Hacker News Reader

> - Many countries have enacted policies to increase proportion of people who get degrees. Far from fixing inequality, this has instead diluted the value of university degrees.

I know enacting social change is much much harder than throwing money at problems, but I wish America figured out a way to really strengthen the cultural admiration for the hard-working craftsperson archetype.

Pete Buttigieg took a lot of flak for pointing out that many jobs in America don't require a college degree, and there should be nothing shameful about learning a skilled trade instead of going to college. We have a vast over-supply of many college majors, and (I'm told) big shortages in many skilled trades. There are way too many people with 4-year degrees from top-100 schools working cash registers in retail, when they'd have far less debt and higher income (and a good chance of later becoming successful small business owners) if they'd gone to trade school instead of college.

It's honestly classist to push 4-year degrees so hard. There's something noble about optimizing your own happiness while providing valuable services, despite much of America considering skilled laborers to be a class below cashier workers with useless 4-year degrees. I wish we as a society could better appreciate skilled laborers.

We don't have much positive to show from decades of flooding the college tuition markets with cheap credit / crippling debt and implicitly pushing hard the notion that going to trade school is settling for second-best.

There's something to be said about removing the crippling personal debt from the act of flooding the education markets with money, but without cultural changes, I think a big effect would be further ballooning of college costs. I fear the crippling debt will just get hidden as accelerating the ballooning of government debt without moving the needle much on inequality.

"- All universities are not created equal. While it is possible (and even common) for employers to pay too much attention to the reputation of the school, it is also quite common for students to over-estimate the value of a no-name institution. I've found this to be moreso the case in the two European countries I've lived in for an extended period of time (France & England)."

From what I've seen over the last decade, this is incredibly true in the United States, particularly with the rise of for-profit schools offering online degrees.

("Oh, and X has a Ph.D."

"Oh? Where from?"

"I think it's the University of Phoenix."

"Ok.")

> Far from fixing inequality

Was this the purpose? I thought it was to raise living standards by improving productivity. By and large, broader education has been successful at that. (It went off the deep end, in recent years, with the proliferation of bullshit degrees.)

I think you covered part of the problem in the second half of your statement.

In the US, part of the problem is that by making education debts non-dischargable in bankruptcy, and by the aforementioned proliferation of degrees that may qualify as 'nice to have' rather than 'increase earning potential'.

The end result is a lot of people who got a college degree that doesn't really pay for itself, and instead leads to 20+ years of debt, or 10 years of indentured servitude to a non-profit.

Making education debts dischargeable in bankruptcy sounds good in theory, but against what collateral do you take out a college loan? Most bankruptcy includes collateral liquidation. What's to stop someone from obtaining a useless degree that doesn't contribute to the nation's economy, and then discharges the debt in bankruptcy?

I think a big part of the problem is that debt is so readily issued for degrees that overwhelmingly leave the recipient incapable of providing for society in gainful ways.

> What's to stop someone from obtaining a useless degree that doesn't contribute to the nation's economy, and then discharges the debt in bankruptcy?

Nothing, and that's exactly why education debts need to be dischargeable like anything else.

Dischargeable loans makes loan companies have actual responsibility and consequences in deciding who to give loans to. Otherwise, they blindly give out loans (why not, there's no risk!), putting all that much money in the system, which college institutions are happy to absorb in higher tuition.

This is spot on. Currently there is very little accountability for predatory student lending. For my mortgage I had to talk to multiple people on the phone, show proof of income, and have a background check. For my student loan I just had to give my parents' socials and prove I was attending college. I know nothing about the laws around this, but I suspect it was set up this way with good intentions. Unfortunately changing this will probably require a nation-wide acceptance that not all degrees are created equal.

It would be interesting to see insurance companies have more skin in the game - we would probably start getting much more accurate breakdowns of ROI by major, degree, and school.

But it could lead to plenty of people making the smart decision to file for bankruptcy even when they have a good degree. Bankruptcy at 22 isn’t that big of a deal, generally.

I’m not sure what the answer is, though I think an economic approach is key.

If the lender can garnish future wages, I think the incentives are still pointing in the right direction. The only way the lender loses money is by lending too much to someone who will never be able to pay it back - which is what you want, presumably.

Bankruptcy negatively affects your credit score by a large amount, so it's not exactly an easy decision.

It would be a very easy decision I think. Can you rebuild your credit in less time than it would take you to pay off your loans?

If you're still going to be paying your loan off in 7 years, bankruptcy would be an easy choice.

What if you need do anything significant with your money in those 7 years? Like rent an apartment? Have a car to get to work?

