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Comment by erikerikson | Hacker News Reader

They are issued for something [contingently] incredibly valuable that cannot be repossessed. They are also generally issued at a lower rate of interest with little collateral, in part due to the fact that they cannot be discharged in bankruptcy and the resulting lower risk.

[edit: added "contingently" above. Some education programs have been found to be scams yet could be paid for with debt. I generally stand by the value of higher education and have found it to be a net benefit in my own life. The value has been strained as costs have shifted and the social contract is rearranged behind the backs of educators at all levels]

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There's nothing rigged about loans being made for something that can't be repossessed and without collateral, there's a whole segment of the lending market for that (consumer lending, eg people take out loans to go on vacation). So absolutely nothing rigged about that. And those loans can still be discharged in bankruptcy. There's a government guarantee, but that's at least as much an advantage for the lender as for the borrower. The relatively low interest rate is a result of that, the loans aren't high risk for the underwriters. Government guarantees aren't unique to student loans either btw. The only thing that's really unique is that the loan can't be discharged, and that is very much a disadvantage for the borrower. So student loans are rigged against the students. No bank would want to make those loans under normal circumstances, so the government has rigged the game in their favor to entice them into the market.

Education is a unique product, which I'd argue warrants favorable loan terms. Ignoring the inability to declare bankruptcy.

Even in non-scam programs, there's sometimes a massive amount of unknowable hazard on the path to a degree. And whether or not the degree is attained, the debt is still due.

In terms of hazard, I don't mean grades. Assume perfect grades. Especially in graduate programs, interpersonal politics can permanently wreck students who then have no effective recourse.

Examples and intricacies of what I'm trying to imply, aside, consider that education is a unique product that costs a lot of money but, in the process of attaining the product, you aren't treated as a customer but as if your position is precarious. Grades aside. Whatever specifics you might imagine, as they would vary, assume that the system is set up to protect the school that is collecting money. Not the person paying it.

Coming back around to my ultimate point about loan terms and risk.

Add “a global pandemic turning your university experience into Zoom-school with no reduction in tuition” to the list of possible hazards there.

I don't know how intentional your choice of words was, but describing education as a 'product' is a sad reminder of the current state of the world. It's as if every action and experience in life must be translated into money.

Thank you. I see your point.

Colleges, let alone Universities, used to be much fewer in number.

It used to be more widely known that the better Colleges, that is mostly the Ivy League and the top Liberal Arts colleges, were the only educational institutions that mattered in terms of imparting the vaguer yet more elite type of education of which you are likely thinking.

That is, the institutions who reliably facilitate the fuzzy process of becoming an educated person who can think like one. In the elite sense of these things.

What we've lost to an extent, in the multi-decade long taxpayer funded college degree bonanza, is that it is these elite institutions which are still seen as the only colleges that matter in the sense that I think that you are implying.

Other colleges are not truly valuable in this sense. So what are they good for? They are good for work training and certification pathways.

Universities have no problem charging obscene rates, which is hard cash, for something that they too would like to be only distastefully associated with money when debating the merits.

If it isn't translatable to money, then make it cheaper. Or keep the value firm and high, but also let's talk about what is being sold.

The 'value' of the education can vary widely. Both in terms of value meaning the ability to use it as a credential for high-paying jobs, or in terms of the imparted skillset/knowledge that either make you a better person or enable you to achieve things like starting a business/inventing/etc.

I mean there is a HUGE spectrum here. And this means that there are many educations paid for with debt that are utterly useless (and therefore valueless) on both of these metrics. In other cases where an investment failed to this extent, you can declare bankruptcy. But not student loans! No no no. Those are forever. Hardly a favorable condition for the borrower.

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