7 ms·

> the feds should handle student loans the same way they handle medicaid/medicare reimbursement. I'm not sure how anyone looks at our health care reimbursement

by jefftk 6y ago

> the feds should handle student loans the same way they handle medicaid/medicare reimbursement. I'm not sure how anyone looks at our health care reimbursement system and the decides that's the approach to apply to fix anything else? Personally, I'd like to see: * Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where. * Make student loan debt dischargeable in bankruptcy. Lenders will be much less willing to pay high tuitions in cases where students are unlikely to be able to pay it back, and if the lender guesses wrong and it does come to bankruptcy then the student is no longer encumbered. (I wrote more along these lines: https://www.jefftk.com/p/fixing-student-loans https://www.jefftk.com/p/fixing-student-loans)

koolba 6y ago
The fix for both is the same. Get the government out of the demand side and, if anything, only work on the supply side. Want lower doctor and hospital prices? Try competing against a “free but you have to wait” government option. Budget $X million dollars per year to put some primary care doctors on retainer. Want lower private school tuition? Try competing against a free (or at least low cost) government / public option. If you boost the demand side then the market will suck up any money thrown at it. Loans and subsidies going are the worst approach as they encourage price increases. This works with housing too! Stop subsidizing rents (increasing demand) and build more houses (increase supply).
- Ericson2314 6y ago
  I would not make "Get the government out of the demand side" a rallying cry because UBI is the huge counter-example of something governments should be doing. Better to say governments should do, not fund, on the institutional level (run the school, run the hospital, like you say), and fund, not do, in the individual level (UBI not SNAP).
  - shkkmo 6y ago
    UBI doesn't manipulate the demand for specific markets, it is more of a monetary policy that has only an indirect impact on demand.
    - Ericson2314 6y ago
      > UBI doesn't manipulate the demand for specific markets Totally agreed, this a good thing. > It is more of a monetary policy Sure > that has only an indirect impact on demand. Many disagree. Obviously the most basic goods aren't going to be consumed that much more (e.g. we might consume better food but not dramatically more calories). That said, it's a not-fringe view that demand as been statement for ages, due to things like wages not keeping up with productivity growth. UBI is, among other things a way to fix that.
vonmoltke 6y ago
> Lenders will be much less willing to pay high tuitions in cases where students are unlikely to be able to pay it back The federal government is the lender. That's the central point of the post.
Spivak 6y ago
> Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where. This would never work. People who went to high-prestige schools want to signal that to their employer and when barred would find other ways to signal like "Interned in Dr. Blah's group at the MIT media lab" or "Secretary of the Princeton chapter of the Phi Beta Kappa." > Make student loan debt dischargeable in bankruptcy. This is a fine solution iff you want to make the market exclude all academic endeavors that aren't high-probability profitable. This would basically destroy all specialized scientific research, education degrees, agricultural science, all high-level maths, biology, ecology, zoology, environmental research. When people want the market to decide these thing I imagine they think that "those silly liberal arts degrees" is what will get cut but forget that science doesn't pay either.
- jefftk 6y ago
  > "Interned in Dr. Blah's group at the MIT media lab" or "Secretary of the Princeton chapter of the Phi Beta Kappa." Both of these are about what you have done, and not what you can do. I'm proposing limiting interviews, at least entry-level ones, to relevant skills, abilities, and knowledge. "Read this judicial decision and tell me whether you think it was correctly decided and why." etc. > destroy all specialized scientific research, education degrees, agricultural science, all high-level maths, biology, ecology, zoology, environmental research The government should fund students in these directly, as we do with grants in graduate level education.
- philwelch 6y ago
  > This would basically destroy all specialized scientific research, education degrees, agricultural science, all high-level maths, biology, ecology, zoology, environmental research. Why? All of these fields existed prior to student loans becoming non-dischargable. As it stands, in many fields there is a massive grad school bubble where there are many more grad students and Ph.D’s than tenured positions. As for education degrees, those have the same basic instrumental role as engineering or business degrees—they’re a form of professional training and accreditation. A lot of minor public universities started off as teachers’ colleges in the first place.
citilife 6y ago
Any time you provide increased funding to a customer, the price of the goods will go up. This is the same reason raising the minimum wage would likely increase prices of other goods. An easy-ish solution to this is: 1. Breaking up unions/lobbies - AMA for reference is the limiting factor in the number of doctors. They limit the number of medical students intentionally, inflating doctors wages (and university costs). Administration costs for universities also have high overhead and should be reduced. 2. [Agree] Student loans should be dischargeable via bankruptcy 3. Government shouldn't offer student loans. Instead, offering grants and / or work programs. I went to a junior college for 2.5 years, while working and saving up. Then went to UIUC. I took on some loans, but it was subsidized by my own funds. This leads to more responsibility / accountability so people don't take loans to "party".
- nradov 6y ago
  False. The AMA doesn't limit the number of doctors. The actual limit is the number of residency slots at teaching hospitals, most of which are funded by the federal government. Every year there are students who graduate from medical school with an MD but are unable to practice because they can't get matched to a residency program. The AMA actively supports increasing residency funding.
AlexTWithBeard 6y ago
But strictly speaking, employers do not look where did you go to school - they look at which school has given you a degree.
- toast0 6y ago
  No school of good repute will give you a degree without having some attendence, so I'm not sure this is an important distinction, although certainly two years or community college can save a bunch of money in some states if the circulum is well aligned with the four year program you transfer to (or it you figure out college isn't a good fit for you). Excluding honarary degrees, which are usually given to people who don't need a degree to be hired.
btilly 6y ago
Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where. For those who are unaware, these tests are considered a violation of the Civil Rights Act because they result in hiring blacks at a much lower rate than whites. A big underlying cause of that is that schools with lots of blacks are underfunded relative to schools with lots of whites. Make student loan debt dischargeable in bankruptcy. I support this. I thought that the 2005 change to the law that made it not dischargeable was a bad idea then, and we are seeing the predictable consequences now.
