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Comment by TallGuyShort | Hacker News Reader

I recently discussed this with a person who was continuing to get student loans after already being under a mountain of debt and recognizing that their job prospects were not as lucrative as they hoped. I asked them why they were doubling down when it was obvious they were in a bad situation and making it worse. They said they had invested too much to choose another path.

This person has a bachelor's in economics and is about to finish a master's in finance. We conflate "an education" with "being educated" far too much.

I graduated 6 years ago with zero debt and no help from parents, because I actually looked into costs / benefits before starting school, picked a cheap school, and worked the whole time. I really don't know how we think it's acceptable for people to be 18 and not capable of making these decisions. You can vote and join the military, but you can't recognize financial servitude like this. They're being failed long before they get to college.

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Perhaps moving too far in the direction of pushing all career training onto universities.

Long ago, if you wanted to become an attorney, you could go through an apprenticeship with a practicing attorney. Not many states still allow that, and I'm sure there are good reasons for requiring all aspiring lawyers to go to law school instead. But the old system did have one thing going for it: It kept the supply of lawyers from becoming completely detached from demand. As a great many people who who are trying to pay off their JDs on Starbucks pay can attest, the same is not true under the current system.

> Not many states still allow that, and I'm sure there are good reasons for requiring all aspiring lawyers to go to law school instead.

There isn't. Law is the same profession it was 150 years ago. (There are new tools, of course--electronic research, e-discovery, etc.--but you don't really learn to use them in law school anyway.) The JD requirement is just one instance of the larger capture of American society by academia.

Your point about supply and demand is astute. The JD requirement didn't replace the apprenticeship requirement, it supplemented it. Today, lawyer supply is still limited by the opportunities for new lawyers to go to trial, handle deals, etc.--nobody would hire a lawyer who has only academic or theoretical experience in those areas. But the winnowing process happens after a whole bunch of people have taken six figures in non-dischargeable debt.

> There isn't [a 'good reason[] for requiring all aspiring lawyers to go to law school instead.']

In my view, there are two good reasons.

First, the legal job positions that only require a mechanistic understanding of the law have been automated. The days of needing a "country lawyer" whose practice consisted of basic family law like wills are gone, thanks to LegalZoom and similar services. The jobs that were best filled by these people have been automated away. In the jobs that remain, it's not enough just to know the law, but you must learn to think in a legal/analytical way. This is not a skill that comes easily just from reading statutes and some case law under supervision.

Second, the size and complexity of the American legal regime, including the administrative state, has made it necessary for lawyers to (a) specialize; and (b) be able to issue-spot in areas well outside their expertise, to know when to look for help. Although a mergers and acquisitions attorney might be able to apprentice a young aspiring lawyer in that area, they're unlikely to be able to transfer all the latent knowledge they have of other areas of law. As an example, I have about a decade of experience in my practice areas, and would be wholly incapable of apprenticing an aspiring lawyer in the area of, say, commercial paper to the point of being able to pass the bar exam. The first requirement (depth in a specialty area) makes most practicing attorneys ill suited to train someone to standard in the second requirement (latent breadth).

Unless this has changed in the last two years and I've missed the news, Vermont, Virginia, California and Washington State allow anyone holding a BA to study under a licensed attorney for a specified period of time and sit for their respective state Bar exams following that period.

>nobody would hire a lawyer who has only academic or theoretical experience in those areas

Given the high cost of lawyers, and the general understanding that you avoid going to court as much as possible, as it can easily bankrupt you before achieving any good, its hard to imagine that's actually true. The current options are to pay a huge amount, or give up entirely; I'm sure there's a market for the middle ground (inexperienced but cheap lawyers), and a reason no one can access (eg regulation)

> I'm sure there's a market for the middle ground (inexperienced but cheap lawyers), and a reason no one can access (eg regulation)

There is no such regulation. A fresh graduate could theoretically argue a case in the Supreme Court--it just requires a pro forma application and payment of a $200 fee to be admitted to the Supreme Court bar. A JD you hire for $20/hour on Craigslist can, legally, represent you in almost any proceeding, as long as she is upfront with you about the fact of her inexperience (and is willing to shoulder the malpractice risk).

