Comment by mblevin | Hacker News Reader

Comment by mblevin | Hacker News Reader

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This is actually the most insidious misperception that a wide swath of people appear to have about American education.

It's not that the government spends too LITTLE money - it's because it spends too MUCH without any in the form of cheap student loans with no risk based pricing.

Any 18 year old with no credit history can go and and take out over a $200k of student loans ($57,500 / year) from the government, without any regards to school or risk.

Barely graduated high school and majoring in underwater basketweaving at BoneHead U? As long as it's an "accredited school" (a sham process in and of itself), here's your money - at 3.5% interest! Nothing secured against the loan, no evaluation of your ability to repay, nothing - just free money with the not-so-insignificant fact that these loans are mostly non-dischargeable in bankruptcy or in some cases even death[1]

Majoring in computer science at Stanford? Here's the same loan at the same terms!

Now tell me which student is more likely to default and which is the better risk?

It's ABSOLUTELY because loans are underwritten by the US government willy-nilly in the name of "education for all" that we're in this mess, with universities building movie theaters and lazy rivers[2] at taxpayer expense.

It's a trillion dollar bubble waiting to pop.

[1] http://en.wikipedia.org/wiki/Student_loans_in_the_United_Sta...

[2]http://www.nytimes.com/2014/09/21/fashion/college-recreation...

In most other countries universities are effective nationalized and loans are unnecessary because tuition is set by government fiat.

Why loan money tot he student to pay it to the university?

Why not just pay it directly to the school and charge the student some nominal amount? There's academic entrance requirements either way.

So, here's the crazy thing. Back-of-the-envelope, but it gives a picture. Harvard has 20,000 students, give or take. Plucking a number from the air, let's say that one year of study is $50,000. Across 20,000 students, that's $1B in tuition fees. Harvard's endownment is $36B.

For less than 3% of their endowment, they could give 'free education'. Obviously the whole picture is a little more complex, but it does add some context around funding.

I can't speak for Harvard, but MIT for example insures that all students who come from families making < 75K attend tuition free.

http://web.mit.edu/facts/tuition.html

I think on a few levels, MIT is not the source of problems in the US university system.

People do not tend to graduate MIT in deep debt and without job prospects.

Harvard and Princeton both offer no-loan financial aid.

http://admission.princeton.edu/financialaid

Interesting. I imagine there's some devil in the details, but taking it on faith, 60% of the students there get no debt. Thanks for the info.

As a student at Princeton, I know I'd never have been able to attend if it were not for their extremely generous financial aid. Princeton's aid package lowered the total cost to well below the other schools I applied to (mostly New Jersey state schools).

Harvard (and most of its peer institutions) give ~free education to anyone who can get in and comes from the ~middle class.

The biggest issue I have with our exiting system of funding higher education is the special nature of the debt. In any other credit purchase, if the service bought turn out to not be what is promised, you have recourse, you and default, file bankruptcy, or even sue. You can't do that with a college education, you're effectively buying it sight unseen with no recourse or remedy, and that debt lives on forever and ever.

If we made it so college debt was like normal debt, meaning it could be discharged in bankruptcy, the cost of a higher education would likely plummet, and come back down into the affordable range again.

That 57k is the lifetime amount for undergrad, not the per semester amount.

CMU is, I believe, the most extreme example at $65K per year: http://www.cmu.edu/hub/tuition/1516-undergraduate.html

CMU's tuition is indeed quite high, but it's actually 50k$ per year for undergraduates. The 65k$ you quote includes campus housing and dining services, so it's not really fair to compare that figure to tuition costs elsewhere.

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