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U of Chicago projected to be the first U.S. university to cost $100k per year (hechingerreport.org)
336 points by Reedx 13 days ago | hide | past | web | favorite | 543 comments

UChicago 2011 graduate here. When I attended, I paid about $20k/year in tuition, given that I had various merit scholarships, worked for the university, and that my siblings also attended school. My parents were in for a RUDE awakening in my fourth year, however, when my brother graduated his undergraduate program...UChicago found out via a survey, that I was now the sole college attendee, and without warning they jacked the tuition from $20k to $32k for my final year. My parents were absolutely livid and it left a terrible taste in our mouths.

I must say, it was not a pleasant undergraduate experience. On top of being expensive and working very long hours daily, it was immensely competitive and the social life was very poor for me. I have always had numerous friends in life, but I constantly felt lonely at that school, not to mention receiving MUCH worse marks due to grade deflation, which made medical school applications a nightmare.

In hindsight, I absolutely should have gone to my state school, and I'd be a Tesla and a Steinway piano richer for it if I had. I think these ridiculously expensive, 4 year educational vacations need to end...let's encourage our young, bright minds to stay local, to save money, and to use their brightness and talents to lead very productive and EFFICIENT lives.

UChicago 2011 here as well, except actually class of 2010 because I couldn't afford to keep paying the tuition as my parents were both unemployed due to the financial crisis. I remember the financial aid office saying they could use the last two or three years of prior income rather than consider unemployment as a current and urgent condition. They literally said something along the lines of, "Your parents are smart, they will find a job soon, statistically speaking." They also capped my work at 20 hours a week as an employee of the University, which made it really fun for various departments to pay me via bonuses instead.

I feel you, and had a very similar experience academically and socially. It's not easy to get by minimal GPA filters when math professors declared that a C would be a great grade worthy of a good recommendation to a PhD in math. There's no easy way to tell that to an HR screener! I also found to great sadness by the end of my first year that I had more online friends than classmate friends. Looking back, it seems this was the time when the university just started to realize that it needed to prepare students for practical work. And that sort of experience can be gained at a lot of different universities.

That is absolutely horrible.

I got in to University of Chicago, but the finances were rough. They expected my parents to pay around 30% of their (combined) income in tuition after scholarships and loans. Presumably this would have dropped when my brother entered college a year after me, but given that I got into other schools that cost less than half as much it wasn't really a question.

My parents didn't really know what to tell me because on one hand they felt like they were being punished for not making profligate decisions like going into debt for a fancy car or buying a bigger house, but on they other hand they didn't really want to outright tell me not to go somewhere like U of Chicago.

Made me feel like college admissions spiels saying not to worry about finances were a lip-service scam designed to make college look accessible while mostly benefiting the rich and very poor and screwing those in-between.

Went to a state university instead, but never really fit in there. Too much alcohol, greek life, and sports.

In any case, I don't mean to imply that my parents didn't have a decent income, just that the way things worked made them feel like they were being punished for trying to be financially responsible, and being asked to pay the equivalent of a 2nd mortgage for your kid's college only for them to be in debt on top of it anyway, and not knowing how things would work once they had a 2nd kid in college wasn't a strong sell. Even though they didn't say not to go there, I would have felt super super guilty about saying yes.

Fun fact: the scholarship U of Chicago offered would have covered the cost of attendance at each other college I got into and then some, but still didn't cover even half of the cost of attendance there.

just that the way things worked made them feel like they were being punished for trying to be financially responsible

100% feel you, as I my son just started UCSD. He was looking at a bunch of private colleges and I did the financial aid (for early decision) and it was really shitty. I felt that because I had so much equity in my house and no debt, I was screwed. And, when the numbers came back, it was true. Very little help.

I have a work friend who has a very close friend. They're both Dr's pulling down > $500k/yr, but with huge debt. Their kid got into Princeton and they paid $15k/yr. I was more than double that for some equivalent schools, but I make far, far less than $500k/yr.

Very glad he decided on UCSD.

So is the life advice to go massively in debt (and jack up your income) before your kids apply to colleges? How far in advance do you have to go massively in debt?

EDIT: Looking at Princeton's financial needs calculator, assuming a constant income, to maximize your financial aid you should: - Reduce your assets: Buy a really expensive house, have nothing in savings/investments/other equity - Reduce your income: Pay a ton for private school tuition, medical expenses, or child support.

EDIT 2: Looking around some more, apparently FAFSA doesn't consider: Your primary residence Your car A boat you may own or furniture in your home Untaxed Social Security as income

Here comes my big house / Bugatti / yacht!

>mostly benefiting the rich and very poor

Not quite just the very poor: U Chicago gives free full tuition to students from families making under $125k.

But as for the very poor at nearly every other private college, the picture is more bleak: The average private is in the ballpark of $35k. Maximum grants from the feds and state of Illinois total about $16k. That's not enough. However, it is generally plenty for attending any public state school.

The most squeezed bracket financially are families making around $65k a year. They earn too much and so lose a large portion of need based grant eligibility, and have and "estimated family contribution" (EFC) 3 or 4 times higher than families making not too much less. Even state schools are difficult here. My recommendation to such families is to begin by getting an associate's degree for 1/3 the cost for those 2 years, then only pay the higher rate to finish the bachelor's degree in the last 2 years.

It's true families making > $100k a year are expected to contribute the lion's share, absent merit scholarships, but they also tend to be families with assets, including houses with equity they can leverage, to help pay. Yes, it sucks to have to do that, but many thousands of families in the $65k bracket are much worse off without even that option.

To be clear, I'm not really disputing what you said on that topic: I just wanted to add more detail and nuance.

Source: I work in Higher Ed analytics.

When I was accepted that ($125k) policy didn't exist or we'd have been included, though in the upper half. I'd likely have chosen to go there if it had existed then.

That said it sounds like the general situation I described is somewhat true overall.

Yep, your comments were largely correct. I just wanted to add a bit more context and detail. I didn't intend it to come across as a disagreement.

I didn't take it as disagreement!

No, you guys need to quit the platitudes.

You need to do something about your “fixed” meritocratic society where your future is largely determined by your parents’ wealth.

You need tax reform, healthcare, cheaper education. I had a discussion with an American friend recently, he offered that the American society has produced marvels such as Google and Facebook and Tesla and countless others, fair point.

Can you imagine a new social media today competing with Facebook? A new search engine? Wanna open a retail online store? AWS will eat you alive.

I grew up thinking America was the greatest country on earth, truly. You know who also had some absolutely amazing achievements? The Egyptian pharaohs.

Non American here. They seem to be the greatest country on earth. They have a big problem with the gap between the rich and the poor but have huge upward mobility.

The education system is too expensive and a bit of a scam but does that cause the problems people think it does. Can you make it in the US without a degree?

Social mobility in the USA is actually much lower than in other developed countries.

Social mobility is basically invariant across societies, with a heritability of about 0.7 according to Gregory Clark’s research (A Farewell to Alms, The Son Also Rises, the upcoming For Whom the Bell Curve Tolls). The difference is explained by the number of generations covered.

It's not the best in the USA but I understand it's not terrible. https://www.oecd.org/centrodemexico/medios/44582910.pdf

It's also incredibly complex so perhaps it was a silly thing for me to comment on as I don't think it's that easy to define or measure.

upward mobility doesn't scale well. USA is doing epic for the scale on the upward mobility. If you were born here or get to become a citizen you've won a lottery compared to the bottom 50% of the world. To claim much worse and to be a US citizen is to say you've 'earned winning the lottery' .. Not to build up the US or put down any other country just the way it is imo

They do measure it though, and the best measurements show that the USA does not compare favourably to other developed nations at all.

I think the line commentators tend to use is “the American Dream is alive and well, in Denmark”

> Can you make it in the US without a degree?


* This being HN, I should point you can make it in IT/software without a degree though you must start at the low-end and climb from there.

* Skilled blue collar work has its limits but provides an accessible career more than capable of supporting a family.

* Military service has its drawbacks but has quite cushy benefits.

