How America's universities became debt factories

https://anandsanwal.me/college-student-debt-deception/

by car • 2 years ago

492 544 2 years ago

I was lucky enough to get a grant, 100% of cost, with two caveats, you have to finish, and once you finish you HAVE to work in the country for 2 years. Overall an amazing compromise for government.

wood_spirit2• 2 years ago

Guessing from your username that this was Australia? Is this normal? And was this for specific courses and entry grades etc?

chii8• 2 years ago

It's not normal to have this in australia - these are probably scholarships.

Australia has similar loan system for tertiary education.

pelagicAustral2• 2 years ago

Falkland Islands. It is normal, only requirement is to have permanent residence. It is wide open, any type of study...

refulgentis• 2 years ago

I agree entirely, made my college decision based on these factors at 18. However, these analyses miss the mark by stressing the map, instead of the territory.

Ex. The graph about graduates being underemployed goes back to 1990, and there's no meaningful difference in the difference in the rate between then, and now.

Ex. 41% graduating after 4 years doesn't mean it is necessary colleges need to Find A Better Way: that would affect ex. the complain around graduates being not prepared with no discernible skills

roywiggins• 2 years ago

The graph about graduates being underemployed goes back to 1990, and there's no meaningful difference in the difference in the rate between then, and now.

this probably mattered less when the debt load was much lower

johng• 2 years ago

Even saying this a decade ago would have been labeled misinformation.

lordfrito• 2 years ago

Not true... people were talking about this in the late 90's as being a bad idea because of misaligned incentives.

Loans are supposed to be inherently risky to the bank issuing the loan. Managing that risk is their business, and the reward for doing it right is the interest payments.

I remember people back then talking about "if the loans are non-dischargeable, then the bank is pretty much guaranteed it's money back, making it a no risk proposition to them. What's stopping them from becoming student loan mills? What's stopping colleges from asking for more and more money if the banks just lend it no risk?"

These ideas were out there, but get drowned out by the voices of the big pocket companies that are proposing the legislation. Tons of articles talking about the risk being overblown, the results are wonderful, etc. Think about the kids, good for 'murica, etc.

The big messages you hear over and over again in the media are being payed for by groups that aren't particularly interested in benefiting you. This is not a new problem, it's been this way for a long while.

And here we are 25 years later. Wondering how we got here. When anyone with a brain at the time knew this was coming.

The problem is only getting worse because of media consolidation and the vast reach of the internet into everyone's eyeballs. Be skeptical very of what you read.

michelsedgh2• 2 years ago

I agree, and another way out is educating people who are about to enter university properly so they make an informed decision about the major they wanna choose more than their feelings and more on facts to see the outcome.

squidgedcricket• 2 years ago

That's not a one-size-fits-all solution. Many 18 year olds will not be willing or capable of making a good financial long term decision regardless of education.

Mortgaging yourself into decades of indentured servitude shouldn't be an option that's available to young adults.

michelsedgh2• 2 years ago

I actually beg to differ, most people who go into STEM for example have a pretty good understanding of their path and they are very smart 18 year olds who make really good decisions, but I agree that mortgages shouldn’t be like candies giving them to any kid. I agree that If banks were worried of not getting payed back, then maybe they would screen better, but still the issue of universities with bad incentives still remains there.

advael7• 2 years ago

We should be way more willing to straight up kill multi-billion dollar industries. Without that willingness, most modern problems are impossible for governments to solve, and such industries and even their potential competitors are incentivised mostly to exacerbate the problem. I love a good market as much as anyone but there really are problems markets will never solve

WorkerBee284742• 2 years ago

That's too disruptive, and there's too high a chance of unintended consequences. Instead of that what you'll see is a 'we'll kill this multi-billion dollar industry over the course of the next 30 years'

mrfox321• 2 years ago

China does this, for better or for worse.

advael7• 2 years ago

With all due respect, fuck that. We do disruptive stuff with unintended consequences for millions of people as a matter of policy all the time, and the idea that it'll disrupt some finance goons' ponzi scheme does not bother me

candiddevmike3• 2 years ago

Multi-billion dollar industries represent jobs, stocks, and campaign contributions. The US government is not designed to beat those forces. It's the same reason we'll never see universal healthcare unfortunately.

advael7• 2 years ago

It isn't set up to now, but it has been before and it can be again

radpanda• 2 years ago

Same reason we have TurboTax instead of a government website to type our taxable income numbers into.

anovikov6• 2 years ago

We shouldn't see the government as solution to too many problems. If we overdo on it, we get socialism. And we know how it always ends.

Let the market forces decide. Eventually people will realise college doesn't work and will stop going there. Seriously problem is that too many people think they are smart and can benefit from a degree, when most can't. If 10% top graders go to college from school as it was in the boomers' era, ROI of higher education will be enormous (as there won't be an oversupply of useless graduates), and costs will be low (as low demand always reduces prices).

We shouldn't punish people who take the money because people are willing to pay it. Who's fault it is that they are dumb? Do we see much say, annoying advertisement to the tune of "go study X with us, you'll be rich and women will love you"? No. People are doing it because they are dumb. If we try to build a system that prevents smart people from taking money put on the table by dumb people, we will make the whole system dumber by incentivising dumbness.

BoxedEmpathy2• 2 years ago

I question utility of that reduction. When you reduce complex situations to simple words like 'socialism' you lose nuance and predictive power. It's not binary. It's more or less. Canada is more socialist than USA. Norway is more socialist than Canada.

Reducing to "is" or "isn't" doesn't help understand the problem or come up with viable solutions.

advael7• 2 years ago

Socialism is a term too broad to mean anything. When we say socialism, do we include states that provide healthcare systems as infrastructure, as is common across the world? Do we include the vast amounts of market interference represented by decisions about what crimes can be hidden behind a corporate veil, what companies win lucrative government contracts to have decades of non-competitive profits?

The attitude that the government shouldn't intervene against companies on the behalf of human rights has been tried for fifty years, and it is an unprecedented failure even in financial terms for at least roughly 80% of the population of one of the largest and wealthiest countries in the world in terms of real purchasing power. Even for many of us in higher income brackets, the resulting crumbling infrastructure and drastic wealth disparities leave much to be desired as a society to live in. Many of these problems have solutions, and calling them "socialism" is meaningless as an argument against them

candiddevmike3• 2 years ago

We shouldn't see the government as solution to too many problems. If we overdo on it, we get socialism. And we know how it always ends.

With a place in the top 10 happiest countries? https://worldpopulationreview.com/country-rankings/happiest-...

ben_w3• 2 years ago

If we overdo on it, we get socialism. And we know how it always ends.

First, no, we have some high-visibility examples of dictators claiming to be socialists, several of whom had purges of other internal opponents who said socialism was a different thing to what they were doing.

We don't point to the "Democratic People's Republic of Korea"* or "The Democratic Republic of Congo" then say of Democracy (or of republics) "And we know how it always ends".

Second, there's a huge gap between what the USA considers "dangerously lefty" and what is seen in northern Europe today, let alone states today which are or were explicitly socialist such as the USSR.

* AKA North Korea, AKA Naughty Korea

thayne2• 2 years ago

In this case, government intervention is what caused the problem, and removing that intervention is what would disrupt the multi-million dollar industry.

Specifically, the government made it so college loans can't be discharged in bankruptcy, and backs many student loans.

The solution is to remove the exception for student debt in bankruptcy, and either have the government stop backing student loans, or make stricter requirements for colleges to quailify for its students qualifying for federal loans. Like say, require that a certain percentage of students graduate, and get jobs within a year of graduating, having reasonable tuition, etc.

amelius• 2 years ago

Who's fault it is that they are dumb?

They are young. And therefore there is an asymmetry in information.

mchusma• 2 years ago

But…the whole point is that it is NOT a market. If student debt is dischargeable and the government guarantee is removed or dramatically reduced, pretty much all problems are “solved”.

Universities will have to start focusing on ROI. Universities that provide a poor ROI will shut down. Universities will need to reduce costs for traditional coursework, cut courses with poor returns, add courses with higher returns.

The inflation in higher education that has run rampant due to subsidized demand being removed.

tway_GdBRwW3• 2 years ago

Universities will have to start focusing on ROI.

In Europe, they have a simpler system. Education is paid for from taxes. If a student does well, they pay for it via taxes. If they don't, then they aren't crippled by debt.

The problem with the ROI approach is it still places too much burden on the student, and, well, life happens. Say you major in comp sci (or some other high-paying field) but shortly after graduation something happens which prevents you from working in the field. Sucks to be you.

And likewise it sets up universities to, as you say, "cut courses with poor returns." Like for example "teaching", because school teacher pay is crap, so it has a poor ROI.

jancsika2• 2 years ago

If student debt is dischargeable and the government guarantee is removed or dramatically reduced, pretty much all problems are “solved”.

Chesterton's fence definitely applies here.

If you don't understand what that law attempted to prevent in the first place, you're just going to get your pocket picked by a different group of people.

closeparen• 2 years ago

Trade schools should definitely focus on ROI, and a lot more people should attend them. The idea of the public university is to bring a traditionally aristocratic practice - the devotion of several years of one’s young life to not-necessarily-practical intellectual pursuits - to the middle class. I think our civilization would lose something worthwhile by returning this practice to the exclusive domain of rich families. Much the same as if we sold off all our public parks for development.

The issue is that we have democratized not only the class background part but also the “intellectual pursuits” part. College should be a lot more selective and a lot more rigorous; only a small minority of students have any business attending. The rest can get their credentialing and coming-of-age ceremony in an ROI focused trade school.

thatcat• 2 years ago

They already focus on ROI, the problem is it's ROI for them not the student. In most states the biggest or second biggest company is a university because they run for profit sports programs with no pay to players, make money off commercial research grants and classes using pHd students making 34k/year, use the students as both low wage workers for campus jobs in high value retail space leased to franchises and as a captive populace to price gouge with required meal plans using the student loans, capitalize again off the real estate that is often land granted to them by the state by offering overpriced student housing that is often mandatory for freshmen. You basically have to accept getting scammed to get a degree.

kmeisthax• 2 years ago

Yes, but this is also the preferred solution of the people who caused the current crisis with university cost inflation.

Universities used to be expensive schools for rich people's failsons to "find themselves". That's why there's a lot of focus on "well-rounded" educations even today. Then western governments started offering taxpayer-funded tuition, which resulted in a new wave of educated kids who refused to believe government narratives regarding wars and refused to comply with conscription and drafts. This came to a head during the Vietnam War, where the US found that it's usual ability to start wars against labor in other countries had been stymied by them educating the enemy (their own workers).

While the draft has been relegated to a vestigial function in the US today, the people in power were able to shut the people down. Saudi Arabia, a theocratic dictatorship that belongs in the 10th century, not the 20th, did the American ruling class a solid by embargoing the US and shutting down our economy for a decade. This gave cover for the complete overturning of Progressive Era policies. Most importantly for this subject, public state universities were stripped of their government funding. Instead, they would charge ever-increasing tuition which students would pay for with loans. This ensured that the poor could not access education and that the educated middle class would be in permanent debt slavery.

Public universities went along with this because they were promised more money than they could get from public funding. This is why you see massive amounts of money being wasted by universities on bullshit. The ruling class gave universities a seat at the table of lavish excess in exchange for, y'know, letting the cops shoot their students with rubber bullets any time they get antsy. Your student debt is a bribe from the military-industrial complex to the university system that you pay for.

However, this gambit did not fully succeed. For one, students are still protesting, despite the debt noose around their necks, and university officials' best efforts to rubber-bullet their students into compliance. So there's a lot of politicians who want to get rid of university education altogether and replace it with trade schools. I may have harshed the concept of a "well-rounded" education before, but it does mean universities still have to teach things like history and economics, which is the sort of thing that makes the lower classes resist their social programming.

So a lot of people in power want to get rid of universities and replace them with trade schools. Now, I actually don't have a problem with trade schools; a lot of good paying jobs are going undone because they don't confer the kinds of status middle-class families want. But there's a lot of right-wingers who want kids in trade schools solely because trade schools generally do not teach all the problematic subjects and forbidden knowledge (aka "traditional coursework") that makes tools of society start asking questions.

If you want an actual way to fix universities (without just turning them into trade schools):

- Have a ONE TIME student debt forgiveness event, contingent on shutting down the student loan system, so this shit doesn't happen twice.

- Restore public university funding sufficient to allow tuition-free education for all poor and middle class students.

- Purge the university administrative class, they've grown overbloated and turned universities into their own personal hedge funds.

Once this is done, then we can start talking about what classes and degrees actually have good ROI on the public money the universities will be getting again. The thing is, though, the existing "low ROI" degrees mainly existed so the university administrative class could pump up admissions numbers. Remember, that was part of the deal they made with the devil. Taking away the student loan system means there's less incentive to admit students to prop up numbers, but if that becomes an issue again, we can further require minimum standards for students or courses through the university funding mechanism.

rr8089• 2 years ago

If student debt is dischargeable and the government guarantee is removed or dramatically reduced, pretty much all problems are “solved”.

No, it just means everyone will complete their degree then file for bankruptcy immediately before starting their first job.

