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.
This is a great gesture, but I wonder if it will just encourage bad/gouging behavior by colleges.
Why the hell does education need to be that expensive? Maybe for a doctor, sure - but for teachers who are going to come out making 30k - it seems that education prices should be tied to future earning potential somehow.
The real problem is that people are completely price insensitive when it comes to their education. I would prefer us to move to an equity model, personally. One where education is free, but the university takes a small cut of your future earnings. This way everyone's incentives are properly aligned.
The system was changed by the more fiscally conservative government of the 00s into the terms I got, which is a payment plan over 25 years. If you can't pay you can apply for an exemption, but the interest rate is still compounding during the exemption. The loan has to be repaid before you're 60.
The reasons given for the change were many, but the most cited are that income earned overseas (very common, this being the EU and all) is very hard to keep track of and that this system incentivizes us into choosing a degree resulting in a high paying job.
(I should ad that we do not pay tuition for universities in Sweden, the student loans are almost exclusively used for living expenses so that you can study full time and some of it is used for textbooks and other supplies)
While some people are, there are plenty of people who are not insensitive. I went to a public state school and pretty much everyone i knew there chose that school because it was way cheaper than going out of state/private and some of them even got scholarships.
However, this gesture is not a policy, and just a really nice gift and expression of altruism.
Also... since you mentioned it, I cannot believe how little teachers are making, including their pension guarantees (in US and many other countries) -- for the effort that many of them put in -- this is just a disgrace.
I wish, there would be a way for exchange safety/tenure guarantees for significant pay increase (eg at least double). And let the teachers make that choice.
They could go to a public 4 year college cheaper.
You probably got a good package. That was about 25 years ago, when Tufts was the first college to break to 20k/year barrier.
MIT without financial aid: $67,342
MIT with "average" financial aid: $18,025
UMass in-state: $29,876
The Cal State system is basically the same:
Note, college loans don't only cover tuition (which is not the sole cost of college). They are also needed for room and board. The above links explicitly call that out.
For me, minimising the debt at the far end was important, so I took a heavy course load and worked half time on average. Work experience from that period (IT for the university) was actually quite valuable in the jobs (mainly engineering) I've had in the decade since. Maybe one employer has ever even looked at my school paperwork; I really don't understand the idea of doing nothing but university with that time.
Now take those numbers, multiply them by 12, and add them to the tuition cost.
Now multiply that by four. Near $80-100k?
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.
Maybe at a public school the debt amounts are some percentage less. But, I argue, not that much less.
The public university my brother is going to in New York costs around $25k for four years of tuition.
When you do, $25k isn’t hard to hit at all a year. Take any UC school (average in-state ~$15k) and add just rent (~$800/month if you’re lucky) and you’ll get there. Now factor in food, travel (over breaks), club fees, etc and you’ll see why debt is so high, on average, despite students working part time jobs.
I know some of that might be attributed to them just being lazy or not being motivated, but it has been, in my experience, such a common story that I feel that there's a problem with providing kids with a simple life plan of "get two years at the local community college and transfer out".
But if the students didn’t complete a 2 year degree while staying at home, what are the chances of them completing a four year degree when they would have more autonomy and less oversight?
Many students don’t have the options to stay home.
I’m a proponent of cc’s, but the discussion is about four year public schools being affordable.
I don’t want to be too pressing, but I’m guessing you’re in your forties or older, solely based on how out of touch are your responses (I.e. just do this, things aren’t so bad!).
Our plan is just what I outlined.
- a two year school that is part of the four year program at a local college where all of the credit transfers.
- staying at home for the first two years and we will pay for her car + car insurance.
- She will work part time just for spending money and incidentals.
- Since we won’t have to pay for room and board, she can get student loans that should cover tuition.
- That gives us four more years to get things together to help pay the student loans after she graduates (step daughter, I had no reason to worry about putting a child through college until 7 years ago).
I have a relative, whose parents just did something similar. He went to my alma mater for two years and with my encouragement, he transferred to a state school in Atlanta for a better curriculum and better networking opportunities.
They were in a position to save for his college, but his parents also put limits on the type of degree that he could get and the amount he could spend.
Christ, it's like the FLOSS "time-isn't-money" scam got bored and decided to tackle higher education.
Any freshman at a four-year college who can "afford" a part time job along with their studies has the perfect detection system for a low quality education and should make their exit posthaste.