* For the ambitious, service-based small businesses are easier than ever.

While it's possible to make it in the US without a degree, I'd recommend more of a middle ground of a 2 or 4-year degree from a local college or state school.

Americais and always has been fantastic place if you're part of the upper 20% and dog shit for everyone else. We just have great propaganda.

The Thirteen Colonies were the richest group of states under the British and as the US grew it continued to be land rich and labour poor. Americans were noticeably taller than Europeans until week after WWII. The rest of the world has caught up some but the US is without a doubt in the top ten by GDP per capita though competing with city states and what would be individual states there. Measured by average individual consumption it’s probably number 1. The US may not be a good place to be in the bottom 10%, possibly even the bottom 20% but by standards of living for normal people nowhere else compares.

> The US may not be a good place to be in the bottom 10%, possibly even the bottom 20% but by standards of living for normal people nowhere else compares.

Arguably, not even the bottom 50%. Even a minor medical issue can tank middle-class families.

OTOH, you're in the top 30% of the bell curve there is nowhere else better than the US.

I totally disagree. I was raised in a family of 8 kids, we didn't have any money. All my siblings and friends have had a good shot at the American dream, most of us have done quite well.

I've also lived in several different states. Haven't seen anything even close to 80% dog crap. Not even close.

I mean, imagine telling that to people living in poor countries.

Please travel or read about the world to get some perspective.

Seriously, if you were born in a country like the U.S. in modern times, you won the birth lottery.

Nah. Winning the lottery is being born in a country with free health care and education. Being born in the US is OK at best.

>Seriously, if you were born in a country like the U.S. in modern times, you won the birth lottery.

Agreed. The lottery won is for starting position in a game where participation is not choosen and objective you choose determines position ranking.

> No, you guys need to quit the platitudes.


> You need to do something about your “fixed” meritocratic society where your future is largely determined by your parents’ wealth.

> You need tax reform, healthcare, cheaper education.

Please continue your nuanced argument with a straw-man.

I'm a graduate of Uchicago (from shortly after you), and to offer a different perspective, I'm still paying off my loans (and will be for another 6 years), but I'm incredibly glad I went. I thought the undergraduate experience was perfect, and about half of my friends from around the world are people I met while I was there. I did get much worse marks that I had ever gotten before, but the University being very difficult is part of the package.

One question: I think a large part of the social experience for me was based around the house system. Even though I moved out of my house when I was a second-year, the house and dorm I was in provided a big chunk of my social network. Did you not have a good experience with your house? And if so, were you placed in the house you wanted to be in?

So how does having more realistic grades (i.e. not everyone gets B or above) feel when it comes to graduate admissions?

I went to the university with the hardest admissions score for EE, some of the brightest people I've met, graded on a curve, and yet for graduate admissions I'm competing with people who took much easier classes and ALL have much better marks. The GPA system is just insane really.

It helps a lot if the university you're coming from had a reputation for difficulty and grade deflation. Academia is incestuous enough that people will usually be clued into that.

Barring that, having excellent rec letters and GRE scores, having been published or done research in a lab, having written an undergraduate thesis etc can all help provide signal that you'll make a good candidate for the department you're applying to. I don't know much about EE departments, but generally grad school admissions will be more holistic and thoughtful than undergrad admissions.

Well, I found UdeM pretty awful, difficult to talke to anyone, took a long time and really screwed me around. In retrospect I would say hard avoid based on the incompetence of the admin (DIRO specifically). It seems like if you're coming from overseas they really don't know what to do, and its impossible to get past the admin. In retrospect, talk to professors first, do admin process second, and allow at least 12 months for the process.

I don't know what's happened in the last 25 years since I last went. But my college started testing the snot out of incoming freshmen. Basically they didn't trust the students GPA or the classes they took in high school to tell whether they were ready for college level classes.

Ace the GRE and get letters of recommendation and it doesn't matter.

Different schools do the sibling calculation differently. I had the same experience you describe in my third year at Swarthmore, which jacked up the "parental contribution" after my brother graduated from Carleton College. But Carleton does things differently, with the same parental contribution each year. They know going in how many siblings you have and just come up with a flat rate that you pay each year.

Each method has its pros and cons: the flat-rate method gives certainty, and the adjustable method is more appropriate if you don't know whether siblings will actually go to college. It seems the most important thing is for each institution to communicate which method they are using, so nobody gets a rude awakening.

caveat: my data points are 15 yrs old

I'm curious what you think could have convinced you to attend a state school as opposed to where you went? Did you know the state school was a viable option at the time? Did your parents push you toward a state school, were they upfront with you about the cost difference?

I agree with your last line, but am unsure how we would best implement that as a practicality. Young people tend not to always think in the most efficient ways, and parents aren't always knowledgeable nor around to help.

One thing I remember from my college admission process years ago was how overhyped it all was, especially the soap opera aspect. Everything was about numbers, and where you would get in, and where you would 'fit,' which was far more ambiguous, sinister, and completely unrooted in any logic or reasoning because you just aren't going to ever understand what your personal experience will be like until you get there.

Fretting about 'fit' keeps schools like u chicago alive. A radically unwise decision in pursuit of some romantic youthful ideal. Otherwise, everyone would just go to a state school, have largely the same college experience, end up with largely the same career outcomes, but with far less debt.

Sorry to hear that. I graduated the same year as you but had an incredibly positive experience, and one I look on more and more fondly over time. Having said that, I immediately recognize that IT IS NOT for everybody. There are a few peculiarities about the school that can really make it or break it for you, even beyond simply the matter of fit. To me the house system was the epicenter of my social life, and I know full well that had I simply been assigned to a different random group of people my experience could have been significantly different and possible way worse.

What’s the reasoning behind the discount for siblings? Seems strange to me that this would affect the cost of tuition.

They squeeze everybody for as much as they’ve got.

More kids in school translates to greater financial need per kid.

Ah, any school. I thought this was about siblings attending the same school.

What do you mean by grade deflation? I've heard of grade inflation (mostly in the context of college admissions), but not deflation.

Grades are determined by curves. There's no absolute scoring in most university classes, especially in engineering and science programs.

Professors usually draw something similar to a bell curve along the grade distribution and set the average to be a particular grade. Grade inflation would be setting the average to something high (as practiced at Harvard this is usually an A-).

Grade deflation which both U Chicago and my alma mater Johns Hopkins are notorious for has professors set the average grade to a B-/C+. In classrooms full of students who have excelled their entire life, where the average represents a pretty high standard of work and achievement, setting the average to a B- is grade deflation.

Did your parents not know that your sibling would graduate college before you did. Strange thing to be livid about.

One thing I find crazy is the very same institutions that are generally very left leaning, decry income inequality, and espouse generally liberal views then turn around and having tuition costs that having been rising at rates so far above inflation.

Student debt is a major issue in the US and the ever increasing costs of tuition are a MAJOR culprit in pushing this crisis. Where are these costs coming from? How can you politically espouse free college while ratcheting up tuition costs?

I work at one local university, and my wife works at another. One thing we've definitely noticed (and this is a widespread problem) is that the administration is becoming more top-heavy. There are cutbacks in faculty, support, and teaching staff, more reliance on adjuncts (academic temps, basically), and so on, while central administration grows. Expensive new buildings contribute, but less than people suppose. But that is a tangential problem, in that wealthy donors want to give big gifts for vanity projects rather than to, say, scholarship funds.

Former tenured professor.

I think your impression is generally spot-on although there's nuances and it's more complicated than that.

In general, universities are suffering from many of the same pressures as other fields. Nonprofits are being run as profit-generating centers, and the implicit promotion track goes from faculty to senior faculty to administration, if you're even on tenure track. The administration salaries are increasing, as are the number of administrative positions (deans, associate deans, vice associate deans, assistant deans, etc.), and the structures are becoming increasingly hierarchical. Things are very top-heavy and expensive to run because the salary budget is so disproportionately distributed.