AndyKelley• 2 years ago

You seem to imply that a general willingness is what would allow this to happen when the article spells it out pretty clearly: it's powerful organizations clinging to power. Your sentiment amounts to nothing more than wishful thinking.

It's tempting to just agree with your sentiment, but I think that day dreaming about an unrealistic solution sucks energy away from more effective actions. The main challenge of solving a difficult puzzle is to avoid dead ends and red herrings.

A more promising plan involves explicitly strategizing against the agents who have the opposite agenda.

d0mine2• 2 years ago

A viral meme/tiktok/xkcd/etc could educate many 18 years old on how bad the deal is.

brigadier1328• 2 years ago

I love a good market as much as anyone but there really are problems markets will never solve

The problem with student loans is that they are not driven by markets. If they were, absolutely nobody would give a loan to an 18 yo to spend 4 years and $160k to study psychology.

jmyeet3• 2 years ago

We should do (at least) three things:

1. Provide a counterbalance to private industries by having the government player to be a significant player in that market. That means a free or near-free high-quality state higher education system like the California system used to be until it was made an explicit political goal to avoid an "educated proletariat" [1]. It also goes for housing, hospitals, banks, ISPs and so on;

2. Nationalize failing industries rather than providing them loans for no reason. Banks fail in 2008? Well, you belong to the state now. Just like the FDIC does with failing banks.

3. Federal dollars for pharma research should come with an equity stake in the private corporations that monetize it. Most drugs are developed with Federal grants.

I love a good market as much as anyone

Just curious: where do you see markets actually working?

[1] https://www.bestcolleges.com/news/analysis/threat-of-educate...

ryandrake3• 2 years ago

2. Nationalize failing industries rather than providing them loans for no reason. Banks fail in 2008? Well, you belong to the state now. Just like the FDIC does with failing banks.

I kind of agree with this, but as a taxpayer, I don't necessarily want the government to have an equity stake in a failing or horribly-run business.

We need the government to grow a backbone and allow large businesses and even entire sectors of the economy to FAIL when they suck. I hate the narrative "We have to keep ShittyCo alive because it provides 10,000 jobs!!" as if those jobs would just disappear if ShittyCo got flushed down the toilet like it should be.

Taxpayers should not bail out GM and Chrysler and AIG and US Airways and these shit companies. We should have let them fail, let their careless shareholders eat it, and created a regulatory environment that allowed better-run competitors to spring up.

Der_Einzige• 2 years ago

Can you imagine if we could kill MLMs, pay day loan sharks, bail-bondsmen (My state fully banned this lunacy), Psudoscientific medicine (chiropractors), Scientology and other useless trash from society?

God going after just one is liable to get you a fate worse than Daphne Caruana Galizia

alephnerd5• 2 years ago

It depends on the type of university tbh.

Getting a BA in Underwater Basketweaving from your local commuter state university is much less financially damaging than at Duke or UChicago.

I'm not a fan of the idea of "useful" and "useless" degrees (ime, the best predictor for success is critical thinking skills, not major), but I do find private universities don't make as much financial sense, especially given that well paying industries like Engineering, Accounting, etc don't place much weight on your initial Alma mater beyond your first job.

Anecdotally, I had an alumni interview with a successful tech IB/PE/HF alum from CS@CMU years ago while I was applying to colleges, and he was very insistent about how he felt the RoI at SJSU or CalPoly is superior to CS@CMU. I didn't end up attended CMU (I was lured to a more "prestigious" LAC) but he was absolutely right.

rr8089• 2 years ago

beyond your first job.

That's the twist though. If your first job is better, the second job is likely better too. It took me a decade before I made it to a first class job, sitting next to people who worked there straight out of college.

alephnerd5• 2 years ago

The best jobs themselves have a regional bias.

That's why Baruch has Ivy level representation in IB and High Finance, and SJSU plus CalPoly SLO has Stanford level representation in the tech industry at large.

Just looking at the Linkedins of the most successful EMs, PMs, and SEs in my network, most attended a normal state flagship and worked at an "OK" company like Oracle or Splunk.

This whole "FAANG"-or-bust or "Ivy"-or-bust mentality is legitimately divorced from reality, especially now that the market is legitimately horrid for new college grads.

It took me a decade before I made it to a first class job

What do you define as a "first class job"? Where was your first job located? Were you open to moving to a major tech employment hub (eg. Bay Area, Seattle, Austin, NYC)? Did you start your career during a tech slowdown (eg. 01-04, 08-12, 20-21, 23-present)?

"Meh" companies like Oracle or Cisco pay early-to-mid career employees roughly the same as similarly leveled employees at Google or Amazon.

The main thing is, these employees need to be based in the Bay Area, Seattle, or Austin to justify those salaries.

And if you start your career during a hiring slowdown, it doesn't matter if you went to Stanford or SJSU - you're screwed. I'm already seeing the desperation right now at on-campus recruiting events at Harvard/MIT as well as at regional publics.

jackdaniel3• 2 years ago

I wonder why there's no mention of a free education as an alternative solution to the broken system

dwighttk• 2 years ago

how does that help?

jackdaniel3• 2 years ago

You don't have "an industry" that hikes prices, and there is a central authority without ulterior motive that has an influence over what is funded. Not to mention that you don't put young people into debt from get go.

atomicnumber3• 2 years ago

I think in part because on the "buyer" side, there's often a problem of how to sort through 100 resumes for a position. Given that in any given pile of resumes, probably 70% are unqualified, filtering for "degree" is an easy way (though naturally not great, though how not great it is is hard to measure, which of course means we do it) to cut the work required in half or more.

jackdaniel3• 2 years ago

Free education does not mean "no degrees", it means "funded from taxes/ by goverment".

ants_everywhere• 2 years ago

Yeah I don't get why this isn't talked about more. It feels like one of those things in the 80s/90s during the free market fad where people decided that private loans would fix education and it ended up just disastrous.

SpicyLemonZest4• 2 years ago

Many states do operate tuition-free programs for residents at their public colleges. But students with good grades often prefer to take a large amount of debt rather than go to the local state school, and it's not clear how you would go about changing that.

penguin10294• 2 years ago

This. If you want education to be cheaper or free, you'll need to give up some amount of choice.

Most states in the US already have public university systems, but that isn't where most of the debt comes from.

Everyone wants to go to Harvard, Stanford, Princeton, etc.

somerandomqaguy• 2 years ago

Dunno if it's any better.

The competition then switches from spending direct financial resources to the university to spending financial resources to out compete other students vying for the same university. In China there's usually 1 seat per 50 candidates for good university spots, and the only thing that matters is your ranking in the entrance exams. It's not exactly uncommon for high school students to be spending 14 to 19 hours a day 7 days a week for 3 to 4 years preparing academically to win a spot.

Trading one bad situation for another one really.

righthand• 2 years ago

But on the other hand it would encourage other universities to build better programs. Who cares if it’s difficult to get into a good university. That’s already true without free tuition. Post-high school education already has marginal gains. Networking is a completely different story but one that isn’t affected by the cost of tuition.

fortzi• 2 years ago

It may be better to start with understanding why on earth the it’s so expensive to get educated in the USA, while in other countries it’s much cheaper, even when unsubsidized

grecy4• 2 years ago

Any mention of reducing (or eliminating) profit in America is STRICTLY taboo. You’re just not allowed. Profit is the foundation of the American culture and society.

advael7• 2 years ago

I think it's really sad that we so reflexively consider universities vocational training that criticism of universities so often includes "offering degrees that won't get you a job"

Actually academia predates the push to gate jobs behind undergraduate degrees, and trying to repurpose these institutions that mainly exist to train and employ researchers to be fully general vocational schools has been a disaster in every respect for everyone but the parasitic class of administrators it's spawned

hiddencost• 2 years ago

At that time they were also incredibly exclusive and mostly the rich.

advael7• 2 years ago

Yea, and jobs that selected by university degree wanted to implicitly select for class

Making the path to go to a university more accessible is admirable. Entrenching this hiring practice with policy designed to enforce its implications on universities was always ill-conceived and the consequences have mostly been negative, creating a class of permanent debtors, turning universities into dysfunctional and corrupt quasi-businesses, and not really causing a significant de-stratification of job opportunities on balance at all

ghaff12• 2 years ago

I think that's effectively what a lot of people here are arguing they should be. You're not going to have cheap and quality research institutions (except via financial aid/loans). You can imagine different systems--and they exist to some degree in Europe. It's presumably not a terrible system but it probably does tend to be more exclusive.

rr8089• 2 years ago

You mean if you are wealthy you can afford the best education available and that is a broad liberal arts curriculum.

BobaFloutist• 2 years ago

Well people aren't paying them $30,000 for the love of the game

Ekaros• 2 years ago

And then on other side universities started as vocational schools for clergy. Who then also had time on the side to do at least some research or muse about things.

fallingknife3• 2 years ago

If you would like to study something economically useless I have no problem with that. If you ask me to pay for it, I do. It isn't the business of society at large to fund anyone who wants to study whatever they want.

Academia does predate its role as employment gatekeeper, but it was privately funded then.

andreyk• 2 years ago

Seems like a good overview, but I do find this bit unclear: "But why don’t market forces correct these issues?

The answer lies in the unique shield that non-dischargeable student loans provide to educational institutions and lenders.

In a normal market, if a product consistently fails to deliver value, consumers stop buying it. Producers either improve or go out of business. But in the world of higher education, this feedback loop is broken.

Colleges and universities, shielded by the guarantee of student loan money, have no real incentive to improve their product or direct students to majors that have an ability to pay back their loans.

They can raise tuition year after year, even as the value of their degrees stagnates or declines. "

Sure, colleges can charge a lot due to loans, but they are still competing with each other and differences in tuition could make a big difference. I went to Georgia Tech over other universities because it was in-state and Georgia has generous scholarships for students with good grades. So why does competition among schools not lower costs?

candiddevmike3• 2 years ago

I don't know about nationally but my local universities are having year over year enrollment decreases. I think there are some market forces in play, but they aren't reducing tuition, just making the universities ask for more state or local tax money.

tway_GdBRwW3• 2 years ago

But why don’t market forces correct these issues?

Another theory: The value creation is not linked to the value capture. So market forces make a bad feedback loop.

Look, I'm totally pro business, but business is only "good" at allocating capital when value capture and creation are linked. Education isn't like that. The closest we have are the bootcamp schools, where they take a cut out of your first 2 year's salary if you find a job or nothing if you don't.

When capture/creation are not linked, you need a different social organization method. "Government" or "Religion/non-profit" come to mind. Perhaps others have additional suggestions.

MarketingJason• 2 years ago

I ran a coding bootcamp school that had both your typical pay-upfront and later added an option like you outline. I can't speak for all programs, but schools use an affiliate third party lender for those "free" loan programs.

It was relatively new for us when I left, so I never saw the aftermath. I know it worked out well for some students, but my biggest concern was ensuring payments only kicked in if the job was "in-industry or field". My logic was the value isn't there if you go to a coding bootcamp only to not use the skills.

I was still worried they'd basically ask "do you use a computer?" and consider it in-field.

Another issue here is we had folks just looking to up-skill and the value return was harder to gauge if they were returning or continuing to work their job. This was mostly limited to our part-time program so we didn't offer the delayed-loan for it.

imtringued4• 2 years ago

The fundamental problem in job education is that it needs to be linked to the needs of future employers, but those employers do not have an incentive to hire workers and train them, thereby aligning the education program with the needs of the employers. Employers do not want to pay for training, because employees can leave at any point, so they decided to let employees go to university and pay for their own education. This then leads to a misalignment between what people elect to receive an education in and what employers want, because people aren't mind readers and know exactly what will make their boss five years into the future happy. So what happens instead is that higher education becomes purely about standardising worker skills, so that each worker is a replaceable cog according to their degree. This means you can just hire X amount of Y degree holders instead of caring about their individual skills.

hinkley2• 2 years ago

Also people get their first loan when they’ve just been legally considered adults. Nobody knows for sure they’ll be able to start paying these back in five years.

You buy a car so you can work and eat. These are very straightforward causes and effects. No car no job. Buy car that costs << than job. Done. Buy an education and you get more bills, not more income, for years. You might not even finish.

spencerchubb2• 2 years ago

Sure there may competition among suppliers. When you artificially inflate demand, the price will still go up. One does not negate the other

agosz• 2 years ago

I went to Georgia Tech over other universities because it was in-state and Georgia has generous scholarships for students with good grades. So why does competition among schools not lower costs?

All the schools have access to loans that are guaranteed to be repaid. We still have the mindset that degrees are required for employment (I'm not commenting on whether that's good or bad; that's just the current cultural mindset). Because of this, schools have no incentives to control costs. The students will go regardless because they have access to money that will pay for the tuition, no matter how much it costs. There's no penalty for the universities to raise costs because they will get students anyways.

jampekka• 2 years ago

The profit motive at work.

ehvatum• 2 years ago

The profit motive reliably exposes brokenness. What changed to make loans for useless activity profitable? Normally, a loan for useless activity wouldn’t be issued, because of the expectation that it wouldn’t be repaid.

brigadier1328• 2 years ago

The vast majority of universities are not for profit. As we clearly observe with all government guaranteed demand subsidies, prices sky rocket.

oldpersonintx• 2 years ago

but it makes a nice opportunity for Democrats to buy votes later with selective debt forgiveness

debt forgiveness was a hot topic exactly one month before the midterms and it is already becoming a hot topic as we head in to the general election

if these students were not in debt, there would be no debt to forgive and no votes to buy

jmyeet3• 2 years ago

a nice opportunity for Democrats to buy votes

That's exactly what political parties in a democracy should do.

