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Comment by RGamma | Hacker News Reader

From a European perspective I can only shake my head at this.

It doesn't seem like a good idea at all to indebt a significant part of the young population (which I presume creates a lot of avoidable stress) while the rich gain in wealth and power year after year. But I guess longer-term thinking has been thrown overboard in economic decision/policy making anyway, because that would make the numbers not grow fast enough.

Recently I'm under the impression that American society has been tearing itself apart more than is healthy, damaging social cohesion to a great deal. Good luck building an advanced society on distrust and inequality though...

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American here who just went through this process. I returned to finish my undergrad at one of the most expensive schools, in one of the most expensive cities.

I think as others said, many students aren’t doing the ROI calculations.

For me, the government loans are 3.75% which is totally reasonable IMO. One could easily outpace this with an ETF fund.

The private loans are more expensive at 6% and up but the lower end is still totally reasonable.

The real issue is that people taking these loans lack the financial skills to pay them back. A friend who is out of school for 10 years has a near six figure loan debt that he refuses to pay down despite earning six figures. Learning to budget and live frugally is a required skill to escape the debt that many don’t have.

I also know very few that have visited financial aid to get a second look at their scholarships / grants. I went every semester and walked out with something. A friend walked out with $14k extra in financial aid from one meeting. Those in the worst positions financially also get vastly more aid. I had some savings going in but still paid a fraction of the tuition sticker price.

In all, the experience worked out well in my favor with a paid research position and other breaks along the way, but given any other situation I would recommend going the state school route which is often a tenth of the cost.

My federal loans from a few years ago ranged from 3.25% to 6.7%. My fiance had to stay an extra semester, which means she had to get a private loan for it. ~9% fixed.

My school wouldn't give anyone extra aid even if you went in in person and asked (the only case I know about is a student's mother passing away halfway through undergrad) and you'd get a little less every semester because tuition kept going up.

Top schools tend to be more generous despite the higher sticker price. My sister graduated from one with around 1/4 of the debt that I did. 2 years was with the same FAFSA for both of us.

Don’t mean to sound defensive (I’m not American), and I mostly agree with you.

But, from a non-European perspective, Europe doesn’t seem to be doing well? It seems the EU is slowly disintegrating, and the monetary union isn’t working. Also the political landscape seems to be in turmoil as well.

I don't see how that relates. Maybe you see something I don't?

Most Europeans do not associate themselves with the EU but rather with their nation state. Also - not all Europeans are in the EU to start with.

This is a conversation about education. The EU, with all its faults, is leaps and bounds ahead of the US in the democratization of education, even though the US was the nation that pioneered the field in the first place. Goes to show how extreme the whole political spectrum of the US has gotten.

> This is a conversation about education.

Actually, this particular part of the thread you're responding to is about wealth inequality, economic policy, short-term political thinking, whether the EU is doing well comparatively, and policies that create a large amount of potentially avoidable anxiety - among a few other topics.

Education is only a related topic for this specific comment chain.

Aren't a lot of these European countries a lot more pragmatic (cut throat?) about who can go to college? For example in Germany, I was under the impression that around adolescence they start dividing people into the university path people and the non-university path people. I don't think this type of system would go over well in the US with its individualism/"control your own destiny" mindset.

I'm not saying the European countries have it wrong, but their systems seem far from free college for everybody (how it is often reported in the states) and much closer to free college for the worthy. Please correct me if I'm wrong.

We have this in Austria but if you are dedicated to take the lower school paths and later decided to get extra education to go the Uni, there's nothing that stops you. There's nothing unusual in a mid-20 taking evening school and going to uni two or three year. And not just that, if you dropped out with nothing at all, evening school allows you to get even the lowest ranking of the three paths: Hauptschulabschluss. The cost for you? Nothing!

When you have finished your Hauptschule or Realschule (lowest and mid path) you usually start a job but part-time you also go to a job-school (Berufsschule) where you learn more specific things that are useful for your job. This dual-education works great and is being exported to other countries where german manufacturers get active but don't find the skilled workers they are used to.

It's not as cut throat as you make it sound. People who go to "practical" schools can always switch back. I lived in Germany and have friends who got Bachelor's degree at 35+. Another good reason to make it affordable is that people will always have options.

Also non-American and non-European here. My impression is that the EU is getting itself into a huge mess mainly due to abused good intentions taking in immigrants and as a byproduct of the GFC and Middle East’s proxy American x Russian war.

