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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

#131

Post by rhizome »

rukittenme wrote: post #116
zrail wrote: post #112

Earlier quoted context omitted.

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?

The purpose of charter schools is to circumvent equal access provisions and to break teacher unions.

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

#132

Post by will_brown »

harryh wrote: post #119
will_brown wrote: post #117

Earlier quoted context omitted.

>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."

Fine how does tax funded vs loan funded vs private capital funded education align the interests of the school with the students?

The students interest is getting an education, converting that education into employment, and not being indebted. The schools interest is revenue.

The student would be best off with a free tax funded education and no debt, the school is best off with guaranteed federal loans allowing them to charge imaginary tuition rates no one can normally afford but for guaranteed student loans.

Where is the alignment of interests come from with private capital in exchange for future earnings? Students are left indebted (maybe not in debt but indebted) and schools face the reality the private market isn’t willing to pay runaway tuition costs like guaranteed federal loans because private market knows it’s a bad investment (as evidenced by the current amount of outstanding student loans and default rates, nearly 1million defaults a year). Next thing we know the private investors will begin negotiating tuitions on behalf their investments and leaving non- capital backed students footing the bill for the difference (kind of like our messed up healthcare system).

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

#134

Post by rchaud »

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.

The fact that you're using cliched "conservative" meme tropes like "basket weaving" indicates you're not interested in having a non-ideological discussion about this. As of 2016, the most common bachelor's degrees in the US were in the areas of business and healthcare [1]:

[1]:https://nces.ed.gov/programs/digest/d17/tables/dt17_322.10.a...

From the table in the link:

Business - 371,694

Health Professions - 228,896

Public Admin/Social Services - 161,230

Biological + Medical Sciences - 113,749

This is Hacker News. Please respect the community here and attempt to present some data to support your comment.

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

#135

Post by leptoniscool »

Isn't at least part of the problem the exorbitant high cost of college education?

This will cause the price of college to spiral higher and higher, since students can just sign away a larger portion of their future earnings.

I've heard that higher education is free in Germany, even for foreign students. Couldn't we implement a similar model here in USA?

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

#136

Post by benmanns »

colpabar wrote: post #98
esoterica wrote: post #64

Earlier quoted context omitted.

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.

The math is excluding compounding. A simplified look (payment due at end of 15 years) is around 6.3% annually https://www.wolframalpha.com/input/?i=2.5%5E(1%2F15)&assumpt...

The math including payments is a bit more complex and will depend on how much you are paying during the loan term. I.e. if you paid 2.4x on day one and 0.1x the final day looks a lot different from 0.1x on day one and 2.4x the last day due to the time value of money.

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

#137

Post by harryh »

will_brown wrote: post #132
harryh wrote: post #119

Earlier quoted context omitted.

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."

Fine how does tax funded vs loan funded vs private capital funded education align the interests of the school with the students? The students interest is getting an education, converting that education into employment, and not being indebted. The schools interest is revenue. The student would be best off with a free tax funded education and no debt, the school is best off with guaranteed federal loans allowing them t…

If a student with an ISA doesn't get a good job after graduation, the school gets nothing (or not much).

If the student does get a good job, the school gets paid more.

Thus the school is highly incentivized to make sure that their graduating students are highly employable.

This is very different from the other systems where the school gets paid no matter what happens after graduation.

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

#138

Post by darkerside »

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,…

> A tax on students

It would take all of about two decades, maybe less, for program spending to spiral out of control. And the only way to solve it would be to expand the tax to non-students.

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

#139

Post by geebee »

JudgeWapner wrote: post #130
geebee wrote: post #96

Earlier quoted context omitted.

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 artist…

> the government's monopoly on physical force in service as a collection agency for people who make stupid loans > the power of government sponsored men with guns to pursue foolish borrowers please correct me if I'm wrong, but I belive tax evasion is the only debt-related (but still requiring a criminal intent to avoid paying) situation that will result in arrest. If you don't pay your student loans, even gov't backe…

Good point. If I'm going to discuss use of government force, I should distinguish between civil and criminal action taken on the part of the government.

This discussion does take me past my knowledge boundaries, though I believe failure to pay child support can also be "criminal". The main reason I'm not confident (and used quotes) in what I'm saying here is that there's a difference between criminalizing failure to pay a debt itself, and criminalizing various kinds of fraud that go into hiding money that would otherwise be garnished by court order. This difference can be complicated legally and I just don't know enough about it to have a meaningful discussion.

Seizing someone's assets in response to a failure to pay debt does eventually require law enforcement, so I do stand behind my claim that government force is ultimately to collect money based on foolish lending and borrowing practices, under draconian non dischargeable conditions.

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

#140

Post by jedmeyers »

Shish2k wrote: post #88
jedmeyers wrote: post #71

Earlier quoted context omitted.

> No one cares to help anyone else. If people in Europe cared to help their money would not have been taken by force via taxes.

"Taken by force" is a strange (very American?) way to put it. As a European, I'm happy to pay taxes because it's a convenient and efficient way to get money out of my bank account and into the hands of people who need it more than me; I'm helping my fellow countrymen with literally zero effort on my part, which makes my country a better place for me to live in. If we cancelled taxes and required people to make indivi…

> As a European, I'm happy to pay taxes because

Because you will go to jail if you won't.

> taxes is a convenient and efficient way to get money out of my bank account and into the hands of people who need it more than me

If this is something other than a very elaborate satire, I would be very surprised.

> literally zero effort on my part

Calling at least a third of your earnings "literally zero effort" is a bit disingenuous.

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