Elizabeth Warren Wants to Lower Student Loans to .75%

For federally subsidized loans, I would consider tying interest rates to the school you go to - and basing it on that school's job placement success and/or tuition levels. If a particular school is terrible at getting kids into real jobs, interest rates should be higher because those kids are a higher risk of default. Similarly, higher tuition increases risk and thus should result in higher rates. This would create incentives for schools to keep tuition competitive and focus on job placement.

 

you know we have this simple mechanism for setting the price of borrowing money or anything else

just let the market work, stop trying to manipulate and distort it with silly schemes

 

Bankers are some of the biggest ****ing crooks in the world. I got an idea, instead of letting every scumbag banker get a blank check from the government why not reform the banking system.

Oh wait, that will never happen because Republicans are Wall Street's b****.

 

Loans with no collateral for 18 year olds would be through the roof.

Would these loans still have the backing of the government?

 

I don't think they should provide easy financing for student loans. The value of a four-year degree is being tarnished by stupid policies like this. Public school systems suck, so people opt to get the necessary training and knowledge that the public school systems don't provide by paying for higher education. And now the government wants to incentivize that, so they're watering down the value of the degree and quality of education, all while stradding young people with large swaths of unforgivable debt. Now young people who've achieved a degree are finding themselves in a job market flooded with other young people with the same piece of paper they have and are looking to continue their education.

In short, I think these policies are asenine. The state has done such a miserable job with public education that they now have to manipulate the market for money and credit to have young people further waste their time with more education.

 

Went ahead and fixed that for you, unfortunately.

 

If we could solve every problem by giving people money, don't you think we'd do that? There are reasons why that doesn't work, and it's silly to hear the same things in this forum all the time about how most of the nation's problems could be solved if it weren't for lack of funding.

 

You mean higher risk borrowers would have higher interest rates?!!?! The horror!

The taxpayer you mean. That would be a market manipulation, but far more efficient than all knowing Liz Warren defining the ideal rate. The more the risk is subsidized by the taxpayer, the lower the interest rate will go. That's distorting the market, but at least the price is allowed to find a rational equilibrium.

 

don't you see, all our ills are caused by bankers, who just lend out money and charge for that service, which makes them evil

 

There is a horror in that. It makes moving up the ladder so much harder.

Yes the taxpayer guarantees the debt, but at the same time the government can be far more aggresive in collecting student loan debt. Certainly a better for the taxpayer than handing out more grants with very few requirements.

 

I appreciate the power of markets to set equilibrium prices, but there's a lot of economic research supporting the idea that higher education has large positive external benefits for society. That being the case, it makes sense that society (i.e., government) should subsidize higher education.

Here's one influential paper finding that an increase in the number of college graduates raises wages even for high school graduates and dropouts (PDF): http://cdi.mecon.gov.ar/biblio/docelec/nber/w9108.pdf

Bear in mind that there are other societal benefits of investment in higher education, such as reduced crime, increased racial and religious tolerance, a more informed electorate, and so on.

 

I'm weary of this paper. I haven't read it, but I just read the abstract. I mean, the wages of high school graduates and dropouts would be expected to increase simply from the effect subsidizing the market for a college education would have on the job market for support staff at colleges and in the areas surrounding them.

Your second point is right on, however, but begs the question of why K-12 education isn't bearing the same returns, and what the state can do to fix that, rather than to push people into college education and debt.

 

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Yes, let's create a system where only rich people can go to college and institutionalize poverty. That method has worked so well around the world.

It must be nice to live in a world where you don't care about the real-world effects of anything and just worship at the altar of a free market for everything.

 

Yes, let's create a system where only rich people can go to college and institutionalize poverty. That method has worked so well around the world.

It must be nice to live in a world where you don't care about the real-world effects of anything and just worship at the altar of a free market for everything.[/QUOTE]

I'm just wondering why the line between poverty and riches lies in 4 years of college. You'd think that 14 years of publically financed free education would be the line. I think that's the conversation that should be had.

 

Yes so lets make it so some kids of no real chance of getting an education. If you haven't notice education prices have gone through the roof.

 

Because that's the reality of our system and the types of jobs that are being created vs those that are disappearing.

In a free market, banks are going to loan money to kids from wealthy families and not poor ones because of risk. That's through no fault of the kid - they don't control their family's wealth or circumstances. And this is in a society that has actively pushed for an economy that eliminates blue-collar jobs in favor of higher-education-requiring jobs.

Do you think that is a good system to put in place for our society? That we create a system that minimizes economic mobility?

 

Screw the banks.

I'm for it.

 

In a free market the banks would go insolvent when the victims of their predatory lending schemes fail to pay them back. Since that is never going to happen...

And I love the assumption that you have to go to college to be get rich. Sort of like home ownership is the american dream. That's just perpetuating the lie that caused the current problem.

 

And the reality for the future will be one in which we have young people straddled with student loan debt without any tangible benefit from having gone to college. That is the result this type of incentives system will have, and has already had (as we can see from the great success of the public school system).

Actually, the riskiest loans will have the greatest rewards -- just as an aside. But I don't believe that we should be actively trying to manipulate markets as a means of righting perceived injustices. There are consequences for these actions, and, while it sounds great to say, "every kid should go to school for free and have the best education possible," the reality is that there is no free lunch. You pay for it one way or the other. My problem with the way its been done, and the proposals for how it should be done, are that they will destroy the quality and value of education in this country while putting young people in debt.