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America's pensions can't beat Vanguard but they can close a hospital

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Re: America's pensions can't beat Vanguard but they can close a hospital

#331

Post by pas »

OGEnthusiast wrote: post #2

I don't understand why we don't just ban private equity. Seems like zero value-add to the actual real economy.

they increase productivity, which is one of the most important part of the real economy, separates a lot of grueling manual labor while starving (so the Malthusian state) from having so much economic surplus that we have the opposite of starving in advanced economies.

https://www.nber.org/system/files/working_papers/w26371/w263...

the finding is that on average, target firms add jobs and see improved labor productivity

Re: America's pensions can't beat Vanguard but they can close a hospital

#332

Post by andrewaylett »

codexb wrote: post #68
jazz9k wrote: post #45

Earlier quoted context omitted.

I disagree about student loans. The entire system needs to be dismantled. Universities don't care if their majors will result in a job and the student loans are a source of risk-free money. They need to start taking on the risk of all student loan, not me, the tax payer.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

Surely the first step is to stop issuing loans in such a way that will cause the next generation of students to suffer the same problems, freeing us up to sort out the problems of previous generations without moral hazard.

The UK had what I think was a really nice set up, although it's now not nearly as palatable. My student loan had an interest rate tied to inflation, and repayment was a fixed amount of my income above a limit, collected via the same mechanisms used for income tax. Any unpaid loan would be written off when I turn 60.

The modern system is similar, but the interest rate has been decoupled from inflation which means that instead of paying back essentially the same value, no matter how slowly you pay it off, it's now definitely better to pay more earlier. Which makes it much more like a regressive "graduate tax" that you only have to pay if you don't earn enough.

Re: America's pensions can't beat Vanguard but they can close a hospital

#333

Post by dbspin »

WalterBright wrote: post #296
dbspin wrote: post #286

Earlier quoted context omitted.

> People don't value what they get for free No education is free, it's paid in time and effort. I value my degree because it was difficult, not because it had a cost attached. One that could be purchased without effort would have no value.

Paying tuition out of one's own pocket motivates one to learn the material.

That's factually wrong - extrinsic demands decrease intrinsic motivation. There's a tonne of research on this. Similarly negative conditioning is less effective than positive.

Re: America's pensions can't beat Vanguard but they can close a hospital

#334

Post by drakythe »

WalterBright wrote: post #177
drakythe wrote: post #124

Earlier quoted context omitted.

That's why it should be a one time event in conjunction with reworking the whole system. Why can I, as an 18 year old, sign for a loan that _cannot_ be forgiven, graduate into a crashed economy, and still be held accountable for choices that impact me when I only had a small part in them? The system needs reformed, and we need to do something for the people still on the hook of the old system (and I say this as someo…

Why should other people be on the hook for your decisions?

Thanks to the crashed economy I was on the hook for hundreds of other people’s bad decisions and the degree I went for did not result in a job despite prospects being more than good when I began the program.

People who want loan forgiveness anbd to rework the financial aid system aren’t looking for a get out of jail free card, they’re looking yo even the playing field a bit.

Re: America's pensions can't beat Vanguard but they can close a hospital

#335

Post by mschuster91 »

WalterBright wrote: post #190
mschuster91 wrote: post #143

Earlier quoted context omitted.

That's not a solution at all, because it will price out way too many students. The solution is to do what Germany and most of the EU does - pay universities with tax money and do not charge students anything at all (or maybe a few hundred to thousand euros).

When students have "skin in the game", i.e. they are paying for it, they will work to get their money's worth out of it. People do not value things they get for free.

> When students have "skin in the game", i.e. they are paying for it, they will work to get their money's worth out of it.

For one, Europe's academic system works well enough to disprove this zero-sum ideology.

Making everything financialized has two serious downsides: first, it excludes a bunch of people - those who financially cannot afford to take the risk of failure (because you can't discharge student loans in a bankruptcy) even if they get a stipend, and then it leads to humanities and "niche" subjects being either killed off entirely as the chance of ever earning back the student loan is very slim, or the only students for these subjects are those who "come from money", both of which has negative impact for society at large.

