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This has a critical flaw: those expecting to work in a high-paying field will self-select more traditional loans, whereas those pursuing a degree with less prom

This has a critical flaw: those expecting to work in a high-paying field will self-select more traditional loans, whereas those pursuing a degree with less promising income expectations will disproportionately opt for this type of loan. If a university (or a state) chooses to force everyone to study under this model, they'll find that students expecting high-paying jobs will go elsewhere, and students expecting low-paying jobs will flock to those schools. Fundamentally, if I'm planning to study CS for the next four years, it's a good bet that I'll be making more money than someone getting an English degree; and I don't particulalry want to subsidize their education with my future earnings. There's a close parallel here with John Galt quitting his job in Atlas Shrugged.

toomuchtodo 13y ago
How is this any different than simply raising taxes and providing education at minimal cost with no loans? As always, the US drops the ball again.
- bajsejohannes 13y ago
  Small evolutions are easier than big revolutions.
  - enraged_camel 13y ago
    Evolutions take a long time. Can we as a nation really afford the luxury of waiting?
- dangrossman 13y ago
  It's an opt-in tax only on the people that receive the benefits of the program. I actually like that idea; it wouldn't work for everything, but I think it can work for higher education.
  - toomuchtodo 13y ago
    So its like health insurance if you don't make it mandatory. Only the people who are going to maximize their utilization of it are going to opt-in. Hence why it has to be a blanket tax. How many people would opt-in to social security if it wasn't mandatory?
MJR 13y ago
At a 100K salary, over 24 years you would pay 72K. The same cost of 72K as a loan at 6.8% paid over 24 years would amount to $146,229.96 with total interest paid of $74,229.96 That's more interest than the cost of the loan. You would have to average more than 203K a year in salary in order for this to be the wrong choice. The average student isn't going to come close to that. Do you really expect that you'll be making more than an average of 203K over the next 24 years?
- deleted 13y ago
  [deleted]
- pfisch 13y ago
  At 100k salary why would it take 24 years to pay back a 72k loan?
  - MJR 13y ago
    I used 100K as an example that even at that high of an income $3,000 a year only adds up to 72K. If you make 50K salary for 24 years you're still only paying 36K for your education. The program stats "students would pay 3 percent of their paycheck back for 24 years in order to help fund the program for future students". With the direction higher education costs are moving, this could be a very inviting choice for those who would pay for college with student loans.
- deleted 13y ago
  [deleted]
  - count 13y ago
    Depends on the interest rate of the loan. No reason to pay it off early if you've got a 1-2% loan - you'd be better off in the long term investing that 'extra' money and getting 3-5% return.
    - dangrossman 13y ago
      Where are you going to get a 1-2% student loan as an 18 year old with no credit or assets (or anyone else, really)? Government loans are 6.8% right now.
icn2 13y ago
This is the part I am always confused. If we all know graduates getting an engineering degree(CS,EE) make more money than graduates with english/arts degree. We should see an obvious trend students heading to engineering majors. Why still so many students go to english/arts/... major and they know they will make less promising income?
- MJR 13y ago
  Isn't it obvious that it's because they aren't interested in a career in engineering? For some people having a higher income is not more important than having a career that they enjoy or that inspires them.
- jmduke 13y ago
  Why still so many students go to english/arts/... major and they know they will make less promising income? Many -- I'd say even most -- students base their careers on something besides projected income. I think this is a very good thing.
  - dantheman 13y ago
    Unfortunately they're taking on massive amounts of debt that will make their life more difficult. If they could only receive a loan for a percentage of their projected income then they'd be able to decide if it's worth it. And it would put price pressures on the school.
- gngeal 13y ago
  We should see a obvious trend students heading to engineering majors. Yes, especially people with childhood dreams of studying history or art will be turned on by the prospect of designing airliners and nuclear reactors.
- cdavid 13y ago
  Same could be said of doing a MBA or medicine compared to STEM. Yet few people on HN made that choice.
  - 13y ago
majormajor 13y ago
Most of the people most likely to want to opt out are, I imagine, already effectively doing by not going to the Oregon state schools and going to, say, a highly ranked private university. Or they might be getting substantial scholarship assistance as it is (it's unclear to me how this would work under the new system, the article could use more details there). There are a lot of students out there who don't go into college with the sort of super-high self-confidence that would cause them to turn down a free education because they think they'd be better off with a traditional loan. So the question is: will enough of them make enough money to make it a workable solution? My guess is yes.
jberryman 13y ago
> and I don't particulalry want to subsidize their education with my future earnings. Then do you oppose the idea of public universities generally? Atlas Shrugged is a work of fantasy and light philosophy; I don't think it's relevant to the problem at hand.