There is no market for inexperienced but cheap lawyers, at least for business litigation. If you're a plaintiff, you can get experienced lawyers to work on contingency. If you're a defendant, you have huge potential exposure if you lose the case. If you really have no money, the plaintiff will realize it can't get blood from a stone and will settle cheaply. It would be incredibly risky to roll the dice and try to fight with a lawyer who lacks experience.

> There is no market for inexperienced but cheap lawyers, at least for business litigation.

Caveat there - there's room in the boiler room, at least on the bigger cases.

Not exactly the kind of work kids dream of when they apply to law school, though.

Specifically only 4 states allow taking the Bar Exam without attending law school: California, Vermont, Virginia, and Washington. Only a tiny number of people successfully do that each year.

https://en.wikipedia.org/wiki/Reading_law#Modern_practice

This is such an unrecognized part of the problem: overcredentialing. It's rampant: it's explicit in areas like healthcare and law, and implicit in the HR practices of many corporations.

We bitch about people going into debt, but turn around an are fine with companies being picky as hell about having a specific degree, as if that's everything about a person's ability or background. We also bitch about healthcare costs, but then act like the sky will fall if we start discussing the possibility of pharmacists, optometrists, or psychologists prescribing or offering more services. Your observation about law is equally astute.

I'm going to beat a dead horse until it rises from the grave, but this is the situation with liberal arts degrees as well: they're from a time when it was assumed that you could major in, say, philosophy, and take comp sci classes, do work in that area, and build up a career in comp sci without anyone questioning it. Now your local HR department uses that comp sci degree to screen you, as if you are your degree.

Everyone knows that these degrees are helpful but imperfect indicators, but we treat them as perfect indicators because it's easier to maintain the myth, and it benefits those who benefit from rent-seeking and overregulation.

They said they had invested too much to choose another path.

This person has a bachelor's in economics

Man, of all people that ought to know about the "sunk cost" fallacy...

This particular individual may have fallen prey to it. However, I think students in similar situations face something a bit more nuanced than the sunk cost fallacy.

If you accept that middle-income, professional jobs are decreasing relative to lower-income and higher-income positions, then many students with a non-trivial amount of debt are in a trap. For example, say you graduate with a B.A., $120K in debt, and the only job you can get out of school pays ~40K, but low upward mobility long-term (pay-wise).

Your options are (for this hypothetical):

(1) Take the ~40K job with low upward mobility long-term.

(2) Purchase a $120K graduate degree that offers a 65% chance at a six-figure job out of school (and high upward mobility long-term) and a 30% chance of a ~$60K job (and medium upward mobility long-term) and a 5% chance of ending up in outcome (1).

Which is more rational?

Now, we could get into questions of how well this maps to reality, or what the expected value of each outcome is, or how to even compute expected value in a situation with myriad messy variables and reductionist assumptions, etc. Regardless, I think we can say that if income and upward mobility resemble a barbell distribution more than a normal distribution, then we have defeasible justification for believing the following:

(Proposition) A non-trivial number of students face decision traps which lead to a choice less akin to the sunk cost fallacy than a non-confident choice when living between 'a rock and a hard place'.

At times, people will say something about having invested so much already that their decision is pretty much pre-determined even though they're attempting to convey having made a non-confident choice after being stuck between 'a rock and a hard place'.

Your number 2 scenario is dead wrong. The reason the person is in that scenario in the first place is because they mis-judged the payoff from having the first degree. The likelihood they misjudge the second degree is just as high.

In fact let's look at it: what's the probability that given your inability to gain one of the lucrative jobs at this level of education you can gain one with a higher level of eduction? Well we can speculate, a higher level of education can be sought for two reasons: you're acadmically gifted and genuinely want to get more education, or you're not academically gifted and you want the magic fairy wand to wave to get into Brothers and Brothers LLP. Well let's face it, you're in group number 2, and it's the people in group 1 who are the actual successful candidates. So given that your pay off looks way off. You won't get the top jobs - you're not good enough, you won't get the medium jobs - you're overqualified, and you won't get the cheap jobs - you can't afford to work for that amount.

