7 ms·

While I’m happy for the students and appreciate the “pay it forward” message, I am just shocked that the collective debt for 396 students is $40 million. That’s

by qzw 7y ago

While I’m happy for the students and appreciate the “pay it forward” message, I am just shocked that the collective debt for 396 students is $40 million. That’s $100k per student on average, just for a bachelor’s degree. How could this be sustainable?

austenallred 7y ago
It’s not
- maxerickson 7y ago
  Is that because the cost for a useful vocational education should be closer to $30,000? Or are you saying that people with millions of dollars of productivity ahead of them can't afford $100,000?
  - austenallred 7y ago
    Starting life with $100,000 in debt compounding at 4-10% per year is a rough start, even with millions of dollars of productivity ahead.
    - lotsofpulp 7y ago
      The real handicap is the lost compounding as many will sacrifice saving for retirement, emergency funds, or otherwise use funds that can be invested for long term security.
    - maxerickson 7y ago
      Sure, I think huge student loans are bad for society, I was just wondering what your reasoning was, and I'm obnoxious enough to prod you to make the case that a $30,000 obligation is materially different.
      - austenallred 7y ago
        It’s only a $30,000 obligation if you’re making more than ~$90,000/year, and there’s no interest attached. A non-trivial number of those students would never make enough to pay off the loans. Ever. That’s not an exaggeration and happens in more than 50% of cases at expensive HBCs.
scarface74 7y ago
It’s what happens when you think you need to go to a private college.... They could go to a public 4 year college cheaper.
- thereare5lights 7y ago
  4 years at a UC is still 80-100k
  - pbreit 7y ago
    Four years at UC is about $55k.
    - thereare5lights 7y ago
      Room and board?
  - archgoon 7y ago
    This appears to be accurate. http://admission.universityofcalifornia.edu/paying-for-uc/tuition-and-cost/index.html http://admission.universityofcalifornia.edu/paying-for-uc/tu... The Cal State system is basically the same: https://financialaid.calpoly.edu/coa1819.html https://financialaid.calpoly.edu/coa1819.html Note, college loans don't only cover tuition (which is not the sole cost of college). They are also needed for room and board. The above links explicitly call that out.
    - scarface74 7y ago
      As another poster said. They are only needed if you don’t work while in college or at least go to a two year college that lets you stay at home and then transfer.
      - archgoon 7y ago
        Hey, I'm just citing the estimates from the financial help sections of Universities. 80k-100k is an accurate description of what UC Berkeley estimates for a 4 year degree.
deleted 7y ago
[deleted]
rgbrenner 7y ago
It says the gift will be "up to" $40m. We don't know the actual amount of collective debt. It could be more or less.
- WesternStar 7y ago
  A good estimate based on Dept of Ed statistics is around 400*26k or a little over 10 million. He might be able to pay for 4 classes in fact.
deleted 7y ago
[deleted]
joelrunyon 7y ago
Agreed - This is a great gesture, but I wonder if it will just encourage bad/gouging behavior by colleges. Why the hell does education need to be that expensive? Maybe for a doctor, sure - but for teachers who are going to come out making 30k - it seems that education prices should be tied to future earning potential somehow.
- platform 7y ago
  Surely, just cancelling debt will always increase cost of service (I cannot come up with a historical example where this is not the case, but happy to be corrected). However, this gesture is not a policy, and just a really nice gift and expression of altruism. Also... since you mentioned it, I cannot believe how little teachers are making, including their pension guarantees (in US and many other countries) -- for the effort that many of them put in -- this is just a disgrace. I wish, there would be a way for exchange safety/tenure guarantees for significant pay increase (eg at least double). And let the teachers make that choice.
- darawk 7y ago
  > Maybe for a doctor, sure - but for teachers who are going to come out making 30k - it seems that education prices should be tied to future earning potential somehow. The real problem is that people are completely price insensitive when it comes to their education. I would prefer us to move to an equity model, personally. One where education is free, but the university takes a small cut of your future earnings. This way everyone's incentives are properly aligned.
  - captbaritone 7y ago
    I wonder what an equity system would end up doing to the way compensation works. I would imagine “perk” and other non-salary forms of compensation would increase, and other forms of Hollywood Accounting style tricks would be common. Maybe not though, since the IRS already has legal frameworks in place to ensure income is able to be accounted for.
  - igorkraw 7y ago
    And for efficiencies sake we could centralise the collection of that cut. We could call it "taxes" (snark aside, this is why public education works. If you need to have a free market system, then have well regulated collection agencies compete for the attention of universities who's only allowed source of funding will be this cut, with some additional bonus paid out by the state for social mobility. One measure of this could be the increase in salary vs expected salary based on socioeconomic class)
JackFr 7y ago
That number might possibly grossed up to include the gift tax he's got to pay. That being said it's still an astonishing amount of debt.
hanoz 7y ago
This is the natural consequence of unrestrained usury in a market for things everyone needs one of. See also - housing. Only the bankers benefit in the end.