toomuchtodo 13y ago

How is this any different than simply raising taxes and providing education at minimal cost with no loans? As always, the US drops the ball again.

bajsejohannes 13y ago
Small evolutions are easier than big revolutions.
- enraged_camel 13y ago
  Evolutions take a long time. Can we as a nation really afford the luxury of waiting?
dangrossman 13y ago
It's an opt-in tax only on the people that receive the benefits of the program. I actually like that idea; it wouldn't work for everything, but I think it can work for higher education.
- toomuchtodo 13y ago
  So its like health insurance if you don't make it mandatory. Only the people who are going to maximize their utilization of it are going to opt-in. Hence why it has to be a blanket tax. How many people would opt-in to social security if it wasn't mandatory?

MJR 13y ago

At a 100K salary, over 24 years you would pay 72K. The same cost of 72K as a loan at 6.8% paid over 24 years would amount to $146,229.96 with total interest paid of $74,229.96 That's more interest than the cost of the loan. You would have to average more than 203K a year in salary in order for this to be the wrong choice. The average student isn't going to come close to that. Do you really expect that you'll be making more than an average of 203K over the next 24 years?

deleted 13y ago
[deleted]
pfisch 13y ago
At 100k salary why would it take 24 years to pay back a 72k loan?
- MJR 13y ago
  I used 100K as an example that even at that high of an income $3,000 a year only adds up to 72K. If you make 50K salary for 24 years you're still only paying 36K for your education. The program stats "students would pay 3 percent of their paycheck back for 24 years in order to help fund the program for future students". With the direction higher education costs are moving, this could be a very inviting choice for those who would pay for college with student loans.
deleted 13y ago
[deleted]
- count 13y ago
  Depends on the interest rate of the loan. No reason to pay it off early if you've got a 1-2% loan - you'd be better off in the long term investing that 'extra' money and getting 3-5% return.
  - dangrossman 13y ago
    Where are you going to get a 1-2% student loan as an 18 year old with no credit or assets (or anyone else, really)? Government loans are 6.8% right now.

icn2 13y ago

This is the part I am always confused. If we all know graduates getting an engineering degree(CS,EE) make more money than graduates with english/arts degree. We should see an obvious trend students heading to engineering majors. Why still so many students go to english/arts/... major and they know they will make less promising income?

MJR 13y ago
Isn't it obvious that it's because they aren't interested in a career in engineering? For some people having a higher income is not more important than having a career that they enjoy or that inspires them.
jmduke 13y ago
Why still so many students go to english/arts/... major and they know they will make less promising income? Many -- I'd say even most -- students base their careers on something besides projected income. I think this is a very good thing.
- dantheman 13y ago
  Unfortunately they're taking on massive amounts of debt that will make their life more difficult. If they could only receive a loan for a percentage of their projected income then they'd be able to decide if it's worth it. And it would put price pressures on the school.
gngeal 13y ago
We should see a obvious trend students heading to engineering majors. Yes, especially people with childhood dreams of studying history or art will be turned on by the prospect of designing airliners and nuclear reactors.
cdavid 13y ago
Same could be said of doing a MBA or medicine compared to STEM. Yet few people on HN made that choice.
- 13y ago

majormajor 13y ago

Most of the people most likely to want to opt out are, I imagine, already effectively doing by not going to the Oregon state schools and going to, say, a highly ranked private university. Or they might be getting substantial scholarship assistance as it is (it's unclear to me how this would work under the new system, the article could use more details there). There are a lot of students out there who don't go into college with the sort of super-high self-confidence that would cause them to turn down a free education because they think they'd be better off with a traditional loan. So the question is: will enough of them make enough money to make it a workable solution? My guess is yes.

jberryman 13y ago

> and I don't particulalry want to subsidize their education with my future earnings. Then do you oppose the idea of public universities generally? Atlas Shrugged is a work of fantasy and light philosophy; I don't think it's relevant to the problem at hand.