Let Them Eat Teslas

theodp writes "If you're a bright kid who wants to prepare for the 21st century workforce (PDF) by studying engineering at Purdue, the government will help your parents pay the $100,000 or so tuition tab with a 7.9% interest loan (plus 4% fees) that's likely to be non-dischargeable in bankruptcy and paid back with after-tax money. If, on the other hand, you want to buy a tricked-out $100,000 Model S, Tesla has teamed up with the government, Wells Fargo, and U.S. Bank on what it calls a 'Revolutionary New Finance Product' that enables those who play the game right to avoid paying sales tax, get the government to pick up the first $15,000 (no down payment needed!), and also receive a 2.95% bankruptcy-dischargeable loan for the balance, the payments for which could be tax-deductible. Yep, 'Revolutionary' may be about right!"

Comments

Collateralized vs Non-Collateralized Loans

[trout007]

They can always repo your car.

This is why Education should be funded where the risk is borne by the one making the loan. The repayment terms should be based on a percent of the students income for a fixed number of years.

These guys are trying to do it.

https://www.upstart.com/

Re:Collateralized vs Non-Collateralized Loans

[SJHillman]

Very good point...
With a car loan, the car is collateral. If you default, they can take back the car.
With a student loan, what are they going to do? Cut out sections of your brain?

Re:Collateralized vs Non-Collateralized Loans

[drinkypoo]

This is why Education should be funded where the risk is borne by the one making the loan. The repayment terms should be based on a percent of the students income for a fixed number of years.

This is why Education should be funded by The People. If we took the profit motive out of education we wouldn't have to worry about the "administration" making several times what the instructors do for not even teaching.

Re:Collateralized vs Non-Collateralized Loans

[Captain Hook]

"This is your brain..." "And this is your brain after defaulting on an education loan..." Cut to shot of egg being smashed under a frying pan.

Re:Collateralized vs Non-Collateralized Loans

[Custard Horse]

And who underwrites the losses for students who flunk out, die, refuse to work or only work for minimum wage (they need to be able to retain minimum wage to live), and those who are committed to prison for whatever offence?

Re:Collateralized vs Non-Collateralized Loans

[h4rr4r]

Great, so I get a loan and don't work or part time for the first X years.

How about we just admit having an educated society is a good thing and we make a university education free to those who qualify.

Re:Collateralized vs Non-Collateralized Loans

[hughbar]

Yes naughty students for dying just to avoid their financial obligations. Never heard of such outrageous behaviour.

Re:Collateralized vs Non-Collateralized Loans

[Sarten-X]

Wait, you mean the summary is misleading me? I'm shocked! Shocked, I tell you! Maybe the details of the Tesla deal will bring some truth:

US Bank and Wells Fargo will provide 10% down financing on approved credit, and the down payment is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000. New Jersey, Washington and DC also have no sales tax for electric vehicles. These advantages are not available when leasing.

So buyers don't "get the government to pick up the first $15,000 (no down payment needed!)", but rather they get a government credit that may cover the 10% down payment, assuming their purchase qualifies for the various government programs. There's no further details on what exactly the tax credits are, but my suspicion is that they're generic credits for buying an electric car or other blessed "green" technology, and probably cover 7.5% to 15% of the item's value..

After 36 months, you have the right, but not the obligation to sell your Model S to Tesla for the same residual value percentage as the iconic Mercedes S Class, one of the finest premium sedans in the world, made by Daimler (also a Tesla partner and investor).

Not only is Tesla guaranteeing that resale value, but Tesla CEO Elon Musk is personally standing behind that guarantee to give customers absolute peace of mind about the value of the asset they are purchasing.

And here's the part that's being touted as "revolutionary". The company founder is apparently personally guaranteeing the car's resale value. That's it. We're back to the idealized old days where company owners stood by their products and actually put money behind having satisfied customers. Not really "revolutionary" in my book, but I don't write headlines.

As is usual for Slashdot these days, the summary is sensationalist bullshit and most of the comments are knee-jerk anti-government reactions.

Re:Collateralized vs Non-Collateralized Loans

[Stormthirst]

Oooohhh!!! The scary spookiness of Socialism.

You're right of course.

Re:Collateralized vs Non-Collateralized Loans

[thoth]

Here's the thing, the free market isn't some magic fairy that shits pots of gold and sprinkles rainbow dust everywhere.

If you want to have education with a profit motive, then the RISK should be borne by universities. Getting government guaranteed loans with bankruptcy exemptions so it can be handed over to a for-PROFIT institution is total bullshit. In this situation, the university is motivated to crank up tuition with no ceiling. When the RISK is borne by universities, they'll price their damn "product" better, screen students better, perhaps even innovate (e.g. charge different amounts for degrees based on perceived ability to earn income).

Of course, that would lead to large stratification of education, with the wealthy drawn like a magnet to the best schools, the poor having to do with leftovers, etc.

And I would argue that outcome is unacceptable for a 21st century superpower, due to the fact that the free market outcome would not adequately distribute available resources, so education should be exempted or removed and handled by "the public" whereby the society itself benefits.

