4 ms·

Basic decision making and investment ROI should be covered in HS, or at least by peoples parents. 50k for a 1 year degree when you are already in debt isn't in

by ProAm 8y ago

Basic decision making and investment ROI should be covered in HS, or at least by peoples parents. 50k for a 1 year degree when you are already in debt isn't insurmountable but it is significant.

JumpCrisscross 8y ago
> Basic decision making and investment ROI should be covered in HS The "a member of my family once said I deserved student loan debt because I chose the unrealistic field of history" comment reminds me of friends. They're smart. But they came from families that didn't teach ROI. (Their high schools didn't offer , they pursued majors that they found interesting. Nobody offer economics in a remotely-useful form, either.) Nobody told them to consider job-placement frequencies and mean exit salaries. (Let alone where to find these data.) So they didn't. It's difficult to fault them. Their adolescent brains were given insufficient information (or, in some cases wrong information) for a series of huge decisions. They are now left with the consequences of those decisions for life. The only way to fix this is to let loans be wiped out in bankruptcy (i.e. give lenders skin in the game). We probably also need to let lenders vary interest rates by institution and major. (The latter to give borrowers an early price signal around their choices.)
- ASpring 8y ago
  I agree it is difficult to fault these students who chose majors without fully factoring in lifetime earnings and that we should allow college loans to be wiped out in bankruptcy. However, I disagree that we should let lenders vary interest rates by institution and major. Our premise was that these students didn't understand the full picture of what they were getting into. I'm not sure complicating that picture by varying interest rates is going to make the situation better overall.
  - JumpCrisscross 8y ago
    > Our premise was that these students didn't understand the full picture of what they were getting into. I'm not sure complicating that picture by varying interest rates is going to make the situation better overall. As the article illustrates, complexity isn't the core problem. College applications, student aid and education loans are already complicated. The problem is critical information is not being presented to students at the right time. One way to solve this would be mandatory disclosures when (a) schools or lenders send out any marketing materials, (b) admissions or loan applications are received, and (c) school or loan acceptance letters are sent out. (I think this should happen.) Unfortunately, simple disclosure is only a first step. Incorporating the disclosed information into pricing ensures it's received. Also, if we're going to force lenders to bear the risk of default, we should give them a way to manage it. Forcing a single market rate subsidies students pursuing uneconomic majors at the expense of those pursuing economic ones.
  - theli0nheart 8y ago
    > However, I disagree that we should let lenders vary interest rates by institution and major. Going to college is a financial investment, so I see the logic in this: just make it a flat "fee" and let the student decide what to study to make it worth it. I'm not sure what the ramifications of this might be, though. I can imagine there might be some unintended consequences.
    - Mirioron 8y ago
      The consequences are that certain easier degrees will get flooded and the degree becomes worthless "because everyone has one". Most of those people won't be able to find work in their field of expertise. College will still be useful for them, but only as a signaling mechanism. But it might even be a negative signaling mechanism, because it would show that the student didn't think through their actions.
- smileysteve 8y ago
  I find it interesting that we so readily blame this ignorance on age. Someone turning 18... - can join the military - enter contracts - get a credit card or loan - decide not to go to college
- iguy 8y ago
  Here's a half-way measure to give the lenders better incentives, without risking making bankruptcy on your 22nd birthday a rite of passage: Make non-dischargeable student loans only repayable at all when your taxable income is above $50k (or some number keyed to official stats), capped at 15% of income, and written off after 20 years. And let the interest rate, and amount offered, vary with major, school, SAT score, everything. This will provided a vivid picture to 17-year olds of what their choices mean. Taking a 4-year all-inclusive resort holiday should be expensive, maybe it's a nice gift to buy your kids, but nobody should stumble into it thinking they are getting job training. (But the same major at a more selective school may actually have great outcomes -- it doesn't have to be direct job training.) And this way there's no need for a committee to identify which programs do or don't fall into this category, the bankers are free to gamble as they wish.
