Your first three points are very strong and insightful, but I somewhat object to your fourth. Individuals get loans for things that pay off in the long-term regularly - cars and houses, for the most part. I don't see any reason why college should be different, especially because the alternative is for taxpayers to subsidize it.
The real issues are twofold: first, student loans are underregulated and very predatory in a way that car loans and mortgages are not; second, like you said in your third point, college is way overpriced, with the cost of it going up about an order of magnitude over the past few decades with no discernable increase in quality (see the excellent Consideration On Cost Disease for more[1]).
If education was 10x cheaper and student loan rates were 3-5% a year, you wouldn't need the public to fund education - and even if you wanted to, it'd be a far easier time selling that idea than trying to convince people to fund undergraduate degrees to the tune of $100k+ per student.
There's much more to higher education costs than Baumol's cost disease. Public universities have much higher tuition because state subsididies to universities have decreased. In 2005, the state paid 3/4 and students paid 1/4 of the cost of instruction at my university. By 2019, those numbers were reversed, with students paying 3/4 of the cost. Total cost of instruction remained the same within a couple percent over that time period.
On the other side, elite private universities are in ever greater demand, driving higher tuitions. Higher tuition is a signal of their elite status, and such universities want to keep their tuition close to that of their competitors. They use financial aid to produce a sliding scale to collect as much money as they can from those who can afford to pay. On the other side, because of that financial aid, raising tuition an amount x may only produce an increase of income of 1/2 x, because the rest goes to increased financial aid. That factor increases the rate at which they raise tuition.
I think a third real issue is also important, the 'undue hardship' burden necessary to get rid of student loans through bankruptcy needs to be dropped.
Exactly, people get loans for houses and cars, and the banks make damn sure you're a good credit risk. For college loans, it's literally the opposite. Since the loans are so hard to get rid of, the only incentive is to increase the number and size of the loans.
The issue is that if lenders looked at creditworthiness for college loans the way they do for mortgages, either the price of college would have to decline precipitously, or they would trust far fewer people with that amount of money.
I've been shouting this from the rooftops at anybody who'll listen for several years.
The trick to fix our college system is simply allow student loans to be discharged through bankruptcy, like any other loan. It is a simple incentive shift that changes the whole dynamic of the higher learning industry. All the problems with it that we talk about nowadays will right themselves and everything falls into place with this one weird trick.
If you complete your degree and declare bankruptcy, you still get to keep your education. So what's to keep every student from going to college, getting a diploma, discharging their debt, then getting a job?
I'm not pro-student debt, but I don't see how this is sustainable for colleges either.
If all you want is an education, that can already be obtained for free. No need to take on debt for that. The value proposition colleges claim to bring over education, and why you might consider debt to obtain it, is an associated certification. Certifications can be revoked.
Very good points - I had no idea of this crazy situation for student loans.
So, perhaps, "student loans" need to go (in the sense of all of the awful regulation (or lack thereof) around them), but not necessarily "loans to students to earn a four-year degree".
The real issues are twofold: first, student loans are underregulated and very predatory in a way that car loans and mortgages are not; second, like you said in your third point, college is way overpriced, with the cost of it going up about an order of magnitude over the past few decades with no discernable increase in quality (see the excellent Consideration On Cost Disease for more[1]).
If education was 10x cheaper and student loan rates were 3-5% a year, you wouldn't need the public to fund education - and even if you wanted to, it'd be a far easier time selling that idea than trying to convince people to fund undergraduate degrees to the tune of $100k+ per student.
[1] https://slatestarcodex.com/2017/02/09/considerations-on-cost...