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> ...$25k in loans to make hundreds of thousands more over their life time. 1. Future reward should be discounted, usually by a fairly large constant, because

> ...$25k in loans to make hundreds of thousands more over their life time. 1. Future reward should be discounted, usually by a fairly large constant, because of interest and risk. Also, in many fields, most of those extra hundreds will come toward the end of a career. So, highly discounted. 2. I wonder if it's really a good idea to set up a society where banks that provide educational loans are able to capture huge percentages of future productivity. Seems like this would have all sorts of really negative outcomes. Some of those negative outcomes are already happening -- e.g., we effectively import 90+% of our scientific human capital because US students aren't willing to do phds. We realize that allowing financiers to capture a big chunk of the rewards for K-12 ed is a bad idea. Why don't we realize that the same is true for college?

learc83 7y ago
1. Enough of the extra income is weighted towards the beginning that for most people it's worth $25k particularly since repayment us based on income. 2. Public loans are over 90% of disbursements, and if you're only borrowing $25k you're definitely getting public loans. Public loans are made directly from the treasury. No banks involved. Also most stem phds work as researchers and teachers--they generally aren't paying tuition.
- throwawayjava 7y ago
  > Enough of the extra income is weighted towards the beginning... No banks involved.... Whether it's banks or other taxpayers or recipients of other entitlement programs is, I guess, a bit of a red herring wrt the point I was trying to make. The question is about the knock-on effects of squeezing an entire generation for some chunk of what they're worth before they even enter the job market. Again, I think the K-12 analogy is the best way of communicating the point I'm trying to make. Why don't we also charge high school students $10K @ 4% instead of paying for high school through taxes? Well, because that would be a huge net negative for society. > Also most stem phds work as researchers and teachers--they generally aren't paying tuition. I have a stem phd :). I was referring to the huge opportunity cost re: delayed earnings. US students opting out of phds because they have huge student debt to service is a real thing. This is true even when the phd would undoubtedly increase lifetime earnings (e.g., students from no-name schools turning down CMU/MIT/Berkeley/Standford phd acceptance letters for mid five figure salaries).
  - learc83 7y ago
    You don't need to pay public loans back while getting a phd, so it's not because they have to service them. An extra few years of interest isn't going to matter in the long run. If it would undoubtedly increase life time earnings it's a stupid decision to turn it down because of undergrad student loans. That makes absolutely no sense. >red herring I was taking your post at face value. It lamented allowing financiers to capture value. I'm also not against tax payer funded college. But the loan system we have in the US combined with income based repayment is not as bad as people think it is. Mostly people just don't understand income based repayment and public vs. private loans.

learc83 7y ago

1. Enough of the extra income is weighted towards the beginning that for most people it's worth $25k particularly since repayment us based on income. 2. Public loans are over 90% of disbursements, and if you're only borrowing $25k you're definitely getting public loans. Public loans are made directly from the treasury. No banks involved. Also most stem phds work as researchers and teachers--they generally aren't paying tuition.

throwawayjava 7y ago
> Enough of the extra income is weighted towards the beginning... No banks involved.... Whether it's banks or other taxpayers or recipients of other entitlement programs is, I guess, a bit of a red herring wrt the point I was trying to make. The question is about the knock-on effects of squeezing an entire generation for some chunk of what they're worth before they even enter the job market. Again, I think the K-12 analogy is the best way of communicating the point I'm trying to make. Why don't we also charge high school students $10K @ 4% instead of paying for high school through taxes? Well, because that would be a huge net negative for society. > Also most stem phds work as researchers and teachers--they generally aren't paying tuition. I have a stem phd :). I was referring to the huge opportunity cost re: delayed earnings. US students opting out of phds because they have huge student debt to service is a real thing. This is true even when the phd would undoubtedly increase lifetime earnings (e.g., students from no-name schools turning down CMU/MIT/Berkeley/Standford phd acceptance letters for mid five figure salaries).
- learc83 7y ago
  You don't need to pay public loans back while getting a phd, so it's not because they have to service them. An extra few years of interest isn't going to matter in the long run. If it would undoubtedly increase life time earnings it's a stupid decision to turn it down because of undergrad student loans. That makes absolutely no sense. >red herring I was taking your post at face value. It lamented allowing financiers to capture value. I'm also not against tax payer funded college. But the loan system we have in the US combined with income based repayment is not as bad as people think it is. Mostly people just don't understand income based repayment and public vs. private loans.