Basically students can get a zero interest government loan (rises with inflation), and only need to pay it off once they make above a certain threshold ($51,957 according to the official website). The payments are deducted as a percentage of your income, with the payments increasing with your wage.
This has a number of benefits:
1. Students whose degrees don't work out for them (i.e. can't find meaningful employment) aren't stuck with rising interest on their debts.
2. Allows poorer students to go to uni without parental support (I am currently a student and support myself entirely)
3. Reduces pressure on graduates to find a job just to pay off their debts. They can take their time to find a good job in their industry, rather than working lower-paying, unrelated work to pay off their loans.
My degree at UNSW in Australia will cost about $27k AUD (~$19k USD) and I'm unsure about the costs of others in my country. Under the HELP system, Australians are allowed a fair go at an education, and can take their future into their own hands (rather than relying on their parents).
I also have difficulty seeing the first benefit you list as being a benefit. I don't have a problem with people pursuing degrees in fields that aren't big money makers, but I also don't know that the government should be in the business of incentivising people to study in these fields.
On the other hand, there is societal benefit to these fields being pursued in general. And the market economy may not adequately pay for the benefits it receives. As a society we wouldn't want everyone to major in poetry, though.
It's actually one of the best things about the system. Maybe you want to be a social worker who will never earn much but will make a meaningful difference in peoples lives, or a lawyer that only works for non-profits, or a doctor that only works for doctors without borders, or any one of ten thousand other examples where a person can make an extremely valuable contribution to society, but doesn't earn a ton of money.
You made the mistake of assuming that only people earning a ton of money make valuable contributions to a society.
Option #2: higher-paid job. Have to pay back loan, which might be a problem if you're just at the bottom of the "you have to pay it back" scale. May have your own apartment or possibly a house, savings, hopefully good health insurance, etc.
I've worked with people who would choose option #1 permanently. Their life was outside their work. They started thinking about the job when they clocked in and stopped when they clocked out. Most of them didn't go to college.
Others did go to college and graduated but didn't know what they wanted to do with their lives. Having the equivalent of a gap year or two (or ten!) after college without worrying about loan payments doesn't seem like the worst thing in the world.
You make no repayments below 50k but it when it kicks in starting at 50k it's something like 1.5% of income, with increments as you earn more. Combined with the fact that it's (1) real-interest free, (2) payments are collected by the Tax Office and automatically added on to your tax bill, and (3) Australia is really expensive, there's not much incentive to stay below 50k just to avoid paying it. Historically there have also been large discounts (10-20%) just for voluntarily paying it early too.
That's interesting. So do you want government to only fund the vocational courses and allow the rich class to be the torch bearer in research, art, and culture because only they can afford it?
I'm not seeing the downside of only the rich being able to understand how Post-Impressionists like Suerat were different from Impressionists like Renoir.
You are picking the edge case here. Art and culture are much more then just rich class's pretense.
As far as wasting money is concerned, spending it just to create more replaceable cogs for capitalistic profit seeker is also a wasteful exercise. Why not ask the Industry to invest in producing those cogs and let government think the long term by focusing on things which cannot be measured in next quarter.
Why Government should subsidize the Industry?
I'm all for long-term investments, but can these ever be measured? If not, it will take more than your claims to convince me that it's worth investing in.
There are other ways to appreciate art and culture, such as visiting museums, reading books, watching documentaries or other youtube videos on these topics, etc. These are all free or much cheaper than a course in a college. You haven't demonstrated how an academic setting is better and worth the cost.
Govt doesn't need to subsidise industry. I'd be fine if these loans are issued by private investors, as with Lambda school.
> capitalistic profit seeker is also a wasteful exercise
No, their benefit can be measured in GDP. Imperfect, sure, but 100x better than your hand-waving claims. No personal offence intended.
Academics is necessary to teach people how to create, understand and appreciate Art and Culture. People writing books (not necessarily, but most probably) have a degree in Language and Literature, people creating documentaries have a degree in Film-making etc. If you think these skills can be obtained from reading books, watching videos on YouTube etc, then the same thing can be said about STEM fields as well.
Any evidence in favor of that claim?
> If you think these skills can be obtained from reading books
I didn't say that nobody should study these fields; just that they needn't do so on taxpayer money.
Some Universities have Arts appreciation course for non-arts students who are interested in knowing, understanding and
>just that they needn't do so on taxpayer money
May I know the rationale behind this? If I understand correctly, what you're trying to say is that letting people study these subjects on taxpayers money is a waste of public money, which I think is not true. There are people with Academic arts background who have contributed to the society. Even (for the sake of argument) if these are not economically rewarding areas of study, is it justified that the whole field of arts which has been there almost since the beginning of mankind to be not funded by the government just because the system under which we currently live doesn't find it profitable? Is it justified to deny access to an entire group of people who are interested to study Arts but they can't because they don't have the money to pursue it?.
I was saying that govt should perhaps not give subsidised loans to individuals (as in the Australian example) to study things like art because:
- the subsidised loan program needs to have a positive measurable ROI for it to continue. Otherwise, the next govt may bring it to an end, because there are hundreds of projects competing for government resources.
