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Comment by jefftk | Hacker News Reader

> the feds should handle student loans the same way they handle medicaid/medicare reimbursement.

I'm not sure how anyone looks at our health care reimbursement system and the decides that's the approach to apply to fix anything else?

Personally, I'd like to see:

* Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where.

* Make student loan debt dischargeable in bankruptcy. Lenders will be much less willing to pay high tuitions in cases where students are unlikely to be able to pay it back, and if the lender guesses wrong and it does come to bankruptcy then the student is no longer encumbered.

(I wrote more along these lines: https://www.jefftk.com/p/fixing-student-loans)

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The fix for both is the same. Get the government out of the demand side and, if anything, only work on the supply side.

Want lower doctor and hospital prices? Try competing against a “free but you have to wait” government option. Budget $X million dollars per year to put some primary care doctors on retainer.

Want lower private school tuition? Try competing against a free (or at least low cost) government / public option.

If you boost the demand side then the market will suck up any money thrown at it. Loans and subsidies going are the worst approach as they encourage price increases.

This works with housing too! Stop subsidizing rents (increasing demand) and build more houses (increase supply).

I would not make "Get the government out of the demand side" a rallying cry because UBI is the huge counter-example of something governments should be doing.

Better to say governments should do, not fund, on the institutional level (run the school, run the hospital, like you say), and fund, not do, in the individual level (UBI not SNAP).

UBI doesn't manipulate the demand for specific markets, it is more of a monetary policy that has only an indirect impact on demand.

> UBI doesn't manipulate the demand for specific markets

Totally agreed, this a good thing.

> It is more of a monetary policy

Sure

> that has only an indirect impact on demand.

Many disagree.

Obviously the most basic goods aren't going to be consumed that much more (e.g. we might consume better food but not dramatically more calories).

That said, it's a not-fringe view that demand as been statement for ages, due to things like wages not keeping up with productivity growth. UBI is, among other things a way to fix that.

Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where.

For those who are unaware, these tests are considered a violation of the Civil Rights Act because they result in hiring blacks at a much lower rate than whites.

A big underlying cause of that is that schools with lots of blacks are underfunded relative to schools with lots of whites.

Make student loan debt dischargeable in bankruptcy.

I support this. I thought that the 2005 change to the law that made it not dischargeable was a bad idea then, and we are seeing the predictable consequences now.

> For those who are unaware, these tests are considered a violation of the Civil Rights Act because they result in hiring blacks at a much lower rate than whites.

Work sample tests are legal; otherwise we wouldn't see tech companies giving whiteboard interviews.

More general tests are not legal (https://en.wikipedia.org/wiki/Griggs_v._Duke_Power_Co.) unless you can demonstrate that they "bear a demonstrable relationship to successful performance of the jobs for which it was used". On the other hand, they held that "neither the high school completion requirement nor the general intelligence test is shown to bear a demonstrable relationship to successful performance of the jobs for which it was used" so I think there's a decent chance that the widespread use of college degrees as a filter is also already illegal. (Not a lawyer)

IQ tests aren’t blanket-banned; they just have additional hurdles. For instance, the Wonderlic test is routinely used in hiring contexts and is even part of the NFL scouting combine.

While the Wonderlic published, is it even used as a factor? Does a coach say "no linebackers who scored less than 18?"

Often it is used as a red flag when a prospect scores particularly low on the test. NFL playbooks are complex and there is a lot to learn and then apply in real time on the field compared to in college. Players who cannot process all of this added complexity rapidly and then apply it are at risk of not being able to keep up on the field, even if they are incredible athletes. This holds the most weight with quarterbacks who have the most to juggle mentally throughout a game, so you most often hear conversations about the wonderlic when talking about the quarterback position.

There’s actually rumors of upper limits because smart guys are perceived as harder to coach. For playbook memorization and decision-making though, high Wonderlic scores are usually expected for offensive line and QB’s.

Even the SATs and ACTs (and most definitely the ASVAB) have significant overlap with IQ tests.

Most students graduate with no assets so what would stop someone from graduating and declaring bankruptcy before they begin working? Would that not reduce the ease in getting student loans since banks would be reluctant to loan to someone that doesn't have a wealthy cosigner, effectively eliminating poorer people from attending?

You don't declare bankruptcy like Michael Scott by just yelling into a hallway. If college loans could be discharged, your fresh grad example still has to convince a court to discharge the loan. That's not likely to happen unless they also managed to rack up many tens of thousands of dollars in unsecured debt. No one is going to give a 22 year old that much unsecured credit so it would be pretty obvious they're trying to game the system.

At best they could attempt loan restructuring but even that would probably not be worth it. Student loans really don't need the bankruptcy protection they have. It's created a huge problem for a whole generation of adults that have been fucked over by three separate recessions in a twenty year span.

