[HN Gopher] Tuition costs have risen 710% since 1983
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Tuition costs have risen 710% since 1983
Author : armanhq
Score : 608 points
Date : 2023-07-10 17:03 UTC (5 hours ago)
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| jasonlotito wrote:
| Remove loans and make colleges and public universities free
| again. It worked before and worked quite well. All comes back to
| the failings of Reagan once again.
| araes wrote:
| The situation for students is pretty close to a double bind
| situation [1]:
|
| - Get loans and go to school, or I (your family, society, the job
| market) will punish you.
|
| - Do not get loans, or I (the economy, lenders, your credit
| score) will punish you.
|
| - You must got to higher education and get a degree, but only if
| you want to. ("college isn't for everybody", except all we ever
| say is a HS education is a dead end).
|
| - With a blaming tertiary of "You should have already know that
| and realized what an issue large student debt was before taking
| the loans. Why are you trying to act like such a victim?"
|
| And I admit, I've fallen into this previously of "how did they
| borrow so much money?" Except its this same issue of "we put you
| in a bad situation, and then blame you for not escaping earlier."
|
| [1] https://en.wikipedia.org/wiki/Double_bind
| pneill wrote:
| The core issue is that there isn't a free market at work here and
| there are conflicting motivations that are preventing progress
| toward that model. One the one hand, people want higher education
| to be affordable and cost effective (which requires a free
| market) but on the other hand they want higher education
| available to all even if that means taking on an ROI negative
| course of study.
|
| For example, if we allowed student loans to be a bankruptable
| form of debt, then over time, certain schools and majors would be
| unable to get loans, which then could have a series of economic
| responses such as universities increase tuition for ROI positive
| majors to support ROI negative majors or some departments might
| close or we might see consolidation of universities specializing
| in certain types of education.
| codegeek wrote:
| It is free money for lenders because backed by the Govt AND
| protected against bankruptcy. It is Free money for colleges
| because they know they will get paid regardless.
|
| Remove this "free money guarantee" and watch how market corrects
| itself. When students can file for bankruptcy and/or the debt is
| not guaranteed by Govt, lenders would now use the same criteria
| they use to issue credit cards to 18 year olds. Hint: It's tough
| to get your 1st credit card if you have no credit history in the
| US and most lenders will not even entertain that idea. Some will
| do if you put in a collateral like $500 of actual cash deposit to
| guard against the default risk.
|
| When lenders stop lending or get strict, colleges will have to
| consider how quickly and by how much they keep raising costs.
| aidenn0 wrote:
| > Hint: It's tough to get your 1st credit card if you have no
| credit history in the US and most lenders will not even
| entertain that idea. Some will do if you put in a collateral
| like $500 of actual cash deposit to guard against the default
| risk.
|
| Is that true these days? At my university 20 years ago, the
| credit card companies would bribe 18-year-old freshmen to sign
| up for their cards.
| nsvd wrote:
| My first credit card was a $200 secured card. They offered me
| a real card after about 6 months of usage.
|
| This was about 5 years ago.
| function_seven wrote:
| Same here. 25 years ago I got a $500 AMEX card and a bag of
| M&Ms. A $1,000 Citi card and a T-shirt. And another card--
| Discover, $2,000!--along with a free CD I think?
|
| The conventional wisdom at the time was that (a) we were
| college students and were therefore more likely to have
| earnings in the near future to cover those small credit
| limits, and (b) we were college students and were therefore
| more likely to have parents to bail us out if we got in
| trouble with the credit card, and (c) there's no better time
| to snag a lifetime customer than at the very beginning of
| their adult lives.
| aidenn0 wrote:
| I got a Discover and a Citi Mastercard.
|
| The students working in the mail-room of my dorm were ...
| less than meticulous about sorting. My bills occasionally
| went to the wrong box, leaving insufficient time for me
| feel safe that my payment would arrive on time. When this
| happened with Discover, I just called customer service and
| they said they'd waive the late-fee since I called in
| advance. It happened once with Citi, I called and they said
| I would have to do an electronic payment with a $10 service
| charge. paid the bill and immediately canceled the Citi
| card.
|
| Guess which (of Discover and Citi) I'm a lifetime customer
| of, and which one I will never sign up for again.
|
| P.S.
|
| After re-reading the above, it strikes me how much of a
| "period piece" the comment is. The bill arrived in the
| mail, I had to mail in payment, and I spoke with a person
| on the phone when I called the credit card company.
| function_seven wrote:
| > _... it strikes me how much of a "period piece" the
| comment is..._
|
| Ha. I mean, I got a free _CD_ , which itself dates the
| story. But even more old-timey? That Citi card I
| referenced above was actually an AT&T Universal Card. The
| "Universal" was because it was also a calling card! On
| the back was a separate number I could use to place calls
| from a payphone, at cheaper rates than dropping coins
| into it.
|
| It's been many years since the card had that feature, but
| the branding relationship must be strong, because it's
| still called that, and my card still sports an AT&T logo
| on the front.
| FormerBandmate wrote:
| There is also a massive difference between a $500 credit
| limit of hypothetical spending for a credit card and
| actually giving out $100,000 in an unsecured loan. At the
| worst case scenario, your credit card loss will probably on
| average be $50 per customer if not much less, but for
| unsecured student loans it will be much higher, which will
| require higher interest rates that further increase
| defaults.
|
| The reason student loans aren't dischargeable in bankruptcy
| is because it's basically literally impossible to collect
| on them, you can't repo a college education
| yardie wrote:
| I had an unsecured student credit card, 20 years now. Its
| limit was $800, no deposit required; just enough to pay for
| books, lab supplies, and a few meals. I know because I kept
| it as my last resort emergency card all these years later. Or
| use it on sketchy kiosk/online shopping sites. Every few
| years BoA asks me to increase the limit, which I decline to
| do.
|
| I'm still FB friends with the girl that gave me a free
| t-shirt for signing up. LOL.
| rahimnathwani wrote:
| Off topic: 20 years ago, FB didn't exist.
| yardie wrote:
| All my FB friends are friends I've made through physical
| contact. Most of us have been separated through location,
| time and obligations. Even though we haven't seen each
| other in over a decade we're still FB friends.
| jackson1442 wrote:
| I was able to get a credit card with a relatively low limit
| ($1200) as my first one, partly because I had a higher than
| average income during school as a private tutor. Many people
| do get secured cards if they are on a low income though.
|
| That was a "student card," so optimized for people who don't
| have a credit history. After having that for a while I was
| able to leverage it into standard rewards cards.
| ourmandave wrote:
| If you don't repay your student loan, it dies with you.
|
| They won't go after your estate for the balance.
| swagasaurus-rex wrote:
| At great sacrifice to your credit score
| cannonpalms wrote:
| Dead people don't have or need credit scores
| huehehue wrote:
| Speak for yourself, in my town you can't get a decent
| plot without at least a 760 FICO
| kayodelycaon wrote:
| Death makes your credit score somewhat irrelevant.
| solarmist wrote:
| Sure, but the bulk of those consequences are decades away so
| effectively they don't exist (or are at least invisible).
|
| So schools and lenders are acting as if it's true.
| codegeek wrote:
| Sure but then it depends on *when* you die. Let's say you
| graduate at 22/23 and live till 70. For almost 50 years, you
| will be chased for that debt. Is that a good way to live ?
| yardie wrote:
| Hospice and long-term care would have already picked through
| those bones. Unless you're rich there isn't much of an estate
| to go after.
| carabiner wrote:
| Yeah but I'm not so comfortable with a technocracy where
| universities become advanced trade schools, purely to increase
| your chances of getting a job. As the late Kaczynski said,
| students are grudgingly pursuing these subjects because it's
| the only way to survive in a country without real social
| services.
|
| There needs to be some formal patronage of the arts, but I have
| no idea how to pursue that.
| nightski wrote:
| I'm pretty sure the government is the lender in the case of
| federal student loans. There aren't any banks getting "free
| money".
| gowld wrote:
| I can vividly recall having this exact conversation in my
| grandmother's apartment, in 1995.
| robomartin wrote:
| > When students can file for bankruptcy
|
| Agree with everything you say, except for this.
|
| Allowing student loans to be discharged in bankruptcy will
| result in millions of students pulling that lever as soon as
| they graduate. They, of course, get to keep their degrees and
| use them to make money their entire lives.
|
| If you file for bankruptcy and, for example, want to keep your
| car (which has a loan), you have to reaffirm that debt and
| continue paying. Same with your home, etc.
|
| Student loans provide you with a valuable life-long asset.
| Allowing discharge simply isn't right and is economically
| destructive. How about I BK, discharge my mortgage and keep my
| house forever? Same thing.
|
| I agree 100%, government has to get the hell out of the student
| loan business. Universities and students need to be forced into
| a situation where risk is assessed and loans are issued --or
| not-- accordingly. The university has to have risk. And
| students have to be held to their commitments.
|
| The other problem the current system causes is what I call
| "course padding". Most degrees in the US have a year (or
| slightly more) of coursework unrelated to the field of study.
| In the case of STEM degrees, students spend a year or more on
| non-STEM courses.
|
| This is detrimental on many fronts.
|
| First, the time to graduation rate for undergrad is 33% longer
| than it would be without this irrelevant coursework. No
| employer cares about this stuff for STEM degrees. Some might
| differ wit this. OK. Let the free market decide then. If Google
| wants engineers who have taken three semesters of Underwater
| Basket Weaving History, the free market will drive students to
| take those courses as enhancements to the required curriculum.
| They should NOT be conditions for graduation at all.
|
| This would reduce a typical engineering degree from four years
| to three.
|
| Second, these non-major courses add 33% to the cost of a
| typical STEM degree. Whatever a year costs at a school
| (including housing, etc.), that's what they add to the student
| loan. That could mean $30K to $70K. This is horrific,
| unnecessary and counterproductive. If the student wants to take
| these courses because they add value and become additive to
| their career, they can make that decision --not be forced by
| government into it.
|
| If government wasn't in this business, bullshit degrees and
| bullshit unnecessary courses would cost a ton less and some
| would completely evaporate from our universities. A few weeks
| ago I was watching a show where this guy helps people deal with
| debt. This poor fellow had over $250K in student debt for a
| degree that might not even make him $50K a year. The only way
| that happens is in a distorted market, one that is distorted by
| government in favor of what usually ends-up being political
| agendas disguised as good intentions.
|
| The other element of this equation is our failures in K-12
| education. Again, government (and union) meddling has caused
| much of this.
|
| Our 18 year old's graduate high school devoid of marketable
| skills. They are useless to most businesses without training
| and, generalizing, are ignorant about most things that matter
| as they transition into adulthood.
|
| For example, they have no understanding of money and finances
| and no skills to help them make sound decisions. So, someone
| throws a $200K loan at them for a degree on Basket Weaving and
| they take the ride, not understanding they are going to make
| just above minimum wage and have signed-on to financial hell
| for the rest of their lives.
|
| That is a failure in pre-college education. And a serious one
| at that.
|
| Not everyone has to go to college. Our K-12 path fails that
| population as well. The average US high school graduate
| requires training to stack boxes on shelves and make coffee.
| That sure sounds like a formula for societal success, doesn't
| it?
|
| At the end of the day, the problem might very well be that
| education, in the US, has become a political punching bag. One
| could come-up with dozens of scenarios to understand why we
| seem to insist on destroying our nation by not doing a good job
| educating our kids. All of them would seem insane to even
| suggest. And yet, here we are, it's 2023 and our kids rank
| below third-world-nation levels almost across the board.
|
| This is insane. What are we doing?
| nielsbot wrote:
| > Allowing student loans to be discharged in bankruptcy will
| result in millions of students pulling that lever as soon as
| they graduate.
|
| What happened in the days before student loans become exempt
| from bankruptcy?
| robomartin wrote:
| Prior to 1976?
|
| That might as well be another century. My guess is not many
| loans discharged by BK. I would also guess loan amounts
| were not insane, as they are today. I would further guess
| the no-discharge rule had to have origin in excessive
| defaults. Nothing happens in a vacuum.
| Workaccount2 wrote:
| This isn't going to happen because the whole point of the
| current government back student loan program is to give kids
| from not-ideal backgrounds access to credit, and hence access
| to the full range of schools available.
| throwawaysleep wrote:
| There is currently a shortage of people for the military, so
| let them join that for the education. Can pay for their
| schooling with service.
| p1esk wrote:
| Pretty sure that has always been the case in US.
| yardie wrote:
| Why not just make it free? Kids from not-ideal backgrounds
| can compete on merit alone. The way this Supreme Court
| intended?
| gowld wrote:
| The Supreme Court did nothing of the sort.
|
| What is "merit" for _access to education_?
| naijaboiler wrote:
| there's nothing like pure merit if you are talking about
| not-ideal backgrounds. those folks are already heavily
| disadvantaged. Making it "merit" is just compounding their
| disadvantage while advantaging those already with
| advantages. The myth of pure meritocracy lives on usually
| perpetuated by those blind to their own privileges.
| recursive wrote:
| Meritocracy really is the worst system. Except for all
| the other ones we've tried.
| rhplus wrote:
| Crazy idea, but how about the gov just gives kids from not-
| ideal backgrounds access to grants and scholarships, rather
| than credit.
| Workaccount2 wrote:
| There already is tons of that. The issue is the "full range
| of schools" part. You can be from a family with a 400
| credit score and combined income of $45k, and get loans to
| go to a $50k/yr university.
|
| If the government is going to step in and provide direct
| funding, it will almost certainly only apply towards
| community colleges followed by local state schools.
| itake wrote:
| How is that different from the current system?
|
| People from low or mid-income families have access to
| scholarships and funding. Kids from ideal backgrounds don't
| take out loans.
|
| If you're saying schools get a blank check via grants and
| scholarships, then I'm not seeing how that fixes the issue.
|
| This problem feels super similar to the Us health care
| system. Those with blank checks for pre-negotiated prices
| (have health insurance), pay low healthcare costs, and
| those without pay insane prices. Overall everyone is paying
| insane prices.
|
| Can you explain your reasoning more?
| skrtskrt wrote:
| > People from low or mid-income families have access to
| scholarships and funding
|
| It might be relatively common for low income to get full
| rides or near full rides, but anyone in mid-income is
| getting saddled with tons of debt.
|
| I applied to college in 2011 with a household income of
| like 95k, with an older sibling already in college, and
| most "financial aid" packages from state universities
| added up to between $60k-$160k total debt for four years.
| Going out of state to places like Ohio State, Maryland,
| etc. was already $50k/year back then.
|
| This was inclusive of significant amounts of merit-based
| scholarships. Most (all?) schools do not allow you to
| stack merit scholarships with need-based grants. If you
| earn a merit-based scholarship, they reduce your need-
| based aid by that exact amount.
| itake wrote:
| I am still not understanding how offering blank checks to
| more people (mid-income) will fix the problem of sky
| rocketing tuition.
|
| Assuming this is a Supply vs Demand problem, blank checks
| to more people will increase the demand for the services,
| but does not modify supply or competition for the demand.
|
| Increasing demand with static supply will keep tuition
| increasing.
| mattwest wrote:
| They do though. I was a Pell Grant recipient. All I did was
| fill out the FAFSA and the grant was automatically applied.
| That got me through community college debt free.
|
| When I transferred to a 4-year, I once again filled out the
| FAFSA and was eligible for an interest-free loan which
| covered the difference between tuition and my Pell Grant.
| Sohcahtoa82 wrote:
| I'm wondering when and where you went to college and what
| other circumstances affected the size of your Pell grant.
|
| I went to community college in 2009. I filed my FAFSA and
| if I recall correctly, my Pell grant was $300/term.
| Meanwhile, tuition was $115/credit. My full-time class
| load was nearly $2,000/term once you included the books.
|
| When I transferred to the state University, tuition was
| double that and my Pell barely changed.
|
| I was 27 years old when I started college, working at a
| Subway restaurant for $10/hr, had no savings, and parents
| that did not give me a dime after I moved out at 21.
|
| I finished my degree with $45K in debt.
| grumple wrote:
| Pell grants are tiny though.
|
| Really, the current grant system doesn't work.
|
| We should tell the universities they must provide needs-
| based grants on their own and prohibit using ability to
| pay during admissions - or they don't receive federal
| grants. This way they aren't incentivized to continue to
| bloat costs (as happens now), since now the school is
| responsible for the costs.
| lolinder wrote:
| > Pell grants are tiny though.
|
| No, tuition rates _at some schools_ are absurd. Max Pell
| Grant is enough to cover tuition at the three
| universities closest to me.
| grumple wrote:
| Tuition rates are much higher near me and the other
| states I've lived in. PA and CA... and I went to a
| private university. Silly me.
| nsvd wrote:
| The tuition for my university (state school) is about
| $7,000 per year which is coincidentally close to the
| maximum you can receive through the pell grant.
| grumple wrote:
| What university? In PA, Penn State's in state tuition and
| fees come to almost 20k and out of state is almost twice
| that: https://admissions.psu.edu/costs-aid/tuition/
| runarberg wrote:
| Another crazy thought than. How about government simply
| pays for education. Sort of like universal income, but
| with education. No grants, no loans, just free education.
| YetAnotherNick wrote:
| If it is grant for all regardless of performance, it
| basically means giving subsidy, which government already
| does afaik.
| Levitz wrote:
| >Remove this "free money guarantee" and watch how market
| corrects itself.
|
| While I agree, I can't imagine what it would be like for the
| first generation of students under such change. The reason they
| are government backed is to make college a possibility to begin
| with.
|
| First ones in line would probably get massively screwed, no?
| throw_m239339 wrote:
| > First ones in line would probably get massively screwed,
| no?
|
| No, College education will become cheaper, mechanically.
| Right now, it's the government that is highly distorting the
| education market with that loan system under pretense of
| allowing everybody to get an education.
| therealmarv wrote:
| If you look at the whole World: It's a country specific problem.
| There are even English speaking graduation programs with
| international degrees abroad from top universities everywhere. To
| give some examples study in Sweden, Denmark, Germany etc and
| spend nearly no money on tuition. Factor the cost of living in
| and it's overall still cheaper than studying in the US. And I
| have no doubt that people grow personally (beside the education
| side) if they spend a good amount of time in another country.
| It's just not super easy and super obvious to think out of the
| box.
| jansan wrote:
| Some companies even pay your study. You do a regular BS at a
| university (or college), work as an intern at the company
| between terms, and the company will pay you 1000EUR+ per month
| over a period of 3 to 5 years. This is not a scholarship, but a
| mixture of apprenticeship and study (called "dual study"),
| which is becoming increasingly popular at least in Germany.
| m3kw9 wrote:
| Supply demand pricing has to be part of this equation
| jurassic wrote:
| Government lending and a lack of price controls are the ultimate
| root cause. The government extends near-unlimited credit to
| student borrowers that goes way beyond their credit-worthiness,
| academic performance, graduation rates for the school, prospects
| for employment based on field of study, etc. And universities
| have clued into the fact that students who can pay any price,
| will pay any price. The ceiling of what students will pay, if
| they have sufficient access to credit, to join or maintain their
| status in the middle class is very very high. So universities
| hike the price year after year with little resistance because the
| availability of government borrowing takes the sting out and
| shifts the pain years or decades into the future of those
| students' lives.
|
| I think some major force is needed to counter-act the runaway
| price growth without cutting off borrowing for students from low-
| income families. I think university prices should be capped by
| law at the inflation rate.
|
| Think rent control for tuition.
| briandear wrote:
| Rent control results in slums and shortages.
| tick_tock_tick wrote:
| > Think rent control for tuition.
|
| The only thing economists from every politic view can agree is
| horrible?
| jurassic wrote:
| There's no direct comparison to be made with housing
| shortages. The only scarce educational resources are those
| that convey high prestige, and there's no way to manufacture
| more of that through higher tuition payments because it's the
| scarcity that makes it prestigious. Harvard would be just as
| prestigious if it were free to attend as if it were $100k/yr
| to attend. Whereas in housing, if you had people lining up to
| pay $100k/yr, you'd be throwing up new buildings as quickly
| as possible.
|
| In general there is a an oversupply of higher education
| capacity due to demographic downturn and a decline in
| enrollments since 2010. Smaller colleges have been closing
| because they cannot attract enough students.
| RyanShook wrote:
| The main reason correction is needed is a matter of economic
| and national strength. Increasingly we see students opt out of
| college because the cost benefit to them doesn't make any
| sense.
|
| You can argue that those people will learn skilled trades or
| online but university has always been and will continue to play
| an important role in economic output in the US. When only those
| in the highest tax bracket can afford college it exacerbates
| instability and undermines the economy.
| xd1936 wrote:
| I work IT for an institution that is currently kicking off a
| campaign to transform the business model of higher education.
| We're currently one of the more expensive private liberal arts
| schools in Michigan, and we want to pivot to fully funded tuition
| for all students. We have been talking a lot lately, just like
| OP, about how this cost trajectory in Higher Ed is unsustainable.
| We want to instead build a cycle of generosity.
|
| 1. https://hope.edu/forward
|
| 2. https://www.pushkin.fm/podcasts/revisionist-
| history/a-good-c...
|
| 3. https://youtu.be/A-c3h6J8ZKk
|
| 4. https://youtu.be/VssQtdXWqSs
| dv_dt wrote:
| In the same time period, stay public university systems had their
| state funding also decimated. Federally sourced loans were
| favored over expanding grant programs.
|
| The thought that public universities should "run like private
| businesses" is a disease of neoliberalism. They largely succeeded
| in running like businesses, but it's all the wrong metrics.
| public goods should not be profit centers for state or federal
| government budgets.
| dv_dt wrote:
| *state public university systems.
|
| Take away state funding, make it a business objective to
| capture students, add a abstraction of student loans and direct
| federal funding, and of course tuition increases.
| anovikov wrote:
| Well, speaking of loan forgivance - i am not really sure how it
| is supposed to work. Just allow to also let go of student debt
| when declaring bankruptcy, and revoking the degree?
| whall6 wrote:
| S&P has risen 2,200%+ since then as well
| paulpauper wrote:
| _Short-term, students need recourse. Defaulting on loans creates
| a cascade of consequences that necessarily harm borrowers earning
| potential for years (e.g. colleges can withholding proof of
| attendance, decline in credit score, wage garnishments, etc.)
| There are loans that are highly likely to default regardless
| after the COVID moratorium on payments ends ._
|
| no they don't, as mean as this may sound. The data shows that
| college grads earn way ore than non-grads, even after accounting
| for inflation and loans. people who fial to finish or fail to
| attend college do way worse. Thanks to an abundance of aid,
| scholarships, and other discounts, hardly anyone is paying these
| inflated tuition prices in full.
| gitfan86 wrote:
| My favorite idea that I have seen is allowed students to return
| their degrees for a 70% refund within 12 months of graduation. If
| the school is confident that the degree will be a great asset
| throughout the person's career it will be no problem.
|
| This is how lemon laws work with cars.
| AaronFriel wrote:
| And yet, college is still worth it. While many folks like to
| point out the Baumol effect aka cost disease, it's also important
| to remember that college is overwhelmingly worth it, and the
| government _ought_ to subsidize college educations. There 's no
| better investment the government can make than subsidize more
| people to go to college. (Well, perhaps except for funding the
| IRS, but that's more of a zero-sum game.)
|
| See:
| https://www2.ed.gov/policy/highered/reg/hearulemaking/2011/c...
|
| Lifetime net earnings increase for progressively higher levels of
| education, resulting in overall GDP growth and a wealthier
| society better able to pay for public goods and the social
| welfare of all. The vast majority of college students who attend
| a 2 or 4 year in-state program will net a significant increase in
| lifetime earnings and the amount they pay for that degree, even
| assuming they maximized their federal loans, will be dwarfed by
| their lifetime earnings increase.
|
| Even for those folks getting masters degrees to the tune of
| hundreds of thousands of dollars, the Department of Education
| finds that the lifetime net earnings increase by nearly $1.5
| million over a high school education, and yes, actually, around
| $300k over a Bachelor's degree.
| mensetmanusman wrote:
| We know what happens when it is other people's money.
|
| Also fascinating is the increased room and board (square area
| requirement per student) due to the lack of experience sharing
| rooms in the family as family sizes have collapsed to sub
| replacement levels.
| mrguyorama wrote:
| Funny because all the other countries that use literal public
| funds to pay for all of college do not have this problem.
| sixstringtheory wrote:
| My understanding is that other countries that bankroll higher
| education also get to decide who even goes on to that level
| of study. Could you provide a list of countries you had in
| mind so we could see if they have that kind of process?
| prewett wrote:
| I think these statistics are meaningless without discussing how
| much state/federal funding has been removed. The article briefly
| mentions it, but gives no idea of what percentage of tuition was
| effectively state funded in 1980/1983. I'm not sure where to get
| that information, and I expect tuition costs will have risen
| faster than inflation + reversion to students paying the true
| cost, but without that information these numbers are misleading
| at best.
| asow92 wrote:
| Won't it go up more if colleges can be assured that students will
| be bailed out?
| NoMoreNicksLeft wrote:
| You're confused. Colleges and universities have made (poor)
| decisions that have increased their cost, ostensibly to attract
| enrollment because of all the tuition/fee dollars out there for
| the taking.
|
| If those tuition/fee dollars dry up, then that money isn't out
| there floating around to chase after with poor decisions.
|
| However, all the previous poor decisions were still made, and
| they're still paying for all the extra buildings and gardens
| and resort spa dorms thinking they'd have time to pay them off.
| Not to mention the absurd increases in (non-faculty) staff
| levels... those people might be looking at unemployment.
|
| But, and this is the most important point: allowing bankruptcy
| is never a bail out. It's the acceptance of reality. Yeh, "loan
| forgiveness" is sort of screwed up, but why has bankruptcy been
| denied these people? Why is _education debt_ such an important
| kind of lending that we must make an exception for it and allow
| the lender to do what we allow no other lenders to do?
| pixl97 wrote:
| > we allow no other lenders to do?
|
| Well, because we don't technically allow debtors prison. It
| is an unsecured loan which are not really that common.
| asow92 wrote:
| Agree to disagree, and I guess we'll just have to wait and
| see :popcorn:
| aj7 wrote:
| "Prices will rise to absorb any subsidies."
| m1n1 wrote:
| What is the "best" thing for students to do?
|
| What is the "best" thing for parents to do?
|
| For "best", I'm interested in two things: making the system less
| broken, and the kiddos being ok as adults.
| bastardoperator wrote:
| Here in California you can go to JC almost if not completely
| free. Transfer to a UC school with TAP (guaranteed), and save
| considerable amounts of money. I will never recommend paying for
| a 4 year university, it's just not worth it when you can get the
| same exact diploma for half the price.
| tboyd47 wrote:
| And has the populace gotten more educated?
| iaseiadit wrote:
| Surely the problem will go away if President Biden simply uses US
| taxpayer money to pay off student's loans. That's the smartest
| course of action, not blatant pandering to young voters that will
| only perpetuate the underlying problems.
| throw9away6 wrote:
| Part of this is probably because real inflation has been
| undercounted.