While the Americans seem to not be operating as a democracy for a while and are instead a Corporocracy. It became fairly obvious after the GFC. The three “super powers” in the world are not democracies.

Which are you three?

I make it US, EU and China - 4 if we count Russia for the 8000 nukes but not by most other measures.

First of all, a lot of those arriving and asking for asylum are sent back because they don't qualify.

Moving on, we Europeans are making a decent profit from selling weapons to the Middle East and African countries. We might as well take on those refugees driven out by the violence our weapons cause.

Europe's history, even the years since WWII, is full of migrations: Post-war displacement affected more than 10 million people, refugees from East to West Germany, Brits fleeing the rain for sunny France and Spain (they are a few hundred thousands), Hungary 1956 dispersed 200,000 hungarians of which 70,000 crossed this little bridge https://en.wikipedia.org/wiki/Br%C3%BCcke_von_Andau and the last decade saw a massive flow of young people from southern Europe to the north which causes long-lasting problems for the southern countries. The list goes and and will go on. Some EU countries have 10% or more of EU-nationals in their population which in my eyes will become a hot topic in terms of higher level elections as right now you are only allowed to participate in local elections if you are not a native.

In politics things come and go in waves. Yes, there's populists but the Brexit chaos shows everyone that leaving the EU is a very stupid idea. Of course the Tories are ideal as they apparently love shoveling shit onto fans facing them. Unlike the unpopular US Congress, the EU parliament has members from 128 parties grouped into 8+1 fractions. I just wish we'd send our brightest minds into this parliament and stop member countries from abusing it as a semi-retirement for some of their politicians.

The EU is making progress every year: I grew up near a border which was gone by the time I was a teen and nowadays using my mobile phone in any of the EU28 will cost me extra. It's those small things that the people do love about the EU and would miss if they'd just think harder about it. It's also boost regions otherwise neglected by their respective country's government. No one in Westminster gives a fuck about the North or Wales, the EU does, with lots of money being invested.

I hope we see a decade of consolidation and more unification e.g. in the tax, finances and transparency. Junker's own blunders as Luxembourg's prime minister are unforgivable.

> But, from a non-European perspective, Europe doesn’t seem to be doing well? It seems the EU is slowly disintegrating, and the monetary union isn’t working. Also the political landscape seems to be in turmoil as well.

The purpose of the EU is to prevent war. The EU hasn't had a war in 75 years. That is the longest that Europe hasn't been at war in its recorded history.

Is your take that the EU, and not nuclear weapons, is the driving force behind the European peace since 1945?

Porque no los dos?

I'd wager that even without nuclear weapons, dividing Germany in half and keeping half a million or so foreign soldiers there for 50 years would have been pretty effective at keeping the peace.

The feasibility of that depends on the stability brought about by nuclear weapons, though, no?

Perhaps. It's possible a cold stalemate between the two non-nuclear armies would have lasted a while, I don't think there was much enthusiasm for full-scale fighting.

The EU didn't even formally exist until the early 1990s, before then it was just an overgrown trade federation.

The EU is if anything a force against peace, as it takes a totalitarian "you obey us on everything or we work with you on nothing" approach which may appear to create temporary peace, but only by suppressing dissent. The USSR was also by this approach very "peaceful".

Are the balkans not part of what has traditionally been considered Europe? I seem to recall a little conflict involving ethnic cleansing back in the late 90's...

Also, I understand that Russia is considered less and less "European" with each passing year but the Ukraine and Russia (or at least all of its centers of power) are located within the European continent by definition. There's also the issue of the IRA's war against Northern Ireland and the UK as a whole, while that conflict doesn't meet the commonly agreed definition of "traditional warfare", it was the very template every modern insurgency bases itself upon. In a sense that was a war by any modern definition since traditional warfare seems to have become a relic of the past.

Balkans were not part of the EU when that conflict happened in the 90s.

The EU was a necessary prerequisite of the peace process in northern Ireland, as is being brought into sharp focus now With Brexit.

To be fair, there are plenty of state universities in the US that are considerably cheaper than private schools. Students entering college are generally making two bad decisions:

1. Selecting a very expensive, non-prestigious private school.

2. Selecting a major that has no ROI for the cost of tuition.

To give concrete examples:

Option 1.

   4 years at U of Texas at Austin.

      Tuition = $40k.