You know who never says no to handouts from the government? Wealthy people. In fact, they don't just say no, they demand handouts. It's only when the government gives money to poor people that it suddenly becomes a moral hazard.

debt forgiveness was a hot topic

... until a politicized Supreme Court killed it because it was giving money to poor people.

pj808• 2 years ago

Human capital contracts are another partial solution that flips the incentives: instead of using loans to pay tuition up front, institutions are paid a % of your income for a fixed period of time, after which any remaining amount is forgiven. Typically this only applies to income over a base amount (such as 10% of income above a 40,000 base). Naturally this works great in fields with strong employment outcomes and terribly everywhere else.

chii8• 2 years ago

a % of your income for a fixed period of time

why not a % until the cost of the degree is paid back? Why does there have to be a forgiveness component?

clcaev• 2 years ago

The return window should be time limited so that the uni shoulders some of the risk - that their degree has market value. Masters programs can be particularly egregious, they are profit centers where only a small fraction of those getting the degree advance to a PhD program or some position where the degree matters. If the time is limited and one only need to pay a % over a threshold pay, the uni has some skin in the game and can lose on the gamble. In this market design they may be more careful about the promises they make and better guide our population towards programs that have better market value (and less personal debt).

d0mine2• 2 years ago

So there would be an incentive for a university to actually teach marketable skills.

Of cause it is all wishful thinking: big corrupt institutions exist not as if nobody can come up with better solutions

esafak2• 2 years ago

A bootcamp called Lambda School had an income sharing agreement (ISA) to that effect. They did not do well.

wizerno• 2 years ago

John Oliver discusses how so many people have come to take on student loan debt, why it’s so hard to pay off, and what we can do about it [1].

[1] https://youtu.be/zN2_0WC7UfU

honksillet• 2 years ago

- the government should not be guaranteeing these loans - they should be dischargeable in bankruptcy That’s it.

jmoak• 2 years ago

and if nobody is willing to lend to these students any longer because their field of study won't yield enough income to pay back a loan... well, mission accomplished

freshtake10• 2 years ago

this. you'll also need escrow, a notary, a co-signer, and 50 pages of signatures to secure the loan

dachworker3• 2 years ago

Meanwhile, I know of German and Dutch peers of mine who upon completing their masters in Europe, enrolled in California to do a second Masters ( at the time I believe they paid in the range of $100k) for the VISA and internship opportunities. And IIRC, the bet paid off because they all found employment in California, with salaries 3x to 4x what they could get here.

thatfrenchguy• 2 years ago

Masters in the US are essentially diploma mills for OPT work authorizations

dvh• 2 years ago

Let me guess, it wasn't Egyptology degree

esafak2• 2 years ago

That just means they needed the degree to get an opportunity to work in the US. This is really a tax.

baq• 2 years ago

This is also very unfair towards the Dutch and German taxpayer. These countries ended up donating their money and educator time to the US.

If your constitution includes provisions for free education, it might also be super hard to fix. (E.g. Poland.)

dachworker3• 2 years ago

Their parents paid taxes like everyone else. If anything I would say it is unfair, that they are forced to move to the US, because the imbeciles in power mismanaged the economy so much that there are few adequate jobs for them, and the local Germany/Dutch economy is not competitive on the world stage.

idunnoman1222• 2 years ago

All other unsecured debt disappears after what seven years but this university debt is somehow guaranteed?? That’s why this happened.

rufus_foreman• 2 years ago

Absent a government guarantee, what lender is going to lend to people with no job, assets, or income?

Students' parents would need to co-sign, and if the parents were poor, the student would be out of luck.

sweeter• 2 years ago

It is genuinely insane that US Colleges are basically holdings companies at this point. They priority is investments. It seems hostile to the goal of students

Yaina• 2 years ago

It's somewhat besides the point of the piece and might be unfair, but I can't help to feel an immediate sense of distrust for any piece of writing that uses AI images.

Anyways, tying lending terms to the value of the degree sounds like a horrible idea, because how do you even determine that?

Seems to me the big issue is A) that the loans are managed b private companies with ridiculous terms and that even public state universities can basically behave like private companies by increasing prices this much.

Why can't the government not just radioactive prices for their own universities

csa• 2 years ago

It's somewhat besides the point of the piece and might be unfair, but I can't help to feel an immediate sense of distrust for any piece of writing that uses AI images.

Im guessing that you’re probably not representative of the target audience, or the author doesn’t know his audience well.

The image is thematically appropriate. I don’t think the author is trying to bamboozle anyone with that image.

in_cahoots• 2 years ago

My problem is that it’s extremely poorly-done. The chain seems to sprout from the first student’s hair. If the author couldn’t be bothered to pay attention to the first thing people see when they click on the webpage, how much thought is put into the rest of the article?

topheroo• 2 years ago

Same here about distrusting pieces that use AI art. It’s like… a signifier of something hard to describe — values, qualities — that makes me want to listen to someone’s point of view less.

AnimalMuppet2• 2 years ago

It's a sign of low effort, maybe? If they're not putting much effort into the art, maybe they're not putting much into the writing, either. Maybe not even into the thinking.

amadeuspagel• 2 years ago

I think this is about intellectual power more then money. Academics, who benefit from this system, have an outsized influence on political discourse.

jmyeet3• 2 years ago

It's bizarre to me how accepting we are of the idea that higher education should cost anything let alone be mind-bogglingly expensive. This is wildly successful propaganda. Student loan debt was an explicit political goal [1]:

"We are in danger of producing an educated proletariat," announced Reagan advisor Roger A. Freeman during a press conference on Oct. 29, 1970. Freeman, an economics professor at Stanford, was also an advisor to President Richard Nixon.
"We have to be selective on who we allow to go through [higher education]," Freeman added.

Poverty is intentional and a necessary condition for capitalism. It creates a malleable and compliant labor force. Student debt, medical debt, housing debt. All of it only exists to make a handful of extremely wealthy people slightly more wealthy.

Modern universities aren't really about education at all. They're simply hedge funds in a trenchcoat.

Harvard, for example, makes what? Half a billion in tuition per year? But they have upwards of $50 billion in their endowment. The interest alone could fund the entire university.

[1] https://www.bestcolleges.com/news/analysis/threat-of-educate...

chii8• 2 years ago

the idea that higher education should cost anything

somebody has to pay it - whether it's the students themselves via loans, or via tax payers.

Harvard, for example

so may be harvard, if they should so feel charitable, could pay for their student's costs via their endowment funds. But what about _every other uni_?

Not to mention that the endownment's a private source of funds - you're just as well be asking why don't billionairs just fund more public costs?

blackhawkC17• 2 years ago

Harvard's endowment is $50 billion, and its expenses in 2023 were $6.25 billion [1]. To fund that, the endowment will need 12.5% annual interest, which is impossible. Tuition revenue is not remotely suitable enough for Harvard's operational expenses.

Again, people don't understand how endowments work. When endows a specific program at Harvard, their money must be used for that program alone. The funds can't be sent to the general pool for the entire university.

There are many ways to criticize wealthy educational institutions, but calling them "hedge funds" makes no sense. Which hedge fund subsidizes their clients' expenses with donations?

1- https://projects.propublica.org/nonprofits/organizations/421...

freshtake10• 2 years ago

In-state University of California, Riverside tuition is roughly $13k/year. This isn't mind-bogglingly expensive IMO. Less than 25% of student debt is from public colleges, with the majority due to expensive private schools. Most of my friends also worked part-time during undergrad, to further lower their loan burden.

You aren't making this point directly, but I think it's worth pointing out: not everyone is entitled to attend Harvard, Princeton, (etc.) any more than they are entitled to a Maserati.

There are, and should always be, affordable public options, so that anyone who wants a college degree can get one. We need to stop romanticizing elite universities, and acknowledge that you can get a great education, with hard work, at almost any university.

lordnacho2• 2 years ago

I don't know if this is some kind of heresy, but here we go.

I don't think universities provide much value at all to the common student who is not going to be a PhD.

I went to a very well-known institution known for putting the students in a room with the professors, maybe two or three students, to one professor. My economics professor taught me one on one.

I still think, in the end, the work is mostly done alone, in a pile of books, on your own time.

Not with other students, and not in lectures, and not in tutorials.

This is a bit different from school where you can actually learn the material in class because, let's face it, school doesn't have a very deep curriculum.

So at university my impression is that they mainly tell you what to go and read about, and then you read about it yourself. The tutor is there to course correct you a bit, but they aren't going to do much other than save you a bit of time learning the orthodoxy of your subject. The lectures are a table of contents. At most, it's really just a guy telling you that you should know what an eigenvalue is, or you should have read about the ISLM model, and so on. For you to actually understand something, well, you have to have spent a lot of time in the books rearranging your mind.

Given that this is what you actually do at university, why have it this way?

Make an examination authority. "Here is the national linear algebra test. Anyone who wants to try it, sign up, and come to this hall on this date." Everyone who passes, whether they studied at home or went to fancy U, gets a paper that says they passed it. Do it as a 12 year old prodigy or a 75 year old grandma, you get a diploma.

Now, maybe there is already an authority that does this, I don't know. But it isn't very well known or authoritative.

The current incumbents are gatekeepers. Everybody thinks that smart kids go to the most prestigious universities, and that includes employers. It's a Schelling point that doesn't need to be there, and it allows the universities to extract a great deal of value from the kids.

If you made this authority of examinations, many people could learn the material and show their competence without incurring huge costs.

People could start working earlier. You could separate the coming-of-age experience from academic learning. Poor people could participate more.

dgfitz• 2 years ago

I still think, in the end, the work is mostly done alone, in a pile of books, on your own time.

I feel compelled to link the quote from Good Will Hunting here, I will refrain. However I agree completely. I also went to a “great” school, and I learned everything from overpriced books on my own time. In fact, in my entire tenure of undergrad I never attended a full week of class, not even the first week.

rr8089• 2 years ago

Was it worth it then? Was there a benefit like meeting your classmates? I have to make the decision for my kids.

firejake3083• 2 years ago

I mean, a lot of trades do have standardized tests. The LSAT for law school, the MCAT for medical school, and the CPA exams for accounting come to mind. I don't know why computer science hasn't organized in this manner, maybe because it's a younger field or maybe because there are simply too many people and employers don't care enough about having certified employees.

lispisok2• 2 years ago

It's a younger field. A lot of self-taught people think they will be excluded (they wouldnt be). There is a deliberate effort by execs to lower the salaries of software developers by ensuring there are no barriers to entry and flooding the market which the vast majority of the workforce has been tricked into going along with.

jcranmer3• 2 years ago

CS does have a lot of certifications, which are generally regarded as crap by most university-educated CS people. Part of the reason is that a lot of certifications test you knowledge with specific tooling, and that tooling may become obsolete rather quickly in the field.

It's also worth noting that a lot of the tests you talk about aren't valued particularly higher by their own fields. Most lawyers I know have commented that the bar exam [1] primarily tests material that is largely irrelevant to the actual practice of law, to a degree that scoring too highly on the exam tends to be seen as "you wasted too much time preparing for the exam."

[1] The LSAT isn't a test of whether or not you've mastered law school material, it's a test of whether or not you are allowed to be admitted to law school in the first place. The bar exam is the actual necessary certification to be a lawyer.

ThrowawayR2• 2 years ago

Except for medical students, who require a teaching hospital and all its equipment.for their education

Except for EE and other engineering students, who require lab and other equipment for their education

Except for chemistry, biology, and other science students, who require chemistry equipment, etc. for their education. You get the idea.

Even for fields that require no specialized facilities, frankly, I don't see any Fields Medal or Turing Award winners that are self-taught nor do I have any reason to expect to see any in my lifetime.

lordnacho2• 2 years ago

Except for medical students, who require a teaching hospital and all its equipment.for their education

They're not really students in the normal sense, they fit more into the PhD category that I mentioned, since they need actual personal help.

Except for EE and other engineering students, who require lab and other equipment for their education

I have an engineering master's from a world famous university where the lab work was pretty pointless. It didn't count for much if at all, and was more or less just entertainment.

If you were doing a PhD, you would do experiments where the outcomes were not a foregone conclusion. In undergrad, it's not any different from baking a cake, it ain't gonna go any differently than expected.

I suspect you'll learn more watching a video of someone doing the experiment, that way you are not concerned with trivialities like converting units and wearing safety goggles. Something like what NileRed does for chemistry.

Even for fields that require no specialized facilities, frankly, I don't see any Fields Medal or Turing Award winners that are self-taught nor do I have any reason to expect to see any in my lifetime.

Well, that level of work requires a personal contact, like a PhD advisor. I am addressing undergrad work, which is fairly ordinary material that has already been well digested.

zamadatix• 2 years ago

Most received the Fields Medal or Turing Award are not "the common student who is not going to be a PhD" so you and GP agree on the importance of universities in that regard. In general I read what they say as solely relating to what I'd categorize as "undergrad or non-specialized track students".

