Tiago Splitter wrote:
minnbills wrote:If federal loans are restricted, private capital will probably step in to fill the gap since the need for loans will still be there, and the issue will still be unresolved.
But if private capital is actually on the hook if the borrower defaults the problem is largely solved. Tuition and enrollment both go down.
As Campos has said just about anything would be an improvement over the current system. I'd even prefer a hardcore left-wing system of straight capping the number of people allowed in over the existing disaster.
To BearsGrl's point, we probably need to make the schools accountable by having them issue or guarantee at least part of the loan. That way if you really are capable of making it the school can let you in, but it prevents them from taking on just any idiot who can borrow from the government.
minnbills wrote:Haha exactly, somebody on Wall St. will take the risk
Not if the government got out of the way. But it's fair to suggest this won't happen. For those of us that support limited government, it's sad times.
There are three elements to this whole problem.
1) There is almost certainly a psychological element undermining market efficiency here. There are information asymmetries that the buyers of legal education are on the wrong side of, and there is likely an overestimate of the value of legal education amongst buyers.
2) The government really is distorting the market by making loans so accessible. This creates more people in law school than there is demand for lawyers;
3) There is increased competition from people who without federal student loans would not be able to afford legal educations. A huge part of the reason top law schools had 50%+ acceptance rates back in the 1950's was because only people with financial resources could really afford to go to top schools.
The "limited government" folks are really focused on (2), but it must be understood that (1) and (3) are also huge problems. Their deeply flawed economic models which ignore behavioral/psychological elements of modern economics make them ignore (1), and their lack of concern for fairness makes them ignore (3). But just getting government out of the way isn't going to fix the problem. It's not going to address the psychological irrationalities in the market, and will return us to the status quo ante. The status quo ante was pretty great for upper middle class folks, who faced less competition, but was far less meritocratic.