Student Loans Are A Drag On The Economy • Hacker News Board

Re: Student Loans Are A Drag On The Economy

#121

Post by ap22213 » Sun, Mar 02, 2014, 12:12 AM UTC

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 get what you're saying. But, in a market-based system, where universities are highly profitable, we would expect that there would be an enormous influx of capital in to create more universities. But, we don't see that. There are very few new entrants into the university education space.

Re: Student Loans Are A Drag On The Economy

#122

Post by tsotha » Sun, Mar 02, 2014, 12:52 AM UTC

patmcguire wrote: post #21

It's not the interest, it's the principal. And I don't understand how the principal got so high. Is calculus ten times more expensive to teach than it was thirty years ago? Is Shakespeare? Supply is totally inelastic, because it's almost impossible to get a new college accredited (for profit schools all started with an already accredited school and expand them). Same with demand - not having a college degree puts you…

Much of the increase is driven by the government. In the last thirty years the ratio of administrators to students has gone from 9:1 to 3:1, and it's nearly all in response to extra government rules and paperwork.

Re: Student Loans Are A Drag On The Economy

#123

Post by tostitos1979 » Sun, Mar 02, 2014, 1:00 AM UTC

javajosh wrote: post #119

mesaaz wrote: post #116

Earlier quoted context omitted.

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.

Wow. I did not know this statistic. With bit of googling, I saw this:

http://en.wikipedia.org/wiki/Trigeminal_neuralgia

Apparently, Salman Khan has this. Painful :(

Re: Student Loans Are A Drag On The Economy

#124

Post by yonran » Sun, Mar 02, 2014, 1:16 AM UTC

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…

Charles W. Calomiris and Stephen Haber made a similar point in a recent EconTalk interview discussing their book Fragile by Design. When the US government wants to promote a populist cause (college, home ownership, farms), it is easier to do so off balance sheet by reducing interest rates rather than giving a straightforward subsidy. Thus, we trade economic risk for a reduced federal deficit.

http://www.econtalk.org/archives/2014/02/calomiris_and_h.htm...

Re: Student Loans Are A Drag On The Economy

#125

Post by thesimpsons1022 » Sun, Mar 02, 2014, 1:18 AM UTC

Glyptodon wrote: post #18

Meh. This is (mostly) the students' and the families' who abet their stupid decisions fault. If you go to an in-state community college and then matriculate to an in-state university in my state the total cost of college is (~$4500 for 2 years of CC living at home + ~$25000 for 2 years of closest to home in-state school) ~$30000 + the cost of living at home. Meanwhile people continue to whine about sending their kids…

Also, most people at my school are either really wealthy or really poor. This is because the middle class isn't poor enough to get financial aid, but not rich enough to pay tuition.

Re: Student Loans Are A Drag On The Economy

#126

Post by [deleted] » Sun, Mar 02, 2014, 1:19 AM UTC

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…

[deleted]

Re: Student Loans Are A Drag On The Economy

#127

Post by thesimpsons1022 » Sun, Mar 02, 2014, 1:26 AM UTC

existencebox wrote: post #57

aaron-lebo wrote: post #19

Earlier quoted context omitted.

How many 18 years olds are making rational decisions about return on investment in 10-15 years time? I'm not sure how you go about adequately informing students about a major life decision they are making.

At this point; I'd accept "more than not at all." Anecdotes ahead, proceed with caution: Very average PA public school; had a "home ec" course, in which we did hilariously outdated calculations on things like interest vs compound interest. Not a single mention of what I'd call "practical economics"; e.g. actually balancing a real budget (which, FWIW, I've heard is becoming more a thing in certain districts), calculat…

why is it the schools job to teach their finances? I see school as more academic, while personal matters like that should be taught at home.

Re: Student Loans Are A Drag On The Economy

#128

Post by [deleted] » Sun, Mar 02, 2014, 1:26 AM UTC

ap22213 wrote: post #121

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 get what you're saying. But, in a market-based system, where universities are highly profitable, we would expect that there would be an enormous influx of capital in to create more universities. But, we don't see that. There are very few new entrants into the university education space.

[deleted]

Re: Student Loans Are A Drag On The Economy

#129

Post by belovedeagle » Sun, Mar 02, 2014, 1:27 AM UTC

toomuchtodo wrote: post #86

tn13 wrote: post #77

The root of this problem is that the liberals have been paddling relatives good sounding notions such as "everyone needs to go to college" thing and the subsequent government moves to ensure that every tom dick and harry can go to college. This was about to happen.

Everyone gets to drive on roads in the US because we each pay a bit per gallon of gas. Couldn't we all go to school if we each paid a little bit for it and you just had to show up?

Tell me: where did you get your free car?

Re: Student Loans Are A Drag On The Economy

#130

Post by thesimpsons1022 » Sun, Mar 02, 2014, 1:27 AM UTC

vacri wrote: post #108

superJoy wrote: post #26

Earlier quoted context omitted.

My high school counselors frequently came by classes and spoke about college---while they didn't talk about the financials in detail, they easily could have. It'd be as simple as doing a quick calculation on the board of how long it will take to pay off some amount of debt. Now whether that advice would stick in the students' heads, I don't know, but they should at least try. There's also high school economics classe…

Now whether that advice would stick in the students' heads Certainly not all, by a long shot. Here in Australia, you get a couple of grand to help you out when you have a baby, helping cover various initial costs, purchasing prams or whatever. A friend of mine mentioned that he'd heard his 17-year-old daughter talking with her friends about having a baby because then you get that baby money. They saw it as a huge win…

but what about their parents? shouldnt the parents be smarter than that?