The debt doesn't just magically go away. Chapter 7 requires liquidating assets, and chapter 13 requires paying some loans back anyway. And besides, I don't see why loan companies couldn't require cosigners to reduce risk on these college loans.

>Like rent an apartment? Have a car to get to work?

Then you rent an apartment or buy a car. Are you implying you can't do this after bankruptcy? It's much easier to do these with a bankruptcy on your "record" than with a $1000 monthly payment.

I'm implying that these things are affected by your credit score.

Cash is King

If you've got an 800 score and no money, no one will give you a loan. If you've got a trash credit score, but an extra $1000 that isn't going to loans, then you can 'afford' to get fleeced on 36% 72 month auto loans for 7 years until your credit is rebuilt.

Depending on the market, I can’t imagine it being easy/straightforward for someone with “trash credit” to find a landlord willing to lease an apartment at the market-rate.

That $1000 is likely getting spent no matter what, either in repaying loans, or paying a premium over the market rate to get a landlord to agree to lease you an apartment instead of someone with an 800 score.

Make 10% of the balance become dischargeable at the end of each year after graduation.

This will increase inequality, people from richer background will get loans easily.

What America has now is a good system, where anyone can use these loans to pull themselves up.

What government or maybe banks need to invest is in more career counseling.

Agree, that’s a strong point.

> What's to stop someone from obtaining a useless degree that doesn't contribute to the nation's economy, and then discharges the debt in bankruptcy?

I assume lenders would take the degree being pursued, institution at which it’s being pursued and applicant’s academic history (and this likelihood of completing it) into account.

Currently, there is zero incentive to do that work.

Some commercial lenders do consider degree/program.

That's a great point.

It seems like we should make the debt conditional on the degree pursued. How much you’re allowed to take out in federal loans ought to be a function of the pay associated with that degree. I’m sure it’s not a perfect system, but it seems a lot better than the status quo or solutions that involve burdening society with the economic liability of a glut of (economically) low-value degrees.

My suggestion to achieve this is to cap repayments (of non-dischargable loans), perhaps at 15% of taxable income, and written off 20 years after signing. That would make lenders very interested in the outcomes of various courses. And their offers to prospective students would convey useful career advice, too.

Note that the average (mean, I assume) student loan payment is $393, according to the article. The median student loan payment is $222 (https://www.forbes.com/sites/zackfriedman/2020/02/03/student...).

$393 is 15% of $2620 which annualizes to $31,512, which is about the median personal income for full-time workers (whoops, before taxes). ($222 is 15% of $17,760 annual, about the poverty line for two.) That's not a wildly big change over the current state.

How about 10% of taxable income?

20% pretax deduction would probably be sufficient for repayment. Of course loan reform in general would probably be a good idea. If there are 10k graduating with a degree in a field with only 100 jobs/year needing that degree, or likewise paying less than $40k/year, should probably not be granting loans for those degrees in the first place.

10,15,20% all plausible figures, the point is just to ensure that it can't get so large that it gets in the way of living your life.

> 10k graduating with a degree in a field with only 100 jobs/year needing that degree

What I'd live very much to avoid is having a centralized body which makes such decisions. Under my scheme, lenders who identify such fields will be reluctant to grant loans, but how they decide what's in the field, and what exceptions to make, the can do however they like.

A few years ago, I read that at least two big-name U.S. universities announced plans to pilot something like this, where tuition was free, and they'd get a fixed percentage of employment income (wages plus bonus, etc.) for a fixed number of years after graduation.

The university takes on the risk, but they have much more information about their students and their degree programs than students, governments, or private lenders, so they're probably best placed to be making informed risk decisions. Under the current systems, the government and the student take on the risk, while the university and the private lenders get the rewards.

That seems reasonable.

I mean, people got college educations before 1998, when student loans were made non-dischargeable except in cases of "undue hardship".

I never knew the date, 1998 sounds super-recent. But digging a bit, it sounds like that's the last step of many, with the first bankruptcy restrictions in 1976 (when the only concern imagined was medical & law degrees!)

https://www.savingforcollege.com/article/history-of-student-...

Productivity has increased but I'd argue that because of technological leverage and not more college grads.

A large portion of those creating the tech are self educated.

Would you mind elaborating on your experiences in France and England? I'm curious about the situation there. I was under the impression that there are many effective non-college options in those countries (England's pretty robust apprenticeship system comes to mind), and that university is generally both hard to get into and relatively cheap to complete. I also haven't lived in either France or England, so I speak from a place of little knowledge.

