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> I think the last thing any part of the higher education industry -- for-profit or not -- needs is more subsidies. edit: some revision. There are two forms o

by nmrm2 12y ago

> I think the last thing any part of the higher education industry -- for-profit or not -- needs is more subsidies. edit: some revision. There are two forms of subsidy: direct funding for state systems, and loans. With respect to subsidies in the form of low-interest loans, the underlying premise of this position is both faulty and arrogant. Talk with any student. Odds are, they are acutely aware of how much debt they are taking on, and what that means for their life in the next 5, 10, 15 years. The trope about cognitively dissonant art majors is an exception, not the norm. More to the point, the position isn't even internally consistent. if the premise is accurate (again, wrt low-interest loans), then rate hikes on loans won't have any effect other than increased student debt and larger profit margins for major banks. With respect to state funding, all we need to do is look at historical data.

crazy1van 12y ago
The purpose of subsidized loans is to redirect debt towards a specific area. Society determines that people should be given preferential treatment if they are borrowing for certain purposes and they pass laws to reflect that. Typically these are things like higher education and homes. When this happens, it changes the calculus of an individual -- borrowing towards these specific purposes becomes more appealing because you get more for your money. I'm not arguing that this is either good or bad. However, I don't see the logic of both complaining that we spend too much on something while at the same time advocating more subsidies for those who want to borrow to buy more of it.
- nmrm 12y ago
  This premise is also faulty; this isn't the calculus of most consumers of higher education. The calculus is more like "I need a college degree to get where I want in life. Period." > I don't see the logic of both complaining that we spend too much on something while at the same time advocating more subsidies for those who want to borrow to buy more of it. "we" the government, or "we" the individual consumer? It's possible for the individual to spend too much money on something precisely because the government isn't spending enough.
  - crazy1van 12y ago
    > "we" the government, or "we" the individual consumer? I mean the total of all spending. Although I contend that the two really aren't that different as government spending is just the aggregate of individual spending on government itself. > This premise is also faulty You are suggesting that subsidizing something can make the sum total of all spending on that thing go down? I completely disagree with that notion and I think this is the root of our disagreement. At least we found the crux of it. Even if neither side in the debate leaves convinced of the other side's position, I'm convinced it was worthwhile if the debate ends knowing more precisely where you disagree.
    - nmrm 12y ago
      > Although I contend that the two really aren't that different as government spending is just the aggregate of individual spending on government itself. America has a progressive tax system, so this sort of aggregation argument is over-simplistic. > You are suggesting that subsidizing something can make the sum total of all spending on that thing go down? Yes, absolutely. Even operating from your premises, spending more can decrease costs. In the case of no/low-interest loans, as long as the cost of defaults doesn't exceed the amount saved in interest paid to banks, everyone is spending less money on education. Combining no/low-interest loans with increased state funding for education significantly decreases the risk of default. So the "right answer" to minimizing spending is just a matter of simply arithmetic: C_f = Cost of state Funding C_d = Cost of Defaults B_i = Total money saved on interest payments (let's assume 5% rate with 20k load, probably higher if the entire market is unsubsidized) Then we want to maximize B_i - C_d + C_f. Since we have some amount of state funding and some subsidized loans, it's entirely plausible that increasing C_f could decrease C_d, because the loans are smaller and therefore risk of default is lower. Furthermore, decreasing C_d increases B_i since higher-interest unsubsidized loans will meet the new demand. Of course, there's a degenerate optimization: you can always just have zero subsidies. Most first world countries rightly give a shit about educating the non-independently-wealthy. But also: * I don't think "minimize cost" is a wise philosophy wrt education. Nations that do this tend to be sucky places to live/work. * America has a progressive tax system, so the aggregate reasoning of your first response is at least disingenuous.
- eli_gottlieb 12y ago
  Few people are advocating additional student-loan subsidies. What we want is the restoration of strong state funding for public, and therefore publicly accountable, higher education.

by nmrm2 12y ago

crazy1van 12y ago

The purpose of subsidized loans is to redirect debt towards a specific area. Society determines that people should be given preferential treatment if they are borrowing for certain purposes and they pass laws to reflect that. Typically these are things like higher education and homes. When this happens, it changes the calculus of an individual -- borrowing towards these specific purposes becomes more appealing because you get more for your money. I'm not arguing that this is either good or bad. However, I don't see the logic of both complaining that we spend too much on something while at the same time advocating more subsidies for those who want to borrow to buy more of it.

nmrm 12y ago
This premise is also faulty; this isn't the calculus of most consumers of higher education. The calculus is more like "I need a college degree to get where I want in life. Period." > I don't see the logic of both complaining that we spend too much on something while at the same time advocating more subsidies for those who want to borrow to buy more of it. "we" the government, or "we" the individual consumer? It's possible for the individual to spend too much money on something precisely because the government isn't spending enough.
- crazy1van 12y ago
  > "we" the government, or "we" the individual consumer? I mean the total of all spending. Although I contend that the two really aren't that different as government spending is just the aggregate of individual spending on government itself. > This premise is also faulty You are suggesting that subsidizing something can make the sum total of all spending on that thing go down? I completely disagree with that notion and I think this is the root of our disagreement. At least we found the crux of it. Even if neither side in the debate leaves convinced of the other side's position, I'm convinced it was worthwhile if the debate ends knowing more precisely where you disagree.
  - nmrm 12y ago
    > Although I contend that the two really aren't that different as government spending is just the aggregate of individual spending on government itself. America has a progressive tax system, so this sort of aggregation argument is over-simplistic. > You are suggesting that subsidizing something can make the sum total of all spending on that thing go down? Yes, absolutely. Even operating from your premises, spending more can decrease costs. In the case of no/low-interest loans, as long as the cost of defaults doesn't exceed the amount saved in interest paid to banks, everyone is spending less money on education. Combining no/low-interest loans with increased state funding for education significantly decreases the risk of default. So the "right answer" to minimizing spending is just a matter of simply arithmetic: C_f = Cost of state Funding C_d = Cost of Defaults B_i = Total money saved on interest payments (let's assume 5% rate with 20k load, probably higher if the entire market is unsubsidized) Then we want to maximize B_i - C_d + C_f. Since we have some amount of state funding and some subsidized loans, it's entirely plausible that increasing C_f could decrease C_d, because the loans are smaller and therefore risk of default is lower. Furthermore, decreasing C_d increases B_i since higher-interest unsubsidized loans will meet the new demand. Of course, there's a degenerate optimization: you can always just have zero subsidies. Most first world countries rightly give a shit about educating the non-independently-wealthy. But also: * I don't think "minimize cost" is a wise philosophy wrt education. Nations that do this tend to be sucky places to live/work. * America has a progressive tax system, so the aggregate reasoning of your first response is at least disingenuous.
eli_gottlieb 12y ago
Few people are advocating additional student-loan subsidies. What we want is the restoration of strong state funding for public, and therefore publicly accountable, higher education.