Your argument doesn’t sound very convincing. People declare bankruptcy now all the time; it’s quite easy actually if you really have no assets and don’t mind your credit ruined for 7 years or less.

You haven’t actually stated under what conditions you would be allowed to discharge your debt, you’re just trying to convince me that it wouldn’t be abused and also that we really need this to happen. Again, not very convincing.

There’s a reason student debt was made undischargeable right around the same time that the government started guaranteeing loans.

Isn't the risk of default/bankruptcy part of what justifies charging interest? If there is no risk for lenders, how do they justify charging interest?

Not being able to discharge a debt in bankruptcy doesn't make the loan zero risk. Even if you can garnish someone's income there's no guarantee that they'll ever make enough money for that to repay the loan.

The risk also isn't the only thing that justifies interest. Why would they let you borrow some of their money if they weren't getting some benefit from doing so?

> Lenders will be much less willing to pay high tuitions in cases where students are unlikely to be able to pay it back

The federal government is the lender. That's the central point of the post.

> Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where.

This would never work. People who went to high-prestige schools want to signal that to their employer and when barred would find other ways to signal like "Interned in Dr. Blah's group at the MIT media lab" or "Secretary of the Princeton chapter of the Phi Beta Kappa."

> Make student loan debt dischargeable in bankruptcy.

This is a fine solution iff you want to make the market exclude all academic endeavors that aren't high-probability profitable. This would basically destroy all specialized scientific research, education degrees, agricultural science, all high-level maths, biology, ecology, zoology, environmental research. When people want the market to decide these thing I imagine they think that "those silly liberal arts degrees" is what will get cut but forget that science doesn't pay either.

> This would basically destroy all specialized scientific research, education degrees, agricultural science, all high-level maths, biology, ecology, zoology, environmental research.

Why? All of these fields existed prior to student loans becoming non-dischargable. As it stands, in many fields there is a massive grad school bubble where there are many more grad students and Ph.D’s than tenured positions.

As for education degrees, those have the same basic instrumental role as engineering or business degrees—they’re a form of professional training and accreditation. A lot of minor public universities started off as teachers’ colleges in the first place.

> "Interned in Dr. Blah's group at the MIT media lab" or "Secretary of the Princeton chapter of the Phi Beta Kappa."

Both of these are about what you have done, and not what you can do. I'm proposing limiting interviews, at least entry-level ones, to relevant skills, abilities, and knowledge. "Read this judicial decision and tell me whether you think it was correctly decided and why." etc.

> destroy all specialized scientific research, education degrees, agricultural science, all high-level maths, biology, ecology, zoology, environmental research

The government should fund students in these directly, as we do with grants in graduate level education.

Making it riskier to lend to students again is a pretty regressive policy. It will definitely decrease the average student debt burden, but only because you'll be denying people the opportunity to incur the debt (and go to college) to begin with.

You're ignoring the feedback loop here. Supposedly wider availability of loans didn't increase enrollment, just tuitions. Before 1993 student loans weren't riskier for the lender. The government was on the hook for the loan if the student defaulted. The lender was never in danger of not getting their money.

> but not evaluate them based on whether they went to school or where.

This is akin to how you can fire someone for ANY REASON, except a few forbidden reason.

Guess which reason Timmy is fired for? Certainly not for trying to start a union.

That does happen some, but it would be much harder for large companies to have an off-the-books policy of requiring a college degree if they couldn't talk about it with each other or put anything in writing for fear it would come out in a suit.

A large company would simply have a policy to not even interview, resumes can be discarded for 'lack of qualification' or any other reason. You can't sue a company for discarding applications.

The company would have some sort of training on how to review resumes. Do you think they would have a secret policy of "you must have a college degree" and tell every new HR hire never to discuss it in a discoverable medium?

Making student loans dischargeable in bankruptcy is a terrible idea. A much better way to help young graduates/professionals is to enforce sensible forgiveness programs for private loans.

> Employers are allowed to test students to see what they can do, but not evaluate them based on whether they went to school or where.

One of my father's arguments, in trying to motivate me to focus on a degree, was that it helped show future employers that I can stay on task over a period of time.

I'm not sure how much of a role that really plays, but to whatever degree that matters to employers and a degree is helping to demonstrate it, it would be difficult to test directly in anything resembling an interview setting.

But strictly speaking, employers do not look where did you go to school - they look at which school has given you a degree.

No school of good repute will give you a degree without having some attendence, so I'm not sure this is an important distinction, although certainly two years or community college can save a bunch of money in some states if the circulum is well aligned with the four year program you transfer to (or it you figure out college isn't a good fit for you). Excluding honarary degrees, which are usually given to people who don't need a degree to be hired.