by qzw 7y ago

austenallred 7y ago

It’s not

maxerickson 7y ago
Is that because the cost for a useful vocational education should be closer to $30,000? Or are you saying that people with millions of dollars of productivity ahead of them can't afford $100,000?
- austenallred 7y ago
  Starting life with $100,000 in debt compounding at 4-10% per year is a rough start, even with millions of dollars of productivity ahead.
  - lotsofpulp 7y ago
    The real handicap is the lost compounding as many will sacrifice saving for retirement, emergency funds, or otherwise use funds that can be invested for long term security.
  - maxerickson 7y ago
    Sure, I think huge student loans are bad for society, I was just wondering what your reasoning was, and I'm obnoxious enough to prod you to make the case that a $30,000 obligation is materially different.
    - austenallred 7y ago
      It’s only a $30,000 obligation if you’re making more than ~$90,000/year, and there’s no interest attached. A non-trivial number of those students would never make enough to pay off the loans. Ever. That’s not an exaggeration and happens in more than 50% of cases at expensive HBCs.

scarface74 7y ago

It’s what happens when you think you need to go to a private college.... They could go to a public 4 year college cheaper.

thereare5lights 7y ago
4 years at a UC is still 80-100k
- pbreit 7y ago
  Four years at UC is about $55k.
  - thereare5lights 7y ago
    Room and board?
- archgoon 7y ago
  This appears to be accurate. http://admission.universityofcalifornia.edu/paying-for-uc/tuition-and-cost/index.html http://admission.universityofcalifornia.edu/paying-for-uc/tu... The Cal State system is basically the same: https://financialaid.calpoly.edu/coa1819.html https://financialaid.calpoly.edu/coa1819.html Note, college loans don't only cover tuition (which is not the sole cost of college). They are also needed for room and board. The above links explicitly call that out.
  - scarface74 7y ago
    As another poster said. They are only needed if you don’t work while in college or at least go to a two year college that lets you stay at home and then transfer.
    - archgoon 7y ago
      Hey, I'm just citing the estimates from the financial help sections of Universities. 80k-100k is an accurate description of what UC Berkeley estimates for a 4 year degree.

deleted 7y ago

[deleted]

rgbrenner 7y ago

It says the gift will be "up to" $40m. We don't know the actual amount of collective debt. It could be more or less.

WesternStar 7y ago
A good estimate based on Dept of Ed statistics is around 400*26k or a little over 10 million. He might be able to pay for 4 classes in fact.

deleted 7y ago

[deleted]

joelrunyon 7y ago

Agreed - This is a great gesture, but I wonder if it will just encourage bad/gouging behavior by colleges. Why the hell does education need to be that expensive? Maybe for a doctor, sure - but for teachers who are going to come out making 30k - it seems that education prices should be tied to future earning potential somehow.

platform 7y ago
Surely, just cancelling debt will always increase cost of service (I cannot come up with a historical example where this is not the case, but happy to be corrected). However, this gesture is not a policy, and just a really nice gift and expression of altruism. Also... since you mentioned it, I cannot believe how little teachers are making, including their pension guarantees (in US and many other countries) -- for the effort that many of them put in -- this is just a disgrace. I wish, there would be a way for exchange safety/tenure guarantees for significant pay increase (eg at least double). And let the teachers make that choice.
darawk 7y ago
> Maybe for a doctor, sure - but for teachers who are going to come out making 30k - it seems that education prices should be tied to future earning potential somehow. The real problem is that people are completely price insensitive when it comes to their education. I would prefer us to move to an equity model, personally. One where education is free, but the university takes a small cut of your future earnings. This way everyone's incentives are properly aligned.
- captbaritone 7y ago
  I wonder what an equity system would end up doing to the way compensation works. I would imagine “perk” and other non-salary forms of compensation would increase, and other forms of Hollywood Accounting style tricks would be common. Maybe not though, since the IRS already has legal frameworks in place to ensure income is able to be accounted for.
- igorkraw 7y ago
  And for efficiencies sake we could centralise the collection of that cut. We could call it "taxes" (snark aside, this is why public education works. If you need to have a free market system, then have well regulated collection agencies compete for the attention of universities who's only allowed source of funding will be this cut, with some additional bonus paid out by the state for social mobility. One measure of this could be the increase in salary vs expected salary based on socioeconomic class)

JackFr 7y ago

That number might possibly grossed up to include the gift tax he's got to pay. That being said it's still an astonishing amount of debt.

hanoz 7y ago

This is the natural consequence of unrestrained usury in a market for things everyone needs one of. See also - housing. Only the bankers benefit in the end.