what if colleges required payment up front?

[GrayHare]

Inspired by a different thread... this is merely for discussion, I'm not particuarly advocating the following:

Assuming 1) schools exist to prepare students for a productive adult life, and 2) servicing a heavy debt load for an extended time period is not a productive use of one's life, then perhaps schools, colleges in particular, should not admit a student unless he/she can document an ability to pay (with family help) the tuition up front, possibly with assistance from earned grants and scholarships but without loans, and without raiding a parent's retirement accounts. To instead accept a student who will take on a large debt is doing a disservice to that student.

 

[pb4uski]

I dunno about that but if parents and students viewed higher education as an investment rather than some familial obligation, perhaps students would select more sensible majors and be more willing to attend their second or third choice and graduate with more modest debt.

 

[Philliefan33]

Do you mean pay for four years all at once? That would be unreasonable for families like ours. We paid for our girls one semester at a time, which is how it's billed. Payment in full before the start of the semester.

We used savings and current income to cover the cost. No loans for us or the kids. When only the oldest was in school, that was about $15K per semester. For four semesters when there was overlap, the total was about $35K. Then back down to about $20K per semester after the oldest graduated.

We spent roughly $280K in college costs. We were able to afford that because we had some of it saved for years ahead of time, and the rest came from current income. We would not have been able to come up with the total all at once without taking a loan. So it seems to me that the OPs proposal would either force more parents into taking loans or delay/prevent many students from entering college.

It would have been nice if we could have locked in the cost for DD1 by paying ahead. Tuition/room/board increased about $25K/year in the four years she was at school.

 

[Midpack]

I dunno about that but if parents and students viewed higher education as an investment rather than some familial obligation, perhaps students would select more sensible majors and be more willing to attend their second or third choice and graduate with more modest debt.

+1, great answer IMO.

Nothing wrong with going outside STEM, but I'd sure research the outlook for a chosen field of study beforehand. http://salary.com/8-college-degrees-with-the-worst-return-on-investment/slide/3/

 

[marko]

Great idea! I keep reading how the availability of loans is a factor in the increase tuitions.

But that would mean that only those with financial resources would be accepted. We already have enough outcry about the unfair advantages of those who can afford things others cannot.

 

[aaronc879]

I think this would add yet another thing that results in the rich getting richer and poor staying poor which is the opposite of what we should be looking to do. Basically you are saying if you won the birth lottery then great, otherwise you are almost guaranteed a life of poverty. Not good!

The better solution is to reduce college costs and have public colleges free for all or at least subsidized for the less fortunate. Eliminate the requirement of professors to do research and just have them teach. I'm sure there would be plenty of qualified professors even if the pay was reduced to mid/high 5 figures.

 

[Philliefan33]

There could be some unintended consequences as well.

If we had to pay in full up front, our daughters (and many others) may have started at community college. With more students wanting entry into community college, it would soon be over capacity. IMHO, the fairest way to determine who gets admission would be using grades and standardized test scores. My girls had credentials much much higher than the average CC student. So with more highly qualified students filling up the CC seats for financial reasons, there is not enough room for the average B student to matriculate. Now you have most students shut out of a college education for financial reasons, and more shut out because they didn't get a 4.0 GPA and 2200+ on the SAT.

If students and parents are taking huge loans now to pay for college, shame on them. There are other ways to get an education.

 

[Philliefan33]

!



The better solution is to reduce college costs and have public colleges free for all or at least subsidized for the less fortunate. Eliminate the requirement of professors to do research and just have them teach. I'm sure there would be plenty of qualified professors even if the pay was reduced to mid/high 5 figures.

Public colleges are already subsidized by taxpayers. And less fortunate students already get need-based grants (Pell grants for one). Low income students can borrow about $5500/year in subsidized loans. If you start at community college and transfer to a state university, you could likely graduate with less than $25,000 in loans.

The problem is that too many have champagne tastes on a Budweiser budget. Too many students want to go away to a four year school, or go to a private school, when they cannot afford it. Parents take huge loans because their child worked hard and "deserves" to go to their dream college.

For us, this was another instance of being frugal. Our oldest wanted to go to a certain private college. She got no financial aid (need-based or merit aid) so the cost for the first year would've been $45K. She had two other reasonable options, one a public school and one a private that gave her merit-based aid. We took the most expensive one off the table and told her she could choose either of the other two at a cost of about $25K for the first year. We could've taken loans to send her to her dream school but we realized that was not a good decision. No sense in paying double for the same BS degree. We know some parents who took the loans. They are still working, we are ER.

Oh, and many college professors are already making less than "high five figures". Oldest D should have her PhD in biochemistry next year...she would jump at the chance to make that. Most of her peers have started at a lower pay scale.

 

[NYEXPAT]

I think University should be paid by WS.

 

[RE2Boys]

With a soon to graduate HS senior, we've started looking at the housing options for him to attend a nearby state school. I'm amazed at the choices available, which is not bad except that this area can drive up the cost of even a state school. One can get the basic dorm (two to a room, bath down the hall) for $2500 per semester or one can stay in a four person suite with each kid private room/share bath with one other and a common area for $4500 a semester.

Thinking of making a deal with him....stay in the traditional dorm and the savings will buy him a car at some point.

 

[Texas Proud]

I think that making someone pay upfront is stupid....

You want to get the person at the highest production level in the shortest amount of time... that is going to college right after HS... and if that means taking out loans then so be it...

But, as others have said, there are some stupid decisions being made... but that should not change the system for the vast majority of people who do what they need to do and have no problems with their debt...


BTW, as someone else mentioned, making a decision of the cost of a degree is important... my DS was accepted to Rice... but we would not get enough financial aid to bring the cost down to a reasonable amount... so he is going to a top state school, which BTW is ranked the same as Rice for his degree choice...

