News Reader

When it comes to student loans though, they should be given on someone's potential ability to actually pay them back, which is dependent on future career prospects.

I'm not against Arts or offering scholarships/grants for them. What I'm against is allowing a person to take out $160,000 of debt at 6% interest for an education that will land them a job as an administrative assistant. They will most likely carry that debt for the majority of their adult life.

It's bad for society to allow 18 year old kids that have a poor grasp of long term consequences to shackle themselves with such a financial burden. None have had long term full time jobs to appreciate how difficult it will be to pay back that much money.

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Part of the problem here is that the terms/interest is so crippling that they can't take out another $160K debt to "pivot" into something more financially practical.

Further, I think having the availability/flexibility of studying multiple degrees can be immensely useful/rewarding. Particularly as industries get more advanced/sophisticated (and others get automated/downscaled), I wouldn't be surprised if there's a cultural shift towards continuous reeducation (at least, as much is financially practical/possible).

This. Banks give home/auto/business loans based on value of the home and ability to pay. Why not have similar metrics for education?

Because there is no collateral for education.

The collateral is a claim on future earnings, isn't it? In the UK, the student loans company gets back 9% of your salary post graduation and you cannot legally opt out until the loan is repaid provided you earn over a minimum threshold.

You can't squeeze blood from a rock. Sure, you can say 'hey let's garnish this guy's McD wages for the next 25 years' - but the collection costs are almost as much as you can get your hands on. Just not worth it. Well, only at very high interest rates, so that the good ones make up for the bad ones.

I'm not suggesting collateralized student loans, I agree that's difficult without a durable good. I'm suggesting a similar risk-based approach for determining the size of the loan. This would cut down on the number of people who have $200k in student loans and a MFA which generates no income.

The difficulty of getting loans for degrees which are less likely to be able to generate significant income might even lead to lower tuition at non-STEM schools (hey, a guy can dream)

Risk for loans is low(er) for material assets (because they can be repo'd), which is why interest on loans for them is so cheap. Education loans are priced 'correctly' by the market (i.e., very expensively), the 'problem' is that people consider them different from material goods because they're the best/only way for social advancement for many/most people (which I don't disagree with, I'm not making some sort of moral statement here, just explaining the mechanics.) So then 'they' (as in, some amorphous group of voters and politicians) want the government to step in, which creates disincentives all around, yadda yadda yadda and then we find ourselves in the situation we're in now.

So, to come back to your question, why don't we treat education loans the same as other loans - because 'society' doesn't think they're the same, for moral/equality/social mobility reasons. It's really as simple as that.

In home and auto loans, the asset purchased acts as collateral. Business loans, especially for small businesses, are difficult to get. If it were easier, I'm sure we'd have a problem similar to the student loan situation.

Because student loans are harder to shed during bankruptcy. They have less incentive to evaluate proper risk.

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