

The truth about student loans - samh
http://www.youtube.com/watch?v=lXbbam141zk#t=31s

======
djcapelis
Summary: Political rant with editorialized title. Speaker advocates for cuts
to student loan programs to produce massive cuts the university budgets
leading to decreased program quality but affordable prices.

I'm not sure this is even worth criticizing because frankly this guy is
completely clueless, but:

* The decreased program quality part seems to be skimmed over.

* Educational institutions that just react to market forces are bad educational institutions. Market forces result in grade inflation and low graduation standards, something I think most people agree are extremely unfortunate trends.

Alternative proposal: Redirect student loan subsidies from students towards
institutions directly, possibly also bias the subsidies towards public
institutions. The result should be lower tuition for everyone, mild downward
forces on private institutions' tuition costs, hopefully no cuts to program
quality and reasonable levels of affordability for reduced income students who
will still rely on need-based aid more than loans and continue to have fairly
cheap public schools they can opt to go to.

~~~
yummyfajitas
_The decreased program quality part seems to be skimmed over._

Some numbers: students pay $19,869.5 per term
(<http://www.nyu.edu/bursar/tuition.fees/rates09/ugcas.html>). If each student
takes 6 classes (between 18 and 24 credits), a class of 30 students pays
$99,347.5 for one course.

Another number: a typical PTL in math gets $4-6,000 per class. Presumably the
cost of a PTL in a less marketable subject is lower.

Unless rent for a classroom + admin overhead adds up to about
$90,000/semester, there is plenty of waste to be cut.

Specific examples of waste: the climbing wall, counseling services, latino
center, anime club, gym, soccer team, korean formal ball, resident assistants,
multiple offices of affirmative action [1]. (These all exist at universities
I've attended or worked for.)

 _Educational institutions that just react to market forces are bad
educational institutions. Market forces result in grade inflation and low
graduation standards, something I think most people agree are extremely
unfortunate trends._

Come up with uniform standards, and separate the tasks of education and
evaluation. Problem solved.

[1] If a university has _three_ offices of AA, that's either 2 or 3 too many
(depending on your views on AA).

~~~
djcapelis
Also, the specific examples of waste I'd like to address, since I think you
might have some misconceptions on how these are funded:

* Climbing wall: At most universities I've seen these types of services are usually funding through a university recreation department that gets paid via student fees... voted on by the students. I.E. students went to an actual ballot and chose to raise their fees to supply things like this.

* Counseling center: I disagree this is waste. Parents tend to get angry when students throw themselves from buildings. Universities that provide psych help for their students can lessen the number of students who do this, which is helpful for retaining not only the students who would otherwise kill themselves, but the students who object to seeing a rain of their peers from the tall building on campus. It also tends to increase alumni donation rates, IIRC.

* Latino center / other AA type things: These are often student funded or sometimes funded through restricted funds where some interest group gives funds to the university specifically for this purpose. This doesn't always happen, but does more than you think. And yet again, these usually increase alumni donation rates among minorities and therefore net the university more than they paid, which means the university is simply making a smart investment, doubly so if they didn't even pay for it because someone else gave them funds to build it.

* Various student clubs: Again, these are typically funded by students at most universities through an activities fee their own student government put onto the thing. They voted on this, they decided to spend it where they spent it and on some campuses the administrators are in fact legally prevented from doing anything about it.

* Soccer team / sport programs: I'm not really a fan of sports programs being part of a university, but from a waste perspective not all of them are revenue losers. Some universities actually find they make money of teams _and_ inspire a lot more private donations. Universities with strong sports programs tend to raise more money from alumni. I think this doesn't work out in practice for a lot of universities so I see this as potentially one of the better cases you've brought up as waste.

* Resident assistants: Actually a vastly cheaper alternative to paid university staff doing these types of tasks. This generally is a smart and low cost way to staff buildings and the opposite of waste.

~~~
yummyfajitas
_At most universities I've seen these types of services are usually funding
through a university recreation department that gets paid via student fees...
voted on by the students_

We have a better way than voting to allocate private goods than voting: a
market. Rather than allowing some students to vote for other students to pay
for their entertainment, we should simply require that everyone pay for their
own entertainment.

As for sports teams/etc, if they bring in money, keep them. Most don't. As for
RAs, their services are completely unnecessary. My apartment building simply
_does not provide_ monthly pasta dinners, free light bulbs, an ice cream
social at the beginning of the year, or endless spam about sorority events.
Somehow I've survived.

