Comment by specialist | Hacker News Reader

Comment by specialist | Hacker News Reader

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How to pay for higher ed breaks my head. So many variables. While listening to this podcast, I had two crazy notions.

The Next Four Years: Beyond the student debt debate The Weeds

New America’s Kevin Carey explains loan forgiveness and the deeper problems with American higher education.

https://podcasts.apple.com/us/podcast/the-next-four-years-be...

#1 Government underwrites student loans based on projected life time earnings.

Actuaries are smart about this stuff, right? Figure out someone's future earnings to determine their "credit worthiness". Just like buying a house. And the student's collateral is the future labor. So assess how the loan will be used. Just to be sure everyone's committed, pick a fraction that is repaid directly. Say 50%. Then plug in the numbers.

Someone going to community college to get an AA to work as a dental hygienist will need X dollars and likely earn X' over the next Y years. Another person is getting an MD PhD, who will earn 10x the future hygienist. So future doctor is eligible for a proportionally larger loan.

Tweak the incentives to encourage people to choose more needful professions. Like we may need more electricians, nurses, or language teachers for a spell.

Ya, this is how student loans kinda work now, indirectly. I just want to formalize and daylight the calculus.

I also want it to be more explicit that governments are making an investment and expect a reasonable return.

#2 Institutions are cosigners for all student loans.

Fraud has been a huge problem. So if an institution loses it's accreditation or goes kaput, they assume the full value of the loan. It's unconscionable that the students carries all that risk.

In a democracy, isn’t having an educated citizenry enough of a return? Or at the very least a significant factor?

I’ll also throw in the idea (as an addition not a replacement to what you say) of national service in some form which isn’t military service (lots of ways to help the country beyond the military) and the government funding a university education to some degree in exchange for that.

> In a democracy, isn’t having an educated citizenry enough of a return?

idealy one would think so, but the issue is we have paired our democracy with economics that demand compound annual growth, and where the money goes, so follows everything else...

In theory yes, but in practice the problem is that many people choose majors that have no value to society....

Or often we have a glut into 'trendy' major that have fuzzy benefits to the society (think marketing/pr). Since it is not a specialized skill, many do have trouble finding jobs in their field.

The barista at my favorite coffee place, had a marketing/pr degree... you just don't need a college degree to make coffee. If she never finds a job in her field, or something that requires college degree, it would have been wasted money and a loss to society.

If you have to give free college, it has to be conditioned to things that do benefit the economy/society (engineering, teachers, medicine, etc). This introduced a different problem, that is 'state planing'.

>many people choose majors that have no value to society

I think you're missing the word "financial" there, going by the rest of your comment.

Straw man. Sure some Universities have branched out (to fill a demand we must suppose) with non-tradition degrees. But those departments are far from large. Universities still have vigorous STEM colleges that are doing well.

Further, who's to say college is a society-profiting institution? Why them and not, say, circuses? Movie houses? Candy manufacturers? Are we so poor a nation, that we have to cut institutions to the bone and they all have to be mercenary money makers?

Educated populace makes for better voters. Which God knows we need.

+1 Civil service.

You're advocating free tuition? Yup, I'm 100% on board. [1]

However.

This episode is about the current proposals for patching up our current system. This following summary is so over generalized as to certainly be mostly wrong; so please just read it as indicative of the policy challenges:

Currently, each state runs their own higher education institutions (university, community colleges, voc tech, etc). The feds currently handle the student loans. (States and institutions also receive grants, research monies, etc. YMMV.)

In our future perfect free school system, feds would give money to the states to spend. Since the feds can't just tell states what to do, there may be some kind of carrot & stick arrangement, like how the highway funds were dispersed.

But that's no guarantee that state's will sign up or play nicely. For example, look at the spotty adoption of Medicare expansion. Some states declined FREE MONEY, which had very few strings, because of REASONS.

Which leads us back to today's Gordian knot. How do the feds design and implement a fair system which is strenuously opposed by some states and a lobby of the most powerful universities? The feds don't want to enable dysfunctional states who are screwing over their own students. The feds also want to avoid rewarding bad behavior, eg giving bad states the same deal as good states.

So right now it seems the best leverage the feds have is thru student loans. Hopefully our nation progresses to something more reasonable.

[1] I have no idea what free higher education would look like. I was pretty happy with my state's pre-Reagan funding model; not quite free, but still very generous. I do accept that students have to have some "skin in the game". Civil or military service leading to free education is great. And I also accept that just giving institutions money, no strings attached, leads to bad outcomes. So maybe a hybrid system; 50% state funded directly, 25% student funded (self or loans), and 25% vouchers (like charter schools). But I'm open to any reasonable, pragmatic system.

"free money" is very, very hard. Institutions will soak it up, leaving the price to the student exactly where it is. Because, markets (price levels settle where they bring the most profit).