- in a world where poverty still exists, programs that are more bang for the buck may have the maximum positive impact on people. I live in India where millions are poor. Some amount of money should definitely be spent on arts / culture, but probably 100x more should be spent on pulling people out of poverty, and the way to do that is to identify high ROI investments in people.
- there are already other venues than Australian-type student loans for govts to subsidise arts / culture-type education, like university grants.
- I'm not sure about the ethics of giving a loan to a student for a course that may not pay back financially, but the loan will with the student for life, even if payment is delayed till his income increases. If arts are considered important to society, is it ethical to burden a student with the loan?
It was just a thought. I'm not adamant about it. I'm happy to see that we've had a good exchange of views, which is supposed to be the purpose of a forum like this.
Thanks for sending the link to the OECD report. I'll read it when I'm free to learn more about this topic.
And who becomes incharge of those museums? Who makes those documentaries and those books?
Once you earn over the threshold your HELP repayments apply to your entire income. So, yes, at low incomes you get a pretty significant tax increase when you cross the threshold. I think they should make it marginal like regular income tax is...
That only makes sense if its not implemented like taxes are. For example if when you exceed 50k and your repayment rate for the first 10k of income past 50k is 2%, and you earn 59k, you would take home $58,820. Why would you not want to take home this extra income.
Is of course is assuming it works like taxes in the US (which it probably does). The same kind of bad logic occurs in the US when people won't take a raise because they don't want to "jump tax brackets", but they don't realize you only pay the higher bracket rate on the income that was in that bracket!
The repayment scheme is stupid.
I understand your problem with the first benefit I have listed. Here are a few things to consider though:
1. Should a student be penalised for not making the best degree choice (most doing so at the age of 18 or so)?
2. Even if the degree choice is perfect for them (in a potentially risky profession), should one not be allowed to give it a go?
3. In university you see many students who have graduated, started working, decided they hated their profession, and then subsequently returned to university to reskill. Rising debt interest would have prevented many of these students from taking the new risk of changing industries. The threshold allows people to re-enter education without being drowned by their payments for the duration fo their degrees.
I agree with you that the arts are an important part of society. However, I don't believe that, given the chance, absolutely everyone would pursue them fully. I believe those who do embark on the potentially risky career of the arts should be allowed and supported to do so, as well as being able to change career paths if they so need.
So yes, it is stepped, and no, there is no incentive for staying below that threshold.
re: your second point, there is no 'incentive' to study in those fields, it is merely possible to do so. It is good, as fields that are low-earning like literature and art; are not reserved only to people in society who have parents with disposable income. It's an egalitarian policy, more in line with Australian cultural values than American.
re your third paragraph: indeed. The result of our system however is that the vast majority of students major in commerce & science; perhaps because the incentive of a lucrative career is enough to stop everyone pursuing arts.
At this point they've lost those 4 years of their life, end up with unreliable sources income (gig economy, part time work, borrow from family, etc), they're bogged down with crippling debt, and the world tells them it's their own fault. They even feel deep down that it is their fault, but now they're resentful and bitter because they're suffering despite that they had been working hard just doing what they were told to do all along.
With this proposed kind of loan forgiveness, the years are still lost to them but at least they're not crippled with debt as they try to get out of the hole they've found themselves in.
I also think a system like this incentivizes universities to help students make money and be productive after college. Under the current system, schools will shake down anybody for what money they can get. If tuition is based on future earnings, the university is going to try to get the student to make as much money as they possibly can.
In fact, this system would likely swing the pendulum so far the other direction that it might kill colleges of art and literature because they would suddenly be deemed unprofitable to the university.
This "businessification" of university education is an extremely new thing. I know you didn't intend it this way but that comment in a way hits me like when the music industry was trying to claim that piracy would kill music. We could pass a law that any and all music could be copied indefinitely and for free which would indeed kill the music as a mass industry, but music would undoubtedly continue to thrive. We just wouldn't have so many Justin Biebers or Britney Spears. Darn.
And so too for education. Get rid of systems which motivate profit driven education (which is no longer an issue just at universities which are overtly for profit), and you don't destroy education - you destroy the artificial facade masquerading as education.
Most people will probably earn over the minimum HELP repayment barrier over their lifetime and if they don't then I don't think they should be saddled with debt.
As a student you give your tax number to the university, and then the loan repayments are handled by the tax system when you do your regular annual tax return.
The system looks good on paper. It reminds me of a type of public housing offered that allows you to give 30% of gross wages. Many people stop working completely and get welfare/assistance (to qualify you need to be working or getting a regular cheque) or delay raises, etc because the less you make the less you pay. The more you make the more taxes you pay so it creates a situation where the harder you work the less you make unless you can get a huge pay increase and leave. It creates a trap.. there is a huge fear of leaving because you will never get back in.
I like the free if you qualify German model but even that has problems.
The current HELP/HECS system doesn't just work on paper. It's been used successfully for a while.
