Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Student Loans Are A Drag On The Economy

business.time.com

Post reply on HN
Print view View original

111–120 of 181 posts

Re: Student Loans Are A Drag On The Economy

#111

Post by Crake »

superJoy wrote: post #10

At what point do these students realize the cost indicates they should stay from that school? Like, "Oh wait, even though X is a better school than Y, it will cost 5x more, and my starting salary will only be 5% less." Is that happening? It just seems some of these people are naive. Another example is ones that are unaware of the economy of the city they aspire to live in, and get a degree with little value in that c…

It's always amazed me that some people get to pick which colleges to go to. I never had that option. Until I turned 24, the maximum financial aid available to me was a measly $5,000 stafford loan. There aren't many places you can attend with only $5,000. That won't even pay for an in state public university in virtually every state. The colleges I spoke with told me that if I didn't have the money, I should wait until I turned 24 and try again. That was a long half decade wait.

You have to have a rich relative available to cosign for all those private loans--federal loans for dependents are capped at about $5,000/year, and independents get about $10,000/year. The total lifetime amount is capped at about $60,000, which is why I'm sometimes skeptical of "I have $200,000 in student loan debt! I'm so poor and oppressed!" stories. It's very likely that these people are just fine because their family will eventually bail them out no matter how many bad choices they make--they're legally obligate to. Student loan companies don't loan money to people without collateral.

Re: Student Loans Are A Drag On The Economy

#112

Post by snogglethorpe »

joezydeco wrote: post #56

This is an interesting NPR Planet Money podcast where they try to break down why Duke's tuition costs $60,000/yr (and Duke claims that the actual cost of a student is really $90,000/yr). http://www.npr.org/blogs/money/2014/02/26/283018555/episode-... One of the most interesting points is that colleges are in a unique inverted position when it comes to price vs. demand. Cutting their tuition price would actually decre…

> You can grind your teeth at the rest of the podcast where the administrators claim a lot of this cost is building amenities and facilities that students now expect out of a high-tier college like all-single dorms, a myriad of cafeteria options, and 24/7/365 library and IT staffing.

I've seen a fair number of universities in the U.S. and other similarly developed countries, and one of the most striking differences I've noticed is that U.S. university physical plants tend to be really nice — super well-maintained and frequently renovated, "deluxe" feeling — whereas even top-tier universities in other countries often feel a bit threadworn and sometimes even kind of run-down, even if they have beautiful old buildings. The latter function perfectly well as universities, mind you, but the impression is that they're being pretty careful with their maintenance budget....

Re: Student Loans Are A Drag On The Economy

#113

Post by tostitos1979 »

falsestprophet wrote: post #37
yashg wrote: post #13

Earlier quoted context omitted.

Exactly my thought when I read that. $400,000 for dentist? Heck some people don't even give them as much respect as they give to other kind of doctors. Some say they aren't even doctors. No wonder people go to India or Eastern Europe to get their teeth replaced.

They are literally not medical doctors.

Yes, they aren't MDs. But they are Doctors. Personally, I have more respect for the average dentist than for the average GP. They put in tons of physical effort in their work. Lawsuits (or the threat thereof) are constant. Their board exams cover a lot of the same material as MDs. My personal experience is that the average dentist brings more relief to humanity (ever had dental pain?) than the average GP.

Re: Student Loans Are A Drag On The Economy

#114

Post by tostitos1979 »

Bahamut wrote: post #110
eropple wrote: post #55

Earlier quoted context omitted.

I have a degree from a cow college. I'm very good at what I do. But I'm at a disadvantage: my network doesn't include people who are valuable to know. The dudes who started Dropbox are dudes friends of mine knew in college. People like that aren't in my rolodex. That's what these colleges are for: social entry into that class of mover shaker, be it MIT for tech or an Ivy for politics. This stuff is the difference bet…

Hope is not lost in this situation - you just have to work at it more. I'm a stellar mind who also went to public schools for undergrad and grad, but I focused on self-development and networking after. I went from $50k a year to likely over $120k (that is in negotiation) in the span of 1 1/2 years of hard effort &learning. I too racked up lots of debt from school, about $200k total. I am forced to focus on money beca…

You got into 200K debt with a CS degree? I assume you did a Masters from Stanford or some other elite place?

Re: Student Loans Are A Drag On The Economy

#115

Post by rwallace »

nirnira wrote: post #81

Why are student loans so high, the market so ridden with defaults, and the price of education so high? I think (well, I'm a little more certain than that) the answer is basic economics. Here's my take: You (America) have a government that offers discount loans - i.e. loans with poor prospects/low interests rates - in the hope of driving a higher allocation of capital to education than would occur in a pure private le…

I agree with what you said about the toxic market and the poisonous blend of state and capitalism - I'm a moderate libertarian, but the evidence overwhelmingly indicates if you're not going to have genuine capitalism in a sector, you are actually better off with honest socialism like we have in Europe than with pretend capitalism which gives you the worst of both worlds.

I must, however, take issue with your last sentence. That is, I agree education has benefits, but the current school/college system is hardly at all about education and mostly about potlatch: burning away some of the best years of your life in an attempt to obtain relative status. Sure, a college degree might improve your chances of getting a good job, but in most occupations that only means you got the job at someone else's expense; it's a negative sum game.

Proposed practical solution: outside fields like law and medicine (where college actually provides necessary training, albeit in a very inefficient way), make it illegal for hiring to discriminate on the basis of college degree.