I agree with you there is a lot universities have to offer students though. Your examples of equipment are a great highlight. On the other hand I think when you weight the ever growing cost of attendance with the amount of unique values provided it has been shrinking quite a bit, in favor of the "not providing much value" side. This is especially true for the relative lack of unique values brought for the vast majority of students during the first ~2 years of general education. It's difficult or impossible to get many of these organizations to let you just jump in at that point though.

Overall I think, for many at least, the biggest value is an environment which helps guide them to doing the self learning. Many (most?) can't just sit down to write and then follow their own multi year study plan and end up with something comparable to what they'd get out of going to a university, even if they end up spending the majority of their time there self learning. GP may well not be part of that group but I'm not sure their conclusions apply to those who are.

dachworker3• 2 years ago

University is too rushed. That's why you feel like the work is done on your own. Cause of course you have to acquaint yourself with the subject at your own pace. Once you become acquainted, that's when it becomes useful to have access to a leader in the field. But by that time you are writing your finals and preparing for the next semester.

freshtake10• 2 years ago

Online education ftw?

If you can drop 90% of administrators and real estate by moving online, student loans become a thing of the past. College becomes a halfway house commune for young people to who want to leave their parents nest.

So the way you fix a broken system is to replace it with something cheaper and better. The issue of course is that 99% of people who start online courses don't finish them. Universities provide motivation for learning, which is required for many learners.

AnimalMuppet2• 2 years ago

Make an examination authority. "Here is the national linear algebra test. Anyone who wants to try it, sign up, and come to this hall on this date." Everyone who passes, whether they studied at home or went to fancy U, gets a paper that says they passed it. Do it as a 12 year old prodigy or a 75 year old grandma, you get a diploma.
Now, maybe there is already an authority that does this, I don't know. But it isn't very well known or authoritative.

Western Governors University operates this way. You can get a full, recognized degree that way (in a limited set of topics).

NemoNobody2• 2 years ago

That's the truest sounding heresy I've ever heard.

oramit• 2 years ago

I don't think this is heresy at all. I read this and just think you have a giant blind spot because you seem to be assuming that the way you learn is universally applicable.

I went to an unremarkable state school where I had classes with a hundred other students. Even my senior level courses were about a dozen to one teacher ratio. I still remember my professors and specific moments during their lectures when I was able to ask a follow up question which triggered that Eureka moment we're all looking for.

I wish I was able to just sit down with a textbook and learn a meaty subject but that doesn't work for me. I, and many others, need (or at least it helps a lot) the academic structure to learn effectively. The academic calendar, lectures, textbooks, homework, and other students you can study with all work in concert. The way you're dismissing all of that strikes me as really myopic.

There are many examination authorities but employers basically ignore all of them and have gone all in on college degrees as the signal for employment. In that way colleges are gatekeepers to higher level jobs, but they're hardly the only actor here.

ryandv• 2 years ago

I also attended a well-known institution and this was precisely my experience of university. I stayed home and read the textbook, supplementing with materials online, hardly attending lectures at all.

I had paid for university almost entirely out-of-pocket with earnings from co-operative internships in software; when "real-life" problems started to rear their ugly head, the choice came down to incurring debt or working in a (still to this day) lucrative industry.

What was the point? Why join the rat race of my peers who would rush through the material, only for it to be forgotten amidst the torrent of next semester's information? Does this style of studying actually produce a level of erudition equal to or greater than one who obsessively pores over the literature at their own pace, taking their time to slowly digest and process and crystallize the information in their mind? Or have they just found the most expedient route past the gatekeepers of higher education and diplomas?

I would much rather do exactly what I did in university - read through the material on my own terms and take time to digest it at my own pace, but without the crippling debt. That said, I still very much view education as a privilege, open to those of financial means, who have the opportunity to put aside several years' worth of earnings and time to pursue academic studies, irrespective of practical application. I am reminded of a second-year philosophy professor who took half a lecture to explain how the purpose of higher education is not as a vocational school to bring one wealth and employment (taking shots perhaps at the career focus of the institution's co-operative program), but rather to give one a more fulsome perspective of the world and enrich their intellectual life - not in hopes of some mundane, worldly reward, but for its own sake.

Had I the wealth, I would love to go back to complete a degree, not for practical employment prospects or even prestige, but to (at least attempt to) feel intellectually whole. A merit based system of standardized testing that awards degrees based on examination performance would be right up my alley, for I could prepare myself to meet its demands at my own pace and according to my terms; I consider the hacker spirit of measuring the quality of a software solution not according to the attributes of its author (wealth, status, degree, or otherwise), but on whether or not the code works correctly and efficiently adjacent to this sentiment. For everyone else, there's debt - and I can't justify making that decision.

8f2ab37a-ed6c• 2 years ago

Not a heresy at all. I went to two of the top 5 CS schools in the US and I barely recall anything I learned in there, almost everything I know ended up being self-taught later in a much more efficient manner than being student n.200 in a class taught by a researcher who barely speaks English and doesn't want to be teaching. The main upside was associating myself with those two brand names which later got me jobs and cofounders, but that's about it.

mydogcanpurr• 2 years ago

You are correct, but universities did use to actually teach. SICP is still relevant 40 years later, and it was because the professors who created the class and textbook actually gave a fuck, knew what they were doing, and were still allowed to do their jobs. I really do think this is a recent phenomenon, but I have no idea how to get back what we once had from the parasite class.

jltsiren2• 2 years ago

When I went to a public university in Europe, I realized after a month or two that lectures are a waste of time, and I stopped attending most of them. But the structure and guidance provided by the university allowed me to study things more efficiently than I could have done on my own.

I think the key is that universities are not schools. They are places of learning, not teaching. If you go to a university and expect to be taught, you are probably wasting your time.

And that vision is not really compatible with tuition fees, because they can easily turn you from a student to a paying customer.

photochemsyn• 2 years ago

Academia is not a monoculture, but people who take the path suggested by the administrative faction are the ones ending up in debt. The marketing is like that for dodgy credit cards or subprime home loans. (The Ivy League strata is more about getting to network and socialize with clubs of the wealthy and powerful, possibly getting a lucrative position as in the British Empire's public school system, so set them aside as a special case.)

Otherwise, for people who want to learn arcane technological skills and curious knowledge for the science and engineering world, community colleges and research universities are the way to go. Two years in a community college at low cost, ideally some kind of grant/scholarship for 2-3 years more at a research university, preferably in collaborative/teamwork situations with actual professionals in their fields. You also have access to tools and equipment that you'd never get to use otherwise, and experience with such setups can lead right into a good R & D job.

It's not worth being weighed down with debt at the end, though, since the loan payments will eat up revenue that could have gone to savings for a home, founding a startup, etc.

Students should thus view the academic finance system as a hostile adversary that's always trying to force them to take on as much debt as possible. Student loans are traded like subprime mortgages were in 2008, I imagine tranched into pyramid schemes, and the industry always needs fresh meat.

snakeyjake• 2 years ago

My university has a space mission ground station.

I wasn't an engineering major, I was a computer science major, but I still asked and was allowed to work evenings in the facility.

I got on the job training from experienced experts on orbital mechanics, the practical operation of spacecraft, and the infrastructure behind space flight activities. I also got to write some software that is used in the command and control of spacecraft.

Going to school gave me access to supercomputers and mainframes, practical hands-on experience that cannot be learned from a book.

Also, my university is somewhat unique in that it has an extremely rigorous writing requirements for all graduates, including creative and business writing. A comment I received multiple times at the beginning of my career is that my writing skills were extremely advanced compared to my peers. This is a double-edged sword because now, decades later, coworkers send me paragraphs to edit before being sent out.

I also minored in studio art, because as a young freshman I figured it was an easy A. Little did I realize that free and easy access to studios, models, screen printing equipment, and photography labs would lead to several lifelong hobbies.

My school also had telescopes I got to use as a member of the astronomy club, and amateur radio equipment far beyond my ability to afford as a member of the ham radio club. There is an exact and precise 0.0% chance that I would have ever gotten to even touch a 20" reflector, high quality CCD cameras, or sophisticated mounts and star trackers without going to school. Ditto for 1.5kW amplifiers and vast fields of specialized antennas for radio communications.

After I realized that staring at an IDE window all day was actual, literal, hell to me I transitioned to being an aerospace engineer. No degree, I just explained to people what I knew and did in school, what programs I had worked on, and they said "good enough, here's a board assembly drawing start spec'ing out space-rated micro- and nano-d connectors for it" and decades later I'm a senior principal engineer designing satellites.

Hell, just understanding what SWR is, what multiplexers and other RF terms meant, and knowing about polarization, propagation, and effective radiated power from my university ham radio club days went a long way to getting me to where I am today.

All of this is possible to learn autodidactically.

It would require a level of income (to gain access to the tools), foresight (to focus on specific subjects relevant to your goals), and drive (to have realistic goals laid out and to actually do it) not typically found in young adults, or old adults.

I assert it is easier, and outcomes are more favorable, if you pay someone to do all of this for you.

My perspective may be warped. I used the GI Bill and paid $0.00 for all of this. But if I had to pay the $54k it cost it would have been worth it 100 times over (I make a lot of money now).

Aerbil313• 2 years ago

When did you go to college? It might as well be that is the primary differentiator between your experience and others.

DataDive• 2 years ago

The author forgets to mention yet another dimension of the problem - a direct political one.

Loan forgiveness ... in essence, a form of vote-buying ... vote for me, and we'll forgive your loan (aka someone else will pay the loan).

If there is a chance that, at some point, we forgive loans - why would the cost of education ever decrease?

ndgold• 2 years ago

I think that a student debt could be replaced by dischargeable debt if you churned $100,000 of credit card cash advances in the same month, paid down your student debts, and then after the one year zero interest period expires, declare bankruptcy on your credit card debts that replaced your student loan debts. Can anyone confirm?

tway_GdBRwW3• 2 years ago

Clever! with the challenge being getting a 100K credit limit and assuming your student debt is < 100K.

oarla• 2 years ago

As with other industries, there is a steady increase in demand but not enough supply. Make it easier for accredited universities to be setup and let the free market forces drive the cost of an undergraduate degree down.

firejake3083• 2 years ago

I actually think we should be decreasing demand rather than increasing supply. Not every job needs a college degree, and allowing more people to avoid college altogether would naturally drive prices down from the demand side. The hard part is that I don't know how to make employers accept non-degreed applicants, outside of having Peter Thiel shout at them to do so.

huuhee34• 2 years ago

I agree. At least in my country degrees are commonly used to filter applicants for jobs that could easily be done by someone with way lower level of education. That's not a healthy system. A degree should teach you skills that you need and can actually utilize in the work you will do.

bilater• 2 years ago

The education-politician complex as we know it will face a dramatic reckoning in the next few years. Many mid-tier universities are likely to go under.

Perhaps, as a society, we will rethink how education is attained. In a world shaped by AI, maybe kids will take MOOCs just for fun.

CatWChainsaw• 2 years ago

Or maybe kids will have AI generate minecraft levels and porn of their classmates just for fun...

wood_spirit2• 2 years ago

Many years ago I went to university in the uk. Entry required good grades but tuition was free and there was a reasonable grant to live on.

Twenty or so years ago the grant became a loan and, more recently, tuition fees were introduced.

Nowadays way more people go to uni but come out saddled with debt.

Presumably the incentives are the same as described in the article for the US: the uni wants as many students as possible because they get tuition fees and short term the administrators don’t care about graduation rate or job outcomes because it will be on some future administrators watch when the feedback loop stops new undergrads joining?

hrnnnnnn• 2 years ago

When I graduated in the UK in 2006, I had to pay an extra £3000 because I graduated.

freshtake10• 2 years ago

Agreed with the overall consensus that we should let this market be guided by true market forces, but I also think people often assume the wrong outcome of this.

Universities give students a ton of control over their education. Where do you live, what classes do you take, when can you unenroll, etc.

Want higher graduation rates without lowering the grading bar? Simple, do not permit part time enrollment, even for one term. Sounds harsh.

Want better job prospects on graduation? Simple, kill off 90% of majors (dance, sociology, etc.)

The reality is that people generally think of college was a guarantee of success (it isn't). Many people would do better going to trade schools.

Attending an elite university will always be expensive (in HCOL cities, high demand for students and professors, etc.)

We need to stop treating college like a basic right, or a place for people to chase their dreams. Dream chasing is great, but if someone else has to pay for it, incentives will never align.

lenerdenator• 2 years ago

1) Move most good careers that do not require a college degree out of the country for the benefit of shareholders

2) Tell everyone born between 1980 and 1995 that they'll be unable to compete in the global marketplace if they don't get at least some post-high school education, and imply that the mere presence of a degree will help instead of having a specific type of degree

3) Have next-to-zero standards for public funds used in grant and loan programs for college education, meaning people can take out loans for any sort of degree program at almost any sort of institution

4) Hold these debtors to standards that aren't applied to other types of debtors. You cannot discharge them through bankruptcy, it's very difficult to renegotiate, and SCOTUS has said that the chief executive of the note-holding institution (in this case, the President of the United States) cannot use discretion in deciding who he gets to forgive for loans.

scoofy• 2 years ago

You forgot the most important part. The people agreeing to these debts, by definition, do not have an education in complex debt instruments that cannot be discharged.

