
Billionaire Robert F. Smith pledges to pay Morehouse 2019 grads’ student loans - Toyentrepreneur
https://www.cnn.com/2019/05/19/us/morehouse-robert-smith-student-loans-trnd/index.html
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hugh4life
Looks like an opportunity for a longitudinal study. Compare life outcomes of
this class vs classes that come before and after.

[https://en.wikipedia.org/wiki/Longitudinal_study](https://en.wikipedia.org/wiki/Longitudinal_study)
'
[https://www.ssc.wisc.edu/wlsresearch/](https://www.ssc.wisc.edu/wlsresearch/)
\- The Wisconsin Longitudinal Study (WLS) is a long-term study of a random
sample of 10,317 men and women who graduated from Wisconsin high schools in
1957. The WLS provides an opportunity to study the life course,
intergenerational transfers and relationships, family functioning, physical
and mental health and well-being, and morbidity and mortality from late
adolescence through 2011. WLS data also cover social background, youthful
aspirations, schooling, military service, labor market experiences, family
characteristics and events, social participation, psychological
characteristics and retirement.

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qzw
While I’m happy for the students and appreciate the “pay it forward” message,
I am just shocked that the collective debt for 396 students is $40 million.
That’s $100k per student _on average_ , just for a bachelor’s degree. How
could this be sustainable?

~~~
scarface74
It’s what happens when you think you need to go to a private college....

They could go to a public 4 year college cheaper.

~~~
addicted
Are you a boomer? Because you seem to think a decent public college is
significantly less than 25k/year.

~~~
scarface74
GA State University is a well regarded public college in GA - $10K a year.

[https://sfs.gsu.edu/files/2019/05/FY20-Undergrad.pdf](https://sfs.gsu.edu/files/2019/05/FY20-Undergrad.pdf)

And four year public colleges in GA offer 2+2 programs where you can go to a 2
year college even cheaper and then transfer.

Honestly, most students don’t go to Morehouse because it’s an outstanding
college, they go to be a “Morehouse man” and the historical significance as an
HBCU - And before I start getting replies about not understanding “the Black
Experience”, I am Black, went to a much less prestigious (and cheaper) HBCU,
spent a summer on Clark’s campus (part of the Atlanta University Center along
with Morehouse) at a summer program, and came out with no student loan debt,
and making just as much in 3 years as people coming from more prestigious
schools.

~~~
arsenide
How much is rent, utilities, and books on top of 10k/year tuition? Can
students work to pay these other costs of living without sacrificing their
studies? I have doubts.

Maybe at a public school the debt amounts are some percentage less. But, I
argue, not that much less.

~~~
DuskStar
I can't speak for Georgia, but my monthly expenses at UMich were less than
$1k, and I graduated less than 5 years ago.

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pbreit
I don't totally understand the idea of forgiving student debt. Isn't it fairly
healthy to take out a loan to invest in yourself and then pay it back?

~~~
toasterlovin
It should be.

The things that fucks this whole calculation up is that student loans in the
U.S. can't be gotten out of via personal bankruptcy, so, in reality, a lot of
dumb young people rack up way more student loan debt than they really should.
And the people lending them that money have no incentive to think about the
student's ability to pay the loan back, due to the bankruptcy exemption. Oh,
right, and the loans are often guaranteed by the government, so there's yet
another thing which screws up the incentives.

~~~
rayiner
The private student loan market is almost non-existent now. The “people
lending them that money” is the federal government. And the combination of no
credit checks on the front end and non dischargability on the back-end is a
deliberate policy to make loans universally available.

~~~
toasterlovin
> make loans universally available.

That's the part that I think is a bad idea.

~~~
chongli
The whole point of student loans is to make a university education universally
available. It's an attempt to avoid the regime of the old days when only the
children of nobles and members of the clergy (also usually children of
nobility) could go to university. Whenever I hear people advocating for an end
(or a severe curtailment) of student loans, I have to wonder what people ought
to be expected to do in order to achieve upward mobility.