| Tempest1981 wrote:
| What was the corresponding increase in teacher salaries?
| Eumenes wrote:
| Can we talk about the inflation related to the value of the
| degree as well? A college degree in 1983 is worth alot more than
| one in 2023.
| Workaccount2 wrote:
| This is something that always bothers me. People have
| completely lost sight of the forest for the trees.
|
| The entire point of an education is to make you a good
| worker/citizen. That's it. People completely lose sight of this
| and think that the point of an education is to get a degree.
|
| Therefore we end up with legions of kids trying to "get a
| degree" as opposed to "become a good worker/citizen".
| runako wrote:
| Exactly the opposite. In 2023, a degree is a prerequisite (or
| effectively so) to a lot of jobs. This was less true in 1983
| than it is now.
| Eumenes wrote:
| Not if you're independent, resourceful, and motivated to
| learn. Is there some risk in not going to college, yeah,
| maybe - but young adults have many years to 'figure it out'.
| Not all answers lie in institutional credentials.
|
| I've worked with dozens of self taught programmers,
| designers, operators, etc. Look at how much more information
| is available via the web now vs what was available in 1983.
| runako wrote:
| Not disagreeing with anything you are saying. In fact, why
| get a job at all? Start a business during high school, make
| millions, and skip it all. There's plenty of information
| out there to make this a realistic option.
|
| However, for people that did not pursue that route, it is
| also true that many employers require a college degree for
| many jobs. Some 19-year-olds may "pattern match" well
| enough to get some hiring managers to grant exceptions. But
| these are exceptions and by definition not good general
| advice.
|
| > Not all answers lie in institutional credentials.
|
| Also consider that the truth of this may depend on the
| specifics of a job-seeker's phenotype. YMMV.
| spondylosaurus wrote:
| I would love to see comparative data on how the average college-
| educated worker's earnings have changed during the same time
| frame!
|
| My guess is that the adjusted wages haven't risen much over time,
| or at least nowhere near as steeply as the associated education
| costs have.
| SideQuark wrote:
| A better method to analyze college cost is to look at expected
| lifetime income gain for a college degree vs not having one. If
| it's significantly net positive, then college is a good
| investment.
|
| Since 1980, that has gone up a lot. This method is
| lr4444lr wrote:
| Why is that better? Non graduates also have loan expenses for
| other things, e.g. businesses or mortgages acquired sooner.
| You'd want to compare paychecks net of debt payments to look
| at workable income.
| SideQuark wrote:
| College is either a good investment, or it is not. To
| evaluate, you look at expected returns, just like any
| investment.
|
| Last time I ran numbers, it was one of the best investments
| one could make; better return than historical stocks, real
| estate, or just about any similar volatility asset class.
|
| You also might want to figure in lifetime expected
| unemoloyment- there's usually a decent gap between college
| degreed unemployment rates vs non-degreed rates.
|
| And the gains given to skilled vs unskilled are only
| increasing.
| londons_explore wrote:
| I'd like to see a new funding model for universities.
|
| I'd like to see universities be able to register for a share of
| tax revenue from their students post-graduation.
|
| For example "This course costs 5% extra income tax for 20 years".
|
| Then, you pay nothing for the course, but after you graduate you
| pay a 5% higher tax rate, and that extra money goes to the
| university. The IRS would administer the scheme since they
| already have to do all the math anyway for every taxpayer.
|
| This gives the university a strong incentive to make sure their
| students are productive. They'll help push students into studying
| finance rather than 'soccer studies'.
|
| Obviously the university needs money now, not in 20 years, but
| private lenders can help cover that gap (and then the lender
| _also_ has an incentive to make sure the university is doing a
| good job educating students).
| renewiltord wrote:
| Yeah, that's an idea. Purdue used to have that, but at some
| point they stopped
| https://www.insidehighered.com/news/2022/06/23/purdue-pauses...
|
| Ultimately, I think it's a market non-optimal way if you're the
| university since student loans allow you to decouple pricing
| entirely and completely derisk the student.
| Rebelgecko wrote:
| Fun fact, some schools do the opposite of this. Slightly
| oversimplifying, but the schools say "we'll raise your tuition
| by $x and give you ~$x in grants after you graduate if your
| income is below $y". It's most common for people in law school
| that know they'll be working for the government (eg
| prosecutor/public defender), so their income is mostly
| predetermined and they'll be eligible for loan forgiveness
| regardless. Win/win for the colleges and the students.
| sbdaman wrote:
| This is just an Income Share Agreement.
| https://en.wikipedia.org/wiki/Income_share_agreement
| f1yght wrote:
| I think some places have tried it before, but if it's optional
| then people who think they will earn a lot will just get a
| traditional loan, and people who think they will earn less get
| the income based one. So it ends up not being economical to
| offer.
| jedberg wrote:
| The one problem with this scheme is that it turns colleges into
| job training and nothing else. They would most likely drop any
| major that doesn't make a lot of future money.
|
| There is still value in providing philosophy courses and music
| and art and all the other things that don't lead directly to
| high paying jobs.
| londons_explore wrote:
| Well some philosophy majors will still end up earning a
| decent amount.
|
| So the philosophy department will still be earning - just
| less.
|
| They could also charge a higher percentage of future income
| to make up for the loss of earnings.
| FormerBandmate wrote:
| This value is nowhere near 200 thousand dollars, and everyone
| knows it
| jedberg wrote:
| I agree, the price must come down. But how do we get the
| price to come down while still making sure poor kids get a
| chance to study?
| fragmede wrote:
| government investment so the professors get paid, the
| students don't pay through the nose, paid back in the
| form of taxes, not crippling student loans. some, just
| not crippling debt.
| fragmede wrote:
| For whom? John Lennon, Qunicy Jones, Yo-Yo-Ma might
| disagree with that. John WIlliams, Alicia Keys? It's fine
| to point out that almost nobody with that education gets to
| that level of fame, but, I dunno, I'd value it at well over
| $200k if I were Phillip GLass, Jonny Greenwood (of
| Radiohead), or Herbie Hancock.
| jsight wrote:
| Why is this understating the increase in overall inflation to
| such a large degree?
| SkyMarshal wrote:
| Should probably measure this before and after the US left the
| gold standard in 1971. The question is, which contributed more,
| leaving the gold standard, or some Reagan era policies?
| phillipcarter wrote:
| Surprised that nobody here mentioned community colleges yet. Not
| a silver bullet, but the total cost of someone commuting to a
| community college from home is an order of magnitude cheaper than
| going to college. In many cases, CCs have explicit transfer
| programs, and the chances of transferring to a decent university
| after year two are pretty high.
| elpakal wrote:
| +1, and don't forget that they don't force you to pay room &
| board for your dorm your first two years.
|
| I'm a product of the California Community College system and a
| lot of my teachers were teaching both in the UC and Cal State
| systems at the same time. I am happy with the quality of
| education I received.
| [deleted]
| kjkjadksj wrote:
| Or even just in state colleges. I went to a large public
| school. It was a great school, but so are the big public
| flagships found at any state. I knew a lot of people who were
| out of state, taking loans, to do things like business or
| premed they could literally do wherever they came from for over
| half off tuition before you even account for financial aid or
| scholarships. CCs really aren't that much cheaper than in state
| rates for public schools, and you can even take certain classes
| at the local CC and transfer the credits over to the public
| school to save a little bit per credit hour and have somewhat
| inflated grades (plenty of people I know did this for their
| physics or math requirements over a summer).
|
| Another way to get free college is to just join the national
| guard program they have. A few friends did this as well. You do
| bootcamp which sucks, and like one weekend a month playing army
| in the woods during drill which I'm told also often sucks. But
| in the end you get free school and some pay. If you are used to
| doing hard work like manual labor, a weekend a month is not a
| bad deal. You can even land a job after through this experience
| and your degree e.g. in cybersecurity.
|
| There are options, obviously not as good as affording it
| outright but there are things you can do that aren't going out
| of state on a huge loan, so I'm surprised why so many people
| opt to take routes that put them in the same exact place by
| their mid 20s but with a massive debt over their heads versus
| these seemingly less glamorous routes. Maybe the marketing of
| "leaving the parents nest" is just that good?
| HDThoreaun wrote:
| Tuition at my states flagship, UIUC, is now 20k a year.
| Combine book costs and other misc and youre looking at 100k
| of debt before even accounting for room and board.
| 999900000999 wrote:
| CCs are perfect for students who might not know if they need to
| go to college or not. Better to only waste a few hundred
| dollars to realize college isn't for you. I had an amazing time
| at Community College, and even though I took off time to work I
| ultimately did get a 4 year degree for a pretty low price .
|
| The biggest issue in my opinion would be all of the people who
| have tons of student loan debt but didn't exactly graduate. You
| have the worst of both worlds
| cool_dude85 wrote:
| I'm curious if anyone has run the numbers on tuition versus
| direct state spending on higher education. What is the trend for
| overall spending on public higher ed since 1983, for instance?
| How much of the increase in tuition fees is to make up for
| decreased direct subsidization?
| eschulz wrote:
| Makes sense when you have student loans backed by the federal
| government. If an 18 year old with no money and no credit history
| gets accepted into a qualifying university, she will be able to
| receive a loan since the bank knows that the government will
| protect their investment if she fails to pay them back. So now
| young people have this easy access to credit, and universities
| can greatly increase tuition and fees with the confidence that
| their admitted students will be able to pay.
| stingraycharles wrote:
| Purely out of interest: what do they do with all that money?
| Does it increase the quality of education and/or research?
| kevstev wrote:
| A lot of the increase was driven by the "arms race" to
| attract the best students by building ever more facilities to
| make their ever glossier brochures more attractive. My school
| when I was leaving in the early 2000s was on a $200 million
| dollar building spending spree- a new library, a new sciences
| building, etc. I don't have a citation for this, but I had
| read somewhere awhile back that the administrative ranks have
| swelled at these schools and they are making tons more money
| than they used to in the past as well.
| prepend wrote:
| Administration.
|
| There's a growth in admin [0] that I think is the
| proliferation of the most bullshit of bullshit jobs. It's
| weird that I think the issue is much worse by basically
| funding all these admin positions that pay more than actual
| instructors and researchers yet I'm not sure what they really
| do.
|
| I'd like to see universities advertise low admin:student and
| admin:instructor as measured of quality.
|
| [0] https://yaledailynews.com/blog/2021/11/10/reluctance-on-
| the-...
| rovolo wrote:
| Yale is not a representative college. It makes 4x the
| income from its endowment than from tuition, room, and
| board. It also has multiple research labs _and a hospital_.
| They don 't break down the staff (admin) by department, but
| 2/3 of all faculty are in the school of Medicine, most on
| the clinical side. I would assume most of the staff (admin)
| are also working at the hospital.
|
| https://oir.yale.edu/data-browser/faculty-
| staff/faculty/facu...
|
| Universities are not just educational institutions. You
| can't just compare students numbers to employee numbers
| without also examining what the university does.
| prepend wrote:
| Of course Yale isn't representative, it's just one data
| point in a national trend.
|
| I don't understand your point.
|
| Do you dispute that admin staff have grown at a high
| rate?
|
| My point is that universities have too much admin and
| that it's growth quickly. I think it's perfectly
| reasonable to compare this trend without knowing exactly
| what specific universities do.
|
| I agree that comparing medical system admin staff
| wouldn't make sense, and the article I linked excludes
| medical system and other non-university staff.
| eslaught wrote:
| This is a common theme on HN, but it's not obvious to me if it
| reflects this entire period we're talking about here. Were
| government loans growing from 1980 to 2000? I know they have
| been in the last 20 years, but tuition was clearly growing
| before that (as you can see for yourself in the graphs of the
| original article).
| dauertewigkeit wrote:
| Easy access to credit is a good thing. I cannot believe I am
| saying this on HN. The problem as I see it, as a non-American,
| is that university in the US is a business trying to turn a
| profit. Even if most universities are technically non-profits,
| they are managed like businesses by MBAs. In the EU many
| countries offer guaranteed loans for Uni education, but this
| has not spiked the cost of education because Universities are
| not run with the aim to turn a profit.
|
| IMHO, easy access to credit is one of the best things about the
| American economy, and hiring MBAs to manage things that aren't
| for profit corporations, one of its worst aspects.
| brightlancer wrote:
| Not-for-profit businesses in the US are not legally allowed
| to turn a profit. There are no financial owners to be paid a
| profit. So, everything you wrote about that is BS.
|
| Not-for-profit businesses are still businesses; they need to
| take in as much as they spend, whether it's through fees for
| service (e.g. tuition) or donations. Colleges and
| universities in the US spend a lot of time begging alumni to
| donate money.
|
| And yes, there is education and training specific to running
| a not-for-profit _business_, and many GOOD leaders have MBAs.
| I have watched a lot of them fail because the folks at the
| top did not manage money well.
| anthlax wrote:
| This theory makes sense but since the loan is essentially risk
| free, why are private student loan interest rates roughly 10%?
| jedberg wrote:
| Those are the private loans not backed by the government. The
| government ones are basically at the prime rate or less to
| fund the administration of the program.
| Night_Thastus wrote:
| It's unfortunate, but to me this feels like half of the root of
| the problem.
|
| One half is easy access to loans, the other half is student
| debt relief programs.
|
| Between the two, colleges know they can charge absurd prices
| and pocket the money.
|
| It's awful, and I wish someone was doing _something_ to stop
| this. It cannot go like this forever.
| leshow wrote:
| There is an answer that "just" requires the political will:
| instead of doing public K-12, do public K-16.
| somewhat_drunk wrote:
| >the other half is student debt relief programs
|
| ...which student debt relief programs?
|
| Afaik there are no widely used student debt relief programs.
| nieksand wrote:
| It's buried in Excel sheets, but looks like quite a few
| folks: https://studentaid.gov/data-center/student/loan-
| forgiveness/...
| ilikehurdles wrote:
| Work for a public organization or certain non-profits while
| making 10 years of regularly scheduled payments and you may
| be qualified for student loan forgiveness. Lots of
| physicians I know took advantage of this since most of
| their training is at public academic institutions, and I
| believe many teachers do as well.
| diob wrote:
| Do you have data on how many take advantage of it? My
| anecdotes are that everyone who tries this gets trapped
| in some bureaucratic hell hole that tends to prevent it
| from actually being used.
| hdctambien wrote:
| NPR did some reporting on this a couple years ago:
| https://www.npr.org/2019/07/11/739860400/broken-promises-
| tea...
|
| "By the department's last count, only 1% of the people
| who think they've made their 10 years of payments and
| apply for loan forgiveness are getting approved.
|
| If you took all the people getting rejected and got them
| together in one place, Peterson says, you'd have
| "football stadiums full of nurses, firefighters,
| teachers, law enforcement officers that are seeking to
| have their debts forgiven.""
| abduhl wrote:
| The PLSF has been significantly overhauled since 2019,
| and continues to be made easier to qualify (and be
| approved) for.
| rayiner wrote:
| https://www.consumerfinance.gov/ask-cfpb/what-is-pay-as-
| you-...
| jayd16 wrote:
| I think the solution is to just grant some money to schools
| and cap tuition costs. The current incentives are just so
| misaligned.
|
| Its only half the problem because you'll still see inflated
| housing as well but at least its something.
| crote wrote:
| Or just go all the way and make education free, paid for
| using tax money - with a fixed per-student payout of
| course.
| kortilla wrote:
| Just stop backing student loans. The issue will stop, very
| fast.
| jayd16 wrote:
| That's only true if the issue is the cost and not
| maximizing education. The trick is we really do have
| folks that deserve college and can't afford it without
| some kind of help.
| rgrieselhuber wrote:
| And I assume there is nothing preventing this student-loan
| backed tuition money from funding university endowments.
| chiefalchemist wrote:
| The loans:
|
| 1) Increased demand.
|
| 2) Increased what the market could bear.
|
| The result is Economic 101. There are no surprises here.
|
| p.s. Note: Roughly the same applies to mortgages. The idea that
| more affordable mortgages (i.e., 30 yr) was going to make homes
| more affordable, is comical at best. With a relatively fixed
| supply, increasing demand is only going to have one effect on
| price. And the solution? The 40 yr or 50 yr mortgage.
|
| Round and round we go.
| somewhat_drunk wrote:
| Agreed. The real question is: do they produce a net positive
| effect for society?
| anonzzzies wrote:
| That is obvious, but it used to be that admission needed some
| tests which most people simply cannot get past. Colleges
| lowered the bar of entry to make more money and that caused
| your point 2 and as well massively lowered the quality of the
| education making the diplomas not very worthwhile (known
| exceptions are there of course). Keep the bar to entry very
| high and you cannot have a reason for upping prices. Get a
| loan when you are actually really good and otherwise don't
| get in, even if your parents have billions.
| stcroixx wrote:
| Also helps to drop standards like SAT/ACT. If you don't need
| grades or money to get into school, well, that includes just
| about everyone.
| thedangler wrote:
| I've been saying this for a while and no one has ever agreed.
| They are always like you think they are that greedy. YES I DO.
| It's not complicated. If one can get bailed out, one can do
| what ever they want.
| leshow wrote:
| You're missing another driver of the growth in tuition though:
| many colleges are only superficially "not for profit" and in
| reality are being run as profit maximizing institutions.
| FlyingBears wrote:
| Another problem with student loans is that they are frequently
| issued for way more than bare minimum required to pay tuition
| and study materials. This extra amount just exacerbates the
| problem and gives universities room to get to that money via
| tuition increases. Students may legitimately use that extra
| cash for living expenses, but most of the time it is just fun
| money expense.
| ch4s3 wrote:
| It's worth mentioning that degree granting institutions
| numbered ~3500 in 1980 and total enrollment was almost 10
| million, and in 2022 there were just over 4000 such
| institutions serving 17 million students, and that number of
| institutions is actually declining from its peak in ~2016. This
| alone is bound to drive up prices.
| KoftaBob wrote:
| https://shrewdcuriosity.medium.com/why-has-college-gotten-so...
| no_wizard wrote:
| Two things you have to do to keep tuition costs down nowadays,
| by my estimation, unless you get a full ride scholarship or
| accepted by the an Ivy League:
|
| - Do your first two years at community college. A lot of states
| have zero tuition costs for community college credits. I think
| in all 50 states its the absolute cheapest way to do get your
| first two years done
|
| - Enterprising students may realize that if you're married,
| FAFSA (which is used to compute both federal and state aid)
| will use _your married income_ and not your parents. Most
| students make little to money while in school. This
| automatically games the algorithm in your favor. Tricky to
| manage socially.
| ytdytvhxgydvhh wrote:
| Agreed about community college. It's unfortunate though that,
| like so many things, it's essentially a lottery on where
| you're born. Some community colleges are wonderful, others
| not.
|
| I've heard of other FAFSA games as well - last I heard the
| parents' cars and primary residence were excluded from the
| FAFSA expected contribution calculation so middle class folks
| with a fat savings account might decide to buy new cars or
| pay off the mortgage or do something similar to make the cash
| "disappear". Deferred compensation plans are used along the
| same lines for income. The fact that such games are viable is
| a shame but probably unavoidable unless we have government
| foot the bill for college.
| WkndTriathlete wrote:
| That's not the worst part. Rich families had their kids
| legally emancipated prior to age 16 so that the kids could
| legally show zero income and zero family net worth on their
| FAFSA applications.
|
| The FAFSA is such a load of horseshit I don't even know
| where to begin with it.
| indymike wrote:
| > Makes sense when you have student loans backed by the federal
| government. If an 18 year old with no money and no credit
| history gets accepted into a qualifying university, she will be
| able to receive a loan
|
| This is the exact problem. Whoever makes the loan has an
| incentive for eternally increasing prices.
| fredgrott wrote:
| false narrative, two counter points:
|
| 1. State govs have reduced funds to all public colleges. 2. Fed
| gov has refused to increase grants such as Pell on inflation
| basis.
|
| And that is way before the other forces of price increases and
| demand increases.
| eschulz wrote:
| You're right that state govs have definitely reduced funding
| in many places for public colleges. And although this started
| decades ago in some cases, it is significantly exacerbated by
| the size of loans that students can easily access (due
| directly to federal backing of such loans). Therefore, states
| can reduce spending on colleges with the knowledge that the
| colleges can easily increase tuition to make up the
| difference.
| za3faran wrote:
| I hope to see the day where interest bearing loans are
| recognized by the rest of the world as the evil they are.
| Muslims and Jews know this fact quite well.
| SamBam wrote:
| Serious question: what would incentive anyone to lend to
| people who have any risk at all (i.e. everyone)?
| Retric wrote:
| One of the major dangers with interest is it compounds in
| bad times. Someone gets laid off for 6 months and suddenly
| owes more money, this is especially problematic if someone
| gets injured and can no longer make the same income etc.
|
| Fees are one option. If you agree to a 2 year loan of 100$
| as long as they pay you back 110$ that's acceptable, the
| difference being if it takes them 3 years you still only
| get 110$. Obviously this runs into problems with inflation
| and people skipping payments etc, but it's one socially
| "fair" way to handle loans between friends and family.
| timfsu wrote:
| The same incentive you'd have to do something for someone
| without receiving payment - a desire to help. I'd imagine
| the fact that people in that time had stronger familial
| ties to others in their village also helped increase
| payback rates.
| ars wrote:
| And both religious created a way to indirectly pay
| interest by turning it into a business partnership.
|
| i.e. when you are helping someone (a friend, relative)
| you don't pay interest. But when it's a business loaning
| the money that desire to help doesn't exist, and it
| becomes a business partnership instead.
|
| https://en.wikipedia.org/wiki/Loans_and_interest_in_Judai
| sm specifically: "Heter iska". And
| https://en.wikipedia.org/wiki/Murabaha for Muslims (I
| think there are other forms as well). A copy of a Heter
| Iska: http://www.jlaw.com/Forms/iska_d.html
| sakjur wrote:
| Assuming such a rule would mean "all mandatory fees are
| prohibited" and that we're talking about profit driven
| ventures (not cooperatives or patrons that might have other
| reasons to want to lend money than monetary profits), you
| can be creative and charge money in ways that technically
| doesn't count as interest.
|
| The Medici bank gained lots of their money from foreign
| exchange speculation issuing a sort of option for buying
| foreign currencies at a specific date (this would probably
| be a lot harder to do today), you could also charge late
| fees with the social understanding that paying a loan back
| on time is really bad for your credit score. I guess a
| modern conglomerate might make money by putting certain
| terms in effect: You want to build a house but need some
| money to do so? I will lend you the money if you contract
| my contractors to build your house. A university could lend
| you the money but keep charging extortionate tuitions as
| long as the cost for the education service is unregulated.
| micromacrofoot wrote:
| Well if you're a credit union that operates in Shithole
| Town, USA... then in theory if you lend money to people who
| improve the community, you'll reap the benefits everyone
| else does by living in a more desirable place (more
| valuable property, more customers for businesses, etc).
|
| Almost impossible to imagine given the current state of the
| economy where every possible thing you can imagine has been
| commodified.
| boeingUH60 wrote:
| This seems good in theory but hard in reality. The modern
| economy is built on debt being used for new investments. The
| problem is high interest rates, not interest rates in
| general.
| pixelatedindex wrote:
| Debt is being used for new investment? That can't be right
| - it's gotta be some form of credit, right? Maybe I'm
| mistaken.
| boeingUH60 wrote:
| Of course, it's credit. The word "new" is redundant.
| uoaei wrote:
| Something never asked is whether what the modern economy is
| built on makes sense for longer than a couple hundred
| years. It seems premature to assume that the modern economy
| is sustainable ad infinitum.
| tiedieconderoga wrote:
| Abrahamic religions in general - Jesus was also not a fan.
|
| >Jesus went into the temple courtyard and threw out everyone
| who was buying and selling there. He overturned the
| moneychangers' tables and the chairs of those who sold
| pigeons. He told them, "Scripture says, 'My house will be
| called a house of prayer,' but you're turning it into a
| gathering place for thieves!"
|
| - Matthew 21:12-13
|
| >If you lend money to my people--to any poor person among you
| --never act like a moneylender. Charge no interest.
|
| - Exodus 22:25
|
| KJV used the word "usurer", but it's the same idea.
| gottorf wrote:
| The fact that default risk and time value of money exist are
| immutable, irrespective of whether you think that's evil.
| Modern Islamic banks in Sharia jurisdictions still recoup
| that risk and time value through various means, irrespective
| of whether you call that interest. (Some forms of "Islamic
| mortgages" charge you "rent" based on LIBOR/SOFR, which is
| just interest with extra steps.)
| crote wrote:
| Christianity also used to have many restrictions on charging
| interest, but that got lost somewhere around the 19th
| century.
|
| It is where the whole "Jews are greedy bankers" stereotype
| comes from: during the Middle Ages Jews were allowed to
| charge interest to non-Jews, so they were essentially the
| only people who could act as bankers for Christians. Combine
| that with a large dose of racism keeping them out of a lot of
| other jobs, and you end up with a lot of Jewish bankers.
| doalldrugs wrote:
| So the easier solution then since the government is effectively
| already paying for anyone who doesn't pay back their loan (a
| dead person for example) then is to just pay for everyone's
| college education (Public Universities).
| taeric wrote:
| Worse than just "backed by the federal government," the loans
| are basically protected by the government. Being one of the
| small list of things you can't bankrupt out of, the risk in
| giving out the loans has been fully pulled from the lenders.
|
| It is frustrating to hear the discourse over the inappropriate
| students that are taking on too much debt, all the while
| ignoring the lenders that are taking on too much risk. At
| least, they would be taking on too much risk, if they hadn't
| captured the market so effectively.
| wdb wrote:
| Aren't they government issued loans? That's how it worked
| over here
| adventured wrote:
| Yes. It's not the bankers doing it, it's the US Government
| - the Feds are the market, they own 93% of student debt.
| What a coincidence they dictate whether you can discharge
| the debt too, not too difficult to spot the gigantic
| conflict of interest.
|
| It's designed by the US Government to bring in massive, on-
| going funding to help fill in the red ink in the
| entitlement programs now that those are no longer funding
| sources to steal from (entitlements used to produce
| persistent surplus funding the politicians used to steal
| from for decades). That's why they'll never allow it to be
| dischargeable. Their margin on the loans is de facto 100%:
| it's all magic printed dollars or otherwise taxpayer
| dollars (makes no difference to them).
| brightlancer wrote:
| > It's designed by the US Government to bring in massive,
| on-going funding to help fill in the red ink in the
| entitlement programs
|
| Massive? Even before COVID and the lockdowns (and the
| pause on repayment), the student loan program was
| operating at a _loss_.
|
| The Dept. of Education has presumed (because they're
| incompetent AND corrupt) the program would be net
| positive but only to $114B over 25 years -- that's an
| average $4.5B per year. In 2019, the federal government
| spent $4.4T, so the _expected_ return from student loans
| would have only been 0.1% of the federal budget.
|
| That money couldn't fill squat.
