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Purdue Experiments With Income-Contingent Student Loans
HughPickens.com writes: Danielle Douglas-Gabriel writes in the Washington Post that Purdue University is partnering with Vemo Education, a Reston-based financial services firm, to create income-share agreements, or ISAs, that its students can tap to pay for tuition, room and board. In return, students would pay a percentage of their earnings after graduation for a set number of years, replenishing the fund for future investments. Purdue president Mitch Daniels calls the contracts a constructive addition to today's government loan programs and perhaps the only option for students and families who have low credit ratings and extra financial need. "From the student's standpoint, ISAs assure a manageable payback amount, never more than the agreed portion of their incomes. Best of all, they shift the risk of career shortcomings from student to investor: If the graduate earns less than expected, it is the investors who are disappointed; if the student decides to go off to find himself in Nepal instead of working, the loss is entirely on the funding providers, who will presumably price that risk accordingly when offering their terms. This is true "debt-free" college."
However some observers worry that students pursuing profitable degrees in engineering or business would get better repayment terms than those studying to become nurses or teachers. "Income share agreements have the potential to create another option for students looking to pay for college while seeking assurances they will not be overwhelmed by future payments," says Robert Kelchen. "However, given the current generosity of federal income-based repayment programs and the likely hesitation of those who expect six-figure salaries to sign away a percentage of their income for years to come, the market for these programs may be somewhat limited."
However some observers worry that students pursuing profitable degrees in engineering or business would get better repayment terms than those studying to become nurses or teachers. "Income share agreements have the potential to create another option for students looking to pay for college while seeking assurances they will not be overwhelmed by future payments," says Robert Kelchen. "However, given the current generosity of federal income-based repayment programs and the likely hesitation of those who expect six-figure salaries to sign away a percentage of their income for years to come, the market for these programs may be somewhat limited."
Want to pursue a STEM or other high-paying degree? No problem, but you have to pay a lot more for your degree.
With investment in other asset classes being unproductive, Purdue turns a portion of its foundation money into a bank to loan to its own customers. It's like the car makers' financing arms, just more speculative contracts.
This is pretty much what university students in the UK have had since the early 2000's, but without offering different terms for different fields. Instead, some career paths, e.g. nursing, are incentivised with bursaries.
If God forks the Universe every time you roll a die, he'd better have a damned good memory.
Now that we're treating college as a necessity for getting a job, it's nice to see one that gives itself a financial incentive to actually perform that function.
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways
My wife is a nurse (RN). If she chose to work full time, she'd make a very nice income.
Nurses are well-compensated - in the Puget Sound region, anyway...
#DeleteChrome
One point of Income Share Agreements (ISA) is that if you're pursuing a STEM or other high-paying degree, you're more likely to make more money overall, so they'll charge you a lower percentage than someone with a less lucrative field. Don't be an idiot and agree to pay back a STEM degree using the same percentage as a sociology major, for example. The anonymous "observers" in the summary are whining about that detail.
One of the positive sides is if the financial services company is going to make money, the prices for an ISA becomes a good proxy for letting students know which potential majors are likely to be more valuable to society and thus earn them more income over the course of the payback period.
So doctors and engineers, yes, womyn's studies, not so much...
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
You need to read up on this. There is no requirement that you have to work.
If you don't work then the investor loose on you. You have no requirement that you have to work or what you have to earn. If you want to get your degree and then go flip burgers for your entire career you will end up paying the investors nothing.
You may pay more on average, but you'll be debt free, and you'll have access to much more expensive majors that what you'd otherwise be capable.
mind boggling
This is true "debt-free" college
Yeah *only* if you decide 'I just spent 4-5 years getting a degree FUCK IT I am going to go live like a hermit/hobo for the next 15 years'
In the real case it is a 15% loan over 30 years. If you get say a CS degree and an entry level job and never get a raise at 60k a year. That is 270,000 dollars. With pretty much no upper limit on cost. I like how they use a 10k example. Hell 25 years ago when I was in college 10k was *nothing* I could spend that in half a semester at a state school. It costs *way* more than that now.
This also assumes you get a job in your field and make a decent amount of money. Lets say you cant get a job because you were brain dead and picked a specialty that no one else has or they are dime a dozen. You end up as a server making a bit above min wage. Giving up 15% of your min wage earnings would be a terrible idea.
This is a terrible financial instrument designed to rip people off. Much like student loans. Most real loans out there are 1-3% right now. Yet somehow magically student loans are still at the max allowed by law.
As an investor I would have to pool thousands of these together to make it even slightly worth doing. The default rate could be huge.
