In the US, part of the problem is that by making education debts non-dischargable in bankruptcy, and by the aforementioned proliferation of degrees that may qualify as 'nice to have' rather than 'increase earning potential'.
The end result is a lot of people who got a college degree that doesn't really pay for itself, and instead leads to 20+ years of debt, or 10 years of indentured servitude to a non-profit.
I think a big part of the problem is that debt is so readily issued for degrees that overwhelmingly leave the recipient incapable of providing for society in gainful ways.
I assume lenders would take the degree being pursued, institution at which it’s being pursued and applicant’s academic history (and this likelihood of completing it) into account.
Currently, there is zero incentive to do that work.
https://www.savingforcollege.com/article/history-of-student-...
Nothing, and that's exactly why education debts need to be dischargeable like anything else.
Dischargeable loans makes loan companies have actual responsibility and consequences in deciding who to give loans to. Otherwise, they blindly give out loans (why not, there's no risk!), putting all that much money in the system, which college institutions are happy to absorb in higher tuition.
I’m not sure what the answer is, though I think an economic approach is key.
If you're still going to be paying your loan off in 7 years, bankruptcy would be an easy choice.
The debt doesn't just magically go away. Chapter 7 requires liquidating assets, and chapter 13 requires paying some loans back anyway. And besides, I don't see why loan companies couldn't require cosigners to reduce risk on these college loans.
Then you rent an apartment or buy a car. Are you implying you can't do this after bankruptcy? It's much easier to do these with a bankruptcy on your "record" than with a $1000 monthly payment.
If you've got an 800 score and no money, no one will give you a loan. If you've got a trash credit score, but an extra $1000 that isn't going to loans, then you can 'afford' to get fleeced on 36% 72 month auto loans for 7 years until your credit is rebuilt.
That $1000 is likely getting spent no matter what, either in repaying loans, or paying a premium over the market rate to get a landlord to agree to lease you an apartment instead of someone with an 800 score.
It would be interesting to see insurance companies have more skin in the game - we would probably start getting much more accurate breakdowns of ROI by major, degree, and school.
What America has now is a good system, where anyone can use these loans to pull themselves up.
What government or maybe banks need to invest is in more career counseling.
$393 is 15% of $2620 which annualizes to $31,512, which is about the median personal income for full-time workers (whoops, before taxes). ($222 is 15% of $17,760 annual, about the poverty line for two.) That's not a wildly big change over the current state.
How about 10% of taxable income?
> 10k graduating with a degree in a field with only 100 jobs/year needing that degree
What I'd live very much to avoid is having a centralized body which makes such decisions. Under my scheme, lenders who identify such fields will be reluctant to grant loans, but how they decide what's in the field, and what exceptions to make, the can do however they like.
The university takes on the risk, but they have much more information about their students and their degree programs than students, governments, or private lenders, so they're probably best placed to be making informed risk decisions. Under the current systems, the government and the student take on the risk, while the university and the private lenders get the rewards.