Originally Posted by Dude
Originally Posted by Bostonian
Originally Posted by aquinas
I predict we'll see student debt securitized by major and class, with differential rates of return by area of study, region.
I support this, but such lending is crowded out by the current system of government-guaranteed loans, which charges all students the same rates and effectively gives the largest subsidies (the difference between a market interest rate and the government interest rate) to the worst students who study the most impractical subjects.

I don't see how financing student debt at significantly higher interest rates is a practical solution to excessive education costs.

Higher rates aren't required, or even inevitable. For fields with above-average demand, rates would actually decline with market indexed rates. Right now the public subsidies are blended average across geographies and domains. You could devise any number of levers to move rates across classes to be responsive to market demand, then use merit scholarships to subsidize high-ability students in low-demand fields to ensure a diverse legacy of scholarship. You would expect that, on net, education costs would decline in aggregate because a portion of students would shift to lower cost programs.

I'm also a fan of in-course scholarships rather than entrance scholarships. I'd like to see financing somewhat back-end-loaded to disincent prep schools from inflating grades so that students have the opportunity to gain more support if they show talent.

What is to give light must endure burning.