Taking our a vast loan to study English literature might seem unwise, but it’s something I could definitely see a starry eyed 17 year old deciding to do.

paulcole7• 2 years ago

I took out around $20k in loans to study literature starting in 2001. Graduated in 2005. Rent was $150 a month. Played a lot of poker and disc golf. Studied and learned a bit. Had a 75% scholarship to help with tuition. Had a $300/semester book stipend as part of that and just bought penny books off Amazon (one of the benefits of an English degree) and pocketed the difference.

Basically for 5-8% or so of my (estimated) lifetime I was completely free to goof around. Great value for someone who dislikes working.

Consolidated the loans after I graduated at 1.5% interest. Finished paying them off in 2021 with the Biden Bucks.

Pretty sure that kind of deal doesn’t exist anymore.

NemoNobody2• 2 years ago

Exactly - 12 years of education to get children ready to be citizens and not single class on how to manage a bank account, or even the most basic education about investments or actual wealth building.

Instead, all I was told was to go to college.

So... the people that made me woefully sheep like and "financially innocent" then sent me to the wolves because they believed in me.

Seriously, they made huge changes to the way people were accepted into college - created High School "career counseling" (college/University recruiters) to tell everyone kid they were smart enough to go, and the dumber down tests convinced enough to convince the rest.

The loans went up each year - the costs more than doubled between my Freshman and Sophomore year and just never stopped going up - the more you owe the more you HAVE to finish to get the job to pay the loans.

Before all this, when less than 1% of all student loans had been defaulted on, the loan debt was made unforgivable by 6 people - a committee of bankers created by the people in Congress they bought.

It was setup so that of a millennial "Wins" it means they can afford to pay their loans - so the bank wins. If we lose we still have to pay/often must pay more with all the fees and added interest - bank still wins.

During the time I lived thru all this I was reading shit about how lazy all f are bc we don't own as many houses as we are supposed at our age - this is still true to this day actually.

This is an intolerable and disgusting thing for a society to do to an entire generation - any group is wrong but to plan out the demise of a generation of, at the time all this was first set in motion, we were literal Elementary Students.

These loans destroyed lives, relationships, sets parents against their children, divided families.

- All just part of the plan.

jancsika2• 2 years ago

The people agreeing to these debts, by definition, do not have an education in complex debt instruments that cannot be discharged.

I guarantee you that law/med school students have an education in "complex debt instruments that cannot be discharged."

Because before the current law was passed, they were the ones abusing the old "complex debt instruments" to discharge debt they knew they'd be able to pay back once they started making bank. The law was passed because they were doing this in large numbers. For these serious med/law students, the old system was free money. The new system is a reasonable risk.

Did you know this? If so, why did you write "by definition?" And why go off on a tangent about English literature students?

zozbot2342• 2 years ago

The bulk of education debt in the U.S. is not about undergrad degrees in English literature or the like. By and large, it gets incurred either for lucrative postgrad degrees (MBA, law, medical etc.) or for earning degrees at "non-traditional" for-profit colleges.

ghaff12• 2 years ago

Plenty of smart people who get liberal arts degrees from top schools do just fine. I know plenty of them even though I have engineering degrees myself. They may not get FAANG salaries in general--unless they end up in management--but plenty of people I know are just fine.

pessimizer• 2 years ago

I could definitely see a starry eyed 17 year old deciding to do.

That's the addendum to the "most important part." These people without an education in complex debt instruments are the vast majority of the time either children, or were children quite recently. Even when it comes to the ones in grad school, I have jeans older than their legal ability to sign contracts.

MisterBastahrd• 2 years ago

Sorry, I feel no sympathy for them.

I went to college before I had internet access and my decision on what college degree to get and where to go to get it was based upon the salary I would receive upon graduation and my ability to repay my loans. I went to the library to figure these things out for myself.

Nowadays, you don't even have to get up out of your chair. If you are a young person and you make stupid decisions on your college education and student loans, that's a YOU thing.

I personally think college should be free because education is a worthwhile endeavor for everyone. But since it isn't, I'm not willing to make excuses for those who attend without weighing the costs and benefits. It's one of the easiest things in the world to do.

ClumsyPilot6• 2 years ago

debt instruments that cannot be discharged

Your regular reminder that debt bondage is a form of slavery, and is illegal in most countries.

https://en.wikipedia.org/wiki/Debt_bondage

There are only two options with debt: bad debt are written off, lender takes a hit and the lender must be careful who they lend money to.

Or bad debt lingers forever and accrues lucrative interest, in which case giving out bad debt is the whole point for the lender’s operation. The only risk is that the debtor might die. If the debt also passes to the next of kin, you have full-on, real slavery.

maerF0x02• 2 years ago

The people agreeing to these debts, by definition, do not have an education in complex debt instruments that cannot be discharged.

I mean it's a pretty simple concept that you borrow money and you must pay it back.

However we agree that the failure is that we do not educate them enough already in the first 12 years we force upon them. For that I blame a lack of options, government "standards" which become ceilings instead of floors, and the unions that protect bad teachers, also I'll note as a foreigner in the US. The US Schools i've seen (and i'm extrapolating here to most public schools) are ran like social clubs and have far too much time devoted to bs that does not help the kids. I'm talking about extracurriculars that impede with a quality education. Football is not a subject we should be prioritizing as a nation... Formals, homecoming, spirit days etc are such a distraction from what highschool kids should be focused on -- Growing up and making a viable future for themselves.

People note that Highschool rankings in Canada are excellent, well guess what? None of that happens in Canadian highschools (that I'm aware of), there might be a school dance or two, and "Prom" is very low key, relatively. High school football is small time...

WalterBright6• 2 years ago

complex debt instruments

They are not complicated. Compound interest is middle school arithmetic. Too bad the public schools are inept at teaching math.

I received a modest tuition loan when I went to college. There was no mystery about it. I made the payments after I graduated, and paid it off.

ta_1138• 2 years ago

Then colleges are concerned when they see enrollment at many majors keep shrinking, while the demand for computer science grows, even when the college doesn't even have a proper CompSci department, but they depend on the Math school.

Then the students wonder why it's a 4 year degree with a full year wroth of non-major classes that seem unrelated, but tack on tens of thousands to the cost of the degree, plus whatever on-campus housing and meal plan, mandatory for freshmen, might cost.

freshtake10• 2 years ago

5) Do nothing about the problem until the debt becomes too large, then attempt to blanket cancel the debt without expecting any fallout. All the while doing nothing to fix the underlying issues.

29athrowaway• 2 years ago

i.e.: transfer the wealth from the taxpayer to the creditors anyways, just in a different way

bufferoverflow2• 2 years ago

I would also add

5) Don't educate young people on what their degree would earn them.

So many young people think their hobby can become their career and pay for a nice life style. Unfortunately, it's not the case for many majors.

kraussvonespy2• 2 years ago

Which is bad too because if you turn your hobby into your career, you end up not having a hobby anymore. In order to have a happy life, you have to have a vocation and an avocation that are separate from each other.

pixodaros5• 2 years ago

There are no guarantees in education. Lots of people have degrees in engineering, finance, software engineering, etc. but are not working in that field, either because they find they don't like the work or because that field is not hiring in the years after they graduate. Incomes of people with any academic bachelor's degree are similar in the country I live in, because if you are bright enough and diligent enough to get a degree in something reasonably rigorous, you generally eventually pick up the skills and connections to find a good niche. But 'get a degree in this, it pays well' is risky.

bigstrat20032• 2 years ago

So many young people think their hobby can become their career and pay for a nice life style. Unfortunately, it's not the case for many majors.

We (as a society) tell kids all the time that their hobby can't be a viable career. Kids are just headstrong and don't want to listen to their parents/other adults telling them unpleasant truths.

cruffle_duffle2• 2 years ago

I mean for fucks sake we were pushing 18 year old teenagers into tens of thousands of dollars of debt! I dunno about most people but at 18 I had absolutely no clue about anything, especially the concept of money nor career. How the fuck does an 18 year old comprehend why taking $60,000 to get a degree in “Latin Dance” is not a good idea (and we all know many people who fall into this bucket too!). And yet parents, councilors, teachers, and “the whole system” pushed this onto every kid in high school.

And then society turns around and mocks them later on for being “stupid” and “lazy” or whatever… fuck that shit. Society strongly told kids that college, any college, was the only way to have a future.

lispisok2• 2 years ago

You are being downvoted but that was exactly my experience. It wasnt hyperbole. I was told my entire time in k-12 you need to get a college degree by everybody. Parents, teachers, counselors. Additionally they said, with no exaggeration, to get any degree, at any school, and take out as many loans as you need. So yes an entire generation of kids were told the $60,000 in debt for a latin dance degree at a no-name school was better than no degree at all.

jajko• 2 years ago

Where were parents? Don't tell me they were absent in such a massive decision that absolutely defines rest of their kids lives.

Yes its horrible to force 17-18 year old to make such an important decisions and also schools should have known better and counsel heavily beforehand. But lets not forget that for the state you are 100% responsible for your actions at that point including any crime, state will happily draft you and send you to get killed if the need arises. Loan management pales in comparison with this.

Truth is harsh, society is harsh and unfair in many aspects. I don't see this improving unfortunately anytime soon.

skrebbel2• 2 years ago

I don't like this type of comment because it's makes it seem like that this was all planned like this on purpose (by some cabal of evil schemers, I suppose?), but without the need to provide any evidence that that's indeed how it went, because nothing of the kind of is explicitly claimed.

Things can go wrong without people scheming to do evil. It's not helpful to twist "these and these circumstances combined to produce a bad outcome" into a plan description unless you bring at least some evidence that it was, in fact, planned to go like that.

carapace2• 2 years ago

It would actually be worse if we accidentally built this machine to trap and drain a generation of their productive capacity?

And of course there is a cabal of evil schemers, they have hardly bothered to hide themselves, e.g.:

Mudsill theory is the proposition that there must be, and always has been, a lower class or underclass for the upper classes and the rest of society to rest upon.
The theory was first articulated by James H. Hammond, a Democratic United States senator from South Carolina and a wealthy Southern plantation owner, in a speech on March 4, 1858. Hammond argued that every society must find a class of people to do menial labor, whether called slaves or not ...

https://en.wikipedia.org/wiki/Mudsill_theory

It gets worse from there.

You can go look up the people who passed these laws and the arguments they used to promote them, but in the end it hardly matters.

What matters is disassembling the mudsill machine.

dogcomplex2• 2 years ago

Distinguishing between malice and ineptitude at the systemic level is nearly impossible.

If the OP's type of comment makes you uncomfortable, you might be leaning too far into putting blame on ineptitude by default, instead of a healthy at least 50/50 mix of blaming greedy malice. OP just listed the 20/20 hindsight of this all. If that makes it sound like it was all a scheme, well - who knows - but it's just as unhelpful to always suppose such circumstances could have just been incompetence with no clear evidence.

majani• 2 years ago

The reality is that people constantly vote for well-intentioned, empathetic interventions that have adverse economic effects in the long run

spencerchubb2• 2 years ago

Unless I missed it in the article, I don't think the author mentioned one of the biggest factors. The big lenders in America are effectively extensions of the US government, and the government guarantees over 90% of loans.

That means there is no risk (for the lender) to give out student loans. The taxpayers take on the risk

brigadier1328• 2 years ago

In your 4 step process where do you blame the not for profit schools for raising tuition by completely absurd and unsustainable amounts?

If we are going to forgive student loans, tax payers should not be on the hook. The loan originators and most importantly the schools should pay since they are both the primary beneficiaries of this disastrous policy.

JoBrad• 2 years ago

The cost of student loans is nothing compared to the value that those degree holders will provide. In my opinion, your first degree at a public university or community college should be paid for by the Federal government as long as you keep a certain grade average, and stick to a reasonable timeline.

If it matters to anyone, I paid off my loans entirely, but also received Pell grants.

api• 2 years ago

You forgot:

5) Systematically under-build housing so that future generations will be unable to simultaneously repay these loans and afford a place to live.

schmidtleonard• 2 years ago

Also:

6) Intentionally train too few doctors for the explicit, stated, out-in-the-open purpose of pumping doctor wages. Continue this policy until it is too late to train enough doctors for the coming wave of Boomers.

spamizbad• 2 years ago

I feel like the key thing missing from this discussion are the employers who still demand these degrees. Let's say we reformed both higher education and student loans - does that have any meaningful impact on the demand side beyond pushing the salaries of degree holders up (thus increasing the value of a degree, thus making larger loan values easier to justify, thus...)

fallingknife3• 2 years ago

If we stopped subsidizing the degrees less people would have them, but employers would still need the same number of employees. They would be forced to drop necessary degree requirements or go understaffed.

VirusNewbie2• 2 years ago

Most good employers, especially in tech, don't require degrees these days.

abnry• 2 years ago

Re: 4), isn't forgiving loans awfully close to having power of the purse? That is explicitly congress's role.