Remember, we are about repayments starting at 2% at 50k AUD (35K USD) and going up to 8% at $107+ AUD (77k USD). This is not a crazy, crippling payment. It is not worth making substantially less in your job in order to save such (relatively) small sums.
Australia is not a welfare state. We rank 5th in economic freedom  (USA is at 18). While the nation does have many problems, I do believe that Australia performs decently at balancing a free market and government support. While we used to have completely free universities, I believe that the current loan program is a decent midpoint between the US and European systems.
There is also a contingency plan for students who come from families with a household income of R600,000(USD 43,000) per annum.
Was this with room and board? FWIW, there are many college degrees in the USA that are in the $7k/yr range, and many of then were around $20k total prior to the last round of state-level austerity in the USA.
Getting a US college degree for under $20k is still very possible if you a) commute and b) do the first two years at a community college (typically closer to $2k/yr, or $18k-$21k for 2 years cc + 2 years state college).
With a bit more public subsidy (or differently targeted subsidy), many US colleges could be well within the $20k USD range for commuting students. And some courses of study already are.
In terms cost, UNSW is one of the top universities in the country. (EDIT: this is an ambiguous sentence, I am sorry. I mean that UNSW is one of the top universities, and cost is still lower than many US universities) I understand that US college can be done on the cheap, but it's definitely not the norm. You can always find work arounds I'm sure, but I was just emphaising that going to a top uni for this price sans-hassle is very much the norm here.
On top of this, it's important to note that even minimum wage jobs here pay pretty well (the highest by buying power in the world ). Thus, even if you are doing university and working part time you can do ok.
This is certainly the major difference.
So no matter which university you go to you'll be paying the same "Commonwealth supported place" rate for your field of study. For engineering it's $9185/yr for what's usually a 4-year degree. 
Postgraduate study is strange because some universities charge full-fee, some offer commonwealth supported places for certain degrees, and some offer CSP as scholarships. My masters degree at UNSW for example was commonwealth supported so I only ended up adding $8k onto my loan for it.
The article doesn't really have information on the Purdue system other than saying that it might cost high-earning students 250% of the price of their education. Of course, a 30-year loan at 6% will have the borrower repaying 216% of the original amount and around $24k/year so it would only cross 10% for people earning a quarter million a year (and it doesn't generally seem bad for people earning a quarter million to pay more back).
The big issue is for universities is how they would handle marriage. For federal IBR, I believe you have to file your taxes separately. That isn't a big issue in 2018 due to the Tax Cuts and Jobs Act of 2017 which meant that the tax brackets for "married filing separately" are the same as "single" up to $300,000 in individual income. However, in 2017 "married filing separately" had higher taxes starting at $76k.
The federal government has a big hole in their IBR calculations in that it doesn't consider the fact that spousal income can change what another spouse might earn. But it's the federal government and they can afford to lose a bunch of money.
How would a private university with a much more limited budget handle this? Would they be happy with someone deciding to leave the job market because they married a high-earning spouse? Would they require payments based on household income?
Likewise, the article really doesn't answer how a university is going to do this. With the Lambda school, it's easy: VC. Lambda has quite low costs (their programs aren't 4 years), they only teach high-earning fields, and they have a 2-year payoff window. It's easy for them to say that their students average $70k/year and 17% of that for two years is $23,800. Likewise, the two-year payoff period means that things like marriage and leaving the job market aren't as likely.
While universities have a bunch of money, can they essentially float tuition for a decade or two? Probably not. If they could, they could have just offered loans themselves rather than having the federal government lend to students.
Plus, while the cost of university is terrible, most students don't graduate with a mountain of debt - more like a hill of debt. $22,000 is a lot of money, but a middle-income job can tackle $22,000 in debt. That's well below the cost of the average car sold in the US. More importantly, 10% of your income would likely be quite a bit more than the regular payments on a $22,000 loan. Are universities just going to use income sharing agreements to replace grants? Will students be graduating with $22,000 in loans plus an income sharing agreement to cover what the university scholarships/grants?
Generally speaking, universities in the US price themselves as, "how much can you afford to pay?" If you are receiving need-based aid and get a merit scholarship, usually your price goes up because that merit scholarship means you can afford to pay more. Is the income sharing agreement going to mean that students can afford to pay more? "I know that you can't afford more than $X today, but this agreement ensures that you pay $X and then Y% of your income after graduation." Is that the future?
One of the things that makes education financing so difficult is that steps taken to reduce student hardship can simply increase prices. If you give every university student a $10,000/year grant, every university knows that they can raise their prices by $10,000/year. The students (and families) were paying the price before given their means. If the government gives them an extra $10,000, the university knows they can ask for it with little to no options for the student. Universities can capture most or all of programs designed to help students afford them (rather than helping the students).
Also: advocating for keeping the old system by saying this new way is not different is the least Hacker News things I’ve ever heard. The student loan crisis is an existential crisis for America. More schools should adopt the Lambda School approach, America would be much better off.