It's funny how we just keep doing this to ourselves
no that is the current student loan system that cannot be ridden of no matter what. Or to be more specific our current education system with schools prices being far more than most will ever be able to pay off until their 40's if they are lucky.
I'd like to see the people with the most money who also claim that there is a "shortage" to offer to pay the tuition for X number of STEM classes so that students could take them for FREE.
Even if they only start with the 100 level math courses.
Would more people end up taking Calc 3? Maybe. Maybe not. If they do, good. If they do not, then the cost won't be a problem.
Switch the focus from getting-money-from-students to getting-more-STEM-students.
Someone has to pay for the Liberal Arts majors to hike through Nepal.
Really, what this is going to do is encourage people to get degrees with no marketable value, then wait out the repayment period. Sounds perfect for the "but I'm entitled to a free degree" crowd. Like everything else that is free, this is going to get real expensive, real quick,
Meanwhile, other countries offer free (as in beer) University / College tuition to all students who qualify academically. Maybe if they didn't piss so much money up against the walls of their sporting facilities - and did their job of imparting knowledge to future engineers, scientists, etc, and not service as a training ground for the professional sporting organizations, they might have more money for their academic function.
As opposed to someone getting something for nothing...? You are more than welcome to not agree to the repayment terms and not get the "free" education in return.
You can hardly take a single step in here without someone making some baseless comment about indentured servitude or robber barons. How about you get some proper education and discover the real meaning of those terms rather than using them as the basis of some pathetic comment, eh?
Regardless, the free degree doesn't mean fuck and you'll still end up at McDonalds afterwards, going back to school until your retirement in order to stave off making the payments.
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Private schools want profit first and everything else, like actual education, third.
Nope, what you described are for-profit schools. There are plenty of non-profit private schools that provide a great education and value their standards highly.
Two thirds of college students graduate with no debt whatsoever. Only about 11% have debt larger than $36000 (the average cost of a new car).
If you choose to go into debt under these conditions by choosing to take out loans to get an overpriced degree that doesn't lead to a good career, it's your own fault; it's clearly not necessary for succeeding in life.
I call BS. This nothing more than owing the Company Store.
Listen, our society, if it weren't for greed, should understand that
an education S/B part of the infrastructure - some states actually
have it in their State's Constitution (but it's rarely honoured).
Some other European countries are starting to see this fact, and
provide for their people accordingly. This is one of the reasons
India is killing the U.S. in STEM - just ask any one of them!
CAP === 'fortify'
For every private business, providing a product is the necessary evil to get your money. Duh.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
> replenishing the fund for future investments
Obviously the "financial services firm" expects ROI and then some, and the money comes from proles. Oh how grateful we are for money-shuffling middlemen.
The silver-lining, if this is done correctly (lol), is that it'd leech off salaries that live comfortably anyway.
"... some observers worry that students pursuing profitable degrees in engineering or business would get better repayment terms than those studying to become nurses or teachers..."
And that sounds completely REASONABLE.
TAANSTAFL, people.
I know you really want a giant grant so you can get that PhD in Russian Literature but you know what? To live, you need money. To have money, you need to have a job. Life is work, and work is (usually) shit. If you're staggeringly lucky, you get to do something you love for pay. More often, you rationalize whatever enjoyment you can out of what gig you can get.
But you're simply not entitled to do what you want, and have someone else pay for it. I'm sorry if your parents never taught you that. We can talk all day long about the bullshit costs of colleges, and I'll entirely agree with you. My dad? Full ride as a football player in 1955 to the U of MN, this was noted in the paper as worth $300/year.
I went to the same school in 1986-1990, and my college education cost about $3600-$4500 annually as I recall.
My son going to the same school this year, it's about $25k/year.
Using RoI calculators on the web, my dad's tuition this year would be $2600.
Mine would be $9800.
That's absolute horse shit, and personally I suspect at least part of it has to do with ample grants and easy loans since the mid 1980s. Clearly, it's not going to teachers.
-Styopa
..what this is going to do is encourage people to get degrees with no marketable value,
What's marketable today doesn't necessarily mean it's marketable in four years. Electrical engineers have a horrible job market now as well as petroleum engineers. When I was in school, a math degree was worth as much as an English degree - all you could do with it was teach. Unless of course you were smart enough to get into actuarial or you minored in CS. Now it means something because unbeknownst to us, it became marketable 10 years later.
Education used to be about bettering oneself. To expanding ones mind and being a better citizen and bettering society. Now, it's nothing but vocational training. Business, engineering, computer science is just vocational training - it's not an education. I learned more about logic and critical thinking in my one Philosophy class than I ever did in any of my Math or CS classes.