You have some really perverse incentives too if you allow loan forgiveness by the executive branch, something close to buying votes.

mbostleman2• 2 years ago

For number 2, how did you come up with the very narrow 15 year window of birth from 1980 to 1995? I was born in 1963 and for the entirety of my upbringing it was a forgone conclusion that the lack of post high school education had a dire and inescapable consequence in future earning and socioeconomic status.

kungito• 2 years ago

Because at that time an engineering degree still had some weight because not everyone can get it. This inflation 9f degrees caused the degrees to have way less value only for the next generation

ryandrake3• 2 years ago

I was born in the mid-70s, and nobody told me "Just go to college, any college, and major in anything." That was never the narrative.

It was "Go to a top-N college, major in one of these very carefully enumerated majors that tend to result in good career trajectory (business, engineering, medicine, and so on), and maintain a very good GPA throughout." The messaging was very clear, from parents, teachers, and guidance counselors: Don't go to film school or a Tier-2 university and major in history, if you want a career.

I'm not sure when the "Go to any school, and do whatever" messaging started but it was not happening in the 90s when I was in high school.

User23• 2 years ago

cannot use discretion in deciding who he gets to forgive for loans

You present this as though it doesn't make sense, but as far as the federal government is concerned forgiving a debt is spending (which is why the IRS will tax you for forgiven debts, income is the other side of spending). And spending is explicitly under Congress's authority.

diob• 2 years ago

5) Don't forget the massive rise in tuition. My brother went to college a few years before me, and by the time I got there (born before 1990), the price was double what it was his first year. It was only 2 years of increases.

6) Only allow help for families making under a certain amount, so those from abusive homes are shit out of luck.

IG_Semmelweiss• 2 years ago

>> 1) move most careers...out of the country....to the benefit of shareholders.

You've hidden very carefully the causality in this sentence. Who moved them? Why? Its perhaps implied that since shareholders benefited, that they did it. Yet a careful examination reveals quickly the elephant in the room in that thesis: why did outsourcing now, and not before, if the benefit to shareholders has always been there? why did this happen mostly in the US, and not other countries?

Of course, the reality is far more complex and reveals that the road for manufacture hollowing in the US was a road paved with good intentions. History is there for anyone who wants to read it.

bobthepanda• 2 years ago

There is outsourcing in places like the EU but it looks different and takes place within it, because the wealth disparities between EU countries are so much greater and US GDP per capita is so high. The state with lowest GDP per capita, Mississippi, is on par with Belgium.

doctorwho42• 2 years ago

Well one of the reasons for outsourcing was the idea that becoming a service economy would improve our country and it's citizens... Unfortunately that turned out bust.

to11mtm• 2 years ago

2) Tell everyone born between 1980 and 1995 that they'll be unable to compete in the global marketplace if they don't get at least some post-high school education, and imply that the mere presence of a degree will help instead of having a specific type of degree

Yes but I'm conflicted on this for a couple reasons.

The second part, became less true for anyone graduating after 2004 or so.

Where I still get -vexed- are the people I know who, about to hit or are into their 30s, start in a program for (or, wind up finishing with) a non-marketable degree as their first degree.

And the best example I can think of, was a specific not-colleague that started in some sort of program because they wanted to get into prostetics (I warned them about 3d printing upsetting the industry, they yelled at me for raining on their parade,) the 3d printing paradigm shift, surprise surprise, caused an upset into the marketability of their program, and they shifted into, at least last I was on speaking terms with them, women's studies.

I think part of the reason for the second half however, is an odd balance of 'younger people can be naive' and it's better to have them think that and finish than drop out a year or two because their major isn't panning out, i.e. switch to something else.

I say -that-, mostly because I know a lot of folks in my school would wash out from Engineering into Business or something else and while it's possibly not 'ideal', finishing some semi-useful degree is better than dropping out with some percentage of the full debt and nothing to show for it. I will note that almost everyone I saw 'leave' an engineering/CS/STEM type major flipped to something that was still, on some level, marketable.

3) Have next-to-zero standards for public funds used in grant and loan programs for college education, meaning people can take out loans for any sort of degree program at almost any sort of institution

This is a large blowback effect of various laws to prevent discrimination/etc against historically ethnic universities and programs. Unfortunately it's led to the 'Underwater Basket Weaving' meme.

4) Hold these debtors to standards that aren't applied to other types of debtors. You cannot discharge them through bankruptcy, it's very difficult to renegotiate, and SCOTUS has said that the chief executive of the note-holding institution (in this case, the President of the United States) cannot use discretion in deciding who he gets to forgive for loans.

Well, there's the 'flip' side, which ironically, due to all the other arms of the Kraken, contributes to the problem.

They are difficult to negotiate but have various outlying circumstances, i.e. IBR and time periods associated with that, certain discharge conditions (I have a colleague who's student loans were completely forgiven because she had ADA paperwork and they neither offered her a reasonable accommodation nor warned her when she started said program, at least -that- part of the system worked,) and the lovely 'indentured servitude with extra steps' Nonprofit forgiveness program, where if you work for a nonprofit long enough, you can get a discharge.

But then, you do get all these folks that 'wash out' into non-marketable degrees, they keep working at Starbucks or low paying jobs so they get the IBR, what does that do to the rest of the system though? it puts a fuckton of stress on it that we see in the rates.

All of that said, I feel like there's a 'number' where the loan should just be treated like any other debt. e.x. oh you've got $4000 in student loan debt and $50,000 in other debt? Fine wash it too. Or 'hold' the degree till it gets paid back, IDK.

DavidPiper• 2 years ago

From TFA:

Lenders keep issuing loans without regard for the borrower’s ability to repay, knowing the debt can’t be discharged. ... Meanwhile, lenders—both government and private—keep the money flowing. Why wouldn’t they? With loans that can’t be discharged in bankruptcy, they’re guaranteed a return, even if it takes decades to collect.

From the first chapter of David Graeber's "Debt: The First 5000 Years".

“But,” she objected, as if this were self-evident, “they’d borrowed the money! Surely one has to pay one’s debts.” It was at this point that I realized this was going to be a very different sort of conversation than I had originally anticipated.

Sounds like the perfect way to create a system where the only way out is some kind of black swan bubble burst. I (genuinely) wonder who will be protected from the shockwave when it does: the number of people on the debt side is presumably enormous.

Dalewyn• 2 years ago

SCOTUS has said that the chief executive of the note-holding institution (in this case, the President of the United States) cannot use discretion in deciding who he gets to forgive for loans.

Yes, because the power of the purse rests solely with the House of Representatives.

Despite terms like "the President's budget", the White House has next to no authority in regards to what budget they get and how it will be spent. The legislature (House of Representatives) legislates and the executive (White House) executes; the executor cannot legislate.

This is why the often mentioned PPP loan forgiveness was fine (it was codified by the House) but Biden unilaterally deciding that certain debts to the government are forgiven is not.

WalterBright6• 2 years ago

4)

SCOTUS ruled that the President exceeded the authority over this that was authorized by Congress. I.e. it's Congress' purview to do this, not the Executive. The Executive does not get to make up laws.

WalterBright6• 2 years ago

Move most good careers that do not require a college degree out of the country for the benefit of shareholders

The economic law of comparative advantage means that expenses go to where they are the cheapest.

The solution is not to punish companies, because if you do then the entire company moves out of the country.

The solution is to look at why foreign labor is cheaper, and what can be done to make domestic labor more competitive.

nothercastle• 2 years ago

Sure just allow slavery, unlimited pollution and no safety requirements or liability then the US would have no problem competing. Otherwise you have to regulate to create a level playing field

qwerpy• 2 years ago

I'm glad that everyone is calling out that it is in fact a very good thing that the President is prohibited from arbitrarily deciding who to gift free college to. Loan forgiveness should rarely if ever be used. Too much opportunity for abuse by politicians who would love to dangle it as a carrot during election season.

WalterBright6• 2 years ago

Hold these debtors to standards that aren't applied to other types of debtors. You cannot discharge them through bankruptcy

That's because other types of debts are backed up with collateral. 18 year olds have no collateral, and so can easily just declare bankruptcy - and what is the note holder gonna do about it?

That means the note holder needs some sort of guarantee to get paid back, otherwise they are simply not going to grant the loan.

rayiner• 2 years ago

Hold these debtors to standards that aren't applied to other types of debtors

That’s because these loans are made using standards that aren’t applied to other loans. The government basically does not consider credit risk or traditional underwriting standards when making student loans.

sp527• 2 years ago

SCOTUS has said that the chief executive of the note-holding institution (in this case, the President of the United States) cannot use discretion in deciding who he gets to forgive for loans

It's really amusing how the unitary executive oscillates in fashionability according to which political tribe is currently in power. Congress is responsible for appropriations. Full stop. Whenever this has been bypassed via some loophole, by Bush, by Trump, by Biden, etc, it has been at its core unconstitutional. And it is in our collective interest that it remains that way.

jklinger410• 2 years ago

Someone should be in jail for this. And the boomers and older who enabled it should feel embarrassed about feeding their children into this debt machine.

Log_out_• 2 years ago

5) Have a massive elite overptoduction that becomes an anti elite toppling your democracy .

huuhee34• 2 years ago

While the US system is particularly messed up, it's not that great in Europe either.

In my country universities get paid by the government based on number of graduates. Things like quality of education and employability matter very little. So, the end result is a system where many young people spend 5 years of their life on a masters degree that doesn't give them any monetary benefit. The university gets their money, the government gets fancy stats about level of education, but many students end up just misled and wasting their time.

Obviously this is better than graduating with massive debt, but it's still a major financial loss compared to working full time, or studying something employable. In my opinion, what we need is a change in mentality. People shouldn't tell their kids that it's okay to study just whatever you enjoy, at least not until you have some other means of earning a living you're happy with.

fredgrott• 2 years ago

What is missing from the debate....

The rise of Education Grants on Fed level and the decrease of state funds per student...classic economic game-ship gone wrong...

What might have worked better is higher Fed grants per student handed over to states as match grant where it matches state funds in the same student.

Anything else delves into false narratives around false facts....

And we do in fact have an example of said cure working...elementary education where no student has a debt...everyone forgets the 1-12th grade school system that works with no debt transferred to students....

SamuelAdams• 2 years ago

Make student loans dischargeable in bankruptcy again.

I would like to see the author back this up with more considerations.

Bankruptcy disappears from all credit reports after seven years. The average age of first time home buyers is 35.

So if a new grad’s credit is trashed from the age of 23-30, it makes no difference to them - they are not planning on using credit for anything substantial anyways.

What is going to stop every single student from declaring bankruptcy immediately after graduation?

hypeatei• 2 years ago

What is going to stop every single student from declaring bankruptcy immediately after graduation?

The long and arduous process of going through bankruptcy proceedings. Have you or do you know someone who has gone through that? It's not fun nor is it a guaranteed ticket out of your debt.

Cerium• 2 years ago

I would rather see us switch to an income based repayment schedule with discharge at 30 years, seems fair to the student and society.

imtringued4• 2 years ago

Yeah just make it dischargeable after X years. It would be fair even to current holders of student loans.

freshtake10• 2 years ago

This exists to an extent today. If you apply your profession to an area that the government deems a societal good (e.g. you work at a public university), it can be discharged after 10 years. This was status quo for decades.

imtringued4• 2 years ago

What's going to stop young people from declaring bankruptcy immediately after doing anything?

mezzie22• 2 years ago

I feel like allowing bankruptcy in certain situations would make sense.

For example, I took out undergraduate and graduate loans to train for a career that, due to a freak health event (I got MS) in my last semester of grad school, I couldn't actually do. Currently, the disability discharge works in a way where if you can do any work at all you're on the hook for the full amount.

So someone who went to school to become an actuary/doctor/lawyer/etc, suffered a severe head injury and afterwards can only work a retail or fast food job is still on the hook for all their loans and has to pay them off on poverty wages.

Another case is people for whom the economic landscape changed so drastically so quickly that the decisions they made when entering school might not be relevant when they leave school. Think people who started undergrad in 2005/2006/2007 - they might have made perfectly reasonable decisions about what college to go to and how much debt to take out based on expected future return, and then that return tanked while they were in school + there were several years of scraping by during which interest accumulated due to no fault of their own.

pixodaros5• 2 years ago

Think of people who started a Computer Science degree in 2019 or 2020 (yes, individuals can maximize their chances of getting a software development job after university, but as a collective many of them will have to do something else for the foreseeable future).

freshtake10• 2 years ago

Yep, and I think most reasonable people would agree with this.

downrightmike2• 2 years ago

At this point, all students should on principals alone default and bankrupt. The system is rigged and is actively hurting people.

hinkley2• 2 years ago

<search page for “Reagan”>: 0 matches.

They didn’t go far enough back or broad enough.

“We” decided that cheap college was too socialist and his people cooked up a scheme to make it more expensive and push the underclass and PoC into the GI bill. “You people” only get an education once you survive the military. But it made things worse for the middle class as well, as almost every5ing from Reaganomics has, and things have only snowballed from there.

eschaton• 2 years ago

It wasn’t even to push people to the military, but literally to ensure “the wrong people” had more difficulty getting a university education—Reagan’s people came up with it as a reaction to Vietnam War protests.

peterweyand382• 2 years ago

The problem here is the time value of money. If the world is based on a production function of compound interest then in a world of finite resources what becomes cheaper over time are cell phones and what becomes more expensive are people's time, because the per unit cost of clean water and housing goes up and technology makes virtualizable goods cheaper.