I've seen it in 'incentives' to develop local railway-adjacent properties. City subsidized rents, but they just advertised 'premium' apartments and the rent is the same/higher than elsewhere. The developer pockets the incentive.

Lest we imagine that some institutions to lower their rates because of Fed support, that isn't happening now and rates are already well above what it takes to run a college.

Preach it brother.

Story of graft is as old as history.

But somehow I'm optimistic. Management and governance are technologies too. (h/t Peter Drucker) We can do better. We will do better.

How do we incentive desired outcomes? Ensure feed back loops are working? Thwart conflicts of interest? Try out new ideas, run experiments? Share best practices?

I've been wandering around for 20 years, hoping to meet other people (locally) who apply Drucker, Deming, Everett Rogers, etc. paradigms to policy nuts and bolts. Something like this, but for the close combat of actual work:

https://ssir.org/issue/winter_2021

I've started to read about participatory democracy (h/t David Graeber), but have yet to find people applying those strategies at work.

Last week, my politic & policy bestie turned me onto holocracy. I'm still chewing on it, am rather skeptical tbh, so won't share any links.

Meanwhile, we don't need to fix any and everything. It's enough to make some improvements, lick our wounds, and then do it all again.

Good point.

That said, lots of things are hard :). Which I don’t think you’re necessarily disagreeing with.

This kind of makes sense for the vocational courses you mention but only when students follow the expected path. If a medical student fails out, they may struggle to pay back the large loan taken out against their future earnings. The same is true if they pass but don’t want to be a doctor.

I studied mathematics at university and if you look at the typical student entering undergrad at my university, there was a high chance they would go into further education after the degree, and a somewhat smaller chance they would become an academic (though this is the outcome the university was focusing on). There was a reasonable chance they would go on to a reasonably ordinary middle class job, and a small but significant chance they would go into a highly paid field like investment banking. It seems it would be terrible for those incoming students to take out loans against their expected future income because the average is pushed up by a small proportion of high-paying careers, while many students may choose to go into lower paying jobs (e.g. being phd students).

The problem is that the greatest burden falls on those who fail to meet the income expectations. I think such a system is regressive, at least in the technical sense.

Obviously with the hind sight of being someone with a reasonable amount of success, one might want to have had a system like the one you describe, but I think I wouldn’t want my friends who e.g. went on towards academia to have suffered such a system, and perhaps the pressure of needing to find work to repay loans would have led to a worse outcome for me.

I think I would want a system where the risks are socialised to at least a large extent. But I sympathise that some people don’t like the idea of others going off to get certain degrees that don’t really lead to improved financial outcomes, and the more serious issue of not having a way to incentivise certain courses[1].

In the uk we have a bizarre system of “loans” where if you are from a wealthy family you pay upfront for university, if you are not so wealthy the government pays for your tuition (for a certain amount of time) and provides money to cover living expenses as a “loan”, and if you are more poor the government (and if you’re lucky your university) will provide extra money towards your living costs as a grant. The “loan” accrues interest at a somewhat high rate (that depends on how much money you make) but isn’t really like a loan because it is paid back based on income (one pays 9% of gross monthly income above a threshold of about £20k/12) and written off after 30 years. This means that while people who don’t earn so much money don’t have an impossible burden after university, it is people with middle incomes who end up paying back the most in absolute terms (e.g. getting the balance down to 0 just before the 30 years is up and paying a lot of interest) while those with high incomes can quickly pay off the loans without paying so much interest and then enjoy an effective 10% pay rise. It seems this system is also somewhat regressive.

Restoring bankruptcy protections for student loans is obvious much needed reform. In the USA; I have no clue how others manage this.

The linked podcast episode touches on some of our bigger inequity challenges. My only notion is restore state funding to public institutions (to greatly reduce tuition burden). It varied greatly by state. My own state's universities used to be ~80 state funded and are now almost ~100 tuition funded. So wrong.

Maybe also treat loan for private institutions differently. It's really distasteful that our elites universities are hoarding so much cash (endowments). They should use it or lose it.

Edit:

Another reform for mitigating inequity may be increasing supply to meet demand. I truly don't understand this dynamic. Admissions are down overall. But demand for the elites is ever greater. Meanwhile newly 100% tuition supported orgs are now dependent on foreign exchange students. Ad nauseam...

It seems to me the Pareto curve of credential issuing orgs has to be releveled. The elite have to either expand enrollment or partner with other orgs to share the glory or...?

I've read a lot of criticisms (gripes), but can't remember any policy proposals. The most concrete I've seen is Scott Galloway's new MBA teaching startup (https://www.section4.com), which really looks like an ITT (https://en.wikipedia.org/wiki/ITT_Technical_Institute) or Phoenix University model, but I really don't know.

That’s a terrible idea.

Just so. What's your prescription?

Take your time. No pressure.

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