It's not hard to get into a university in the UK. It is quite hard to get into a 'top' university, and Oxbridge typically requires a fair bit of luck in addition to being very hard.

There are pretty decent apprenticeships, but only so many people want to work trades regardless. It's not exactly a ticket to wealth or status like a degree might still be perceived.

From an American perspective, it seems extremely easy to get into a 'top' UK university. Oxford and Cambridge admit around 20% of applicants. Compared to Princeton (6%), Stanford (4%), MIT (7%), etc. it seems like a cakewalk. Is there something I'm missing?

> Is there something I'm missing?

Yes you're missing something.

My friends in the US all apply to a very large number of elite universities. In the UK I don't believe you're even allowed to apply to more than one elite university in the same year, and only a very small number of universities overall. One person I know in the US applied to 23 universities.

And then on top of that, in the UK all admissions for elite universities and most below that require an in-person interview, which the US (bafflingly) doesn't do.

I think I applied to one elite and two just below elite.

All of this means total applications in the UK are far fewer than in the US but each is more focused and more realistic which makes successful admissions seem higher. But really people who wouldn't have gotten in didn't apply in the first place.

> it seems extremely easy to get into a 'top' UK university

Also, what's with these scare-quotes? Are you skeptical that they're really top universities? They consistently top international rankings, alongside your best.

> In the UK I don't believe you're even allowed to apply to more than one elite university in the same year, and only a very small number of universities overall.

When I applied to university a while ago the rule was that you can apply to 5 universities only, ie make 5 applications in total. Only exception was "clearing" but thats a different story

UCAS only allows you to pick either Oxford or Cambridge as part of those 5 if I'm remembering correctly.

That's dumb. By what right do they limit your choices?

>> require an in-person interview, which the US (bafflingly) doesn't do.

Not all, but at least premium ones do alumni-driven interviews.

I see; I didn't know that. I was using the quotes from the parent comment; I don't know enough about the UK system to know which are considered 'top' -- which I'm guessing is as subjective and rancorous a discussion as it is here -- to be confident in my own judgment beyond the parent-cited Oxbridge.

Yes, Oxbridge are not the only excellent universities in the UK. The Russell Group is a piss take, Queens University Belfast and whatever the Welsh representative is are not world class but the LSE and Imperial are, among others.

Almost half of school-leavers go to university in the UK. If you look at a normal school in a middle-class area it’s going to be about 90%.

Seems like that can’t be ‘hard to get into’.

I'm not sure for how much this accounts, but the UK allowed polytechnics to call themselves universities. Of course, this then increases the number of people going to uni... but this might've been a bad idea. While there was a prestige issue with the name, they now have to compete on a similar playing field.

Germany's interesting here, since they had/have Fachhochschulen (apparently translated to University of Applied Sciences). Some of which were very highly regarded, and offered a different focus that suited some people. Although after the Bologna Process, this difference is less clear, too.

> "- Many countries have enacted policies to increase proportion of people who get degrees. Far from fixing inequality, this has instead diluted the value of university degrees."

no, what it's done is uncover the hypocrisy of the meritocracy underlying western narrative--when university degrees were exclusive to the upper class white guys, degrees exhibited a "meritocratic distinction". naturally, only smart and capable people got degrees, not just people in a fiercely-defended and exclusive club.

but when educational attainment became more wide-spread and democratic, the club moved on and abandoned the university degree as a useful in-group signal. economic value was with in-group membership, not in the degree itself, a decidedly unmeritocratic, and unequal, system.

it's made this relationship more apparent, elucidating why inequality has persisted despite wider degree attainment.

> it is also quite common for students to over-estimate the value of a no-name institution. I've found this to be moreso the case in the two European countries I've lived in for an extended period of time (France & England).

Tuition in France is basically free from what I understood. Even if students over-evaluate the value of the school, the fact that it's free still makes it attractive. And I think that some universities are teaching only (no research) no?

It's only free if you forget opportunity cost. Lots of people working behind cash registers with 4 year degrees would have been much happier going to trade schools and being well on their way to being small business owners/co-owners.

There's no doubt that not having crippling debt is much better than having crippling debt. However, we have this cultural idea that being on the road to taking partial owneship of a small skilled labor business is inferior to being in a dead-end job with a 4-year degree. I fear that an over-emphasis on opening access to 4-year degrees implicitly reinforces this idea of 4-year degrees being universally better and that tradespeople have somehow settled for second-best, even if they have more income, a better work-life balance, and are providing absolutely essential services.

Does the average tradesman have their own business though? I think we like to compare mediocre corporate drones to the most successful tradesman.

Yes, they do. Typically after a few years working.