Re: America's pensions can't beat Vanguard but they can close a hospital

#336

Post by BoxOfRain »

andrewaylett wrote: post #332
codexb wrote: post #68

Earlier quoted context omitted.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

Surely the first step is to stop issuing loans in such a way that will cause the next generation of students to suffer the same problems, freeing us up to sort out the problems of previous generations without moral hazard. The UK had what I think was a really nice set up, although it's now not nearly as palatable. My student loan had an interest rate tied to inflation, and repayment was a fixed amount of my income ab…

> The UK had what I think was a really nice set up, although it's now not nearly as palatable. My student loan had an interest rate tied to inflation, and repayment was a fixed amount of my income above a limit, collected via the same mechanisms used for income tax.

My problem is that it's presented as a loan but is in effect a tax. I would rather have a graduate tax which was honest on the face of it rather than wilfully misleading students that it's an ordinary loan. The 'loan' framing is harmful in my opinion, because if student loans were regulated like actual loans the government would have much less room to effectively change the deal after the fact.

I also feel a lot of the current social and political toxicity around the student loan system comes from it being effectively a tax which you can get out of by lucking into having rich parents who pay your student fees upfront, it rubs people up the wrong way on class grounds. A graduate tax would avoid this problem as well.

Re: America's pensions can't beat Vanguard but they can close a hospital

#337

Post by thatcat »

AnthonyMouse wrote: post #239
thatcat wrote: post #205

Earlier quoted context omitted.

The money can't be spent on a house or any useful asset that could be resold. They wouldn't give you a loan for that at 18 because it'd be irresponsible since they know you don't know anything about finance or economics as you likely don't have an education yet. They'll give you a high interest credit card with a 500 dollar limit to buy what you want though.

They give you the loan because the asset is you . In general if you get a degree, your future earnings increase by more than the cost of the degree. The "problem" is that if you don't pay a mortgage the bank takes the house, but the only thing for them to take if you don't pay your student loans is your future earnings, which is just the thing where you have to pay back the loan.

A educational program using "your future earnings" as collateral only really has a claim to some percentage of the delta between what you earn and what you would earn without the degree (after 4 years experience), which would incentivize them to not to structure programs in a wasteful manner or misrepresent the future economic value of a given program.

In many cases, that delta is negative. The school and lender should at least be forced to disclose that reality when you're filing FAFSA and taking secured loans.

Re: America's pensions can't beat Vanguard but they can close a hospital

#338

Post by WalterBright »

dbspin wrote: post #333
WalterBright wrote: post #296

Earlier quoted context omitted.

Paying tuition out of one's own pocket motivates one to learn the material.

That's factually wrong - extrinsic demands decrease intrinsic motivation. There's a tonne of research on this. Similarly negative conditioning is less effective than positive.

> That's factually wrong

I don't buy that. Are you going to buy guitar lessons and then not show up?

Have you ever noticed how public school students trashed their textbooks that they were handed for free?

People don't value things they get for free. It's human nature.

Re: America's pensions can't beat Vanguard but they can close a hospital

#339

Post by codexb »

mschuster91 wrote: post #143
codexb wrote: post #68

Earlier quoted context omitted.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

That's not a solution at all, because it will price out way too many students. The solution is to do what Germany and most of the EU does - pay universities with tax money and do not charge students anything at all (or maybe a few hundred to thousand euros).

Germany and other EU countries that offer free tuition begin segregating students into vocational and university tracks starting around age 10. Only about 30% of students qualify for university. The rest stop school around 15-16 and go into vocational training. These aren't student choices, their dictated by the school system.

The US would never approve of a school system that told parents that their children weren't allowed to go to university and had to go into vocational training.

Re: America's pensions can't beat Vanguard but they can close a hospital

#340

Post by WalterBright »

mschuster91 wrote: post #335
WalterBright wrote: post #190

Earlier quoted context omitted.

When students have "skin in the game", i.e. they are paying for it, they will work to get their money's worth out of it. People do not value things they get for free.

> When students have "skin in the game", i.e. they are paying for it, they will work to get their money's worth out of it. For one, Europe's academic system works well enough to disprove this zero-sum ideology. Making everything financialized has two serious downsides: first, it excludes a bunch of people - those who financially cannot afford to take the risk of failure (because you can't discharge student loans in a…

I went through free K-12 public school. The caring about getting educated was performative, not reality. Neither the teachers nor the students particularly tried.

Yes, there were a handful that did try.

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