Solution to the student loan bubble

[John_doe]

http://money.msn.com/now/post.aspx?post ... a4be1b0eb4

[barrytrot]

An interesting idea that ONLY works in the micro. There is no way most Universities could stay competitive with this approach.

Why would someone go to the place that makes you PAY UP FRONT when you can PAY LATER for the other place?

This isn't going to catch on beyond boutique smaller colleges.

[John_doe]

An interesting idea that ONLY works in the micro. There is no way most Universities could stay competitive with this approach.

Why would someone go to the place that makes you PAY UP FRONT when you can PAY LATER for the other place?

This isn't going to catch on beyond boutique smaller colleges.

Demand side economics= effective in the macro world? Seems to be detrimental in most cases, care to eloborate?

[barrytrot]

Very few students (i.e. ignorant 18 year olds) are going to choose to pay up front when they don't have to do so. Therefore this cannot catch on as it gives a distinct competitive disadvantage to the schools that adopt this policy.

Is that what you mean by elaborate?

[John_doe]

Very few students (i.e. ignorant 18 year olds) are going to choose to pay up front when they don't have to do so. Therefore this cannot catch on as it gives a distinct competitive disadvantage to the schools that adopt this policy.

Is that what you mean by elaborate?

Avoid interest, avoid the post college burden of extreme debt load. A little hard work and patience now could save you a lot of hard work down the road. IMHO


Elaborate in how aquiring massive debt loads is good economic policy, sounds too much like Ben Bernanke and Paul Krugman to me. (masters of the band aid fix) Very short sighted. I don't know of any business in America that would want this type of ideology, it defies logic in all aspects.

[John_doe]

A college promoting fiscal responsibility is a bad thing? I think they will reap huge rewards in the future if their students are taught properly.

[barrytrot]

Very few students (i.e. ignorant 18 year olds) are going to choose to pay up front when they don't have to do so. Therefore this cannot catch on as it gives a distinct competitive disadvantage to the schools that adopt this policy.

Is that what you mean by elaborate?

Avoid interest, avoid the post college burden of extreme debt load. A little hard work and patience now could save you a lot of hard work down the road. IMHO


Elaborate in how aquiring massive debt loads is good economic policy, sounds too much like Ben Bernanke and Paul Krugman to me. (masters of the band aid fix) Very short sighted. I don't know of any business in America that would want this type of ideology, it defies logic in all aspects.

I'm not saying it's a good idea (My statement has nothing to do with that), I'm saying that students will flock to the FREE (temporarily at least) over the PAY NOW model.

[barrytrot]

A college promoting fiscal responsibility is a bad thing? I think they will reap huge rewards in the future if their students are taught properly.

I'm not saying it's good or bad, I'm saying it can't possibly become the standard model as those accepting loans will have much more drawing power than those not.

[John_doe]

Very few students (i.e. ignorant 18 year olds) are going to choose to pay up front when they don't have to do so. Therefore this cannot catch on as it gives a distinct competitive disadvantage to the schools that adopt this policy.

Is that what you mean by elaborate?

Avoid interest, avoid the post college burden of extreme debt load. A little hard work and patience now could save you a lot of hard work down the road. IMHO


Elaborate in how aquiring massive debt loads is good economic policy, sounds too much like Ben Bernanke and Paul Krugman to me. (masters of the band aid fix) Very short sighted. I don't know of any business in America that would want this type of ideology, it defies logic in all aspects.

I'm not saying it's a good idea (My statement has nothing to do with that), I'm saying that students will flock to the FREE (temporarily at least) over the PAY NOW model.

It feels good to drink tons of beer today, but I might regret it tomorrow.

I guess if you feel it is a good idea to do it, then go right ahead. You can't blame someone else for the consequence however.

[barrytrot]

Are you hearing me? I didn't say it was good or bad.

I'm saying that colleges will not be able to effectively compete for their buyer's, "students", using this technique in general.

Some will do it successfully, those will be small boutique schools only.

[John_doe]

Are you hearing me? I didn't say it was good or bad.

I'm saying that colleges will not be able to effectively compete for their buyer's, "students", using this technique in general.

Some will do it successfully, those will be small boutique schools only.

In the long run, some of the higher end schools may have to shift policy to compete.


Today is one thing, but I am looking into the crystal ball a bit. A company adding money to the bottom line is a more healthy company than a conglomerate with a massive debt load. At the end of it all the tortoise will beat the hare.

I would rather attend this school than any other in the country at this point, so I know I am not being robbed by the faculty. I am paying for education not a casino.

[John_doe]

http://en.wikipedia.org/wiki/Ponzi

[John_doe]

I see what you are trying to say Barry, and at face value it does seem appealing. I am saying in the long run I think the success rate of these smaller schools may be much higher in that they are making capital, and their student body is leaving with an education with no strings attached. Alumni contributions will probably be better, and it is just a healthier business model.


If employers catch wind of this they may be more apt to hire someone who is a bit more responsible also.

[johnbrickner]

It starts with teaching your children about debt, investment, business, a work ethic, sales skills, self-responsibility (and many other responsibilities,) achievement motivation, herd mentality, deferred gratification, morals, values and other life skills.