|
| ----
|
| "From 1997 to 2021, the Education Department estimated
| that payments from federal direct student loans would
| generate $114 billion for the government. But the GAO
| found that, as of 2021, the program has actually cost the
| government an estimated $197 billion.
|
| "A percentage of that shortfall, $102 billion, stems from
| the unprecedented federal student loan payment pause that
| began under the CARES Act in 2020."
|
| https://www.npr.org/2022/07/29/1114560119/student-loan-
| progr...
|
| https://en.wikipedia.org/wiki/2019_United_States_federal_
| bud...
| singleshot_ wrote:
| Curious for your opinion: do you think it's really hard to
| discharge a student loan in personal bankruptcy in the US, or
| impossible?
| tempsy wrote:
| Eh I think the impact of the federal government on
| undergraduate costs is largely overstated. The limits for
| dependent students, which is most undergrads, is really small
| over 4 years.
|
| https://studentaid.gov/understand-
| aid/types/loans/subsidized...
|
| You can only borrow $31k over 4 years. That isn't a lot at
| all.
| dragonwriter wrote:
| There is no limit for dependent students of federal support
| through loans: the limits you cite are the limits for loans
| _to the student_ for students whose parents are able to get
| PLUS loans.
|
| But PLUS loans themselves have no cap, so the amount of
| potential federal impact on potential costs for this
| population--which, as you note, is _most undergraduate
| students_ --is _infinite_ , not $31K over four years.
| kortilla wrote:
| This is wrong. You're mixing up subsidized loans with the
| ability to get loans.
|
| People can get unsubsidized loans that still come with the
| same constraints around inability to discharge in
| bankruptcy for vastly more money.
|
| It's essentially all unsecured student loans (i.e.
| effectively the entire student loan market) that have this
| risk free model for lenders.
|
| It would all be completely toxic trash otherwise that no
| lender would issue. A student with no assets, no income,
| and no credit history to preserve has no downside to just
| declare bankruptcy after school and get $200k or whatever
| essentially for free.
| tempsy wrote:
| No its not
|
| Literally says "Subsidized and Unsubsidized Aggregate
| Loan Limit $31,000-No more than $23,000 of this amount
| may be in subsidized loan"
|
| Just confirms most people have no clue how small the
| limits actually are.
| frumper wrote:
| Those don't include private loans which can be co-signed
| by parents if needed, nor do they include PLUS loans
| where parents also take out loans. Colleges are also
| quite helpful in what you need to do to be declared
| independent for financial aide purposes, which almost
| doubles that limit.
|
| Graduate students are where it gets wild though.
| l33t233372 wrote:
| Private loans aren't backed by the government though.
| frumper wrote:
| They do have protections in bankruptcy as student loans
| though so it isn't a normal unsecured risk for lenders.
| They're also not hard to get, which goes back to the
| point of easy money inflates tuition.
| pixelatedindex wrote:
| That's the limit directly from the government. Depending
| on what you're studying for, that might end up being
| lower than what you actually need.
|
| For instance, when I was in college (undergrad) I took
| the maximum, but it wasn't enough for me to pay tuition,
| rent, etc. Also those loans don't pay during the summer,
| so you've to budget for that as well. My part time job
| tended to cut hours because there's a high influx of kids
| who also want summer jobs, which meant less money overall
| for me. I ended up taking some more loans from Wells
| Fargo to make ends meet.
|
| In hindsight, I should have got a better job instead of
| retail - some sort of office job. But I didn't have a
| car, so I was limited in how far I could go.
| monero-xmr wrote:
| I am afraid you are woefully confused. A good friend had
| $150k in debt from undergrad and $200k in additional debt
| from law school, and this was 10 years ago.
| shkkmo wrote:
| That would have likely been a mixture of direct loans
| (which have the current 31k limit for undergrad) and
| private loans.
| boeingUH60 wrote:
| Your friend spent the cost of a new house on education,
| lol. There's only one country where I hear of things like
| this...
| zo1 wrote:
| South Africa: now you've heard of two.
|
| Looked up the prices just now. Undergrad + postgrad can
| come up to the price of small town houses.
| hamandcheese wrote:
| Again - the rules about student loans during bankruptcy
| apply to _all student loans_ , including from private
| lenders.
| shkkmo wrote:
| That is not as clear cut as you make it. There have been
| rulings in the last several years that have allowed some
| private loans to be discharged in bankruptcy proceedings.
|
| > In January 2020, the U.S. Bankruptcy Court for the
| Southern District of New York discharged over $200,000 of
| student loan debt for one borrower. Then, in August 2020,
| a ruling by the 10th circuit federal appeals court based
| in Denver, Colorado eliminated $200,000 for a Colorado
| couple who held 11 private student loan accounts. And in
| September 2020, a judge for the U.S. Bankruptcy Court for
| the Southern District of New York ruled to enforce a
| prior bankruptcy discharge of a borrower's $400,000 of
| federal student loans that a servicer had failed to carry
| out.
|
| > These decisions could serve as a precedent for future
| bankruptcy cases involving student loans, says John Rao,
| an attorney with the National Consumer Law Center.
|
| > "A lot of people, even some of the lawyers who
| represent consumers, thought for years that you really
| shouldn't even try because there's not a chance you'll
| win, but I think everyone is looking at it now with sort
| of a fresh look," Rao says.[0]
|
| [0] https://www.nerdwallet.com/article/loans/student-
| loans/stude...
| taeric wrote:
| Granted, this is getting very close to "the exceptions
| prove the rule." :D And this rule is spelled out fairly
| directly to be as hard as possible to discharge.
| [deleted]
| macdaknife wrote:
| I would disagree that 31K is not a lot of money, but then
| again, maybe it is not a lot of money and my opinion is
| warped. I think if the government took a few points off for
| performance as a preferred return on the massive
| endowments, all of this would go away.
| [deleted]
| tempsy wrote:
| it's $8k a year. that wouldn't even cover rent for a
| school year at this point.
|
| i think a lot of people seem to believe that the federal
| government is handing out $50k+ a school year when theres
| a very small limit. people who need to borrow likely have
| to tap private lenders.
| kortilla wrote:
| Please stop. You're completely misinformed here on how
| much is available for students to loan. I know multiple
| people that took out massive PLUS loans from the
| government that carry interest, are not discharged in
| bankruptcy, and far exceeded the limits you are talking
| about ($70k a year for grad schools).
| macdaknife wrote:
| I would also add that a lot of loans end up rolled up
| into a package, which you are given no forbearance.
| FireBeyond wrote:
| This for federal loans.
|
| But the government has "protected" all loans - private
| education loans are also unable to be discharged by
| bankruptcy, for example.
| tempsy wrote:
| yeah, and we're talking about federal loans here.
|
| the government is not on the hook if a student defaults
| on a private loan. the critique was that tax payers were
| somehow on the hook for most undergraduate costs when
| $31k over 4 years barely pays for rent at this point.
| kortilla wrote:
| No, this is incorrect. The federal government is also the
| backstop for a majority of private student loans as well.
| https://www.investopedia.com/articles/personal-
| finance/08121...
| taeric wrote:
| I can see how you think we were only talking of federally
| "backed" loans, but I did intend my expansion to be all
| loans the government has "protected." Which, as the other
| poster points out, is basically all of them.
| dragonwriter wrote:
| Federal loans are basically all of them to start with
| (over 92% of outstanding balances).
| taeric wrote:
| I had thought that I had private loans back in the day.
| Been a long time since I paid all of mine off, though, so
| I can't remember who they were through. (And, I fully
| grant that, even if I was private loans, 8% is still a
| non-zero number...)
| dragonwriter wrote:
| Before federal loans were all direct (Ford loans), there
| were federal loans issued through third-party lenders
| (Stafford loans) that otherwise worked the same way with
| the same kinds of loans (subsidized, unsubsidized, PLUS;
| for a while, both Stafford and Ford were offered at the
| same time, with identical terms.) These are collectively
| "federal" loans (and there are still balances on loans
| originated as Stafford loans) distinct from "private"
| loans.
| taeric wrote:
| I remember I maxed out my Stafford allocation, and then
| also had to get extra loans to cover my last year. Memory
| being what it is, I wouldn't be shocked if I am
| misremembering some.
|
| Regardless, I got them all payed off; and still have a
| massive distaste at how most discourse over this goes.
| didgeoridoo wrote:
| The CBO estimates that the government is indeed "on the
| hook" for about 93%[0] of ALL student loans, despite not
| necessarily being the originator or servicer.
|
| There essentially is no such thing as a "private" student
| loan anymore.
|
| [0]: see sibling investopedia link
| dragonwriter wrote:
| > But the government has "protected" all loans - private
| education loans are also unable to be discharged by
| bankruptcy,
|
| Private education loans are mostly an issue for non-
| accredited schools, since usually you can cover the full
| costs, with better terms, with federal loans at
| accredited schools. They are also less than 8% of the
| volume of student loans. They are basically a whole
| different (and much smaller) policy issue.
| taeric wrote:
| Wait, what? That is a misleading read of that page. Only if
| you have parents/guardians that can get a PLUS loan is that
| the limit. You have to look at the other column for
| everyone else.
|
| And that is the principal. With a short limit on how much
| of that can be subsidized, meaning the rest is accruing
| interest from day 1. Such that they amount you would owe
| will be laughably higher than even that number after your
| school. And that is assuming you don't have to then delay
| repayment for financial hardships.
| tempsy wrote:
| how is it misleading? most undergrads are considered
| dependent, which means they can only borrow $31k in total
| over 4 years. beyond that they would need to tap
| alternative sources.
| taeric wrote:
| I'm interested in numbers backing up that claim? But,
| even with that, student debt is almost certainly
| including PLUS loans which, "The maximum PLUS loan amount
| you can receive is the cost of attendance (determined by
| the school) minus any other financial aid received."
| So... yeah, very misleading read of that page.
| dragonwriter wrote:
| > how is it misleading?
|
| Because the limit cited only applies to students whose
| parents can get (federal, direct, and capped only by the
| school's estimate of costs) PLUS loans, and yet is
| characteized as a limit of the impact of federal
| subsidies on school costs.
|
| A cap that only applies where another _unlimited_ federal
| loan stream is available to the same student is, well,
| not a limit at all, when discussing federal impact on
| prices.
| shkkmo wrote:
| The cap when PLUS loans are not available is $57,500.
|
| The impact on prices is not just the direct, but the
| general understanding that private educational loans also
| could not be discharged in bankruptcy that was created by
| the Bankruptcy Abuse Prevention and Consumer Protection
| Act of 2005. Courts have started to push back against
| that but there are only a handful of precedents.
| taeric wrote:
| Another misleading point, though? As you can then go on
| to get 138500 for graduate/professional school.
|
| I'm interested in how many students aren't able to have
| their family go in on PLUS loans. As that is still a
| gaping hole to relying on the page and limits linked.
| ShadowBanThis01 wrote:
| It's also frustrating to see politicians trumpeting efforts
| to help Americans pay rip-offs like health insurance and
| tuition, instead of putting a stop to the rip-offs
| themselves. It's hugely wrong-headed and makes the problem
| worse.
|
| I went to a major private university, and several years after
| I graduated they raised the tuition 24% in one shot. When
| asked why, they basically answered, "Everyone else did it."
|
| It's time to revoke universities' tax exemptions when they
| pull shit like this, or are rolling in massive endowments,
| windfalls from sports programs, whatever. The regression of
| education in the USA at all levels marks the continuing
| decline of our society. We've gone back to book-burning in
| some areas. Now college is unreachable or a crushing burden.
| WTF.
| colordrops wrote:
| It's maddeningly frustrating to see such short-sighted greed
| dragging down the class of people meant to lead the future.
| thatfrenchguy wrote:
| The loans are mostly owned by the government too :)
| 8note wrote:
| They are and they aren't. Student loans can also be forgiven
| once you've paid them for a long enough time
| lr1970 wrote:
| > Worse than just "backed by the federal government," the
| loans are basically protected by the government.
|
| It is really strange that government does not constrain
| tuitions of the colleges participating in the loan program.
| Currently, Universities have no incentives to control costs
| in any way.
| jedmeyers wrote:
| > Currently, Universities have no incentives to control
| costs in any way.
|
| Most universities are the supporters of the existing
| government structure, so it seems to be a mutually
| beneficial relationship.
| imtringued wrote:
| Literally all they have to do is limit the maximum loan
| size. Max $50k per year. Anything beyond that is not
| subsidized or requires proof of academic performance or
| ability to repay.
| hoosieree wrote:
| How about a tuition capped at the median salaries of its
| graduates?
| ke88y wrote:
| 1. Over what time frame? Med school takes 4 years and
| Residency takes 4+. JDs+bar take a few years and earnings
| take some time to ramp up. PhDs take half a decade (Even
| if we don't need more faculty, we do have a shortage of
| PhD supply in industry for fields like CS, Chem E,
| Biotech-ad, etc. and the median salary for those
| graduates is quite high with unemployment basically as
| low as you can go.)
|
| 2. Even without graduate education requirements, other
| fields have loooong ramp-up times but eventually end up
| doing well.
|
| 3. There are also jobs that are extremely valuable to
| society despite the expense of education (nursing comes
| to mind, as does teaching).
|
| 4. We would end up with stupid boom-bust cycles in labor
| supply and demand, even worse than what we have now.
| Reducing labor supply by making loans unavailable
| increases labor prices eventually, which eventually
| results in loans becoming available, which saturates
| supply, and then repeat the cycle every couple decades.
| Constant idiotic predicable crises. Welcome to myopic
| financial capitalism, where trust fund kids who never
| needed to pass their delay differential equations unit
| have all the power.
|
| So to make this work you need some form of central
| planning of supply and demand -- by DECADES at a time.
| Who knew we'd need so many Python programmers in 1980 or
| even 2000? Which, if that predictive function works, why
| the FUCK are we using markets anyway?! Cut out the middle
| man if central planning works. (It doesn't.)
|
| How about we just lose the cold war brain-rot and stop
| trying to use markets -- a legal fiction and policy
| tool!!! -- where they make no fucking sense. Markets are
| an incoherent solution to allocation problems where price
| signals are EXTREMELY delayed (education) or EXTREMELY
| coercive (health). Just fund it with tax dollars instead.
|
| The market religion zombie from the red scare era needs
| to die. The amount of absolute brain rot in the American
| public caused by the inability to understand that markets
| are just fucking tools that depend on government coercion
| anyways is sending our entire society into a death
| spiral.
|
| It's somehow unsurprising that the one true American
| religion of the 21st century -- deference to The Troops
| -- is the place where we're completely okay with
| socialism in higher education (the military academies).
| sudobash1 wrote:
| There goes philosophy, music, and many other liberal arts
| degrees.
| leesalminen wrote:
| There would just be fewer students in this major, they
| wouldn't disappear entirely.
| sudobash1 wrote:
| Sorry, my comment was more snark than content. If tuition
| was limited to student income the universities would be
| incentivized to cut departments that don't produce high-
| income graduates.
| fleshdaddy wrote:
| Yeah if we did that I think we'd need to build some
| systems for these things. We need artists and writers and
| what not and precluding anyone who can't afford it would
| probably suck for society. We'd need some good
| scholarship type programs to help out there. Honestly we
| could probably use those now, I don't know how realistic
| a lot of these things are under our current system.
| peanuty1 wrote:
| We have far, far too many liberal arts graduates. There
| is a huge labor shortage that we need those people to
| fill in fields like restaurants, plumbing, nursing,
| construction, farming, etc.
| wing-_-nuts wrote:
| Universities have long tried to argue that education
| isn't 'vocational' that their entire focus should be on
| producing a well rounded individual.
|
| That dog don't hunt when that 'well rounded education'
| costs tens or even hundreds of thousands of dollars and
| will burden the students for the rest of their lives.
| Once the student is on the hook for that debt, it becomes
| a strict return on investment calculation.
|
| Want to study philosophy? By all means! It's among the
| most important subjects humanity can study, but you
| probably shouldn't be seeking a degree in it if you don't
| wish to teach it, and you damned sure shouldn't be
| condemned to serfdom because of it.
| zztop44 wrote:
| I have a philosophy degree (and a good career in a
| different field). It's a good thing I didn't wish to
| teach it, otherwise modern academia being what it is,
| that would be a life of serfdom!
| rorroe53 wrote:
| Good, the world doesn't need that many liberal arts
| graduates. Quality over quantity should be the focus in
| fields where there aren't that many employment
| opportunities and potential for successful
| entrepreneurship.
|
| Besides, nothing prevents one from pursuing a career in
| most liberal arts without a degree, assuming you don't
| want to be a researcher. You can always be a nurse or an
| engineer with arts related side-job, but doing it the
| other way around is hard.
| mcphage wrote:
| > the world doesn't need that many liberal arts graduates
|
| If I were to make a list of the problems with the world,
| having too many people with liberal arts degrees would
| not be anywhere near that list.
|
| Too _few_ , yes. Too many business school graduates,
| yeah. Too many law school graduates, probably. Too many
| STEM field graduates, maybe. Too many graduates who look
| at people as a resource to be extracted, or an
| abstraction to be ignored. But damnit, we need more
| people who care about the quality of human experience.
| lo_zamoyski wrote:
| I think the proper way to characterize the situation is
| as follows.
|
| The university were founded largely for the sake of
| teaching the liberal arts, that is, the _free_ arts (as
| opposed to the servile arts). I am using the traditional
| meaning of "liberal arts", and not the tragedy we have
| now. The university was supposed to educate the man, to
| mature him intellectually, to free him to be able to
| pursue the truth and to do so effectively which meant
| also the ability to draw from and participate in the
| tradition.
|
| The feverish mission to push everyone through college is
| a fool's errand. It is not for everyone. The result is
| that universities had to change to make this possible,
| thus failing their founding mission. But at the same
| time, they aren't good at vocational training. So for
| most people, it's a waste of time and money.
|
| We would be much better off with a system of vocational
| schools and apprenticeships. This would unburden
| universities and free them to pursue their original
| mission, and it would enable vocational
| schools/apprenticeships to provide excellent training for
| workers.
|
| Primary education is, frankly, in an awful state as well,
| as it, too, is supposed to educate the man, and it is
| here where the vocational stuff is still not necessary to
| learn even for those who will eventually enter the
| vocations.
|
| We're seeing some interesting developments in both
| primary education (with the spread of classical
| education) and the founding of small colleges that aim to
| avoid the failure of the university. Some try to combine
| intellectual formation with an apprenticeship program to
| try to reconcile the desire to form the man with the need
| to find a job. Apprenticeship is also used to cover at
| least part of the costs of the education.
|
| Ballooning costs are a symptom of corruption and bloat.
| The mission is lost, so it's a numbers game now. There's
| no reason a university education should cost anywhere
| near what it costs today, especially given the mediocrity
| of the education. I don't really see much will to change
| the status quo among those in power, so we'll probably
| see a combination of hamfisted maneuvers like debt
| cancellation to maintain the status quo, but ultimately,
| probably a collapse of the system.
| missedthecue wrote:
| I thought that there was a cap on federal student loans.
| Isn't it like $6k a year?
| erickhill wrote:
| Reminds me of our healthcare system. And military
| contractors. And..
| bilbo0s wrote:
| So true.
|
| This is essentially how the US works. We're built on
| debt. Sometimes I think our society would collapse
| without all the debt we create.
| jjoonathan wrote:
| Well yeah, the problem is _never_ that prices are too high
| and _always_ that customers can 't afford it so therefore
| they need more debt to _help_ them!
|
| (This message brought to you by people-with-thing-to-sell.)
| paulddraper wrote:
| > lenders
|
| AFAIK virtually every financial institution has been pulled
| from student loans.
|
| The U.S. government is now the only major lender.
| adventured wrote:
| > all the while ignoring the lenders that are taking on too
| much risk. At least, they would be taking on too much risk,
| if they hadn't captured the market so effectively
|
| The lenders? Risk? 93% of all student loan debt is owned by
| the US Government. What risk?
|
| How is it everybody pretends it's the Big Evil Bankers making
| all the money on this racket? It's equivalent to the false
| narrative about private prisons driving the high US
| incarceration rate (when in fact it was over 95% government
| prisons across the decades that the rate was skyrocketing).
|
| It's a government replacement funding system for the
| entitlement programs that are bleeding out. They had to find
| a new funding source as entitlements dipped red, so they're
| strapping young people with massive debt (forever rising
| interest payments) they can't discharge and that derives from
| magic fiat dollars the US Government 'prints' at will.
|
| This is another case of the government abusing the
| population.
|
| Anti abortion laws? Government.
|
| Anti gay marriage laws? Government.
|
| Anti trans laws? Government.
|
| Segregation laws? Government.
|
| The war on drugs? Government.
|
| The war on terrorism? Government.
|
| Foreign adventurism wars? Government.
|
| Vast illegal domestic espionage? Government.
|
| Non-existent social security 'lock box' (not filled with $10+
| trillion like it should be; should be the world's largest
| sovereign wealth fund)? Government theft.
|
| How many examples do you all need?
| zeroonetwothree wrote:
| People hate Comcast for raising their rate $10/month but
| when the government prints trillions causing you to lose
| 20% of your income and assets to inflation it's not a big
| deal.
| roamerz wrote:
| It's easy to miss the connection between printing money
| and the affect of printing money since there is always a
| time period between cause and affect. The example of
| comcast raising hour bill is immediate. Well
| comparatively.
|
| Eventually and hopefully people will wise up.
| taeric wrote:
| I honestly don't know what you are trying to say here.
| Government debt has been discharged before. Look into the
| number of cities that have declared bankruptcy. (That is,
| you don't even have to look at failed nation states. Plenty
| of places in the US have done this.)
|
| That is, no amount of lending is ever risk free. To pretend
| that you can hedge all risk out of a loan is the problem.
| It doesn't matter who issues it. It doesn't matter why they
| issued it.
|
| So, to put the question back to you, why would you feel
| there is no risk in lending to students to go to college?
| speakfreely wrote:
| It's not about getting the risk to zero. It's about
| managing it. Right now anyone can take on massive debt to
| go to college programs they almost certainly will not
| finish. There's no risk evaluation for individual
| students, no qualification process that decides to only
| give loans to those with a history of performance that
| indicates they will finish. And almost 40% of student
| loan defaults are people that didn't finish [0].
|
| Whether they finish or not, it surges the demand for
| education and makes it more expensive for the people that
| did perform well in high school and achieved a minimum
| level of personal organization to succeed in an academic
| environment.
|
| [0] https://www.wral.com/story/fact-check-how-many-
| student-loan-...
| taeric wrote:
| If I loaned out a ton of money to people that couldn't
| repay it, the system would rightfully tell me that I took
| on too much risk in lending the money out and that I
| earned the losses. To that end, the system works as
| designed and desired. People, by and large, are not
| capable of putting others in absurd debts that they are
| unable to get out of.
|
| The way these loans are done, the "risk" is supposedly
| managed down to zero by some byzantine limits on how much
| people can take out. This is silly, at face value, as the
| limits on how much a family can take out are basically
| non-existent. Yes, we have limits on individuals, but
| those seem to be little more than token talking points.
|
| That said, reading your post again, feels like we are in
| agreement?
| tejohnso wrote:
| >It is frustrating to hear the discourse over the
| inappropriate students that are taking on too much debt, all
| the while ignoring the lenders that are taking on too much
| risk
|
| But as you point out, the lenders are not taking on risk. The
| only ones who are silly in the deal are the students.
|
| The system is really messed up. But when it comes to your
| individual student making that deal, it's often a dumb idea.
| Consultant32452 wrote:
| The simple solution is to remove student loans from that
| small list you mentioned.
|
| But then, how do you secretly replace the billions in bribes
| to your friends in the universities?
| GartzenDeHaes wrote:
| > lenders that are taking on too much risk
|
| The lenders are taking no risks since these loans cannot be
| discharged through bankruptcy. There are also very large late
| fees and penalties that can triple (or more) the amount owed.
| 015a wrote:
| And yet, some lenders (Navient is the big one) have now
| lost so much money due to COVID forbearance that they've
| exited that industry entirely.
|
| There's inherent risk to everything, everywhere. Making the
| loans undischargable in bankruptcy doesn't negate the risk
| of non-repayment; it just hides it. Until, eventually, all
| the band-aids fall off, reality bares its ugly head, and we
| all wish we hadn't-a done that. Yet, in thirty years we'll
| forget about it and do it all over again, in some new,
| crazy, way.
| SoftTalker wrote:
| I mean, you can't get blood out of a turnip. If the
| borrower has no money to pay, they aren't going to pay,
| bankruptcy or not.
| jrockway wrote:
| Since there is pretty much no social safety net, people
| are probably going to find some sort of work even if they
| have a lot of student loan debt. And, the debt servicer
| can garnish those wages. You are essentially selling
| yourself into slavery if you take a student loan! (And
| the reasoning is so weird to me; I went to a state school
| and tuition was $750/semester. Why are people paying more
| unless they are extremely gifted and they want to go into
| a highly regulated field like civil engineering or
| medicine?)
|
| Student loans not being dischargeable through bankruptcy
| creates a moral hazard, much like bailing out banks.
| Banks will lend an infinite amount of money for student
| loans, because there is no risk to them. Creating free
| money always devalues it; if you have to work for your
| money, an education is priced $X because that's the
| maximum people will pay. If everyone gets unearned money
| to pay for education, it becomes worth $X + $Y. This is
| just the SaaS model for people. (Consider AWS; "oh you
| want to make money selling a SaaS service? we'll take 10%
| of your revenue for servers." Student loans are the same
| thing, "oh, you want to go into a high-earning field?
| we'll take 30% of your income for the next 10 years.")
|
| Compare this to things where banks could lose money, like
| mortgages. If you bid $1,000,000 on a property that's
| worth $200,000, the bank will simply require a down
| payment of $840,000. They have no interest in your
| starry-eyed games. If you walk away, they can close out
| your loan by selling the property at the appraised value,
| and they're happy. Banks have the right amount of
| paranoia about lending for this kind of purchase; their
| goal is to never lose money. Student loans should be no
| different; current grades and expected job prospects
| should play heavily into the decision as to whether or
| not to lend money. This will reduce the cost of education
| because selling a $600,000 art history degree to
| straight-C students won't be viable in the market
| anymore. (Universities will fight hard against this,
| because the degrees are cheap and everyone pretends they
| have some value. If people realize degrees don't have
| much value, the cash cow dries up. But we have to kind of
| look at the effect on society as a whole and realize that
| work experience is actually what we value. After the
| first 4 years of your career, nobody cares about your GPA
| or where you went to school anymore. And incidentally, 4
| years is exactly how long college takes!)
| brightlancer wrote:
| Garnishment is capped by law and most judges are
| favorable to former students over the banks, so it's
| usually well below that.
|
| > I went to a state school and tuition was $750/semester.
|
| I paid about $800 per quarter in 1996. Even at tax
| subsidized state schools, tuition has gotten much more
| expensive since then.