And the trend now is to send STEM work overseas ,as well as accounting, law and even some medical.
Ted Turner was pressed by his dad to go to business school. He rejected that idea because he was to learn to lead and not manage. So, he studied the Classics. Study people like Alexander the Great. He took his father's little billboard company and Ted became a billionaire. He made a "worthless" degree work for him.
My point is that training for something marketable at least at the college level is pretty risky. And with employers demanding that people be passionate in what they do, it's kind of hard faking that when you did what you did just to get a job. And if you got the job, you'll be miserable since you're going to be doing it 55+ hours a week 52 weeks a year - vacation? (HA! Try to take it!)
Instead of indebting our next generation that is gonna create wealth for the country, or make deals so rich people can leech cash from whatever the next generation is gonna make after graduating, How about just make education free? I know. Crazy Commie talk!!
this is not an loan.
Australia uses a system that is call HECS - HELP to fund students. This is provided to all students by the government and is them funding your tuition fees and then the loan recouped from your earning later in the form of a slightly higher tax rate. The loan provided has interest calculated at the rate of inflation so there are no real penalties in not paying it off quickly.
There is currently a discount of 10% applied to the education fee if you decide to pay it upfront but you are financially better off sticking the money in a bank account than taking that option.
The debt is also structured in such away that any outstanding balance is waived upon death.
If you choose to go into debt under these conditions by choosing to take out loans to get an overpriced degree that doesn't lead to a good career, it's your own fault; it's clearly not necessary for succeeding in life.
That's kind of a simplistic take on a complex subject.
Not everyone has the means to pay for a degree in the field they want or need. Not everyone is suited for a given field. Not everyone is blessed with enough income to afford any degree, let alone a more expensive one. Does that mean they should be able to try to get one?
If no one could afford to go to school to become a heart surgeon or a pediatric specialist, should we just throw up our hands and go "Gee whiz, too bad there's no doctor available for you or your kid/parent/spouse"?
Some people want to achieve more than being a code monkey working for Amazon, and people are needed, yes needed in all sorts of careers, not just the ones you think are worthy or affordable.
You better fucking hope that some enterprising young college guy or gal has the guts to take on the debt required to be your doctor 10 or 20 or 30 years from now, because you're going to need him or her.
Personally I think education should be free, period, and available to those who can make the grades required to obtain whatever degree they can. Yes, education is expensive, but ignorance costs even more.
Just cruising through this digital world at 33 1/3 rpm...
They also have a trades / tech school tracks as well that are not 4+ years pure class room as well we need that as well.
we also need to drop the idea of college for all and stop makeing so that you need to go to a 4 year of more school to get a job. We need more tech / trades like settings that only take 1-3 years.
...at the increasingly inventive ways to be found to screw the poor; HUZZAH!
Requiem for the American Dream
One of the positive sides is if the financial services company is going to make money, the prices for an ISA becomes a good proxy for letting students know which potential majors are likely to be more valuable to society and thus earn them more income over the course of the payback period.
So doctors and engineers, yes, womyn's studies, not so much...
I think students already know which potential majors are likely to be more *lucrative*. A potential student may *value* them differently than society and that is generally why these less lucrative majors are pursued.
The problem is that students still need to eat (and potentially pay back those pesky student loans) and sadly at that age, practicality often isn't high on ones agenda. All the futures markets in ISAs in the world can't fix stupid, just like posting calories per serving in a fast food restaurant, the message is either ignored or treated as a temptation to spite.
The only way I could see this working is if it were the only option for financing college. We would have to completely eliminate conventional student loans. Otherwise, the results will be very predictable. People planning on high paying careers in engineering or finance will choose conventional loans, since that's a better deal for them. These agreements will be used mainly by people who don't expect to make much money for a long time. The companies financing them will take that into account, and find that to earn a reasonable payback, they have to set the repayment percentage really high. High enough that most people will end up worse off, not better.
Remember, risk has negative value. You have to pay people to accept risk. Under these deals, the companies take on more risk. They won't do that unless they get something in return, that is, unless their projected profit is greater. So on average, graduates have to end up paying more, not less. And unless you force the wealthier graduates to bear that whole burden, it will end up falling on the poorer graduates.
"I'm too busy to research this and form an educated opinion, but I do have time to tell everyone my uninformed opinion."
they're expected to prep for the school year and keep working on their skills during that time or face layoffs. I've got a lot of friends/family who are teachers. Summer is _not_ a 3 mo vacation for any of them.
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Yea, this is really ludicrous. They own a part of you forever?
If the educators were free to fish for good prospects, this could maybe be ok, if not morally questionable. But when you realize that you'll still need to check all the "enough of this sort of person" boxes, this gets even spookier.