This also has the added benefit of screwing with the Gini coefficient as returns to capital are always compounded where worker productivity at best goes up linearly.

So people mortgage their future in a bad Nash equilibrium in a competition to increase their productivity at a slightly faster linear rate than other workers, by taking money from financiers. The same financiers that see an exponential return and are incentivized to shrink labor costs to keep maximizing compound returns. So students are stuck in a system in which they're borrowing from their ideological competition.

It's not that universities are inherently evil or administrators are bad. It's a natural extension of how returns to investment work.

Now I'm not a Marxist, but that's the way the math works. The only solution I can see is a social system in which the wealthy form investment vehicles that run as cooperatives owned by the workers and flatten the Gini coefficient as much as possible. If students bought shares in a university that they then owned for life similar to bonds, then the university system itself would self correct.

Say you go to graduate school or had tenure - then you would have a higher share of bonds. You would no longer be paid in a linear way, but a compound one. If the returns didn't align with expected earnings the university would fail. Linear payments are essentially just an admittance of failure to believe that inflation won't destroy someone's earning potential unless they're able to become a shareholder faster than someone else. Which causes intergenerational disequilibria as we've seen where the old are incredibly wealthy and the young are too poor to start families.

Unless economics is willing to confront the social problem of compound interest in a finite world accelerationist capitalism will end up destroying society.

No, the solution is not to burn down academia. Ask the Cambodians how killing everyone with glasses worked out for them.

imtringued4• 2 years ago

Silvio Gesell essentially makes the argument that the return on mere ownership of real capital is negative in the real world. Positive interest can only exist in a world where demand for capital exceeds supply. Since capital produces capital, we reach the excess capital "regime" eventually. The holding costs of excess capital are negatively therefore people destroy the excess capital. In the positive interest range there is a tendency for the interest rate to drop. In the negative interest rate range there is a tendency for the interest rate to rise. Both lead to the equilibrium real interest rate being exactly 0% in the long run.

But a 0% interest rate has some quite significant implications. The value of non-extracted rock in earth's crust and the mild steel it eventually becomes are equivalent, despite being separated in time. Capital requires energy to operate, which also comes from the earth's crust. In other words, everything that exists today is just a long winded transformation of one chunk of the universe into another. Nothing is ever "produced". All wealth is based on the direct or indirect ownership of land and its resources playing out over the ages. Mind you, in this framework, owning an expensive machine is equivalent to having the mining rights to dig out the materials and energy sources. It is not literal ownership of land that is important, but the access to its benefits.

Basically, we will never escape feudalism.

peterweyand382• 2 years ago

My position is that global GDP is a compounding function on interest. So you if you take the sum total of the world's GDP you can take out (x - m). You can simplify the equation further to goods produced today and investment, which is similar to your argument.

So you have a total stock of raw resources, the current production function based on technological transformation, and computed interest in the future (which is a compound function). The resource stock is finite no matter its size (like all resources on earth), and the future expected return to transform those resources is expected to go up exponentially.

Competition doesn't matter under these circumstances. So long as investment has a compound function you run out of resources quite quickly or reach a point where whoever owns the most raw resources is the person that wins under the condition of a complicated game of musical chairs.

At 3.5 percent GDP growth rate at a compounded return you have to double the real return of goods in twenty years. Or you have inflation. In a generation the system collapses.

You have to massively redistribute wealth and flatten the gini coefficient almost immediately while assuming that GDP can no longer increase. Or you don't believe in math. There isn't a middle ground. Giving people bonds based on what they do that are nontradeable would be a start, although how you forbid resale is legally difficult. Forming investment vehicles that do what Benjamin Franklin did with the college in philedelphia might help. But the math doesn't work if you have a finite set of resources and a compound function of return. Technological transformation of raw resources into goods isn't a guaranteed exponential function.

Or we'll see more of what's come before. We can afford fancy computers but not homes because cell phones are cheap to produce and land is expensive to own.

Compound interest is a massive problem.

whatever1• 2 years ago

I mean you are given a blank check to change your future for ever and the debt will be paid by your future, better self.

Who would not take this lucrative deal, regardless of the number on that check?

osigurdson• 2 years ago

I think we are going to have an era of entrepreneurial maximalism coming soon. For a lot of young people, the employment deal is rather broken. Also, AI will benefit smaller companies far more than larger ones.

blackeyeblitzar• 2 years ago

One thing that really annoys me about universities is being forced to take random classes under the dubious banner of being well rounded. The incentives for the university are to make us spend more time and money on them. So of course, they want us to waste time in arbitrary forced requirements. My observation is that people are not actually well-rounded just because they went to a university. And I don’t think they’re even studying the fields that we need as a society. There are too many random fields that just seem like activism rather than something rigorous. Taxpayers should not be subsidizing those, and the government needs to be much smarter about managing the bad incentives for administration.

big-green-man• 2 years ago

I've been saying this to anyone who would listen for years. All the problems with higher education in the US are the direct result of student loans being unable to be discharged in bankruptcy. Usually complex problems have complex causes, usually if someone says "simple, just do this" it means they probably don't understand the problem. Not this one. This is one of those rare problems with a singular cause and a "simple" solution: allow student debt to be discharged in bankruptcy. I put quotes on simple because, while the solution is simple, it's easier said than done as the author points out, the regulation of the industry is captured and making it actually happen is very difficult due to incumbent institutions benefitting from the status quo. But we have to set the bone, it's going to hurt but there's no way around it. We are very fortunate that the solution is so simple.

graycat• 2 years ago

Simple facts of life about education and (OP) student loans:

(1) Liberal Arts and Sciences. If you have the money/smarts, can go for a Bachelor's degree at an Ivy League university, maybe also join a fraternity, and, thus, get some more understanding of history, civilization, and people and meet some people likely good to know for a good career/marriage.

The Ivy professors are expected to publish a lot of research and, hopefully, get that research funded. The university may take 60% of the research funding for overhead.

I'm shocked, shocked to find US National politics going on here. Here is your 60%, Sir.

The universities like getting the 60%, e.g., for the white table cloth restaurant or the the President's limo. US politicians like funding education.

Due to WWII with radar, sonar, the Bomb, the US government liked to fund research in the STEM fields and, soon, medicine, agriculture, etc. Due to the research, the profs stay bright, with brains active, but otherwise their research has not much to do with what is in the Bachelor's degree courses.

(2) State Colleges. Could get a Bachelor's degree and also a Teaching Certificate which would enable a career in K-12 teaching that could be good for wives and mothers. Low tuition.

(3) State Universities. Could continue and get a Ph.D. Could use that (A) as a union card for a career in college teaching that did not require research, (B) a career in research, maybe as an Assistant Professor trying to publish enough and build reputation enough to get promoted to tenure, (C) whatever else could use the work for. Can regard (C) as speculative with best results quite good for career, wealth, US national security.

One academic direction: Get a good background in math (probability, statistics), physics, and chemistry, and then do research in some other field, e.g., what is happening on the floor of the Gulf of Maine.

(4) Broadly, children need to grow up, and that can involve lots of inputs and experiences. Then they can go fourth into the great US society, lands, and economy and try to be successful. Some Bachelor's degrees might help.

Bachelor's, ..., Ph.D. as job training -- has not been very popular, respected, or successful in the US.

Broadly one effect for young people in the US economy is the economy might continue to grow and develop with new directions; so, ..., a young person can try to select a direction that is or promises growth, get a first job, and go ahead and grow.

E.g., my education concentrated on math and physics. Early career was in US national security which liked math and physics. Soon there was also a lot of interest in computing, so got into that -- right, quick sort, heap sort, AVL trees, numerical issues in matrix inversion and curve fitting, .... At one point, the US Navy was HIGHLY concerned about the US labor force in computing, especially for work in math and physics, and I got well paid to sit, learn about computing, and do some on some Navy sonar data, the FFT (fast Fourier transform), power spectral estimation, etc. As US computing grew rapidly, so did my career. Now, doing a startup in computing using some original math -- that is, combining what I'd gotten like the novel ingredients for a popular new pizza.

So, if job training, trade school, education with good "ROI" for good careers does not work well DIRECTLY, maybe (A) pick some of the best of what is in the libraries and (B) make what can with it -- yup, it's risky, speculative, etc.

My recommendations:

(A) If you can afford (1), fine. Otherwise, don't spend a lot of money on that Bachelor's ... Ph.D. education. I.e., for the OP here, don't take out student loans, and if go to state schools might not need the loans (might not apply to careers in law or medicine). By the way, for grad school, Master's and Ph.D., I never paid anything and did get paid for doing ugrad math teaching.

(B) For a Ph.D., at some schools, courses are optional, the main point is the dissertation, the definition is "an original contribution to knowledge worth of publication", the main criteria for publication is "new, correct, and significant", a cheap way to get the background for such research is independent study, and might do enough of that on evenings and weekends before going for a Ph.D. E.g., not a lot of need for "student loans".

(D) Meet people, especially the right people: It can be better who you know than what you know.

(E) If you are doing really good work as an employee, then maybe see if can do much the same work but for much more money as an owner.

haberman• 2 years ago

I agree with the article's diagnosis: the system is out of control, with no market forces are in place to keep costs in check. It's unsustainable for students to take on this level of debt.

I'm not sure I agree with the solutions though. Making student loan debt dischargeable doesn't make a lot of economic sense. We're talking about 17-year-olds with no income and no collateral. Why would any lender want to be in this business? Who will lend to students if the debt is dischargeable?

The article's solution is to essentially make the school the co-guarantor of the loan, such that the school absorbs part of the financial impact of student default. Ok, but now the school has a direct financial stake in the student's overall finances. Do you really want to have that kind of relationship with your school? Do you want an admissions process that is partially trying to decide if you're financially responsible? Do you want your school pressuring you to choose a more lucrative major? Do you want communications from your school reminding you that it's important to be making good financial decisions? If your school is co-guarantor of your loan, it's their business to make sure you're going to repay on time.

There has to be an element of responsibility that falls to the borrowers themselves. It's true that a 17-year-old does not have the experience to know for themselves how much debt is reasonable, especially when they cannot necessarily predict their future earnings. But there has to be some incentive to borrow less. I don't think it's healthy if student can borrow with abandon, safe in knowing that they can just discharge the debt in a few years if it doesn't work out.

Ideally students would be voting with their feet, and would make it clear to colleges that the cost of tuition is a significant factor in their decision. But I guess prestige and tradition are so powerful that people will want to go to name-brand colleges no matter the cost.

robswc• 2 years ago

Do you want an admissions process that is partially trying to decide if you're financially responsible? Do you want your school pressuring you to choose a more lucrative major? Do you want communications from your school reminding you that it's important to be making good financial decisions? If your school is co-guarantor of your loan, it's their business to make sure you're going to repay on time.

I wouldn't particularly enjoy this... but at the same time, the alternative seems to be students that "don't know what they're doing" taking out loans over $100k to get degrees that are not in demand. These people will then claim they were ignorant of the true cost, job prospects, potential salary, etc.

The elephant in the room is that many degrees simply don't leave students with a lot of earning potential. I never understand why the discussion seems to trend (not implying your comment did this) towards how we can pay for these degrees or make them affordable. It sounds harsh but I don't know how to see it any other way.

next_xibalba3• 2 years ago

Do you really want to have that kind of relationship with your school? Do you want an admissions process that is partially trying to decide if you're financially responsible? Do you want your school pressuring you to choose a more lucrative major?

Yes. These schools need to eliminate or drastically reduce the economically useless degrees that they have produced in such grotesque surplus for the past 40 years. They should absolutely have an incentive to produce an education that is useful to society. They’ve miseducated Americans for generations on the lie that all education is inherently good.

freshtake10• 2 years ago

FWIW, most of my friends in undergrad would openly flaunt the way they were spending their student loan money (weed, video games, new spoiler for their car, etc.). This was not the exception, as far as I could tell.

So the age thing goes both ways - 17 year olds are too young to make smart financial decisions, both about whether to get a loan, and how to spend it.

stefan_• 2 years ago

Why do brands market to young people? Why do people buy stocks that make no profit and never have?

It's never about today.

next_xibalba3• 2 years ago

I’ve said it before on HN and I’ll say it again: I don’t support any reform with respect to student loans that doesn’t see the academic institutions participate in the pain. I’d like to see a large number of universities get bankrupted by assuming some portion of the student loan liabilities of their alums, then allow the alums to file bankruptcy if they can’t pay off any remaining balances.

Did you know that federal student loans cannot be discharged via bankruptcy AND if you carry federal student loans into retirement, your social security income can be garnished?

seizethecheese2• 2 years ago

1) I do not agree with applying this retroactively. You shouldn’t change the rules in the middle of the game.

2) it would be unfair to make universities participate in the downside but not the upside. Perhaps the federal government should also turn the interest earned over to universities. This could actually go some way towards lessening resistance.

next_xibalba3• 2 years ago

1) The game has been rigged since the beginning and the unis have been the biggest beneficiaries and the most malignant actors. You don't think they knew damn well what they were doing by charging $100k+ in tuition for an English degree to an 18 year with no hope of paying back the loans used to pay the tuition?

