Charter Oak Partnering with Excelsior

[ncpenn]

If very few people could afford to pay these high tuition rates out of pocket, colleges would be forced to lower their costs.

Unfortunately, this isn't true. How Much Money Does the Government Really Make From Student Loans? - Andrew P. Kelly - The Atlantic

The government makes money off of student's who default. Ergo, it is in the Fed's best interest for tuition prices to rise so more need to take loans (and to make the loans big enough that default is a likely option).

[sanantone]

I don't think colleges would be able to survive without state funding if most of their students transfer in and test out of 90%+ of their degrees. That's the reason why the Big 3 have high fees you don't really see anywhere else, but I think that most of their students also take a substantial amount of their courses in residence. TESC and Excelsior are also able to make money off of their own CBEs.

WGU might sound cheap and it is, but you're really paying for time. No matter what, you're going to have to pay for at least one 6 month term. If you don't spend more than 6 months with them, it doesn't hurt them much because they didn't have to spend anymore resources on you.

[sanantone]

Unfortunately, this isn't true. How Much Money Does the Government Really Make From Student Loans? - Andrew P. Kelly - The Atlantic

The government makes money off of student's who default. Ergo, it is in the Fed's best interest for tuition prices to rise so more need to take loans (and to make the loans big enough that default is a likely option).

I didn't say it was in the Fed's best interests for tuition prices to fall. I said that they would fall if financial aid weren't available. Colleges and the federal government are two separate entities. If no one could afford to pay $300 per credit hour, then colleges would have no other choice but to lower their costs or shut down. The government offering financial aid to just about anyone does away with free market price controls. Colleges can raise their tuition rates as much as they want as long as the federal government is offering enough aid.

[sanantone]

Unfortunately, this isn't true. How Much Money Does the Government Really Make From Student Loans? - Andrew P. Kelly - The Atlantic

The government makes money off of student's who default. Ergo, it is in the Fed's best interest for tuition prices to rise so more need to take loans (and to make the loans big enough that default is a likely option).

I finally got time to read the article you posted. According to that article, the government makes money off of student loans. However, they do not make money off of defaults.

But by the CBO's own admission, the FCRA procedures don't account for the cost of "market risk," or the potential for economic forces out of the government's control to affect the ability of borrowers to pay back their loans. When the economy goes south, for instance, borrowers are more likely to be delinquent or to default, leading to lower recovery rates and higher collection costs for the government.

Another article gives more statistics.

The Obama administration’s latest budget proposal shows the federal government only recovers 82 percent of a student loan after it enters default.

Though the feds can often recoup 96 percent of the lost loan’s value, it can take years for the feds to recover the full amount of the loan — and, as Delisle writes, “time is money”:

How Student Loan Defaults End Up Hurting Taxpayers | StateImpact Indiana

Time is money. If the interest rates aren't keeping up with inflation, then the money that the student pays back is worth less over time. Also, if the government is borrowing money to lend money (which it is), it is also paying interest until the student pays his or her loan back.

Other ways student loan defaults hurt the economy.
http://www.usatoday.com/story/money/busi...g/1969293/
http://www.cnn.com/2012/12/06/opinion/be...udent-debt

[ncpenn]

I finally got time to read the article you posted. According to that article, the government makes money off of student loans. However, they do not make money off of defaults.

My bad. I grabbed the link off of the wrong article. The one I was looking for was this one. Government Collects on Student Loan Default - WSJ.com

Sorry.

[ncpenn]

I said that they would fall if financial aid weren't available . . . Colleges can raise their tuition rates as much as they want as long as the federal government is offering enough aid.

:iagree:

Very true.

[UptonSinclair]

There is a lopsided market when the government provides funding but little oversight. Public colleges want to live off of the government purse, but they want to claim the benefits of market based pricing. As a big government liberal, I am all for clamping down on public colleges and universities. I just spent $23,000 for my daughter to spend one year at Colorado State. What they don't take in tuition, they get in room and board. The best part is when they showed my American Opportunity Tax credit as financial aid.

College presidents remind me of middle aged men driving corvettes. Only, their corvettes are paid for by students.

[sanantone]

The Jungle is one of my favorite books even though I didn't fully agree with the ideology Upton Sinclair was promoting.