Income-sharing agreements let students trade future earnings for investment • Hacker News Board

Re: Income-sharing agreements let students trade future earnings for investment

#91

Post by exodus_de » Wed, Apr 10, 2019, 4:30 PM UTC

tracer4201 wrote: post #80

jki275 wrote: post #61

Earlier quoted context omitted.

what is "free"? There is no "free", it just means I have to pay for it. I prefer to pay for my own responsibilities, not for people to get underwater basketweaving degrees.

My parents didn’t have mountains of wealth. We grew up in a home where sometimes my mom forced me to go to school even when I was feeling sick because I could get one of my meals there. In your view of the world, people like me essentially wouldn’t have access to opportunity that would be reserved for the wealthy folks. You shouldn’t have to care about me individually, but if there are enough people like me, it takes…

> In your view of the world, people like me essentially wouldn’t have access to opportunity that would be reserved for the wealthy folks.

That is just not true. Historically, working your way through college was completely feasible. It still is feasible, unless you need one of those fancy 50,000$-100,000$ degrees, in which case you need a loan.

In Germany, a lot of students are working and living modestly through college. You don't have to rush your degree, employers do value actual work experience.

> You shouldn’t have to care about me individually, but if there are enough people like me, it takes a huge toll on society. You won’t be able to hide from it.

Look at it this way: In society, not everybody can or needs to be an academic. If you're not willing to work your way through college, or get a loan, or get one of these ISAs, then society isn't worse off if your place is taken by someone else.

Just look at the situation right now, there are tons of Americans with advanced degrees that are bartending and they're deeply in debt. Clearly society didn't need them to get that education, so it's better off not having paid for it.

Re: Income-sharing agreements let students trade future earnings for investment

#92

Post by dahart » Wed, Apr 10, 2019, 4:33 PM UTC

jki275 wrote: post #61

velcrovan wrote: post #60

Make the college free and provide students with a living stipend. Return higher education subsidies (and tax brackets) to their 1950s levels. Join the rest of the developed world.

what is "free"? There is no "free", it just means I have to pay for it. I prefer to pay for my own responsibilities, not for people to get underwater basketweaving degrees.

Do you pay for your own roads & police? It’s very likely you’re using some publically funded resources more than others. If you actually got your wish and paid for all of your own responsibilities, isn’t there a pretty good chance it would completely bankrupt you? Think about it and be honest about what benefits you’re actually receiving.

Paying for education for all is something we could very easily afford by moving money from other publically funded programs, so you wouldn’t have to pay an extra cent in taxes above what you’re paying now.

So the question is why not divert some money from the military or other programs? It has been demonstrated many times over that we don’t need new taxes to cover a national education program.

Several countries in Europe have publically funded university, and they are ranking higher in education than the U.S. https://en.m.wikipedia.org/wiki/Education_Index

And that doesn’t seem to hurt those countries; wealth per adult is higher than the U.S. https://en.m.wikipedia.org/wiki/List_of_countries_by_wealth_...

So is it possible you’re mistaken and that public funding for education might not just be free but even have financial returns, that it might even make us richer in the long term not poorer?

Re: Income-sharing agreements let students trade future earnings for investment

#93

Post by T800M101 » Wed, Apr 10, 2019, 4:33 PM UTC

neffy wrote: post #69

Oh, hey. Somebody just reinvented indentured servitude. https://en.wikipedia.org/wiki/Indentured_servitude Good job.

Not quite. You can find it if you're looking for it, but I've known and heard of some companies helping out with student payment programs or scholarships under the pretense that you will work for them at an agreed upon salary, albeit a bit lower than standard.

The initial case in the article suggests something similar where investors will "invest" in a student and bank on a successful career with repayments, similar to a student loan. I can't see this as being a negative that Indentured Servitude was.

Re: Income-sharing agreements let students trade future earnings for investment

#94

Post by charlesdm » Wed, Apr 10, 2019, 4:33 PM UTC

simonsarris wrote: post #76

velcrovan wrote: post #60

Make the college free and provide students with a living stipend. Return higher education subsidies (and tax brackets) to their 1950s levels. Join the rest of the developed world.

Absolutely not, at least not without making college much more difficult. Otherwise it is just subsidizing adult daycare. Many people do not belong in college and learn next to nothing, but go because they're shoo'ed along into it and the universities are in on the joke, and in on the money-making, and undergoing a drastic reduction of standards as a result. Some data on just how bad higher ed is getting, from 2017: h…

Most people are (somewhat) stupid in their early 20s. I don't disagree that not everyone belongs in university, however, most people don't realise that until it is too late and are already in debt.

Free higher education works well in the European countries that offer it.

What better investment could a society make than allow someone to pursue a field they are passionate about, and letting them start life with a clean slate? I'm by no means a socialist, but I think university should mostly be free.

The only thing (student) debt does is tie someone down. To a lifestyle or employer that they actually should have no loyalty to.

Tax brackets don't need to rise, resources just need to be moved from alternative things (i.e. military spending).

Re: Income-sharing agreements let students trade future earnings for investment

#95

Post by nukeop » Wed, Apr 10, 2019, 4:37 PM UTC

The American society has progressed so far it managed to bring back indentured servitude, what an achievement.

