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This seems to be a pattern in America. People call for X to be more affordable > government subsidizes X > X absorbs all subsidies and becomes even more expens

This seems to be a pattern in America. People call for X to be more affordable > government subsidizes X > X absorbs all subsidies and becomes even more expensive > people call for X to be socialized. Maybe instead we should start to unwind student financing. For example: let students discharge student loans via bankruptcy. That would give financiers pause and would put an upper bound on what many universities could charge.

NTDF9 8y ago
> People call for X to be more affordable > government subsidizes X > X absorbs all subsidies and becomes even more expensive > people call for X to be socialized. The problem is that government subsidizes loans. It doesn't do something like capped match. The government should just say, "We will cover your need-based education burden up to $20,000". Something like this would make most state schools accessible to most kids and yet, put a big limitation on how much schools can raise tuition. Some schools will raise it up to 40k, others will keep it at 20k, both will try to maximize intake for their tuition. Simply handing out unbounded, undischargeable loans is just crazy!
- megamindbrian2 8y ago
  This sounds like government should pay people subsidiaries directly. Like an HSA but for more than just health. If you use the account for school it's tax free otherwise there are fee or the transaction is declined. How much more amazing would service from utilities be if they had to go through customer to get the same subsidiaries they get now.
  - NTDF9 8y ago
    I have taken an education loan from a bank in another country. They literally only approved me for a maximum of $30,000 loan. Let me explain how that worked. I had to pay first 15% from my account, they would pay the remaining 85%. Every semester, once I showed a receipt that I paid 15% to the university, that bank would wire the remaining 85% directly to that University. What did this do to my decision making? I literally only chose universities for which I could afford the upfront 15% and the max of $30k. I chose this university even though I had admit from other universities which had higher tuition. What impact does it have on universities? Universities with higher tuition start seeing a decline in enrollments. I got out with a max $30k debt, of which I paid 15% out of pocket already, per semester. I could've dropped out of school and joined again a few years later but that loan would still be available to me for 7 years.
  - pitaj 8y ago
    Or, we could try just doing none of that, like back when college was actually affordable!
    - testrun 8y ago
      How?
moorhosj 8y ago
== That would give financiers pause and would put an upper bound on what many universities could charge.== It would also limit the pool of people who could get a loan for college in the first place. Maybe we can take a page from other developed countries who don't seem to have the same problem. It seems to be a pattern in America where we act like a problem has no answers, meanwhile the rest of the world contains many potential solutions to the problem.
- pitaj 8y ago
  Remember when college used to be cheap enough for people to afford working summers? I don't remember because that was before my time, but that was also before the subsidies and loans were made available by the feds. Turns out, if you dump money into an industry while increasing demand and not changing supply, prices will increase.
  - rrcaptain 8y ago
    That was because states covered most of the budget. Austerity policies changed that. And supply and demand is not applicable to macroeconomics, which education is part of.
    - nostrebored 8y ago
      States still cover most of the budget. As someone who went to school while poor and on a scholarship, I hated this, the price was so inflated because 1) The government pays the majority of it if you're poor, schools know you'll pay 2) If you're middle class your parents pay half of it, the government pays half of it, schools know they'll pay 3) If you're upper class, you might have a legacy admission and the school knows your parents will pay and probably donate to the school too
      - rrcaptain 8y ago
        There's a difference between the government funding education and the government funding students. Costs are high because the government funds students (sometimes), not education. And very few people get government scholarships, most get loans which must be repayed: essentially an extra tax on the middle class.
ataturk 8y ago
The whole non-dischargeable loans thing was to make it possible at all for private lenders to make the loans. If you take that away, the underwriting will not work--the risk is too high, you would have 35% interest rates like on a credit card. Non starter.
mcny 8y ago