| SoftTalker wrote:
| You're entirely right, but if I have $200K in debt for my
| useless undergrad degree, and I can only find a job at
| Starbucks, garnishment or not the bank is not getting
| their money back. The court will order some kind of
| payment, sure, but they'll prioritize me paying for rent
| and food.
| jrockway wrote:
| I agree with that. Having that money taken out of your
| paycheck just makes you extra miserable; you're in debt,
| you get yelled at for not making Karen's coffee right for
| 8 hours in a row, and you don't even have enough spending
| money to go see a movie or whatever. It's just miserable
| and I don't like it; if you have to take a shitty job to
| feed yourself, you shouldn't have to live a completely
| miserable life 24/7. That just doesn't seem right to me.
| bell-cot wrote:
| Hopefully for you the court's prioritizing will actually
| allow enough $$$ for your rent and food and medical
| expenses and transportation and clothing and etc. And
| adjust that when inflation hits the costs of those
| things.
| chiefalchemist wrote:
| In other words, the government gave the leaders license to
| do "predatory".
| pclmulqdq wrote:
| In other words, the government has become a predatory
| lender with some intermediaries.
| pixelatedindex wrote:
| Which I find really weird, they take this stance against
| education but businesses don't have to deal with such
| predatory loans - in fact govt loans for businesses tend
| to have low interest rates, or forgiven like the PPP
| loans.
|
| Why do we take anti-individual stances, but pro-business
| stances? Is that a byproduct of capitalism, or am I
| misreading the world?
| nightski wrote:
| PPP loans weren't really loans. It was known they would
| be forgiven before taking them out. If that had not been
| the case, most businesses would not of participated. I
| believe they were structured as loans providing a
| mechanism for congress to pass the aid immediately.
|
| Actual business loans require assets/collateral, even
| those from the SBA. At least this has been my personal
| experience with my businesses. You can't get a loan with
| no credit or assets (like a student can).
| pixelatedindex wrote:
| That's the part that doesn't make sense to me. Businesses
| make way more money than an individual, so why charge the
| individual more APR?
|
| And PPP really should not have been forgivable - if you
| run a business, then it's your responsibility to have
| enough money in the coffers to survive any economic
| downturns. Individuals get punished way more harshly than
| businesses when things go south.
| brightlancer wrote:
| > And PPP really should not have been forgivable - if you
| run a business, then it's your responsibility to have
| enough money in the coffers to survive any economic
| downturns. Individuals get punished way more harshly than
| businesses when things go south.
|
| If that business goes under, how many individuals are out
| of a job?
|
| The PPP loans were intended to keep _individuals_
| employed.
| nightski wrote:
| That's not really true imho. If we are going to be
| pedantic and talk about the pandemic, almost all
| taxpayers received individual stimulus checks in the
| thousands. On top of that those with children received a
| lot more. The vast majority of PPP loans went to small
| business and it was to make up for the government
| shutting down parts of the economy (it wasn't simply an
| economic downturn). I don't agree with how hastily and
| sloppy it was administered, you'd think we would have
| plans in place beforehand. But hey it's the government.
|
| As far as interest rates, I had six figures of student
| loans and they were at 2.88%. Rates today are higher, but
| that's because they very loosely follow the federal funds
| rate. This is no different for business loans. But
| loosely speaking, interest rates on federal student loans
| are pretty low compared to other types of loans.
|
| In fact, the reason the stock market reacts so badly to
| interest rate increases is precisely because it increases
| the cost of borrowing for business.
| pixelatedindex wrote:
| I would kill for such a low interest rate. I graduated
| soon after the financial crisis and the cheapest loan I
| had was 4.88%, with the average being 6%, and some were
| even 8%. I can (could have?) finance a car for cheaper,
| which is a bit ridiculous to me. Personally, there should
| be a cap or a set interest rate for education loans but I
| understand that it's a contentious statement.
|
| Yeah there were stimulus checks, and I saw a lot of
| people say something like "wow look at all these handouts
| people are getting, they don't deserve it all!" but then
| they turn around and say the PPP was the greatest thing
| ever and businesses deserved them.
|
| I think we are too critical of individual choices
| nowadays, but not critical enough of the terrible choices
| that businesses make. That's probably the gist of my
| discontent.
| pclmulqdq wrote:
| Where are we taking anti-individual stances? I'm pretty
| sure you are misreading the world here. Nobody mentioned
| individuals at all - the question is just how much you
| blame businesses vs lawmakers.
|
| I claim that the blame here really rests on big
| government for creating this fucked up system, not the
| businesses that work within it. By the way, I blame the
| government for the PPP fiasco too.
|
| None of this is particularly pro-business, but a lot of
| people are apologists for big government and need to be
| disabused of that notion.
| mistrial9 wrote:
| you are right basically -- with the caveat that "business
| has shown the ability to be responsible with money" while
| individuals fail at this for a large variety of reasons.
| However, in many societies past and elsewhere, not every
| single individual adult has to manage money like a
| business. Zoom out a bit and you might imagine that
| government now treats corporations as a person, and
| persons like they have to behave like a business.
| taeric wrote:
| In what world have businesses shown the ability to be
| responsible with money?
| mistrial9 wrote:
| I did put is quotes !! .. meaning that it is something
| that has been said, not something that is true in itself.
| taeric wrote:
| Fair! I wrongly read that as an endorsement of the idea.
| kolbe wrote:
| > Why do we take anti-individual stances, but pro-
| business stances?
|
| You're presuming a fact that's not in evidence. I know
| it's the flavor of the month whataboutism to point to PPP
| as an excuse to forgive student debt, but PPP was wildly
| unpopular amongst people who didn't directly benefit from
| it as well. I have full faith the SBA makes terrible
| loans as well.
|
| Also, anti-student loan isn't exactly an anti-individual
| stance. It can also be interpreted as anti-University
| subsidy. And when you look at the absurd wages professors
| and administrators can command at these places, I
| wouldn't blame someone for thinking these loans are
| distorting the market so badly that it harms
| consumers/taxpayers while enriching professors and
| administrators.
| pixelatedindex wrote:
| I 100% agree that universities are not incentivized to
| keep their costs low, and there are so many that could
| run on a much leaner funding.
|
| > You're presuming a fact that's not in evidence. I'm not
| so sure about that. How many executives get paid
| remarkably well, even though they fail miserably?
| Sometimes even with tax payer money.
| prepend wrote:
| Comically, the government is the direct lender and is
| charging "predatory" rates. My loans are all through DEd.
| At time of issuance, they were double the 30 year
| mortgage and many multiples of prime. My payments go
| directly to the governments payment processor
| (AidVantage/Navient) and on to DEd.
| tylerhou wrote:
| Student loans can be discharged through bankruptcy, if you
| pass hardship requirements.
|
| - https://studentaid.gov/manage-loans/forgiveness-
| cancellation...
|
| - https://www.consumerfinance.gov/about-us/blog/busting-
| myths-...
| taeric wrote:
| I'd love to see numbers on how many are actually
| discharged. My understanding is this is almost as akin to
| saying that the lottery does, in fact, pay out.
| gen220 wrote:
| There's more paths to discharging than bankruptcy.
|
| Somebody I know had a medical emergency while in their
| repayment period. They were unable to work and went on to
| disability insurance, and eventually had their loans
| forgiven. I think they had to be on disability for a
| certain period of time (measured in years, iirc) before
| they were discharged.
|
| Eventually, they recovered sufficiently to be able to
| return to the work force debt-free. I'm not sure if the
| hurdle for loan forgiveness ought to be "you have to
| basically die", but it's at least that high for now.
|
| There's also the well-known "public servant" path. I'm
| sure there's some ironic joke to be made comparing the
| two.
| gorjusborg wrote:
| Thanks for sharing the anecdotes.
|
| Doesn't it seem like a society shouldn't encourage people
| to financially self-immolate in order to start their
| adult life?
|
| I mean, giving the self-immolators some tweaky hacks to
| prevent being lit on fire is not really the best
| solution.
| gen220 wrote:
| I totally agree, I think most level-headed people do.
|
| It's a tricky problem. We want people to have equal
| opportunity to pursue college, even if their parents
| can't afford it. But at the same time, we don't want to
| subsidize cost creep.
|
| Clearly the current solution doesn't work. Alas, we're
| deeply invested in it (literally), and each passing year
| the entanglement grows.
|
| I think you can make a strong case for govt-funded
| tuition at public universities. But I don't know how to
| get to there from here without making a handful of people
| very unhappy.
| brightlancer wrote:
| I don't have numbers but I've read enough stories about
| it that I think it's far more likely than winning the
| lottery.
|
| The bigger problem is that people _think_ it won't work
| and they don't bother trying. How many folks could have
| met the hardship burden but didn't apply?
|
| We need to stop repeating the falsehood and instead be
| truthful: Student loans CAN be discharged via bankruptcy,
| if the applicant meets a hardship threshold.
| taeric wrote:
| To be fair, I was unfair to compare it to the lottery.
| That is clearly not paying out often. Such that, if you
| are comparing to that, you had best be favorable.
|
| I'm assuming it pays out at 100x lottery numbers. But,
| again, that is still basically zero. Is why I don't
| regularly buy 100 lottery tickets.
| taeric wrote:
| Right, this is what I meant by them having captured the
| market.
| kortilla wrote:
| But your comment seems to blame them for taking on risk,
| which they aren't. Maybe reword it?
| taeric wrote:
| I can see that read. I meant that we should not have
| built a situation where lending money is risk free. It is
| a perverse incentive to do more lending, and ignores the
| actual risks that people will be unable to repay.
| TheRealDunkirk wrote:
| Now I read that Wall Street is creating CDO's based on
| these loans, like they (continue to) do on mortgages. Some
| people die "early" without paying back these loans, and
| sometimes, they will owe more than they took out. Given the
| mounting problems with the numbers here, it seems a whole
| generation of people in the middle of this bubble are going
| to go to the grave while still owing on these loans. What
| happens to these CDO's? Are we headed for a smaller
| "meltdown?"
|
| I went to school from 87-91. I could already see the
| problem starting. I was hoping this bubble would burst
| before my own children went to school. Two of three have
| gone to public schools so far, and we've paid through the
| nose for it. We are pushing our third towards some sort of
| trade school.
| dgellow wrote:
| Excuse my ignorance, but isn't the point of public
| schools that they are free?
| kingrazor wrote:
| K-12 are "free" (funded in large part by property taxes,
| as I understand it). Higher Education is not, though
| public colleges tend to be cheaper, from what I've seen.
| AmVess wrote:
| Same time frame for me. Adjusted for inflation, I paid
| $56,000. That same college is now charging almost $130k
| for the same degree.
| [deleted]
| lordnacho wrote:
| Well the CDOs are probably tranched, so there will be
| some portions that are safe. But in general, you'd think
| the student loans would only be in trouble if there's a
| large increase in the unemployment rate. You'd get a
| meltdown if the government were to announce a change in
| the laws.
| reaperman wrote:
| > But in general, you'd think the student loans would
| only be in trouble if there's a large increase in the
| unemployment rate.
|
| I thought the government guarantees these loans, but
| maybe I mis-read that, mis-understood, or something
| changed. I think the borrower is still on the hook and
| accrues fees if they don't pay but I also thought the
| federal government literally paid to keep the bank whole.
| HWR_14 wrote:
| There are some loans the government guarantees and other
| loans that the government merely makes immune to
| bankruptcy. Obviously, they have different risk profiles.
| lordnacho wrote:
| Even if you can't discharge the loan in bankruptcy, if
| someone can't pay, you as the lender have a problem. The
| balance in your favour might keep increasing with the
| borrower totally screwed, but that doesn't really help
| you if nothing is being paid.
|
| Have to wonder how this interacts with the US healthcare
| system. As people get older they are more likely to have
| health problems that prevent them from working and cost a
| bunch of money.
| imtringued wrote:
| >The balance in your favour might keep increasing with
| the borrower totally screwed, but that doesn't really
| help you if nothing is being paid.
|
| The secret is to lend money and then make people spend it
| on something worthless. You know, the easiest way is to
| lend someone money so they can gamble the money away. You
| might now argue that this is terrible for the lender, but
| only if the lender doesn't own the casino. Then the
| gambler ends up in massive debt for no benefit. It
| doesn't matter if the borrower repays the loan or not
| because the lender didn't lose a single penny and every
| payment results in profit.
|
| This is just a hypothesis because I am not aware of any
| banks or financial institutions operating an educational
| institution, except maybe lambda school which was heavily
| incentivized to get people to sign up for income sharing
| agreements but then only deliver some low quality MOOCs
| with the only source of support being TAs who themselves
| are former lambda school graduates.
| TheRealDunkirk wrote:
| This is why I'm asking. If that's the case, then I think
| even I would want to invest heavily in them. As long as
| the US government continues to make the money printer go
| BRRRR, this is an investment vehicle that simply cannot
| fail. (Until it does, in which case it will do so in a
| most-spectacular fashion.)
| Shaanie wrote:
| Presumably they're also priced with that taken into
| account, so you're not exactly going to be making bank.
| TheRealDunkirk wrote:
| Very good point.
| have_faith wrote:
| > the CDOs are probably tranched, so there will be some
| portions that are safe
|
| The mortgage CDO's where tranched in 2008 also.
| masfuerte wrote:
| Sort of. They took the shitty bottom tranches from the
| mortgage CDOs and repackaged them as new CDOs. The
| credulous ratings agencies gave these new CDOs the same
| rating as the old ones but it took only a modest market
| downturn to wipe out even the top tier of these second
| level CDOs. Even this might not have been a problem if
| the whole thing hadn't been massively leveraged. The fact
| that mortgages were involved was nearly irrelevant. This
| shitshow could have been built on anything. The
| regulatory reforms that tackled the mortgage market were
| missing the point.
| pixelatedindex wrote:
| I'm a newbie, what's a CDO?
| missedthecue wrote:
| Something everyone pretends to be an expert in because
| they saw the Big Short once.
| HWR_14 wrote:
| It's a combination of loans. The idea is let's say I have
| 100 identical loans I made (in reality, there are
| averages). Further, we agree 5-15% are likely to default.
| I'm going to get paid 85-95% of the interest + principle.
| But I want that money now. You want to invest in future
| cashflow, so I want to sell you a loan. Buying one from
| me is kinda risky, you may get back 100% or 0% of the
| interest + principle you expect. So instead I sell all
| 100 as a lump sum, and you and 99 other people each get
| 1%.
|
| But, CDOs go a step further. You may have more or less
| risk tolerance. So we chop it up. You can buy something
| that gets paid back if 70% of the loans are good, or only
| if over 70% or over 80%, or even over 90%. The less
| likely you are to get paid back, the more you make.
|
| So the person who absolutely wants to get paid back gets
| a small interest rate. The person who only gets paid back
| if literally every loan pays off gets a much higher rate.
|
| In 2008, what happened is all those people buying the
| "very safe" 75-85% failure rate sections also were
| getting wiped out.
| arrosenberg wrote:
| https://en.wikipedia.org/wiki/Collateralized_debt_obligat
| ion
|
| You take a bunch of loans and bundle them together and
| securitize the bundle to sell to the public. Mortgage
| CDOs crashed the global economy in 2007-8.
| maxbond wrote:
| Collateralized Debt Obligation, sort of like a bond
| that's composed from many loans on something you can
| repossess, like houses or boats. They're notorious
| because they were involved in the 2008 financial crisis.
|
| https://www.investopedia.com/terms/c/cdo.asp
|
| Or if you prefer the Big Short explanation:
|
| https://youtube.com/watch?v=EEXTqtH-Oo4
| adhesive_wombat wrote:
| The Big Short also has an earlier explanation of a non-
| synthetic CDO ("we just repackage it [low-quality risky
| debt] along with a bunch of other shit that didn't sell
| and put it into a CDO"):
|
| https://youtu.be/xbiDrzTd8fE?t=260s
| Armisael16 wrote:
| One of the core elements of the 2008 meltdown was when
| someone abandoned a house, all the other houses in the
| neighborhood would see a substantial drop in their value.
| This made it more likely that other people would go
| underwater on their mortgage and also walk away.
|
| Education doesn't have this kind of contagion. If you
| stop paying your student loans it has very little impact
| on the value on my education.
| wernercd wrote:
| > Education doesn't have this kind of contagion.
|
| It's never been more true that education is overpriced
| and underdelivers.
|
| The contagion may not be "house goes bust and my house
| value goes down"... but there is a contagion: My degree
| is now no better than the degrees for the mills pumping
| out idiots while lowering standards and full of soft
| degrees filling the markets with "educated" people that
| aren't qualified to fill a coffee cup at starbucks.
|
| If you don't see a market flooded with lower value
| results as devaluing the worth of higher education then
| you're not looking closely enough.
| actionfromafar wrote:
| I think it could ripple, somehow. People just giving up
| and stop paying, suicide, homelessness, crime, tax
| evasion etc.
| mquander wrote:
| It doesn't need to be contagious to create a crisis, just
| correlated, e.g. if there is a big macroeconomic shock
| that makes many students unable to pay their loans all at
| once.
| imtringued wrote:
| If you can't pay your loan back because of poor education
| quality, then your fellow students will have the exact
| same problem.
| JamesLeonis wrote:
| > Now I read that Wall Street is creating CDO's based on
| these loans
|
| The official term is SLABS: Student Loan Asset Backed
| Securities. Here's a recent paper on the subject.
|
| https://papers.ssrn.com/sol3/papers.cfm?abstract_id=36319
| 53
| throwaway29812 wrote:
| Have we learned...nothing?
| teeray wrote:
| Greed's gonna greed
| thatguy0900 wrote:
| What were they supposed to learn? They got bailed out and
| noone went to jail or anything
| HKH2 wrote:
| Well, students can't default on their loans, so this time
| round it's more interesting.
| ben_w wrote:
| Effectively a stealth tax for most graduates, if they
| can't ever hope to repay it. But regressive if you're
| rich enough to pay it off... or never have need for it to
| begin with.
| imtringued wrote:
| 100% guaranteed bailout.
| throwaway29812 wrote:
| "Too big to fail..by law"
| jbverschoor wrote:
| We learned that people like to gamble and that it's easy
| to push things forwards. Also, better jump on the loan
| band wagon, or you'll be left out. Anyone without a
| mortgage + houw which appreciated has basically been
| robbed by people who do
| spaceman_2020 wrote:
| This is why I'm 100% sure we're headed towards another
| real estate meltdown sooner or later. Real estate prices
| and rates have skyrocketed. The number of people who
| could afford 500k mortgages at 3% is much higher than
| people who can afford 750k mortgages at 7%.
|
| But lenders aren't going to suddenly go from approving
| 100 loans a month to just 10 a month. The incentive
| structures are designed to weasel and lie to pump out
| flattering bottomlines every quarter.
|
| You can trot out the statistics but you can't change
| human behavior without changing the incentives.
| throwaway29812 wrote:
| The problem with that is there still is very strong
| demand for new home buyers, many of whom just couldn't
| find anywhere to buy.
|
| Yes prices are crazy but if demand is still not being
| met, then prices are meant to be crazy.
| araes wrote:
| Looked at this a bit ago and share the sentiment.
| Vancouver, BC was an excellent case study. House prices
| average: ~$1.1M. Loan rate average: ~5%. Month payment:
| $5900. Yearly: $71k. Avg Salary: $60k (before tax). After
| tax: Maybe $48k or less. Result: No normal worker can
| afford the loan, and the bank won't give you the loan.
| You pay everything you can each year, and you owe more.
| This isn't even with property taxes, utilities, other
| basic Maslow's heirarchy stuff taken out.
| frumper wrote:
| It's crazy to see homes still selling with an increase in
| value of 10% from a year ago and interest rates more than
| doubled.
| Xeronate wrote:
| Seems wrong to influence your son's decision based on
| your financial situation rather than his
| desires/passions. Of course if he's naturally interested
| in the trades then sure.
| willcipriano wrote:
| Most people desire not being poor over most other things.
| chaxor wrote:
| If you don't want to be poor, don't go to university.
|
| Academia should be a place for people who run away from
| money, because it's the last thing upon the list of
| interests for them. Academia should be a place for joy in
| learning concepts, and in some circumstances, which
| strive to be useless. Mathematics is one of the most
| exemplary fields for this, which is summed up quite
| nicely with the following quote:
|
| "The mathematician does not study pure mathematics
| because it is useful. He studies it because he delights
| in it, and he delights in it because it is beautiful."
|
| Never go to a university expecting to improve your wealth
| status, because it very likely won't happen. Turn
| elsewhere to find wealth.
| [deleted]
| Xeronate wrote:
| There are a lot of ways to make money. Picking a job
| based on money is a good way to be absolutely miserable.
| My parents pushed me towards making money my entire life
| and there is nothing I regret more than following that
| advice. Every day I wake up dreading going to work and it
| seeps into every aspect of my life.
| prepend wrote:
| Yes, but your top regret would have been different had
| you chosen a different path. And perhaps your top regret
| would be worse than your current.
|
| > every day I wake up dreading going to work
|
| This sounds terrible. But at least you have a job. Many
| people wake up with dread every day for whether they or
| their baby will starve to death.
|
| Also, it's never too late to change.
| idiotsecant wrote:
| The world is cruel and wants to see us all ground to
| dust. The typical HN denizen might know this at an
| intellectual level, but few of us have the lived
| experience. I sincerely hope you never have to learn how
| much of a privileged perspective you have.
| rqtwteye wrote:
| You may regret it even more if you hadn't made money.
| pixelatedindex wrote:
| Presumably you have enough money now to switch to
| something that makes you happy?
|
| Personally, if you're going to be miserable anyway (as
| most Americans are these days), it's probably better to
| be miserable with money than without money, lol
| Xeronate wrote:
| I'm 29 and have 500k saved up (live in Santa Monica which
| is quite expensive), but yes I think I will quit my next
| stock vest which is Friday.
|
| And idk. My best friend from high school moved out here
| with me and he's a waiter making 40k a year and seems
| totally happy. Works like 30 hours a week, no mental
| stress, able to work out and work on himself. I think
| money is highly overrated.
| sixstringtheory wrote:
| Making 40K a year is only sustainable while you're in
| good health and don't have a family to support. I
| remember my carefree twenties as well, but things can
| change as you get older. There is no retirement plan on
| that kind of income other than waiting tables till you
| die. At least you should recognize that your relationship
| to money is very different than theirs. Having half a mil
| in savings is a completely different ballgame.
| Xeronate wrote:
| I think both situations are unsustainable. I'm not
| financially stable because I hate my job and might quit
| at any time and he doesn't make enough money.
|
| But I think my main point is both of us have a way of
| becoming sustainable so you might as well do what makes
| you happy instead of working a job you hate for 8 years.
| Being a waiter making 40k isn't enough long term, but
| working your way into a higher end establishment or
| management is. A girl I dated started out as barista,
| became a store manager, and is now the regional manager
| and makes ~125k a year and more importantly she is a
| perfect fit for the job and enjoyed it the entire time.
|
| All I'm trying to say is there are a lot of paths to a
| sustainable life even when following your natural
| inclinations.
|
| But anyway OP responded his son's not super interested in
| college anyway so his plan sounds good to me anyway.
| kaitai wrote:
| I was happy with a low income until I had a kid. Then the
| calculus shifts. Same with physical disability or taking
| on caregiving responsibilities.
| [deleted]
| [deleted]
| [deleted]
| prepend wrote:
| How many kids do you have?
|
| Interests are all well and good, but costs are real.
| Following passion is for rich people (or people who get
| unlimited student loans).
| brightlancer wrote:
| > Following passion is for rich people (or people who get
| unlimited student loans).
|
| I think this is a truism that people want to be false.
|
| But in any developed country, most poor people are pretty
| rich when compared to the world, and it offers them lots
| of freedom to choose what field they want to work in,
| where they want to work (both city and company), etc.
| There isn't the expectations that sons take their
| fathers' jobs and that daughters take their mothers'
| (often being a homemaker).
|
| It still sucks to be relatively poor in a developed
| country, but most are rich enough that they can follow
| their passions in ways their grandparents never could and
| half the world can't today.
| TheRealDunkirk wrote:
| His grades do not warrant the gamble on the expense,
| either mine or his. He's very artistically inclined,
| rather than academically.
| johngladtj wrote:
| Education is an investment, period, end of story.
|
| If you don't do a modicum of Research before you take on
| tens or hundreds of thousands in debt to invest in
| something, that's on you and you alone.
|
| If people were not bailed out and subsidized we would not
| have these issues of this magnitude.
| epistasis wrote:
| Seems like if we don't think 18 year olds are not legally
| responsible enough to drink alcohol, then perhaps we
| shouldn't allow them to take on life-destroying amounts
| of debt.
| Willish42 wrote:
| One has to think the ROI for any financial investment in
| someone <25 YO towards things like education pays off
| more than similarly-sized investments later in life.
|
| Regardless of whether the parent can support that tuition
| cost or the kid has to take on loans themselves, it
| should be up to the individual whether they take on that
| risk irrespective of the parent's financial situation,
| which is I think where this heavily-downvoted reply was
| going.
|
| As somebody who's education was way less supported than
| the rest of my family, who came out with a better job
| than all of those others in spite of that, there's a
| decent chance your kid will resent being "held back" by
| such a choice for a very long time if you give them trade
| school as their only option in life.
|
| Lots of people find ways to be successful in the arts by
| eventually finding something cross-disciplinary, and with
| the direction most non-white-collar jobs in the US are
| heading I wouldn't bet my kid's life on trade school.
| What made sense as a sentiment on Mike Rowe's "Dirty
| Jobs" 10+ years ago doesn't quite hold up as well today,
| and those projects were funded by the Koch brothers and
| the whole "trade school is just as good" thing should be
| taken with a mountain of salt. I'd love to see more data
| proving trade school proves better today, especially for
| young adults with educational backgrounds and access to
| learning and job opportunities whose parents are in the
| economic class to be browsing HN
| boeingUH60 wrote:
| Passion doesn't pay the bills. It's good to be passionate
| about something, but many passions are not marketable.
|
| Many have drowned in student debt following their
| passions, but this wouldn't be so in many countries that
| have university education fully covered or significantly
| subsidized by taxes.
| SoftTalker wrote:
| The countries that have "free" university education also
| steer young people into career paths starting in middle
| school. If you're not the sort of person who will succeed
| at university, you get directed into vocational or trade
| school or apprenticeships, etc.
| mc32 wrote:
| Exactly! Passions are good hobbies. Many people who take
| their passion and turn it to make it their source of
| income regret the decision because it sours the passion
| --it become a job.
| brightlancer wrote:
| If passion doesn't pay the bills, it certainly can't pay
| taxes. Why should engineers and plumbers and garbagemen
| pay taxes to send someone to art school for years?
|
| Once something is paid for with tax money, then the
| people paying the taxes want a say in how it's spent --
| which is not just reasonable, it's a requirement of a
| liberal democracy.
| boeingUH60 wrote:
| Of course, countries with tax-funded higher education
| ration degrees. There are limited slots, and art courses
| are usually at the bottom of funding considerations.
