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Income-sharing agreements let students trade future earnings for investment

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

#111

Post by Retra »

blackrock wrote: post #43

Great.. why don't we just call ourselves the new digital serfs? Definition: 1. A person in a condition of servitude, required to render services to a lord, commonly attached to the lord's land and transferred with it from one owner to another. 2. A slave.

Being free but indebted is not really as bad as being forced to work someone else's land. I owe my bank a significant sum, but I am able to find work that schedules both a repayment of that debt as well as a nice profit and accumulation of assets for myself on the side. That is not possible under slavery or serfdom. I owe my bank money, but I don't owe them my life, as they cannot require that I pay them back under such an inefficient and disenfranchising mechanism.

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

#112

Post by zrail »

llamataboot wrote: post #101

Let's scale this up huge, let everyone take part, and have all of society invest in education and reap the rewards. We can call it "public education" and even capture the public externalities of having a well-educated population!

I agree with you. ISA proponents make two arguments that sort of resonate with me, though. First, incentive alignment is closer with a private structure. This is weak to me because there’s no reason why incentives can’t be aligned in a similar way with, say, an additional tax on students that looks similar to an ISA (big standard deduction, time limited, with a total cap on return).

Second, and more reasonable to me, is that the political climate makes public universal education impossible at the moment so why not pioneer in the private space? I would love to see society invest in citizens, and in fact I would go farther and fully federalize the preK-12 system and ban charters. Such things are just not realistic with a government that can’t even pass a simple budget without fireworks.

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

#113

Post by daniel-cussen »

harryh wrote: post #109
daniel-cussen wrote: post #103

Earlier quoted context omitted.

No, no, no. Before the seventies student loans could be discharged and less than 1% of lawyers and doctors discharged them through bankruptcy. In general these loans were paid back. Second point. Saying a loan should be dischargeable does not mean the loan shouldn't exist. It is a cost the lender has to assume. And before you point out that this will be inflicted upon the borrower in the form of higher interest, I ha…

Student loans were much much smaller in the era you refer to (before 1976 when the law was changed). Behavior would be much different today with the much larger debts people take on.

Tuition was much much smaller in that era too.

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

#114

Post by larrik »

dahart wrote: post #107
larrik wrote: post #100

Earlier quoted context omitted.

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...

Great point, the terms might not be great at all. I should have said relaxed schedule. Agreed, income sharing might not be worth it. Just another reason we should investigate other ways to pay for education than personal financing, right?

It seems the ones in the article end after you pay off 2.5x the original loan, at least.

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

#115

Post by honkycat »

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.

I hate to break it to you, but this is already very much the case. Do you think the education you got was even CLOSE to what a Bill Gates or Mark Zuckerberg received? You are dreaming.

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

#116

Post by rukittenme »

zrail wrote: post #112
llamataboot wrote: post #101

Let's scale this up huge, let everyone take part, and have all of society invest in education and reap the rewards. We can call it "public education" and even capture the public externalities of having a well-educated population!

I agree with you. ISA proponents make two arguments that sort of resonate with me, though. First, incentive alignment is closer with a private structure. This is weak to me because there’s no reason why incentives can’t be aligned in a similar way with, say, an additional tax on students that looks similar to an ISA (big standard deduction, time limited, with a total cap on return). Second, and more reasonable to me,…

> and ban charters.

Why? What's the difference between publicly funded versus publicly funded and operated?

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

#117

Post by will_brown »

harryh wrote: post #110
llamataboot wrote: post #101

Let's scale this up huge, let everyone take part, and have all of society invest in education and reap the rewards. We can call it "public education" and even capture the public externalities of having a well-educated population!

ISAs != tax funded education because the former closely aligns the incentives of the educator with the educated while the latter does not.

>the former closely aligns the incentives of the educator with the educated

Do you think the school cares if you pay them using a federal student loan vs a group of private investors making payments on your behalf?

How does one align the incentives of the school with students any more than the other?

The only alignment of interests the school has with the students is when the student has a rich parent who could be a donor or the student is a super athlete that can measurably impact the school revenue as an unpaid student athlete.

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

#118

Post by harryh »

daniel-cussen wrote: post #113
harryh wrote: post #109

Earlier quoted context omitted.

Student loans were much much smaller in the era you refer to (before 1976 when the law was changed). Behavior would be much different today with the much larger debts people take on.

Tuition was much much smaller in that era too.

If the point you are trying to make is:

  1) loans should be dischargeable via bankruptcy so that
  2) lenders refuse to make such large loans so that
  3) tuitions are forced down
Then I think that's a perfectly fine point of view (as I already said above). It's just important to be clear about it and not simply say that loans should be dischargeable with the expectation that everything else will stay more-or-less the same.

Making this change would have an enormous impact on how higher education in the US functions.

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

#119

Post by harryh »

will_brown wrote: post #117
harryh wrote: post #110

Earlier quoted context omitted.

ISAs != tax funded education because the former closely aligns the incentives of the educator with the educated while the latter does not.

>the former closely aligns the incentives of the educator with the educated Do you think the school cares if you pay them using a federal student loan vs a group of private investors making payments on your behalf? How does one align the incentives of the school with students any more than the other? The only alignment of interests the school has with the students is when the student has a rich parent who could be a…

OP wasn't talking about funding the school via federal student loans, but instead via taxes which is why the inequality in my comment said "tax funded" and not "loan funded."

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

#120

Post by ineedasername »

dariusj18 wrote: post #33

This is a little too much like The Unincorporated Man for my comfort. https://en.wikipedia.org/wiki/The_Unincorporated_Man

This is literally the exact first thing I thought about when I read the article. I think the book gets a bit too ideological, but the prospect of buying a stake in someone's future earnings stuck with me as a pernicious side door into indentured servitude. At the times I shrugged it off as "well, it won't happen" yet here we are 10 years later...
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