- jefftk 6y ago
  > For those who are unaware, these tests are considered a violation of the Civil Rights Act because they result in hiring blacks at a much lower rate than whites. Work sample tests are legal; otherwise we wouldn't see tech companies giving whiteboard interviews. More general tests are not legal (https://en.wikipedia.org/wiki/Griggs_v._Duke_Power_Co. https://en.wikipedia.org/wiki/Griggs_v._Duke_Power_Co.) unless you can demonstrate that they "bear a demonstrable relationship to successful performance of the jobs for which it was used". On the other hand, they held that "neither the high school completion requirement nor the general intelligence test is shown to bear a demonstrable relationship to successful performance of the jobs for which it was used" so I think there's a decent chance that the widespread use of college degrees as a filter is also already illegal. (Not a lawyer)
  - philwelch 6y ago
    IQ tests aren’t blanket-banned; they just have additional hurdles. For instance, the Wonderlic test is routinely used in hiring contexts and is even part of the NFL scouting combine.
    - Wohlf 6y ago
      Even the SATs and ACTs (and most definitely the ASVAB) have significant overlap with IQ tests.
    - jldugger 6y ago
davinic 6y ago
You could also stop this degree inflation by requiring a $15 minimum wage on all jobs but a $25 minimum wage when the job lists a bachelor's degree requirement (applied based on whether the job requires a degree, not whether the employee has a degree).
- kube-system 6y ago
  Wouldn't work. Employers would simply not list the requirement but hire upon the criteria anyway.
  - jjk166 6y ago
    If jobs with a similar title, description, and other requirements require a degree, and the people you hire all happen to have degrees, it's pretty obvious that you're using it as a criteria. While like other discrimination cases it may be difficult to prove in any one instance and thus small businesses who don't individually hire a statistically significant number of people might get away with it, large employers can still be held accountable.
- nottorp 6y ago
  That would mean those philosophy students wouldn't be able to get a job at McDonalds :)
  - jeremyjh 6y ago
    No, the proposal it is based the job's requirements, not the student's credentials.
kube-system 6y ago
Making it riskier to lend to students again is a pretty regressive policy. It will definitely decrease the average student debt burden, but only because you'll be denying people the opportunity to incur the debt (and go to college) to begin with.
- giantrobot 6y ago
  You're ignoring the feedback loop here. Supposedly wider availability of loans didn't increase enrollment, just tuitions. Before 1993 student loans weren't riskier for the lender. The government was on the hook for the loan if the student defaulted. The lender was never in danger of not getting their money.
Aperocky 6y ago
> but not evaluate them based on whether they went to school or where. This is akin to how you can fire someone for ANY REASON, except a few forbidden reason. Guess which reason Timmy is fired for? Certainly not for trying to start a union.
- jefftk 6y ago
  That does happen some, but it would be much harder for large companies to have an off-the-books policy of requiring a college degree if they couldn't talk about it with each other or put anything in writing for fear it would come out in a suit.
  - Aperocky 6y ago
    A large company would simply have a policy to not even interview, resumes can be discarded for 'lack of qualification' or any other reason. You can't sue a company for discarding applications.
    - jefftk 6y ago
      The company would have some sort of training on how to review resumes. Do you think they would have a secret policy of "you must have a college degree" and tell every new HR hire never to discuss it in a discoverable medium?
dllthomas 6y ago
> Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where. One of my father's arguments, in trying to motivate me to focus on a degree, was that it helped show future employers that I can stay on task over a period of time. I'm not sure how much of a role that really plays, but to whatever degree that matters to employers and a degree is helping to demonstrate it, it would be difficult to test directly in anything resembling an interview setting.
apta 6y ago
The real solution is to ban lending with interest. We have known that usurious lending is a parasitic practice for thousands of years, how did we not learn?
- jefftk 6y ago
  Are you suggesting we run everything on equity? Lend without interest (why would the lender be interested)? Something else? Our society uses debt for an enormous number of things: business loans, car loans, mortgages. Simply prohibiting these seems like a cure worse than the disease?
  - apta 6y ago
    Let's take it one step at a time. Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on. If we ban lending with interest, then you're right, there is no financial benefit to be made. So the lender would be lending out of good will. However, the seller might also be willing to let go of his product on installments (without raising the price, that's also usury). For example, if I go to purchase a car from the dealer, given most people would not be able to afford to pay cash outright, he'd be forced to give it out in installments, otherwise he wouldn't sell. The entire system must be set up properly for this to work. Introducing easy debt just ups prices for everyone, and pushes the poor deeper into misery, exactly as you note: car loans, mortgages, etc. There are solutions. Instead of business loans, the person providing the funds would get a share of the company in return. That way, if the company succeeds, he'll make a profit, and if it doesn't, he'll lose his investment. We can come up with similar scenarios for personal loans.
    - jefftk 6y ago
      > Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on. Many loans have nothing to do with the needy. If I borrow $1M to buy pile driving equipment to start a pile driving business, and pay the loan back with the proceeds of my business, nothing predatory or immoral has happened. Similarly, I borrowed money from the bank to buy my current house. I am relatively well-off; the bank did not take advantage of me by offering a loan at market rate, and I wasn't needy. > If I go to purchase a car from the dealer, given most people would not be able to afford to pay cash outright, he'd be forced to give it out in installments, otherwise he wouldn't sell. The entire system must be set up properly for this to work. To afford to let you (and everyone else) pay for the car in installments, the dealer is going to need to charge a higher price. The amount you end up paying in total for the car is approximately the same under an installment approach than under a loan-with-interest approach. > Instead of business loans, the person providing the funds would get a share of the company in return. This is what most startups do, yes
paxys 6y ago
Making student loans dischargeable in bankruptcy is a terrible idea. A much better way to help young graduates/professionals is to enforce sensible forgiveness programs for private loans.