Welcome to the world of Indentured Servitude. thought we got rid of that idea centuries ago.
we've turned students into investments for predatory lenders. If you think those lenders hadn't noticed and haven't started taking steps to maximize the amount their "investments" borrow you're nuts. Education has gone up in price for two reasons: We pulled billions in federal subsidies and the middle class has eroded to the point where their competing with the poor for what few scholarships are left. That leaves our investor class in a prime position to swoop in with big loans and big profits. Rent seeking at it's finest...
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to bypass rules and laws about how much interest can be charged for certain types of loans. I can't think of any other reason to do this.
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Pants? What's to "design"? This isn't even a college level job. It's a midieval trade.
A Pirate and a Puritan look the same on a balance sheet.
So, they are basically reinventing education funded by income tax? What a novelty!
There's nothing like $HOME
Yes, far from "worrying" about this, I was in fact EXPECTING that the quality of the major you had in terms of employability would be factored in. It would restore balance to a totally out of whack system where a kid that doesn't know any better can easily rack up debt that will follow them into retirement!
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Welcome to the world of Indentured Servitude.
"non-profit" does not mean charity or unbelievably high quality or even moral fibre. It just means a different financial structure.
Virtually all respected colleges and universities with any sort of historically recognized quality are non-profit.
For-profit universities (if they can even be called that) are in many cases little more than diploma mills. The primary goal is to move bodies through the system as efficiently as possible and extract the maximum payment, not provide a usable education.
FWIW, I think people are better off with the eponymous well-rounded education, but I also think they're better off with 5 years of global travel, too, but that isn't the kind of hoop-jumping social standard (yet) that a 4 year college degree currently is.
So much of "going to college" isn't about the well-rounded part for probably 90% of the students -- it's about achieving some vocational credential that employers want before they will hire someone. In many cases, the vocational education really has no bearing on the actual vocation. A degree in marketing doesn't actually provide you with the specific education to do any specific marketing job.
And even where this is some kind of specific vocational skill being learned (engineering, medicine, etc), how much of even those educational experiences are spent on classroom instruction that's actually vocationally beneficial? Could we train civil engineers in 3 years instead of 4 by cutting out the crap? Could we train doctors in 6 years or even 5 if we cut out the nonsense? Is it REALLY vocationally beneficial for a doctor to have a semester or year of organic chemistry?
There's so much hand-wringing about the cost of college but almost never does anyone question the underlying assumption that the college experience as we know it is actually beneficial. Much of it seems to be a way of socializing the costs of corporate HR screening and training, much of which would be better for the corporations to do themselves, so they can focus on the specific attributes and skills they want.
And if you think about it, it doesn't even socialize those costs well -- the in-demand jobs demand higher salaries, so where there is demand for workers the corporation is paying some of the inflated educational costs themselves. It all seems to be a giant pork barrel for Universities, who manage to jack of tuition relentlessly without ever reforming a sclerotic educational system that doesn't really produce well-rounded graduates anyway.
Called Income Based Repayment. https://studentaid.ed.gov/sa/r... However it only applies to some kinds of loans made in the pasr ten years. Some politicians want it to be retroactive and universal.
We need to stop whining about basic loan fundamentals. The current distortions in student loan business are problematic and every time some tiny incremental change in the right direction comes about, a whole host of whiners come out complaining that people who are less able to repay their loans in a timely manner would get worse payment terms. Well no shit! I'm sorry but out of all the problems in higher Ed, focusing too much on ROI when picking majors ISN'T one of them. Just ask any anthropology and women's studies double major.
That's almost funny.
deleting the extra space after periods so i can stay relevant, yeah.
That is somewhat of a simplistic rebuttal to a complicated subject.
There are such a thing as *scholarships* that some people get to help them pay to attend schools which they cannot personally afford. Although some of them are need based, but some are simply are merit based (a strange concept). Sometimes people can given partial scholarships or even full scholarships to attend a school (such as medical school) and not even have to pay back anything (e.g., my uncle for instance got one of those mysterious scholarships to attend medical school)...
Millions in scholarship money goes unclaimed every year (estimates vary from $100M-$200M), that that doesn't even include the estimated $2 Billion in pell-grant money that high-school seniors didn't claim by attending an accredited college w/o filling out the FAFSA form.
As you point out, not everyone is suited for a given field, so the idea that everyone should be able to afford to get a degree that they want is somewhat a strange notion (even if we need all sorts of people to get those degrees). So why not just stick with the current scholarship/grant scheme? Does it have to be *free*?