If you read this and think your college days are a counterexample, please allow yourself some time for silent contemplation before responding. (Contemplation-- that endeavor which apparently only gets introduced around graduate school nowadays.)
Or, if you live somewhere like Oregon, if you graduate from an Oregon high school, the state will cover your tuition to a state college.
The one person I know who is getting full state funding for community college in Oregon is waiting to see if the program they're in will be renewed next year. If not, they won't be continuing on to a bachelors degree. Note that this program is only for those that are essentially financially destitute.
Edit: All I can find is the Oregon Promise covering only up to 18k highschool students with a GPA over 2.5. This program does not cover anything beyond Community College. Seems much more limited/shitty than the Seattle Promise (free Community College for all highschoolers)
Their estimates total for tuition + books + room & board...etc is 28k/year. With the hope merit scholarship it's <18k year
And it will cover most of your tuition.
The following estimated annual costs for 2018-19 are for full-time students living on campus, excluding costs of books, supplies, clothing, travel, and personal expenses:
Tuition & fees $7,331
Room (standard double) $5,381
Meals (university meal plan) $3,657
But, looking at the tuition of public colleges in GA - where I am a resident and where Morehouse is - I don’t consider the tuition outrageous.
Or are you saying that people with millions of dollars of productivity ahead of them can't afford $100,000?
A non-trivial number of those students would never make enough to pay off the loans. Ever. That’s not an exaggeration and happens in more than 50% of cases at expensive HBCs.
Would a bank approve an 18 year old high school grad for a $100k mortgage at the same rates? Say, $0 down, 5% interest, no mortgage payments for 4 years?
Why can a high school grad get the first one and not the other? Is an 18 year old even smart enough about personal finance and debt to understand the differences between the two?
I was a kid who took out a huge student loan to attend university. At the time, all I knew was that “college was mandatory” and I was encouraged to “study my passion”. Fortunately for me I’ve been able to monetize my passion... but at the time, I had no concept of how much money I’d be needing, or how interest stacks debt on top of debt, or how it would affect my credit when I wanted to buy a house at the age of 30, because no one told me these things and with a verbal agreement my parents co-signed the loan (I never signed a paper myself) for me and now I have this baggage for probably a few more decades.
It’s almost impossible to expect an 18 year old in today’s American society to fully understand the crippling punishment of six figure debt and its long term effects on your life. When you have 1 year to figure it out, and the choices are “go to college” or “be a failure” then there is only one way forward — isn’t there? I feel so badly for people in my situation that aren’t working at tech industry wages... and there are many.
Average student debt load I believe is much less than $100k.
5% interest accrues very modestly.
The bankruptcy thing is irrelevant to this discussion.
Well if we are talking about the American educational financial system then it's absolutely relevant to the discussion.
Cars, houses, credit card debt etc. are all discharged with bankruptcy which keeps the markets in check. Student loan debt is the only debt that cannot be discharged when it becomes impossible for the debtor to repay. As a result we are with in a 1.3 trillion dollar debt bubble. And with the government printing IOUs for the students, the universities/profit education centers take full advantage. If the students were able to discharge the debt then the market would correct itself and education would be affordable and there would be less economic risk.
Right now the government is projected to go to a 30 trillion dollar deficit by 2030 with its government job programs and these education 'loans'. Even if you do not have student loans or work in the education system, you should be aware of the large debt bubble that's forming. And if Saudi Arabia, Iran, etc. decide to trade oil on different currencies... well then things will get interesting...
It will affect everyone just like the mortgage crisis in 2008.
Why do you think costs of education are skyrocketing? It's because lenders can write blank checks to 18 year olds who are going to be the ones footing the bill for the next 20-30 years.
If student loans were bankruptcy-forgiveable, lenders would think very carefully about what loans they give out to who, and why. Schools would be focusing on education instead of building worthless buildings that remain mostly-empty (yes, I saw this happen at UC Santa Cruz) or lining the pockets of the administrators. Lenders would be incentivized to loan people money based on their income potential in the future, which does not currently happen.
Bankruptcy is not only relevant, it's the entire crux of the issue. Make lenders partially responsible for the debt and you solve an entire slew of problems we currently face.
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.
That's the part that I think is a bad idea.
Especially given that we already have a way for students to earn a free university education by serving in the military. And if we wanted a sane system of increasing access to student loans, it would probably look something like garnishing up to 10% of a student's wages for up to 10 years, after which the student can file for bankruptcy to clear out any remaining loan balance. And get the government out of securing student loans. Students would still carry a significant burden, but lenders and institutions would also have to pay a lot of attention to the economic benefit of their offering, and it would leave me and my descendants out of this whole thing.