(1) Your group number 2 describes a sizeable portion of law school graduates who actually do end up in six-figure corporate jobs, as well as a decent (though smaller) portion of medical school students. Unless, only those persons who obtain the six-figure jobs out of graduate school are academically gifted. This would mean, however, that sizeable portions of the graduating classes of many such schools (even just the elite ones) harbor non-academically-gifted students. That's not an indefensible position. However, it would be rather odd and not terribly convincing on its face, as presumably only the academically gifted could have arrived there in the first place.

(2) Even assuming your argument goes through successfully, it is irrelevant to whether the person committed the sunk cost fallacy, which is the issue under discussion. Now, you could argue that subjective assessments of expected value always track the true underlying expected value (i.e. the actual expected value for any individual's objective abilities). In that case, all non-academically-gifted students who chose further education would likely be committing the sunk cost fallacy. That's not the case though, and you know that. Or you should, because it is prima facie absurd.

(3) It is relatively uncontroversial that there is a substantive disconnect between the supply of graduates and the number of jobs paying a salary justifiably commensurate with the debt-levels we are seeing. This has a couple of knock-on effects. For example, an across the board devaluing of degrees, which unjustifiably increases hiring requirements for lucrative professional jobs, further exacerbating prestige whoring, etc. This turns high school seniors deciding to attend elite private schools into even greater gamblers as the cost of an initial degree rises. Maybe they are or maybe they aren't rational to take that gamble (Are gambles by definition irrational? If so, pick a different term.). However, after having taken that gamble and come up short, they don't automatically become irrational in taking it again. Or, at least, the irrationality wouldn't necessarily have anything to do with the sunk cost fallacy.

I've worked with dozens of economists during my career, and their inability to recognize sunk costs that are staring them in the face is astounding.

One might as well say that you just don't consider what life is like without a diploma, especially if you already have student debt.

So given that they'll just not even get back to zero net worth if they stop, the "better" option is to continue. Despite the negative dollar value standing next to it.

That's something that's just not considered here. When it comes to net worth, -$1000 has exactly the same consequences as -$99999999999 for that individual. So if you're going to be negative anyway, why not be as deep as possible ?

For society, that is a very negative outcome, but not for the individual. But the individual chooses (even in societies that like to pretend otherwise).

I think the nuisance in your point is really important. Particularly when you are talking about 22(ish) year old. They've essentially been fronted the money with no collateral so it's not real for a lot of them yet.

> That's something that's just not considered here. When it comes to net worth, -$1000 has exactly the same consequences as -$99999999999 for that individual. So if you're going to be negative anyway, why not be as deep as possible ?

I'm not sure I follow your point... -$1000 could be paid off in a month. -$99999999999 probably couldn't be paid off in 100k lifetimes.

I mean debt that you can't pay off for some reason. $1000 that you can't pay is the same as $100 million you can't pay.

That's one thing people keep forgetting about, for example, take population figures. Species specifically refuse to multiply unbounded. And that's weird the first time you realize that DNA contains a distributed regression algorithm that estimates to what size the population of it's species can grow under the current circumstances and then blocks reproduction, or enables asexual (or otherwise really fast) reproduction. Why ? Because if you get it wrong, population numbers will fluctuate.

And that seems "what's the problem ?". Well the problem is that there is a very special number, called "zero". And if the population of any species randomly fluctuates, it might randomly hit zero. And then it's over. There's no coming back from zero. Then you will realize that the number where that happens is not actually zero but can in fact be quite large a number and you see why fluctuation is an extremely undesirable property.