The common notion that everyone has large student loan debt is a myth. 2/3 of college students graduate with no debt. Of those with debt, the *average* amount of debt is about $10k ($7k in government backed loans), . So who has these massive $100k+ in loans? Why it's the ones that attend exclusive private institutions and advanced degrees (medical school, law school).
Even then, those $100k+ jumbos are only responsible for a small part of the default potential on the loans (most pay back w/o problem within 10 years). The biggest problem student loan problem is those that take out loans to attend private degree-mills like the now bankrupt Corinthian college group. Buying worthless degrees from worthless colleges is the big problem with student debt.
If you want to pick on medical school as one that "should be free", the biggest problem medical practice sees is the *underused* degree. People who have used a slot in the medical school who cease to practice full time after a 10 years is staggering (they call it the 7 year itch in the profession). When questioning doctors about this, the general issue is that even the job is high-paying, the job burns them out. Many medical school admissions people will tell you many go into the profession because of high pay and social status, but fewer go in as their *calling*. Making medical school "free" really doesn't solve this problem at all.
For the record, my uncle got his scholarship essentially for being from a small town in Wyoming. He didn't go back there to practice, but is now practicing in a different small town across the country (Rhode Island). I suspect the scholarship committee gave him the scholarship because they knew it was his *calling* to practice medicine and he was also a small town type who would probably never live in a big city. It didn't work out for them specifically, but they probably had more insight into the him than either the University of Colorado medical school admissions committee, or he had into himself at age 21. Another thing to think about before you think "free" is necessarily the best option.
What is simplistic is your view that education is "too expensive" or that "it should be free, period." or your assumptions about the cost of medical education. The numbers are clear: there is no student loan crisis; almost all graduates have either no debt or no problem paying back their loans. And in the US, 65% of high school graduates go on to college, compared to 45% in places like Germany where education is essentially free. In both places, only about half of those who enter actually graduate, which tells you that many people who enter university shouldn't have gone in the first place.
There is not a shred of evidence that there is any need for more government support of education in the US. If anything, far too many Americans waste their time in college and government spending on college and university education should be cut, along with federal student loan programs.
(In case you're wondering, I worked my way through college and grad school, since my parents couldn't pay for it.)
... It's called taxes. You pay an amount proportional to your income, plus or minus adjustments based on your personal situation.
Public universities, colleges, tech schools, etc., should be completely free to all citizens, paid for by tax dollars. This is an investment in our citizens and our culture and worth the tax money. Most students on average would pay the money back and then some in taxes over their working lifetimes anyway, so it's a net win. Plus, studies have shown that we could offer free tuition and actually SAVE money from our federal budget compared to the enormous amount of money we dump on banks to prop up the failing student loan "industry".
It's obscene what we're allowing to happen to our young people; starting life with a massive debt really puts a huge roadblock on the path to prosperity and happiness, one that is not easily overcome, even when working hard. My wife had private loans for an average cost university. They make the loans sound so simple, but by the time you graduate you have 8+ loans (at least one for each semester, but possibly more since sometimes a bank is not willing to give a loan for the complete cost of a semester, so you have to get another one from someone else to finish it out) each with a minimum of at least $50 and before you know it, your monthly minimum is a mortgage payment of $600+ a month. So we're effectively requiring students to pay a mortgage right out of school (on top of the real rent/mortgage and cost of living). But then when students ask for higher wages to pay that bill, many of the older generation scoff and call the kids "entitled". If companies and HR want to continue demanding degrees for every position, then they need to pay the cost of doing business and raise wages.
So tuition should be free to everyone, at any time, funded by taxes from individuals and businesses alike. Aside from obvious young adults age 18-22, I think we should encourage anyone of any age to attend college whenever they wish, and push the idea of microdegrees or certifications or badges, or whatever you want to call them. Why shouldn't a 30, 40, 50 year old be able to attend an engineering seminar to brush up on skills? Or a history class for fun (better use of time than sitting in front of the TV!)? We should encourage everyone to pursue life-long learning, not just the fresh-out-of-high-school crowd. We can do that when tuition is free and there is no financial risk to giving it a try and backing out later if demands of life (kids, work, etc.) prove too much that particular semester.
Bernie Sanders has called for tax-funded tuition-free universities. If you want to see this too, chip in a few bucks to his campaign.
tuition are a scam. It's all been financially engineered to extract as much baby boomer money as possible. The idea is to enslave the kids to inescapable debt (thanks, republicans!) from which the only rescue is for mom and dad to pay off the loans for them either while they're still alive or via inheritance after they're gone.