The current model is no different to unscrupulous bankers selling loans to Wall Street or Fannie Mae: they just lure students to the school helping them fill out student aid and loans and then give them subpar educations with curriculum being taught like it has been for years but they don’t care to change or innovate because the school has already been paid by an entity — the US education department who has deep pockets.
And as I mentioned before, if it was too short you could declare bankruptcy, which is an option you don't have with student loans. My point that even in the worst case you're in a better position than before still looks valid.
And if they aren't, personal loans are possible. Or even bankruptcy! The common thread between these options is that they're better than being $50k in non-dischargeable debt.
IRS liabilities can easily be repaid over long time scales, usually at much lower interest rates than you can get on unsecured loans such as a student loan.
A $50k non-dischargeable loan, at a relatively high interest rate, with a flexible repayment timeline does not appear, to me, to compare favorably with a $15k IRS liability, dischargeable in bankruptcy, at relatively low interest rates with a similarly flexible repayment timeline.
Total tuition loans outstanding is around $1.5T. Total US Education Dept annual budget, 70B. Median length to pay off student loans is around 20 years. 30% of people graduate with no debt, and of the remaining, median debt is around $30k, the cost of a decent car, and a fraction of what the same people will pay for a house.
Adding the entire Ed budget for the past 20 years is no where near the amount of loans outstanding. And in fact they lend only a fraction of their budget to student tuition.
Thus your claim that the US Ed dept is paying at the end of the day is mathematically impossible. The debt is from private lenders, who do have incentive to ensure borrowers pay back.
Not necessarily. Private banks issuing federally-backed student loans want you to default, because then they double their money. See here: http://www.collegescholarships.org/research/student-loans/
Don't exist. They used to, before 2010, though (the propagadagraphic you link obliquely alludes to that with it's reference to the “Obama changes” that it does not explain, perhaps because they render the flowchart entirely irrelevant.)
Non-federal loans account for 11% of loans: https://trends.collegeboard.org/student-aid/figures-tables/t....
It’s not about the payment structure alone, it’s about a school that is incentivized to make its students successful. IBR is just taxpayers swallowing the bill when schools fail.
It seems, this just provides one more payment option to students who are likely to succeed anyway and a refreshing business model for schools that move early into the space.
It doesn't address the real problem with schools i.e. making the 20th%le student successful and not a taxpayer burden.
That still sounds far better than the current system of selecting for the most popular (instead of valuable) subjects that draw in the most clueless students to get indebted for life for something they are unlikely to succeed in anyway.
> It doesn't address the real problem...
That actually sounds like a good incentive structure to me. Most people shouldn't study something that will not give them some advantage (which these schools would select for).
If you struggle to make ends meet it wouldn't be a reasonable decision to study something unprofitable in the first place. I wish it was different and everybody could invest an infinite amount of time to learn what they are interested in, but in a resource constrained reality that's not possible and individuals have to make decisions that are advantageous for them.
The remainder of the iceberg hence, will need to go to other lower parts of the pyramid. ISAs won't do anything for that. Only the government will. And the Govt does it for us, with our money, because not providing education to lower levels of pyramid will result in nothing but societal anarchy.
ISAs hence shouldn't be hailed as panacea for education loans which is what marketing makes us believe. The only advantage of ISAs, is that they unlock better education for some "motivated students" (for lack of an accurate phrase) from underprivileged circumstances. That's not a trivial advantage for those who qualify. I don't know what that % of population is, but it can't be much.
In any case, however small, that number sure seems enough to build a business around it with some feel-good marketing (like this article).
There are significant numbers showing the loan servicers engaged in fraud to prevent the forgiveness. One of the major loopholes is on an annual basis when income documents are due, the loan servicers would take extended periods to “review” the income docs and place the loans in forbearance for a month. Then when forgiveness time came they were denied for not having made payments (through no fault of their own) for 120 consecutive months essentially resetting the clock every year.
Not to mention at any given point these programs can be axed, which I’m sure they will be if there were ever a significant portion of the population who would actually qualify for the forgiveness.
So you very possibly could pay Lambda School $0.
tl;dr; on that is you borrow a certain amount (that you choose, but is capped by the program). In exchange, you pledge a certain percentage of your income every month for a certain number of months (5-10 years generally) . The maximum amount you'll repay is capped at 2.5x the loan amount (i.e. if you borrow $10k, you'll repay a max of $25k).
Practically speaking, the gist of the program is that it's good for students with middle income career outlooks, but terrible for students with high income career outlooks (i.e. talented CS majors) since you'll end up paying more than a traditional loan.
: The percentage pledged varies by the loaned amount and major. The number of months seemingly only varies by major. You can play with the calculator here: https://compare.vemo.com/
Purdue's program: https://www.purdue.edu/backaboiler/index.php
I don't see why this is an issue at all. If the college claims that "finding the high-income person you will marry" is one of the reasons to attend that college, then they should please return to the 1950s (or earlier!). If they DON'T, then the repayment should be based on the individual's income, regardless of their spouse's income.
