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That’s an extremely counterproductive idea as stated if the goal is to attack schooling industry. It would be a huge boon to schooling industry if these were dischargeable. Instead, what you need to do is to stop the federal government providing the loans.
Actually it wouldn’t. One reason that admitting thousands upon thousands of people into institutions of higher education is that no matter how poorly they do, the college gets paid. If that were no longer true, if students were no longer money buckets, then they’d either have to do without students or retool to provide value to their students. That means more practical education and lower costs. And obviously no bank is going to back a dischargable loan for “activism studies” because the student won’t be able to pay for it.
Yes, and that’s why making them dischargeable doesn’t make sense. The schools are paid up front. The loan payments are made to Federal Government. If you allow the loans to be discharged, the schools don’t lose a penny, and it’s the taxpayer who bears the cost.
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His point is that the college already got the money, so they don't care if the loan is dischargeable or not. The one on the hook if the student is allowed to default is the government, not the university.
Most student loans are from the government, not from private banks. And the government doesn't make a risk/profit calculation before lending you the money.
Private parties wouldn’t give out loans for worthless degrees and bad students when the degree is the collateral.
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Why not both?
I don't even mind the FedGov providing loans, as long as it's directly linked to something FedGov cares about. Right now you can dispose of a loan by working for a nonprofit, or, say, a public school teacher, which creates a very specific incentive. Cut all of those general-purpose incentives out, and make it so that if you want the federal government to loan you money for education, it's because you're going into military service, or you're going into shipbuilding, or you're going to go work for the three-letter-agencies we haven't abolished, or w/e.
Otherwise, you can get your loan from a bank, and it will be dischargeable through bankruptcy, and they will evaluate it on the likelihood that you can pay it off. (No, I don't object to people getting a PhD on Aristotle's conception of the good life who will go on to earn $80k/year teaching at a mid-tier university, but the federal government doesn't needing to be footing the cost, and neither do the banks. That's what special interest scholarships are for.)
Frankly, I think this is less an "attack" on schooling than something that is likely to fix it (although it would be perceived as an attack).
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Why not allow them to be discharged in bankruptcy, but require the schools to cosign the loans?
That would work too.
This would bankrupt pretty much every non-ivy inside of a few years. Higher ed operates on razor thin margins. I want to burn down the system, but this is too much fire.
You say that like it's a bad thing
Apparently you don't; or, at least we have very different ideas of what that means. My model for the minimum in dealing with Academia is Henry VIII's Dissolution of the Monasteries — complete with seizure of assets and the imprisonment or execution of resistant abbots and monks.
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Private tier 1s and state schools is enough to provide education. Rest is mostly credential signaling.
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