by jefftk 6y ago

koolba 6y ago

The fix for both is the same. Get the government out of the demand side and, if anything, only work on the supply side. Want lower doctor and hospital prices? Try competing against a “free but you have to wait” government option. Budget $X million dollars per year to put some primary care doctors on retainer. Want lower private school tuition? Try competing against a free (or at least low cost) government / public option. If you boost the demand side then the market will suck up any money thrown at it. Loans and subsidies going are the worst approach as they encourage price increases. This works with housing too! Stop subsidizing rents (increasing demand) and build more houses (increase supply).

Ericson2314 6y ago
I would not make "Get the government out of the demand side" a rallying cry because UBI is the huge counter-example of something governments should be doing. Better to say governments should do, not fund, on the institutional level (run the school, run the hospital, like you say), and fund, not do, in the individual level (UBI not SNAP).
- shkkmo 6y ago
  UBI doesn't manipulate the demand for specific markets, it is more of a monetary policy that has only an indirect impact on demand.
  - Ericson2314 6y ago
    > UBI doesn't manipulate the demand for specific markets Totally agreed, this a good thing. > It is more of a monetary policy Sure > that has only an indirect impact on demand. Many disagree. Obviously the most basic goods aren't going to be consumed that much more (e.g. we might consume better food but not dramatically more calories). That said, it's a not-fringe view that demand as been statement for ages, due to things like wages not keeping up with productivity growth. UBI is, among other things a way to fix that.

vonmoltke 6y ago

> Lenders will be much less willing to pay high tuitions in cases where students are unlikely to be able to pay it back The federal government is the lender. That's the central point of the post.