Does this mean that a college risks getting paid very little by a graduate who ends up becoming a stay-at-home spouse? Sure, but that's part of the risk. A 4-year college wishing to introduce such a program can always take a less-than-complete approach and still charge some minimal tuition up front (presumably in exchange for a smaller slice of "lifetime" earnings).
When a couple marries, I think they should realize that they are to face the world together, and this means repayment of educational expenses of both partners.
A lot of people who can't pay their loans are in low-paying jobs they don't like, so this would be a very tempting option indeed.
But if the low-paying job is crummy enough, maybe you don't care about strict financial calculations...
Which is really funny, since that's absolutely the primary reason why college educations are pushed. E.g. "if you don't go to college you'll end up working at McDonald's"
Plus, I have yet to see the evidence that colleges provide this virtuous yet intangible quality of non-economically beneficial "wholesome" education.
If one does have such an intense interest in some topic, getting a "real degree" at college would offer them a lifetime of spare money and time to pursue it. You can't do much painting working 80 hours at McDonald's only to not be able to afford paint. It just doesn't make sense to me.
The biggest performance dilemma I noticed upon entering college is basic literacy. I saw most people reading at a 9th grade level, which is average for most Americans, and struggle to write a 2 page paper. That 2 page paper was hardly competent once written.
The problem was so pronounced that in order to be awarded graduation of a bachelor's degree you had to take and pass a writing competency test at any time during your undergraduate education.
In the real world, as a software developer, the biggest barrier I see to the success of many developers is basic literacy. I see so many people who cannot communicate at a professional level. They struggle to reason about the problems they encounter and struggle further to put their thoughts into words that a make sense to an outside party.
Most developers I have ever worked with spend their entire careers struggling with a variety of concerns that ultimately (when you remove the bullshit and excuses) boil down to struggles of basic code literacy. I suspect we have all encountered this when everything is an argument of code style, spaces vs tabs, OOP vs functional, and so forth. Code literacy is the difference between thinking in terms of algebra (instructions) versus thinking in terms of calculus (process). When you are literate you form visions of what you want and simply build the vision accordingly.
As somebody who rewrote their personal application from scratch last year (about 40,000 lines of code with minimal boilerplate) while also working for two separate employers and having a spouse and kids I really don't have patience for people who fill their time with literacy bullshit. As somebody currently deployed with the time military to a conflict zone this is the thing I dread most about returning to the corporate world.
Holy shit people. Pick up a damn book and read. How you communicate will influence how you write code.
This is a problem when most information consumed are now either in Video ( TV / YouTube, etc ), Pictures ( IG with short or no description ), and Short form of writing ( Blog Post / Internet Comments ), even worst is when most of these are for Entertainment. And there is a trend of basic literacy falling even those coming out of College ( Or Universities ).
Not quite sure how we could fix this. People aren't reading books any more. Steve Jobs once said we need Editorial more so than ever, and not fallen into a nations of bloggers, and that was nearly 9 years ago.
Sadly he also learns new words on youtube and in games, and sometimes I need to correct his spelling and he doesn't believe me.
1) what evidence would convince you?
2) when you consider that education is a social policy, and is designed with the purpose of delivering benefit at scale, does that change your opinion? (That is, when you consider that it's meant to shift the median student's outcome more than that of the p99 student)
College education is hugely overrated, and especially by using bad reasons like that
Spare me the hyperboles, using the "well rounded" adjective makes no sense except for objects that are supposed to be round.
College is essential if you are in a regulated profession and/or is it too expensive (or impossible) to learn it yourself (like medicine, other engineerings, law, etc)
For other areas? Not so much
You could try checking course requirements. Every college I'm aware of requires that students take classes in a variety of subjects outside their major before they can graduate.
> virtuous yet intangible quality of non-economically beneficial "wholesome" education
How could I possibly provide evidence of an intangible benefit? All I can do is show that they provide the education that's supposed to have this quality.
Otherwise, all you’re claiming afaict is that the posters should argue with themselves — find the counter-evidence to their own claims, which is likely sufficiently convincing that they would not have had any reason to speak in the first place.
That is, this idea of “not anyone’s job to search for (counter)evidence” is antagonistic to any form of discussion where parties disagree. If you want to make the opposing claim successfully, its quite useful to have evidence to support it (it’s not their job to find it for you... its not anyone’s job to do anything in an HN thread.)
But in this case, evidence was requested for a particular idea, and the response was completely tangential to the request. And it wasn’t really an issue of citation needed, I think, so much as just anything to support the idea that colleges actually offer non-job value (and that they offer courses across multiple fields is insufficient, which is true, its a thing they’re doing but says nothing about effectiveness).
Ofc, the difference is in the intent. And the problem I have with “its not my job” is the intent; it’s a belief/defense whose primary purpose/outcome is to kill communication, and I very much like communicating
One one or two occasions, when I was about to post something, I looked for evidence, and realised I was mistaken, and didn't mislead others.
