4 ms·

This just is how society currently works, except instead of $125,000 the young person gets four years of classroom lectures. And it's more like 10% of income fo

This just is how society currently works, except instead of $125,000 the young person gets four years of classroom lectures. And it's more like 10% of income for 20 years, depending on the school.

sliverstorm 13y ago
The article won't load for me. $125k? Is that the number? Am I failing at math, or does that mean someone is betting she will average at least $125k/year over the next 10 years? Not sure how to react. Not outside the realm of possibility, but a pretty darn aggressive bet nonetheless.
- just2n 13y ago
  $168k. After taxes. If you assume 30% taxation, she'd have to have a pre-tax salary of $240,000/yr. This is assuming the investor could have obtained 3% per year in relatively safe investments. To break even (which is actually a loss, due to inflation), it would still be somewhere in the $160-170k ballpark.
pjscott 13y ago
Student loans actually come on less friendly terms; with loans, the amount of money you pay doesn't depend on your post-school income, so the financial burden falls equally on everyone regardless of their ability to bear it. Imagine, hypothetically, that the student loan system were replaced with percent-of-income contracts like the one in the OP. This would give investors an incentive to maximize the total future income of the students they invest in, minus school cost. There are some problems with that, but frankly, I much prefer those incentives to the ones created by the current student loan system, where the most profitable strategy is to get students in as much debt as possible.
- manicdee 13y ago
  That is how student financing works here in Australia: below a certain threshold income (about $37k in a country with median wages of about $50k) you pay nothing, then you pay a percentage of your income over that.

4 ms·

This just is how society currently works, except instead of $125,000 the young person gets four years of classroom lectures. And it's more like 10% of income fo

by reader5000 13y ago

This just is how society currently works, except instead of $125,000 the young person gets four years of classroom lectures. And it's more like 10% of income for 20 years, depending on the school.

sliverstorm 13y ago
The article won't load for me. $125k? Is that the number? Am I failing at math, or does that mean someone is betting she will average at least $125k/year over the next 10 years? Not sure how to react. Not outside the realm of possibility, but a pretty darn aggressive bet nonetheless.
- just2n 13y ago
  $168k. After taxes. If you assume 30% taxation, she'd have to have a pre-tax salary of $240,000/yr. This is assuming the investor could have obtained 3% per year in relatively safe investments. To break even (which is actually a loss, due to inflation), it would still be somewhere in the $160-170k ballpark.
pjscott 13y ago
Student loans actually come on less friendly terms; with loans, the amount of money you pay doesn't depend on your post-school income, so the financial burden falls equally on everyone regardless of their ability to bear it. Imagine, hypothetically, that the student loan system were replaced with percent-of-income contracts like the one in the OP. This would give investors an incentive to maximize the total future income of the students they invest in, minus school cost. There are some problems with that, but frankly, I much prefer those incentives to the ones created by the current student loan system, where the most profitable strategy is to get students in as much debt as possible.
- manicdee 13y ago
  That is how student financing works here in Australia: below a certain threshold income (about $37k in a country with median wages of about $50k) you pay nothing, then you pay a percentage of your income over that.