Option 2.

   2 Years at Tarrant County College.

   2 years at U of Texas at Austin.

      Tuition = $24k.

Option 3.

   4 years at Southern Methodist University.

      Tuition = $250k.

So a student could spend $24k versus $250k, and I would imagine most would consider the UT Austin degree more valuable, as well, though these two schools are ranked similarly for undergraduate.

And, while I would support further taxes to support state schools, I have no desire to support students who are personally selecting to attend a school that will cost 10x just because they want to. And I have no desire to forgive their loans, either.

The education bubble has nothing to do with the rich. It’s entirely a middle class phenomenon—a wealth transfer from young middle class people to older middle class people (professors and administrators). To the extent that state colleges aren’t more heavily tax subsidized, again its primarily the fault of the older middle class. (The biggest difference between US and European tax rates is for the vast middle class. Rich Germans pay somewhat more in taxes than rich Californians. Middle class Germans pay twice as much or more.)

> Middle class Germans pay twice as much or more

Citation needed. My personal experience paying taxes in both EU/NL and US/TX is that I pay slightly more in the US, in pretty much the same situation (family of four, two incomes)

US taxes on average-ish incomes are definitely among the lowest in the OECD (as expected): http://www.pewresearch.org/fact-tank/2017/10/24/among-develo...

> So we chose to focus on a simple measure of tax burden: national-level income taxes plus mandatory social-insurance contributions as a percentage of gross income

I am not an American, nor that knowledgeable about their tax system, but my impression is that their system has a lot of layers (like state/county/local), which might make it unfair just to compare national level taxes.

Don't forget VAT is double. Property tax is higher. Employment tax (paid by employer, not part of gross pay) is a lot higher.

I always feel like tax should be measured in "if my employer pays 100 extra, how much more can I give another company for a good/service".

I don't know about US but for Germany the answer is between 25 and 40 depending on how low your income is and what your family situation is.

Right, this is a good measure. The national-level one is just proportion of GDP spent by the government, however they collect it, and IIRC the figures are about 25% in the US, vs. about 45-50% in Germany.

You don't have to work this out from first principles; varying tax burdens in developed countries is intensively studied, and any analysis angle you come up with has already been come up with, long ago, by professionals paid to analyze this stuff. Germany's middle-class tax burden is significantly higher than that of the US.

http://www.oecd.org/newsroom/oecd-tax-rates-on-labour-income...

Not generally. The reason the middle class pay higher taxes in Europe is mostly because of contributions to public welfare systems. Society level concerns are usually still to a large degree paid for by taxes on high incomes and businesses.

No, the tax burden on the middle class in Germany is substantially higher than in the US after accounting for benefits, which, of course, tax policy analysts thought of doing long before we started arguing about it on HN.

You fail to account for student loan interest, which does not transfer to your academic boogeymen.

I think there is a balance to emphasize the psychological and physical impact that debt can have to individuals and incentives individuals need to make smarter decision (debt is an incentive, not forced on ppl 99% of the time). If folks know that they will be indebted after university, they have more reason to study something that will allow them to pay it off or that it is at least partially paid by grants/etc.

Long-term thinking may mean less burden in society by making the incentives based on debt

I also think people forget that the US is a superpower in part because of the brain power it has, that brain power in part comes from the folks coming out of university. When you look at Uni's top 100 rank, 58% is American & 22% is European. Although this might be a simple correlation vs. causation scenario, I think it is worth accounting for in conjunction with a variety of variables.

I still agree that the tuition $ in the US is exorbitant and that governments need to teach people the values, risks, etc of going to university just like I think everyone should have at least 1 personal finance class in high school, it would help a lot of people.

P.S. I am not American

I’m curious about the juxtaposition of the indebting of young people and the rich gaining in wealth and power. Is there a causal linkage between student loan debt and the rich getting richer? It’s true that we could levy higher taxes on the rich to pay for college, but as others have pointed out, part of the problem of spiraling costs is the heavy governmental subsidies. Or am I missing the point on how these two things go together?

Who do you think decided that students need debt? And that some of the richest economies in the world "can't afford" to educate their citizens without it?

The connection is that people who have debt out of college tend to need to take whatever job they can find. This worsens their negotiating position vs a situation where they don't have any obligations.

Wealthy people tend to be owners of businesses (directly or indirectly) that buy this labor, and they have a better negotiating position.