Yes, some countries have similar structures, where you pay after a certain threshold. The difference is:
1. In those structures the school gets paid no matter what, the taxpayer just swallows the cost. With Lambda School we will literally go out of business if a large percentage of our students don't get jobs. That causes a lot of stuff. For example, we have an entire sales team dedicated to bringing companies in to hire students, and there are 2-3 that come in every day to hire students.
2. Our minimum is much higher than government minimums ($50k in the US).
3. We only collect a percentage of income if you're hired in field (using the skills you learned)
4. If you don't get a job within 5 years the agreement simply goes away and you owe nothing.Happy to answer any questions, though I'll be in and out.
In the current system, students are the customers, in your new systems, students are the products.
How will you ensure that your private interest are aligned with individuals, and society needs ? You are currently avoiding that issue by targeting high demand/high paying jobs but on a larger scale those issue will arise
The service we provide is helping them into a good job, so of course hiring companies are stakeholders, but companies are the customers.
Closer to our trade you might see stuff like :
- We don't offer design lessons because backend developers earn more than designers, so go study Rust, it's so hot right now !
- Marketing ? Heck no, salaries are only soaring later in your career, we can't get break even with that
- Your idea of a quantum computing course seems interesting but we don't believe there is a big enough market for people in that field at the moment, it's more of a research subject right now (weather that's true or false is up to the reader to decide).
Since the university is exclusively paid by your future salary, every second that you spend in class must be immediately translated in extra $$$ in you first compensation package. If your goal is to make as much money as soon as you get out of school, your incentive are aligned. Otherwise they are not, and that can be dangerous. Steve Jobs is a notorious example of someone who took some lessons that did not seem really useful not so high profile at the time, and only later proved to be critical in his success.
At a much smaller scale, 7 years after graduating, I am rediscovering some skill/knowledge I acquired at uni that did not seem to matter a lot when I started working (and that definitely were not taken into account in my first job interviews). I believe they makes me a better/more productive engineer. I fear that under that new system I might have never learned them in favour of something hotter and more marketable.
If there's an issue, it seems to me it's the fact that students shouldn't be treatef like customers, specially by the State.
How will you ensure that your private interest are aligned with individuals, and society needs
How is the current system achieving that?
You can easily scale the number of classrooms by 2x but it isn't as easy to 2x the starting salary of your graduates.
The worry here is that you will over-focus on how to market/brand yourself to capture the salary of as many people transitioning to tech as possible, rather than helping individuals maximize their potential.
I think that this is a viable model for professions where high paying jobs are available aplenty. How are you planning to scale with this narrow model? Also what is your competitive advantage? I am trying to figure out the valuation as an investor.
The model scales very well. We move people from low(er) income to high(er) income. That’s how it should be, and there’s a whole lot of that to be done.
As far as less profitable majors or high risk individuals, they can remain in the traditional system and pay up front. You don't have to totally scrap everything else. If you truly want to study Russian literature that's fine, stay in a traditional system, but don't force the rest of us to accept it just because you want to be a special butterfly edge case. We should not be catering to those types. Eliminate guaranteed federal loans and the price of those majors would come way down anyways. If you truly want to preserve some niche program, some strategic investments on the schools part could set up something that returns enough money to allow a handfull of true scholars who do well but are too poor to pay up front still attend and get their niche major.
You may even see the emergence of a school that has radical teaching methods that turn high risk students into earners. Probably a system you can't even fathom yet which involves some level of psychology and counseling along with your education to get you to the finish line.
Supporting the continued interest in the historical, artistic, cultural, literary and philosophical development of mankind and likewise supporting the preservation of these fields shouldn't be seen as 'catering to those types'. If you'd like to live in a world devoid of art, culture, and history, but efficient, logical, and completely determined to the apex, be my guest; it sounds like tons of fun.
If these systems are to be adopted nationwide they'll have to figure out a reasonable way to fund studying the humanities for more than just 'a handfull[sic] of true scholars'. Traditions and whole fields of disciplines don't live and die off the progress of a few geniuses--they are worldwide human endeavors sustained by a complex of economic, political, and pedagogical interests. Maybe that means this sort of model is only fit for 'trades', but eliminating support for the humanities wholesale wouldn't work.
A percentage of earnings from a single George Lucas or JK Rowling would finance the school while the vast majority of students would pay nothing.
This philosophy operates under the assumption that colleges should be beholden to an economic system that values individuals solely for their ability to grow existing capital.
It's a recipe for cultural stagnation.
Where do we develop entirely new modes of thought and expression [and potential new sources of wealth] if we deprioritize every activity other than those that optimize for the growth of existing wealth?
It's not completely unheard of; airline pilots often have a similar this arrangement because their training is so expensive. However this is the dark side of a "human capital" approach - the educational capital exists in one person's head, but the return on capital is partly owned by someone else.
It does however share risk back to the educational institution, which has become a problem of people being left stranded by imcomplete courses or worthless degree-mills.
> Critics of such programs have argued they are a form of indentured servitude. The percentage of income that Lambda takes — 17 percent — is high, and has even been described as predatory. And Purdue’s program is even more aggressive: It is a loan-like arrangement that could charge high-earning students 250 percent of the cost of their education.