Re:Collateralized vs Non-Collateralized Loans

[bsDaemon]

What good is universal literacy in a society where the written word is severely restricted? (Goes not only for Cuba)

Re:Collateralized vs Non-Collateralized Loans

[Anonymous Coward]

Let the market fund the schools

"The market" won't even train its own employees anymore and you expect them to pick up the tab for education?

At least it'll be self-correcting. The market will cry and sob to it's capitol servants that they can't find anyone smart enough to hire and the government will say "well gee we better open the floodgates so all these people in socialist countries that bothered to provide education can come in" and the ideology will be drowned out.

Re:Collateralized vs Non-Collateralized Loans

[uncqual]

Unfortunately, in the U.S., I fear this would result in a situation where "everyone gets an associates or technical degree", and these programs would end up getting dumbed down so "everyone gets an associates or technical degree" in the interest of "fairness, diversity, and inclusiveness" - just like our K-12 system has. Then, the two year degree would be worth what a HS degree is now - not much.

I think the U.S. should be seriously considering something more like the German system. Put students on one of a few tracks early (maybe fifth grade?). One of these would be a strong academic track which is intended to end up with at least solid STEM MSc or a PhD in one of the "softer and in less demand" disciplines (such as Ancient History). At the other end of the spectrum would be trade oriented curriculum with students learning skills necessary for basic life (some accounting, enough math to figure out interest, basic understanding of government, basic writing skills) and skills specific to a group of trades and including apprenticeships in HS.

If you've ever worked with fifth graders, it's pretty obvious which ones will never be on the academic the track or the one just "below" it. If, in spite of being exposed multiple times to it, they haven't figured out how to compute 6.9 × 0.042 or 42.42 ÷ 0.1, they are extremely unlikely to catch up and even survive Algebra 2 a few years later. However, generally students should be given the benefit of the doubt and put into a higher track if they are "on the bubble" and then be aggressively reevaluated every six months to determine if they should be moved to a less academically demanding track. The requirements and expectations of the tracks should not be adjusted to match the students, the students should be placed in the track that match their motivation, intelligence, and interests.

Re:Collateralized vs Non-Collateralized Loans

[h4rr4r]

If you want education to be taken seriously we have to change our whole culture.

Basketball players make more money than people who cure cancer, kids know this. People who make sex tapes get on TV, people who educate are mocked on TV.

Expecting any different outcome is foolish when our culture flatly does not value education and will not pay for it.

Re:Collateralized vs Non-Collateralized Loans

[ebno-10db]

Isn't this more or less the Cuban model

Maybe you mean Canada. All those 'C' countries sound alike to me too, and what's the difference? Universal health care, nearly tuition free university education, a commie is a commie.

And it's getting worse. Even here in America we now have socialized fire and police departments. That's right - no conspiracy theory! If your house is burning down, or you're the victim of a crime, you can request fire or police protection (there's even a hotline for it) and the government will pick up the whole tab. Talk about moral hazard! Before you know it, people will be tossing lighted matches into their homes for fun and walking down the street with $100 bills hanging out of their pockets.

So what?

[bistromath007]

I don't really have a problem with this. Everyone knows that a car, even considering that they quickly depreciate, is much more valuable to the average person than most college degrees.

I defy you to prove me wrong. :|

Lease Tesla

[0100010001010011]

Sell Tesla.

Use funds for college.

Re:LOL! American "priorities"!

[MickyTheIdiot]

Our government is being managed for the benefit of corporate elites. It's the simplest and most reasonable explanation for what looks like total idiocy from the outside.

Not exactly

[Adifex]

Nissan took 1.4 billion from the feds for the Leaf and produced laughable results. Tesla took a third of that and produces the Motor Trend car of the year, and is set to pay off the loan early. I don't blame the DOE for wanting to help them out some more. Note: from a student with a non-dischargeable 7.9% loan.

Re:LOL! American "priorities"!

[Stormthirst]

From the outside?

Re:LOL! American "priorities"!

[kilfarsnar]

Our entire economy and society is being managed for the benefit of corporate elites. It's the simplest and most reasonable explanation for what looks like total idiocy from the outside.

FTFY

Re:Grow up.

[ultranova]

It's not just the corporate elites. It's the elites period. Once day you'll be one of them. And you will shit on your fellow man with just as much disdain as the current batch of elites do now.

No, you won't. That's the Big Lie: if you put up with being shat upon for now, you get to do the shitting one day. You won't. It's just a lie to keep you sitting there in a shower of shit rather than fight those who shit on others. It's that simple.

Besides, if by some miracle you actually became an elite yourself, is getting to shit on others really such a desirable goal? How about you grow up, or at leat try to get past your anal stage?

The only fair system is the one that does nothing equally for everyone,

And that's another lie.

Re:LOL! American "priorities"!

[yurtinus]

I also have quite favorable loan terms on my house - better than my girlfriend has on her student loans. I'm not going to go pound on my credit union's door and demand social justice. The problem is with the education loans, not the home or car loans. Demonizing Tesla or the auto industry for striving to provide a means of buying their products is asinine and childish.

Education finance has some serious issues that need to be addressed. We aren't going to solve them by crying about auto loans. This entire discussion is flamebait - just fishing for angry rants.