| allenrb wrote:
| Giving the benefit of the doubt here, I assumed the push
| toward trade school is because that makes the most sense
| for the child in question. College is not for everyone,
| including a lot of people pushed into attending.
| gorjusborg wrote:
| It really baffles me sometimes how readily we assume our
| conclusions apply to others. Most serious decisions in
| life require balancing multiple difficult trade-offs. To
| think that our particular biases, experiences, resources
| and difficulties are anywhere close to another's is a
| huge leap.
|
| It's fine to speak from one's experience, but to say that
| someone else should make the decision one thinks is wise
| based on a single comment is either ignorant, arrogant or
| both.
|
| Edit: I replied to you @allenrb, but I'm not directing
| these thoughts toward you. I'm just pointing out a
| general behavior I see (but wish I didn't) on the
| internet and HN.
| jorvi wrote:
| Not that it touches on your other points but
|
| > Two of three have gone to public schools so far, and
| we've paid through the nose for it. We are pushing our
| third towards some sort of trade school.
|
| Jesus Christ. You're gonna give child one and two full
| opportunity to realize whatever potential they have, but
| steer child three?
| bryanrasmussen wrote:
| I believe that was the posters original point, because the
| lenders have no more risk it means that the market solution
| has been put out of balance, and the current situation is
| arguably a logical consequence of that imbalance.
| milsuj2 wrote:
| Just because the loan cannot be discharged doesn't mean
| there are no risks. The money doesn't just appear out of
| nowhere if the borrower doesn't already have the money.
| rayiner wrote:
| What "lenders," and what "market" are you talking about? 92%
| of all student debt was issued by the federal government. As
| a matter of social policy, the government does not
| meaningfully consider credit risk when issuing student loans.
| FormerBandmate wrote:
| The government taking credit risk into account would have
| such regressive results it would be hilarious. The cost of
| college would dramatically plunge for kids from rich
| families taking CS and finance classes and skyrocket for
| everyone else
| peanuty1 wrote:
| That would be great if cost of college plunged for CS and
| finance students.
| mistrial9 wrote:
| where does that exact figure come from?
| hospitalJail wrote:
| The first I had heard about this was from libertarians
| complaining about the government backing causing the tuition
| increase.
|
| This was among a debate where people were asking for more
| federal and state funding.
|
| Its crazy to see this point become so mainstream. I suppose
| it was inevitable if it was the truth.
| kalleboo wrote:
| From an outside point of view, it looks like just another
| problem of the duality of the American self-image.
|
| "We want everyone to have a chance at school, but public
| schools are government indoctrination so we'll just make
| sure people are in un-releasable debt to private
| companies."
|
| "We don't want to see people dying in the streets, but
| universal health care is "socialist", so we're create these
| convoluted insurance systems, but still require hospitals
| to provide free ER care (that has to be covered by everyone
| else in the end)."
|
| "We're afraid of immigrants, but our agricultural industry
| is dependent on their cheap labor, so we'll make legal
| immigration difficult, and keep pretending that we're going
| to restrict illegal immigration, but never actually do
| anything effective to curb it."
|
| (I also want to add that mentalities like this are not at
| all exclusive to the US - you can find similar
| inconsistencies in every countries self-image, the US just
| seems to have them in more fundamental issues that other
| countries made a decision on long ago)
| soundslikeapop wrote:
| [dead]
| basisword wrote:
| If only governments could make...laws to restrict the price of
| University. Or...could limit the maximum loan size thus
| encouraging Universities to not charge more than that.
| AzzieElbab wrote:
| Easy fix - include education, health care, and housing costs
| into inflation indices.
| treeman79 wrote:
| Proper solution is government to stop guaranteeing the loans
| and to allow people to put them in bankruptcy.
|
| Prices will collapse to what people are willing to pay in
| real time, or save up for.
| DesiLurker wrote:
| Right, let the market decide interest rate charged for them
| based on risk of default. this will also quickly filter out
| pointless degrees without much carrier prospect because
| interest rate would be high. right now basically govt has
| created a fully protected predatory loan that can follow
| you to your grave. IDK why is this so hard to understand.
| dragonwriter wrote:
| > Proper solution is government to stop guaranteeing the
| loans and to allow people to put them in bankruptcy.
|
| Proper thing is for the government to stop _issuing_ the
| loans, and instead do need-based grants plus establish cost
| and quality controls for institutions that wish to be grant
| eligible, while prioritizing federal institutional funding
| other than direct student aid for institutions that,
| whether througj grant eligibility or their own pricing and
| in-house aid programs, or both, meet set financial
| accessibility standards.
| rayiner wrote:
| The government cannot and will not do that, because such a
| policy would have racially disparate impacts.
| DesiLurker wrote:
| Govt can totally do that. but you are right in that only
| congress can do that via legislation. every policy that
| effects poor has racially disparate impact so that
| argument can rally be applied anywhere.
| dragonwriter wrote:
| The government actually can do, and often does, policy
| with racially disparate impacts. Disparate impact is not
| a Constitutional limit on government discrimination, its
| a judicially-created rule in the application of certain
| statutory anti-discrimination laws.
|
| (And the disparate impact rule is politically and legally
| unpopular with the same faction that currently dominates
| the Supreme Court and whose members on the Court have
| shown an unusual willingness to discard precedent, so its
| quite likely it won't be a limit on discriminatiom under
| those statutes much longer, either.)
| rayiner wrote:
| I didn't say it's a constitutional issue. It's a
| political non-starter.
| dragonwriter wrote:
| > I didn't say it's a constitutional issue. It's a
| political non-starter
|
| And I said your argument for that is nonsense, since the
| government does lots that has racially disparate impacts.
| gottorf wrote:
| The disparate impact rule is challenging to begin with
| because literally every policy has a disparate impact,
| because there is and always will be an uneven
| distribution of people of whatever cultural or ethnic
| subgroup they can be divided into in whatever social
| roles that exist. It should rightly be rid of. There are
| many other better ways to address discrimination.
| dragonwriter wrote:
| > The disparate impact rule is challenging to begin with
| because literally every policy has a disparate impact
|
| "Disparate impact" prohibited by the rule isn't just
| unequal impact, its unequal impact without sufficient
| justification (what qualifies for that differs between
| the employment and housing contexts where the rule is
| applied.)
| philipkglass wrote:
| There are many things that the government doesn't
| guarantee loans for. Why is not-guaranteeing for higher
| education more of a racially disparate action than not-
| guaranteeing for e.g. vehicle loans?
| jedberg wrote:
| That's how things used to be. It means that only rich
| people can go to college, because they are the only ones
| who can afford it. Prices can only come down so far. The
| college still has to pay professors and maintain
| facilities.
|
| There needs to be a middle ground where we support poor but
| promising students in a way that doesn't inflate prices. I
| don't know what that solution is.
| gameman144 wrote:
| > It means that only rich people can go to college,
| because they are the only ones who can afford it.
|
| I hear this a lot, but I don't understand the argument to
| be honest. If someone is poor _today_ , then they can
| take an exorbitant amount of debt that they can't
| discharge in order to attend university.
|
| In a world where loans _are_ dischargeable in bankruptcy
| and the federal government limits subsidizes loans, we 'd
| expect prices to fall somewhat and rates to rise
| somewhat. It seems like we would still expect the poor
| student to be able to take on a large amount of debt to
| attend university, though, no?
| jedberg wrote:
| The interest rates would be so high that it wouldn't make
| sense for a promising student to take that loan. If
| you're a loan company and someone comes to you asking for
| $100,000, and they have no credit and no family with
| assets, even with a 4.0 GPA and perfect SATs, they are
| still a huge risk.
| gameman144 wrote:
| This seems fine to me. If someone has no assets and no
| reasonable prospects to pay back $100,000 of debt, then
| saddling them with $100,000 of debt is a bad idea.
|
| Additionally, discharging student loans in bankruptcy
| should absolutely not be a way to get off scot-free, it's
| meant as an escape valve. If your options are the
| terrible downsides of declaring bankruptcy and the
| terrible downsides of a life in extreme debt, neither
| option is great, but having the choice is useful.
| jedberg wrote:
| Right but see the problem is how does a really smart poor
| person get an education so they can become a really smart
| rich person?
| eitally wrote:
| Well, as a start states can start refunding their
| colleges and universities, to levels that used to be
| common [until roughly the 90s].
|
| After that, it becomes more prescriptive around roles of
| operation, and that's murkier. For example, I'd be happy
| to see hard caps on $ of operational budget spent on
| admin. I'd also be happy if sports was budgeted for
| separately and that student athletes were separately
| admitted to both their sport(s) and for academic study.
| There are many things states could do that would impact
| how schools are managed, regardless of the federal
| government's rules for student loan lending.
| gameman144 wrote:
| They study in a field which has a high likelihood of loan
| repayment, or study at a less expensive school.
|
| If a really smart poor person wants to become a really
| smart rich person by pursuing a degree in film studies,
| it's reasonable (in my opinion) for a bank to say
| "borrowers whose only education is a bachelors in film
| studies tend to have trouble paying back loans, so we
| won't lend you very much".
|
| If that very smart poor person is pursuing a degree in
| accounting or engineering, though, most banks can do the
| actuarial work to determine that the likelihood of
| payment is pretty good.
|
| This all seems totally fine and fair to me. And if the
| really smart person _does_ have trouble paying back their
| loan, bankruptcy can be the absolute last option they
| resort to, just as it is with most other loans.
| jedberg wrote:
| I'm not sure loan companies want to get into the business
| of rating specific programs at specific universities and
| their ability to produce students who can get good jobs.
|
| And also if they did do that, we get back to other
| problem which is that schools will only offer programs
| that lead to high paychecks making them just job training
| and not places of overall learning.
| gameman144 wrote:
| Loan companies might not _want_ to do that, but it 's
| absolutely part of the due diligence they _have_ to do.
| If I borrow a few hundred thousand for a home, the loan
| company does a deep dive to ensure that my home is a
| sensible buy (e.g. appraisal) and that I 'm in a position
| to pay back the loan (e.g. credit check, historical
| performance). It's absolutely wild that we'd absolve loan
| companies from this due diligence for young adults with
| less credit history and no ability to default on the
| loans.
|
| Also, you may be right that schools start to prioritize
| programs that allow borrowers to earn enough to repay
| their debt. Why is this a bad thing? I would absolutely
| argue that a poor student would be better off being
| unable to obtain loans for a degree with poor returns
| then they would be taking on mountains of debt that they
| can never discharge.
|
| For the rich, those talented enough to earn scholarships,
| and those willing to accommodate loan companies'
| stringent conditions on risky borrowing, degrees with
| poor monetary returns will absolutely stick around as
| they always have.
| jedberg wrote:
| > It's absolutely wild that we'd absolve loan companies
| from this due diligence for young adults with less credit
| history and no ability to default on the loans.
|
| We haven't absolved them per se. At first they _tried_ to
| get the data and make smart decisions, but there just
| wasn 't enough data for them to make good decisions, so
| they denied everyone. That's why the government got into
| the business of backing the loans in the first place --
| it was the only way to get the loan companies to make the
| loans.
|
| > For the rich, those talented enough to earn
| scholarships, and those willing to accommodate loan
| companies' stringent conditions on risky borrowing,
| degrees with poor monetary returns will absolutely stick
| around as they always have.
|
| There wouldn't be enough students to support that,
| because amongst those people, many would still choose the
| lucrative majors.
|
| > Also, you may be right that schools start to prioritize
| programs that allow borrowers to earn enough to repay
| their debt. Why is this a bad thing?
|
| Now we have a philosophical debate. Do we want to live in
| a society where no one studies philosophy, poetry, art,
| music, creative writing, and so on? Ironically, someone
| who studied philosophy would probably be more suited to
| answering this question than I am.
| gameman144 wrote:
| I think we might have different fundamental viewpoints
| here, and that's okay.
|
| In my view, current government policy is actively
| enabling people to dig themselves into holes of debt
| which they'll never be able to get out from.
|
| It's great that people are choosing to study art, music,
| and philosophy. I personally have a degree in music, and
| it's one of the great joys of my life! Whether the
| government should loan me an absurd amount of money
| strictly for those pursuits, though, is a different
| question. There's great value in history, but I think
| most people would hardly endorse a government policy of
| loaning anyone a few hundred thousand dollars in living
| expenses to go to their public library and read about the
| Civil War for a few years.
|
| Also, it's completely feasibly to encourage a broad range
| of studies while _also_ conferring a degree in an
| employable field. This is the model of liberal arts
| schools: you study art, music, philosophy, literature,
| etc. but you can leave the school with a degree in an
| employable field.
|
| As far as I understand it, your belief is that without
| the government lending people money with minimal
| constraints, fields that are less employable would go
| away almost entirely. I don't agree that this would be
| the case, but if that's where you're coming from I think
| that's a reasonable enough disagreement that we can land
| on.
| treeman79 wrote:
| "Hi bank. I want to open a coffee bar in Antarctica."
|
| After Rounds of laughter. "If I failed to pay, the
| government will pay you back."
|
| Bank. "Here's 10 million dollars. Let us know if you'd
| like more. "
|
| Banks and other lenders do basic sue diligence all the
| time. It's government that screws this up.
| mrguyorama wrote:
| A good first start would be to ban college sports as a
| commercial endeavor
| jedberg wrote:
| Not sure how this helps? In most schools the sports
| programs subsidize attendance for a lot of kids, and
| proportionally more underprivileged kids.
| pclmulqdq wrote:
| Now that we have a student loan system, I'm sure that the
| students who are good bets will continue to have access
| to credit. You would be insane to not give a student loan
| to an MIT CS student, for example.
|
| Also, prices should fall a lot, making school a lot more
| affordable.
| dantheman wrote:
| They could easily limit the loan size...
| somewhat_drunk wrote:
| Price controls are one of the few things that economists on
| both sides of the political aisle agree do not work, and/or
| have unintended consequences which are worse than the problem
| they attempt to resolve.
|
| https://www.econlib.org/the-consensus-on-price-controls/
| mitchdoogle wrote:
| That depends on what it means for this to be "working"
| tomjakubowski wrote:
| You won't find many economists arguing against farm
| subsidies, which are a form of price control. This is among
| the oldest practices of statecraft in history.
| basisword wrote:
| Seems to work well in the UK. Fees are set by the
| government and the government provides the loans. Private
| Uni's can set their own price but the government loan will
| only only fund about PS6k (PS3k less than the public Uni
| fee). Because of this, many private Uni's set their fees at
| PS6k and then make their money on international students.
| crote wrote:
| That's not quite true. See for example the existence of the
| billions of $ of corporate agricultural subsidies,
| essentially creating an artificial price floor.
|
| The primary reason price _ceilings_ are criticized by
| "both sides" is because the shifting Overton window has
| resulted in both the Republican and Democratic parties
| having quite neoliberal views. In an international context
| the two sides of the aisle can be described as "right" and
| "far-right".
| Scarblac wrote:
| Paraphrasing the Onion -- "This policy doesn't work", agree
| politicians on both sides of the aisle in only country that
| has this problem.
| jayd16 wrote:
| I don't think that's a fair take on the suggestion. What if
| it was something like Medicare where services were tax
| funded and costs are negotiated but fixed?
| pixelatedindex wrote:
| Sometimes it feels like economists come up with these ideas
| in an ivory tower, detached from reality. Any kind of price
| control seems to make economists very upset, rent control
| being another example.
|
| Reality is that there are so many other factors that it's
| probably better to have some sort of price control as a
| form of regulation, instead of only focusing on
| supply/demand levers.
|
| I'm not an economist so I'm happy to be proven wrong, but
| the stance of "x,y and z policies need to be implemented so
| supply/demand is changed to mitigate these issues", but the
| reality is that politicians and the business landscape
| doesn't incentivize such changes. For example, colleges
| aren't incentivized to keep the cost low, housing
| construction isn't incentivized because NIMBYs control what
| can be built where, etc.
|
| So when someone says "well the economists don't agree on
| that", it really rubs me the wrong way.
| leshow wrote:
| I'd wager econlib is cherry picking
| https://mediabiasfactcheck.com/the-library-of-economics-
| and-...
|
| Mainstream economists have thought very different things
| at different times. The current mainstream orthodoxy is
| largely free market fundamentalists that took over in the
| 80's. There are heterodox economists that disagree with
| this view. Practically, there are also many examples of
| price and rent controls and de-commodification "working"
| throughout modern history and currently on other
| countries.
| gottorf wrote:
| > Any kind of price control seems to make economists very
| upset, rent control being another example.
|
| They're probably upset the same way that climate
| scientists get upset when people dispute climate change;
| that is, it's a widely-studied phenomenon by economists
| of all political persuasions with lots of evidence to
| back it up.
|
| A price ceiling causes a shortage, like cars lining up at
| gas stations during the 70s oil crisis or the 10+ years
| of wait time in Stockholm apartments. A price floor
| causes a surplus, like unemployed workers at the minimum
| wage.
| skissane wrote:
| > Price controls are one of the few things that economists
| on both sides of the political aisle agree do not work,
| and/or have unintended consequences which are worse than
| the problem they attempt to resolve.
|
| Australia effectively has price controls on both health and
| tertiary education. It isn't perfect but it is hardly
| terrible.
|
| I know the US pharmaceutical industry hates it - the
| Australian government uses its monopsony power to limit
| drug prices and hence drug company profits - and is forever
| lobbying the US government to use trade negotiations to
| pressure to undermine it (but hasn't yet succeeded)
|
| Universities can charge as much as they want - but if they
| want students to have full eligibility for government
| student loans and government tuition subsidies, there is a
| maximum they can charge. Students want that full
| eligibility, so for the majority of places they stick to
| the maximum
| gaoshan wrote:
| If that's the case, that the federal government backing the
| loans is what permits the increases, then why not just have the
| federal government pay up front and cut out the loan portion?
| Might give them more power to negotiate lower prices. Though I
| suppose the loan industry wouldn't like getting cut out of
| their middleman position, eh, and politicians probably wouldn't
| stand for that egregious cutting of profits.
| tzs wrote:
| > Makes sense when you have student loans backed by the federal
| government.
|
| Everyone says that, but I've not seen much actual evidence.
|
| I tried to find evidence, by looking for tuitions of various
| major universities over time and seeing if there was any clear
| difference in the tuition growth rates before Federal loans and
| after.
|
| I know the data is available. Most schools list tuition in
| their catalog, and have their old catalogs in their library,
| but it wasn't turning up in. Google searches.
|
| I was only able to find historical data for Stanford, giving
| tuition by decade, and one big state school whose name I don't
| remember. Here's a graph of log10(Stanford_tution) over time
| [1]. I don't have a copy of the graph for the other school but
| recall it was similar. It looks like it has been growing about
| the same for a century.
|
| I also remember comparing tuition rate increases to inflation,
| and found that tuition has grown pretty consistently at roughly
| 2x inflation both before and after Federal backed loans.
|
| [1] https://imgur.com/fXnjDNn
| godelski wrote:
| This is not wrong (despite being common and the de facto
| explanation) but it isn't complete either. The reason I say
| this is because people that often say this (or read this) also
| conclude that the way to fix this is to just get rid of
| government backed loans. The issue is that this model doesn't
| question why the government backed loans in the first place.
| How they were seen as an investment in the people, as higher
| education was already prohibitively expensive. The solution
| failed because it did not account for a feedback loop, relying
| on competition to keep prices low rather than implicit
| coordination (sometimes explicit collusion). Mostly being due
| to momentum and prestige having an ineffable market value.
|
| So we need to resolve that issue as well if we're to stop
| federally backed loans. There's more things at play as well and
| the convoluted mess is the real reason we haven't solved the
| problem. Realistically, this is probably true about most of the
| larger issues we face. I'm concerned that over simplifying the
| problem statement results in an over simplification of the
| solution and it just causes us to argue (which can be supported
| by evidence) or take ineffective/theatrical action rather than
| actually resolving the problem (meeting the intended goals
| (plural)).
|
| We can keep having this conversation over and over, but it has
| happened for well over a decade now and no real progress has
| been made. We gotta start looking at the actual complexity of
| the situation as first order modeling isn't good enough.
| dpierce9 wrote:
| Private high school costs have also gone up astronomically and
| there are no federal loans for them.
|
| [0] https://educationdata.org/average-cost-of-private-school
| lr4444lr wrote:
| This is really interesting, but has it outpaced inflation ?
| Did not see that skimming the site.
| dpierce9 wrote:
| There is a chart at the bottom. Costs doubled over twenty
| years since 1999, directly comparable to the college rate
| over the same period and well above inflation.
| bitshiftfaced wrote:
| This says that the average private highschool tuition is
| $15,645. In 2003, the average private highschool tuition was
| $8,412 (Snyder, Dillow, & Hoffman, 2008), or $14,079 (in
| today's dollars).
|
| Please correct me if I've made some mistake, but plugging
| those numbers in shows that the annualized real increase in
| price is 0.5% per year over 20 years. Looks like doing the
| same thing for public 4 year college over the same timespan
| results in an annual real increase in 2.1%
| dpierce9 wrote:
| The first bullet says: "$23,839 is the average annual
| tuition among the nation's private K-12 schools."
|
| Edit: it looks like there is an error on this page. The bar
| chart the numbers are much higher. Anecdotally, private
| high school is always more expensive than private
| elementary. That is what the bar chart shows but not the
| bullets.
| bitshiftfaced wrote:
| In your post, you said "private high school."
| [deleted]
| dpierce9 wrote:
| I think the average high school price is incorrect. I
| would love to see better data. I edited my previous
| bullet to reflect this.
| hospitalJail wrote:
| Where does it say that?
|
| Btw private school looks quite affordable. I used to think my
| neighbor was rich, they were, but for only $20k/yr you can
| send 2 kids to private school? That is cheaper than daycare.
| dpierce9 wrote:
| There is a chart at the bottom. Costs doubled over twenty
| years since 1999, directly comparable to the college rate
| over the same period and well above inflation.
| shkkmo wrote:
| According to that chart, by "well above inflation" you
| mean "<20% above inflation" and by "comparable to the
| college rates" you mean ">100% above inflation".
|
| Your use of generalizations seems radically inconsistent.
| jasonmp85 wrote:
| [dead]
| zeroonetwothree wrote:
| The private school near me is 55k per child. And that's
| typical for this area
| prepend wrote:
| And what is your point. Average rates were noted.
|
| The study also does average and median prices and
| increases.
|
| Of course there is variability. What does you living in a
| higher cost of living area have to do with the points in
| this thread. Are you distributing?
|
| Or just wanted to note that there are outliers that
| factor into the average? Maybe there's something
| noteworthy about your private schools, but please add
| more info.
| Sivart13 wrote:
| Daycare is considered by many to be very expensive and a
| lot of parents would prefer not to (or can't!) pay daycare
| prices until their kids leave the house.
| thebradbain wrote:
| Depends on the city... in Los Angeles private schools can
| push $70k/yr/student easily; In the Bay Area I would
| imagine even higher. In Dallas, where I grew up and went to
| the same school for much less, tuition is now around
| $40k/student/year for top private schools.
| eitally wrote:
| The highest I've found in the bay area are a small
| handful of residential private schools (e.g. Athenian is
| $82k for boarding students). Most of the top private day
| schools are still <$50k/yr, but I strongly suspect they
| top that once fees & "discretionary" expenses are added.
| [deleted]
| onlyrealcuzzo wrote:
| If you're paying $20k for daycare and there's not really a
| free option, that's just what you have to do.
|
| If you're paying $20k for private school, and there's a
| free option (public school) - you obviously have a healthy
| amount of disposable income.
| eitally wrote:
| But once you've become sensitized to the impact of paying
| for daycare on your budget, it's easy to logically just
| continue the same budget and funnel the same money to a
| different school.
| iteria wrote:
| This. I put my kid into daycare because it didn't cost
| more than daycare and I'd been paying it this long, what
| was paying it forever when I'm financially stable. My kid
| is special needs and the public school would have never
| accommodated her like this private school has.
| brightlancer wrote:
| > If you're paying $20k for private school,
|
| The link says the average for HS is $15.6k; if that's a
| mathematical mean, that's going to be driven up by a
| handful of very expensive schools.
|
| > and there's a free option (public school)
|
| Most public schools in the US are garbage.
|
| > - you obviously have a healthy amount of disposable
| income.
|
| Or make frugal choices elsewhere, or receive
| scholarships/ financial aid, likely both.
|
| Yes, that's right, parents can drive an older car and
| skip buying a bigger TV and cook at home and save money
| in all kinds of ways, and private schools offer
| scholarships and financial aid to advance missions of
| service.
| onlyrealcuzzo wrote:
| > Or make frugal choices elsewhere, or receive
| scholarships/ financial aid, likely both.
|
| Most people are already doing that and still can't spend
| $20k to send their children to a non-"garbage" school.
| janalsncm wrote:
| It only makes sense if you believe education is just like any
| other commodity whose price should be driven by market forces.
| Should government have any say in whether its citizenry gets
| educated? Is there a public interest in it?
|
| I can't think of an easier way for e.g. China to win the 21st
| century. American undergrad enrollment is already down. As the
| world gets more technical, that is not a good sign.
|
| When an entire generation of Americans are priced out of higher
| education, who is going to develop the technologies of
| tomorrow? Should we assume foreign students will always want to
| come to our schools and stay to work in our companies? It's not
| sustainable.
| zdragnar wrote:
| The rise in prices has largely been driven by schools going
| on real estate binges and bloating administrations.
|
| Right before I graduated, my school decided to build a new
| football stadium, because they decided using the city's
| stadium wasn't attractive enough for students. They promised
| tuition wouldn't be used to pay for it, and it wasn't. We
| just got something like $500 added to student "fees" instead.
|
| I have no sympathy for universities and colleges in the US,
| only for the students who were duped into thinking they
| didn't have another choice.
| Clubber wrote:
| When I went to school ages ago when it was reasonably
| priced, they did a breakdown of the tuition. Half of it was
| stupid bullshit the student government voted on over the
| years.
|
| "Too many piglets, not enough tits" -AL
| janalsncm wrote:
| Ultimately it doesn't matter if the cause is administrative
| bloat, government-backed student loans that can't be
| defaulted on, or space aliens. What is not debatable is
| that higher education is necessary in an advanced economy,
| and starving the job market of highly skilled workers is a
| fast track to companies shifting to other places where they
| are more abundant.
|
| Either the US will figure it out like every other developed
| nation has seemed to do, or there will be grave
| geopolitical consequences. Whether the US
| political/economic machine can figure it out is a question
| that only time can answer.
| brightlancer wrote:
| > Should government have any say in whether its citizenry
| gets educated? Is there a public interest in it?
|
| That's a very dangerous road.
|
| Governments are not some benevolent creature which always
| acts in the best interests of the People. As a practical
| matter, governments are usually incompetent and corrupt
| (usually in that order), and try to get the masses to further
| the interests of the politicians, the bureaucrats and the
| donor class.
|
| I want an educated populace. For that reason, I want
| government as far away from it as possible.
| patrickthebold wrote:
| "Able to pay", but where is the "Want to pay?"