Spivak 6y ago

> Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where. This would never work. People who went to high-prestige schools want to signal that to their employer and when barred would find other ways to signal like "Interned in Dr. Blah's group at the MIT media lab" or "Secretary of the Princeton chapter of the Phi Beta Kappa." > Make student loan debt dischargeable in bankruptcy. This is a fine solution iff you want to make the market exclude all academic endeavors that aren't high-probability profitable. This would basically destroy all specialized scientific research, education degrees, agricultural science, all high-level maths, biology, ecology, zoology, environmental research. When people want the market to decide these thing I imagine they think that "those silly liberal arts degrees" is what will get cut but forget that science doesn't pay either.

jefftk 6y ago
> "Interned in Dr. Blah's group at the MIT media lab" or "Secretary of the Princeton chapter of the Phi Beta Kappa." Both of these are about what you have done, and not what you can do. I'm proposing limiting interviews, at least entry-level ones, to relevant skills, abilities, and knowledge. "Read this judicial decision and tell me whether you think it was correctly decided and why." etc. > destroy all specialized scientific research, education degrees, agricultural science, all high-level maths, biology, ecology, zoology, environmental research The government should fund students in these directly, as we do with grants in graduate level education.
philwelch 6y ago
> This would basically destroy all specialized scientific research, education degrees, agricultural science, all high-level maths, biology, ecology, zoology, environmental research. Why? All of these fields existed prior to student loans becoming non-dischargable. As it stands, in many fields there is a massive grad school bubble where there are many more grad students and Ph.D’s than tenured positions. As for education degrees, those have the same basic instrumental role as engineering or business degrees—they’re a form of professional training and accreditation. A lot of minor public universities started off as teachers’ colleges in the first place.

citilife 6y ago

Any time you provide increased funding to a customer, the price of the goods will go up. This is the same reason raising the minimum wage would likely increase prices of other goods. An easy-ish solution to this is: 1. Breaking up unions/lobbies - AMA for reference is the limiting factor in the number of doctors. They limit the number of medical students intentionally, inflating doctors wages (and university costs). Administration costs for universities also have high overhead and should be reduced. 2. [Agree] Student loans should be dischargeable via bankruptcy 3. Government shouldn't offer student loans. Instead, offering grants and / or work programs. I went to a junior college for 2.5 years, while working and saving up. Then went to UIUC. I took on some loans, but it was subsidized by my own funds. This leads to more responsibility / accountability so people don't take loans to "party".

nradov 6y ago
False. The AMA doesn't limit the number of doctors. The actual limit is the number of residency slots at teaching hospitals, most of which are funded by the federal government. Every year there are students who graduate from medical school with an MD but are unable to practice because they can't get matched to a residency program. The AMA actively supports increasing residency funding.

AlexTWithBeard 6y ago

But strictly speaking, employers do not look where did you go to school - they look at which school has given you a degree.

toast0 6y ago
No school of good repute will give you a degree without having some attendence, so I'm not sure this is an important distinction, although certainly two years or community college can save a bunch of money in some states if the circulum is well aligned with the four year program you transfer to (or it you figure out college isn't a good fit for you). Excluding honarary degrees, which are usually given to people who don't need a degree to be hired.

btilly 6y ago

Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where. For those who are unaware, these tests are considered a violation of the Civil Rights Act because they result in hiring blacks at a much lower rate than whites. A big underlying cause of that is that schools with lots of blacks are underfunded relative to schools with lots of whites. Make student loan debt dischargeable in bankruptcy. I support this. I thought that the 2005 change to the law that made it not dischargeable was a bad idea then, and we are seeing the predictable consequences now.

jefftk 6y ago
> For those who are unaware, these tests are considered a violation of the Civil Rights Act because they result in hiring blacks at a much lower rate than whites. Work sample tests are legal; otherwise we wouldn't see tech companies giving whiteboard interviews. More general tests are not legal (https://en.wikipedia.org/wiki/Griggs_v._Duke_Power_Co. https://en.wikipedia.org/wiki/Griggs_v._Duke_Power_Co.) unless you can demonstrate that they "bear a demonstrable relationship to successful performance of the jobs for which it was used". On the other hand, they held that "neither the high school completion requirement nor the general intelligence test is shown to bear a demonstrable relationship to successful performance of the jobs for which it was used" so I think there's a decent chance that the widespread use of college degrees as a filter is also already illegal. (Not a lawyer)
- philwelch 6y ago
  IQ tests aren’t blanket-banned; they just have additional hurdles. For instance, the Wonderlic test is routinely used in hiring contexts and is even part of the NFL scouting combine.
  - Wohlf 6y ago
    Even the SATs and ACTs (and most definitely the ASVAB) have significant overlap with IQ tests.
  - jldugger 6y ago

davinic 6y ago

You could also stop this degree inflation by requiring a $15 minimum wage on all jobs but a $25 minimum wage when the job lists a bachelor's degree requirement (applied based on whether the job requires a degree, not whether the employee has a degree).