If you do, good chance by the time they are ready for college (having already gotten an education) they have an education nest egg they've built up, a scholarship they've earned, investments paying an income, a small business or two they are running on the side, a paying job, and little or no overhead (or some combination of the above).

Upon graduation, don't be surprised to see them living their dream in a career they love doing with all their heart, everyday of their lives with passion.

[John_doe]

It starts with teaching your children about debt, investment, business, a work ethic, sales skills, self-responsibility (and many other responsibilities,) achievement motivation, herd mentality, deferred gratification, morals, values and other life skills.

If you do, good chance by the time they are ready for college (having already gotten an education) they have an education nest egg they've built up, a scholarship they've earned, investments paying an income, a small business or two they are running on the side, a paying job, and little or no overhead (or some combination of the above).

Upon graduation, don't be surprised to see them living their dream in a career they love doing with all their heart, everyday of their lives with passion.

[reddirtcoins]

http://money.msn.com/now/post.aspx?post=319fa0e7-f900-4756-bb5e-38a4be1b0eb4

Every hour I ever acquired was paid for up front. Most I ever did in a single year was 30 and no one ever helped me nor did I want it. I think this is a very good stand.

BTW: post 1000!

[Rodebaugh]

If I had to "pay as I go" I would still be going.

This approach may work in limited modalities, and I applaud their creativity, but it is most certainly not universally applicable.

[barrytrot]

I see what you are trying to say Barry, and at face value it does seem appealing. I am saying in the long run I think the success rate of these smaller schools may be much higher in that they are making capital, and their student body is leaving with an education with no strings attached. Alumni contributions will probably be better, and it is just a healthier business model.


If employers catch wind of this they may be more apt to hire someone who is a bit more responsible also.

I'm pretty certain that the school gets paid either way They aren't the ones giving out these loans. So they don't get more capital this way.

[John_doe]

I see what you are trying to say Barry, and at face value it does seem appealing. I am saying in the long run I think the success rate of these smaller schools may be much higher in that they are making capital, and their student body is leaving with an education with no strings attached. Alumni contributions will probably be better, and it is just a healthier business model.


If employers catch wind of this they may be more apt to hire someone who is a bit more responsible also.

I'm pretty certain that the school gets paid either way They aren't the ones giving out these loans. So they don't get more capital this way.

what about in default? If they think they will see that trillion dollars in the bubble ever again I have bad news.

[Engineer]

If employers catch wind of this they may be more apt to hire someone who is a bit more responsible also.

I'm pretty certain that the school gets paid either way They aren't the ones giving out these loans. So they don't get more capital this way.

I'd bet that recruiters will be lining up to hire these students over run of the mill grads. Whether it's the prospect of paying a slightly lower wage, or picking up talent with a bit more of a work ethic and common sense, they do have an advantage.

Either way, this school's business model shows what can be done. If the government made the sensible decision and got itself out of the higher education racket, schools could adapt by hiring students to do whatever work the school could bring into the campus. That could be anything from call centers to catering or parts machining...and students would graduate with actual work experience.

[barrytrot]

what about in default? If they think they will see that trillion dollars in the bubble ever again I have bad news.

Defaults on student loans are also handled by the loan company. Most of which are guaranteed by the US Government.

So again the colleges definitely want this FREE CASH to them.

If the student defaults the payer is the tax payers not the University.


So very few sane University Deans and/or financial managers are going to recommend taking this cash cow off the table.

[barrytrot]

If employers catch wind of this they may be more apt to hire someone who is a bit more responsible also.

I'm pretty certain that the school gets paid either way They aren't the ones giving out these loans. So they don't get more capital this way.

I'd bet that recruiters will be lining up to hire these students over run of the mill grads. Whether it's the prospect of paying a slightly lower wage, or picking up talent with a bit more of a work ethic and common sense, they do have an advantage.

Either way, this school's business model shows what can be done. If the government made the sensible decision and got itself out of the higher education racket, schools could adapt by hiring students to do whatever work the school could bring into the campus. That could be anything from call centers to catering or parts machining...and students would graduate with actual work experience.

You could be right that the school's graduates will be thought of more highly.

Although it is humorous that the reason may be that they will work cheap because they aren't in debt

[John_doe]

If employers catch wind of this they may be more apt to hire someone who is a bit more responsible also.

I'm pretty certain that the school gets paid either way They aren't the ones giving out these loans. So they don't get more capital this way.

I'd bet that recruiters will be lining up to hire these students over run of the mill grads. Whether it's the prospect of paying a slightly lower wage, or picking up talent with a bit more of a work ethic and common sense, they do have an advantage.

Either way, this school's business model shows what can be done. If the government made the sensible decision and got itself out of the higher education racket, schools could adapt by hiring students to do whatever work the school could bring into the campus. That could be anything from call centers to catering or parts machining...and students would graduate with actual work experience.

Are all of your posts on this subject matter loaded? it is hard to tell the context of your arguement, when you argue from authority.


Will the student with a debt load take a job of lesser value?

This is the exact false sense of entitlement that gets so many people into this situation to begin with.