I don't think that's all of it, though. The rest of it is harder to quantify, but is the flip side of the educational bubble coin. Students are rushing to go to college in record numbers, which then puts pressure on colleges to stand out to attract more students and more high-paying students who become high-donating alumni. Institutions that should be getting public funding are not, which then trickles down to students; other private institutions then benefit from the increased tuition norms etc.

It's a complicated problem that involves HR and administrative practices and norms, economic incentives within university funding structures, incentives coming from a broken employment system in the US, problematic incentives coming from federal grant structures, etc. etc. etc. etc.

Can you expand on the broken employment system in the US? Honestly just curious.

If I had to complain about things, it would be these:

1. Lack of workplace training - very few employers will pay for you to train/gain experience, partly because there's nothing preventing someone from jumping ship for better pay once the training is complete

2. Credentialism - the things that actually matter in hiring are either difficult or illegal to test for (conscientiousness, knowledge, intelligence), and so degrees are used as proxies instead

> very few employers will pay for you to train/gain experience

Yes and no.

Most HVAC shops will pay for technician's training.

Most dev shops pay for technical conferences.

Most managers have access to management seminars and training.

Expecting an employers to pay tens of thousands of dollars seems weird, but many employers do pay on a smaller scale for skills training.

> degrees are used as proxies instead

Though conventional wisdom is that a degree doesn't matter 5 years after graduation.

Nor does it seem that prestigious positions are even that picky in practice. Yes, there are a number of Harvard, Stanford, Yale alumni in Congress, but other seven of the top 10 colleges for Congress members are public state schools. [1]

[1] https://www.usnews.com/news/slideshows/the-top-10-colleges-f...

Dev shops pay for technical conferences but few tech places want to hire fresh, green devs and train them up. They all would prefer experience.

It's why you see so many forums talking about sending out applications to hundreds of places for months when searching for their first job, then never having a problem again after.

The degree you get certainly matters for graduate admissions though. For example, at both MacGill and U of Montreal they don't take any account of industry experience when you are applying for grad school. And they assume grade inflation, so unless you scored A average you can give up.

Schools in QC are a different breed, though. The cost for QC residents is very low, and the cost for non-QC residents is still pretty tolerable. This means there are lot of applicants -- like why not, it's cheap -- and they can be picky.

I've also noticed that Canada and Australia place far more emphasis on formal credentials than US colleges. US Uni's will take you if you can demonstrate competency and can pay; Uni Melbourne won't talk to you unless you have the exact, specific kind of degree. Ditto for UBC, U Sydney, etc.

That's true. It's a relatively small set of jobs that require a medical, law, or phd degree.

I'll just throw this out here: for IT you almost don't want your in-house trained people to stay very long because it's pretty important less experienced people to get a variety of different experiences. I would say that people who stick to their first job for a decade or so tend to become under performers and I don't think it's generally because they can't find another job. Breadth of experience is really valuable in this field.

I've often thought it would be amazing if you could do the equivalent of professional football (soccer) lending of players. Lend a developer to another company for a few years with the expectation that they will come back. If they decide to stay then the borrowing company give some compensation. But it would mean having very strict contracts that limit the freedom of workers, so it's almost certainly a no go. I wish there was a way to make it work, though...

I think in general I mean that people are seen as cogs in a machine, rather than individuals to be trained, and there's no safety net from the government, either in terms of real retraining or advanced education or life benefits or anything.

HR gets a million applications, people are evaluated on what boxes can be checked off rather than their skillset, etc.

With regard to the educational system, the problem is that degrees are seen as signals or credentials (to use the language of the article) rather than as a background. That's admittedly a fuzzy distinction, but it really reduces the degree to the degree per se rather than the host of courses and experiences the person during college. So, we talk about "useless degrees" without recognizing that someone might have had equivalent coursework and experience without majoring in something else per se. In the end it doesn't matter.

I worked for five years at a private university a few years ago, and my experience is similar, although to add a little:

It never felt like a plan or conspiracy to make administration costs bigger. It's just very easy to do when you have more money coming in, year after year. In another economic environment, you'd get a "hard no" because the money isn't there. But when there is, expenditures become just another bargaining chip. Maybe you get your seventh librarian this year, and I get my fifth network guy next year.

New buildings (as you stated) aren't as big of a contributor as expected due to the convoluted role of donations, grants, etc. But another big factor for those buildings is that we were getting loans for them, too, and those were based on (big surprise) long term forecasts presuming this gravy train is going to keep on chugging for the next 30+ years. And even then we were getting projections of our "debt capacity" and always riding that line, so it's debt on top of debt all the way down.

I don't know about big schools, but for a smaller one like ours, there was no visible bad faith. These kind of things just happen when you can keep bringing in more and more money and so can your competitors.

I work in academic IT. My job is mission critical to the existence of 3 other project manager jobs. The bureaucracy grows to meet the needs of the growing bureaucracy is not a joke.

>But another big factor for those buildings is that we were getting loans for them, too, and those were based on (big surprise) long term forecasts presuming this gravy train is going to keep on chugging for the next 30+ years.

Harvard got spectacularly burned by the genius planning of Larry Summers in that regard.

Are the people who actually teach the classes (professors who teach and TAs) getting raises matching the tuition raises in your school? Or, is all of the money diverted to administration?

I wasn't in a position to be explicitly told, although I did at one point see an anonymized list of faculty salaries and they did not seem unreasonable (only one in six figures). This school is about 40 minutes away from a city with an international airport.

I think "diverted" is perhaps a strong word here. The way administrators see it, the administration is necessary to even reach the point where faculty can teach classes, and provides a significant role in empowering them to do so.

And there's some validity to it. Besides, students' expectations with regards to faculty haven't changed nearly as much over the last ~20 years when compared to administrative departments. Students absolutely expect good WiFi, good Internet speeds, Google Apps-quality e-mail, and that's just tech stuff. Colleges are implicitly competing with other colleges with things like on-campus events, residence halls, modern cafeterias, online course registration, athletics... all kinds of stuff. There's a lot of money involved in these expectations that has outpaced the faculty side.

But it's cyclical. We pump money into those things to keep retention up because we need to because the other schools are doing it.

> Students absolutely expect good WiFi, good Internet speeds, Google Apps-quality e-mail, and that's just tech stuff.

My personal internet with Comcast is ~$60/month, so assuming universities have greater bargaining power due to scale that shouldn't make much of a dent in tuition. And my college email interface was clunky but I just set it up to forward everything to Gmail, which is free.

It's not really reasonable to compare a residential ISP to one for a college campus. It probably is cheaper if you count only the Internet service itself, but everything between that ISP and each end user's device has significant fixed and maintenance / upgrade costs attached. Your residential ISP can give you an all-in-one modem / WiFI router and you're good to go.

On the case of California all the salaries of public employees aka. University of California employees are public, Googleable information.

> These kind of things just happen when you can keep bringing in more and more money and so can your competitors.

Yep. If appetite and available funding grow year after year, even the most honest of colleges will have a hard time not expanding costs.

Fortunately, it's still pretty easy to get a 4-year degree from a solid school for < $40,000 tuition not including scholarships.

Pricy, but still far less than the $1m extra lifetime earnings.

Hmmm, I'd beg to differ.

I lived at home, with my parents, and went to a state school and paid in-state tuition. Found online PDFs of all my textbooks, and I'm still just barely scraping in at under 40,000. This is from 2016 to 2020 (finishing up my last few courses over the next 6 months.) And the administration is still considering (aka going to pass) an 11% tuition increase, after a 9% increase just 2 years ago.

It's even worse for people who don't live near a university and need to live on campus, pay for meal plans, etc.

Note that I only mentioned that number for tuition.

Rent, food, clothing, etc. will of course be more than that. $10,000/yr doesn't even clear the poverty line, college or otherwise. [1]

My number might have been a bit low, but average in-state public college is $10k/yr for tuition and fees. [2]

I went to college in Florida and Utah. Their top ranked public universities right now cost $6k/yr and $8k/yr respectively.

[1] https://www.thebalance.com/federal-poverty-level-definition-...

[2] https://www.usnews.com/education/best-colleges/paying-for-co...

