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Comment by gsatic | Hacker News Reader

Biden needs to move faster and not just with the debt jubilee but drastically change how much unnecessary cash American universities spend on bullshit. Visiting campuses in other parts of the world, I am always shocked how much they do with so little while keeping education relatively free.

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The main problem with American higher education is the profit motive. As is often the case, capitalism eventually ruins everything, especially when it’s treated as the state religion.

It doesn't work because the state interfered. College is so expensive because of federally guaranteed loans. This means colleges can charge any price they want because the student has access to any sum of money.

This is the #1 problem

Depends what you mean by interfered. The government subsidized loans as far back as the 1960s, and this I remember clearly.

Not having to pay interest while in school was very helpful to someone like me.

Somewhere around the 1990s to the early 2000s is where things went awry, but it’s also around the time colleges became more (too) accessible.

While colleges set entrance minimum standards, who determined loan eligibility and size in the 1980s and earlier?

Was it the lending institutions?

I think the profit motive is downstream from the root causes. There are MANY issues with higher education at the moment. IMO, federally backed loans which can't be discharged in bankruptcy is the single worst factor.

Without this protection loans become more costly since you'd move risk to lenders. Where else can an 18 year old get an unsecured loan for this amount and rates? Nowhere, for good reason.

Price will have to come down so the risk isn't so bad

Private lenders used to do this.

The Federal interest payments gave a stream of income to the lender.

But I thought in decades past someone used to assess the risk of someone not repaying, and limit the amount.

Or was it always a small amount no matter what? I remember not being able to afford even the state schools, even with the loans and meager scholarships.

This is in the early 1990s.

> Where else can an 18 year old get an unsecured loan for this amount and rates? Nowhere, for good reason.

If schools competed on price, prices would be lower.

if kids couldn't get loans, they would have to compete on price.

as it stands now, there is no economic incentive to compete on price.

Schools most certainly compete for students, and a major factor is price.

Loans are not some boogey man whose simple presence suddenly throws out all cost consciousness.

If you look at surveys of biggest concerns about students (and their parents) selecting colleges, cost is the biggest factor (42% of them put this as #1 in the survey I'm looking at).

So no, loans are not letting prices run free by any means.

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