Young people with all the time in the world, an education, and no debt are also in a good position to establish new businesses. Having fewer of those reduces competition.

The secondary effects of this are definitely under-reported (and possible under-appreciated).

In essence, what we're talking about here is a massive wealth transfer from people seeking post-secondary education to those offering that education (sometimes public, sometimes private)... except (critically) the effects are future loaded.

We've indebted an entire generation, but it's an invisible anchor dragging on their economic aspirations.

If you ask me, we should do three things to fix this: (1) haircut absolute public loan amounts to a manageable amount in exchange for public service (more funding & new opportunities), (2) haircut private loans to a manageable amount (too bad, they shouldn't be able to offload risk to the public and keep their profits), funded by new taxes on underperforming (read: abnormally large numbers of deliquent loans) private loan vendors AND institutions generating said loans (both of whom benefited from originating poor quality loans), (3) continue efforts to tie government-guaranteed loan eligibility to positive outcomes (your graduates don't find jobs in their fields, your program(s) are no longer eligible for loan guarantees).

> Is there a causal linkage between student loan debt and the rich getting richer?

The lenders are rich. That's how lending works - you have money (are rich) so you lend it now for more later (get richer).

Note sure whether there's a (more or less evident) causal linkage and in retrospect that juxtaposition is somewhat artificial. I just thought that these two things seem inconsistent given the central importance of tertiary education in this day and age.

My thinking was more along the lines of: shouldn't the haves fund/enable the future success of the have nots instead of having them turn into (hopefully temporary) "have even less's"? In my mind it doesn't seem very sustainable to fuel education with debt even with government as creditor, especially in case should economic downturn occur...

I'm a university student myself and thanks to publicly funded universities I pay ~300 EUR per semester here (including an IMO quite generous public transit ticket). Obviously someone else is paying all the rest (plus the cost explosion is probably not nearly as bad here). The thought of having to personally indebt myself however, not knowing how things'll play out in this increasingly crazy world, seems quite scary. Looking at the situation of US students makes me all the more grateful to not be in their shoes.

I admit my original comment wasn't very well thought out, just something I wanted to vent (reading certain subreddits may have had something to do with this). There's obviously more forces at play concerning US higher education (and the welfare state in general), many of which I'm sure I can't see.

I pay taxes to fund public school and universities, using it myself or not, because I don't want to live among ignorants.

Yep, we are pretty hosed.

It's just a clever way for the government to spend less than it would. The idea is that it is cheaper to cover all the defaulted loans than it would be to pay for everyone's education upfront. And all the private insurance that will get defaulted on is actually free money the wealthy essentially donated to education. And dont forget that a chunk will be covered by inheritance when the younger generations parents pass away. I'm not saying I agree, but this isn't just a surprise. What is happening is kind of by design.

Beyond that don't trust what you read online about the US. It is all grossly exaggerated. Remember the US is a large country with a wide variety of people with different priorities.

> The idea is that it is cheaper to cover all the defaulted loans than it would be to pay for everyone's education upfront.

European here as well, but best I'm aware what you're saying is not how it works.

The US government is the student loan lender at the end of the day when you work through the insurance chain. And in contrast with mortgages, car loans, credit cards, etc. where you can declare bankruptcy to make the debt go away and start anew, you can't default on the US government.

The real story here is that an increasingly large number of US citizens are having or stand to have their wages garnished by the US government. Debt bondage comes to mind...

In the states, there are many non-profit Universities running for profit. That's why every one can get admitted to whatever major/program at some school. This is like non-profit hospitals ripping off people.

For the European model to work in the states, many schools need to be shut down, so as to reduce the freedom of picking whatever major at some school.

> wage garnishment

Exactly, it just becomes a deferred tax. There are also laws that cap how much a person's wages can get taken specifically with student loans. It maxes out at around 10%.

Again, I do not agree with it. But to pretend the sky is falling is false. That's also why, as you've noticed, laws have been adjusted in the wake of the abuses of the for profit university industry. As well as accreditation crack down on the organizations that accredited these for profit universities.

I'm not saying it's right or just. I'm only saying it's intentional and not some giant debt bomb surprise that the government is not expecting.

It's just kind of how the US tries to do things. By having loans they are trying to apply market forces. The idea is that students will do a better job as a whole deciding what schools and programs continue. And again again, I'm not saying I agree. Just relaying that there is an actual design behind it.

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