Yes, admin is a problem, but its not just admin. If you are a professor making 150k+, you have to ask yourself how much of your salary is being funded by rampant, unsustainable borrowing.

Colleges need dramatic, across the board cost cutting including professors, admins etc.

Colleges are in for a world of pain in the next 50 years.

Why shouldn't a professor make 150k? I mean, from a societal point of view.

How much of that is skimming off what the grad students do? ...who get a poverty wage adjunct position

If that is what they are earning without burdening thousands of students with unsustainable debt over their careers than I'd argue nothing is wrong with it.

For example if the salary is 100% from NIH grants and the prof makes 500k, more power to them.

If the prof makes 100k and all their salary is funded by student loans, then they should decide whether their livelihood is worth the externalities they are creating.

Its a moral choice

150k/year. Let’s assume the professor teaches 4 units per semester and maybe 2 in the summer (or research or some equivalent). Comes out to 15k/unit. Let’s say 15 students per unit just to represent smaller classes comes to $1k/unit/student/year. Each unit is like 3hrs/week for 12 weeks on average. So comes out to something like $28/hr. Doesn’t seem unreasonable to me.

Average course load for a student is like 6 units a semester so using the back-of-the napkin math above it should cost roughly $6k/per semester for students to have a full course load of $150k professors. $12k/year + other expenses is a far cry away from $100k that is being charged.

$12k a year is completely unacceptable.

Other costs are also unacceptable. Colleges charge $500+/month for shared rooms. And require freshman to stay in them.

Nevermind the fact that your math misses several major cost categories like building maintenance, fringe benefits for professors (+30% of salaries at least).

In your hypothetical example, students are paying $20k/year before getting ripped off on the cost of the dorm and meal plan.

If a prof is making 150k, class sizes need to be 300+ and they need to teach 1,000 kids a semester

>If you are a professor making 150k+, you have to ask yourself how much of your salary is being funded by rampant, unsustainable borrowing.

Also, how much of your funding comes from unsavory sources like Jeffrey Epstein and the Saudi government.

Do colleges make their budgets public? When a program is taking too long to run the first step is to profile. What does the data say on college costs?

> But that is a tangential problem, in that wealthy donors want to give big gifts for vanity projects rather than to, say, scholarship funds.

In the past I've felt quite motivated to give to scholarship funds. It resonates a lot if you yourself relied on scholarships to go to college. But I feel somewhat more cynical about this since I've seen costs spiraling out of control. The actual price of college can have anything bundled in there. I want to support students, but I feel less good about supporting ballooning costs that are twice inflation when I haven't heard a good reason for this.

Certainly public colleges have public budgets.

Ahh, the iron law of bureaucracy at work. https://www.jerrypournelle.com/reports/jerryp/iron.html

An AEI report on 'administrative bloat' in higher education: https://www.aei.org/carpe-diem/diversity-and-other-administr...

AEI is a hard-rightish conservative think tank. I’d be wary of trusting anything they publish about money and schools.

You're right that they're libertarian/conservative in this regard. But they've published a number of articles with relevant facts about the growth of administrative roles in higher ed, and the associated costs. I haven't seen those facts questioned anywhere — have you?

That data is only for public universities.

Arguably those are the only ones we should care about -- they're getting our state tax funds.

Private Uni's are, well, private. They can charge what they want, and if the average Pell Grant or other DoE loans aren't enough that's not the Uni's problem.

This comment is sadly familiar to me - it sounds exactly how my friends in healthcare describe the state of their industry (more admin, fancy buildings, less focus or spending on patient care).

The tuition price being talked about is the top sticker price. If you care about inequality, that isn't the metric to care about. You should instead focus on something like median tuition paid since financial aid can mean that any individual student is paying anything from zero up to the full tuition costs. The concept of the richest students paying a six figure sticker price in order to help compensate for the students on the other end of the socioeconomic spectrum who can't afford it is the exact type of thing you would expect from a "left leaning" institution.

But as the article says, low income students are scared away by high tuition. My fiancee was raised poor and I kind of understand the mentality -- when the tuition is a multiple of what both your parents make in a year, you say "this place isn't for me" and move on. You've been told in various ways throughout your life which places aren't for you (there are a lot of them), and a $100k sticker price is a pretty damn good signal.

And besides, no one wants to rely on the generosity of paternalistic college administrators. That's not safe. You don't want to wake up and suddenly find due to some technicality you again owe more money than both of your parents make in a year. And you don't want to feel like a charity case.

(If you think that's a remote possibility, think of the people who went into teaching with the promise of debt forgiveness, and found it revoked. They don't have any choice in the matter -- they're totally screwed.)

Better to go to the local city college. Your cousin went there and a few other people from your school go there, too. It's a safe choice, and there are people like you there.

> One thing I find crazy is the very same institutions that are generally very left leaning, decry income inequality, and espouse generally liberal views then turn around and having tuition costs that having been rising at rates so far above inflation.

It's weird you chose to make this comment on an article about the University of Chicago, the home of Milton Friedman, Supply-side economics, "no safe spaces"[1] and so on.

[1] https://www.washingtonpost.com/news/answer-sheet/wp/2016/08/...

Tuition rates seem to be rising across the board however. University of Chicago is just the tip of the spear.

Has the University of Chicago ever advocated for free college? Their economics department, home of the late Milton Friedman and the Chicago Boys, is among the most right-leaning in the country.

This really isn't true anymore, but people keep regurgitating it. Chicago has a lot of behavioral economists like Thaler/List/Levitt, a lot of people who work on econometrics or mathematical economics like Harberger/Uhlig/Stokey/Tesler. There are still some Chicago school of economics folks at the university, but increasingly "the Chicago school" is an independent beast. There are a few emeritus professors in the old guard, but claiming that the department is one of the most "right-leaning" in the country is wrong.

That was then.

Given that most (yes, most) students at the University of Chicago receive financial aid, what you're seeing is a sticker price. The school is using the high sticker price + financial aid to perform very efficient price discrimination[0], so they can get a lot of money from people who can pay.

It is effectively a sliding scale fee [1].

[0] https://en.wikipedia.org/wiki/Price_discrimination

[1] https://en.wikipedia.org/wiki/Sliding_scale_fees

That is part of it, but the term "financial aid" is usually trotted around to make people think that the less wealthy are getting "aid" but in reality, the majority of that "aid" is in the form of non-dischargeable student loans.

I don't consider a loan "aid". Especially since that loan has interest.

Yes, this. The nameplate tuition is paid by a vanishingly small percentage of students. What I think each school should do is publish data showing what the median tuition paid is, and the quartiles. That would help a lot to fight this perception that "tuition is going up every year!"

In theory. Do you have evidence that is what is actually happening?

If your request for evidence is about the claim that most Uchicago students receive aid: https://news.uchicago.edu/story/financial-aid-budget-forecas...

If its about the claim that this is an example of price discrimination: that is an opinion I formed while I was at the University and spoke with some folks in the economics department about it. There is a class offered in econ about the economics of education, and that certainly hit the point home that financial aid is a type of price discrimination. I couldn't have paid for the tuition in full, so I myself received significant financial aid and supplemented with some student loans, so I got to see a bit of it first hand.

They are mixing financial support/debt and grants it seems in the writing. Getting loans isn’t the same as getting money you don’t have to pay back.

Interestingly enough, many elite schools have need-blind admissions and excellent aid if you are poor. If you are rich, it's affordable. As usual, it's the middle class that gets screwed.

I went to Stanford. My mom did part time office work and my dad was the director of planning for a local city government. It was very affordable for us.

Everyone thinks they're in the middle class.


I'm in my early 30s.

>UChicago guarantees free tuition for families with incomes under $125,000 per year (with typical assets).

Seems generous for middle class. (the median US household income is only 61k)

Right, I also assume a lot of these MSRP prices are what they want wealthy foreign nationals to pay, not necessarily a US citizen. We really need the data on the average cost and what the distribution curve looks like.

> One thing I find crazy is the very same institutions that are generally very left leaning, decry income inequality, and espouse generally liberal views then turn around and having tuition costs that having been rising at rates so far above inflation.