There's no policy that limits loans to courses of study that are likely to result in sufficient income to service the debt. There's no policy to encourage people to go into the fields that are considered good for the economy, such as STEM, by offering loans at no or even just lower interest. Why? because the purpose of the loans is to make money. You want to get a PHd in underwater basket weaving? Sure, here's $300k to fund your education and you don't even have to think about repaying it until you finish school. While you're at it, here's a couple credit cards to pay for pizza and beer with your friends and a new 60" TV!
n both places, only about half of those who enter actually graduate, which tells you that many people who enter university shouldn't have gone in the first place.
Is that what that tells you? Do you have some kind of test you can do to know in advance which half a student belongs to? Are you sure that the people who drop out didn't benefit from their time despite not earning a degree?
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Yes, and not everyone can get them, which is why they're highly prized.
So you're poor (or just low-income) and unable to get one of these magical *scholarships*. What does one do then? For now the only real option is to go into debt.
Make education free or low cost and it would obviate many of the issues that surround higher education. Other countries do it, we can probably find a way. I know, how about we stop waging wars at 5 trillion bucks a pop? I bet you could put at least 3 or 4 deserving students through school for that much money.
Just cruising through this digital world at 33 1/3 rpm...
You may hate liberal arts majors, who who do you think does the 3d modeling, scripting, and artwork for those games and movies you spend your spare time masturbating to?
Look around, that shit you buy, like your pants, wasn't designed by engineers; it was designed by liberal arts majors and implemented by engineers. Even your cheap-ass corelle plates.
You're talking about completely different worlds. Someone who goes into art and 3d modeling isn't the liberal arts majors that people are complaining about. Someone who loves to draw and comes up with a reasonable plan to make a living at it isn't the problem. Likewise for the person who wants to be a writer or a musician and has an actual plan. You can make a living as an artist, a musician, or a writer. The odds are probably much better that you can scrap by as a "starving artist" than it is that you can be a professional ball player. I have no problem with someone pursuing their dreams and either having a backup plan or knowing that they might not ever make a lot of money. The problem is when someone wracks up a huge amount of debt on a major without a clue what they are going to do with it after they graduate. If you have 80k dollars worth of debt and you either have no career plan or your only career plan is to paint what you want and hope people fall in love with your paintings then you have a problem. Likewise if you have 80k dollars worth of debt and you're planning on getting a job that pays only 20k per year. You should never go into debt for a degree that you have no idea how it will help you get a job and if you're going to go into debt on a long-shot major then you need to have a plan, a backup plan, and a backup to your backup plan on how you're actually going to pay your debt back. It's completely irresponsible to go into debt without any plan on how you're going to pay it back whether it is for a house, a car, or an education. And winning the lottery (or the virtual lottery) doesn't count.
What is simplistic is your view that education is "too expensive" or that "it should be free, period."
I know, it's crazy, huh? Just like providing K-through-12 education was dismissed as nutty and "too expensive" when the idea was proposed. But the fact is that K-through-12 education has been one of America's most potent and effective tools for improving life and the overall economy in this country for the last 50 years or so.
People in other countries literally dream of providing a basic education for their kids whereas we take it for granted.
(I know this because my wife comes from one of those countries and she was blown away to learn that every child here gets 12 full years of schooling. She kept asking, "Who pays? Who pays for it?" and I kept telling her, "We all do. We all pay for it through taxes." She thinks it's awesome that we as a country do this for our children. And she's right, it is.)
But maybe, just maybe if we stopped waging a never-ending series of pointless wars at 5 trillion dollars a pop then who knows, you could probably put 4 or 5 students through college for that much money.
The fact is that other countries do it, and we should be able to as well. We're the richest fucking country on the planet but we can't afford to send our future doctors and engineers to college even though the economic and social benefits are blatantly obvious.
Just cruising through this digital world at 33 1/3 rpm...
No, I don't. What I do know is that if people pay for stuff with their own money, they make more careful and prudent choices.
I'm quite sure that even many of the people who don't drop out don't benefit from their degree. So, yeah.
"I'd like to see the people with the most money who also claim that there is a "shortage" to offer to pay the tuition for X number of STEM classes so that students could take them for FREE."
Aren't there private grants in your country?
"It's completely irresponsible to go into debt without any plan on how you're going to pay it back"
Maybe you are right but then, what would you call the one that lends money to somebody without a pay back plan?
Specially considering that most probably the lender knows to the petty detail what are the chances and income distributions for somebody majoring in hellenic studies while the 18 y.o. potential borrower does not.
THIS. Seriously, treating 18+ year olds as children incapable of making their own informed choices is one of the reasons that student loan debt is an enormous problem.
We don't treat them as children incapable of making their own informed choices. If that was the case they couldn't enter into these contracts in the first place.
