Comment by btilly | Hacker News Reader

Comment by btilly | Hacker News Reader

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The problem is that there are a lot of jobs, like lawyer, where people think they will be able to pay it back and only discover years later that they cannot.

Heck, my wife has an MD (from a top medical school, earned with honors) and a wrist injury from residency that limited her ability to make money for years, and will greatly lessen how much money she'll be able to make in the long run. She'd be in a very tough spot if I wasn't paying her loans off for her.

You'd be hard-pressed to find a job that the public thinks is safer financially than "doctor". Yet even that is not safe enough for the risk structure that student loans impose.

Sure, I agree that there are lots of victims who deserve more than their fair share of the blame. But don't make the leap from that to blaming the victim. The risk structure that financial loans impose is guaranteed to result in many victims who don't deserve particular blame. Bankruptcy exists for a reason, and it is a travesty that corrupt politicians have been bribed into carving out a targeted exemption for a powerful industry.

Judging the potential worth of degrees is indeed quite the challenge. Most individuals cannot be expected to accurately do it.

The people with the knowledge to actually make an informed decision in the matter are the schools (who track employment of their alumni.. and currently only mention it if it looks good) and the financial institutions who know which people are paying back their loans quickly and which people are paying them off slower than interest is accumulating.

I think any solution needs to at least involve one or both of those two parties.

People who request and get loans are "victims" of "risk structure"? My parents told me "this is what we can afford, the rest is on you. If you earn $xx,xxx then xxx is about how much you can afford to pay per month." Seems to me that a large part of the problem is that we're letting 18-22 yr olds make career and financial decisions without adult mentor/parental input.

Some fraction of people who request and get reasonable loans will be unable to pay those loans back through no fault of their own. For instance, like my wife, they suffer an unexpected injury and suddenly the career path they were planning on becomes closed to them. What should happen in that case?

You lay reasonable plans. But shit happens. What happens in that case? Is it really your fault if plans that were 95% certain to work out fail due to forces beyond your control? How are people that that happens to NOT victims?

Insurance is a great way to hedge against career ending injury.

The risk structure is a big part of it, yes.

Take law school for example. At a top school, you've got say a 70% chance at getting a job at a big firm starting at $150k+, and a 30% chance of ending up at a small firm making $45k. The ~$200k tuition for law school is, at least purely financially, generally worth it for the people in the former group, and not worth it for people in the latter group. The expected return, weighted by that 70% risk factor is still positive. Purely objectively, for a risk-neutral person it makes sense to take on the $200k of debt for a degree from a top school.

But it really sucks for the people who aren't in that 30%. They didn't make an irrational decision to attend law school, but they still got badly burned because the process creates winners and losers in a very stark way.

The problem is the educational system. Schools should not be charging as much as they do. The market is supposed to drive costs down, but the cost of a legal education has skyrocketed since the 1950's despite being more or less the same exact process it has been for 150 years. You have seen this across the whole spectrum of degrees.

Law school is a cartel controlled by the ABA. That is a special case.

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