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Comment by algoatecorn | Hacker News Reader

An appropriate correction, but I don't think it changes the inevitable feeling of doom that many college students and recent graduates face. $25,000 is an enormous amount of debt, especially when there is a multitude of uncertainties with the investment. When you borrow for a house or car, there is an immediate, tangible benefit. With college, it's not so simple. It would be great if you didn't need to go to college, but let's face it. You simply make more money with a degree, and many employers require them. There is an undeniable problem with tuition rates over time and its affect on the mental health of many American students.

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$25k is actually less than the average price of a new car sold in the US. It's not an enormous amount of debt. It's manageable.

Would it be better if students didn't owe money after college? Yes. Is the student loan debt equivalent of a new midrange Toyota Camry a life-crushing burden? No, not really.

Student debt is running at around 8% of US GDP.

It might or might not be a life-crushing burden for individuals. But it's still an incredibly risky burden for a fragile economy.

And personally I don't find "And don't even think about a graduate degree unless you want to end up with >$40k" all that reassuring for those with postgrad talent and ambitions.

I don't know who says "And don't even think about a graduate degree unless you want to end up with >$40k". When I went to grad school the standard advice was that you shouldn't go anywhere without a free ride in the form of tuition waivers and/or a stipend or TA job.

Professional schools (law, medicine, MBA, etc.) are different, but they also cost way more than $40k.

I don't know many people who get saddled with $25k of brand new car debt when they turn 18. Typically, you buy a brand new car if you can afford one, and that precludes most teens.

We're telling every kid in high school not born into means that they'll be destitute if they don't go to college.

The two are not comparable.

"I don't know many people who get saddled with $25k of brand new car debt when they turn 18."

Spend some time near a military base. Brand new Mustangs galore. And when you ask the kids who bought them for some details you find out these Lance Corporals are paying like 19% interest. -_- A side-effect of schools not having classes like Home Economics anymore.

>$25,000 is an enormous amount of debt, especially when there is a multitude of uncertainties with the investment.

If that $25k is public loans, which it should be since that's well under the limit, the uncertainty should be mitigated by income based repayment plans. You'll never have to pay more than 10% of your disposable income (income over 1.5x the federal poverty level).

If anything I think the feeling of doom is caused by people constantly telling kids how bad student debt is without realizing that $25k in public loans and $200k in private loans are vastly different situations. Most younger people I know feel guilty about taking out $25k in loans to make hundreds of thousands more over their life time.

> ...$25k in loans to make hundreds of thousands more over their life time.

1. Future reward should be discounted, usually by a fairly large constant, because of interest and risk. Also, in many fields, most of those extra hundreds will come toward the end of a career. So, highly discounted.

2. I wonder if it's really a good idea to set up a society where banks that provide educational loans are able to capture huge percentages of future productivity. Seems like this would have all sorts of really negative outcomes. Some of those negative outcomes are already happening -- e.g., we effectively import 90+% of our scientific human capital because US students aren't willing to do phds.

We realize that allowing financiers to capture a big chunk of the rewards for K-12 ed is a bad idea. Why don't we realize that the same is true for college?

1. Enough of the extra income is weighted towards the beginning that for most people it's worth $25k particularly since repayment us based on income.

2. Public loans are over 90% of disbursements, and if you're only borrowing $25k you're definitely getting public loans. Public loans are made directly from the treasury. No banks involved.

Also most stem phds work as researchers and teachers--they generally aren't paying tuition.

> Enough of the extra income is weighted towards the beginning... No banks involved....

Whether it's banks or other taxpayers or recipients of other entitlement programs is, I guess, a bit of a red herring wrt the point I was trying to make.

The question is about the knock-on effects of squeezing an entire generation for some chunk of what they're worth before they even enter the job market.

Again, I think the K-12 analogy is the best way of communicating the point I'm trying to make. Why don't we also charge high school students $10K @ 4% instead of paying for high school through taxes? Well, because that would be a huge net negative for society.

> Also most stem phds work as researchers and teachers--they generally aren't paying tuition.

I have a stem phd :). I was referring to the huge opportunity cost re: delayed earnings. US students opting out of phds because they have huge student debt to service is a real thing. This is true even when the phd would undoubtedly increase lifetime earnings (e.g., students from no-name schools turning down CMU/MIT/Berkeley/Standford phd acceptance letters for mid five figure salaries).

You don't need to pay public loans back while getting a phd, so it's not because they have to service them. An extra few years of interest isn't going to matter in the long run.

If it would undoubtedly increase life time earnings it's a stupid decision to turn it down because of undergrad student loans. That makes absolutely no sense.

>red herring

I was taking your post at face value. It lamented allowing financiers to capture value.

I'm also not against tax payer funded college. But the loan system we have in the US combined with income based repayment is not as bad as people think it is. Mostly people just don't understand income based repayment and public vs. private loans.

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