Taxing Mechanical Engineers and Subsidizing Drama Majors

The relief policy has been terribly irresponsible:

* Those who sacrificed and paid off their student debt receive no reward. Those who put 10k in ink or vacations on the books get a 10K payday.

* People are now incentivized to not pay off the last 10K of their debt until there is an answer if relief will be enacted or not

* The policy smacks of "vote us back in or else 10K wont be yours"

In general I am strongly against policies which change the rules on and penalize people who sacrificed to better their life and better those who made relatively worse choices (or choices with known tradeoffs, but then the tradeoffs get mitigated at the expense of those who did something more taxing for a reward). You can tax the wealth out of those who chose to better their income, but you cannot tax the experiences (eg:travel) out of those who dissipated their resources today/in the past.

For example, bad news for those who never had a dream to be a Mech Eng, but did it anyways for the good of their family.

As a general observation being in America the past ~10 yrs I find America has a major problem with policies that pattern match this kind of subsidize the negative side of choices with tradeoffs to the detriment of someone else who made a sacrifice to receive a reward.

The efforts to discredit this policy are truly fascinating - that's how you know how effective it is, it truly is a threat. But this article is correct, that this is not sustainable and a longer term policy is needed.

Plenty of people are benefitting dramatically from this, and for once it's not the mega rich getting tax breaks or the fraud rife PPP loan fiasco.

Instead of income based repayment, I would rather see very low interest rates on student loans (like 1.5%). That way everyone pays the full amount they borrow, there is still incentive to repay promptly, borrow less, earn a higher wage, and those with low income can at least pay off the loan interest so their loan does not balloon. And it's simpler.

Another thought I had (not completely fleshed out)... Federal student loans could help cap tuition costs somewhat like medicaid/medicare. The fed offers a fixed amount per semester (say $4k) to each student. The catch is that a uni can only accept fed loans if their tuition is fixed at the cap. (i believe this is how medicare negotiates reasonable prices for meds - "if you want to accept medicare here is what we will pay for Rx, and it's all or nothing").

So the U.S. is on track to create a half-free university system, very convoluted and with extra steps and gate-keepers, tax funded? (It can of course never be completely free like some other rich western countries, because communism would ensue.)

Superficially it sounds like the U.S. health system. Please, enlightened people, write something insightful, I'm here for the comments and would like to get a vibe for if the article is a hit piece or has good points. :)

I never understood why children should be able to give a consent to such loans. There is a young and naive person, that can not legally drink, but somehow is able to understand complicated legal contracts!

Make student loans part of personal bankruptcy, and see what happens!

Make loans dischargeable in bankruptcy after some fixed amount of time. Say 10 years. Offer subsidies to loans that are older than this. Emminent domain all existing student loans. Ignore the resulting inflation.

I don’t think the government should be involved in student loans at all. If people could file for bankruptcy and banks had to do their job it seems like many of these issues would be solved. If a bank was going to provide a student loan that they wanted paid back they would look at: * what the graduation rate of your major is and what the average annual income is for your major * your GPA, test scores, and other factors that can be used to predict graduation rate * the cost of the university and how likely your are to be able to repay that amount given the above

I don’t think the free market is perfect, but it seems apt to handle most of these issues without resulting in all of the issues people currently have with student loans.

I'm not sure how things will look by the time my daughter might be ready to go to college in 18 years-

Would it be best for us to sock away money in a 529 plan, or to just let her take out loans to the greatest extent possible and pay them back after the fact?

Interesting to see "BA Biology" in the "most subsidized" list. Is that because it's a popular default major at many schools, and unlike a BS it is less rigorous? I went to a school that only granted BAs, except for Engineering, so all of our Bio majors were BAs. I don't know how common or uncommon this is, or if there are schools that offer both BAs and BSs in Bio.

$10k is a trivial amount when compared to the amount of loans current students end up with. At many public universities, it amounts to a single semester.

Community colleges used to be free - fully subsidized by taxpayers. Until Reagan. As California stopped funding vocational education and community colleges, other states followed along.

Making student loans exempt from discharge in bankruptcy has been a massive subsidy to the financial markets. With a guaranteed source of income (from loans to students), universities have raised rates far faster than inflation. Even the textbook companies don't care about prices - pricing for American textbooks is outrageously high.

No one cares. Until Biden advocates for some tiny relief for students - then everyone complains. It is like some parody of the Trolley Problem: "debt relief is a betrayal of all the people who the trolly has already run over!"

Choose your career and own it too.

Subsidizing others because of their choice is not a choice but tyranny.

After all, after education, technology should be any nation’s #1 priority, just to survive.

I'd like to share this video, which I feel explains the crux of the debate around allocating funds for one cause or group of people over another:

https://www.c-span.org/video/?520337-5/sen-rand-paul-ukraine...

I find myself agreeing with about 10-20% of what he says. His basic argument is that it's not the government's place to take from one group and give to another.

The fallacy in his argument is that the government's primary job is specifically to gather funds through taxation and allocate those funds to certain groups, governed by the public's intentions as determined through the electoral process. Our elected officials are our proxy within our democratic republic, making those kinds of decisions on our behalf every single day.

In other words, his argument isn't supported by fact. It's ideological.