|
| I feel you also need to argue: "18 year olds don't realize they
| are being ripped off", or "college is actually worth that
| much". It's probably a different answer for different students.
| mrguyorama wrote:
| Society is better off as a whole with a well educated
| populace. We shouldn't optimize for college only for kids who
| can learn to program or whatever.
|
| Most other developed nations manage to send every smart kid
| to college for ten thousand dollars per kid or less. Once
| again, it is only the US that thinks it is a special
| butterfly that can't somehow manage to give kids college.
| Sure, most European colleges don't spend one billion tax
| dollars on a football stadium, but that is also a good thing.
|
| And no, those sports complexes largely DON'T pay their own
| way. A significant amount of college sports don't make much
| money, and don't give it back to the campus as a whole, and
| that's WITH literal free labor of NCAA athletes.
| nsvd wrote:
| That's a popular opinion, but how do you quantitatively
| prove it? While the formal education of a population may
| correlate with wealth, I think it would be harder to prove
| a causal link.
| mrguyorama wrote:
| It's about what is necessary for DEMOCRACY to work well.
| I don't care what provides a higher ROI to some rich
| owner-class people, I care about a society that
| represents its people.
| SoftTalker wrote:
| The education needed for a functioning society should be
| delivered by the end of high school. A few generations ago
| it was delivered by the end of 8th grade.
|
| And yes, college sports on the whole does pay for itself.
| Those stadiums are built by donated money, and revenue from
| ticket sales. Yes taken in isolation there are a lot of
| sports that don't make money, but they are subsidized by
| those that do (chiefly football and basketball). Sports
| stadiums are not the reason tuition has inflated by 700%.
| They are two separate pools of money. If you got rid of
| sports entirely it would not affect the finances of the
| academic side of the university at all.
| janalsncm wrote:
| It's a question of what kind of "functioning society" you
| want to have. Those 8th grade education jobs still exist,
| but they're in China, Bangladesh and other developing
| economies. And no offense to those people either. A lot
| of manufacturing depends on them.
|
| Those are certainly "functioning societies" but their
| economies are much less advanced than in the US. It's not
| realistic to say that an advanced economy can get by with
| education ending at age 18.
| ecshafer wrote:
| Define well educated populace.
|
| Does this mean ability to read, write, and do arithmetic?
| Does this mean the ability to speak and read Latin with an
| understanding of the classics and the Bible? The ability to
| fix a car and build an engine? Program a computer?
|
| One could argue that a university does very little to make
| a populace more educated, since they can already read,
| write and do basic math (or should be able to) to get into
| school. Is taking psychology making one better educated?
| Maybe? Maybe not.
| Broken_Hippo wrote:
| Well educated isn't so clearly defined: In general,
| though, it is having been exposed to a varying number of
| subjects, be able to read a varying amount of things,
| have enough general knowledge that they can understand
| the reason there are "chemicals" in food and the reasons
| not to mix some household chemicals together. In
| addition, the person has been able to dive into a
| particular subject more deeply than the other ones, and
| understand that other folks have different specialties.
| While doing this, you are generally exposed to an array
| of people and if your institutions are fair, they come
| from mixed backgrounds.
|
| Realistically, the basic information will be similar
| (basic science, health, reading, history, and so on) but
| we'll have different areas of interest and skill, so the
| exact subjects will be individualized to an extent and
| will definitely change over time as the world changes.
| You can't say for certain that psychology will make you
| better educated, but an introduction to the basic field
| might open someone's mind to being educated in that
| field, which helps society at large. Other things will be
| more esoteric: Go to art school, work in retail, and
| happily make art doesn't have the same sort of immediate
| payback - but chances are, they are more likely to be a
| bit compassionate just by having the education.
| Baader-Meinhof wrote:
| City and community colleges exist, and are mostly free. But
| for most people, colleges are more than just an education.
| College is about signaling their aptitude. And so people
| keep trying to pile into expensive private school for the
| prestige.
| brightlancer wrote:
| > City and community colleges exist, and are mostly free.
|
| Tuition, usually. Books, maybe. Room and board, ha!
|
| As an anecdote, it cost less for one of my kids to go out
| of state to a private college than in-state to a public
| university; tuition at the public university would've
| been free, but the private college offered scholarships
| and financial aid that fully covered tuition and most of
| on-campus room and board.
|
| Sure, my kid could've gone to a community college and
| lived at home, but the education would have been far
| worse, food isn't free, and it's harder to build a
| community when folks have to leave in the evening to
| travel 30-60 minutes in any direction.
| [deleted]
| samtho wrote:
| I cannot imagine a more sinister, callus, and destructive way
| to punch down on some of the most vulnerable people. 18 year
| olds did not elect any of the people making these laws, every
| adult before them parrots "go to college", financial aid
| offices don't care what people do as long as they pay tuition,
| etc.
|
| But grants, you say! We can avoid loans. Not so fast. If your
| parents made a certain amount, they are fully expected to pay a
| certain amount for their now adult children to go to college.
| To qualify for any aid, you need your parents' income,
| demanding that A middle class family may still be fully
| expected to pay multi-thousands of dollars. The student must
| then take out loans to pay for the rest, which might be the
| full amount.
|
| This is certified, nonsensical, bullshit. No credit system in
| history has been given the grace to royally fuck over
| generations of students, saddling them with loans that cannot
| be discharged, whose amount is effectively dictated by the
| institution that is charging tuition. This is a scam at the
| highest level, sanctioned by the federal government, and
| perpetuated by every adult figure in the students' life.
| hibikir wrote:
| True, although I expect that the US healthcare system is more
| than competitive if we consider its bad outcomes and overall
| inefficiency per dollar spent.
|
| Systems where there is competition, but where efforts are
| made to make the service providers not really have big
| advantages for cutting costs, will get you bad outcomes. It's
| just unfortunate that avoiding needing healthcare, or going
| into many careers without paying for the very expensive
| college degree, is such a big gamble.
|
| A fully public system would be very different. An
| unsubsidized market system would also be very different.
| Either one would be dramatically cheaper than what we have,
| which gives us the worst incentives of both worlds.
| mola wrote:
| More likely cause is the mentality that says universities are a
| for profit institutions That should squeeze as much as
| possible. Instead of "socialist" subsudised school, you give
| loans...
| hatf0 wrote:
| Can confirm. Currently attending a mid-tier public state school,
| and I'm looking at ~1200/mo (2000/mo, including housing - living
| w/ 3 roommates) out of pocket (since I'm trying to avoid taking
| out loans as much as possible). I've worked up to 2 jobs at the
| same time just to keep making ends meet. It's really rough out
| there, and my degree program doesn't even begin to cover
| fundamental CS concepts like P/NP-completeness, DFAs, etc. Waste
| of money IMHO.
| morsch wrote:
| > It's really rough out there, and my degree program doesn't
| even begin to cover fundamental CS concepts like P/NP-
| completeness, DFAs, etc
|
| Then it's presumably not a CS degree...?
| mwerd wrote:
| You have to look at net price not sticker price. faulty analysis.
| better data here https://usafacts.org/articles/college-tuition-
| has-increased-...
| yardie wrote:
| You only get the net price after applying and submitting a
| FAFSA. The net price is only useful if you intend to go there.
| It's functionally useless for any other purpose. If the price
| says $100 then for most everyone it's $100.
| mwerd wrote:
| There are resources such as https://collegecost.ed.gov/net-
| price to help with the information.
|
| College prices are about as real as hospital prices. Sure,
| some outliers literally pay that much, but the vast majority
| receive a discounted price for various reasons. When you
| factor in those discounts, the cost inflation is 2.5x instead
| of 17x as the article suggests. It's more than a forgettable
| idiosyncrasy. It's "how it works" and if the author of the
| article doesn't mention it, they're either so ignorant as to
| not be worth reading or they're being dishonest.
|
| I thought it was important to give that context.
|
| American higher Ed is often about prestige and branding. The
| pricing strategy is similar to luxury goods.
| aimor wrote:
| The number of people where the net price =/= sticker price is
| growing.
|
| "In 2000, 44.4% of all undergraduates received grant aid,
| whereas in 2016, that number increased to 63.1%."
| sgustard wrote:
| I was offered a $10k/year academic scholarship in my state
| school offer letter, no application required.
| spaceman_2020 wrote:
| I studied a year abroad in a US public university back in 2008.
| Annual tuition back then was around $10k. In local currency, that
| was about 400,000.
|
| Today, that tuition is $28k. But the dollar has also appreciated
| so real cost in local currency is now 2,268,000 - an appreciation
| of 467%.
| samtho wrote:
| This data is what I used to convince my parents were very much
| anti-student loan forgiveness (we paid ours so you get to suffer
| too), that a certain level of it is appropriate. I honestly don't
| think a lot of people realize just how bad its gotten. Couple
| this with the fact that somehow budget is limiting the number
| classes being offered with the extra 1.5 semesters on average of
| additional general education requirements, and you've created a
| system that predates new adults, pushing them underwater from the
| start. A bit ironic that we've had the lowest wage growth in 60+
| years just as the cost to get a degree, the default requirement
| for almost any job, skyrocketed. These loans students took out to
| go to university cannot be dismissed and will follow you until
| the day you die. This debt bondage of people just turning 18, is
| pure horseshit. We supposedly outlawed indentured servitude but
| it's still style alive and well, and our machiavellian, geriatric
| congress in the US has offered nothing besides cruel
| indifference, useless excuses, and is distracted arguing about
| shit like drag performance and bathrooms? Like what the fuck.
| mnd999 wrote:
| Where's the money going? I'm not seeing evidence for 5x better
| research outcomes.
| TheCaptain4815 wrote:
| I wonder why University Presidents/ Top Administrators get so
| much less flak from politicians compared to CEOs, while probably
| making decisions that further increase the University "profits"
| all while many make $1mil/year+.
| borissk wrote:
| Because CEOs contribute and control a lot more money going to
| lobbing and politician financing.
| [deleted]
| funemployed wrote:
| what happened in 1980?
| TheRealDunkirk wrote:
| Universities finally figured out what happened in 1971, and
| started riding the Wall Street-Federal Government paper money
| wave.
| consumer451 wrote:
| https://wtfhappenedin1971.com/
| tkiley wrote:
| a counterpoint to this narrative: grants/scholarships have been
| rising rapidly, so actual net tuition prices are surprisingly
| flat in recent years.
|
| > Between 2006-07 and 2019-20, COA [cost of attendance] increased
| by around 27% at both types of institutions, but declined by 7-8%
| in the few years after that. The recent decline occurred because
| colleges posted similar nominal COA increases as in the past, but
| inflation was higher. Overall, COA increased by almost 20% over
| those 16 years at both types of institutions.
|
| > But average net prices rose at a considerably more modest pace.
| Between 2006-07 and 2019-20, average net price increased by 13%
| and 7% at public and private four-year institutions,
| respectively. Those increases reversed in the post-COVID years.
| Overall, average net prices are largely unchanged, adjusted for
| inflation, compared to 2006-07.
|
| https://www.brookings.edu/articles/college-prices-arent-skyr...
|
| in the past 15 years in particular, the big story of college
| pricing is that it has become more progressive, i.e. more
| expensive for those with higher incomes.
| intrasight wrote:
| I can vouch for this. My daughter went to Yale. I paid the
| "Yale tax" of 20% of my income. An that only because I made
| more than $100K. Below $100K parental salary and it's free.
|
| "List Price" is meaningless at university.
| jibbit wrote:
| There was a #1 hn submission some time ago about a theory of
| how/why things have risen is price i.e. cost of educating a child
| now vs 100 years ago, but exam results are no better, cost of
| keeping someone in prison etc. but crime is no lower, etc. it
| gave a name to the phenomenon. I would like to find it, if that
| rings a bell with anyone..
| mberning wrote:
| If lenders actually had to evaluate their chances of getting paid
| back what percentage of students do you think would not receive a
| loan? 50%? We need to make student loan debt dischargable in
| bankruptcy and the problem will be solved overnight. Lenders will
| suddenly take a keen interest in determining which students are
| serious and have a reasonable chance for success.
| propercoil wrote:
| I don't know anyone with half a brain who would believe real
| inflation was only 194% during this whole time.
| tlogan wrote:
| Exactly. For example, house prices increased 7x. S&P 500 jumped
| 11x.
| ilamont wrote:
| We have two kids in the in-state university system which are
| considered "affordable" relative to private colleges ($35k all in
| for tuition/room/board/misc per student per academic year vs.
| $65k-$85k) but are laughably expensive compared to almost any
| other country in the world.
|
| If we didn't set up 529 plans years ago loans would be our only
| option to pay for the quarter of a million dollars required for
| both of them. If they were in private colleges, the combined
| outlay would be well over half a million dollars.
|
| FWIW we did look at Canadian schools which may be affordable to
| Canadians, but not to international students ... mid 40s pre-
| Covid when my oldest was applying.
| at_a_remove wrote:
| As someone who had access to various feeds of people in the
| university and their roles, well, the non-teaching staff numbers
| just kept going up and up as compared to everything else.
| Administrative bloat is real.
| ochoseis wrote:
| Anecdata, but graduated in '08 and it looks like the chart
| roughly matches the doubling in tuition in the university I
| attended since then.
|
| I used loans to pay for my education, and one effect that has
| from an individual level is that it really changes your appetite
| for risk during the payoff. From a macro level it's probably nice
| to have indebted young people motivated to work; however, I'm
| sure it produces a lot fewer entrepreneurs willing to gamble on a
| great idea.
| glimshe wrote:
| Did tuition grow that much more than inflation, or is _inflation
| understated_?
| unyttigfjelltol wrote:
| Inflation is lumpy. This is the localized rate of inflation in
| the higher education industry. As another commenter pointed
| out, TVs have a much more favorable rate.
| jmyeet wrote:
| There are two broad solutions to these kinds of problems: demand-
| side and supply-side. This article is another data point in
| exactly why demand-side solutions are short term if they work at
| all. More likely they don't work.
|
| A supply-side solution to education would be to create more
| spaces in quality higher education and to make those places cheap
| or free by government subsidy, often with price controls on the
| receiving institution. This is largely how most of the developed
| world works.
|
| A demand-side solution is to make something more accessible,
| which has the net effect of increasing demand. This almost always
| raises prices. It's no surprise that money backed by the
| government has increased prices. It's inevitable. Demand for
| high-quality college places still exceeds supply so those
| colleges can (and do) respond by increasing costs. Sometimes that
| extra money benefits the students through better facilities (eg a
| new library, better and/or more dorms, etc). Often however it's
| lost in subsidizing college sports, which most colleges lose
| money on, and inflating administrative costs. Division 1 football
| coaches make millions a year for a supposedly amateur (that's
| what one of the As in NCAA stands for) competition. That extra
| money makes those programs more expensive to run too through the
| same means.
|
| We see the same problem in housing. Nearly all legislative
| efforts are demand-side (eg programs to help first homebuyers)
| where what we need is simply to increase housing supply by
| building more units, making more current units available or both.
| But that runs afoul of vested interests where our homes have
| become retirement accounts.
|
| It's worth noting that many elite colleges are sitting on eye-
| watering endowments that could easily be used to pay for tuition
| but they largely don't do that (outside of a few programs for
| students from poorer backgrounds).
|
| Pretty much all of this is by design. Post-WW2 there was a
| concerted campaign to charge for things that were once cheap or
| free including health care and education. This is nothing more
| than economic bondage, the developed world's equivalent of
| Pakistani brick kilns. A person saddled with debt is a compliant
| worker who will show up to work and not complain or fight for
| better working conditions. That's literally the point.
|
| It's why the prison population is used as cheap labor. It's why
| most states like illegal immigration. It's why states are
| enacting child labor laws. My point is that all of this,
| including spiralling student debt, is a systemic problem.
|
| Education should be free.
| RyanAdamas wrote:
| Accreditation Boards
|
| Textbook Publishers
|
| University Tuition
|
| It's a triangle scheme where one feeds the other and it's all
| fueled by non-dischargeable government loans.
|
| Student Loans are the hill to die on. As someone who isn't
| eligible for Military Service, I don't get supplemental housing,
| free healthcare, free college education, hiring preferences,
| small business loan preferences, nor a lifetime of "OH THANK YOU
| FOR YOUR SERVICE!!", and that's if you aren't one of MILLIONS of
| Veterans gaming the VA disability system.
|
| The military decided asthmatics and ADHD kids will forever be
| second class citizens because we can't join the drunken sexfest
| that is modern military service; which has essentially become a
| daycare for 18-24 year-olds.
|
| It's absolutely unconstitutional for the military to relegate
| individuals to specific spectrums of society given how they were
| born. I'm not gay so I guess that doesn't matter. But, who cares?
| If the Constitution mattered we wouldn't be where we are today.
| enono wrote:
| sir this is a wendys
| RyanAdamas wrote:
| I can't downvote you, but the fact you find huge segments of
| people being left behind and forced into predatory loans
| simply for an education they should have received in high
| school while the military industrial complex forces its
| tendrils into every facet of American life funny, I can only
| assume you realize how wrong it is and can't handle the
| dissonance.
| malfist wrote:
| > can't join the drunken sexfest that is modern military
| service
|
| Wait, what did I miss?
| RyanAdamas wrote:
| Apparently you missed being social. Having worked with a
| number of vets it's absolutely true.
|
| Here, in case you missed this too:
|
| https://www.npr.org/sections/alltechconsidered/2014/11/19/36.
| ..
| borissk wrote:
| Easy access to credit does that. You can see it in developing
| countries. Once banks start offering mortgages to regular people,
| home prices go up five or ten fold in a few years.
| clusterhacks wrote:
| I am beginning to believe that the root cause of tuition costs in
| the US exceeding inflation is based much more on FOMO on the
| benefits of college education rather than federal government
| guarantees on student loans.
|
| My claim is that buyers (parents+children) of college degrees are
| maybe not behaving rationally with respect to cost.
|
| High-cost schools position themselves as offering a "better"
| outcome or opportunity to students. I'm really conflicted about
| this viewpoint. I have two children in high school with one a
| rising senior. So my family is discussing colleges and college
| costs somewhat regularly. We have visited a small number of state
| schools and a small number of smaller private universities and
| colleges. The smaller schools do a VERY good job of selling extra
| opportunities easily available to students. My experience is that
| opportunities can be found by a motivated college student at any
| institution but the small private schools seem to make it almost
| hard for a student to NOT be involved in meaningful outside-of-
| the-classroom options.
| kjkjadksj wrote:
| The advantage of the larger school in my experience, is that
| its like going to a dozen small schools at once. Plenty of
| people I know where able to transfer from one good program to
| another in a completely opposite field once they learned what
| they actually liked (usually quite different than what you
| imagined as a highscooler especially if your parents have no
| concept of the field), because the school was large enough to
| offer so many good options and departments with a lot of
| interesting faculty. The class sizes are the same between big
| and small schools anyhow for the most part, but you also have
| an easier time scheduling classes (and taking certain ones "out
| of season" if need be) at the larger school. It scales
| horizontally rather than vertically as your student body
| increases, big schools have the pockets to hire more faculty
| and support more taships than smaller schools.
| [deleted]
| clusterhacks wrote:
| Agreed re: "large enough to offer so many good options and
| departments." This is definitely a big pro in our opinion. It
| is definitely true that smaller schools are more limited in
| offerings than big schools. During visits, smaller schools
| seem to carefully point out some flexibility in putting
| together a more personal course-of-study to offset this . . .
| BeetleB wrote:
| I think you and GP are using different definitions of
| "larger". One definition is "more programs". Another is
| merely "more students".
|
| Generally, go for the one with the lower student:teacher
| ratio. My anecdote:
|
| I and a friend both went to low ranked undergrad universities
| (state schools). Mine, however, had a low student:teacher
| ratio per class. Comparing notes with him, the main benefit
| was that professors actually cared about teaching. The number
| of students wasn't high enough to be a burden. They didn't
| repeat the same HW and exams every semester. The number of
| office hours per week per professor was 3-9 hours. They could
| be that generous because there simply weren't enough students
| to use up those hours.
|
| We also didn't have TAs teaching any course.
|
| (Also went to a top ranked university for grad school - very
| few professors cared about teaching).
| clusterhacks wrote:
| Yep, I attended a lower-ranked state school for an
| undergrad in CS and had a wonderful experience. Lots of
| positive interactions with faculty in CS and math. My
| undergrad school was also attended by a large population of
| highly motivated students for historical reasons. I
| stumbled into this school almost by accident and was really
| happy with my student peer group because most were quite
| ambitious.
|
| I also then went to a well-known and ranked R1 university
| for grad school. I didn't enjoy it very much but also
| didn't match well with an advisor out of the gate. That
| colored my experience significantly and in hindsight was
| really mostly my fault.
|
| Oddly enough, I returned to this school and work a somewhat
| hybrid staff/research software engineer job and have been
| here for more than a decade. Go figure.
| HDThoreaun wrote:
| In the end college costs so much because people are willing to
| pay, because they think it's a good investment. Generally they
| have been right, college was the best investment you could
| possibly make historically. Now it's just an average
| investment, but the FOMO of not going puts it over the top.
| clusterhacks wrote:
| Good take.
|
| We are questioning if it is even an average investment,
| especially the truly high-cost and selective private schools
| where tuition sits at $80,000+ contrasted with $30,000 at our
| state's well-known and respected flagship university. The
| extra $200,000 in costs is breathtaking to consider.
| LatteLazy wrote:
| In england we refer to this as "pulling up the ladder behind
| you".
| whyenot wrote:
| Tuition and fees in California's CSU system are still only about
| $8k per year. The CSU system provides a very good education, in
| some ways better than the more prestigious UC system because
| there tends to be more opportunities for direct contact with
| instructors. In the sciences, there are often more research
| opportunities and spaces for undergraduate students in labs. It's
| a real bargain, and you can save even more money by doing your
| first two years at a community college.
| YeBanKo wrote:
| Some of my favorite most professional colleges are from San
| Jose State, which is a part of CSU. Obviously, it is anecdotal,
| but I do see in them very practical no bullshit attitude, yet
| strong theoretical fundamentals.
| Waterluvian wrote:
| I'm not seeing it explicitly defined but I assume this is the
| standard asterisk: "In the United States" so I got curious what's
| happening elsewhere.
|
| Average annual tuition in Canada in 2006: CAD $4,400. 2023: CAD
| $6,834. So I could see it also being in the ballpark of 710%
| since 1983 as well.
|
| https://www.statista.com/statistics/542989/canadian-undergra...
| spacechild1 wrote:
| Here in Austria the increase has been 0% :)
| gumby wrote:
| As a single datapoint, in 1983 MIT tuition hit $10K -- highest in
| the nation according to a cartoon in the paper. It's currently
| $60K (total cost estimated $80K) so 7X is about right.
|
| However there's another way to look at it: over the summer I
| would earn over $10K so roughly covered my tuition. Admittedly
| that was at the high end of summer job compensation due to the AI
| boom, but gives you a rough idea of where that tuition fee fit. I
| finished school with no debt.
|
| These days I doubt anyone is getting $50K for a summer job.
| gen220 wrote:
| Big tech and big-tech-competitive places will generally pay you
| around $30k pre-tax for a summer job. But of course, most
| college students don't have access to those jobs at all, let
| alone for each summer in college.
| jeron wrote:
| >These days I doubt anyone is getting $50K for a summer job.
|
| Enter Citadel: https://fortune.com/2023/06/28/wall-street-
| citadel-summer-in...
| gumby wrote:
| More than Google!
|
| It's possible some grad students in AI are getting that kind
| of money these days. I was talking about my undergrad.
| csw-001 wrote:
| Viewed in this light, grade inflation really hasn't kept up.
| deeg wrote:
| I think another reason for the increase is that it's one of the
| few industries where they can charge as much as possible. The
| price is basically determined by:
|
| Student: How much does it cost to attend your school?
|
| University: How much do you have?
|
| The base cost is some ridiculously high value and can be brought
| down with grants/scholarships/loans, which are needs based.
| octacat wrote:
| It is getting expensive to live.
| codedokode wrote:
| Could it be because in capitalism, the seller tries to take as
| much money as possible from buyer and the price is not related to
| expenses?
|
| Let me give an example that can illustrate this: a typical mobile
| plan from Verizon in US costs $45/month and gives you 15 Gb of
| traffic. At the same time in Russia one can get 30 Gb for
| $9/month. Are expenses for maintaining a cell network 5 times
| higher in US? Unlikely. It is just customers in US are richer and
| are ok to pay more for the same service.
|
| I don't know how this effect is called, but couldn't the same
| thing happen to education, land or housing costs? These are
| obviously things that everyone needs desperately so the seller
| will squeeze the maximum they can, and the price is unrelated to
| how much the lecturer earns or how much the bricks cost. The
| house will cost you almost all your life's earnings no matter
| where you live.
| atonse wrote:
| Isn't Russia capitalist too? I'm confused but your comparison.
| Sounds like you've just compared two markets without myriad
| variables.
|
| The fact that student loans are backed by the government would
| in fact undermine this as a good example of a free market.
| codedokode wrote:
| Almost every country is capitalist, including Russia. I
| didn't try to compare capitalist vs non-capitalist countries,
| I tried to show that in capitalist countries the price of
| services is not related to expenses. In both countries mobile
| providers use similar equipment which probably cost the same,
| but the price they charge from consumers is significantly
| different.
| raz32dust wrote:
| I was with you until "It is just customers in US are richer and
| are ok to pay more for the same service." How did you reach
| that conclusion? The other reason (which seems more likely to
| me) is that it is because the free market is not functioning
| because of monopoly/duopoly created by regulatory capture.
| codedokode wrote:
| Let me explain. If a Russian mobile provider would ask
| customers to pay $45 starting next month, then majority of
| users would say: "No thanks, I don't really need mobile data
| that much. Also by law you must provide us with free access
| to VK (social network) anyway so it makes no sense to pay you
| $45 for this". But is US, customers are paying and do not
| complain, because for them it is not that big price. This is
| what I meant by "customers are ok".
|
| Yes, mobile providers market is not a free market, as there
| are small number of companies both in US and in Russia. But
| the price they charge customers is different in these
| countries despite they use similar equipment which probably
| has the same cost. So the difference in prices can be
| explained by what people in different countries consider
| "cheap" and "expensive". The provider charges as much as
| possible, but less than a customer would consider "too
| expensive".
|
| And the same thing is about housing prices, they do not
| really correlate with expenses to build them. It takes the
| same amount of money to build an apartment in Moscow and in a
| small city in Siberia, but the price for the buyer will be
| very different.
| codedokode wrote:
| Also, regarding houses and land prices, there is no monopoly,
| but the prices are extremely high in large cities. So "it is
| a monopoly" doesn't sound like an explanation, but "charge
| the buyer as much as they can afford and a bit on top of
| that" is more realistic. And as for education, there seems to
| be no monopoly too.
| rglover wrote:
| A little anecdote that made me realize the college I went to was
| running a racket:
|
| I remember getting lunch freshman year and one day, the signs in
| the student union cafeteria were printed on poster board and the
| next they were flat screen TVs. When I asked the on duty manager
| why, they just said "because it's more eco friendly."