~~~
derangedHorse
There’s plenty of trade schools that can give careers to those not fortunate
to get a sizeable scholarship and who would need to take out unreasonable
student loans. For those few I’d recommend getting a career and saving up some
money before trying to pay their way through college instead of having their
student loan loom over their heads for most of their lives and potentially
ruining their credit score with a couple of missed payments.

~~~
chongli
There are plenty of people who would do well in science or engineering
programs that aren't prodigious enough for a full ride scholarship. Telling
those people to go to trade school is a huge waste of their economic
potential.

At the same time, there are plenty of extremely bright people who take a
scholarship to study a subject with approximately zero real world
applicability. That often doesn't matter though, because they made it through
and are now able to signal their status to employers.

I happen to own a copy of Caplan's _The Case Against Education_ and I don't
buy his arguments for trade schools. People go to school to signal status,
mostly because humans engage in assortative mating, and trades offer money
rather than status.

Besides that, many trades are very physically taxing and tend to cause
injuries which result in chronic pain later in life. Who wants that? The
epidemic of suicides and drug overdoses in the US is occurring precisely
within the populations of older, injured workers who were essentially forced
into retirement.

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tehjoker
Nice of him, but college should just be free. Charity cannot build a decent
society, only a determined society can... one that prevents the creation of
billionaires in the first place.

If the dominant ladder to the middle class will place those who take it in
indentured servitude, you're not building a great society.

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jshc
Any idea why college education is so expensive? here's just my cynic view from
personal experience but I don't have enough data to back it. 1\. some
professors in some public state schools can get paid a ridiculous amount of
salary 2\. The administration is inefficient and bureaucratic.

~~~
lotsofpulp
Price is where supply curve meets demand curve. Demand curve is extremely far
to the right due to everyone believing college will land them better, whiter
collar prospects than otherwise available to them.

Also, it’s a very conspicuous social status marker and greatly contributes to
the network of people that you have for the rest of your life. Not that it’s
worth it for most colleges, but people believe, and no one likes to make less
than rosy assumptions about themselves or their child.

Couple this extreme demand with an unlimited source of money, e.g. taxpayer
funded student loans. Now a college can state whatever price they want, and
the buy will be able to pay it! All they have to do is apply for a loan they
are guaranteed to be approved for, and many times the parents are on the hook
as well due to co-signing in the case of private student loans.

Not a single person does any cash flow modeling during this business of
borrowing tens and hundreds of thousands of dollars on an unproven adolescent.
Imagine a lender’s requirements for any other scenario where this much money
is borrowed. All because it’s all taxpayer guaranteed.

~~~
mrep
It also allows them to price discriminate against rich parents to get them to
pay more, and then they can subsidize kids from less wealthy backgrounds with
scholarships. This works pretty well as a progressive system most of the time
but there are plenty of stories of kids who have a rich parent or two who
won't help their kid out at all and then the kid gets screwed with high
tuition costs even though they have to pay for it all.

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mdturnerphys
I'm reminded of this:
[https://en.wikipedia.org/wiki/Parable_of_the_Workers_in_the_...](https://en.wikipedia.org/wiki/Parable_of_the_Workers_in_the_Vineyard)

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platform
list of companies in Vista's portfolio (if anyone is interested)

[https://www.vistaequitypartners.com/companies/](https://www.vistaequitypartners.com/companies/)

I though of them as private equity firm, more than an VC. but could be totally
wrong...

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httpsterio
Scott's tod... Wait sorry, Smith's kids.

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mikeash
And thus we see how the wealthy are able to control our society.

A rich man performs an act of generosity to wipe out the student debt of an
entire college class, and you complain. What do you complain about?

Do you complain about how students are being burdened with massive debts
before they even begin their careers?

Do you complain that university education is becoming ever more necessary
while simultaneously becoming ever more unaffordable?

Do you complain that a skilled chemical engineer gave up his career and turned
to moving little green pieces of paper around to make his fortune, because
society rewards certain types of paper pushing orders of magnitude more than
it rewards inventiveness, skill, and hard work?

Do you complain that the billionaire who made this gift pays a lower tax rate
on his income than these students will pay on their part of the gift?

Do you complain that, while a few hundred graduates got an incredible gift, a
million other students around the country will graduate this spring with a
huge amount of debt and no billionaire to pay it off for them?

No, you complain about the fact that some of these students won't benefit from
this gift because they were fortunate enough not to have any debt to pay off.
Never mind the systematic problems that led to this situation, never mind that
a few hundred people got an incredible gift and the only person who lost
anything was a billionaire giving up a negligible fraction of his wealth. The
important thing is that some of the peasants are getting more than the others,
and they must be destroyed!

~~~
Despegar
This isn't very complicated to solve: redistribute more of the wealth. MMTers
say that isn't even necessary, but it is to fix inequality.

~~~
joelrunyon
Question I've never seen anyone actually answer: Why is inequality inherently
a bad thing if the "floor" for everyone is continually being raised?

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mac01021
Rough/vague answers I've been given:

\- our democracy is not perfect, and allowing someone to become too wealthy
affords them too much power, effectively disenfranchinsing the masses.

\- Even if the floor is raising, its still too low and it would be better to
squeeze those on the high side of the inequality in order to raise the floor
even further.

\- the social cohesion thing from the other comment.

~~~
joelrunyon
How high does the floor need to be raised?