IMHO, rather than deciding if we send $40 billion to Ukraine or fix the lead pipes in many of our cities, the government can and should do both.

Given the choice between reducing the student loan burden, or reducing the national debt, the government can and should do both!

You see what I'm saying? This notion of choice in who will be helped and who will be hindered is a fallacy. The government is bigger than us, we need to stop thinking of it in terms of an individual struggling with their microeconomic finances, and realize that it can be more like a superhero and help many people simultaneously through the emergent behavior and opportunities created by macroeconomic policy. I think what's missing in our government today is this sort of visionary consideration of human potential, and the political will to enact policies that materially help people in need, rather than wealthy and powerful people in the status quo who don't need our help in the first place.

If we follow his argument to its logical conclusion - the reduction or elimination of government spending with the private sector left to its own devices - then only one form of government fits that: autocracy. That's where we came from before the American Revolutionary War, and we've been headed back there again under 40 years of trickle-down economics and the rise of wealth inequality the likes of which the world has never seen. Billionaires are the new aristocracy. We're in a positive feedback loop where every time things get worse, people vote for the same people who caused it, making things worse still. Then that side blames the other and the process repeats itself.

That's the seduction of seemingly rational-sounding arguments like the one against student loan forgiveness, which always align with the status quo. We can use that as the signal to know that the argument is disingenuous.

This is a long comment, but the summary is that this article tries to talk about externalities, but doesn't look at a big enough picture.

Like complete lack of economic regulation (markets cannot accurately price all externalities), or universal basic income, the article makes good points about the market distortions introduced by this policy. It offers a concrete example of the cost of a graduate student at Columbia University[1].

The article asserts that most of the cost of student loans is actually to cover living expenses. For the Columbia graduate student, the article estimates about $30k annually, which agrees with Columbia’s estimate. Using their estimates at the link [1], I computed the annual cost of non-tuition elements, including rent, as $37,522. Columbia estimates rent at $23k, with other living expenses pegged at $7k. Fees account for roughly 20% of non-tuition. The tuition is about $52k annually for a doctoral program and is more expensive for Master’s students.

All of which is to say: this article's example doesn't understand true student costs. To bring the cost of attendance down, often universities with large endowments (like Columbia’s $14.35 billion) will privately subsidize tuition for some students, sometimes by half or more. Let’s say half for the typical student. This doesn’t change fees or COL. So now annual rent is on-par with tuition. So then the student is on the hook for "only" $60k per year, or $300k over the course of 5 years (remember, doctoral program). If the student is good, then the university will pay a stipend of $40k annually, bringing the shortfall to a more reasonable $20k per year. But you cannot have another job if you accept the stipend. So $20k in loans per year, or $100k once they graduate. Compared to the average US mortgage of $460k in 2022, it's the size of a home downpayment.

For this lucky student, the article computes the government's additional cost to support this student as twice to house someone on Section 8. Most US students will not attend a private selective institution with a large endowment, but the sticker price is still very high, sometimes comparable to Yale or Columbia [2]. This is because the price is a signal for value. The actual price that a student, whether mechanical engineer or not, will pay for college is NOT what it says on the tin. The article is correct in that it can be abused since it is technically forcing the government to pay for loans after a certain amount of time for those students who haven't found a well-paying job.

So this legislation that the article complains about is a possible way out of this mess, at least in the short term. This is indeed more generous than the state money that it is replacing (since most students are educated by public universities).

I think the real question is whether we want to encumber long-term those who didn't figure out a way to use their degree to earn a lot of money, and whether money is the right way to measure their contribution to society. Entertainers (including athletes) will typically earn much less over their lives than a ML researcher, but well, they're more fun to observe for a lot of people. Most US teachers and professors will struggle to earn enough money that they aren't subsidized by this program, but hopefully the pandemic has taught people about their value.

You could argue that this is really a public-works program because isn't it better that people follow their passions instead of maximizing their individual profit? Specifically, isn't the drama major more likely to substantially contribute to the public sphere instead of a quant? Not saying quants don't help, but public money should help the public sphere. And for those who might quibble about where their taxes go: I sure am glad that I live in a country that other global would-be superpowers think very carefully about attacking (the majority of the US annual budget is military). Not a perfect place by a long shot, but my taxes definitely go to the public good, if not always efficiently.

[1] https://www.gsas.columbia.edu/content/cost-attendance [2] https://www.nytimes.com/2022/09/14/podcasts/the-daily/colleg...

This article is bad to the point of laughter. While it starts out talking about economics, the real point is to rail against other programs that aren't engineering, calling them worthless. Innovation doesn't just come from engineers. That point is laughable. On top of that, calling other degrees worthless just because their field doesn't pay well is also indicative of other problems in the system. For example, my wife is a stage manager for multiple ballet companies. She's quite successful in the field. It doesn't pay well, but she's needed to do the productions. Or think about an editor who went to school for english. They can get a job out of college, but only around 30k and can barely make ends meet. But saying they aren't innovative or pushing their fields because they don't scam VC's for money for their crypto app is silly and diminishing the impact and importance of the arts on our lives. And maybe if more people changes their view and saw how impactful the arts are, my wife might be paid a bit more and can more easily pay off her degree.