Trump Admin Wants to Cut College Loans to Programs Seen as Poor Investments
“Some people go to college [and] take out loans for programs that really just don’t have a whole lot of economic value”
Imagine how much smaller the student loan debt bubble would be if this had been done twenty years ago.
Fortune reports:
Trump wants to cut federal loans from college programs that don’t pay off. College cosmetology, fine arts, and music programs are at risk
Earlier this month, the Department of Education proposed a new rule that would cut off federal student loan access to college programs whose students earn too little after they graduate. For undergraduate programs, those diploma holders would generally need to earn at least as much as young workers with only a high school degree. For graduate programs, graduates would need to beat a benchmark based on workers with only a bachelor’s degree. In certain cases, programs that fall short could also lose access to Pell Grants.
The programs most at risk vary widely and span both traditional four-year colleges and more technical, career-focused institutions. Some are short-term certificate programs, including cosmetology and other vocational training fields. Others are degree programs in areas where graduates often earn less early in their careers, such as music, fine and studio arts, and certain health-related fields.
Out of the nearly 20 million post-secondary students, some 95% are enrolled in a program that is likely to pass the earnings test. But, close to 2,000 colleges and universities in the U.S. have at least one program at risk of failing the earnings test, and it could leave over 600,000 students at risk, according to Preston Cooper, a senior fellow at the American Enterprise Institute who tracks higher education reform. (You can search his list of at-risk programs here, but some include agricultural studies, telecoms, and teaching programs).
Cooper pointed out this isn’t only an issue for one’s career prospects. Instead, he pointed to the $1.7 trillion in outstanding federal student loan debt as a reason why these programs should be held accountable for potential financial harm.
“Some people go to college [and] take out loans for programs that really just don’t have a whole lot of economic value,” Cooper told Fortune. “They end up with a lot of debt, and then they don’t really have the earnings in order to be able to repay that debt.”
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Comments
The federal government should not be in the business of extending college loans in the first place. There should perhaps be something similar to the GI Bill where college is payed for in exchange for services – “We will pay for your doctorate, but you have to sign a contract to work for us for a set period of time in exchange.”
We already have that. It’s called “ROTC”.
Don’t want to serve in the military? Pay your own way.
Cue the screaming “it’s too expensive now, we can’t afford to pay our own way”.
The interesting thing is that government guaranteed loans and grants are WHY tuition is too expensive for anyone to pay their own way. If universities weren’t being subsidized by tax dollars and had to compete on an open market, it would be WAY more affordable. Also, there wouldn’t be 5 administrators for every student and the “Second assistant under-superintendent for equity and affirmation” wouldn’t be making 6 figures.
He’s saying a non military option that serves the public good.
Not everyone needs to be in the military nor does everyone qualify.
I think the greater point of this policy move is sound. The government should not be guaranteeing bad investments.
I get it. But that policy move still maintains the government subsidization of higher education, which is what caused the problem in the first place.
Half measures don’t work. They usually don’t even half work. The government has no business engaging in charitable work. Whether that’s in subsidizing housing, food, Obama phones or education, it’s a recipe for inefficiency, graft and fraud.
We don’t need to reform federally subsidized student loans and grants. We need to END them.
I’m so old, I remember when you had to convince a bank or similar private lender that your education plans made good business sense, and that you were a good repayment risk. Not just throw reams of red tape at the effing federal (“it’s only money”) government for a guaranteed grant.
Democrats deliberately moved into this arena by claiming that lenders were “discriminating” (i.e., doing their JOBS). Leftist parasites weren’t getting “their share” so they could scream down non-Marxist presentations.
Every time the Democrats move the government into another private sector with significant cash flow, it means more rakeoff money for THEIR parasites.
I think the “default rate” on student loans provided by the Fed is much, much higher than is disclosed. For one thing, too many younger people have such a disgusting entitlement attitude and the polling consistently displays how willing they are to disregard the law when it is inconvenient for them. Another thing, they seem to have no commitment to anything that doesn’t involve instant gratification via a phone app or hookup culture. I shudder to think what life is going to be for those brats when they suddenly have to fend for themselves. When they ask how “meat is made at the supermarket”—WORRY.
It’s low-ish but the deferment and accrual of interest for about 4 years with no payments makes it high.
Why do vocations such as cosmetology “need” a certificate in the first place?
Credentialism has been an ongoing scam for years. They are the same as medieval guilds, serving the same purpose.
Probably for the same reason they need a license to practice; to protect the public from bad hair days.
Cosmeticians routinely use chemicals that can cause serious injury if used sloppily. Similarly, Massachusetts requires anyone buying “loads” for powder actuated construction devices (like concrete nailers) to have a certification from the manufacturer (which amounts to having watched an online safety video). I think this sort of professional certification is reasonable, provided it does not balloon into unreasonable lengths of time or costs to the student.
The other scam is when a business owner who does not avail herself of any of the caustic treatments that require the cosmetology certification in the first place – for example, a simple “eyebrow threader” – is forced to get the license unnecessarily. These sorts of cases are a significant portion of the pro bono work performed by Institute For Justice.
One immediate problem is that the Us create and name the programs. They rename majors every day even without a fiscal incentive.
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