Eh...the UChicago economics department and the people of Chile would like a word with you on that.

It's pretty clear how these schools operate. They charge high tuition for people with a lot of money and cover the costs for people that can't afford it.

>With over $159 million in financial aid distributed this year, UChicago is committed to ensuring that its students graduate debt-free and prepared for lifelong success, no matter their chosen major or background prior to enrolling in The College. UChicago is a need-blind institution, which means we make admissions decisions independent of a family’s financial circumstances[0]

That seems like a hallmark move of progressivism, no?


That's basically how healthcare works as well, and I don't think anyone would argue that healthcare is in a good place in the US.

Financial aid is code for student loans. If they meant a scholarship they would have said so.

> Financial aid is code for student loans.

No, especially at well-funded not-for-profit private universities, “financial aid” often includes generous need-based grants (not scholarships, which are merit-based) that reduce the amount that must be met from student/family resources (including loans) substantially for non-wealthy students (not unheard of for it to be down to $0 for the poorest who manage to get admitted, and that's not just tuition but sometimes housing, books, etc.).

Not at the Jesuit college I went to, which I’m still pretty bitter about. I got cheated out of grants because I qualified for “financial aid”—loans which I am still paying off.

I guess it depends on the school.

> Guaranteed Free Tuition Families earning less than $125,000 per year (with typical assets) will receive a financial aid award that covers the full cost of tuition. Families earning less than $60,000 per year will have tuition, fees, and room and board covered by financial aid. UChicago’s need-based financial aid involves no loans and is awarded as grants, which do not need to be repaid.


That's the need-based financial aid program specifically. Are the numbers quoted by the grandparent post for that program specifically?

> Financial aid is code for student loans. If they meant a scholarship they would have said so.

At many of the high-stocker-price elite schools, grants are also a very real part of financial aid.

Grants effectively look like a scholarship but are typically need-based rather than merit-based.

Looked at another way, grants can be used as a discount on the tuition sticker price.

Looking at the sticker price can be confusing, when the majority of students are receiving some financial aid. You'd need to look at the average tuition paid by students at different family income levels. But is that data even publicly available?

That is definitely the way to look at it although there is a middle class where family income is more than what qualifies for financial aid but far lower than tuition being "affordable".

- Rampant cronyism in the administrative bureaucracy. Too many inflated titles with ~$200k yearly compensations.

- Building architecturally impressive (but questionably prudent) faculty buildings/dorms/libraries/etc. in hopes of luring prospective students, many funded by alumni looking to stroke their ego via their name on the structure (reminds me of that scene from House of Cards when Kevin Spacey's character does this very thing)

- Federal government showing no signs of abating the giving out free money to attend college, which enables the entire cycle to continue

> the very same institutions that are generally very left leaning, decry income inequality, ...

These schools are price discriminating, which means only the richest families are paying the full price. This kind of heavily graduated pricing where the wealthy pay for most of the cost of the school is very much in line with their principles.

Yeah they’re not left leaning at all, they’re completely corporate and plutocratic. The highest paid state employees are university presidents and college sports coaches.

When there is a difference between what people say and what they do, always believe what they do.

Has it occurred to you that maybe the state can handle the cost? Compare to how much we spend buying fancy equipment to kill people. (Military spending if that is too indirect a description.)

Consider also that a large amount of student loans are already from the government, so in a default...

You might see people rallying for forgiving debt, but not for increasing enrollment, which is what caused high debts in the first place. It s impossible not to call this hypocritical

While this is true of its peers, no one has ever accused the University of Chicago of being left leaning. The unrestrained neoliberalism (deregulation of consumer protections, unwinding of antitrust policy) that characterizes our time is literally called the "Chicago School" of economics.

The same goes for housing, in same states.

U. Chicago is left leaning? It produced the Chicago boys, the authors of neoliberalism in Chile.

I think most people would say you're correct about the Econ department, but that isn't the whole university. Plus, it's not like U Chicago is that far off from other universities when it comes to tuition and fees. They cost $58k, but Columbia University is already above $59k, Dartmouth is $55k, Penn is $56k, Duke is $56k, Brown is $55k, Tufts is $56k,

There are plenty of liberal schools whose sticker price is going sky high.

It depends on what area of the University of Chicago you're talking about.

You may want to look into the difference between liberalism and leftism.


Good lord, the level of discourse on this site has absolutely plummeted. We're in /r/conservative territory now.

> Please don't submit comments saying that HN is turning into Reddit. It's a semi-noob illusion, as old as the hills.


Assume that inherent skill is evenly distributed, Assume that the environment to foster that skill is not. Why would we not make college affordable if we can produce high quality college graduates. The US isn't a closed system, we make a lot of money in the knowledge economy, a fight we're slowly losing to China and India.

Do you prefer they lean to the right, increase deficits, and promote a military budget larger than the military asks for?

More people need to talk about what Purdue is doing. They’ve held tuition constant for 8 years since Mitch Daniels took over.


As a US citizen, I see the US debt bomb ending it two different ways

1. Sanders/Warren get elected and somehow forgive 1.5 trillion in student loans and make education free going forward.

2. 2008 level crisis

with (2) is the more probable

I think universities tuition is way too expensive in our country, but I'm against (1) currently because I don't think retroactively forgiving debt is a good policy. The students took those loans out, signed the docs, and knew (or should have known) what they were getting themselves into. I think forgiving all of the debt would be obviously ridiculously expensive (1.5 trillion is a lot of money) but also possibly creates moral hazard.

I would be more supportive of (1) if the government took more of a "Canadian pharma industry" approach and just said "this is how much we will pay for this citizen to go to Harvard, take it or leave it". I have no faith that any of the current presidential candidates will be able to negotiate and pass that type of law, so I currently cant support (1).

Is my line of thinking wrong here? I think education should be more affordable but have no faith we have leaders that can get us there.

I'm completely against forgiving student loans. I want to solve the problem, which means no more Government backed student loans. (I'm all for the Government building more low-cost public Universities, though.)

But if they are going to forgive them, certainly the students who prided themselves on being the best and the brightest should have known better! Therefore, anyone in the top 10% of SAT scores or at the top 100 schools should not be eligible for discharge. If you're smart enough to get into Chicago or Harvard, you're smart enough to know how loans work.

I would be angry because I lived in the cheapest apartment I could and biked as much as I could until I paid everything off. Had I been less responsible, I would get more money under debt forgiveness. The incentives are inverted. I'm all for wealth redistribution but messing with incentives is shown over and over again to be a bad idea.

Also, my perspective as the kind of frugal guy that everyone else calls cheap is that we live in the most rampantly consumerist society that has ever existed on the planet earth and we think we need all kinds of things that we really don't.

I just can't stomach the idea of throwing money to people who knew what they signed up for but then decided paying back what they owed was too hard.

I agree with what you're saying in general. But hypothetically, if the forgiveness was made retroactive to say 10 years (or however long ago you paid your loans back) and you got all your money back, would your opinion change?

Because you suffered, everyone in perpetuity must also suffer?

Why do people think this is a good argument whenever I bring that up? Because I signed an agreement that I must pay back my loans, I paid back my loans.

For the record, I didn't suffer. I felt fine and did plenty of fun things. I think the biggest mistake Americans make as a society is confusing convenience with happiness.

I would in fact be in favor of free college for everyone, but I hate this victim mindset floating around, and I think the largest benefits should go to the most prudent and responsible, instead of taxing people who withheld in their younger years to pay for people who didn't.

I'm against loan forgiveness. I went to an inexpensive local college, took the public bus to class, lived with my parents (I realize I was "privileged" enough to be able to do this), worked 25 hours/week while going to school, and took as many classes as possible at a low-cost community college that could be applied for credit to my 4-year degree.

I graduated with no debt.

I don't think others should also suffer. That's why, I want the government to stop backing student loans, and make new non-government loans like any other loan, including bk discharge.

Tuitions would drop rapidly, and nobody "in perpetuity" will have to suffer.