~~~
djcapelis
If your apartment building had an alumni foundation that brought in
substantial revenues it would. Also RAs do paperwork and some amount of
administrative tasks that universities would have to hire a clerk or someone
else to do. RAs are dirt cheap and it takes surprisingly little funds to make
students feel like they're being pampered and money fluttered away on them
when in reality it's almost nothing. But later they go "wow the university
really cared" and they write checks.

Take up the market idea to the students. At most of the campuses they're the
ones who control these fees and can chose to lower, raise, reallocate or toss
them. Students overwhelmingly vote for certain types of fees consistently
across campuses. Apparently they don't buy your market argument and frankly if
they vote that stuff in that's their own choice and not much we can get riled
up about. (These types of fees are typically not a large part of the overall
cost of tuition. It depends on the system. A very few places are just absurd,
most are pretty minor.)

~~~
yummyfajitas
I guarantee you that a temp to do some paperwork for a week or two would cost
less than free rent for a year (the cost of an RA).

As for taking the market idea to students, I advocate doing exactly that.
Allow students to opt out of student activity fees (but they can't join clubs)
and make sure the government doesn't subsidize them.

Incidentally, a student in the 49% who voted against student fees is NOT
paying student fees by choice.

------
holdenc
The government is merely the enabler here. The other part is the unshakable
belief by most Americans that four years at a private liberal arts college is
worth $200K.

~~~
nazgulnarsil
if corporations support this notion with inflated salaries the circle is
complete. this is where the notion is slowly changing, and it will take years
to trickle down to the other systems.

------
gacek
The problem is that the opposite system - publically funded high education has
even deeper flaws.

Many students choose completely useless programs (straight to unemployment),
students don't fell entitled to criticize anything, and of course the
universities don't treat them like paying customers.

~~~
nazgulnarsil
uh...the alternative to government intervention is more severe government
intervention?

the alternative is to stop having the government directly subsidize higher
education through grants and loans. instead let taxpayers keep that money and
fund schools themselves. do you know how the ivy leagues got to be the ivy
leagues? by raising prices until demand and supply met instead of artificially
low prices and quotas^1.

the best plan would be to raise prices until demand is slightly lower than
supply so that you have room for poor merit students.

1\. colleges were quite a bit different before WW2. that's when public funding
of university research really took off, due to military interest.

------
euroclydon
I heard about _The Underground History of American Education_ here on HN
during a discussion about Bill Gates. Someone said they wished Bill were more
into Gatto (author of Underground History) than the Knowledge is Power
program.

I wish I could post this link to HN and have it sit at the top for a while
because I think everyone should read this book.

Gatto, who was an NY and NYC teacher of the year and publicly resigned in the
Op Ed of the WSJ, traces out the origins of compulsory school and it's
detrimental effects brilliantly.

<http://www.johntaylorgatto.com/chapters/index.htm>

~~~
GFischer
You could start by helping him with his website. It looks awful from here.

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alan_p
Eh. It's the good old escalation argument all over again. Sure, you can fix
some problems by cutting the broken solutions and letting it escalate until it
solves itself. Sure, the end result will be better than the status quo, but
why would anyone ever want to go through the mess that would lie in between if
short-term planning is so strongly encouraged (by human nature, if nothing
else)‽

~~~
djcapelis
Okay, let's be clear on something. The US higher education system remains the
top higher education system in the world. This is relatively undisputed.

There are pieces of it that are broken, but the assumption that some new
better system will inevitably and miraculously emerge if only we had the
political will to smash what we have to pieces is silly.

I'm for reform, I'm not for blindly destroying something we have and simply
crossing my fingers in hope that it becomes better that way. If you're
concerned about how education runs, feel free to propose a new system, but
don't simply assume that if we smash it with a sledge hammer something better
will emerge. Frankly the only thing that's likely to result in is ensuring the
US lose its superpower status permanently. (I think people often forget just
how much of our military advantage is predicated on a research infrastructure
that involves US universities. Universities here do a hell of a lot more than
just teach students. Frankly anyone who supports our military needs to
consider that our existing system of universities critical to its success.
Smashing this system is as reckless as proposing to simply cut funding to the
military and then expecting them go to fight China or take over the middle
east or whatever.)