  - JumpCrisscross 8y ago
    > capped at 15% of income I like your idea. I'd edit $50k to some fraction of the median wage (or multiple of the poverty line) and revise 15% of income to a higher fraction of after-tax income after housing, food, childcare, healthcare and other essential costs. (We already have fraction of discretionary income based repayment programs. Shouldn't be hard to borrow that definition.)
    - iguy 8y ago
      There are lots of details, but I would vote that it should be fairly simple, and connected to few facts beyond your IRS income. There should be no incentive to rent a bigger house, or move to an expensive city, beyond the usual salary/rent tradeoffs. (And no cliff-edges, so perhaps it's max 15% of the income above twice the poverty line?)
Bucephalus355 8y ago
This puts the burden on the individual. We’ve had 30 years of this. What is government or business going to do about it? They’ve been exempt / free from responsibility for far too long. They are as lazy as the “welfare queens” they once tailed against.
- PurpleBoxDragon 8y ago
  > They’ve been exempt / free from responsibility for far too long. I've seen arguments that the government not allowing these debts to be discharged through bankruptcy was a major cause of the problem. Do we want more market manipulation, or should we start teaching students that because the government has allowed for a trap even bankruptcy cannot escape, you need to learn how to avoid it?
SilasX 8y ago
For all requirements $R of everyday life: - "Schools should be required to teach $R, and not graduate a student that hasn't learned it!" - "The evil school wouldn't graduate my snowflake merely because s/he couldn't pass the standardized test for $R!"
- harpastum 8y ago
  Are you saying that one individual might hold both of those positions? Or is your point that people disagree on what is important in school? I'm trying to understand the argument you're making here.
  - SilasX 8y ago
    I'm saying that "verifying schools are really teaching $R" requires something like a standardized test, but those are already unpopular even for things that people agree schools should be teaching. Hence there is a tension between "graduation rates" and "adding more things-schools-have-to-teach", and yes, probably a lot of people who don't see the contradiction (between hate for standardized tests and demands that schools teach $R) as clearly as I've laid it out here.
scarface74 8y ago
According to many on HN, your college education shouldn't be about finding a job. "It isn't vocational training". It's about expanding your mind and becoming a well rounded citizen of the world. Obviously, I don't share that belief....
- freedomben 8y ago
  What is your opinion on the relevance of, and proper place for, trade schools?
  - scarface74 8y ago
    In a perfect society that did not over index on a college education, I would be all for it. Most of the core classes should be taught in high school anyway and shouldn't need to be retaught in college.
    - freedomben 8y ago
      Makes sense, thanks. In a few companies I was involved with early in my career, a B.S. in Xyz was required to even get an interview. Until we fix that problem (which I believe is cultural) the trade school won't be widely acceptable.
- Mirioron 8y ago
  I think that's at least partly true, but if that's the reason you go to college for, then you should consider how much it costs you.
- wolfgke 8y ago
  > According to many on HN, your college education shouldn't be about finding a job. "It isn't vocational training". It's about expanding your mind and becoming a well rounded citizen of the world. In Germany, the mentality is different: school is for becoming well-rounded (that is why one has to attend many obligatory subjects from different areas) and university is for specializing into some area in which you will probably work for the rest of your life.
aqme28 8y ago
I think there's a human-nature problem to teaching ROI like you suggest. People are always going to think that they're going to be the one to break through--to rise above the mean ROI. That's why you get so many people trying to become actors or musicians or athletes or even startup founders. The high-end returns are so distracting that people forget about the mean ROI.
- pnw_hazor 8y ago
  That's why schools that offer financial aid are required to have financial aid advisors. Given the inherent conflict of interest schools should bear some of the risk of student debt.