Most people who are against forgiveness are also against continuing to write new loans!

If this argument is made in public, people will never support debt forgiveness. not only it breaks the social contract with severe entitlement, it's also very hard to accept that people who can afford harvard or stanford "suffer"

populist emotional arguments are good when there is the populus to empathize with it. the vast majority of people won't care for such "plight".

You have to realize a lot of kids who went to Harvard and Stanford were just smart kids from normal suburban families and middle class homes. And many of them have middle class jobs, just like people with similar SAT scores who went to state schools instead.

Be wary of populist urges to tear down people you perceive to be "better" than you because maybe they're really not, or they're not the cause of the problem. Do things that will improve society, not just satiate your urge for blood.

What’s the endgame though? You have the federal government pay UChigago $100k a year times however many kids? And then when UChicago raises the price to $120k, the federal government pays that?

Where does it end?

I’m not against free college, or debt forgiveness, but sometimes even if you have a goal there’s no regulatory framework that can meet it.

If I wanted to prohibit abortions, while discouraging birth control, and ensuring victims of abuse get to control their bodies... well, sorry. There’s just no regulatory framework that can achieve that. Doesn’t matter what I think is “right”.

yeah no, i m not from the US and didn't study there so i don't perceive anyone as better or worse. But if the smartest, non-poor people can't keep their promises and are looking for shortcuts that would really make society worse. Painting what's normal (paying off debts) as "bloody" revenge is pure hyperbole

> in perpetuity

How is "debt forgiveness" solving the problem in perpetuity?

Debt forgiveness applies only to past debt, not future debt, unless I am misunderstanding the words.

Someone is suffering. It's either the taxpayer or the receiver of the education.

I think I'd be in favor of discounting them / forcing the interest rate down to ~0% so that they get eaten by inflation over time.

I don't think it's right to let people who sacrificed go high and dry while the people who abused the system get a break, though that is often how it plays out.

But it seems like there would be ways to lessen the burden for people who did take big loans without it being a complete handout.

What you're asking for is a solution in 10-15 years for a problem that's rearing it's head now. If you were to remove government backed loans, you would be locking a significant amount of the US population out of higher education. Without a higher educated workforce, where do you think workers for various jobs are going to come from if we decide to go full protectionist and reduce immigration potential?

Low cost universities don't just pop out of thin air and neither do the professors that staff them.

In addition, forgiving loans is probably not practical - where is all the money going to come from? More tax or less spending on some other service.

Student debt isn't likely to cause a 2008 crisis since the vast majority of it is held by (or backed by) the government.

Also student loans cannot be discharged in bankruptcy, so there will not be a dramatic crisis triggering writedowns. The digestion of bad loans will take decades.

> Also student loans cannot be discharged in bankruptcy

Yes, they can, though it's harder than other unsecured debt.

It's such a rare event that it wouldn't happen at the scale to trigger a financial crisis.

So I actually have a question wrt to the fact the government backs most tuition loans: what is really the difference if the US starts a forgiveness program or everyone defaults and the government pays back the lenders? Aren't the tax payers paying something similar both ways?

Isn’t defaulting on student loans and not having the money garnished incredibly hard? If so, it wouldn’t be possible for more than a small fraction to do it.

Hi, quant here (in Uni). I have some obligation to respond to (2), because I know something about it and you've mischaracterized it alot.

We have around $1.5T in student debt currently, at its peak in 2008, there was around $12.7T in housing debt (there's more now, interestingly). Like 2008 era mortgages, student debt is securitized and sold in the form of SLABS (Student Loan Backed AssetS; [1]). However, to my knowledge, there are no derivative securities trades on these SLABS, whereas in 2008, nth derivative securities were trades on mortgage-backed securities (MBSs; when I say nth, I mean derivatives were traded on derivative were traded on derivatives, increasing leverage). In Q2 '08, around 4.5% of mortgages were "seriously deliquent" (i.e. were over 90 days past due). This figure jumped to over 21.0% in July '08 [3]. In contrast, serious delinquency for SLABS is around 0.254% [4]. This is different by a full two orders of magnitude (a little less) from the crisis levels.

While I get why you might be led to believe that (2) is possible, the data doesn't back it up at all. Remember that almost everyone takes out a mortgage, but only around 50% of relatively young people take out student loans.

[1]: https://www.salliemae.com/investors/asset-backed-securities/ [2]: https://www.federalreserve.gov/pubs/feds/2008/200859/200859p... (pages 2 and 3, use ctrl+F and "delinquent") [3]: https://www.federalreserve.gov/pubs/feds/2008/200859/200859p... (page 5) [4]: https://www.salliemae.com/assets/investors/asset-backed-secu... (page 4; I'm taking this security to be representative, sue me)

Harvard is a weird example to use.

I think we should stop offering government backed loans to all institutions that aren’t in-state public. Then, tie them to a graduation period. The moral hazard of taking out hundreds of thousands of debt that may never be paid back is (Ideally) gone.

Is there an issue to doing this?

There's a few other options, such as it levels off. But something must change, whether social or governmental or economic. At the current rate of growth, by the time my kids are of age, four years at many colleges is going to cost a good deal more than my house- each. Which is not to say that can't happen- but if it did, it would go hand-in-hand with a cultural return to the days of college as a finishing school for the aristocrats, and not something normal people do anymore.

Do you believe the same thing about medical debt? Why or why not?

Yes, and no

Yes, because I dont want to live in a world or a country where someone can go bankrupt and/or end up in poverty because of medical problem - this is still possible in the US unfortunately (though I suspect vastly over stated), Regardless, I would never support forgiving of debts for elected/vanity surgeries.

No because I would not want to just forgive all medical debt without fixing the system, which currently seems impossible in the US, politically. Because of lobbying, big pharma, etc. , free heath care would just be too expensive to implement. Obama changed some things, Trump repealed some things. It's a political hot potato.

Fixing our system is like trying to turn the titanic at this point, and any changes we make alienate a large portion of the population.

The majority of bankruptcies are because of medical debt.

> somehow forgive 1.5 trillion in student loans

A more plausible outcome is that the law changes to allows student to end after bankruptcy.

Maybe lenders are made whole by the government; maybe not.

That provides relief to extreme cases, while not shifting an entire $1T+ of debt.

if (2) is possible, what's the difference if (1) happens? Someone will have to pay that debt eventually (the taxpayer).

Scenario (2) more likely indicates that before (1) happens, a number of colleges would have to go bust in rapid succession.

TBF my biggest problem with scenario 1 happening would be if scenario 2 DIDN'T happen first. Colleges have too long been promoting degrees that they knew students would never be able to pay off reasonably.

The data is this article are pretty misleadingly framed. The only time they quote the current cost, they use the base tuition number of $57,642. In the next sentence they say that in six years the cost is projected to be over $100,000. But the latter number includes all additional costs: tuition, room and board, books, fees, supplies, transportation, and living expenses. The former number is just tuition. UChicago is crazy expensive, but it's not doubling in cost in the next six years.

How to fix student loans...

The .gov backs student loans. And, they are non-dischargeable. So, it is zero risk for the lender to give loan to the 2.7 GPA moron getting a worthless basket weaving degree from the local private lib arts school for $100k. So, they give as many loans as possible, since they can't lose (taxpayer on the hook). Colleges are incentivized to drive up costs of tuition b/c tons of free money.

It's a classic moral hazard created by .gov guaranteeing the loans. Same thing we saw in the housing crisis.

Make student loans dischargeable in bankruptcy or take away the .gov guarantee and watch the market for student loans for worthless degrees dry up and tuition costs plummet.

This is my thought as well. These universities have had very little incentive to cut costs for a long time and have padded out administrators and built opulent and unnecessary facilities driving costs ever upward. Universities used to be little more than professors and classrooms with very few administrators.

>Universities used to be little more than professors and classrooms with very few administrators.

Correct. There was also no IT, counseling, healthcare, Title IX, and secondary public education was functional. Things are different now.

I wish it was getting spent on IT, counseling, healthcare and other practical services. Somehow I doubt the tiny staff at my university clinic, or the four IT people, were soaking all that money up.