This appears to create a cliff:
If you make $50000 a year, you keep $50000 a year.
If you make $51000 a year, you pay 17% ($8670) and you keep $42330. That extra dollar cost you a ton of money.
It really ought to be a marginal rate like tax brackets.
It also turns out that people know this and don't appreciate your trite condescension.
Even more amazingly, it turns out that when people get a raise they expect to actually take home more money, which is only possible when the rate of taxation or whatever this thing is acts on marginal income rather than total income.
WHY do we need this never ending whirlpool of sophisticated financial schemes to take care of this problem?
Most people tend to discount the cheap, unknown schools. But they're accredited, which means they provide a vetted curriculum and their degree satisfies prerequisites for higher degrees at other accredited institutions.
I graduated from App Academy in San Francisco over 5 years ago, paid a percentage of my income for 6 months in my first engineering job, and after roles at Stripe and Bain Consulting, have never looked back.
so, with regards to not paying it back if they don't land a job. how long are they held to that commitment? do we also look to see if they have another means of support? five years, ten, twenty?
with regards to not paying up front, perhaps if we cross that one taboo. not every degree is worth its cost and many not worth having money risked to obtain them.
but the big reason education is expensive is because government is free with loaning the money but not putting restrictions on what colleges can charge per course hour nor what those hours encompass. treat it like medicare/medicaid where the government sets the rates per course credit and you can guarantee colleges will fall over themselves to get that government money and loans
The agreement lasts up ton5 years. If you haven’t paid back at the end of 5 years it goes away and you owe nothing.
You can also pay upfront, but most students don’t have enough cash to do so.
A lot of the criticism of Lambda School seems like unfairly comparing some ideal of education with their model, rather than comparing the current reality, which is colleges that frequently leave people in $30k + worth of student debt with no guarantee of a job afterwards, and that's before we talk about the years you sink into it. Then there are the learn to code bootcamps which seem to be garbage in general.
I'd be willing to bet for most of us, paying 17% of our income (once we made $50k) a year, for two years, is a vastly preferable to whatever we've paid.
Except the Lambda School ( I think it says in the article) is a 6-month program. If you're talking about paying for a four year degree, I think you have to multiply by 8 or so.
Here's some thought on debt and equity: https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo...
AKA the "capital structure irrelevance principle."
My thoughts for some reason wandered that way, but I was actually going to address another issue: as long as it's expensive to go to college, you can't win. There's no free lunch. If college were cheap, you could spend a few years improving your future earnings. If it's fairly priced, you can't. It's as if everyone will be trapped by efficiency, though I haven't quite fleshed this out in my mind.
Of course college is not the only thing there is, but it's a fairly big aspiration for a fairly large chunk of the population.
If the housing market is any example of what happens when entry is eased (low % rates, etc), we are looking at student loans being a lot higher than they are now.
One thing I have always thought about when it comes to incentives in this model is that you have an incentive to only take in students that are likely to finish the degree and get a high paying job. This could lead to pattern matching people from backgrounds that are likely to do well due to demographics. How do you think about this and do you have any systems in place for minorities?
(copied this comment from https://news.ycombinator.com/item?id=18856135)
"Public education and taxes" (1) means everyone pays into the system and then people can enroll without any additional payment (or maybe with diminished additional payment).
You could also have publicly insured student loans (2), where the student pays tuition with a loan and then if they later default on the loan then the public eats the cost.
But this system (3) is neither. In this system, you get your degree and then you start paying for it when your income is enough to afford it. Importantly, if you never attain that level of income, the _University_ eats the cost.
System 2 can lead to ever-ballooning college costs concurrent with gluts of worthless degrees, because universities are incentivized to enroll as many students as they can at as high a tuition rate as they can - they always get paid.
In system 3, the university only gets paid if the student's degree turns out to be marketable. It (hopefully) keeps costs down in a way the (1 & 2) cannot. On the other hand, this could be terrible news for departments that issue degrees in literature, anthropology, etc.
In Denmark (where I'm from), there is a system where education is free. There are private schools, but to my knowledge no private universities. Your entry ticket to a university is your grade from high-school. You actually get some money while studying. You can still chose to do a studen loan on top of that, but typically people come out of university with maximum $20k in debt most way less.
I have many friends that are absolutely brilliant and successful, who would probably not have been able to afford a university degree.
One thing is what that does to the crazy debt many people get in other countries, but think about what it does for low-income areas, immigrant and integration and general inequality of a population.
By all means, Denmark is not perfect. But I think we nailed it with access to education.
And yes. Our tax pressure is pretty high. But surprisingly not that much higher than for example California and NY.
If you don't have job-ready skills (e.g., Quickbooks expertise at a small business), your prospects are limited to big corporations that hire on the basis of a regular recruiting schedule, provide training, onboarding etc. And those firms ghosted completely that year.
I'm not from a rich family, so I would have much preferred to have done school in a short-term program like this that was incentivized to help me hit the ground running when it came to job-ready skills.
