Professor Hanson also points out how the universities totally ignore their fiduciary responsibilities. They should treat the students like any other credit risk and ask about their ability to repay their loans with the major they have selected. "Will you make enough money to repay your loan?" should be a basic question asked. If the kid signs up for a major in Grievance Studies, Wymin Studies, or Black Studies, the answer is clearly "No" and the loan should be denied.
But there's no moral hazard for the universities because they simply pass it on to the federal government. The fedgov loans the money, takes on bad debts, and forgives those bad debts leaving all of us holding the bag. (that has ended, thank God)
Education loan interest rates should be based on the ability of the student's major to generate sufficient income to repay the loan. That's how loans for cars and houses work; why not for education?
- Low interest rates for engineering, accounting, finance, chemistry, biomedical, physics and computer science / AI
- Medium interest rates for law
- High interest rates for Journalism, Political "Science," and Education degrees.
- Deny all loans for anybody wanting to take "Studies" or pursue a DEI or CRT major
Colleges should have to co-sign on the loans.
That’s probably should be the first step going forward.
Make small changes that can’t reasonably be objected to.