Gifted Issues Discussion homepage Forums THINKING BIG About Gifted Education The poor neglected gifted child

"Should college be free?" is a very different question from "Should we be yoking our young people to non-dischargeable debt?"

Agreed! It is good to consider multiple sides of an issue. Anecdotes often represent what is outside the mainstream. These success stories can be inspirational. While they are verifiable facts, they may disappear when statistics are compiled. They are worth hearing, and also worth keeping in perspective.

Well, sure, 5000 low-income students get a great education, so let's forget about the hundred thousand or so who would benefit based on similar qualifications.

Let's celebrate the 5000 who are benefitting! Let's simultaneously see what can be done to benefit more students.

Another poster mentioned some parents being clueless... another mentioned families without internet access... rural families without access to a local library.

What books might they benefit from having in their school library... what books might help school guidance counselors, parents, and students?

Here's one: What Colleges Don' Tell You... http://www.amazon.com/What-Colleges-Dont-Other-Parents/dp/0452288541

I will again point out that debt that cannot be paid back will not be paid back.

It's more of a problem in the for-profit world.

Some of my clients enroll and take out student loans to live off of rather than for educational opportunity, per se.

It's a trend:

http://finance.yahoo.com/news/student-loans-entice-borrowers-more-002100614.html
Student Loans Entice Borrowers More for Cash Than a Degree:
Low-Cost Debt Proves a Draw for Some Caught Up in Weak Job Market
The Wall Street Journal
By Josh Mitchell
March 3, 2014 9:39 AM

It's hard to complain about high interest rates when someone gives you something at a 50% (or more) discount.

If you graduate with $60,000 in debt on an education sold to wealthier individuals at $120,000, then the interest rate would have to be about 16% for the education to cost you the same amount. Anything less than that and we're discussing the value of a top tier school as an investment in general, and being poor has little to do with it.

Ideally I would like to see private banks making educational loans based on their assessment of individual student risks. Smart kids studying in-demand fields should see very low rates in a system like that. Under-qualified students would pay more, as would students studying fields with lower earning potential. This has an added benefit of discounting the study of fields predicted to be in-demand, and thus better matching educational choices with what our businesses need.

The point is that the college finance system has gone completely off the rails due to the massive issuance of debt that has absolutely no business existing in the first place.

It's easy when the thing is priced too high to begin with. Half off egregious = excessive.


I can tell you don't have much experience in the world of finance.

The primary controlling factors for risk-based pricing in your model would be the co-signers: their credit ratings, debt loads, assets, and earnings. Only when co-signers are not available or cannot be approved due to credit risk will the risk pricing begin to consider student achievement levels, chosen major, etc., as a significantly influencing factor. Obviously, not having co-signers represents elevated risk. Low SES backgrounds are, in and of themselves, a significant risk factor for not completing college. The major as an indicator for future earnings has extremely limited utility, because of the numbers of incoming freshmen who drop out and change majors.

So realistically, you're looking at high-achieving, low-SES engineering majors receiving loans at 17.5%, as opposed to 18.5% for political science, and 19.5% for fine arts.

The low-achieving student majoring in underwater basket weaving gets a loan at 8% with wealthy co-signers.

While this embodies traditional business model, some may say this red-lines students with poor prospects, trapping them in poverty. Meanwhile the current practice of equalizing the cost of student loans is a means of redistribution, with some students/families essentially subsidizing others although this may not be well-known by those who've not thought it through.

A given college/uni may charge a specific price per credit. Some classes may be less expensive to teach (ie English) and some may be more expensive (ie anything with a lab component).

Analogy to a salad bar: if it's priced per-pound, everyone eating a half-pound salad may be getting a different value for their expenditure of the same money... depending upon the mix of ingredients they chose. For example, iceberg lettuce in season may cost the deli much less than other more nutritious ingredients.