2) The universities have already gorged themselves at the greed-pig trough. How is it you think they can afford to pay all those $100k+ salaries to liberal arts profs, have a 1:1 ratio of admins to students, and pay their chancellors and presidents $500k+? All of it is funded by indebting students to the tune of $10s or $100s of thousands while granting useless degrees.

Let them suffocate under the weight of their sins. They are the worst actors in the entire ecosystem. Worse than the naive student borrows. Worse than the predatory lenders. Worse than the traitorous legislators. Why? Because they know they're in a position of trust. They wrap themselves in the clothing of the teacher and the philosopher while picking the pockets of naive teenagers who were told they're following the path to prosperity.

pokerface_868• 2 years ago

fuck the Uni’s, they’ve spent decades profiteering off of us. my degree was an absolute waste of time (mathematics, cs+ stats minor) other than telling employers that i’m not a dumbass. i barely attended 30% of classes and graduated with a 3.5. uni is too easy, admits too many people, and serve as just a bottleneck in the system to actually living my life (profitably). the only reason i, and im assuming most others, went and did a hard degree was to signal to employers that im intelligent (and deserved to earn a proper living wage) , not bc i genuinely gave a shit about learning more lol

mbostleman2• 2 years ago

I’m not sure that the impact on the debtors is even the worse part. The removal of any apparent consequence for the cost of education also seemed to remove an incentive for the university to provide a quality product.

hindsightbias• 2 years ago

When will the Stanford and Ivy leaguers making $400K at FANGMAs lead by example and burn their diplomas?

rr8089• 2 years ago

Yeah that's the twist. If you can make FANG salaries the full cost of Private education is quickly paid back.

CaffeinatedDev• 2 years ago

I like the system that some coding bootcamps employ where they take a percentage of the first years of working wages. This would be a way to discern the value of your degree quite accurately. It would align the universities' and students' interests.

Besides this, I also agree to the 200+ upvotes, system is broken y'all!

seizethecheese2• 2 years ago

The premise that 17 year olds cannot make this kind of decision seems widely accepted here. Yet, I remember clearly understanding that since I was paying for college with debt, I must study engineering.

Perhaps college has expanded to select too many people? I wonder if this could be solve by simply restricting college admissions to 20% of graduating seniors.

TechDebtDevin• 2 years ago

This is how "cultural revolutions" begin

rr8089• 2 years ago

I'm not convinced American universities are unusually expensive. Its an costly business. Does anyone have good figures for what the cost/student is globally?

I can see: https://nces.ed.gov/programs/coe/indicator/cmd/education-exp... looks like the US is 20-30% more expensive than other developed countries but that isn't a huge difference.

baby_souffle• 2 years ago

A quarter isn’t a huge difference?

When I think not huge, I think low single digits. Not “most of the way to a third”

rr8089• 2 years ago

I think most of the discourse is about fees students pay, so $$$ for US vs free for Europe. When you see $38k for US vs $32k for UK then its a different problem.

impossiblefork• 2 years ago

They are unusually expensive.

Here in Sweden university education costs less per head than highschool education (we of course pay for research separately). In Russia there's even one university, the Independent University of Moscow, which is just a bunch of mathematicians who give courses.

University education can be made into something really hardcore but simultaneously incredibly cheap.

For example, I think the IUM has exactly zero administrators.

kachurovskiy• 2 years ago

There's a certain point in time for any industry where it has a chance to capture both the user and the legislator. Once that happens, prices for consumers start to grow faster than wages because the industry has more money for lobbying, it's a positive feedback loop.

https://www.abi.org/newsroom/chart-of-the-day/price-changes-...

Political solution to this is very unlikely unless there's a major stress in the system that, at least temporarily, takes out the one piece of the price growth puzzle.

AlbertCory• 2 years ago

So, what’s the solution? It’s simple, but not easy:

"Make student loans dischargeable in bankruptcy again.

Tie lending terms to the value of the degree.

Impose risk-sharing requirements on educational institutions – Schools would face financial penalties or need to contribute to a risk-sharing pool if their graduates default at high rates."

=================

Sounds reasonable. Making people who were either faithful repayers or non-borrowers in the first place, pay for the bad or unlucky choices of a few is obvious bad and unfair policy.

There are always situations where people who make mistakes have them forgiven but pay a price. I think the public would accept something like that, but not a program where the debts are forgiven outright.

Schools need to take a haircut and repay some of the bad debt themselves, just like a bond default does not result in the bondholders receiving 100% of what's owed them.

bachmeier• 2 years ago

This is an important topic, but I wouldn't recommend reading this post to learn about it. There are numerous flaws and jumps in the logic.

However, without getting into all that (time is too valuable to comment on the 50,000th iteration of the same points) I will just point out that the solution is much simpler than the author's. Make the maximum repayment of student loans a percentage of income over a period of time. For example, you have to repay a maximum of 7% of your income per year for 15 years. No need to get into complicated issues of bankruptcy law. If you want universities to align their incentives more than they already are, make them cover some or all of the unpaid loan balances after the repayment period ends.

glurmokiq• 2 years ago

The problem starts at the point where people think the purpose of universities is to qualify people for jobs. I wonder what happens to the Humboldtian ideal.

NickC25• 2 years ago

Why has nobody mentioned for-profit entities allowed to run roughshod over our country's students?

textbook publishers, for one, are guilty of this. professors get kickbacks to assign a new edition of a textbook each year or few years, so archived or older versions don't work. don't get me started on those books that come with a 1-time code that you have to use to do online work. its a racket.

globalnode• 2 years ago

how do you get the system to change itself when it benefits so greatly from the status quo. massive protests? vote them out? those would require organisation and cooperation from people that can easily be turned against each other. no, the system stays as it is or gets worse. sorry to be a downer has there ever been a situation where massive self interest like this have been overcome?

victor106• 2 years ago

In 2003, total student loan debt was around $250 billion. Today? It’s over $1.7 trillion.
That’s not growth; that’s an explosion.

That's about 9.5% CAGR. About the same as the return of S&P 500 over the long term.

https://www.investopedia.com/ask/answers/042415/what-average...

geomark• 2 years ago

If everywhere you see "free university" you could replace it with "taxpayer funded university" that would be great.

analyte123• 2 years ago

A big thing that he didn't mention: Income-based repayment programs (particularly the new SAVE plan) and Public Service Loan Forgiveness (PSLF), while certainly well-intended, make the cost of college essentially irrelevant for people who can reasonably expect to benefit from those programs. And so the colleges up the bill. His 3 proposed solutions don't really deal with this. Obviously people on IDR or PSLF don't need to declare bankruptcy just because of the loans. And if the colleges had to carry the risk, the risk would be far less than imagined if these programs still exist in the same way as today: the federal government guarantees it will write off the loan of anyone who works in non-profits (which are about 10% of all jobs) for 10 years, or anyone who makes a small minimum payment for 20-25 years with SAVE.

The SAVE income-driven repayment plan is a big deal that will make the cost of college far worse. What you have to pay is 5% of income above 225% of the poverty line. A family of 3 making $80k pays $104 a month - it doesn't matter if they had $10,000, $100,000 or $1,000,000 in loans. If you are not planning to be in a very high-earning field, why wouldn't you borrow the maximum? Why wouldn't the colleges charge the maximum? This amounts to a giant subsidy.

theendisney42• 2 years ago

Aligators eat their own babies.

(I'll let myself out)

Edit: the fix could be to fill it under national security hazard(?)

j_timberlake• 2 years ago

Don't worry, if AI starts hitting the labor market like a wrecking ball, almost nobody's gonna be signing up for 4 years of busywork anymore. The only people joining will be the few people who actually WANT to learn subjects or join academia, and they'll get rock-bottom tuition prices.

What happens to all the existing student debt? Debt is just a number on a computer, I'm sure they'll figure something out...

morpheuskafka• 2 years ago

I think Americans need to start very seriously considering working in another country after college. Student loans can't be discharged in bankruptcy, but it is extremely unlikely they will be legally enforced overseas.

For that matter, some serious thought should be given to going to college overseas. I don't care that "American universities are always more prestigious," there are some countries that are handing out full ride scholarships to internationals and some where the full sticker cost is as little or less than a US in-state public school. Most high school counselors know nothing about this and most students don't even consider it.

Ironically, many American study abroad programs probably cost more than just enrolling in the foreign institution directly for a semester (whereas the same is never true in reverse).

dh2022• 2 years ago

A friend of mine did exactly that. Entered U of Waterloo on math scholarship. Lost the scholarship in the first year because of bad grades. Second year transferred from Honirs Math t9 General Math. Third year transferred from Math to film studies. Fourth year transferred from film studies to Independent studies. Fifth year a lot of drinking and soccer - Independent studies did not require any classes just some sort of progress towards some type of essay. I think in sixth year Ontario government cut his student loans. He was on the hook for something like 50,000 CAD. Left to teach English in Seoul. Been there since 2000

nojvek• 2 years ago

Great article.

This is why am not too excited about elections. Both side promise a lot but execution is lax. While credit is due to Biden admin for infrastructure and Chips bill, his handling on forgiving student loan was a mess.

It was a one time shoddy fix. May as well make all loans the Same - based on risk, be discardable and the punishment is credit score ding if it’s not paid.

Non-dischargeable loans are a drain on the economy.

prirun• 2 years ago

IMO, the US govt should stop all student loans and make the universities fund the loans. Then the universities would have an incentive to make sure students graduate with degrees & skills that will allow them to pay back the loan.

THey'd also have an incentive to make their own operation run efficiently, ie, fewer high-paid administrators who do nothing and higher pay (and tenure) for professors who do all the work.

nobodyandproud2• 2 years ago

Perhaps one compromise is to discharge any interest and prevent interest accrual on bankruptcy-claimed loans.

Removing any risk to debtors is what set-up this perverse incentive; and breaks the market.

I’d still prefer what the author proposed, but the status quo is broken.

Background: I graduated in the 1990s with virtually no debt attending a third tier public school as I had to pay my own way.

But only because I didn’t want to declare bankruptcy and don’t like being in debt; yet it was never clear that bankruptcy wasn’t a real option.

What kids have to go through today is outrageous.

berniedurfee• 2 years ago

Regulation should allow students to forgo their tuition payments if they can’t land a good job in their field of study.

That’d help align incentives.

Schools would compete on placement rates and quality. They’d need robust post-graduation placement services and would need strong partnerships with industry players to stay in alignment with required skills.

silexia• 2 years ago

Excellent article, I think it goes too easy on the actual corrupt people who are the real culprits: the huge bloated administrations collecting big paychecks at the expense of poor kids who don't know any better.

dennis_jeeves2• 2 years ago

Why merely target universities?

Think of high school, while most people do not pay fees directly while in high school your taxes pay for it. Most people for most occupations only require perhaps 5 years of staggered high school education. One can have an (extended) apprentice or higher degrees for others.

_heimdall• 2 years ago

The solutions are surprisingly straightforward – make loans dischargeable, tie lending to degree value, hold institutions accountable

This really over complicates it in my opinion.

Student loans should be treated like any other debt. Yes, it should be able to be discharged as part of bankruptcy. From there we just need the government getting out of the way, save for a (hopefully) rare case of predatory lending or collusion.

Lenders will decide what value a degree is worth because lenders themselves should own the loans rather than governments. Banks and financial institutions have very skilled actuaries who would make pretty easy work of calculating the acceptable cost for a given degree from a given school, factoring in the lender's acceptable level of defaults.

Institutions can be very directly accountable when students can't get loans to go there. If a school charges too much, or the education they provide doesn't lead to careers that can pay back the loans, the schools lose.

39896880• 2 years ago

This was one of the worst articles on the topic I’ve ever read. Full of faulty assumptions, ill-defined terms, and just flat out misleading statistics. Numerators without denominator. The list goes on.

ivan_ah• 2 years ago

I believe a decade from now we'll see the "unbundling" of the three types of value universities provide: /1/ employability signal, /2/ knowledge, /3/ social. I don't know what will replace /1/ and /3/, but I look forward the future where /2/ can be made more widely accessible (without the debt).

Imagine a future where everyone knows 101-level concepts in chemistry, biology, physics, etc. and able to function in society informed by all this knowledge, rather than defer to "experts."

gojak• 2 years ago

As an European this sounds lunatic. I pay +-600€ a year for my masters (bachelor coasts the same) and this 600€ also include a train ticket for all local trains in Germany.

Idk why there are so few US people coming here. Honestly our universities have their weaknesses as well but I think they can definitely compete with the average US university.

You have to account for something like 1k living cost per month if you are a bit lucky and don’t eat in restaurants every day. By working part time u can easily live of your salary.

I think the us is famous for its student loan system and it’s a way of separating poor people from people with better situated parents. We do this in Europe too but here we do it a bit more “hidden” and mostly in Highschool.

silent_cal• 2 years ago

How hard is it to just go to the public university in most states? Where I live, you can get your tuition completely covered if you keep a B average. Young people can get whatever degree they want without having to worry about debt as long as they have decent academic ability.

EricE• 2 years ago

This is by far the most honest and accurate assessment of the current situation I have seen. And the solutions are spot on, and sadly his assessments for how likely they are to happen.

How America's universities became debt factories

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