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.
I am directly responding to this sentence in your post...
Fun anecdote, an ex of mine was admitted to Mayo Clinic Medical School back when we were seniors in college. I don't remember all the details completely well, but they put a huge emphasis on getting students through med school debt-free so they could focus on being the best physicians possible in any area of medicine and for however long it took. My ex ended up with a full-ride with their help and it made it much easier for her to focus on being the best physician possible, less stress/able to buy a small home while in med school/take up additional study opportunities/trips/and again much less general stress (we are still friends 14 years later).
It sucks that us Americans are so boot-strapped oriented, but ah-well it makes them easier to exploit.
If the dominant ladder to the middle class will place those who take it in indentured servitude, you're not building a great society.
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.
This powerpoint was on one of the public UCLA websites, but I don't remember which one.
I though of them as private equity firm, more than an VC.
but could be totally wrong...
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!
Irrespective of total overall wealth, the distribution of wealth is an indicator of who decides the future of the society in which that wealth exists. Today, 90% of Americans have as much wealth as the 1% at the top, which means 1% of people wield half of the influence of money in society, and money has an obscenely powerful influence on society.
Its why we get tax cuts and deficits. Why we don't have socialized medicine. Why our labor protections are lacking, why workers get so little mandatory paid time off. Its why stress is up, why working hours are up, why debt is up. Why housing is more expensive - the poor don't use housing as an investment the way the rich do, in the absence of floods of capital floating around for the exclusive purposes of making more money there is a much smaller market for domineering real estate markets so much that you buy out the local government to prevent building to drive up your property values.
As extremes, the floor is death from exposure/starvation and the ceiling is owning all the wealth available. Does it make sense to have a range this extreme? Some think so, but I think they are confusing this for meritocracy. I think it's ineffective and too closely mirrors nature, where one small mistake means perpetual agony or death.
Now the other extreme: the floor and the ceiling are the same. Everyone is paid one wage no matter the work they do. Everyone has a decent amount of comfort. Is this effective? Probably not, because if I get paid the same wage as someone who works half as hard as me, wouldn't I just work less? There's no incentive structure here.
So the rest is exploring areas somewhere in between. Does it make sense for someone to have the power and influence that $100B gives? Does that kind of concentration of economic power make sense? What if it was capped at $1B? Would having $1B be incentive enough to strive for success? What about $500M? What about $100M?
At what point do you say "ok, great job, you've managed to divert an insane amount of wealth to yourself, you won't be needing any more after that?" And the lower you set that level, the higher the floor raises. Is this fair? Debatable, obviously. Is it effective? Probably. Nobody is not going to start a megacorporation because "gee, I wanted to make $100B but I can only ever make $1B, so what's the point? I'll just work in a coffee shop instead."
Now imagine the floor: What if we could all own a house, car, have free tuition, and work 30 hours a week with plenty of time for vacations? In other words, what if we could actually live our lives without running on some endless, stressful treadmill for 45 years?
This isn't about "good" or "bad" but rather being mindful of how wealth is distributed and how it could look if it was done differently. Obviously, we're talking about purely-hypothetical scenarios, but that doesn't mean the ideas shouldn't be discussed.
- 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.
Great wealth isn't accumulated by stealing from the working class, by and large it is accumulated by making the working class better off.
If your goal is to reduce dynastic wealth, this is arguably a good outcome because there's less "harm" in a bunch of people getting a smaller amount of money than a single person getting a huge amount of money.
However, things are a little less clear if a rich man gives all his money to his 4 children, their 4 spouses, and his 12 grandchildren. It still seems pretty dynastic in that case, even though the estate is being split up between 20 people.
I've gotten to the point where I actually desperately want to find a politician with right wing policies who isn't a dishonest slimeball, it's almost my white whale.
The 'moving little green pieces of paper around' is called allocating capital, and it's as important a driver of productivity in the economy as chemical engineering. He was highly rewarded because he used capital effectively.
Charity is random and arbitrary, and does not fairly address problems by actual need. Yet, many people still argue that charity should be our social safety net, and we don’t need to fund programs that help people.
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.).
Just be happy that they have a ton of money even though you don’t?
