Yes, the naive version of this is bad; but the point of a change like this isn’t that the immediate downstream effects are bad. The point is that the system as a whole is a giant adaptive object, and a critical part of the control loop is open. Closing the control loop has far, far more impact than just the naive version.
Consider cause and effect down the timeline:
Students are allowed to default, and start defaulting.
Loan companies change behavior, both to work with existing loan holders (so they don’t default) and be more selective about who they give loans to.
Loans become more likely for careers / degrees which have the ability to make money (STEM and friends), less likely for other degrees.
Number of students, and amount of money coming in to universities, drops.
Universities actually experience price pressure. They start cost cutting and dropping less useful things, and start shifting resources to degree programs with the most students.
Cost of a university degree slowly drops over time due to reduced demand and reduced funding.
Over time, there are broader societal shifts to deemphasize the idea that “everyone needs a degree”. Trade and other schools gain more prominence.
Universities start experiencing increased competitive pressure with trade schools.
… and other effects. Also, this is iterative—all of these components take time to respond and adjust to the new equilibrium, after which they will need to re-adapt.
Yes, it’s not a perfect solution, and yes, there’s definitely the concern that poor / disadvantaged students will have more trouble getting loans. But compensating somewhat for this would be the price drop, additional emphasis on trade schools, and deemphasis on needing a degree for any and all jobs.
Another expected objection might be, “with all these possible changes, how do we know this will be better?” To that I would answer: because we know the system is at least partially broken because the control loop on it is open. Any adaptive system with an open control loop is going to produce garbage; the first most obvious thing to do is to fix that.
Yes, the naive version of this is bad; but the point of a change like this isn’t that the immediate downstream effects are bad. The point is that the system as a whole is a giant adaptive object, and a critical part of the control loop is open. Closing the control loop has far, far more impact than just the naive version.
Consider cause and effect down the timeline:
Students are allowed to default, and start defaulting.
Loan companies change behavior, both to work with existing loan holders (so they don’t default) and be more selective about who they give loans to.
Loans become more likely for careers / degrees which have the ability to make money (STEM and friends), less likely for other degrees.
Number of students, and amount of money coming in to universities, drops.
Universities actually experience price pressure. They start cost cutting and dropping less useful things, and start shifting resources to degree programs with the most students.
Cost of a university degree slowly drops over time due to reduced demand and reduced funding.
Over time, there are broader societal shifts to deemphasize the idea that “everyone needs a degree”. Trade and other schools gain more prominence.
Universities start experiencing increased competitive pressure with trade schools.
… and other effects. Also, this is iterative—all of these components take time to respond and adjust to the new equilibrium, after which they will need to re-adapt.
Yes, it’s not a perfect solution, and yes, there’s definitely the concern that poor / disadvantaged students will have more trouble getting loans. But compensating somewhat for this would be the price drop, additional emphasis on trade schools, and deemphasis on needing a degree for any and all jobs.
Another expected objection might be, “with all these possible changes, how do we know this will be better?” To that I would answer: because we know the system is at least partially broken because the control loop on it is open. Any adaptive system with an open control loop is going to produce garbage; the first most obvious thing to do is to fix that.