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Comment by smsm42 | Hacker News Reader

Now let me ask this - if there would be a proposal in Congress to disband Sallie Mae and do away with these bad loans, just not let people take loans that they can't pay - which side of it she would be on? I have little doubt she would claim this is terrible and makes only rich people to afford education and ruin the country and so on. And would never vote for any representative that proposes that. But when she gets exactly what she, and her parents, and everybody around them, enthusiastically supported and voted for - subsidized loans that there's no way they could afford otherwise and that are way beyond her means normally - it's suddenly terrible and somebody else's fault.

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What about a proposal to return to subsidizing higher education the way that most developed countries do, so that prohibitive loans are no longer necessary in order to acquire it? In the Information Age, isn't having an educated workforce a public good?

So the solution to a problem of unaffordability is to have Uncle Sam pay for it and take it out of the tax payer's pocket? That lady couldn't pay for her expensive education, so I should?

Since I graduated 15 years ago, the public University I went to has increased costs significantly and massively improved student amenities. Baristas and rock climbing walls and whatnot. Why? It improves rankings and people will still pay for it, subsidized by student debt. If, say, people actually had to be able to afford the bill, I bet all the expensive nonsense and massive staff beuracracy would shrink in no time and the schools would go back to costs being classrooms and books.

UK: over the last decade or so we have moved from a grant based/free tuition system of finance for university students to a (capped) fee paying/state loan one.

Not sure which is best. The move the fee paying/state loan has seen the salaries of University managers rise significantly. The part time degree sector has been significantly reduced in volume.

http://www.bbc.co.uk/news/education-40511184

I do personally think that the classrooms + books + dorm/shared house route with subsidy for less affluent ones has benefits.

> the salaries of University managers rise significantly.

> classrooms + books + dorm/shared house

I think we can notice what's going on here. I do not know about the UK, but if you look at education costs in the US, it becomes painfully obvious. It's not books, classrooms or dorms the students are paying for. I mean, think about it. Which books can cost 100K over a bachelors degree, where most knowledge has been known for centuries already? Classrooms have been built years ago in the most places, and their marginal costs of maintenance is negligible. Dorms are not that expensive to run either, not to the tune of tens of thousands per year per student, unless you're talking about luxury which most people neither need nor can afford. So subsidizing those necessities should not cost much. Something else is driving the costs up.

Do you propose to eliminate private education or to sponsor 100% of private education cost, whatever it is, for anybody who asks? We already have public schools, but the article specifically talks about attending a private school.

If the feds didn't have the program, private firms would come in and still offer loans. However these loans wouldn't be offered to students who on average couldn't realistically pay them off due to defaults (Something loans are protected from today).

For example giving 150k of loans to an engineer is a sound investment. Engineers at the low end make 50-60k/year. And most likely pull 100k/year after a few years.

> However these loans wouldn't be offered to students who on average couldn't realistically pay them

That's the point.

> giving 150k of loans to an engineer is a sound investment

No it is not. I've pretty good education (one can claim I maybe over-educated a bit even since I've studied tons of things I never use), I earn six figures, and my education did not cost even close to 105k. And I would be terrified to take a loan of 100k+ even with my current income level, stable job and some assets I've accumulated over the years of work. The only thing I would take such a loan on is a house, but definitely not because I want to attend nicely-named social gathering group that by the way also gives degrees. How a person can take such a loan with no income, no specific job prospects, no savings, no clear perspective of how it would be paid off - just boggles the mind. And it's not like community colleges do not exist...

Moreover, it is absolutely clear to me that the most of 100k is paying for services the students do not need and for the fact they got the coveted paper. Education per se does not cost that much, you can clearly see it in price dynamics and administrative vs. teaching staff dynamics. It's not like professors are known for being billionaires either. The costs inflation is happening elsewhere. And these loans enable it and drive it - what's the incentive to cut costs if the students will just get another government loan, never refused, each time you raise tuition?

Sorry let me clarify, 150k of loans to an engineer is a sound investment for the investor. Its not a great investment by a student though.

> 150k of loans to an engineer is a sound investment for the investor.

Not really even that. Try to get an un-secured loan for 150k and see how happy the bankers would be without government backing to hand it to you and what the rates would be. You need a heck of an income to support such a loan, or mortgage-like duration. Even for 10 years, at 6% - which is very good for an unsecured loan, that's what secondary secured loans charge now, if you're lucky - it's $1660/month. On top of your other expenses, like mortgage or rent. And 10 years is a long time, what if the debtor changes her mind or something happens to her? Now add to that the fact that it's not even know if the debtor is going to actually finish the degree...

The loan she talks about in the article isn't a subsidized one, it's a variable rate private student loan.

Sallie Mae is a state enterprise, subsidized by state. The loans it makes do not exist on private market. Therefore, it's a subsidized loan, even if the subsidy is not as overt as in some other loans.

Sallie Mae is a publicly traded company. Loans have not been federally backed since the Health Care and Education Reconciliation Act of 2010. The loans it makes do exist on the private market because it makes them all on the private market.

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