> For example: let students discharge student loans via bankruptcy. Ataturk's reply to this is dead below but I must agree with the (spirit of the) comment. While I support letting students discharge loans via bankruptcy, I VEHEMENTLY oppose making this applicable to loans already signed. This is absolutely ridiculous and anyone who supports this kind of position should be barred from public office on grounds of insanity. EDIT: I also think income and means testing ought for any government program or service ought to be illegal. You cannot say "you must make below $n to be eligible for this government program". I know the economists in the audience will bellow and bicker and say that we have limited resources that we must allocate "logically" but guess what macroeconomics is nonsense anyway because out here in the real world people don't behave logically. We need to make it against the law to use income, means, or property testing for any government program or service. Can't afford to offer it to the entire population regardless of income? Either increase taxes or rollback the program. Can't have it both ways.
- amanaplanacanal 8y ago
  Wait, you are suggesting that medicaid, food stamps and low-income housing assistance should be offered to everybody? I don't think I have heard this suggested before. I'll have to ponder this.
  - mcny 8y ago
    > Wait, you are suggesting that medicaid, food stamps and low-income housing assistance should be offered to everybody? Yes. None of these programs should exist if we can't offer them to 100% of the population. Both Democrats and Republicans use these programs as a vote bank and it polarizes our public discourse.
    - wool_gather 8y ago
      Means testing is basically a compromise between the two extremes that you offer: fund them completely (by raising taxes) or drop them completely (because they're too expensive). That's the best you're going to get in a system where lots of people with vastly differing views have to agree on a single conclusion: a compromise that makes everyone a little bit unhappy.
nicoburns 8y ago
In Europe when the government subsidies things, they usually also put a cap on what the organisation is allowed to charge. See for example universities and trains in the UK. > people call for X to be socialized Alas it never gets to the final step: X is socialized.
thedufer 8y ago
> let students discharge student loans via bankruptcy This is a fine idea, but you have to recognize that this just means approximately no one gets student loans (and those who do get them don't need them). Think about it: if you come out of college with, say, $20k of debt (granting that this might bring down prices) and no assets, bankruptcy is a very tempting option. Student loans are just inherently problematic - the people who need them have no assets, and the thing they pay for can't be used to secure the loan. Sure, prices would come down, but partially because so many people would be priced out and demand would drop. The solution has to involve more than that.
- Gibbon1 8y ago
  > Think about it: if you come out of college with, say, $20k of debt (granting that this might bring down prices) and no assets, bankruptcy is a very tempting option. You actually have to convince a judge that's appropriate. And the court has a wide variety of tools at it's disposal to reach an equitable decision. From telling the petitioner to get stuffed all the way to telling the creditors to get stuffed.
  - thedufer 8y ago
    Can you cite a case of this happening? As far as I can tell, chapter 7 cases are only ever denied for failing to file properly (missing deadlines, failure to disclose, etc), or kicked over to chapter 13 (which would be pretty remarkable in a case involving the little to no income of most students).
    - Gibbon1 8y ago
      If we were being reasonable about student loan debt Chapter 13 or 11 would be more appropriate than Chapter 7. Both of those allow for debt service to be renegotiated. Student loan debt is a particularly odious bit of neoliberal policy, forcing students to take on debt for something other societies provide for free, non dischargable and guaranteed by the state.
- JauntyHatAngle 8y ago
kurthr 8y ago
Woah there... govt subsidizes what? This isn't about subsidies (except for loan guarantees), it's about unsecured credit and debt that can't be discharged in bankruptcy. That (like credit card spending, 8 year car loans, and payday lending) is a recipe for rising prices and high eventual bankruptcy rstes, but it's not govt subsidy. It is regulatory capture.
- maxerickson 8y ago
  The government backing a huge portion of the loans and creating special treatment for the loans are both, ya know, subsidies. They are slightly indirect.
  - kurthr 8y ago
    Yes, that is why I called out loan guarantees. Regulatory capture (special treatment) on the other hand, is not subsidy any more than granting a patent/trademark is a subsidy... it's regulatory capture (the opposite of effective regulation). Corporations don't get to blame the govt for the rules that industry paid for... see what you made me do!
Joeri 8y ago
To bring down cost you don’t bring down the subsidies, but you let the government negotiate price limits on subsidized goods and services. This is how health care and college subsidies work in my country. The government negotiates with the universities and medical industry what the price and the subsidy level will be. Schools and health care can opt out of the subsidy scheme and shrink their market to the rich or opt in and have lower margins with higher quantities. Most choose to opt in, even the top tier. The trick is using the negotiating power of government, which is something U.S. politicians are unwilling to do.
deleted 8y ago
[deleted]