|
| My entire world view shifted in that moment.
| mattmoose21 wrote:
| I don't know if my world view would shift from an answer given
| off the cuff by someone who is not an expert in that domain.
| There are many rationales for switching to screens including
| easier to update and may be seen as more up to date.
| tlogan wrote:
| During the same period the house prices have risen 586%
|
| I think the way we calculate inflation is kinda weird.
| jsight wrote:
| I was thinking along similar lines. Overall cost of living as
| certainly increased by more than 200% during that timeframe.
| uejfiweun wrote:
| Kinda weird? That's a nice way to say "total bogus". It strikes
| me that the CPI is practically propaganda at this point, a way
| to placate the citizens by saying "oh look inflation is fine",
| distracting them from the mega-hyper asset price inflation that
| has been happening over the past 40 years.
|
| Suppose it kind of makes sense, since the rich control the
| country, and they are the ones directly benefitting from the
| asset price inflation.
| tyingq wrote:
| Well, and wages haven't kept pace with inflation either. And I'm
| sure other categories aside from tuition vastly outpace
| inflation. Cost for health insurance for US folks, for example.
| ursuscamp wrote:
| I love all of the creative ways they use to exclude inflation
| from the inflation statistics.
| foolinaround wrote:
| if we had to eat this elephant one bite at a time, one option to
| consider is completely seperating sports from colleges?
|
| What would be the impact? What are the drivers that could enable
| youth to participate in sports run/administered by a 3rd party as
| well as attend college?
| johnny99k wrote:
| It's because universities have no incentive to lower costs. The
| majority of students get loans, which transfer to the university
| and they don't really care if it gets paid back or not.
|
| The only way this will stop is if the universities are forced to
| take on the risk of the debt.
| throw1234651234 wrote:
| Students will stop attending at some point. Kind of like people
| will stop paying markups on cars. Or it will become so
| unattainable that the middle class will protest rising costs.
| randcraw wrote:
| My preferred solution is to establish an open university in the
| US (or make it borderless), through which anyone can earn a
| degree remotely for as little cost as possible -- like $5000 per
| year or $20k per degree.
|
| Georgia Tech and others have shown this is possible (see their 13
| MS degree programs in engineering). Certainly by enlisting the
| growing set of tools used for remote professional collaboration,
| it should be possible to cover a wide variety of subjects,
| especially if the staff is also remote (and not overpriced).
|
| Compared to the $240K of almost all private colleges in the US, a
| viable alternative that costs only $20k should quickly reset the
| cost of advanced education to be a LOT more reasonable.
|
| In addition, a cheap remote-only college system be a great
| resource for many people who want to take college courses but
| live nowhere near a full-time school, or who need retraining as
| they change careers or advance professionally.
|
| Really, this solution is long overdue.
| notashillthrow6 wrote:
| See:
|
| - Western Governors University (WGU)
|
| - Open University (OU)
|
| Both online; both relatively cheap.
|
| N.B. Georgia Tech's online masters programs are _professional_
| masters and not _research /thesis_ masters -- so unless you are
| getting paid by someone else to get them, they are almost
| certainly a waste of money (and there is negative selection
| pressure during hiring for people with these sorts of degrees).
| hk__2 wrote:
| Can we add "American" in the title? Not everyone on HN is from
| the US.
| fwungy wrote:
| I watched the university I was in for graduate school add all
| sorts of campus buildings, luxury apartments, and new
| administrative titles and hierarchies. Handing out massive
| contracts is a good job, but it's all borne on the students
| backs, and most of that stuff was not necessary for a good
| education.
|
| They do a lot of catering to student egos too to get them in the
| door - "ooh, you're so special and wonderful, we're going to help
| you make it with our programs", knowing full well that most of
| the degrees were garbage.
| paulusthe wrote:
| In the United States, the growth in spending on administrators
| from ~2000-present is more than the combined growth of spending
| on scholarships and professorships combined.
|
| Academia in the US has become a business, and the business is
| being run by the secretaries.
| rayiner wrote:
| From 1991 to 2013, federal student loan issuances increased from
| $20 billion to over $100 billion (in 2013 dollars). And federal
| tax expenditures related to education increased from $2.5 billion
| to over $30 billion.
|
| Growing tuitions are a predictable consequence of the federal
| government subsidizing higher education systems that they don't
| control (unlike state funding of state universities). The feds
| should impose price controls on any institution that receives
| federal funding (including from federal student loans):
| https://prospect.org/education/case-for-higher-education-pri....
| Otherwise, costs will predictably skyrocket.
| sgerenser wrote:
| I wonder if there's any data comparing tuition growth rates at
| "normal" schools and those schools that don't accept federal
| funding of any kind (including federal loans). There's not many
| of them, and they're usually small, Christian-oriented
| schools[0], but I'd be curious to see if there's actually any
| obvious difference in growth rate. A quick google search didn't
| come up with any data.
|
| [0] https://deanclancy.com/a-list-of-colleges-that-dont-take-
| fed...
| f1yght wrote:
| Isn't part of the issue that state and federal funding for
| higher education hasn't kept up with costs, so the increase
| just goes straight to the students paying?
| toomuchtodo wrote:
| The only service category that has outpaced higher education is
| hospital services.
|
| https://www.aei.org/carpe-diem/chart-of-the-day-or-century/
| bmau5 wrote:
| And interestingly both have predominantly grown in
| "administrative" costs
| NoMoreNicksLeft wrote:
| If we get the government more involved in funding these
| things directly, it can only improve the outcome.
| vkou wrote:
| Funding directly by issuing a blank check to the vendors?
| No, it won't.
|
| Funding directly by setting a price cap, and paying vendors
| that amount for services rendered? Seems to work for
| _almost every other developed country in the world_.
|
| With the monetary savings of #2, it could even give every
| medical student a fully free ride.
| NoMoreNicksLeft wrote:
| > Seems to work for
|
| I love when someone says "seems to work". In the strict
| sense, that only ever means "does something". Not
| necessarily "does what someone wants"... and never "does
| what I want".
|
| When it works for those other countries, does it "do what
| you want"? Because it doesn't "do what I want" at all.
|
| > With the monetary savings of #2, it could even give
| every medical student a fully free ride.
|
| Won't someone think of the millionaire heart surgeons in
| the 1%? They obviously needed free rides back when they
| started, it's why they're only single digit millionaires!
|
| > Funding directly by setting a price cap,
|
| Starving the people you want to provide your medical
| treatment isn't the brightest strategy. Increases to
| price caps are always reactive, after they've been
| complaining for years. The bureaucracy demands that it
| take years more to raise the price caps. And by the time
| that happens, they've been bleeding money the whole time.
| It's a strong incentive for them to do all sorts of
| things that you don't want... and if you do it for any
| length of time at all, it trains them to do these bad
| things so even if you realize the error of your ways and
| withdrawn the bad policy, they keep on doing the bad
| things.
|
| Quite clearly, the problem with health insurance is that
| we need a gigantic insurance company larger than any
| other in history, and that it needs to be managed by the
| paragons of competency, the federal government. Of
| course, they'll need to staff up... and with all the
| layoffs in the private insurance industry, we'll hire all
| those empathetic, kind-hearted subject matter experts.
|
| Should be the best thing ever. I can't possibly see
| anything that might go wrong.
| verteu wrote:
| I suspect GP is referring to the fact that the US has the
| one of the worst health outcomes per dollar spent vs peer
| countries [1] [2].
|
| If "better health outcomes per dollar" is not "what you
| want" -- how come?
|
| [1] https://www.pgpf.org/blog/2022/07/how-does-the-us-
| healthcare... [2] https://www.piie.com/blogs/realtime-
| economic-issues-watch/wh...
| NoMoreNicksLeft wrote:
| > If "better health outcomes per dollar" is not "what you
| want" -- how come?
|
| Because I don't confuse "individual" with "group".
|
| The fallacy here is to tally up every dollar spent on
| medical treatment in a given year, then saying "here we
| spent X on medical treatment, but it could only be 0.7X
| if the government were in charge".
|
| But you never asked me how much I spent on medical
| treatment. What if I spent 0?
|
| Well then, your plan has me spending more than I used to,
| to get me something I didn't want/need. It's not a good
| deal for me. And if it's a good deal for someone else,
| it's only because you shackled me up and made me work the
| fields for their benefit. No thanks.
|
| Even if I was the sort to engage in that non-sense, the
| problem itself _is_ insurance. And that holds true
| whether some private company (or many) is in charge of
| the insurance, or the government is in charge of it. You
| think BCBS rejects claims, but that the feds don 't
| reject them? Wow, do I have a bridge to sell you.
|
| When someone wants a good or a service, and they pay for
| it themselves, they are price-conscious. When they don't
| pay for it themselves (because the insurance company
| does, or the government), they aren't price conscious.
| But this encourages the goods-provider to raise their
| prices... even discourages them from keeping them low.
| Low prices signal low quality. This encourages the payers
| to reject claims, then once more the goods-providers to
| raise prices again to cover for all the rejected claims
| (bonus if they can go after the goods-buyers for the
| price too!).
|
| And it all spirals out of control. There is nothing in
| this mechanism that makes it less ridiculous if the
| federal government owns the insurance company, and it is
| the only insurance company permitted by law.
|
| I take that back, there is one thing different. Now you
| can introduce price caps, woohoo! That will certainly fix
| the problem. Some committee 2000 miles away and months-
| distance from the facts can magically determine a fair
| price for all physicians and surgeons nationwide for some
| procedure's medical code (not the procedure itself, these
| are always unique... but the little alphanumeric codes,
| nice and uniform so they fit in the database).
|
| That definitely won't cause further meltdowns. Will it be
| blamed on nefarious capitalists hiding in the woodpile?
| Will it just be chalked up to disappointing reality
| "there can be no other way"? Probably will depend on just
| where we're at in the election cycle.
|
| If you want to see prices drop (plummet really), outlaw
| all insurance. Make people pay cash, out of pocket, for
| everything. You starve if you can't sell your stuff to
| people who want it, and if those people only have 1/100th
| of what you used to ask, then you either learn to live
| with the 1/100th, or you starve. No one gives out bank
| loans for heart transplants.
| vkou wrote:
| People making this argument tend to want 'better health
| outcomes for millionaires/ _healthy_ white collar people
| ', either because they are one, or they think they will
| be one.
| nathan_compton wrote:
| What I always point out is that _markets are a form of
| rationing too_. They are just form where people with
| money are allocated more goods than people without it,
| sometimes to the total exclusion of large parts of the
| population. Given that we set up polities for the common
| good, I 'd argue that any necessity which markets fail to
| deliver to everyone should use some other kind of
| rationing strategy.
| zer8k wrote:
| The US's healthcare system is so bleak because we quite
| literally fund healthcare for the rest of the planet.
| Taxpayers in the US get access to the best treatment
| decades earlier if they're rich enough. Prices are
| increased on US citizens to account for the strong arming
| other governments do to get prices lower for their
| citizens. If the pharma companies couldn't do this, for
| example, they'd refuse to negotiate with other countries.
| A microcosm of this behavior is medicare here is the US.
| Yes, the US taxpayers even have to be charitable to them.
|
| IMO, if the US decided to actually help its citizens
| every country the average progressive considers "great at
| healthcare" would likely implode under the sudden
| increase in cost. The cost of medication alone would
| likely nearly bankrupt several governments. Imagine if
| the price of insulin, almost completely funded by US
| citizens paying absurd prices, went up to its US price.
|
| Much like with defense, the US taxpayer is the hero of
| the rest of the world's healthcare. Without US tax cattle
| the rest of the world would not be as nice as it is. It's
| just like when prices go up at your favorite store due to
| theft. The US is punished by insurance companies because
| other countries refuse to pay more.
| verteu wrote:
| This could only be true if the majority of the healthcare
| spending diff came from payments to pharma/health dev
| cos, right? Do you know whether that's the case?
|
| If we're paying more for nurse salaries, hospital
| administration, insurance company bureaucracy, and
| ineffective procedures near end-of-life with low
| probability of success, it's unlikely the cost diff is
| mainly due to "subsidizing innovation."
| leshow wrote:
| Almost everything you have said here is untrue. Pharma
| companies still make profits in other countries, they
| just make much more profit in the US. Much of medical
| research is in fact funded by the government to begin
| with.
|
| By removing the for-profit system, you would actually be
| removing rampant rent-seeking on something that should be
| a human right.
|
| > Imagine if the price of insulin, almost completely
| funded by US citizens paying absurd prices, went up to
| its US price.
|
| A very strange example to select, considering it was
| first discovered by Canadians and the patent was later
| sold for $1. US citizens are certainly not "subsidizing"
| insulin elsewhere.
| vkou wrote:
| > Won't someone think of the millionaire heart surgeons
| in the 1%? They obviously needed free rides back when
| they started, it's why they're only single digit
| millionaires!
|
| > Starving the people you want to provide your medical
| treatment isn't the brightest strategy
|
| Gosh, it's almost like I pre-empted the latter complaint
| with the note that you've responded to above...
|
| Expanding the number of doctors, and lowering doctor pay
| and workload, and lowering the cost of becoming a doctor
| will produce better health outcomes for everyone. Yes,
| some people will stand to lose from this, just like the
| current bloat of worthless administrators and billing
| clerks and other paper-pushers will stand to lose from a
| cleanup of the system.
|
| _I don 't care about their well-being._
|
| > I love when someone says "seems to work". In the strict
| sense, that only ever means "does something". Not
| necessarily "does what someone wants"... and never "does
| what I want".
|
| > When it works for those other countries, does it "do
| what you want"? Because it doesn't "do what I want" at
| all.
|
| This exact criticism can be levied on the current US
| system.
| NoMoreNicksLeft wrote:
| > Expanding the number of doctors, and lowering doctor
| pay and workload, and lowering the cost of becoming a
| doctor will produce better health outcomes for everyone.
|
| So go do it. No one's cockblocking you. Well, except the
| AMA. Or are you saying that you'll only do this if you
| get your socialized medicare-for-all quackery?
|
| Wouldn't be shocked if it was held hostage like that, but
| no thanks.
|
| > This exact criticism can be levied on the current US
| system.
|
| I never said it worked. Wouldn't catch me saying that
| ever.
| toomuchtodo wrote:
| Who knew providers would raise prices with wild abandon when
| demand is firmly inelastic and debt without default risk is
| liberally provided? /s
|
| Hopefully states experimenting with universal higher
| education legislation makes some improvement possible:
| https://apnews.com/article/minnesota-legislature-college-
| tui... ("Minnesota lawmakers reach deal for free college
| tuition")
|
| Note for this article that private colleges have the highest
| drop out rate, and Minnesota's plan excludes such
| institutions:
|
| > Qualifying students would have to attend a two- or four-
| year school in either the University of Minnesota or
| Minnesota State systems, or a tribal college. Private college
| tuition would not be covered.
|
| > From 2008 through 2009, enrollment in private for-profit
| colleges rose disproportionately compared to private non-
| profit and public colleges. Private for-profit colleges have
| extraordinarily high rates of default, near 16% of borrowers
| default within 3 years.
|
| https://educationdata.org/student-loan-default-rate
| solarmist wrote:
| Demand isn't fully inelastic. Many people are forgoing
| college that would've gone 20 years ago. It's not huge yet,
| but it is happening.
|
| The rest of your point stands though.
| toomuchtodo wrote:
| Agreed, but they're forgoing college because they better
| opportunities without acquiring the traditional
| credential(s) due to a tight labor market, demographics
| and older folks retiring making trades and non college
| paths more lucrative, etc. The debt load is not worth the
| potential opportunity benefit.
|
| The whole "get a college degree if you want to be middle
| class" scam is evaporating, which results in your
| observation.
|
| https://reason.com/2023/03/31/poll-most-americans-dont-
| think...
|
| https://apnews.com/article/skipping-college-student-
| loans-tr...
| hospitalJail wrote:
| No no don't let the Physician cartel get out of this.
|
| Year over year they get at least 5% pay increases with US tax
| dollars. Not to mention, they get private pay increases by
| weaponizing the ACGME to keep residency slots low.
|
| Residency does not need to be paid. Outside of the Medical
| industry, people pay for their college. For some reason
| Physicians make tax payers pay for their education and a
| decent salary.
| burkaman wrote:
| Postdocs are paid, and that's basically what a residency
| is. Or you can think of it as a co-op during a CS degree,
| which is also paid.
| hospitalJail wrote:
| Postdocs/PhDs theoretically are supposed to be paid to
| advance scientific knowledge.
|
| Physicians are not advancing scientific knowledge.
|
| Also a co-op during a CS degree isnt paid with taxes.
| burkaman wrote:
| I think I understand where you're coming from, but even
| ignoring resident salaries the majority of other
| healthcare spending is already government-funded, and in
| my ideal world all of it would be, so it's hard for me to
| be upset about this.
|
| I don't understand your point about scientific knowledge,
| in my mind keeping people alive is at least equally as
| important as advancing scientific knowledge.
| nathan_compton wrote:
| > Physicians are not advancing scientific knowledge.
|
| Yes, but they are providing a similarly valuable service.
| And, in fact, almost all medical practice contributes to
| the development of knowledge as well. Lot's of physicians
| (even residents) write papers.
| SoftTalker wrote:
| PhD students are paid as well, at least in research
| departments.
| ralmidani wrote:
| Medical school is education, and in the US it's
| astronomically expensive (some people graduate with half a
| million dollars of debt).
|
| Residency is more like on-the-job training (a hospital
| still makes money when a resident sees and treats you). It
| just takes longer to train a physician because there are
| human lives at stake.
|
| Yes, teaching fellows and others in academia are often
| taken advantage of and work for free, but that doesn't mean
| physicians are evil for getting paid during residency.
| HDThoreaun wrote:
| > a hospital still makes money when a resident sees and
| treats you
|
| Hospitals lose money on residencies. That's why there
| aren't enough and the ones that do exist need to be
| subsidized by the federal government.
| ralmidani wrote:
| I looked for a credible source for this claim. Hospitals
| say they're losing money on residencies but there doesn't
| appear to be an easy way to verify this. What if the
| federal government is falling for/complicit in a big lie
| (wouldn't be the first time, see PPP "loans" when COVID
| started)?
| abeppu wrote:
| How does this actually work? I have never worked in a
| medical context and am ignorant of their internals so
| this is a genuine question.
|
| I _have_ been a patient going to a specialist appointment
| where the only doctor I saw was a resident, and I don't
| think I or my insurance were charged any less. So if
| their work brings in the same amount of revenue for the
| same services, and if resident often do a lot of hours (I
| seem to recall several years ago their hours were capped
| to not be _dangerous_ but are still a lot), and they're
| paid less during their residency than after it ... why
| _don't_ hospitals make money off residents? Is there some
| training going on parallel to seeing/treating patients
| which is really expensive?
| hospitalJail wrote:
| >It just takes longer to train a physician because there
| are human lives at stake.
|
| Airbags?
|
| Our electrical infrastructure?
|
| Our plumbing?
|
| Please, there are plenty of of industries that have lives
| at stake and we don't have a cartel controlling the
| supply of people. The issue is that we don't have enough
| Physician(By design), so they need to operate
| independently. Any other industry has multiple layers of
| qualified people checking to make sure things are safe.
|
| I kind of dream of a world where you'd have 1 physician
| and a physician manager and a physician director all
| looking at your paperwork. Instead you get 1 total.
| ralmidani wrote:
| I don't want to trivialize the amount of work that goes
| into airbags, electrical infrastructure, or plumbing.
|
| However, the human body is much more complicated. Would
| you trust the life of a loved one who, God forbid, has
| cancer or needs surgery to a person with a fraction of
| the education and training physicians receive?
|
| By the way, I'm reminded of a joke: a doctor called a
| plumber for a faucet leak. The plumber fixed it in 5
| minutes and charged $175. The doctor said "how can you
| charge that much for 5 minutes of work? I spend a whole
| hour with a patient and charge less!" The plumber said
| "that's exactly what I used to say when I was a doctor."
| hospitalJail wrote:
| > Would you trust the life of a loved one who, God
| forbid, has cancer or needs surgery to a person with a
| fraction of the education and training physicians
| receive?
|
| False dichotomy.
|
| Right now the ACGME limits the number of residents. This
| causes a lower supply, so instead of having 6 surgeons
| working on you, you have 1-3. Do you only want a few
| people fresh from residency working on you? Or a bunch of
| physicians with various experience?
|
| Also, plot twist, we own a medical company. (not
| physicians, but a different cartel that is paid way less
| and got a pay cut since 2016) You can treat 7 people per
| 37 minutes, each paying between $40-$125. Physicians is
| way worse, you can charge $250 for 5-10 minutes.
|
| (Note that this ignores documentation costs/times, but it
| should give you an order of magnitude to play with.)
|
| We don't do that blatant 7 people per 37 minutes, its
| more like 1 person per every 60 minutes, but as the
| clinic grows we've had 2 people per 60 minutes out of
| necessity. The hospital/other clinics do this.
|
| I need to do an AMA on owning a medical clinic. My wife,
| the primary doctor, isnt exactly happy that I bite the
| hand that feeds. We already lost our chiropractor
| referrals because I couldn't handle their mysticism and
| spoke out against it.
| wefarrell wrote:
| Average medical school costs are ~230K.
|
| Residency is not college, residents are practicing
| physicians that are providing considerable value to society
| and in many cases they are paid appallingly little for the
| amount that they work.
| RoyGBivCap wrote:
| [dead]
| ye-olde-sysrq wrote:
| How cheap TVs are is unreal. I was looking at the display TVs
| at Target and the largest one was only about a grand, maybe a
| touch less. Ridiculous how big of a panel, complete with
| "smart" OS and etc, you can get for <=1k.
|
| (Mind you, I know "largest" doesn't mean most expensive usually
| - indeed the most expensive TV was "only" 65" but was still
| <$2k.)
|
| Capitalism has certainly worked really well for this one
| specific consumer good.
| lordnacho wrote:
| Yeah it's weird explaining it to my kid:
|
| "When dad was your age, TVs cost a heck of a lot of money,
| had terrible resolution, took several grown men to carry, and
| were almost as deep as they were tall"
|
| "Last year I carried home a larger TV with 40x the number of
| pixels by myself, and paid for it with one day's work"
| hospitalJail wrote:
| The US medical industry is the opposite of capitalism. Heck,
| most of our budget goes to Medicare and Medicaid.
| brummm wrote:
| No it's not. It's a state facilitated oligopoly situation,
| which is the ideal end state for any industry as part of
| capitalism short of a monopoly. Guaranteed high income for
| everybody involved and disruption essentially not possible.
| spondylosaurus wrote:
| It probably helps that smart TVs provide one of the most
| lucrative environments for selling ads... although tbh I
| don't know if the hardware manufacturers get any kickback on
| that, but the people who develop the software where ads are
| shown almost certainly do.
| delfinom wrote:
| They all develop their own smart tv functionality,
| originally at least. That was how they captured that ad
| revenue. The Vizio CEO actually stated the margins were
| non-existent but made up on the smart tv garbage.
|
| There obviously is a different arrangement when you have
| companies like TCL putting in Google TV.
| skyyler wrote:
| With TVs specifically, aren't their costs subsidized by the
| SmartOS features?
| boeingUH60 wrote:
| Same with laptops and PCs. I'm actually in awe of how cheap
| they've become. For sub-$500, I can get a high-performing
| work laptop that pays for itself over and over again.
| hospitalJail wrote:
| I wonder why...
|
| https://www.opensecrets.org/federal-lobbying/top-spenders?cy...
|
| The medical cartels need to be destroyed.
| koube wrote:
| I generally see charts like this in relation to Baumol's cost
| disease, I'm surprised the linked article never mentions
| Baumol, but goes on to talk about government regulation and
| foreign competition.
|
| https://en.wikipedia.org/wiki/Baumol_effect (See also section
| on education
| https://en.wikipedia.org/wiki/Baumol_effect#Education)
|
| Basically as scalable goods and services get cheaper, non-
| scalable goods and services become relatively more expensive.
| In terms of hospital services and college tuition, this is a
| much more intuitive explanation than government regulation,
| although I'm open to more informed opinions.
| abeppu wrote:
| Thanks for pointing this out -- I've heard some people back
| this claim, but I still find it confusing.
|
| In a graph in that wikipedia article, we see that from
| 1998-2018, average hourly earnings increased by less than
| 100%, but tuition increased by more than 150%. If wages for
| university staff (who aren't becoming more productive) are
| rising to match wages for those who _are_ becoming more
| productive, why should tuition costs rise significantly
| faster than the rise in other wages?
|
| https://en.wikipedia.org/wiki/Baumol_effect#/media/File:Pric.
| ..
|
| Further, one statement in the education section sounds right
| to me:
|
| > The economists Gary Rhoades and Joanna Frye went further in
| a 2015 study and argued that the Baumol effect could not
| explain rising tuition costs at all, as "relative academic
| labor costs have gone down as tuition has gone up".
|
| And we know there's a trend towards shifting teaching
| responsibilities from tenure-track faculty to cheaper
| adjuncts. And from anecdata, I get the impression that in the
| humanities especially, salaries _are_ quite low and raises
| are currently below inflation.
|
| And my understanding is also that the trend at many schools
| is towards larger classes e.g. when UC Berkeley increased the
| freshman class size by a third, there was not an across-the-
| board increase for departments to hire a proportional
| increase in faculty and staff, nor did existing faculty and
| staff get a raise ... so the same people are asked to just
| teach larger classes (does that count as a productivity
| increase?), and students just get less interaction with their
| professors.
| relaxing wrote:
| Much of the money is going to construction or capital
| improvements, i.e. shiny new buildings.
|
| Now look at the board of trustees of your local University,
| and play spot the construction firms...
| extrapickles wrote:
| If Baumol was solely the reason for increased prices, I
| expect the increase to be more in line with the increase in
| prices for hiring tradespeople or other professional
| services.
| theptip wrote:
| FWIW Alex Tabarrok (economist) wrote a small book analyzing
| this and came away with the conclusion that it's mostly
| Baumol; if you're interested in a deeper dive:
|
| https://www.lesswrong.com/posts/FCMfToFnRXhsfpfQB/book-
| revie...
| UncleMeat wrote:
| Cost disease can't be the primary cause here. Cost disease
| happens when wages need to rise for people who have jobs that
| cannot become more efficient. But the wages of people
| teaching college courses have not gone up 710%. In fact, more
| and more of the teaching work is being done for lower pay and
| with more ruthless efficiency through the use of adjuncts or
| teaching faculty who teach 5/5s or worse.
| cosmojg wrote:
| Is that lack of scalability in hospital services and
| education completely inevitable due to the constraints of
| reality or is it mostly artificial? For example, would
| completely uncapping medical residencies increase the supply
| of doctors enough to significantly reduce the rate at which
| medical costs increase?