Re: Student Loans Are A Drag On The Economy

#116

Post by mesaaz »

tostitos1979 wrote: post #113
falsestprophet wrote: post #37

Earlier quoted context omitted.

They are literally not medical doctors.

Yes, they aren't MDs. But they are Doctors. Personally, I have more respect for the average dentist than for the average GP. They put in tons of physical effort in their work. Lawsuits (or the threat thereof) are constant. Their board exams cover a lot of the same material as MDs. My personal experience is that the average dentist brings more relief to humanity (ever had dental pain?) than the average GP.

Modern dental care is truly one of the wonders of industrial civilization.

Anesthetized basic dentistry adds more to our quality of life than much of the modern "healthcare" industry.

Re: Student Loans Are A Drag On The Economy

#117

Post by Johnie »

tzs wrote: post #99
nirnira wrote: post #81

Why are student loans so high, the market so ridden with defaults, and the price of education so high? I think (well, I'm a little more certain than that) the answer is basic economics. Here's my take: You (America) have a government that offers discount loans - i.e. loans with poor prospects/low interests rates - in the hope of driving a higher allocation of capital to education than would occur in a pure private le…

> And again, because humans and humans, colleges, which in America have little government oversight as to pricing, raise their pricing. Why? Because people will still pay it. For whatever reason, colleges are able to bank on their prestige and identity, on the promise of access to important social circles, and so pure pressure for price is diluted Harvard could double its price, and still have no trouble filling ever…

Top tier institution get a significant amount of their funding from alumni donations. Their motivation is to identify top tier students, provide them with a network of other top tier students, who when they graduate will become leaders in their respective fields.

Many of these top tier universities have endowments large enough that they don't need to collect tuition from the students. In fact, many of these universities allow free or reduced tuitions for low income students. (http://www.admissionsconsultants.com/college/ivy_league_fina...)

Here is the list of endowment per student: http://www.statisticbrain.com/college-endowment-rankings/

Here's the top 5 (per student) University Endowment / Student Endowment Total Enrollment

1 Princeton University $1,857,040 $14.05 billion 7,567

2 Yale University $1,436,384 $16.65 billion 11,593

3 Harvard University $1,304,492 $27.56 billion 21,125

4 Franklin W. Olin College of Engineering $1,096,595 $335.6 million 306

5 Pomona College $942,490 $1.46 billion 1,548

The motivation for alumni to contribute to the endowment after graduation is that the value of their degree is correlated to the ranking/reputation of the university. By contributing to the university, you not only help the university by help yourself.

So the economics for top tier universities are not similar to the rest of the colleges.

Re: Student Loans Are A Drag On The Economy

#118

Post by dredmorbius »

dlp211 wrote: post #67
dredmorbius wrote: post #59

Earlier quoted context omitted.

Curious, but what other reasons do you see?

I go to a research university so there are 4 main sources of funding in no particular order: 1) State funding (public tax dollars) 2) Student tuition 3) Research Grants 4) Alumni donations State funding is down, research grants are down, and alumni donations are down. The autonomous costs of a university don't decline, so that loss in revenue needs to be made up elsewhere, thus it comes from student tuition.

That sounds vaguely in line with the dynamic I'm recalling now with public university funding.

Re: Student Loans Are A Drag On The Economy

#119

Post by javajosh »

mesaaz wrote: post #116
tostitos1979 wrote: post #113

Earlier quoted context omitted.

Yes, they aren't MDs. But they are Doctors. Personally, I have more respect for the average dentist than for the average GP. They put in tons of physical effort in their work. Lawsuits (or the threat thereof) are constant. Their board exams cover a lot of the same material as MDs. My personal experience is that the average dentist brings more relief to humanity (ever had dental pain?) than the average GP.

Modern dental care is truly one of the wonders of industrial civilization. Anesthetized basic dentistry adds more to our quality of life than much of the modern "healthcare" industry.

To further support your point, I read somewhere that dental pain was the leading cause of suicide, pre-1900 or so, which I find very easy to believe. Dentistry (along with sewage systems) is responsible for more quality of life than almost anything else.

Re: Student Loans Are A Drag On The Economy

#120

Post by nirnira »

ds9 wrote: post #109
nirnira wrote: post #81

Why are student loans so high, the market so ridden with defaults, and the price of education so high? I think (well, I'm a little more certain than that) the answer is basic economics. Here's my take: You (America) have a government that offers discount loans - i.e. loans with poor prospects/low interests rates - in the hope of driving a higher allocation of capital to education than would occur in a pure private le…

"the psychological effect of borrowing from the government - I think people tend to feel safer doing this than borrowing from an obviously competitive private firm. If you read the article, the casual attitude of student debtors to defaulting on their loans shows this - the government has no teeth. The private firm goes bankrupt if it doesn't get a return on investment. " All of the above is incorrect. (a) Student lo…

Thanks for the clarification, but it sounds like the net effect is exactly the same: bad loans are made, money is lost, the taxpayer is forced to subsidise the indiscriminate purchase of education.

As always with such schemes, there is an ongoing push to implement them in as complicated and opaque a fashion as possible, to try and hide the naked fact of what is going on. So no one will admit "we take money from taxpayers and make loans no sane private investor would ever consider," they'll just talk about FDCRP-approved rates this and Fannie Mae-that and fiduciary-backed iron bond multiplexing high-yield 7.5% rederived blahblahblah.

Same bullshit that happens when bank deposits are federally insured.

Post reply on HN