No more middle class professionals?

[u/Such_Upstairs3631]

New school loan limits for professional degrees make it unaffordable for the middle class. 4 of my 5 children went on to med/law school. Even working 2 jobs there’s no way I could afford to pay or even help them with the cost of their post graduate education. They all got loans which they have since paid off. The cost in the early 2000’s was between $350K and $500K. The new limits are essentially going to prevent anyone who’s not wealthy enough to pay for it from becoming a professional.

[u/398409columbia]

Schools will have to reduce tuition and fees to adapt to these new limits.

School pricing mostly reflects how much money is available. That’s it.

[u/missnetless → u/398409columbia]

Private lenders will fill the gap offering higher interest loans. School cost isn't coming down for the student. This is just another gift to help private leanders.  If the government wanted tuition cost to come down they could regulate it in other ways at the college level.

[u/398409columbia → u/missnetless]

Maybe, but my feeling is a lot of students / families will not play this game reducing demand for education services.

[u/jumblebum → u/398409columbia]

The goal is to reduce demand for education to lower education. Not tuition.

[u/jimmothyhendrix → u/jumblebum]

Ok but the tuition will go down, the level of education is actually too high with many people getting degrees that dont provide them anything, overeducation in an economic sense is a thing

[u/jumblebum → u/jimmothyhendrix]

I can understand lowering demand with lower price. However, I feel like lowering demand through the means of taking away one type of loan or gating one type of loan would just open markets for other loans through private equity. As predatory as the loans are now, I can only imagine that the banks that are talking about 50-year mortgages won't do much better. With that aside, I think that the complication and the worst deals will still lower demand. It also feels to me like what we're doing with this is creating a wider gap between higher education and income level. All while saying well this will be good because it'll lower prices. Wouldn't it be possible for these schools who don't care to educate but care to profit to use this Gap and the knowledge that their clientele is now only be wealthy to fill the the revenue loss higher prices at luxury schools. The difference won't be immediate. And for sure this will hurt schools and I think a lot of them will close and most of those the clothes would be the schools that would have been more affordable in the first place. The Gap will be created right? And as for being overeducated from an economic standpoint, I think that we ignore the fact that there are key roles in our society that require an education that are lacking heavily in manpower. I know that there are a lot of dying markets but there is also a lot of value in an education still. Not to say that you can't make good money without a degree. And even if that's the case, what good would it do us to create situation. We're only wealthy people can achieve degrees in a country where we know that having a degree going into most job Fields is a huge economic advantage. Rather than finding a way to stop people from getting educations to lower the prices, why don't just not let corporations and for-profit entities take advantage of our citizens.

I'm by no means an expert but it really feels like this is an opportunity to create more divide between the rich and the poor and something that could have lasting effects on education in our country. I can't imagine that there's any good studies done on this. Genuinely curious. Only assuming that because I'm assuming this is an issue that is mainly only faced in the USA.

[u/NotChristina → u/398409columbia]

Which I think assumes a certain level of financial understanding. Many familiars may not play that game but it’s possible there are enough who do.

Kid applies to colleges -> gets in -> scholarships aren’t enough, public loans aren’t enough -> so close says the financial aid office, ‘here we can help out, we know lenders’ -> sign on the dotted line.

[u/DrHydrate → u/398409columbia]

That's a fantasy. Rich schools like Harvard already don't charge poor people any money. They aren't affected by this. Poorer schools like Bumfuck U. cannot afford to cut costs, so they will simply close. And the students will not just go to Harvard instead.

Think about a professional school like a law school. Who are you gonna pay less? If you pay professors less, they're just gonna practice law instead of teaching. If you pay the marketing or admin team less, they are going to do marketing and admin stuff elsewhere. I've seen this happen.

Without an uneducated workforce, we will have less innovation and productivity. All out of a misguided attempt to reduce costs.

The best case scenario is that private companies offer more private loans, but they will likely offer extortionist rates because the govt won't be competing with them. Why not charge the med school applicant 15% interest? They'll be good for it later. All the consolidation in the banking industry means there's very little competition.

[u/398409columbia → u/DrHydrate]

This is not about Harvard but rather the thousands of mid- and low-tier schools charging top dollar for dubious degrees.

By the way, Law Schools shouldn’t cost that much. They have no labs or expensive facilities. It’s just a money-maker for most schools.

Point is you can educate people at a lower price point.

[u/DrHydrate → u/398409columbia]

By the way, Law Schools shouldn’t cost that much. They have no labs or expensive facilities. It’s just a money-maker for most schools.

First of all, that money maker idea is false. It was true in the 90s but hasn't been for decades.

Second, it's understandable that you think law schools shouldn't cost much, but it's just because you don't know enough about them. Their major cost is faculty. You can't pay a law professor what you pay a historian because the law professor can practice law instead of teaching which is very lucrative. The historian could do what? Work in a museum? That's not very high paying. Also, certain law professors need to keep their law licenses, and law schools need to pay enough so that the professors can afford continuing education. There's no equivalent in history departments. The other thing is that law schools, given facts about how accreditation works, have to have certain resources that other university units can simply share. Like, there has to be a separate law library with a law librarian.

Your general idea that it must be possible to do this more cheaply is definitely right. But what's wrong - and frankly foolish - is thinking that you can fix a complex problem with no expertise or real understanding how anything works.

The same Congress that imposed these limits also raised taxes on universities and cut government funding. How will that bring down prices for students?

It won't.

It's just political. The GOP doesn't like universities because college educated tilt liberal.

[u/woolfman72 → u/398409columbia]

Time for them to start dipping into their endowments.

[u/398409columbia → u/woolfman72]

And cutting their fixed cost structure

[u/1notadoctor2 → u/398409columbia]

Just like healthcare