

Student Loans are the New Indentured Servitude - babyshake
http://business.theatlantic.com/2009/10/student_loans_and_payback_time.php

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Chocobean
article makes a few interesting points :

1) is it fair to ask "children, 17, 18 or 19 years old, to try and assess how
much of a student loan debt burden they can handle vis-a-vis their future
income over their entire lives"?

2) "people under indentured servitude had the job waiting for them"; students
do not.

3) Obviously, after living a lifestyle one cannot afford for several years, it
will take more than several years to pay off the debt.

Student loans are _not_ indentured servitude; living above your means is.

~~~
jbellis
> is it fair to ask "children, 17, 18 or 19 years old, to try and assess how
> much of a student loan debt burden they can handle

I don't know about you, but I discussed that question off and on throughout
high school with my parents while deciding where to apply for college. It's
not like it was a surprise one morning where I had to decide with no time to
prepare or ask someone more experienced about.

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wdavis
The borrower is SLAVE to the lender. This statement has been true since the
creation of the floating rock. Our grandparents knew this. That's a big reason
why they are the "greatest generation". They live by this creed and thus
prospered. We ignore it so we pay...and pay....and pay.

There are two issues I have with our system.of education 1) who said that
college was all that important 2) why is there a necessity to jump from high
school directly to college. The apprenticeship model works ten times better.
In my opinion an aspiring lawyer would do much better if he just got a job
working at a law firm. By working his way up he/she would gain valuable
experience, hands on training, and here it comes MAKE MONEY. Even if he worked
for peanuts the experience alone would be worth more than a college or
university could ever teach. I would bet any amount of money that, after the
same eight years the apprentice would have spent in some pampered cocoon of a
college/university, he/she would be a better lawyer than 99% of Yale or
Harvard graduates who at most may have done an internship. The same goes for
doctors. Even still, if the individual wanted the college experience let him
have a year or two to learn how the world works. It's not doing any of these
teenagers any good to go from the sheltered atmosphere of mom and dad's to
that big and expensive procrastination of true life we call college. By
experiencing life and understanding the value of a dollar, individuals will be
better prepared to make proper financial decisions. Furthermore, by waiting a
few years and not throwing people (in there most immature and naive stage in
life) you avoid the ignorance and stupidity that is college life.

If an individual decides to seek their higher learning from one of our
countries institutions the first lesson taught should always be: the borrower
is slave to the lender.

~~~
rickdangerous1
Well I tried this approach with my IT career. I avoided the high cost college
fees by relying on commercial programming courses and my work experience
(started on help desks and now I'm an independant software development
consultant). I also avoided big student loans (though I did end up with about
10k owing) and basically continued to work part time or fulltime since high
school graduation. So I did pretty much exactly what you suggested but heres
my problem. I wonder about the path I didn't take and the kind of interesting
work I could be having now if i paid the money and went to a top tier CS
college. What kind of interesting research work or product development work
could I be doing now, if I had invested in a first class education?

Don't get me wrong, I'm not doing badly...but I wonder about the jobs I have
the talent for and interest in but not the educational background...many doors
are shut to me now because of a decision I made to forego college 15 years
ago.

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hristov
A big problem here are the schools. A lot of degrees are just not worth the
money and a lot of schools essentially trick students into getting into
enormous amounts of debt based on unrealistic expectations for their careers.

I think a solution will be for the government to be more selective in which
student loans it guarantees. I.e., the government should honestly survey the
types of degrees that are needed for the economy and only provide loan
guarantees for those degrees and for institutions that have shown they can
train people properly in those degrees. If schools want to provide other
degrees they can but they would have to rely on the free market.

Also, bankruptcy law should be changed to allow people to discharge their
student loans in bankruptcy. I think that if a person shows (i) hardship and
(ii) that they are not using their education in any way or form, they should
be able to discharge their loan provided that their loan will be reinstated if
they start using their education.

~~~
sokoloff
Be very careful what you wish for in the last point.

Anything that makes students loans less "guaranteed" will make them much less
available. Right now, the only way to "game the system" is to die. If you
allow someone to take $250K of student loan debt and then just piss off and do
something that "doesn't use that education" and have it discharged, think
about how much harder it will be for some other middle class kid to get a
student loan to pursue their dream.

ObDisclaimer: My student loans are long ago paid off, partly because I
prostituted myself to ROTC to pay for 80% of MIT or so. Still, I'd have hated
to be unable to attend MIT (my dream since age 11) because student loans were
unavailable because the repayment guarantee became only as good as a routine
personal loan.

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lupin_sansei
Milton Friedman's solution was interesting. Basically VCs fund your education
in exchange for a certain percentage of your income over an agreed upon
period. Similar to how VCs invest in your company in exchange for a fraction
of ownership.

<http://www.schoolchoices.org/roo/fried1.htm>

~~~
jrockway
The government already takes a certain percentage of our income; and the more
you make, the more they take. It follows logically that they should pay for
our education.