Re: Income-sharing agreements let students trade future earnings for investment

#96

Post by geebee » Wed, Apr 10, 2019, 4:37 PM UTC

ceejayoz wrote: post #51

empath75 wrote: post #50

Earlier quoted context omitted.

Just make student loans dischargable in bankruptcy again, problem solved.

Well, one problem solved, but likely creating (or restoring) others. Their non-dischargable status helps keep rates low(er) and allow folks who'd never qualify for a $100k loan otherwise get a degree. If we're gonna require a bachelors degree to work at McDonalds, it's probably time to treat undergraduate education like K-12; as an entirely publicly funded endeavour.

The problem is, it also allows folks who would never qualify for a 100k loan otherwise get 100K into debt.

I read an article about how artists are struggling in the high cost San Francisco Bay Area (sorry no link, because it was really an eye-opening article). The article did mention student loans, but focused mainly on gentrification brought about by high tech.

However, they did profiles of various struggling artists, and I was frankly stunned by the debt levels. People with fine and performing arts degrees frequently had student debt levels of $70,000-$90,000. Holy crap.

Is it a good thing that we've created a non-dischargeable, federally guaranteed loan that allows people to go $90k in hock for a degree that they wouldn't otherwise be able to get?

I was very intrigued when I learned that libertarians often look askance on weakening bankruptcy laws. I always figured they were a "that's the bargain you made" soft of crowd. What I learned is that libertarians aren't especially keen on lending (pun intended) the government's monopoly on physical force in service as a collection agency for people who make stupid loans. I'd say that making a $90,000 loan to someone so they can (channeling David Sedaris here) take photographs of rotting produce spilling out of garbage cans is the height of stupidity.

Like, if you make that loan, don't come crying to me. We already have a fairly punitive bankruptcy system, but we are not interested in marshaling the power of government sponsored men with guns to pursue foolish borrowers who don't pay foolish debts to the ends of the earth so that foolish lenders can get their money back. That, to quote pornstache from orange is the new black, "sounds like a whole lot of your problem".

If you don't think ordinary bankruptcy, along with credit and a history of repaying debts, is enough to incentivize repayment, seriously, don't make the loan.

Re: Income-sharing agreements let students trade future earnings for investment

#97

Post by dahart » Wed, Apr 10, 2019, 4:38 PM UTC

It’s interesting they talk about it as something different than a loan. It’s just a loan with good terms, right?

It seems good to have a flexible pay-back schedule, no late fees, and something that adapts to my situation in case I lose my job.

But the bigger picture is that this kind of thing is allowing tuition to increase. We don’t really need better ways to finance ballooning tuitions as much as we need to figure out how to reduce tuitions and get university funding for people who can’t afford it even with income sharing agreements.

Re: Income-sharing agreements let students trade future earnings for investment

#98

Post by colpabar » Wed, Apr 10, 2019, 4:40 PM UTC

esoterica wrote: post #64

Traster wrote: post #10

The obvious point to make is that American student loans already suck so this may be an alternative. However, this makes me feel really uncomfortable. The first is the same reason as student loans: At the age you're agreeing this you are very unlikely to correctly judge your own value. It's the same reason why students take on ridiculously onerous student loans. The solution to that problem in my mind though is to re…

15%? You might wanna do the math again dude. Also the entire point of an equity like arrangement is that the investor gets a larger fraction of the upside and in exchange for agreeing to eat the downside if the investment doesn’t work out. Comparing it to the APR of a normal student loan misses the point entirely. With a regular loan you have to pay the same amount whether you’re making minimum wage or 200k/year, whe…

I think everyone would have appreciated a correction of his math instead of just pointing out how he was wrong.

Re: Income-sharing agreements let students trade future earnings for investment

#99

Post by charlesdm » Wed, Apr 10, 2019, 4:40 PM UTC

harryh wrote: post #89

kaiju0 wrote: post #84

Earlier quoted context omitted.

This is the natural fix. People then don't get the loans they can't afford. There is no limiters in place for a liberal arts major taking out 100k loans. The future is in income sharing agreements. Let the market and investors decide if they can be paid back.

If college loans could be discharged via bankruptcy it wouldn't just be liberal arts majors with 100k loans who did it, EVERYONE would. Even people graduating and taking high paying jobs who could easily pay back the loans. Saying that college loans should be dischargeable is basically saying that student loans shouldn't exist (which is a fine point of view, but people should be clear on what their position is).

You can't have a loan at high APR and then not have it be dischargeable. It's either a special type, but at low interest, or alternatively, high interest but normal.

I like the way this girl did it. Great deal and she was smart about it.

Re: Income-sharing agreements let students trade future earnings for investment

#100

Post by larrik » Wed, Apr 10, 2019, 4:41 PM UTC

dahart wrote: post #97

It’s interesting they talk about it as something different than a loan. It’s just a loan with good terms, right? It seems good to have a flexible pay-back schedule, no late fees, and something that adapts to my situation in case I lose my job. But the bigger picture is that this kind of thing is allowing tuition to increase. We don’t really need better ways to finance ballooning tuitions as much as we need to figure…

Well, a loan ends after you pay back the principal, this only seems to end after a certain period of time, even if you end up in a great job and having to pay back 3x or 4x the loan.

Whether this is still worth it depends heavily on whether this shows up on your credit reports...