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Thread: A new way to fix the student loan problem in the USA.

  1. #31
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    Re: A new way to fix the student loan problem in the USA.

    Quote Originally Posted by wellwisher View Post
    I figured out a cost effective way to fix the student loan problem in the USA using the free market. The idea is to treat a diploma as a commodity. Let me explain how this can work, using an analogy.

    Say you had all the skills and decided to design and build your dream house. You get a loan from the bank to buy the property and materials. You work hard over several years building your dream house. Once it is done, you still owe a lot of money to the bank and find that you cannot afford to pay it back. The bank will foreclose on your property. You will lose the fruit of all your labor, the bank gets your house, so it can sell the house and reimburse itself for the loan.

    If we treated the college diploma and student loan, the same way as we treat the house and mortgage, if we paid off a student loan this would entitle the payer the student's diploma. The bank does not allow the home owner to keep the house if they default. The entity that now owns the diploma, would be able to sell it to recoup their expenses. This way you could buy a diploma, that has been repossessed, without having to go to college. Instead of victimizing the tax payer, this will be driven by free market supply and demand.

    In the example of the man building his dream house, the new owner of his house who bought it from the banks, has bragging rights to the dream home, even though they did not do any of the work. All they did was get a loan and buy the house from the bank. The man who built the house, originally, has memories and experiences which are always his. He only lost the house. The same could be done with the diploma. The student who defaults may have done all the work for the diploma, but the other person gets to enjoy the dream diploma, simply by buying it in the diploma foreclosure market. They do it with houses.

    Conceptually, rich people could go to diploma brokers, as a way to get ideal diplomas for their children at a birth. Why wait for talent to emerge and grow. Wouldn't it be nice to have a degree at 1 year old? That makes you look like a genius to your friends. Colleges may need to buy back foreclosed diplomas, so their degrees maintain value. Colleges have made out like a bandit, and this would level the field. Some forward thinking students may decide to get a loan for college diploma, in High School, then go work in the trades, so they can pay it off faster and still have a degree.

    In the end, a diploma is a type of resume prop, to help one open doors to jobs and organizations. Why not make it a commodity and solve the student loan problem?
    Not sure repossessing a diploma is a viable concept. The knowledge that diploma represents is still in the graduates brain; selling it to someone else doesn't make that person any more intelligent or skillful. A repossessed house can be resold and become a home for a different family.
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  2. #32
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    Re: A new way to fix the student loan problem in the USA.

    Quote Originally Posted by wellwisher View Post
    I figured out a cost effective way to fix the student loan problem in the USA using the free market. The idea is to treat a diploma as a commodity. Let me explain how this can work, using an analogy.

    Say you had all the skills and decided to design and build your dream house. You get a loan from the bank to buy the property and materials. You work hard over several years building your dream house. Once it is done, you still owe a lot of money to the bank and find that you cannot afford to pay it back. The bank will foreclose on your property. You will lose the fruit of all your labor, the bank gets your house, so it can sell the house and reimburse itself for the loan.

    If we treated the college diploma and student loan, the same way as we treat the house and mortgage, if we paid off a student loan this would entitle the payer the student's diploma. The bank does not allow the home owner to keep the house if they default. The entity that now owns the diploma, would be able to sell it to recoup their expenses. This way you could buy a diploma, that has been repossessed, without having to go to college. Instead of victimizing the tax payer, this will be driven by free market supply and demand.

    In the example of the man building his dream house, the new owner of his house who bought it from the banks, has bragging rights to the dream home, even though they did not do any of the work. All they did was get a loan and buy the house from the bank. The man who built the house, originally, has memories and experiences which are always his. He only lost the house. The same could be done with the diploma. The student who defaults may have done all the work for the diploma, but the other person gets to enjoy the dream diploma, simply by buying it in the diploma foreclosure market. They do it with houses.

    Conceptually, rich people could go to diploma brokers, as a way to get ideal diplomas for their children at a birth. Why wait for talent to emerge and grow. Wouldn't it be nice to have a degree at 1 year old? That makes you look like a genius to your friends. Colleges may need to buy back foreclosed diplomas, so their degrees maintain value. Colleges have made out like a bandit, and this would level the field. Some forward thinking students may decide to get a loan for college diploma, in High School, then go work in the trades, so they can pay it off faster and still have a degree.

    In the end, a diploma is a type of resume prop, to help one open doors to jobs and organizations. Why not make it a commodity and solve the student loan problem?
    Would you want to drive over a bridge every morning and evening which was designed by an engineer who got his/her engineering credentials from a diploma broker? Would you want to go under the knife with a surgeon who bought his/her degree rather than earning it? I certainly would not feel comfortable in a for-sale credentials world.

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  3. #33
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    Re: A new way to fix the student loan problem in the USA.

    The alternative being proposed is for the tax payer to pay off all student debt, while allowing students and universities to retain all the value associated with that forgiven debt. It sounds like government sanctioned robbery like in California, where the homeless can steal up to a certain amount.

    It would be like foreclosed homeowners getting relief from their debt, while being able to keep their homes debt free. The tax pay will have to absorb the debt without any value added. What I proposed will ease the debt burden for those who feel overwhelmed, but those who wish to default, will lose value to balance it off. The value is added to those who volunteer to absorb the debt. This is a debt volunteer system with value added.

    If you had a science, engineering or medical degree, and got a good job, there is no reason to give up you diploma. The value added by your diploma and job will pay off your debt over time. The ones who are more likely to default are those whose debt is way more than the free market value of their diploma. The buyers of that debt and diploma, may have other ways to make money; own a store, and this may be a good fit for everyone.

    The idea is not create a new set of victims, but to create a value exchange system, so everyone feels that got a deal. There is no burden being added or transferred by Government decree.

    As far a good jobs, most of what you learn in school, does not even apply once you enter the work force. Most, but not all jobs have have very specific skills, that one learns on the job. The purpose of education is too help you learn to think for the rest of your life.

    Fr example, very few people in the forums have formal degrees in forum writing, yet most learn the ways of forums and do very well. There are many people without a formal education, who can do very well making money n the work place. They may consider a bought degree like a new suit, and be willing to relieve the burden of a struggling young person, who no longer see its value.

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