No one is even asking for that. They merely want laws governing student loans to take the disparity in maturity and available information between an 18 year old and a bank into account.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
I'm a huge fan of the social sciences to teach people critical thinking, how to argue and write persuasively. done right, it produces well-rounded individuals who can go on to be successful in a number of fields. A university degree is more than a trade school in which you go to school to be a plumber, or a chef, and then graduate and go do these things.
Unfortunately, the current social sciences at U.S. Universities is more likely to turn out a 26 year-old government social worker who thinks all parents are idiots who need her detailed supervision and spends her free time in "safe spaces" demonstrating for vague left-wing causes in the hopes of finding an enlightened boyfriend who'll stay longer than one night.
If instead, it were to actually "teach people critical thinking, how to argue and write persuasively." and produce "well-rounded individuals who can go on to be successful in a number of fields.", then the ISA market will value that future success and ability to repay in the future appropriately.
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
We are doing it. US government per-student spending on education is already substantially higher in PPP$ than countries like Germany, France, and the UK, and it's comparable in terms of percentage of GDP (around 5%). Because we are spending so much money, 65% of Americans go on to university after high school (compared to 45% in, say, Germany). You're fabricating a crisis or problem that simply doesn't exist.
We are discussing university education, not K-12. In addition, you are making this up, since "providing K-12 education" was never "proposed" as an idea (public primary and public secondary education developed separately and over many years).
It's a much better deal for the student than a loan, particularly if he's getting a degree that isn't very marketable. With a loan he's still on the hook for payments even if he comes up empty on the job search.
Personally, I don't see how this can work - it's too good of a deal. There's much less incentive to find a remunerative job after graduation - lots of people will find jobs that just pay enough to buy video games and pot while they're waiting out the contract in mom's basement.
Sure... for a the small subset of students who had family money. I'm getting old now, and I remember my classmates paying pretty close attention to starting salaries.
So this is in some ways a loan with much kinder terms and higher risk for investors. It also seems targeted at lower income higher risk students. So what is the total amount owed? My bet is if this takes flight it will be much higher than a comparable loan.
The line about the lack of consumer protections ought to give everyone pause.
That won't happen unless minimum wage is raised to something livable.
Want to pursue a STEM or other high-paying degree? No problem, but you have to pay a lot more for your degree.
Isn't paying more for something that's worth more just normal market behavior? For that matter, engineering and science programs typically also cost the school more, but are somewhat subsidized by tuition from cheaper humanities programs.
That said, there is the issue that engineering degrees are also more valuable to society, which may want to provide its own incentives.
My idea: involve the employers in these ISAs. Plenty of employers already cover tuition in exchange for working a set number of years with them (including the U.S. government). Universities can act like unions, doing collective bargaining on behalf of the students (I am not assuming the universities' intrinsic benevolence here, but presumably students will choose to go to universities which can get them the best deals). Conversely, government and businesses might do a much better job of bargaining down tuition prices than loan subsidied college students have been doing. And instead of gambling on the future, students enter into the arrangement knowing exactly when they are going to be able to afford a mortgage. There are plenty of potential problems, but I think the present process of "guess a good major to land a job from an unspecified employer and make indefinite earnings and by the way your wager is $100k and 4-6 years of your life" leaves a lot to improve.
When things get complex, multiply by the complex conjugate.
You will also help to reintroduce bonded servants, wahoo, your college owns you for life, now what the fuck could go wrong with that. So for attractive females does that include serving the administration on your back and for males bent over. America you are fucking sick.
Chaos - everything, everywhere, everywhen
"This is true "debt-free" college."
Bullshit spin. If it didn't have to be paid back then it would be debt free.
blindly antisocialist = antisocial
"It's completely irresponsible to go into debt without any plan on how you're going to pay it back"
Maybe you are right but then, what would you call the one that lends money to somebody without a pay back plan?
Specially considering that most probably the lender knows to the petty detail what are the chances and income distributions for somebody majoring in hellenic studies while the 18 y.o. potential borrower does not.
I would agree completely except that a majority of student loans are funded by the federal government which doesn't differentiate between different majors. If student loans had actual real underwriters then they most likely would look at majors and have different risk profiles for different majors. Another gotcha is that because the federal government does not differentiate between majors, once you have a bachelor's degree, you are no longer eligible to get student loans to pursue a different bachelor's degree even if that second bachelor's degree would actually allow you to get a job.
Just say no to more then 40 hours. Make America great again.
Cheap storage VM.
Reminds me of Hitchhiker's Guide to the Galaxy. Humanity wiped out because everyone thought that the phone sanitizers were a waste of space and not worth keeping around, until they all got infections from unsanitized phones.
