As I said in another thread:
That might work but it’s more drastic than just limiting the amount you can take on by type of major.
It seems a bit unusual to consider future earning power in bankruptcy. Who’s to say the barista couldn’t get a better job, especially with sub 5% unemployment. Maybe they just like working 20 hours a week.
Actually I would argue that it’s less drastic and more flexible and allows for some human judgment.
I’m thinking of two women I know who majored in theater in college.
One went to the top public high school in her state and was a top student there. Her plan was to major in theater performance and then go to law school and become a trial lawyer. Excellent SAT score, honor society, top 10% of her high school class. Once in college she was consistently making the deans list and always on track to graduate in 4 years.
The other barely got into college with a barely acceptable SAT score and a mediocre high school GPA. Her plan was to keep acting as much as possible and try to get noticed by Hollywood to become a big name actress. Once in college she was constantly flitting on & off academic probation and by the end of freshman year it was already mathematically impossible for her to graduate on time unless she took summer classes (which she did not do).
I would contend that we should be considering more than their majors when deciding how much to loan each of these students. Your method would loan them both the same amount as they had the same major.
And the epilogue is that the first student DID go to law school, decided she didn’t like the courtroom aspect, and is now a successful corporate lawyer. So her plan to use her theater background to help her in the courtroom didn’t exactly pan out as she intended but she’s extremely successful regardless.
I lost track of the second student when she didn’t return to campus after Winter Break junior year. I’d be a little surprised if she’s NOT a Starbucks barista, but I couldn’t honestly attest to that.
Why not just do what the UK does?
You pay x% when you start making over $50k/year
And if you don’t pay them off after 40 years, they get forgiven (this then ties up with retirement).
The structure in the UK is only bad because the interest rates on the debt are ridiculous, but the concept itself (based on income) is sound.
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Do you have sample numbers?
If I read this correctly, the maximum amount people can borrow for an bachelor’s degree in “typical cases” (dependent student who finishes in 4 years) is $19,000 of subsidized loans plus another $8,000 of unsubsidized loans.
https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized
I read this with a slightly different interpretation than I think you intended.
If you have outstanding student loans, then you’re limited in the amounts of additional debt (e.g., mortgage, revolving credit, etc.) you can obtain.
For example, if you have an outstanding student loan debt in excess of, say, $20,000; then the most you can assume in total debt would be limited to, say, a total of $200,000 for mortgage(s) with a total assumable debt amount no more than $30,000 above any mortgages. numbers are illustrative only
So it’s better to make 49k a year and not have to pay the loans? Cliffs create perverse incentives that do more harm than good.
If what you mean is that you have to a minimum of x% of your income that exceeds 50k on student loan repayment (until they’re paid off) then that’s a little better. That essentially means that the career barista is off the hook.
I still favor the bankruptcy route with special rules for student loans (such as not dischargeable within 10 years of taking a class) because I’d like to see people not have their credit trashed for the rest of their lives.
Amen!
I presume that the preferential treatment of STEM has something to do with staying globally competitive in innovation and productivity gains. I am all for that. But if that is the intent, then it would be more direct to amp up the tax support of higher ed, writ large.
Research without patents is the winning play. Let the private side figure out how to best build and distribute (that’s what it’s good at), and simply fund the basic research at major universities. Time to treat education as a societal good, and stop acting like it is a profit center.
Just my 2coppers.
The other problem with the major is that it ignores a student’s likelihood of success.
How many of us have had the experience of talking to someone interested in the actuarial career who says something like “oh yeah, I’d probably be good at actuarial exams. I got all As and Bs when I took Algebra and Geometry in high school.”
Declaring yourself a math major does not mean you’ll get a degree in mathematics.
Who said it was a cliff? In Australia (I believe a similar scheme to UK) you pay back 1% at 51.5K, 2% at 59K and then it goes up half a percent every 5K or so up to a maximum of 10%. More of a gentle incline than a cliff. You can choose to stay at 49K ($US33K) for the rest of your life but that’s going to be a miserly life.
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Is this like the minimum payment until the loan is paid off?
How is the loan balance calculated?
Just wondering because 99% of 58.5K is more than 98% of 59K. I mean if they’re still calculating the loan balance in a semi-normal way and this is just the minimum amount that you have to pay then no biggie. But if it’s like the loans are paid off if you follow their repayment scheme for X years then it could use sine tweaking.
Yes, someone who pays at 1% will take more than twice as long (taking interest and lower income into account) to finish paying back than someone who pays at 2%. In my day, you could pay back more than the minimum and I believe there was some sort of discount to incentivize that, but I forget what that was. I’m sure they’re always tweaking the formula.
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IMO, student loans should be calculated using a basic simple interest formula that is not dependent upon time of payoff specifically.
For example, a 20% simple interest is assessed and become part of the total amount to be repaid. Under the current structure, there are all kinds of incentives for the holder of the loan–the one that keeps the interest portion of payments–to “prolong” the payoff period (after all, they get a tax write off of the principle portion if it defaults).
Note that the 20% simple interest above would be fairly close to a 4% APR (with monthly payments) over a 5 year term. APR could vary by school (set by some committee/standard that might function similar to an AM Best type rating agency) that incentivizes graduation rates, job placement at graduation, full-time employment % at 3 years after graduation, etc.
IMO, “the term” part of the simple interest calculation can be flexible based on graduation with a degree. For example, at loan inception, interest on all loans would use 20 years. With a degree completed, the term is automatically reduced to 15 years with additional reductions based on major of the degree (as a way to incentivize particular programs).
Note that all numbers presented here are illustrative only.
I suspect that some pretty serious immigration restrictions are coming to Canada for international students over the next few months if you are applying as an Indian national.
Canada has caught the suspected killers of the activist Sikh and some of the three-man assasination team got into Canada using student visas in 2021.
It will also be interesting how high up the assassination trail leads into the Indian government. I suspect that the US has information on this aspect but is being more cautious than Canada about damaging its relationship with India.
I am digressing from the thread topic so will stop now.
Largest endowments in the US below
The two surprises are Vanderbilt and Emory. This explains a few things about their recruitment practices
These numbers are mind boggling to us poor Canadians. U of T at $3 billion would be our largest.
I’m more surprised by Washington University than Vanderbilt, to be honest. But not shocked.
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My typically American-centric brain immediately thought “Why would Canadians endow the University of Texas?”
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