Why do those things have to be a part of a university?

Counseling healthcare and secondary public education should be addressed somewhere else. University is the wrong place for that.

Option 3: Make the schools co-obligors on the debt. In a default, the school pays. I suggested that to a congressman once; he nearly spit out his drink.

I was thinking the same thing except maybe place it at 50% or something. So they still want to give out loans but are more judicious about it.

Also there might be scale correlated to market demand. So if doctors are in high demand the gov backs it more, if it’s something with little market demand, back it less.

Everyone passes all of their classes?

Easy classes and grading aren't going to help people not default.

The school can really only improve the education they provide or make their admissions more stringent. If they are going to do the latter, we might as well go back to direct government support, no need to have a loans process and all that noise.

It is incredible to me how straightforward and undoubtedly true the point you are making is, yet I've had 0% success in bringing it up in conversation without immediately being called all sorts of names or accused of hating poor people.

> It is incredible to me how straightforward and undoubtedly true the point you are making is

Even the part when it relies on private lending behavior being driven by security provided to lenders by federal loan guarantees that haven't been available to private lenders since July 1, 2010?

that may be true but the non-dischargeable by bankruptcy part still holds true. A student loan is still one of the lowest risk investments a bank can make.

Or, track the loan payback percentage for each degree, let’s say 5 years after graduation. Publish those results, and stop making loans for programs where the repayment is less than X%. Then, basket weaving degrees won’t get loans, the cost for basket weaving programs will go down, as only those with parent’s stupid money will pay for basket weaving degrees. Students will be directed by market forces to degrees that actually pay, and repayment percentages will go up.

This will of course cause universities to encourage student loans for students with wealthy parents who could have paid up front, as they’re more likely to pay, even if employed as a barista. For every rule, it will be gamed in some way.

More likely, the basket weaving program would entirely go away. Wealthy parents generally aren't idiots and don't encourage their children to waste away in pointless degrees. Well, the ultra-wealthy might not care, but there aren't too many of those.

In any event, congrats, you just made a whole set of degrees inaccessible to anyone except the wealthy. The progressives are really going to love you for that.

It's wise to view a degree of such cost which is unlikely to re-pay itself as a luxury good. We call most other quarter-million dollar products that have little investment potential, such as yachts, luxuries. The whole point of free college is to give everyone a shot at the middle class. Personally I think we'll just get degree inflation; college has been used as a distinguishing factor because there are a limited number of such jobs. That aside, basket-weaving degrees don't move people into the middle class. Would anyone, progressives included, contend that everyone ought to get a free yacht (or other luxury good of your choice)? A free stem degree is at least much more likely to lead to long-term, multi-generational success.

Markets provided some balance here, but were taken out of the picture. No thoughtful lender provides equal capital at equal interest rates to a poetry and a business major. This is reasonable, as the business major has a significantly higher lifetime earning potential. Making more capital available at lower rates to higher-earning majors is a good strategy because it helps to push people into higher-earning jobs. The invisible hand seems better-equipped to do this than a central planner.

I haven't seen ISAs (income-share agreements) mentioned much here, which is a pity. The obvious solution is to modify the incentive structure such that colleges have a strong financial interest in the success of their students, which ISAs accomplish. If you want to read more, I recommend this article: https://reason.org/commentary/a-better-path-to-dealing-with-...

Purdue is currently offering them, so we'll hopefully get some real-world data on how they work, but they seem very promising on paprer.

The federal government directly issues loans now, and they won't give you $250k in student loans. The private lenders who will don't have government backing.

So if they give someone $250k for a basketweaving degree, they are unlikely to ever see that money fully repaid.

No one serious thinks private universities that cost $60k+ a year should be free btw.

Also most STEM degrees are about as economically viable as liberal arts degrees if you don't go to grad school. Computer Science and any degree that can get you into CS are outliers.

I’d consider that a good thing. How many basket weavers are really needed in the world? My biggest concern is that politicians will make basket weaving degrees free, forcing me to pay (through taxation) for these over supplied degrees, and then being forced to support unpaid basket weavers on UBI.

That will automatically happen because lending banks will do it, just like car, home and health insurance.

There are no lending banks. The money comes directly from the Department of Education.

There are both US-government, and nongoverment private bank, student loans, in the US.

Which are not guaranteed by the government. When speaking of government-backed student loans, which this discussion is, there are no banks.

OK. That's confusing, and some brief DDGing finds a bit of a mess.

Got any recommended references?

The relevant Wikipedia article to start: https://en.wikipedia.org/wiki/Student_loans_in_the_United_St...

The relevant paragraph:

> Prior to 2010, Federal loans included both direct loans—originated and funded directly by the United States Department of Education—and guaranteed loans—originated and funded by private investors, but guaranteed by the federal government. Guaranteed loans were eliminated in 2010 through the Student Aid and Fiscal Responsibility Act and replaced with direct loans because of a belief that guaranteed loans benefited private student loan companies at taxpayers expense, but did not reduce costs for students.

Even a student loan from Wells Fargo?

That already happens. Lenders just don't care because they can't lose money on those loans b/c reasons stated above.

The government doesn’t just back student loans, it makes the student loans. The government is the lender. More than 90% of all student debt is carried on the government’s books.

Not only that, I remember reading that something like 1/3 of the US federal government's receivables are student loans. A mass default or forgiveness program would dramatically lower the governments ability to pay other obligations.

The other 10% is still $156Bn... That's more than the GDP of Hungary. It's still worth considering.

That 10% is also dischargeable in bankruptcy. Only the loans made by the US Government are non-dischargeable.

I feel the need to remind people that going bankrupt is the worst thing you can do to yourself financially. It will set up back a long way in very basic things.

Good luck with that. You just made college out of reach for everyone that isn't already wealthy, exacerbating inequality and further entrenching class boundaries.

To be clear, I agree with you, rip out the loan guarantees and let the private market deal. But progressives would never allow this.

> You just made college out of reach for everyone that isn't already wealthy

Immediately yes, fortunately, there is a supply and demand curve, so if you cut the demand for a bunch of colleges that already exist; then the price should find a new equilibrium. Of course, as is the science of economics, time and outside influences matter.

So what do you say to all the people for who college will be out of reach while the market "equalizes"?

The same thing we're telling financially concerned people now; public colleges, community colleges, trade schools.

Fortunately, in a low unemployment world, also means that hiring should be very elastic to this change.

You can get a very good education at a pubic university, for example in California's State University system, for about $6,000 a year. It wouldn't put college out of reach, it would put going to an expensive liberal arts school out of reach. I think that's OK.

> Good luck with that. You just made college out of reach for everyone that isn't already wealthy, exacerbating inequality and further entrenching class boundaries.

You could apply that argument to anything. "Good luck with that, now people can't afford mansions, Good luck with that now people can't afford private jets".

Should everybody be able to afford mansions or private jets? No.

College should either be free, thus directly paid for by the government, or not everybody should go to college, you can't have it both ways, or that's how you'll get your big next financial crisis. The government should not back private loans, period.

Cost of education has skyrocketed BECAUSE banks started to loan crazy amounts of money to every students. This is free money for the banks.

> The government should not back private loans, period.

It's a good thing they don't, then.

Wouldn't they be in roughly the same position, just without a ton of debt?

People have a different emotional response to predatory lending like payday loans, but not those same practices in student loans.

You say that like it's a bad thing and not the real intent.

Make the college take a 10% stake in each loan. Suddenly they’ll start being more discerning about who they accept and what their majors are.

Suddenly costs go up 10%.

If someone told me they'd give me $1 if I throw away a dime, why wouldn't I just keep taking their dollars all day long?

You don’t get a dollar (in your metaphor)...a student still requires variable costs so you’d be left with maybe a dime.

No. If the school assumes 10% of the risk of the loan, they still get the other 90% guaranteed.

Future risk-affected dollars != current risk-free dollars.

You have a cost of production.

The risks can be managed.

What a great idea!