That said, what is to stop Lambda-like firms to crop up everywhere, like bootcamps did, and promise 6-figure salaries that will never materialize? The VC money required to finance such schools is certainly out there, but are the jobs?
The obvious answer would be "free higher education", like in most EU countries and I believe many non-EU countries, have, and like many US institutions offered in the past.
Unfortunately what is being proposed is insted baptising debt by another name, so that it doesn't sound like debt.
The government never had to be involved with financing higher education to begin with.
The government needed to become involved to make education affordable to students without wealthy parents. If the market was going to take care of that by itself, it would have happened before the government got involved.
I think you might mean accessibility. Government loans do expand access, but so does the private income sharing model. There are market-based ways to serve the poor education, and arguably where it does it’s more affordable, and incentivized to lift them out of poverty.
How does this change the dynamic of 'going back to school' for an alternative degree? If the domain I initially studied starts hurting economically and I have to get a different degree, do I still owe the school for my initial degree if I get a job that meets the income threshold off my second degree? How do we determine which degree netted me my current job? (assuming I get the new degree and a job within the N year period during which I owe the initial institution a percentile of my income).
Am I able to 'pay out' at any time? Or, if I get a better paying job, does the institutions paycheck increase if I'm still in the payback time interval? Do I simply need to pay the pay cap?
Should I be comfortable with the notion that my institution is x% responsible for my wage-earnings and overall economic worth? Are there situations in which this isn't the case?
Does this change promote student assessments that are better or worse for the edification of the next generation? As the article states, would schools be tempted not to bother with 'high-risk' students? What does it mean to put a label like 'high-risk' on a student? What does it mean to treat a human being like an investment? Does this reduce interest in students to purely economic terms (a big part of how universities already conceive of their students today, but reputation to some degree still factors in)? Would such a model further exacerbate the gap between the wealthy and poor—would wealthy kids, who grow up in environments that promote study and make them 'low-risk' investments (likely to succeed) have an unfair advantage over kids growing up in poor households?
This also seems to imply that one's learning is the majority of what factors into one's getting a job. What about all the additional work it takes to get a job (networking, etc.) Will these institutions assist in these areas as well?
What of the notion of scholarship? Is it absent in this model?
Does this model actually work for all disciplines? Arguably, it creates a very tight coupling between the 'value' of an education and wage-earnings/income. What of those pursuits that seem to be valuable, in a different light and aren't (today) usually high-income generators ,e.g. the study of history, literature, and cultures, for instance. What will happen to those disciplines under this model? Is this a model that's more appropriate for trades and not all areas of education?
Seems like a very good change, potentially, but it will probably a lot of effects if its adopted nationwide, on both an economic and cultural level.
And the school is not incentivized to sell worthless degrees because it won't get paid when it does.
Hard to say what’s worthless or not - jobs change all the time. Few if anyone would study something like Latin or philosophy if money were an incentive.
Also the idea of human knowledge being locked away for only those who can afford it seems cruel to me
Imagine what our public universities could look like with solid funding increases (which would be a fraction of that 17% that this group wants to take). They could be both free and amazing.
There is a key difference. With public education, the excess cost of the education is born equally by ALL taxpayers. With education that is funded by a percentage of future income rather than a fixed up-front cost, that is born only by the graduates. It means that those not fortunate enough to attend college (or not interested) are not expected to subsidize the students, and it also means that students can choose from a range of different qualities (and costs) of school.
Also the original article spoke at length about aligning the incentives of the school and the student. If you believe (I do not) that the only or most important role of a school is to prepare the student for a more lucrative job, then this alignment of incentives is a significant value of its own.
The reason we're having this conversation in the first place is precisely the "funding increases" they've been experiencing. If this isn't enough "funding increase" for them: https://rpreschern.files.wordpress.com/2013/09/college-tuiti... then I'd have to suggest "funding" is not their problem. What they'd look like with "solid funding increases" is pretty much what you're seeing right now.
Prices tend to do this is a supply constricted market when demand is artificially boosted by government subsidies.
If universities had that tuition plan they would be bankrupt.
Universities could offer this today in some programs (CS, medicine, law, etc). But what about arts programs? Music? Are these employable enough to incentivize a University to to take a chance on students ability to repay?
If Lambda School begins to suck and isn't educating engineers to competency, they go out of business quickly. Voluntary vs involuntary funding is an incredibly important difference.
That said, there’s still substantial differences between Lambda and a free year in college. For starters, if you have a poor GPA with a California Promise grant, it seems you have pay back the fees. Not sure what Lambda’s equivalent of a GPA is, but they don’t skim your salary if it’s below $50K. I think the more salient point is that the Lambda school has much more direct incentive to land you a good job, and ostensibly that incentive creates a stronger learning environment. Such direct incentive does not exist at a traditional state college, whether you’re paying tuition or getting a free year.
This is all a long way of saying that, while I don’t think Lambda is going to significantly impact the student debt crisis (st least in the near future), to say that they’re just putting a SV spin on the old idea of public education is overly facile.