kube-system 6y ago
Wouldn't work. Employers would simply not list the requirement but hire upon the criteria anyway.
- jjk166 6y ago
  If jobs with a similar title, description, and other requirements require a degree, and the people you hire all happen to have degrees, it's pretty obvious that you're using it as a criteria. While like other discrimination cases it may be difficult to prove in any one instance and thus small businesses who don't individually hire a statistically significant number of people might get away with it, large employers can still be held accountable.
nottorp 6y ago
That would mean those philosophy students wouldn't be able to get a job at McDonalds :)
- jeremyjh 6y ago
  No, the proposal it is based the job's requirements, not the student's credentials.

kube-system 6y ago

Making it riskier to lend to students again is a pretty regressive policy. It will definitely decrease the average student debt burden, but only because you'll be denying people the opportunity to incur the debt (and go to college) to begin with.

giantrobot 6y ago
You're ignoring the feedback loop here. Supposedly wider availability of loans didn't increase enrollment, just tuitions. Before 1993 student loans weren't riskier for the lender. The government was on the hook for the loan if the student defaulted. The lender was never in danger of not getting their money.

Aperocky 6y ago

> but not evaluate them based on whether they went to school or where. This is akin to how you can fire someone for ANY REASON, except a few forbidden reason. Guess which reason Timmy is fired for? Certainly not for trying to start a union.

jefftk 6y ago
That does happen some, but it would be much harder for large companies to have an off-the-books policy of requiring a college degree if they couldn't talk about it with each other or put anything in writing for fear it would come out in a suit.
- Aperocky 6y ago
  A large company would simply have a policy to not even interview, resumes can be discarded for 'lack of qualification' or any other reason. You can't sue a company for discarding applications.
  - jefftk 6y ago
    The company would have some sort of training on how to review resumes. Do you think they would have a secret policy of "you must have a college degree" and tell every new HR hire never to discuss it in a discoverable medium?

dllthomas 6y ago

> Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where. One of my father's arguments, in trying to motivate me to focus on a degree, was that it helped show future employers that I can stay on task over a period of time. I'm not sure how much of a role that really plays, but to whatever degree that matters to employers and a degree is helping to demonstrate it, it would be difficult to test directly in anything resembling an interview setting.

apta 6y ago

The real solution is to ban lending with interest. We have known that usurious lending is a parasitic practice for thousands of years, how did we not learn?

jefftk 6y ago
Are you suggesting we run everything on equity? Lend without interest (why would the lender be interested)? Something else? Our society uses debt for an enormous number of things: business loans, car loans, mortgages. Simply prohibiting these seems like a cure worse than the disease?
- apta 6y ago
  Let's take it one step at a time. Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on. If we ban lending with interest, then you're right, there is no financial benefit to be made. So the lender would be lending out of good will. However, the seller might also be willing to let go of his product on installments (without raising the price, that's also usury). For example, if I go to purchase a car from the dealer, given most people would not be able to afford to pay cash outright, he'd be forced to give it out in installments, otherwise he wouldn't sell. The entire system must be set up properly for this to work. Introducing easy debt just ups prices for everyone, and pushes the poor deeper into misery, exactly as you note: car loans, mortgages, etc. There are solutions. Instead of business loans, the person providing the funds would get a share of the company in return. That way, if the company succeeds, he'll make a profit, and if it doesn't, he'll lose his investment. We can come up with similar scenarios for personal loans.
  - jefftk 6y ago
    > Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on. Many loans have nothing to do with the needy. If I borrow $1M to buy pile driving equipment to start a pile driving business, and pay the loan back with the proceeds of my business, nothing predatory or immoral has happened. Similarly, I borrowed money from the bank to buy my current house. I am relatively well-off; the bank did not take advantage of me by offering a loan at market rate, and I wasn't needy. > If I go to purchase a car from the dealer, given most people would not be able to afford to pay cash outright, he'd be forced to give it out in installments, otherwise he wouldn't sell. The entire system must be set up properly for this to work. To afford to let you (and everyone else) pay for the car in installments, the dealer is going to need to charge a higher price. The amount you end up paying in total for the car is approximately the same under an installment approach than under a loan-with-interest approach. > Instead of business loans, the person providing the funds would get a share of the company in return. This is what most startups do, yes

paxys 6y ago

Making student loans dischargeable in bankruptcy is a terrible idea. A much better way to help young graduates/professionals is to enforce sensible forgiveness programs for private loans.