The real solution is to ban lending with interest. We have known that usurious lending is a parasitic practice for thousands of years, how did we not learn?

Are you suggesting we run everything on equity? Lend without interest (why would the lender be interested)? Something else?

Our society uses debt for an enormous number of things: business loans, car loans, mortgages. Simply prohibiting these seems like a cure worse than the disease?

Let's take it one step at a time.

Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on.

If we ban lending with interest, then you're right, there is no financial benefit to be made. So the lender would be lending out of good will. However, the seller might also be willing to let go of his product on installments (without raising the price, that's also usury). For example, if I go to purchase a car from the dealer, given most people would not be able to afford to pay cash outright, he'd be forced to give it out in installments, otherwise he wouldn't sell. The entire system must be set up properly for this to work.

Introducing easy debt just ups prices for everyone, and pushes the poor deeper into misery, exactly as you note: car loans, mortgages, etc.

There are solutions. Instead of business loans, the person providing the funds would get a share of the company in return. That way, if the company succeeds, he'll make a profit, and if it doesn't, he'll lose his investment. We can come up with similar scenarios for personal loans.

> Lending with interest is taking advantage of the needy, it's predatory and immoral, that I think we can all agree on.

Many loans have nothing to do with the needy. If I borrow $1M to buy pile driving equipment to start a pile driving business, and pay the loan back with the proceeds of my business, nothing predatory or immoral has happened.

Similarly, I borrowed money from the bank to buy my current house. I am relatively well-off; the bank did not take advantage of me by offering a loan at market rate, and I wasn't needy.

> If I go to purchase a car from the dealer, given most people would not be able to afford to pay cash outright, he'd be forced to give it out in installments, otherwise he wouldn't sell. The entire system must be set up properly for this to work.

To afford to let you (and everyone else) pay for the car in installments, the dealer is going to need to charge a higher price. The amount you end up paying in total for the car is approximately the same under an installment approach than under a loan-with-interest approach.

> Instead of business loans, the person providing the funds would get a share of the company in return.

This is what most startups do, yes

> Many loans have nothing to do with the needy.

I understand, it's not just the needy. Easy credit also facilitates more corruption and inflation.

> the dealer is going to need to charge a higher price

Not if no one is buying at that higher price.

> The amount you end up paying in total for the car is approximately the same under an installment approach than under a loan-with-interest approach.

The difference is now the same item (car) is being sold at two different prices depending on whether or not you can (or are willing to) pay up front. This is substantive difference.

> This is what most startups do, yes

Exactly, and this model should be extended to other facets of financing, it's only fair for both the investor and the "borrower". It will lead to a much more fair society, and will play a huge role in closing the wealth gap.

Without interest, why would anybody lend?

Exactly the point. You'd lend out of good will, or be willing to engage in a transaction that there is a risk of loss in it (e.g. invest in an upcoming company instead of giving the amount as a loan). It's only fair.

You could also stop this degree inflation by requiring a $15 minimum wage on all jobs but a $25 minimum wage when the job lists a bachelor's degree requirement (applied based on whether the job requires a degree, not whether the employee has a degree).

Wouldn't work. Employers would simply not list the requirement but hire upon the criteria anyway.

If jobs with a similar title, description, and other requirements require a degree, and the people you hire all happen to have degrees, it's pretty obvious that you're using it as a criteria. While like other discrimination cases it may be difficult to prove in any one instance and thus small businesses who don't individually hire a statistically significant number of people might get away with it, large employers can still be held accountable.

That would mean those philosophy students wouldn't be able to get a job at McDonalds :)

No, the proposal it is based the job's requirements, not the student's credentials.

Any time you provide increased funding to a customer, the price of the goods will go up. This is the same reason raising the minimum wage would likely increase prices of other goods.

An easy-ish solution to this is:

1. Breaking up unions/lobbies - AMA for reference is the limiting factor in the number of doctors. They limit the number of medical students intentionally, inflating doctors wages (and university costs). Administration costs for universities also have high overhead and should be reduced.

2. [Agree] Student loans should be dischargeable via bankruptcy

3. Government shouldn't offer student loans. Instead, offering grants and / or work programs. I went to a junior college for 2.5 years, while working and saving up. Then went to UIUC. I took on some loans, but it was subsidized by my own funds. This leads to more responsibility / accountability so people don't take loans to "party".

False. The AMA doesn't limit the number of doctors. The actual limit is the number of residency slots at teaching hospitals, most of which are funded by the federal government. Every year there are students who graduate from medical school with an MD but are unable to practice because they can't get matched to a residency program. The AMA actively supports increasing residency funding.

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