So for debt you can't pay, "zero" is the magic number. Once you cross it, your mission in life changes. It's no longer to get out of debt, but rather to get in as deep as you possibly can, while refusing any and all attempts to get back out (except of course to deceive others to let you get deeper in debt). That behavior by itself is the only thing that might get you back out of debt (just look at the president)

And in economics in general you should keep in mind that while individual humans are stupid, large groups of humans are incredibly good at finding optimal Nash Equilibria. If large numbers of people "randomly" or "out of stupidity" do something, fact of the matter is that the stupidity is yours, for not seeing the whole picture. Stupidity at large scale only exists at very short timeframes, if at all. Lots of people going into debt is not stupidity.

I don't just mean in relation to student debt. I'm talking about any sunk cost at any age.

The way they framed it suggests poor economic thinking, but it's not necessarily a fallacy to think that 2 years into a program means you should stick it out.

The way to think about it isn't that to leave would be to throw away 2 years of tuition, it's to consider whether the next 2 years of tuition is worth a 4 year degree. And the answer could easily be, yes, it absolutely is worth it.

Survivorship bias means only those blind to sunk costs make it through?

I would think that says something about the quality of their education[al institution], and perhaps why they're having trouble finding a lucrative job.

Yeah my own experience made me fear that a lot of students are there to pay (loans) and get their ticket punched (diploma) ....

I had plenty of experiences where I realized "dude can only do exactly what I say ...".

Hard to know if it is any worse or better than in the past, but man, it was disappointing to see.

When I read the Wealth of Nations I was struck by one of the passages where Smith basically says everyone under the age of 24 is worthless. That it doesn't matter what they do, send them to university, or send them to travel. But that they won't be useful in commerce until they're older. I'd assumed at the time that the lack of maturity was a modern problem problem due to coddling, but it's apparently at least a problem for 300 years (for at least the caste likely to read his book).

What struck me again later was finding out that 24 is the tipping point for the brain. That's about when the majority of brain matter is "gray" instead of "pink" (aka the process of myelination), which seems to be a biological rather than an environmental process. So this has likely been the case for a very long time (like 40,000 years or more).

I know a guy in his 40s who works part time and goes to school part time because as long as he is still in school, his loans don't come due.

He has no way to pay his loans, never will, and is unable to discharge them in bankruptcy.

Yeah, there is a "poor me" element to this. However bankruptcy laws exist for a reason, and denying people like him access to bankruptcy forces them into unproductive lives. That non-productivity makes all of us worse off in the long-run.

The lack of defaults on loans also takes away much of the incentive for the lenders to due any due diligence on the viability of your decision. They can lend and will get their money one way or another (except in extreme cases like your friend).

> The lack of defaults on loans also takes away much of the incentive for the lenders to due any due diligence on the viability of your decision.

Since private government-guaranteed loans were discontinued, most private student lending dried up, so “lenders” here basically refers to the federal government.

I've also heard of people staying in school like this for the health insurance.

You would hope an economics major would have learned the sunk cost fallacy.

Given the jobs situation without a diploma, perhaps we should also consider their alternatives:

cost of not continuing - very large chance of being screwed from that point for the rest of your life

cost of continuing - student debt, which at worst gets you into the above situation

So clearly, continuing is the better choice.

Secondly, as they say, when people have to choose between death now or death later, they choose later. No matter the strings attached.

> as they say, when people have to choose between death now or death later, they choose later. No matter the strings attached.

This is only even plausibly true for people who have no family members. That's nearly nobody.

Consider a traditional Chinese or Japanese official who is ordered to commit suicide. Generally the command is obeyed. On your model, such a command would never be obeyed -- you can always just not kill yourself, in which case you'll still die, but later than you would have.

I am almost reluctant to say this, as I'm almost jealous that you're able to think that. But fact is ... this is extremely naive.

Good on you that you think like this. Try to hold on to it and enjoy it, it won't last.

How much was it at this cheap school? (Although I think you meant affordable. :)

If it's not too personal: Which major/minor did you choose? Which school was it? Year of graduation? Would you recommend it to others? Any downsides to the school?