by ProAm 8y ago

Basic decision making and investment ROI should be covered in HS, or at least by peoples parents. 50k for a 1 year degree when you are already in debt isn't insurmountable but it is significant.

JumpCrisscross 8y ago

> Basic decision making and investment ROI should be covered in HS The "a member of my family once said I deserved student loan debt because I chose the unrealistic field of history" comment reminds me of friends. They're smart. But they came from families that didn't teach ROI. (Their high schools didn't offer , they pursued majors that they found interesting. Nobody offer economics in a remotely-useful form, either.) Nobody told them to consider job-placement frequencies and mean exit salaries. (Let alone where to find these data.) So they didn't. It's difficult to fault them. Their adolescent brains were given insufficient information (or, in some cases wrong information) for a series of huge decisions. They are now left with the consequences of those decisions for life. The only way to fix this is to let loans be wiped out in bankruptcy (i.e. give lenders skin in the game). We probably also need to let lenders vary interest rates by institution and major. (The latter to give borrowers an early price signal around their choices.)

ASpring 8y ago
I agree it is difficult to fault these students who chose majors without fully factoring in lifetime earnings and that we should allow college loans to be wiped out in bankruptcy. However, I disagree that we should let lenders vary interest rates by institution and major. Our premise was that these students didn't understand the full picture of what they were getting into. I'm not sure complicating that picture by varying interest rates is going to make the situation better overall.
- JumpCrisscross 8y ago
  > Our premise was that these students didn't understand the full picture of what they were getting into. I'm not sure complicating that picture by varying interest rates is going to make the situation better overall. As the article illustrates, complexity isn't the core problem. College applications, student aid and education loans are already complicated. The problem is critical information is not being presented to students at the right time. One way to solve this would be mandatory disclosures when (a) schools or lenders send out any marketing materials, (b) admissions or loan applications are received, and (c) school or loan acceptance letters are sent out. (I think this should happen.) Unfortunately, simple disclosure is only a first step. Incorporating the disclosed information into pricing ensures it's received. Also, if we're going to force lenders to bear the risk of default, we should give them a way to manage it. Forcing a single market rate subsidies students pursuing uneconomic majors at the expense of those pursuing economic ones.
- theli0nheart 8y ago
  > However, I disagree that we should let lenders vary interest rates by institution and major. Going to college is a financial investment, so I see the logic in this: just make it a flat "fee" and let the student decide what to study to make it worth it. I'm not sure what the ramifications of this might be, though. I can imagine there might be some unintended consequences.
  - Mirioron 8y ago
    The consequences are that certain easier degrees will get flooded and the degree becomes worthless "because everyone has one". Most of those people won't be able to find work in their field of expertise. College will still be useful for them, but only as a signaling mechanism. But it might even be a negative signaling mechanism, because it would show that the student didn't think through their actions.
smileysteve 8y ago
I find it interesting that we so readily blame this ignorance on age. Someone turning 18... - can join the military - enter contracts - get a credit card or loan - decide not to go to college
iguy 8y ago
Here's a half-way measure to give the lenders better incentives, without risking making bankruptcy on your 22nd birthday a rite of passage: Make non-dischargeable student loans only repayable at all when your taxable income is above $50k (or some number keyed to official stats), capped at 15% of income, and written off after 20 years. And let the interest rate, and amount offered, vary with major, school, SAT score, everything. This will provided a vivid picture to 17-year olds of what their choices mean. Taking a 4-year all-inclusive resort holiday should be expensive, maybe it's a nice gift to buy your kids, but nobody should stumble into it thinking they are getting job training. (But the same major at a more selective school may actually have great outcomes -- it doesn't have to be direct job training.) And this way there's no need for a committee to identify which programs do or don't fall into this category, the bankers are free to gamble as they wish.
- JumpCrisscross 8y ago
  > capped at 15% of income I like your idea. I'd edit $50k to some fraction of the median wage (or multiple of the poverty line) and revise 15% of income to a higher fraction of after-tax income after housing, food, childcare, healthcare and other essential costs. (We already have fraction of discretionary income based repayment programs. Shouldn't be hard to borrow that definition.)
  - iguy 8y ago
    There are lots of details, but I would vote that it should be fairly simple, and connected to few facts beyond your IRS income. There should be no incentive to rent a bigger house, or move to an expensive city, beyond the usual salary/rent tradeoffs. (And no cliff-edges, so perhaps it's max 15% of the income above twice the poverty line?)

Bucephalus355 8y ago

This puts the burden on the individual. We’ve had 30 years of this. What is government or business going to do about it? They’ve been exempt / free from responsibility for far too long. They are as lazy as the “welfare queens” they once tailed against.

PurpleBoxDragon 8y ago
> They’ve been exempt / free from responsibility for far too long. I've seen arguments that the government not allowing these debts to be discharged through bankruptcy was a major cause of the problem. Do we want more market manipulation, or should we start teaching students that because the government has allowed for a trap even bankruptcy cannot escape, you need to learn how to avoid it?

SilasX 8y ago

For all requirements $R of everyday life: - "Schools should be required to teach $R, and not graduate a student that hasn't learned it!" - "The evil school wouldn't graduate my snowflake merely because s/he couldn't pass the standardized test for $R!"

harpastum 8y ago
Are you saying that one individual might hold both of those positions? Or is your point that people disagree on what is important in school? I'm trying to understand the argument you're making here.
- SilasX 8y ago
  I'm saying that "verifying schools are really teaching $R" requires something like a standardized test, but those are already unpopular even for things that people agree schools should be teaching. Hence there is a tension between "graduation rates" and "adding more things-schools-have-to-teach", and yes, probably a lot of people who don't see the contradiction (between hate for standardized tests and demands that schools teach $R) as clearly as I've laid it out here.

scarface74 8y ago

According to many on HN, your college education shouldn't be about finding a job. "It isn't vocational training". It's about expanding your mind and becoming a well rounded citizen of the world. Obviously, I don't share that belief....

freedomben 8y ago
What is your opinion on the relevance of, and proper place for, trade schools?
- scarface74 8y ago
  In a perfect society that did not over index on a college education, I would be all for it. Most of the core classes should be taught in high school anyway and shouldn't need to be retaught in college.
  - freedomben 8y ago
    Makes sense, thanks. In a few companies I was involved with early in my career, a B.S. in Xyz was required to even get an interview. Until we fix that problem (which I believe is cultural) the trade school won't be widely acceptable.
Mirioron 8y ago
I think that's at least partly true, but if that's the reason you go to college for, then you should consider how much it costs you.
wolfgke 8y ago
> According to many on HN, your college education shouldn't be about finding a job. "It isn't vocational training". It's about expanding your mind and becoming a well rounded citizen of the world. In Germany, the mentality is different: school is for becoming well-rounded (that is why one has to attend many obligatory subjects from different areas) and university is for specializing into some area in which you will probably work for the rest of your life.

aqme28 8y ago

I think there's a human-nature problem to teaching ROI like you suggest. People are always going to think that they're going to be the one to break through--to rise above the mean ROI. That's why you get so many people trying to become actors or musicians or athletes or even startup founders. The high-end returns are so distracting that people forget about the mean ROI.

pnw_hazor 8y ago
That's why schools that offer financial aid are required to have financial aid advisors. Given the inherent conflict of interest schools should bear some of the risk of student debt.