Maybe my ignorance is showing, but putting a cap on loan amounts for undergrad would probably protect the student quite a bit.
This changed in 2005, under GWB, and was not the worst thing he did (screwing up Afghanistan, invading Iraq, PATRIOT, TSA, ...) but was still a bad thing he did.
Those who can earn enough money eventually pay it off, but they're not worried about debt collectors if they're not earning any money.
People who don't ever earn enough simply don't pay it off and it's not a problem.
To prevent abuse from the universities raising costs too much, if they want to participate they have to adhere to set rates for degrees. There are a couple of universities that don't participate in the system but they're no-ones first choice
Taking away someone's diploma because they defaulted on their loan would just be destroying value. It's the equivalent of a bank foreclosing on your house and then burning it to the ground.
I understand the idea that these loans are predatory might be controversial, but this idea comes from the fact that going to expensive universities and paying for it with loans is pushed by high schools, parents, universities, and society alike as the sure-fire path to success. To an 18-year-old with no way to really comprehend the amount of money they're spending on education or what life looks like after university, they likely will take much of this at face value.
I was so stunned I couldn’t come up with the words to say. Maybe the real issue is teaching kids the value of money.
There were decades of people before internet searches were available who decided to prioritize a lack of debt over going to the absolute best school they could. The most expensive school any of my classmates went to was Tulane, and the kids who went there almost all went on GI bills. Now, across the river, where the people were more affluent... those folks definitely spent more money on their college educations. Can't say I've seen their investments reflected on their Linkedin profiles, though.
https://www.natlawreview.com/article/rmbs-to-slabs-history-r...
So right now we are prioritizing SLAB investors' profits over giving consumers more spending power. If college graduates suddenly could spend their loan payment money on other goods and services, it would be great for the economy. Loan repayments have been frozen for years now and nothing bad economically has happened.
But instead we're just protecting the rent seeking of the wealthy, which isn't really worthwhile economic activity.
Personally I think SLABs are extremely unethical, but even if you disagree with that, SLABs are unsustainable and look a lot like the subprime mortgage bubble.
I agree that there needs to be something to drive the cost of education down, but I don't know if a tuition price ceiling is the way to go. I think a good start would be punishing schools that spend elaborately on buildings, athletics and excess/overpaid administrators while also paying their grad students doing a lot of the teaching work starvation wages (or if you're UCLA, don't even pay them at all!) and neglect spending directly on education and tuition. I think an endowment cap is a great idea in this area, to force schools to lower tuition by having to spend a certain part of their endowment, rather than letting them hoard money.
Some other things that are extremely good ideas is letting the interest rate be renegotiable/refinancible. For example, why did I have to continue paying 6.5% on my loan when rates everywhere else were near zero? And also letting people discharge loans in bankruptcy like pretty much every other debt.
The bubble will burst any day now, since enrollments have been declining for years at this point. Until then, the only people benefiting are student loan servicers, useless and overpaid administrators, plutocratic athletics departments, and investment bankers, NOT students or people doing the actual educating.
Something like dischargeable in bankruptcy after 15 years could work though.
This would cause them to be somewhat cost conscious in certain areas; explosion of administrators, and use of capital contributions for excessive facilities.