Of course, as with healthcare, the rest of the world figured this out a long
time ago.

~~~
bokonist
The problem is that an individual school does not get rewarded based on how
well it educates the students (except perhaps for private colleges who make
money from alumnae donations). Ideally, you're education tax dollars would
forever go back to the school that educated you. That way the school would
have an incentive to train you well.

~~~
jrockway
This incentive does not exist today, either. To even hope to stay financially
solvent enough to remain in existence, universities have to direct their
resources towards research, not teaching. Having researchers teaching classes
annoys the researchers and the students. But since it's the only way the
system can work, it is tolerated.

There is no money to be made in teaching.

------
vaksel
the problem is that the value of a college degree has plummeted. 20 years ago,
it was a guaranteed way to get a high paying job, now it's just another
checkbox that doesn't separate you from anyone else.

Paying $60-200K for a checkbox is hardly worth it, when majority of college
students(outside the hard sciences), will end up working in the same jobs they
would have gotten w/o a degree.

~~~
joshkaufman
I agree completely - the costs of college vs. the benefits don't line up
anymore. It pisses me off to no end that young people mortgage their lives for
a piece of paper that's worth very little. Employers have always cared more
about actual productive skills, but the credential has been hard-coded into
enough HR screens that it makes sense to check the box as quickly and
inexpensively as possible. (Assuming you want a job, of course - if you're
starting your own business, it doesn't matter at all.)

I'm in the midst of writing a series on my blog about getting college
credentials as quickly / inexpensively as possible. Part 1
(<http://personalmba.com/hacking-higher-education-clep/>) covers testing out
of college via CLEP examination. Part 2, which will be published tomorrow AM,
covers how to graduate from Harvard without being accepted for ~25% the cost
of a standard Harvard undergrad degree. Happy to post it on HN if anyone finds
this stuff useful.

~~~
Poleris
That was a very interesting article and brought up a couple of tools I wasn't
aware of. I'm unsure of your intended audience, so take this with a grain of
salt: your writing style tends to be verbose and you could do without much of
the introduction.

That said, I'll be looking forward to part 2!

~~~
joshkaufman
Thanks - glad you found it useful! The intro was there because writing about
degrees is a departure from my normal topics. (I write predominately about
business principles and self-education.) Didn't want my audience to think I
went completely off the deep end. :-)

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lacker
_Now we are currently asking children, 17, 18 or 19 years old, to try and
assess how much of a student loan debt burden they can handle vis-a-vis their
future income over their entire lives._

19-year-olds are children? We let them go to war and get killed. We can let
them go into debt.

------
jswinghammer
I've been considering this issue a lot lately since I have a kid and hope to
have more in the next few years. I'm planning on saving for their future in
such a way that leaves things flexible just in case college isn't the best
option when they are adults. I will do pretty much anything to convince them
not to go into debt for school unless they are going into an engineering field
or something that we can clearly see how they will make it up and pay off that
debt quickly. I'm planning on starting this lesson early with the hope that
when it comes time they already are able to make an informed decision without
me having to get worked up about it :)

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jbellis
26K of debt for a 2 year degree is on the high end. Tuition will run around
$2500-$4000 per semester if you are in-state, you're still living at home so
living expenses are minimal, and the coursework is not so difficult that you
can't hold down a part time job at the same time.

So I'd have to say that the self-assessment of "Years ago, I lived for now. It
was so stupid," probably has some truth to it.

~~~
elblanco
Tip: Go to community college for the first two years of required classes that
nobody cares about at prices that are almost as good as free. Most locals have
a nice reciprocity system between the community college system and a local
state school, often even sharing professors. Get an A.S. or A.A., transfer to
the state university, first two years are done! If your GPA was stellar, get
grants to cover the rest of tuition. Entire 4 year B.S. or B.A., books
included, should be had for less than $18k minus grants and scholarships.

If they got loans for that amount, that's not really a big deal either. If the
first job outside of school pays $60k, they can live _OK_ and still pay that
amount off in a year or two.

Why this simple formula escapes so many is a fantastic mystery.

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johnnybgoode
If not for credentialism, this would quickly be recognized as the shitty deal
that it is and far, far fewer people would go to today's colleges. They would
instead learn through apprenticeships and other methods. In fact, there are
some signs of this happening already, despite the continued credence given to
credentials.

------
spectre
I've known people who had larger student loans 2-3 years after graduating than
at graduation. Interest is really a killer for many people.

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babyshake
It's not hard to imagine YC issuing an RFS about this.

Student debt, you are officially on notice.