 

[GrayHare]

We've seen the problems easy loan money creates. I'd like the colleges, who ostenstibly have the student's best interests in mind, to be more responsible about the financial burden. Low-income students would not be shut out because deserving ones could get grants and scholarships in place of loans.

If you've not been back to your school in decades, you might be surprised how it's changed. At mine the faculty-to-student ratio is way up. No more bumming a ride, now late model limo-busses cart students where they wish to go. The buildings and grounds are impeccably maintained. No more dirt and gravel paths, now the walkways are quality brick and sculpted marble. The place looks like a 5-star resort. Has such spending resulted in much better grads, or mostly ones with more debt?

 

[youbet]

If the rules were changed so that matriculated students could petition for bankruptcy, that would go a long way towards solving the problem.

 

[GrayHare]

If the rules were changed so that matriculated students could petition for bankruptcy, that would go a long way towards solving the problem.

That's an interesting idea. Presumbly it would make lenders think twice about overloaning.

 

[haha]

I dunno about that but if parents and students viewed higher education as an investment rather than some familial obligation, perhaps students would select more sensible majors and be more willing to attend their second or third choice and graduate with more modest debt.

I have never got this familial obligation thing. My kids both handled their own education, and the oldest averages $1 mm/ year, so clearly it was not a terrible burden to him. My other son gets the usual west coast experienced software developer salary, has worked steadily since his graduation, is married and owns a home in Seattle.

I think many parents need to create these dependency relationships to maintain control. I know one young female practicing doctor who still gets Daddy's contributions. He can count on her to accept his calls!

The power relationships in my family reversed early on. If a young person makes his/her own living, youth is power. Once our kids are grown, actually most of us are on the downslope of life. Especially if we are ERs.

Ha

 

[youbet]

That's an interesting idea. Presumbly it would make lenders think twice about overloaning.

You bet it would!

Today's college loan lenders remind me of mortgage lenders in the pre-Great Recession period.

We have a local for-profit trade school which is notorious for churning out grads with huge loans and dismal job prospects. Having a few "fashion and design" majors with large loans petition for bankruptcy after not being able to find work (or even an interview) might give the loan officers a wake up call!

 

[aaronc879]

If the rules were changed so that matriculated students could petition for bankruptcy, that would go a long way towards solving the problem.

I do not believe that you should be able to discharge your student loan debt. College needs to be more affordable to low income students. It is unaffordable to millions and those people need to make a choice. They can either not go to college or take out loans. If they take out loans they need to be aware of the risk and accept it. They should have to pay it back. There could be a system put in place so it's based on income. Say you have to pay back at a rate of 10% of your income or more. If you have a hard time finding a job after graduation and have no income then you make no payment but the interest compounds.

 

[MichaelB]

If the rules were changed so that matriculated students could petition for bankruptcy, that would go a long way towards solving the problem.

That would have a positive impact. I also think that if any debt is needed, the Universities should be on the hook as lenders.

Rue the day that some smart University admissions dept employee first called loans "financial aid". Like a boat aiding someone adrift by throwing her an anchor and calling it flotation assistance.

 

[aaronc879]

Perhaps student loans should only be available to those who attend State schools. Private schools would only be for those who can pay 'out of pocket'.

 

[youbet]

Perhaps student loans should only be available to those who attend State schools. Private schools would only be for those who can pay 'out of pocket'.

Kind of a broad brush.

 

[DrRoy]

I wonder if colleges and universities would do a better job of educating if their compensation was in some way dependent on the income of their graduates.

 

[pb4uski]

Perhaps student loans should only be available to those who attend State schools. Private schools would only be for those who can pay 'out of pocket'.

Perhaps students and parents should exercise some common sense. That would stop the problem in its tracks.

I recall listening to a show on NPR about a year ago where they interviewed an English literature major who was about to graduate and had not given much thought to what jobs their degree would qualify them for or how much total debt they had taken on until it was much too late. Their major did about nothing to qualify them for a good paying job and they had large student loan debt as an anchor around their neck to start off life.

 

[marko]

What about schools having a variable tuition based upon the expected income that major would produce. That way, an arts degree might cost say, [-]$10K[/-] [-]$3K a year[/-] they pay you and a business degree would cost $40K a year and so on.

Please do not forward this to my SIL who vehemently believes that college should never be about getting a job but about "the joy of learning" and the ummm "experience of college life".

 

[youbet]

Perhaps students and parents should exercise some common sense. That would stop the problem in its tracks.

You could take that stand on a number of situations where someone is being sold something........

Automobile customers should exercise some common sense so that lying, high pressure salespeople can never put them into a car and car loan they can't afford.

Investors should exercise some common sense so that lying, high pressure salespeople don't sell them FA services they don't need or complicated, high commission annuities.

Home buyers should exercise some common sense so that lying, high pressure mortgage loan officers (think 2006) don't put them into a mortgage they can't afford.

Students and parents...........

And blaah, blaah, blaah.........

I really think there are shrewd hucksters out there that can easily take advantage of many folks. We need to establish a few rules to help keep them in at least partial control for the sake of maintaining an organized society/economy. Having the student victim at least be able to petition for bankruptcy after the "fashion and design" major that was a "guaranteed winner" doesn't pan out would go a long way towards this.

 

[aaronc879]

What about schools having a variable tuition based upon the expected income that major would produce. That way, an arts degree might cost say, [-]$10K[/-] [-]$3K a year[/-] they pay you and a business degree would cost $40K a year and so on.

Please do not forward this to my SIL who vehemently believes that college should never be about getting a job but about "the joy of learning" and the ummm "experience of college life".

That idea could have potential. After all, different degrees are different products and they are worth different amounts so why not charge different amounts for them.