BYU. Current tuition is $5,620 for full-time semesters - it was about half that when I started 10 years ago. Cost of living nearby is also exceptionally low - I paid $600 / month for a 2-bedroom apartment 4 blocks from campus. Heavy discount if you're a contributing mormon, and of course the big down-side for most people is that almost everyone is. You don't have to be mormon, but it's a dry campus and absolutely not a party school. So most of the other non-mormons are either from a similarly conservative culture (muslims, usually, a few christians) or just recognize the bargain. Despite the general religiosity and political affiliation, the science classes were actually religion-free, a pleasant surprise, and treated evolution and climate change the way I'd expect at any other university.

Majored in computer science. There's a lot of student-friendly work nearby, especially for software people. I really couldn't stand the local culture and I'm even from a pretty conservative christian home, but I was there to get down to business so I worked as much as I could, maxed out credit hours I could take (12 - 18 credit hours all costs the same), and got out in 4 years with a solid education, no debt and enough savings to comfortably start my real adult life right away. A hard 4 years, but looking back it was clearly the right call compared to my peers. Tuition prices at other colleges have just never seemed worth it. Had I not gotten into BYU I would likely have tried to just get software jobs with no degree, or gone into a trade like welding.

> BYU. Current tuition is $5,620 for full-time semesters - it was about half that when I started 10 years ago.

Which indicates a huge part of the problem for a lot of people these days. It's a safe bet that the wages at the jobs you worked then haven't doubled in the last ten years, so someone merely wanting to replicate your path would need to work considerably more hours just to make their tuition payments.

Reliable, accredited colleges cheap enough that you can realistically work your way through them at the wages paid at the kinds of jobs typically open to inexperienced students are increasingly thin on the ground.

Yeah - costs are absolutely rising out of control, and I think the loan situation is a massive part of the problem. If your demand is fixed and people can forget about the costs until you've already been paid, why not raise prices? But I heard the same complaints back then from many of my peers, all that I know of are still in debt, and many got financial aid and misspent it. There's definitely a chronic and widespread problem of people not confronting the costs / benefits and deciding to seriously invest hard work and critical thinking into avoiding debt. If people can't do it at $2000 / semester in a very low-cost town, attending most major universities is just not even an option I'd recommend my kids even consider.

I agree. Too many students and their parents seem to engage in wishful thinking about college and not do due diligence when considering the costs. The schools have a financial conflict of interest: they get paid whether or not the student succeeds. Here are some conversations to start the process:

1) Does the student have a history of completing what they start? If not, consider a part-time trial at a community college with expectation of finishing with decent grades in courses that will transfer.

2) Will the student need remedial classes? The school gets paid but these courses do not satisfy graduation requirements. They do increase debt!

3) Does the student have a clear goal for a major? College is an expensive place to "find yourself."

4) What are the job prospects for that degree? How likely is it that the student will be high in the distribution of the graduates? Will the anticipated salary permit repayment of debt and self-support?

5) Are the time-to-graduate estimates realistic? A surprisingly low percentage of students complete a degree in 4 years. 5-6 is more common and results in more debt...

6) Has the student learned to live within budget? There are many distractions at college. Spring Break trips add cost...

Also to be fair $5,620 appears to be the tuition for LDS church members which likely means it's being subsidized. It looks like it's double for non-LDS students.

https://financialaid.byu.edu/cost-of-attendance

That page is annual, assuming you do full-time Fall / Winter and don't take classes during the summer. My numbers are per full-time semester, which is typically how tuition prices are listed (and how they are elsewhere on the website).

idk whether this is the case at BYU specifically, but in-state tuition at most state universities is going to be about that much per semester, and there are going to be many different grants available to a person who has no assets and a minimum wage job. any loans you end up taking in this position will have highly favorable terms subsidized by the us government.

> any loans you end up taking in this position will have highly favorable terms subsidized by the us government.

Except for the fact that they are almost completely non-dischargeable, you mean.

yes they are nondischargeable in most cases, but good luck finding a private unsecured loan at anywhere near as low as the interest rate on a subsidized Stafford loan.

Same here. I went for a 3 years engineering study at a cheap as uni and worked the whole time. It taught me valuable lessons about personal responsibility.

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