~~~
yummyfajitas
Is the US _education_ system the best in the world?

Or is the US _credentialing_ system, or perhaps _academic research_ system the
best in the world? I don't see a compelling reason why controlling costs on
the education side would harm the credentialing and research parts of the
system.

~~~
djcapelis
The video advocates cutting professors salaries in half. The guy actually says
that. If you don't see how that could impact a university's research
operations then... I'm not sure how we can really agree on anything. :)

The education parts of the university and the research parts of the university
are not staffed separately. In a research university the people who do
research are some of the same people who design lesson plans. The idea is that
this enhances a student's educational experience.

I agree though, that tuition is indeed too high. But I'm willing to stand by
the assertion that our education system is the best in the world too, not just
our research system. This is even more true when it comes to our graduate
programs.

~~~
yummyfajitas
_The video advocates cutting professors salaries in half. The guy actually
says that. If you don't see how that could impact a university's research
operations then... I'm not sure how we can really agree on anything. :)_

It would actually be pretty easy to cut salaries without impacting research;
pay separately for teaching and research. Teaching a class pays $4-6k/class,
or whatever market rate for a PTL is. Grant supported research pays a market
rate salary for research.

Then we get teaching for cheap, but don't sacrifice the quality of research.

As for enhancing a student's educational experience, meh. Some people are good
at research and teaching. Far more people are good only at one. Because
universities want grant money, this usually means good researchers but bad
teachers provide teaching (and waste time not doing research). Not sure how
this "enhances" a student's educational experience.

~~~
djcapelis
I agree that the value of being at a research institution for ones education
is not much for quite a number of students. I think this is where the root of
the problems are. Society needs to appreciate good teaching outside of
research institutions. Until that happens we end up having floods of students
go to research institutions to get job skills training and it's a waste of
resources for everyone involved.

Until this happens it's generally not feasible to pay teachers next to nothing
and research staff a lot on the same campus. Then all the students just
complain they're not being taught by real professors and they truly will pay
twice or four times as much at a different school to get taught by research-
based professors. (Who often, as you point out, can't lecture for crap half
the time.) Universities do some amount of work to ensure that research pays
above grade and teaching only faculty get paid on a completely separate grade,
but the expectations of the students generally keeps this from happening in a
better way.

That said, there are some students that really do benefit from learning with
and participating with the top researchers in the world. Those students do
need to continue to go to research institutions for their education and do
benefit substantially from the research activity on a campus.

------
dangrossman
I always feel the need to squirrel away more gold under the mattress after
listening to Schiff talk.

------
fierarul
I have doubts that the guy would manage to single-handedly publish any piece
of legislation. So while there is some economical talk, it's actually more
towards a political fund gathering talk.

------
Roridge
I have calculated that I will be 40 before my student loan will be paid off...
I've been paying it since 2003

~~~
DougWebb
I had already started paying some of my loans when I finished undergraduate
school in 1993. I started repaying the rest of them when I finished graduate
school in 1996. I finished paying them around 2004. During my undergraduate
years I was in an internship program, so over five years of school I had two
years of fulltime work. And in grad school I was given a stipend and free
tuition. This helped me (a) not borrow as much, and (b) have income to pay
down my loans as quickly as I could.

I remember producing paydown charts in the early 90s and thinking it'd take
forever to pay my loans off, but I planned the amounts I wanted to pay each
month (more than the minimum whenever I could) and it got done. My rising
income over the years helped more than I could have predicted when I started.

~~~
ytinas
I don't know how much you owed, but was it worth it to pay the loans off so
fast? It seems there must have been something more valuable a large sum of
money could have done for you.

EDIT: I mean this as an honest question, not proving a point or something. I
was under the impression that these loans have pretty low interest. If the
interest is low I would pay as little at a time as I possibly could.

~~~
DougWebb
Yes, it was worth it. Being a debtor puts a drag on you, even when you've got
a positive net worth. Owing debt reduces your freedom and flexibility, because
you need to have enough cash flow to make your debt payments. That restricts
your choices. Paying your debts off also improves your credit rating quickly,
which is important after graduating college because sooner or later you're
probably going to want a home, and mortgage you need for that will most likely
be more than your school loans were. Paying your loans off first proves you
can handle the mortgage debt.

------
samchan
amazing.