To the extent that people end up using their degree directly in work, Women's Studies is valuable in areas like healthcare, social care, politics, psychology, education, HR, journalism and more. There are shortages in healthcare, social care and some areas of education, so such degrees might attract favourable student loan terms.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
Education used to be about bettering oneself. To expanding ones mind and being a better citizen and bettering society. Now, it's nothing but vocational training.
This.
Employers used to see people with degrees as being high quality material that they could mould into what they wanted. Now they don't want to spend any money on training or try to retain staff for long periods while they build up skills, they want a fully trained drop-in work units.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
"Best of all, they shift the risk of career shortcomings from student to investor: If the graduate earns less than expected, it is the investors who are disappointed; if the student decides to go off to find himself in Nepal instead of working, the loss is entirely on the funding providers, who will presumably price that risk accordingly when offering their terms."
Why is this 'best of all'? I wouldn't loan money to this type of program, there is no incentive on the recipient to pay back the money.
The nice thing about the ISA idea is that people don't have to argue and debate which degree programs are valuable, real investors have to put their money where their mouth would be and the ones who can't predict the values properly will quickly lose enough money to leave the market to the people who can make money at it by predicting someone's future prospects effectively.
It's essentially doubling as a prediction market for the value of a particular program of study.
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
I've met plenty of social sciences graduates and talked to them enough to see their attitudes in person, but haven't seen anything on Fox News except one of the recent presidential debates in the last year or so (can't actually remember the last time I watched the channel beyond the one debate), so I'm not exactly a regular watcher. Thanks for the advice, though. It's too bad it was based on false premises and completely devoid of valid content.
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
Thank you, this is what I was thinking too - this is a horror, not a good thing.
It's not a bad idea, but it's not a fix for the problem and it is by no mean "debt free college" when wages are garnished to pay it back. It really depends on the career the student has after college too. They may not make enough money to do anything for the economy like buying a house, car, settling down with a family, etc while they're paying it back which means the net result is no change for the college tuition problem.
I suggested a fix to that supposed shortage years ago: Drop tuition for STEM degrees and remove any restrictions on the number of students per program. Yes, the classrooms will get crowded (so what, my Math I class at a Germany university had 1,200 students in it, by Math II it was down to a few hundred), but everyone gets a fair chance and students will drop out of the programs. Still, the number of graduates will rise significantly. And best of all, the graduates do not have to compete for the top paying jobs as much because they do not leave college at the brink of bankruptcy. Since I mentioned it, Germany has very low tuition, capped at 500€ per semester with the fees being typically much lower than the max. You have to pay for room and board on your own, but in almost all university cities student apartments are available (most of them one room studios). Also, most universities include the half year local and regional public transit without restrictions in the fees. If you are a legal resident of Germany you can also apply for BAFöG, which is a federal subsidy and determined on your own and your parents income. The subsidy is paid out half as a grant and half as a no interest loan. If you pay back that loan in a lump sum there are significant discounts offered. Why does the US not offer something like that? How come that US education has morphed from educating the young to a multi-billion Dollar for profit service industry? How come that US tuition rose sharply the past ten years while the expenses for academia remained flat? Do we really have to have the money pits of college athletics (all but maybe two or three programs lose money) that siphon off incredible amounts of cash from what universities should do? Do we really need the manicured greens and posh buildings? Do we really need the excessive amount of administrative staff that does not have any impact on the quality of studies? US colleges are nothing else than a massive employment program and you are paying for it!
But they are still in it for the money, even state schools are interested in cash first, education second. Have a look at the tuition costs of Union College, a private, non-profit, tax exempt university. They did have the NCAA ice hockey champions a few years back, but otherwise while still being a good school they are not that stellar given the steep price. And the real kicker is that Union was founded solely because at that time the middle class could not afford the established colleges and wanted a low cost alternative.
Like churches, state funded universities are considered non-profit. But, as we all know they are both anything but non-profit.
There is a reason that you can join the army at the age of 18 and it isn't because you are expected to be able to make rational decisions by that age. When you are that age you are very easy to manipulate and testosterone is kicked into high gear making us a little more prone to want to fight.
Is there really a better candidate for military recruitment? Poor decision making skills, still in the midst of confusion from puberty, easy to brainwash, and predisposed to show the women that he is a good, disposable man to protect them, by "protecting" all of them by going to war.
Military recruitment of 18 year olds is predatory and unjust.
I'm with you on this one. These days the social sciences have become little more than loudspeakers for feminist propaganda. Their teachings have no basis whatsoever in reality.