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No Tuition, but You Pay a Percentage of Your Income if You Find a Job

nytimes.com

121–130 of 221 posts

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#121
post #31

We're asking the wrong questions. A full semester at my local community college is under $1000. Extrapolating to four years of undergrad education, that's $8,000 total. WHY do we need this never ending whirlpool of sophisticated financial schemes to take care of this problem?

This might be the case for small community colleges but public universities are closer to $400 and $500 per credit hour. See [0] for an example.

[0] https://www.collegetuitioncompare.com/compare/tables/?state=...

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#122
post #67

So you get an education for free, then pay back into the system after you're in the workforce? Congratulations, silicon valley, you've just re-invented public education! Imagine what our public universities could look like with solid funding increases (which would be a fraction of that 17% that this group wants to take). They could be both free and amazing.

Where is post-secondary education free in the U.S.?

Very few places, but there's no reason that it couldn't be. Such a plan would have to come with some substantial changes/restrictions on colleges to help rein in the ballooning costs (e.g. lazy rivers, gourmet cuisine) that are pushing costs up dramatically.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#123
post #121
post #31

We're asking the wrong questions. A full semester at my local community college is under $1000. Extrapolating to four years of undergrad education, that's $8,000 total. WHY do we need this never ending whirlpool of sophisticated financial schemes to take care of this problem?

This might be the case for small community colleges but public universities are closer to $400 and $500 per credit hour. See [0] for an example. [0] https://www.collegetuitioncompare.com/compare/tables/?state=...

Yeah, that's what I mean. Universities are far more expensive than they need to be.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#124
post #19

Earlier quoted context omitted.

But then such schools that predominantly work on ISAs, will pre-select for good students, who are most likely to succeed and also for industries where the compensation is higher. Remainder (which is arguably 90%+) of the students will still be at the mercy of other schools + taxpayer. It seems, this just provides one more payment option to students who are likely to succeed anyway and a refreshing business model for…

> But then such schools that predominantly work on ISAs, will pre-select for good students, who are most likely to succeed and also for industries where the compensation is higher. That actually sounds like a good incentive structure to me. Most people shouldn't study something that will not give them some advantage (which these schools would select for). If you struggle to make ends meet it wouldn't be a reasonable…

By definition and practicality, schools and fields of work will remain a pyramid i.e. at any given time, there will only be a few fields and colleges that "give advantage", being able to absorb only a fraction of students by competition. e.g. field of programming can only absorb a million odd engineers in next few years. (Ironically, when it absorbs more, it will no longer remain a field with high wages).

The remainder of the iceberg hence, will need to go to other lower parts of the pyramid. ISAs won't do anything for that. Only the government will. And the Govt does it for us, with our money, because not providing education to lower levels of pyramid will result in nothing but societal anarchy.

ISAs hence shouldn't be hailed as panacea for education loans which is what marketing makes us believe. The only advantage of ISAs, is that they unlock better education for some "motivated students" (for lack of an accurate phrase) from underprivileged circumstances. That's not a trivial advantage for those who qualify. I don't know what that % of population is, but it can't be much.

In any case, however small, that number sure seems enough to build a business around it with some feel-good marketing (like this article).

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#125
post #3

How is this different from income-based repayment of federal student loans? While there are different programs, the general idea is that you pay 10% of your "discretionary" income for 20 years with the guarantee that your payments aren't higher than the 10-year payoff rate. The article doesn't really have information on the Purdue system other than saying that it might cost high-earning students 250% of the price of…

Lambda School's ISA is forgiven at 5 years if you don't get a job that pays $50k+ in the field you studied.

So you very possibly could pay Lambda School $0.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#126

> At Lambda, students pay nothing upfront. But they are required to pay 17 percent of their salary to Lambda for two years if they get a job that pays more than $50,000. This appears to create a cliff: If you make $50000 a year, you keep $50000 a year. If you make $51000 a year, you pay 17% ($8670) and you keep $42330. That extra dollar cost you a ton of money. It really ought to be a marginal rate like tax brackets.

It turns out that people usually work more than a few years, and their salaries rise over time. It would be counterproductive not to negotiate the highest salary you could (because you'll probably go upwards from there).

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#127

Australia has a system that, while different, has similar perks to this. We have a government loan system called HELP (formerly HECS). Basically students can get a zero interest government loan (rises with inflation), and only need to pay it off once they make above a certain threshold ($51,957 according to the official website[1]). The payments are deducted as a percentage of your income, with the payments increasin…

I have to at least partially disagree with #1 being a benefit. Universities and loans for universities should not be encouraging students to waste many years of their life for a degree which does little to help them get meaningful employment. Additionally, with at least the american student loan system as I am more familiar with it, neither the university or the bank offering the loan faces any repurcussions for encouraging and financing these bad decisions, with the government guaranteeing the debt will be paid.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#128
post #3

How is this different from income-based repayment of federal student loans? While there are different programs, the general idea is that you pay 10% of your "discretionary" income for 20 years with the guarantee that your payments aren't higher than the 10-year payoff rate. The article doesn't really have information on the Purdue system other than saying that it might cost high-earning students 250% of the price of…

> The article doesn't really have information on the Purdue system other than saying that it might cost high-earning students 250% of the price of their education.

tl;dr; on that is you borrow a certain amount (that you choose, but is capped by the program). In exchange, you pledge a certain percentage of your income every month for a certain number of months (5-10 years generally) [0]. The maximum amount you'll repay is capped at 2.5x the loan amount (i.e. if you borrow $10k, you'll repay a max of $25k).

Practically speaking, the gist of the program is that it's good for students with middle income career outlooks, but terrible for students with high income career outlooks (i.e. talented CS majors) since you'll end up paying more than a traditional loan.

[0]: The percentage pledged varies by the loaned amount and major. The number of months seemingly only varies by major. You can play with the calculator here: https://compare.vemo.com/

Purdue's program: https://www.purdue.edu/backaboiler/index.php

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#129
post #109

Australia has a system that, while different, has similar perks to this. We have a government loan system called HELP (formerly HECS). Basically students can get a zero interest government loan (rises with inflation), and only need to pay it off once they make above a certain threshold ($51,957 according to the official website[1]). The payments are deducted as a percentage of your income, with the payments increasin…

The key thing missing from this is the incentive for the education provider to provide courses that have real world demand, they get paid either way by the government and it's the rest of society that has to pay for that underwater basket weaving course.

Not an issue in practice. Most students choose degrees that have real world demand.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#130
post #117

Earlier quoted context omitted.

How are students the products now? We only get paid when they are successful, that doesn’t mean they’re not the customer. The service we provide is helping them into a good job, so of course hiring companies are stakeholders, but companies are the customers.

The university has an incentive to value your early salary _above all else_. This may be dangerous (hence my question). The article clearly shows some potential issues by pointing to several very useful but not very well paid profession (eg: nurses) who will have trouble finding lessons in this model. Closer to our trade you might see stuff like : - We don't offer design lessons because backend developers earn more t…

It's not dangerous, not nearly to the extent you're making it out to be.
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