5 ms·

> I laugh at an institution that would loan her money for a field that doesn't pay That doesn't speak well to her judgement either.

dredmorbius 11y ago
Information asymmetries put the burden of guilt on institutional actors. The educational and lending institutions which have a strong awareness of true costs and actual employment prospects. Over individual young students who don't, and are often relying on those institutions for information and guidance. Related: principle agent problem.
- bduerst 11y ago
  Unless the educational and lending institutions are contractually agreeing to the loan on behalf of the students, it's not a p:a problem. Salary and career signals are publicly available. If a student happens to rack up six figure loans for a career that can't support it, then that is ignorance on their part. At 17-18, they're not exactly minors, and even if you do consider them a minor the fault lay on their guardians (parents).
  - dredmorbius 11y ago
    At 17 a student is precisely a minor. My understanding of current research is that full intellectual maturity is generally reached in the early 20s. I said P-A was related. Not identical. Again: students are being advised and encouraged by parties with 1) vastly greater access to information, 2) vastly reduced risk (the loans are federally guaranteed in the US), and 3) benefitting from risk diversifictation over large numbers of incoming students. Final proof: there seems to be rather a problem with the student loans business. Including numerous institutions convicted of fraud, and, if I can find the article somewhere, noncurrent payment rates of 40%. Oh, silly me, that's the very article we're discussing here.
    - bduerst 11y ago
      P:A problem isn't that complex and what you're describing is not even close. You're overestimating the amount of information that educators and loaners have access to regarding job markets, and besides: it's not their job to predict what someone will do in four years. Loans are not tied to specific degrees with specific salaries. You don't lose part of a loan because you pick a major or employer. Making these life decisions is the individual's (and/or their guardian's) responsibility, and just because some make bad decisions doesn't make it "like" p:a.
  - qntty 11y ago
    I'm curious if you're young enough to have gone through this yourself. The idea that publicly available salary information is enough for a young person who has never supported themselves doesn't really make sense to me. I'm willing to bet that 90% of 18 year olds can't figure out what a reasonable amount to borrow is given salary information. This includes me. The problem isn't an inability to do math, the problem is that there are too many variables that fall under "things you don't know that you don't know." Such as: What monthly expenses should I expect to pay? (This varies wildly among people I know, there's no easy answer. And knowing rent + utility costs is only part of the puzzle. An 18 year old doesn't appreciate the costs of things that "just come up") How much money should I plan on NOT spending every month to give myself a buffer against the stress of living paycheck to paycheck? How much should I expect to be taxed? (Again, the number are out there, but just googling around, I can't find any easy answers that include averages for federal + state + city) Should I expect to live in an expensive city if I have X career? (Not an easy question to answer for someone who doesn't even know that that career will be) How much should I really expect to pay for college? (Between yearly tuition increase, variation in scholarships/grants and the differing costs of living on-campus vs off-campus, this is hard to know) If I have the numbers for the average person in my position, what are the chances that I will be worse off than average? I guess there's the possibility that I (and many people I know) are exceptionally bad at making personal decisions, despite doing reasonably well in most other aspects of life, but I doubt it.

dredmorbius 11y ago

Information asymmetries put the burden of guilt on institutional actors. The educational and lending institutions which have a strong awareness of true costs and actual employment prospects. Over individual young students who don't, and are often relying on those institutions for information and guidance. Related: principle agent problem.

bduerst 11y ago
Unless the educational and lending institutions are contractually agreeing to the loan on behalf of the students, it's not a p:a problem. Salary and career signals are publicly available. If a student happens to rack up six figure loans for a career that can't support it, then that is ignorance on their part. At 17-18, they're not exactly minors, and even if you do consider them a minor the fault lay on their guardians (parents).
- dredmorbius 11y ago
  At 17 a student is precisely a minor. My understanding of current research is that full intellectual maturity is generally reached in the early 20s. I said P-A was related. Not identical. Again: students are being advised and encouraged by parties with 1) vastly greater access to information, 2) vastly reduced risk (the loans are federally guaranteed in the US), and 3) benefitting from risk diversifictation over large numbers of incoming students. Final proof: there seems to be rather a problem with the student loans business. Including numerous institutions convicted of fraud, and, if I can find the article somewhere, noncurrent payment rates of 40%. Oh, silly me, that's the very article we're discussing here.
  - bduerst 11y ago
    P:A problem isn't that complex and what you're describing is not even close. You're overestimating the amount of information that educators and loaners have access to regarding job markets, and besides: it's not their job to predict what someone will do in four years. Loans are not tied to specific degrees with specific salaries. You don't lose part of a loan because you pick a major or employer. Making these life decisions is the individual's (and/or their guardian's) responsibility, and just because some make bad decisions doesn't make it "like" p:a.
- qntty 11y ago
  I'm curious if you're young enough to have gone through this yourself. The idea that publicly available salary information is enough for a young person who has never supported themselves doesn't really make sense to me. I'm willing to bet that 90% of 18 year olds can't figure out what a reasonable amount to borrow is given salary information. This includes me. The problem isn't an inability to do math, the problem is that there are too many variables that fall under "things you don't know that you don't know." Such as: What monthly expenses should I expect to pay? (This varies wildly among people I know, there's no easy answer. And knowing rent + utility costs is only part of the puzzle. An 18 year old doesn't appreciate the costs of things that "just come up") How much money should I plan on NOT spending every month to give myself a buffer against the stress of living paycheck to paycheck? How much should I expect to be taxed? (Again, the number are out there, but just googling around, I can't find any easy answers that include averages for federal + state + city) Should I expect to live in an expensive city if I have X career? (Not an easy question to answer for someone who doesn't even know that that career will be) How much should I really expect to pay for college? (Between yearly tuition increase, variation in scholarships/grants and the differing costs of living on-campus vs off-campus, this is hard to know) If I have the numbers for the average person in my position, what are the chances that I will be worse off than average? I guess there's the possibility that I (and many people I know) are exceptionally bad at making personal decisions, despite doing reasonably well in most other aspects of life, but I doubt it.