Far more common is for middle class (and immigrants) to be in this situation, not even to mention the 2-shift-a-day poor parents who paid outright to stay out of debt, worked overtime, scrimped, and planned ahead. They get nothing. I'm sure they can afford not getting any gift...
As I said, I don't begrudge a generous benefactor's actions that help people. It's his choice.
It would be a wholly different matter if government took this approach. In that case, you'd better be dammed sure that someone else getting something and you nothing, isn't going to remain at "be grateful for what you have".
Cf. that company experiment a few years ago (or think through if it applied at your job) that everyone got paid the same. You're probably not so eager in that case.
Almost every financial planner says that you should put your own retirement before your kids college for the same reason.
If you can afford to save for your own future and pay for your kids to go to college then of course that’s different.
I have a step child that I haven’t saved a penny for them to go to college. But, between cash flowing what we can and loans he will have the opportunity to go. Yes, I plan to help her pay the loans after she graduates or probably pay most of them myself - but not at the expense of our retirement.
I'm not saying that parents that let their kids take the loans are bad parents, but it shouldn't be hard to see why some parents don't want their kid to be saddled with debt upon graduation.
If you as a parent want to help your kids after they graduate to pay off their loans once your own situation is secure, help them pay for their loans out of a combination of current cash flows and savings you might have for it.
If $life_happens as a parent and the child can’t pay their student loans, they can get deferments, income based repayments etc.
If the parents don’t have savings because they were trying to avoid student loans and then they lose their jobs or are unable to work, then what?
A convergence of demographic shifts, generational priorities, economic policies (interest rate + cheap money), and personal circumstances.
This is the benefit of being in the right place at the right time. I'm sure people would be salty to not this windfall, but who knows maybe they will be lucky somewhere else.
In this situation, YOU got a free education regardless.
I paid every freaking dime for my education out of pocket by sacrificing my nights and weekends during college. For plenty of people, college was a time where they made a ton of life-long friends. For me? College was a time where I spent half my time on campus passed out in the student union or library trying to get a bit of a nap between classes so that I could work an 8-6 schedule at night.
That's basically the basis of this whole "economic boom". You can rely on the Fed being unable to raise interest rates, or this house of cards will collapse and everyone will need another bailout.
The Fed keeps talking about low inflation while asset prices have exploded on their watch, it's hilarious.
Having said that, this is what companies (and certain wealthy individuals) have been doing for a while now: Get cheap loans, buy back your own stock, buy more real estate, drive up the value, get more loans based on those inflated valuations.
You may be able to do this as an average individual, that's what happened in 2008 when every schmuck would get a mortgage based on another already mortgaged house. The difference is, when you're an individual the government is not going to bail you out personally (unless maybe Liz Warren or Bernie Sanders are in power). You can at least declare personal bankruptcy if you didn't incorporate.
Now the reason why this is a fairly safe bet today is that the governments of the world absolutely don't want to repeat 2008. They will create any amount of money necessary to keep the party going. This means asset prices will rise due to pure inflation. Anyone with cash or long-term bonds will be left holding the bag, which also coincides with the interest of the heavily indebted governments.
Also you know there's gotta be a guy that buckled down and graduated last year instead of this year that's kicking himself.
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.
Those parents should have insisted that there children go to a much cheaper school....
You can’t predict the future. You do the best you can. Your choices mean that you didn’t get to benefit from a gift that nobody knew was coming? Might as well complain about not winning the lottery. That some people was helped doesn’t mean the others have been hurt.
I’m amazed and appalled at how common this sentiment is. So many comments here are complaining that some of these graduates will miss out on this charity because they have no debt. At the risk of violating site guidelines, what the fuck is wrong with you people?
(For the record, I went to a cheap school and was fortunate to have family support that left me with no student debt.)
There are two problems with rewarding only the least responsible people. The first is that it will encourage people going into college to behave less responsibly due to the hope that their debt will be forgiven.
The second is that this gift isn't happening in a vacuum. It's happening as part of a political movement to make this sort of charity part of public policy. People don't want public policy to move forward in a way that puts the people who tried to do the right thing in the least advantageous position.
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.
Your argument that "The people who busted their asses to do things the right way are the ones who get shafted" could also be applied to progressive income taxes: why should the student who busted their ass through college to get good grades and a well-paying job upon graduation pay more tax to support the D-student who drank their way through college and bullied people who cared about intellectual things?
It will make you understand this thought, if perhaps not agree with it.