NTDF9 8y ago

> People call for X to be more affordable > government subsidizes X > X absorbs all subsidies and becomes even more expensive > people call for X to be socialized. The problem is that government subsidizes loans. It doesn't do something like capped match. The government should just say, "We will cover your need-based education burden up to $20,000". Something like this would make most state schools accessible to most kids and yet, put a big limitation on how much schools can raise tuition. Some schools will raise it up to 40k, others will keep it at 20k, both will try to maximize intake for their tuition. Simply handing out unbounded, undischargeable loans is just crazy!

megamindbrian2 8y ago
This sounds like government should pay people subsidiaries directly. Like an HSA but for more than just health. If you use the account for school it's tax free otherwise there are fee or the transaction is declined. How much more amazing would service from utilities be if they had to go through customer to get the same subsidiaries they get now.
- NTDF9 8y ago
  I have taken an education loan from a bank in another country. They literally only approved me for a maximum of $30,000 loan. Let me explain how that worked. I had to pay first 15% from my account, they would pay the remaining 85%. Every semester, once I showed a receipt that I paid 15% to the university, that bank would wire the remaining 85% directly to that University. What did this do to my decision making? I literally only chose universities for which I could afford the upfront 15% and the max of $30k. I chose this university even though I had admit from other universities which had higher tuition. What impact does it have on universities? Universities with higher tuition start seeing a decline in enrollments. I got out with a max $30k debt, of which I paid 15% out of pocket already, per semester. I could've dropped out of school and joined again a few years later but that loan would still be available to me for 7 years.
- pitaj 8y ago
  Or, we could try just doing none of that, like back when college was actually affordable!
  - testrun 8y ago
    How?

moorhosj 8y ago

== That would give financiers pause and would put an upper bound on what many universities could charge.== It would also limit the pool of people who could get a loan for college in the first place. Maybe we can take a page from other developed countries who don't seem to have the same problem. It seems to be a pattern in America where we act like a problem has no answers, meanwhile the rest of the world contains many potential solutions to the problem.

pitaj 8y ago
Remember when college used to be cheap enough for people to afford working summers? I don't remember because that was before my time, but that was also before the subsidies and loans were made available by the feds. Turns out, if you dump money into an industry while increasing demand and not changing supply, prices will increase.
- rrcaptain 8y ago
  That was because states covered most of the budget. Austerity policies changed that. And supply and demand is not applicable to macroeconomics, which education is part of.
  - nostrebored 8y ago
    States still cover most of the budget. As someone who went to school while poor and on a scholarship, I hated this, the price was so inflated because 1) The government pays the majority of it if you're poor, schools know you'll pay 2) If you're middle class your parents pay half of it, the government pays half of it, schools know they'll pay 3) If you're upper class, you might have a legacy admission and the school knows your parents will pay and probably donate to the school too
    - rrcaptain 8y ago
      There's a difference between the government funding education and the government funding students. Costs are high because the government funds students (sometimes), not education. And very few people get government scholarships, most get loans which must be repayed: essentially an extra tax on the middle class.

ataturk 8y ago

The whole non-dischargeable loans thing was to make it possible at all for private lenders to make the loans. If you take that away, the underwriting will not work--the risk is too high, you would have 35% interest rates like on a credit card. Non starter.

mcny 8y ago

> For example: let students discharge student loans via bankruptcy. Ataturk's reply to this is dead below but I must agree with the (spirit of the) comment. While I support letting students discharge loans via bankruptcy, I VEHEMENTLY oppose making this applicable to loans already signed. This is absolutely ridiculous and anyone who supports this kind of position should be barred from public office on grounds of insanity. EDIT: I also think income and means testing ought for any government program or service ought to be illegal. You cannot say "you must make below $n to be eligible for this government program". I know the economists in the audience will bellow and bicker and say that we have limited resources that we must allocate "logically" but guess what macroeconomics is nonsense anyway because out here in the real world people don't behave logically. We need to make it against the law to use income, means, or property testing for any government program or service. Can't afford to offer it to the entire population regardless of income? Either increase taxes or rollback the program. Can't have it both ways.

