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No Tuition, but You Pay a Percentage of Your Income if You Find a Job

nytimes.com

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Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#11

Post by seem_2211 »

Shivetya wrote: post #5

Another sounds too good to be true because of just that. there are only the feel good details in the article and not the nitty gritty that is needed to even make it plausible. so, with regards to not paying it back if they don't land a job. how long are they held to that commitment? do we also look to see if they have another means of support? five years, ten, twenty? with regards to not paying up front, perhaps if w…

You don't pay anything back until you're making at least $50k a year. Not sure what the life of the contract is, but I've been following the Lambda school guys on Twitter for a while and they seem very focused on a 2-3 year payback.

A lot of the criticism of Lambda School seems like unfairly comparing some ideal of education with their model, rather than comparing the current reality, which is colleges that frequently leave people in $30k + worth of student debt with no guarantee of a job afterwards, and that's before we talk about the years you sink into it. Then there are the learn to code bootcamps which seem to be garbage in general.

I'd be willing to bet for most of us, paying 17% of our income (once we made $50k) a year, for two years, is a vastly preferable to whatever we've paid.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#12

Post by jki275 »

austenallred wrote: post #9
Shivetya wrote: post #5

Another sounds too good to be true because of just that. there are only the feel good details in the article and not the nitty gritty that is needed to even make it plausible. so, with regards to not paying it back if they don't land a job. how long are they held to that commitment? do we also look to see if they have another means of support? five years, ten, twenty? with regards to not paying up front, perhaps if w…

> so, with regards to not paying it back if they don't land a job. how long are they held to that commitment? The agreement lasts up ton5 years. If you haven’t paid back at the end of 5 years it goes away and you owe nothing. You can also pay upfront, but most students don’t have enough cash to do so.

it's also possibly cheaper to pay up front -- 20k vs up to 30k if you pay on the installment plan afterwards.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#13

Post by austenallred »

jki275 wrote: post #12
austenallred wrote: post #9

Earlier quoted context omitted.

> so, with regards to not paying it back if they don't land a job. how long are they held to that commitment? The agreement lasts up ton5 years. If you haven’t paid back at the end of 5 years it goes away and you owe nothing. You can also pay upfront, but most students don’t have enough cash to do so.

it's also possibly cheaper to pay up front -- 20k vs up to 30k if you pay on the installment plan afterwards.

Yes it likely is cheaper to pay upfront

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#14

Post by lordnacho »

This is replacing student debt with student equity.

Here's some thought on debt and equity: https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo...

AKA the "capital structure irrelevance principle."

My thoughts for some reason wandered that way, but I was actually going to address another issue: as long as it's expensive to go to college, you can't win. There's no free lunch. If college were cheap, you could spend a few years improving your future earnings. If it's fairly priced, you can't. It's as if everyone will be trapped by efficiency, though I haven't quite fleshed this out in my mind.

Of course college is not the only thing there is, but it's a fairly big aspiration for a fairly large chunk of the population.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#15

Post by [deleted] »

mdasen wrote: post #3

How is this different from income-based repayment of federal student loans? While there are different programs, the general idea is that you pay 10% of your "discretionary" income for 20 years with the guarantee that your payments aren't higher than the 10-year payoff rate. The article doesn't really have information on the Purdue system other than saying that it might cost high-earning students 250% of the price of…

[deleted]

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#16

Post by pitaj »

mcherm wrote: post #8
chrisamiller wrote: post #6

So you get an education for free, then pay back into the system after you're in the workforce? Congratulations, silicon valley, you've just re-invented public education! Imagine what our public universities could look like with solid funding increases (which would be a fraction of that 17% that this group wants to take). They could be both free and amazing.

> Congratulations, silicon valley, you've just re-invented public education! There is a key difference. With public education, the excess cost of the education is born equally by ALL taxpayers. With education that is funded by a percentage of future income rather than a fixed up-front cost, that is born only by the graduates. It means that those not fortunate enough to attend college (or not interested) are not expec…

Also, it's voluntary. Taxation is involuntary.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#17

Post by ggggtez »

mcherm wrote: post #7
mdasen wrote: post #3

How is this different from income-based repayment of federal student loans? While there are different programs, the general idea is that you pay 10% of your "discretionary" income for 20 years with the guarantee that your payments aren't higher than the 10-year payoff rate. The article doesn't really have information on the Purdue system other than saying that it might cost high-earning students 250% of the price of…

> The big issue is for universities is how they would handle marriage. I don't see why this is an issue at all. If the college claims that "finding the high-income person you will marry" is one of the reasons to attend that college, then they should please return to the 1950s (or earlier!). If they DON'T, then the repayment should be based on the individual's income, regardless of their spouse's income. Does this mea…

I've heard professors argue that college as a physical location is only useful for meeting people, and the learning itself was not even relevant. I don't think this is a 1950s outlook.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#18

Post by [deleted] »

ggggtez wrote: post #17
mcherm wrote: post #7

Earlier quoted context omitted.

> The big issue is for universities is how they would handle marriage. I don't see why this is an issue at all. If the college claims that "finding the high-income person you will marry" is one of the reasons to attend that college, then they should please return to the 1950s (or earlier!). If they DON'T, then the repayment should be based on the individual's income, regardless of their spouse's income. Does this mea…

I've heard professors argue that college as a physical location is only useful for meeting people, and the learning itself was not even relevant. I don't think this is a 1950s outlook.

[deleted]

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#19

Post by soham »

austenallred wrote: post #4
mdasen wrote: post #3

How is this different from income-based repayment of federal student loans? While there are different programs, the general idea is that you pay 10% of your "discretionary" income for 20 years with the guarantee that your payments aren't higher than the 10-year payoff rate. The article doesn't really have information on the Purdue system other than saying that it might cost high-earning students 250% of the price of…

In a word: incentives. It’s not about the payment structure alone, it’s about a school that is incentivized to make its students successful. IBR is just taxpayers swallowing the bill when schools fail.

But then such schools that predominantly work on ISAs, will pre-select for good students, who are most likely to succeed and also for industries where the compensation is higher. Remainder (which is arguably 90%+) of the students will still be at the mercy of other schools + taxpayer.

It seems, this just provides one more payment option to students who are likely to succeed anyway and a refreshing business model for schools that move early into the space.

It doesn't address the real problem with schools i.e. making the 20th%le student successful and not a taxpayer burden.

Re: No Tuition, but You Pay a Percentage of Your Income if You Find a Job

#20

Post by [deleted] »

chrisamiller wrote: post #6

So you get an education for free, then pay back into the system after you're in the workforce? Congratulations, silicon valley, you've just re-invented public education! Imagine what our public universities could look like with solid funding increases (which would be a fraction of that 17% that this group wants to take). They could be both free and amazing.

[deleted]
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