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supernova87a
Not to begrudge anyone's generosity, but if my parents / I had worked to save
for my tuition completely and I got no benefit in a scenario like this, I
think I'd feel a little frustrated. Of course you'd be lucky to have had that
position in life, but frustrated nonetheless. Why didn't I just take out loans
like everyone else?

~~~
analog31
The idea that nobody should get a goody if I can't get a goody, is the
beginning of the race to the bottom.

~~~
throw20102010
I think GP has a point that needs to be addressed if we ever want to do a debt
forgiveness on a large scale without alienating a bunch of hard working
people. It's not about keeping people from getting goodies, it's about
rewarding responsible behavior.

Imagine two students, Andy and Brady. Andy decided that it would be best to
get good grades, so he took out more loans and worked less. Andy had more time
to study so he got mostly A grades. Brady decided it would be best to get
graduate debt free, so he worked long hours instead of taking more loans.
Brady had less time to study so he got more B grades. At the typical US
university, you might be able to call their outcomes balanced- Andy can maybe
get a better job because he got better grades, but has to pay off more debt.
Brady won't get quite as good of a job because of his B grades, but gets to
start saving for retirement faster because he is debt free.

But then some billionaire (call him Robert Smith, if we're trying to come up
with the most generic name ever) comes and pays off Andy's debt. Now instead
of a balanced outcome Andy is debt free and has a better job. Which is great
for Andy, so I'm not saying the billionaire should't pay off his debt. But you
have to think that Brady is probably kicking himself right now for not making
a different set of choices. He's now behind in the race, and being behind
sticks with you for a long time when it comes to careers.

If we could find a solution that kept Brady from feeling bad, but still gave
Andy his goodies, then I'm sure that most people would agree that is a good
outcome. An easy one that comes to mind is instead of saying, "I'm paying off
all your student loan debt," Smith could say, "I'm giving you each $100k."
That way Andy and Brady both get goodies, and Andy doesn't have crippling debt
any more. Brady also doesn't kick himself for working hard during college
because he now has a nice sum of money to do something responsible with
(invest, save for retirement, down payment on a house, etc.).

~~~
supernova87a
Agreed, a flat $ gift to every person would be more satisfactory.

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yanarchy
That's incredible.

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ourmandave
Anyone know the odds of winning Free Tuition From a Billionaire vs Lotto
scratch tickets?

Also you _know_ there's gotta be a guy that buckled down and graduated last
year instead of this year that's kicking himself.

~~~
SapporoChris
In addition, some parents are probably reflecting on their choice to pay for
everything. I'm not as concerned about the very wealthy for whom the cost of
sending their child(ren) to school was a minor expense, I'm more concerned
about the parents that made extreme sacrifices.

And then there's the student that juggled work and school to minimize or
eliminate any student loans.

The generosity of Robert F. Smith is admirable. I'm unsure how to reconcile it
with some students paying vs others getting a free ride.

~~~
protomyth
Life is full of serendipity and chaos. Yep, some folks are going to get a
massive break and some are going to be mad because they scraped by and are not
going get a benefit. Neither diminishes the great generosity of a man who
should be praised. Envy will destroy your soul and frankly is the most deadly
of emotions. Celebrate the good fortune of others and remember you are no
worse off then you were yesterday. Nothing has been lost and you were caused
no harm.

~~~
toomanyrichies
Well-put. If someone is going to get mad that they lost out on this windfall,
they may as well get mad every time anyone other than them wins the lottery.

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addicted
This is the issue with all the discussions about loan jubilee.

The people who busted their asses to do things the right way are the ones who
get shafted.

The better approach is to just give out cash to all grads. How do you account
for people who are richer vs those who are poorer benefitting similarly?
Simple. Progressive income taxes, wealth taxes, and inheritance taxes. Keep
everything else blind to income/wealth.

~~~
mikeash
Graduating debt-free is a curious definition of “get shafted.”

~~~
BurningFrog
This piece tries to explain how conservatives think about fairness. Including
making sense of the Tea Party cry “Keep your government hands off my
Medicare!”.

It will make you understand this thought, if perhaps not agree with it.

[https://www.theatlantic.com/ideas/archive/2019/04/why-
conser...](https://www.theatlantic.com/ideas/archive/2019/04/why-
conservatives-hate-warrens-loan-debt-relief-plan/588322/)

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killjoywashere
For those shedding a tear for the kids and families who worked hard to cover
their bills ... I assure you, this leavening of a playing field is relatively
minor in the scheme of setbacks people face in a career. And I say that having
just finished paying my student loans at the tender age of 43. Those who
suddenly find themselves with no debt may in fact end up worse off because
their razor-sharp, college-educated judgement, finely honed by the whetstones
of education and capitalism, just got blunted. We've yet to see how this
experiment of Mr. Smith's plays out.

~~~
season8sucked
I paid my debt off a year out of uni, and if anything I’d say the lifted
burden has sharpened my ability to think.