amanaplanacanal 8y ago
Wait, you are suggesting that medicaid, food stamps and low-income housing assistance should be offered to everybody? I don't think I have heard this suggested before. I'll have to ponder this.
- mcny 8y ago
  > Wait, you are suggesting that medicaid, food stamps and low-income housing assistance should be offered to everybody? Yes. None of these programs should exist if we can't offer them to 100% of the population. Both Democrats and Republicans use these programs as a vote bank and it polarizes our public discourse.
  - wool_gather 8y ago
    Means testing is basically a compromise between the two extremes that you offer: fund them completely (by raising taxes) or drop them completely (because they're too expensive). That's the best you're going to get in a system where lots of people with vastly differing views have to agree on a single conclusion: a compromise that makes everyone a little bit unhappy.

nicoburns 8y ago

In Europe when the government subsidies things, they usually also put a cap on what the organisation is allowed to charge. See for example universities and trains in the UK. > people call for X to be socialized Alas it never gets to the final step: X is socialized.

thedufer 8y ago

> let students discharge student loans via bankruptcy This is a fine idea, but you have to recognize that this just means approximately no one gets student loans (and those who do get them don't need them). Think about it: if you come out of college with, say, $20k of debt (granting that this might bring down prices) and no assets, bankruptcy is a very tempting option. Student loans are just inherently problematic - the people who need them have no assets, and the thing they pay for can't be used to secure the loan. Sure, prices would come down, but partially because so many people would be priced out and demand would drop. The solution has to involve more than that.

Gibbon1 8y ago
> Think about it: if you come out of college with, say, $20k of debt (granting that this might bring down prices) and no assets, bankruptcy is a very tempting option. You actually have to convince a judge that's appropriate. And the court has a wide variety of tools at it's disposal to reach an equitable decision. From telling the petitioner to get stuffed all the way to telling the creditors to get stuffed.
- thedufer 8y ago
  Can you cite a case of this happening? As far as I can tell, chapter 7 cases are only ever denied for failing to file properly (missing deadlines, failure to disclose, etc), or kicked over to chapter 13 (which would be pretty remarkable in a case involving the little to no income of most students).
  - Gibbon1 8y ago
    If we were being reasonable about student loan debt Chapter 13 or 11 would be more appropriate than Chapter 7. Both of those allow for debt service to be renegotiated. Student loan debt is a particularly odious bit of neoliberal policy, forcing students to take on debt for something other societies provide for free, non dischargable and guaranteed by the state.
JauntyHatAngle 8y ago

kurthr 8y ago

Woah there... govt subsidizes what? This isn't about subsidies (except for loan guarantees), it's about unsecured credit and debt that can't be discharged in bankruptcy. That (like credit card spending, 8 year car loans, and payday lending) is a recipe for rising prices and high eventual bankruptcy rstes, but it's not govt subsidy. It is regulatory capture.

maxerickson 8y ago
The government backing a huge portion of the loans and creating special treatment for the loans are both, ya know, subsidies. They are slightly indirect.
- kurthr 8y ago
  Yes, that is why I called out loan guarantees. Regulatory capture (special treatment) on the other hand, is not subsidy any more than granting a patent/trademark is a subsidy... it's regulatory capture (the opposite of effective regulation). Corporations don't get to blame the govt for the rules that industry paid for... see what you made me do!

Joeri 8y ago

To bring down cost you don’t bring down the subsidies, but you let the government negotiate price limits on subsidized goods and services. This is how health care and college subsidies work in my country. The government negotiates with the universities and medical industry what the price and the subsidy level will be. Schools and health care can opt out of the subsidy scheme and shrink their market to the rich or opt in and have lower margins with higher quantities. Most choose to opt in, even the top tier. The trick is using the negotiating power of government, which is something U.S. politicians are unwilling to do.

deleted 8y ago

[deleted]