| naijaboiler wrote:
| People forget that fundamentally, these are services that
| become relatively more expensive over time (as other things get
| relatively cheaper). Both healthcare and education don't really
| benefit from cost-reduction from scaling. At the end of the
| day, its still one service provider to few service consumers.
| Productivity in that sense is unchanged in 30 years. Meanwhile,
| consumer goods can continue to drop precipitiously with
| technology and scale. As technology improves productivity in
| other sectors, Net result over time, is that things like
| healthcare and education and other services which don't scale
| will continue to get relatively even more expensive (i.e. grow
| faster than inflation).
| ed312 wrote:
| Hopefully AI starts to bend the cost curve. Just like a huge
| chunk of doctor visits could be handled by a nurse/NP,
| probably AI could do a lot of triage work and/or improve
| labor productivity.
| abeppu wrote:
| I'm actually confused about the healthcare situation -- is it
| actually getting more expensive relative to the benefits?
| I've heard so many times that a bunch of surgeries that used
| to have really long recovery times can now be done on an out-
| patient basis, or laproscopically, and that some things which
| used to require surgery can now be treated with medication.
| Isn't that productivity growth? Even if the cost per day in
| the hospital goes up, if the same or better patient outcomes
| can be achieved with fewer/shorter hospital stays, that
| sounds like patients are "winning"?
| pastor_bob wrote:
| Most of the 'service' industry is subsidized by cheap foreign
| labor. Harder for Schools and Hospitals to hire
| illegal/unskilled workers.
| mrguyorama wrote:
| Are you kidding me? Half the faculty at any college, no
| matter the price, are adjuncts, who earn $2500 or so PER
| CLASS PER SEMESTER, while the 30 students in that class are
| charged $2500 EACH for that class. It's as close as you can
| get to free labor for knowledge work, basically the original
| Gig economy; Uber for teaching.
| drunner wrote:
| Related: https://www.aei.org/carpe-diem/chart-of-the-day-
| administrati...
|
| I always thought the issue was in admin body count. However,
| just picking the largest universities in Germany and US on
| wikipedia we see:
|
| Ludwig Maximilian University of Munich Academic staff: 5,565
| Administrative staff: 8,208 Students: 51,606
|
| Michigan State University Academic staff: 5,703 Administrative
| staff: 7,365 Students: 49,809
|
| Those look pretty comparable, so what is going on?
| solarmist wrote:
| Limited budget vs uncapped budget.
|
| The way student loans are structured is the cause.
| UncleMeat wrote:
| Are adjuncts included in those numbers? Universities use a
| ton of contract labor to teach classes and those adjuncts
| aren't actually employees.
| akiselev wrote:
| Michigan state is a public university, which generally aren't
| as bad because their mission tend towards providing low cost
| education to residents.
|
| Stanford University, for example: Academic staff: 2,279;
| Administrative staff: 15,314, Students: 17,246 - that's
| basically 1:1
|
| A less prestigious private university like University of
| Southern California: Academic staff: 4,706; Administrative
| staff: 16,614; Students: 49,318 - that's about 1:2.5
| ericmay wrote:
| _But_ both of those universities are quasi-private (I don
| 't consider any university to be truly private unless
| proven otherwise) so it's less of a concern. That being
| said w.r.t administrative staff some of those staff may be
| research scientists that work with academic staff, or maybe
| they're dual-employed at Meta and Stanford, or something
| like that.
|
| You have to really break down the administrative staff
| number (if that's what's of concern here) to see what
| people are doing to make an informed argument (not saying
| you are making an uninformed argument or anything like
| that).
|
| -edit-
|
| For a while I was in on the administrative staff thing and
| I certainly think there is bloat and just flat out
| incompetence at many universities in this area, but I also
| think it's a bit of a red herring to avoid other issues
| like funding reductions, etc.
| kzrdude wrote:
| What happens if you compare with real estate prices?
| treeman79 wrote:
| Imagine if banks didn't have to worry about if you could afford
| to pay the loan or not. Every loan would be approved. House
| prices would sky rocket.
|
| This sounds a lot like 2008 housing crash, among others.
| MostlyStable wrote:
| I couldn't tell from the article or the chart: is that sticker
| price of tuition or actual paid price? Because those 2 things are
| _very_ different. It is true that in either case, tuition has
| outpaced inflation, but I'm skeptical that actual paid tuition
| has increased by _that_ much.
| japhyr wrote:
| I would love to know how other HN parents are thinking about
| postsecondary education for your kids. I started undergrad in
| 1990, and I have a 12yo now.
|
| I understand financial planning, but I'm having a hard time
| wrapping my head around how to think about college. Does anyone
| have insight beyond "Don't pay a tuition amount that's out of
| line with likely earnings"?
| tomohawk wrote:
| Universities are heavily subsidized industries with little or no
| oversight.
|
| Any other industry has all kinds of regulations and consumer
| protections they have to comply with.
|
| A university is allowed to sell degrees to unsophisticated
| buyers, and if the degree is worthless, they are not on the hook.
| Who else can do that?
|
| Universities never experience recessions or any other kind of
| contraction, so they never have to shed dead weight. The
| administrator to student/faculty ratio is way out of whack.
|
| Student loans should be guaranteed by the university, not by the
| government. If the university has enough confidence in admitting
| a person and conferring a degree, they should stand behind it.
| say_it_as_it_is wrote:
| The problem isn't just that the government is backing the loan
| program and forcing borrowers to pay. The government also allowed
| tuition rates to rise. Colleges and Universities increased the
| price of tuition because they were allowed to.
| hnburnsy wrote:
| Much better data on changes in published and net tuition paid
| over time...
|
| https://research.collegeboard.org/media/pdf/trends-in-colleg...
| secabeen wrote:
| Yes, thank you. The OP analysis is terribly naive. Nameplate
| tuition has little relationship to what actual students pay.
| The net data from the college board is much better, and shows
| that actual tuition paid at many schools is flat over the past
| decade.
|
| The OP also barely acknowledges the huge reductions in state
| funding for higher ed. In the 60s California paid 100% of
| educational costs for students. It's now down below 40%.
| Tuition has gone up to close the gap.
| https://fivethirtyeight.com/features/fancy-dorms-arent-the-m...
|
| > Long-term, controlling the underlying cost of higher ed
| itself is an imperative.
|
| Nothing in the OPs analysis supports any increase in the
| underlying cost of higher ed. While there may be some, it's
| well well below the nameplate tuition increases. Here's the
| best data I have on expenditures by college on a per Full-
| Student basis, and they are nowhere near what the OP is
| claming:
| https://nces.ed.gov/programs/digest/d20/tables/dt20_334.10.a...
|
| Lastly, while the argument for some student debt relief is a
| good one, and his points are well made, the correct policy is
| Biden's, a universal reduction in debt in the $20-30k range.
| This gives all students some relief, but doesn't give a
| regressive windfall relief to doctors, lawyers and other
| professional students with good career prospects and six-figure
| debt.
| rokkitmensch wrote:
| [dead]
| jxramos wrote:
| I was just asking colleagues at work in response to the supreme
| court ruling on the student debt forgiveness stuff whether or not
| they experienced yearly tuition increases every single year they
| were enrolled--straight monotonic increase. I got many yes
| emoji's tagged onto that post so I knew I wasn't the only one. I
| can only imagine that treadmill never stopped for people.
| fmajid wrote:
| Universities are the gatekeepers for good white-collar jobs, and
| will charge whatever the market will bear, which is quite a lot.
| Government subsidies are absorbed as pure profit. The money goes
| into cushy salaries for administrators and empire-building,
| specially in real estate.
| I_am_tiberius wrote:
| Stating that inflation is at 194% can be misleading - it all
| depends on which products you include in your calculation. It
| might be more meaningful to differentiate between predictable and
| measured inflation. Predictable inflation should be defined as
| the increase in the money supply, while measured inflation could
| refer to the currently published figures.
| preommr wrote:
| Others have mentioned the proble of government backed loans, but
| the whole higher education system is broken.
|
| People are going in to get a degree with a job, meanwhile there's
| a whole bunch of administrators and people that think
| universities should be for rounding out your knowledge so you're
| required to pay thousands more for courses not needed for your
| degree. If we really wanted to, I am sure we could condense a
| bachelors down to 1-2 years with 2-3 years of practical learning
| in the field.
| rootusrootus wrote:
| The rounding out is absolutely intentional. If we want
| certificate programs that are shorter and career-focused, those
| already exist.
| 300bps wrote:
| Harvard has 2,000 students per year and a $50 billion endowment.
|
| That is enough to refund $500,000 to every student they've had
| for the past 50 years.
|
| Why are universities hoarding so much money?
|
| https://www.highereddive.com/news/how-20-largest-college-end...
|
| Why are universities hiring so many administrators in relation to
| professors and students?
|
| https://www.usnews.com/education/articles/one-culprit-in-ris...
| Kon-Peki wrote:
| Harvard admits 2,000 undergraduates per year, but it has almost
| 3x as many graduate students as undergraduates. As far as
| private universities go, Harvard is a really big school.
| TheMagicHorsey wrote:
| We are seeing the perverse incentives of subsidized and free
| education. There are few barriers to increasing the cost of
| something if neither the consumer or supplier have sensitivity to
| cost at the time the purchase is made. And loans defer the pain
| for students in a way that makes them basically insensitive to
| the eventual cost of their education.
|
| People react to incentives. Systems react to incentives. America
| has been ignoring this for 50 years.
| chmod600 wrote:
| The only thing that keeps a system functional is external
| pressure. Otherwise it will _always_ turn into some weird messed
| up versions of itself that satisfies none of the original
| objectives but is somehow larger than ever.
|
| Universities used to be separate systems, and you could opt out
| of one and into another, and most people wouldn't even go to one
| at all. But now they are basically all parts of one whole (within
| the US, at least) and everyone is going and the universities are
| all failing in the same way.
|
| It could be financial, but I think it's because of the academic
| track and social status.
|
| There's a consensus that college is good and will turn you into a
| professional leader with a nice job title that reflects elite
| values (which happen to be a certain kind of liberal but it's
| more about social status than politics philosophy). But it turns
| out the world only needs so many Environmental Justice Media
| Liaisons, so the universities are just making up these job titles
| to absorb their own graduates.
|
| Of course, that doesn't work well financially, so they pay them
| nothing for as long as possible and then close to nothing after
| that, and crank up the tuition promising the next batch the same
| deal.
|
| The students put up with it because it's hard to evaluate the
| numbers that they can actually expect from such a ridiculous job,
| and because it sounds like a cool (or at least acceptable) job
| title to announce at parties. The fact that a plumber makes three
| times as much is not worth acknowledging.
| Bloating wrote:
| this is corporate greed, end-stage capitalism and Bush's fault.
| Or is it Trump's fault? And Elon Musk's mgmt of twitter
| londons_explore wrote:
| Main cause: Government-backed student loans.
|
| While it is technically the student paying, in reality the money
| is going (indirectly) from the federal reserve to the
| universities.
|
| Everyone loves free government money...
|
| The fact the student may never pay off those loans (and hence the
| government foots the bill) is the cherry on top.
| drew-y wrote:
| Got a source for that claim?
| lotsofpulp wrote:
| Common sense?
|
| Government (taxpayers) underwrite unlimited amounts to
| uninformed buyers paying informed sellers.
|
| I am a seller (college boss), and I can boost my own income,
| and I know I have no competitive pressure to keep prices
| down, so why not increase the college budget and spending,
| hence justifying tuition increases.
| drew-y wrote:
| Common sense is often wrong. I haven't found any reliable
| source yet that even mentions the availability government
| loans as being a driving factor. Based on the limited
| research I've done over the last few minutes, the main
| drivers appear to be:
|
| 1. A large increase in demand for College. I could imagine
| this may be, in part, due to more accessible student loans.
| But it appears that many factors have come into play, and
| the main one is the perception that you cannot get a
| liveable wage in this country without a college degree.
|
| 2. Less funding from state governments
|
| 3. Increased spending in administration and student
| services unrelated to education.
|
| Here are the sources I've read through so far.
| https://www.bankrate.com/loans/student-loans/why-is-
| college-... https://manhattan.institute/article/a-new-
| approach-for-curbi...
| lotsofpulp wrote:
| > Based on the limited research I've done over the last
| few minutes, the main drivers appear to be:
|
| All your drivers cannot cause a price increase if an 18
| to 25 year old cannot get unlimited funding from a lender
| to make a stupid decision.
| pixl97 wrote:
| 3 is a side effect, not a primary effect.
|
| In 1 you're talking about a self-reinforcing effect. "I
| have to put on makeup to look pretty because everyone
| puts on makeup to look pretty". When everyone believes
| it, it becomes true.
| mrguyorama wrote:
| Common sense is horseshit. You know what was common sense
| in the 1600s? A gentleman is clean, so he doesn't need to
| wash his hands between cutting open a corpse and delivering
| a baby, and oh gee why do so many women get awful
| infections after childbirth?
|
| Common sense is the rallying cry of people who cannot
| backup their claim by other means.
| FrustratedMonky wrote:
| Because it is not 'free'. It puts students in debt.
|
| You are boosting your income by exploiting students through
| usury.
|
| Lets say there is no government, then where was the
| 'competitive' pressure? How does government loans take away
| competition? Did they close schools to eliminate the
| competition?
| lr4444lr wrote:
| Good faith reading is that he means its risk free to the
| school, because they get paid up front even if the
| student doesn't graduate, much less earn enough to pay
| back his loan.
| __loam wrote:
| The article this post was about?
| drew-y wrote:
| The article does not support this claim.
|
| The claim: > Main cause: Government-backed student loans.
|
| I've read the article. It discusses student loans and how
| they've skyrocketed, but never makes the claim that their
| availability is the cause. Instead, it argues a t change in
| America's "labor profile" is to blame for the rise in
| demand (which, in turn, leads to higher tuition):
|
| > Rising enrollment is also associated with a changing US
| labor profile; for example, manufacturing jobs were
| eclipsed by "business and professional services" jobs as
| well as healthcare, education, and retail jobs.
|
| Going further, the author suggests we need to
| forgive/cancel the student loans:
|
| > These loans should be forgiven/cancelled
|
| To me, this implies the author does not believe federal
| student loans are to blame.
| ye-olde-sysrq wrote:
| Googling it provides a quick-answer box that states this
| claim and provides a source:
|
| https://www.google.com/search?q=what+percent+of+student+loan.
| ..
|
| 92% Federal student loans make up the vast majority of
| American education debt--about 92% of all outstanding student
| loans is federal debt. The federal student loan portfolio
| currently totals more than $1.6 trillion, owed by about 43
| million borrowers.
|
| I think it's then pretty fair game for a forum comment to
| then suggest there's a causal relationship between "an entity
| that can print the currency that denominates the debt is
| backing the debt" and "this drives the price of the thing up
| due to easier access to funding for it".
| dpierce9 wrote:
| I will say it again:
|
| Private high school costs have also gone up astronomically and
| there are no federal loans for them.
|
| [0] https://educationdata.org/average-cost-of-private-school
| kristopolous wrote:
| Neoclassicalists will Always point at the government as the
| Only possible cause of the market not working.
|
| It's pure ideology. They have the exact same answer every
| time regardless of circumstances, like some evangelical
| responding to every question with "god".
|
| It's not economics, analysis, reason or anything like that -
| it's pure orthodoxy and blind dogmatism. They're Hayekian
| tankies.
| 0xParlay wrote:
| > It's not economics, analysis, reason or anything like
| that - it's pure orthodoxy and blind dogmatism.
|
| It would be rich if the data in the article in no way
| supported your rant.
| kristopolous wrote:
| It doesn't.
|
| Just like the evangelicals see God in every leaf and
| water drop, the neoclassicalists will read any evidence
| and always see the same conclusion.
|
| The article doesn't blame government at all. It's way
| more nuanced but ideologues will only see what they want
| to see.
| 0xParlay wrote:
| I was talking about the "average cost of private school"
| data. Which part is a slam dunk on "neoclassical" econ?
| Or even the original article. I'm not disagreeing just
| curious how you came to that conclusion.
|
| The data linked above suggests Catholic schools are the
| most affordable. Priors confirmed - theocracy is the only
| way forward.
| kristopolous wrote:
| I was responding to an author in the thread, not to the
| author of the article.
|
| Catholic schools are financially structured in rather
| unique ways. They're controlled by clerical orders which
| are technically financially independent from the Vatican,
| kind of like a franchise.
|
| Together, the institutions under a specific clerical
| order operate collectively kind of like a cooperative so
| money flows around differently than most schools.
|
| Weirdly, schools that used to be but no longer are
| religious seem to now be some of the most expensive. For
| instance, Tufts, USC and Yale.
|
| The rise in tuition is because college has been
| increasingly seen as a personal, private transaction and
| not as a social good.
|
| This reframing of the institution as a market based
| services purchase is the rationale for the policies that
| have caused all the other problems
|
| Catholic schools might also be cheaper because these
| clerical orders are ostensibly tasked with social welfare
| so they are still partially operating under the old model
| before the Milton Friedman mind virus.
| [deleted]
| bitshiftfaced wrote:
| This says that the average private highschool tuition is
| $15,645.
|
| In 2003, the average private highschool tuition was $8,412
| (Snyder, Dillow, & Hoffman, 2008), or $14,079 (in today's
| dollars).
|
| Please correct me if I've made some mistake, but plugging
| those numbers in shows that the annualized real increase in
| price is 0.5% per year over 20 years.
| dpierce9 wrote:
| The first bullet says: "$23,839 is the average annual
| tuition among the nation's private K-12 schools."
| stri8ed wrote:
| What is the rate of increase, and how does it compare to CPI
| inflation?
| dpierce9 wrote:
| There is a chart at the bottom. Costs doubled over twenty
| years since 1999, directly comparable to the college rate
| over the same period and well above inflation.
| [deleted]
| pixl97 wrote:
| This said nothing about the number of seats in private
| schools versus public ones. If there are very few then we
| should expect private costs to increase dramatically as
| public costs increase. Not every student gets public loans,
| some students come from wealthy families that have other
| means of financing. If public is $100k, then these families
| would still likely choose the $120k private school for better
| outcomes. There is no reason for private to stay cheap.
| londons_explore wrote:
| I believe this is no accident. The government wants a world
| class education system and leading research.
|
| They _could_ just give money direct to universities - but then
| it 's hard to ensure they're getting good value for money.
|
| But by giving it to students to in turn give to universities
| they get better value for money.
|
| One day someone has to pay for that - and the students paying
| it back via loan repayments isn't awfully different to citizens
| paying it back via taxes. But with the student route everyone
| is more invested in getting good value for money. And non-
| university users (who tend to be the poorest) don't end up
| paying. Win win.
| scinerio wrote:
| A world-class education system where you can leave the $200k
| in debt and never exceed $100k in income.
|
| We're at a point where going into college for non-STEM degree
| can (and likely will be) one of the biggest mistakes of your
| life.
| londons_explore wrote:
| But if the government paid for it, you would never _see_
| the $200k in debt. But you 'd still be in debt - it would
| just be government debt. And as a citizen, your
| government's debt is still kinda your problem.
| FrustratedMonky wrote:
| If it is 'free', then why are students in debt and liable for
| it?
|
| (and don't confuse the issue with current debt relief bill. The
| current bill has not been in effect since 1983, it is trying to
| give relief for this situation, not causing it).
| scinerio wrote:
| It's free for universities who can rest easy knowing that if
| students don't pay then it doesn't affect them.
| FrustratedMonky wrote:
| Ah, free in the sense that the University got its money and
| can now ignore any consequences?
|
| It is NOT free to the student who is definitely affected.
| They are in debt and now crippled. But the university got
| it's money.
|
| If you want to blame the government. Why is it the
| governments fault that Universities are now behaving like
| scammers and charging more for less and leaving the
| 'customer' stuck.
|
| ----
|
| Lets say I go to a used car salesman, and they want to
| cheat me.
|
| Lets say (before 1983) I would pay 2000$ for the car, but
| I'm scammed and out 2000$. I lost 2000$
|
| Lets say figuratively now it is (2020), and I can't afford
| the car, so a rich uncle co-signs, and give me 30,000$.
|
| I still get cheated, but now I'm out more money, AND now
| I'm in debt to my uncle (who lets say wants some 'payment'
| I feel uncomfortable performing).
|
| The used car salesman is a cheat either way, for lesser
| money or more money, and either way they got my money.
|
| And I'm in debt and blowing my uncle until it is paid off.
|
| In the end, I (the student) am stuck. Is it my uncles
| fault? Is it the crooked salesman? Maybe my uncle didn't
| know the salesman was a cheat either (but like a bank, does
| want something in return)? Should I know the salesman was a
| cheat? Maybe I'm young and just starting out in life and
| not sure about the warning signs? Should we allow the young
| and in-experienced to be exploited?
| lotsofpulp wrote:
| > Why is it the governments fault that Universities are
| now behaving like scammers and charging more for less and
| leaving the 'customer' stuck.
|
| Because the government is not doing its due diligence as
| a lender, because current voters and government employees
| have no problem soaking future taxpayers. And crippling
| uninformed 18 year olds' futures.
| FrustratedMonky wrote:
| > "Because the government is not doing its due diligence
| as a lender"
|
| That is called regulation, and once you start putting in
| regulations, then everyone starts screaming about big
| government and over-regulation. There is no winning, put
| in protections and you are some big government commie
| bastard, don't put in protections and you are heartless
| and ineffectual.
|
| And, I dare say, banks even in other areas where they
| could lose money (2008 real-estate), are just as eager to
| reel people in and ignore bad loans.
| lotsofpulp wrote:
| No, I would not call that regulations. Typically,
| regulations refers to the government restricting or
| requiring business activity.
|
| The government offering loans in the first place is
| regulation, and choosing not to do underwriting is part
| of that regulation.
|
| I.e. the government regulated that they would lend tens
| of thousands of dollars to any student, so student A can
| no longer bargain with the school for a lower price
| because student B, C, and D are lined up to pay whatever
| is asked.
| [deleted]
| drewg123 wrote:
| One thing that was mentioned in the article, but which seems to
| be missing from the discussion is the decrease in state funding
| for higher education.
|
| When I was looking for colleges in the 80s, the most expensive
| private schools were on the order of $20K all in. Those same
| schools are on the order of $85K all in, which is an increase of
| "only" (hah) 450%.
|
| However, my alma mater (SUNY Buffalo) has increased in-state
| tuition 830% ($1300 to 10.8K). When I went to school there,
| minimum wage was $3.35/hr. That means that I could work 10 weeks
| at 40hr/week and pay for my tuition. That's the main reason I
| graduated without student loan debt. The NYS min. wage is $15/hr,
| so a student today would have to work 18 weeks to pay for their
| tuition.
|
| We need to increase state funding for higher education.
| ibgeek wrote:
| Adding to this: we should be looking at the actual amount paid
| by students have receiving financial aid. Analyses of tuition -
| average financial aid show that the actual amount paid has been
| relatively flat at private institutions. A lot of private
| institutions (mine included) give a 50% scholarship to most
| students.
|
| Increased costs at public universities are driven largely by
| lack of state funding. This is also in part because the number
| of students attending public universities has gone up
| tremendously but state funding hasn't kept up.
|
| https://www.brookings.edu/articles/college-prices-arent-skyr...
| randcraw wrote:
| In 1975, large state state universities (like Michigan State
| and U Virginia) cost about $1500 for tuition and another $1500
| for room and board.
|
| Since you could earn about $1500 working each summer, your
| maximum shortfall was $1500 per year (assuming no loans or
| grants), or $6000 per bachelor degree. At the CPI's 194%
| inflation, today that would equate to less than $12k of debt.
|
| I'd also like to know how much nonacademic college costs like
| R&B have inflated -- when provided by the rapacious university
| system. They _should_ have followed the CPI. But I 'd lay
| strong odds they haven't.
| downrightmike wrote:
| Take home after taxes is only 77% at $15/hr or $1830/month if
| working 40 hours/week https://smartasset.com/taxes/new-york-
| paycheck-calculator#eI...
|
| As of July 2023, the average rent for a 1-bedroom apartment in
| SUNY College Purchase, NY is $2,696. This is a 12% increase
| compared to the previous year. https://www.zumper.com/rent-
| research/near-suny-college-purch...
| rahimnathwani wrote:
| Minor quibble: the tax rate is a touch lower if you don't
| work year round. If you earn $10.8k in a calendar year,
| you'll take home 81%.
| jldugger wrote:
| IDK that we _need_ to increase state funding, but it absolutely
| explains the tuition trend. I don't feel particularly bad about
| people graduating with student debt if they have high paying
| jobs on the other side.
|
| What does feel bad is turning qualified students away, like one
| school I know used to do.[1] Every year they would pick a GPA
| cutoff to admit more engineering students to the upper level
| classes you need to graduate, not based on evidence of students
| failing but on faculty headcount. It's a total bait and switch,
| and thankfully it seems they ended the practice right before
| the pandemic.
|
| And it's tricky, we run teaching universities because we think
| there's some benefit to students being taught by practicing
| researchers. But the reality is that, especially in STEM,
| research funding is what matters more than tuition funding.
| Which in essence means in order to admit more students we need
| more research labs and buildings, because the 3/3 teaching load
| of a tenure track faculty member will not yield competitive
| wages.
|
| [1]: https://today.oregonstate.edu/news/osu-college-
| engineering-c...
| petsfed wrote:
| Its made worse by the fact that pure-teaching positions at
| public institutions are frequently filled by adjuncts, so
| there's next to no benefits or job security, and the pay is
| often atrocious.
|
| It's really screwy that a great many universities have
| essentially said there can be no long-term work situation for
| teachers if they aren't also researchers.
| nielsbot wrote:
| This seems relevant:
|
| https://www.nytimes.com/1982/12/28/science/california-weighs...
|
| Apparently University of California used to be free.
| mtalantikite wrote:
| They didn't want an educated, unemployed proletariat (their
| words, not mine):
| https://theintercept.com/2022/08/25/student-loans-debt-
| reaga...
| BeetleB wrote:
| Indeed. I attended a talk by one of the presidents of a local
| state university about a decade ago, and she showed a plot
| showing that the _overall_ cost to educate a student hadn 't
| changed in 30 years (inflation adjusted). What had changed was
| the state support per student. As it dwindled, the university
| continually increased the tuition such that the overall cost
| remained constant.
|
| It's one university, so I don't know if it applies to the
| others, but drops in state support is often excluded from these
| conversations.
| ibgeek wrote:
| This is absolutely correct. For public universities, the
| amount of state funding hasn't kept up with the increase in
| the number of students.
|
| While tuition at private institutions have also gone up, so
| has the amount of financial aid (scholarships) that they've
| made available:
|
| https://www.brookings.edu/articles/college-prices-arent-
| skyr...
|
| The result is that the net price hasn't increased all that
| much for the average student.
| fnord77 wrote:
| students per administrator has gone down down down
|
| https://scaleatucla.weebly.com/uploads/2/9/9/2/29923337/4935...
|
| stanford has more administrators than undergrads now.
|
| administrator growth is like a cancer
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