The 100k basket weaving liberal arts student barely exists and is a meme to generate rage clicks.

The modern versions are usually gender studies, communications, or English.. As an engineer, it's difficult to accept any non-engineering degree as legitimate :-)

So my nephew is getting his degree in "expeditionary studies":


I'm jealous..

I haven't got any idea if that degree will lead to a worthwhile career for your nephew, but that looks like a lot more fun than the four years I spent getting an engineering degree I don't use :)

There is a Career Opportunities section on the same page.

The 100k in debt grad student becoming an adjunct and needing food stamps not to die of starvation in poverty is a pretty stark reality. One would have to be tone-deaf to pretend it does not exist.

Sure. But I said the basket weaving liberal art student. The 100k grad student can be everything from a CS major to a soon-to-be-tenured ivy league history professor. These are not the same people, and it's not what I said.

Pick a major which ensures your financial survival. Spending 100k on a degree which cannot ensure survival is a hell of a way to learn that lesson.

I don't disagree with you, but when that cost is underwritten and inflated by nondischargeable, government-guaranteed debt that's the product of a decision made by folks scarcely old enough to vote or serve in the military -- it just feels wrong.

There are other options, not all require college. The world needs tradesmen/women. Some of their pay is on par with my data scientists.

I also have a few on staff who do not have a degree but perform solid work and manage the same tasks as my degreed team members. There are options with college or military.

I think that's exactly why this kind of a loan product existing is wrong in the first place. Why is it okay to directly profit off of the debt interest of selling hopes and dreams of class mobility to impressionable youth who will be in an even worse position after taking that loan? If we abet it, are we intrinsically taking a dim Darwinian view and saying that they deserve to be exploited?

That's probably some of it, but the underwater basket weaving meme predates the internet and has embedded wisdom.

Essentially a cautionary tale about taking on debt for something unlikely to be able to pay off that debt.

Agreed, attacking degree programs is a red herring. Also, what kind of society would we be if the only subjects available to pursue were a select list of STEM programs?

> Also, what kind of society would we be if the only subjects available to pursue were a select list of STEM programs?

It's a sacrifice. I love art and music and spent many years pursuing both. I'm an old man now and many friends spent years seeking that out and unable to ensure their own survival years later.

"Basket weaving" may be a meme.

But English, psychology, history, music, etc. are in fact very real.

I'd go one step further. Make the universities guarantee the loans. If a student earns a degree and isn't able to earn a living sufficient to pay back the loans then the University has failed.

What you are effectively saying is that university education exists solely for providing job training. That's not something most universities will agree with.

For the non-wealthy, the university education is in fact about job training. The non-wealthy can't afford to pay that kind of money for something that doesn't pay them back.

The wealthy can pay for a degree that doesn't pay them back. That's fine. They can study whatever they want with no regard for practicality.

Rank and file students are there to get a job, and the University marketing is commensurate with that. I don't care what they agree with.

This is fundamentally incompatible with the idea that everyone should be able to afford to go to college and private institutions need to foot the bill for the costs. We as a society prioritized availability of college education over costs. In order to get both you would likely have to change to some income percentage based repayment system instead of traditional loan repayments and that probably wouldn't be possible unless the government is heavily involved.

Half of all college students don't finish their 4-year degree in 5 years, and it's not due to cost. Even countries like France, Netherlands, etc which have lower costs for college, place you in a track when you're in your freshman year of high school. This track determines if you're going to college, a trade, or somewhere in between, and it's hard to switch from lower to higher tracks. College should not be a goal for 100% of the population like we have now, there should be a greater push for trades like chefs, electricians, HVAC technicians, plumbers, woodworking, metal working, glass blowing. You're an apprentice, you get paid a livable wage, and you have 0 student loans.

You're describing a caste system, except instead of having your life determined by your lineage it's determined by some standardized tests given when you are 14 years old. It might work for some societies but that flies so directly against the "American Dream" that it will never work here.

In reality it isn't as limiting as you think in the Netherlands. You get different levels of education based on previous school results, but after finishing "mid level" highschool you can continue and take the last two years of "upper level" highschool if it turns out you developed more and are now a better learner at 17 than you were at 14. In total that takes only 1 year extra, because "upper level" is a year longer by default.

Same in college vs university, you can continue from the lower level program into a masters degree as long as you pass the acceptance test or have the required grades.

> Even countries like France, Netherlands, etc which have lower costs for college, place you in a track when you're in your freshman year of high school.

Imagine trying to do this in the US. I wonder to what extent colleges are free in places where there is stricter criteria to get into college.

We also need to consider modernizing our "trade" skill list.

Based on the success of bootcamps etc.... I do wonder if software engineering would be better as a trade skill rather than university

>Based on the success of bootcamps etc.... I do wonder if software engineering would be better as a trade skill rather than university

There's plenty of data plumbers (myself included) who are writing a check a month to pay for skills they don't use but a lot of them don't have degrees in the first place. That blurry line between corporate IT and software development is where people would probably benefit most from trade programs.

Edit: Apparently a lot of people took offense at this comment and I'm not sure why. Please explain.

College was dirt cheap before student loans became non-dischargeable and the government started backing them.

I looked for tuition costs over time, but didn't find much online. I did find Stanford tuition data going back about 100 years. Here's a graph of the log of Stanford tuition over time [1]. The log of tuition has grown pretty much linearly.

There doesn't seem to be much difference between how it grew before government backed loans and after them. Somewhere I've got a spreadsheet where I compared the growth rate to the inflation rate. I can't find that right now, but if I remember correctly the tuition growth rate was about twice the inflation rate.

It would be interesting to get this kind of data for a variety of schools, but I couldn't find it.

[1] https://imgur.com/fXnjDNn

College was also dirt cheap in an entirely different era where people could earn a living even with menial labour and where the average purchasing power was higher.

Trying to correlate the two and say it's because of government loans is just plain ignorant. Or are government loans also to explain why people can't save money, or afford rent, or survive off of a single 40h job etc.

The government is already heavily involved and we already have that system: https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...

Debt as an investment is fine. If you are investing in your future with your education, okay, but that requires the education be practical. It must have a value greater than its cost. That is not true for most education and thus we are not investing in our future as a society with this debt.

I'd rather the debt we incur as a society be spent on infrastructure and engineers than wicker baskets. Wicker baskets don't last very long. Roads and bridges do. Engineers do.

Sure, but once you bring financial value into the equation it starts limiting access. Not everyone can be an engineering major. Not everyone even belongs at college in the first place. But we as a society want everyone who wants to go to college to be able to afford it (at least initially). That is not compatible with a profit minded view of that education being a sound financial investment for each individual student.

This doesn't mesh with my perspective of education. Universities are non-profits for a reason. yes, there are profit minded University of Phoenix's but that is not the historical norm and they are the worst offenders.

Not everyone should go to college. We shouldn't enable everyone to go to college. If you shouldn't go to college, going to college won't change that. You'll struggle and fail out or get a worthless degree because it's the only one you can pass enough classes to get.

We have trade schools. We have apprenticeships and on the job training. Lots of folks for home those paths are better, are turned off to them by social pressure, not logic. I've taken welding classes and vehicle maintenance classes and they have shown themselves to be valuable assets to me. I can connect steel at the atomic level. I can keep my vehicles safe for me and my family and friends.

There's no one-size-fits all approach to human evolution and we need all of us. Maybe I'm idealistic.

We need to stop doing stuff that only makes sense to the banks. They are entirely self-interested and provide negative value back to society. We are squandering our futures to the fat cats.

Okay - can anyone actually cite me even a class, let alone a degree, that has the word wicker baskets in them? If not, stop using this straw-man term.

Dude it is a satirical term to symbolize low value programs. It isn’t supposed to be taken literally.

Teachers generate less value (see:income, GDP) than engineers.

We should abolish teaching degrees and just teach software engineering at college.

We probably should. I bet it's easier to teach a STEM grad how to teach (in a professional training program after college) than to teach a professional 'teacher' how to do math.

What are you basing that on?

My sister is a 3rd-grade teacher and I'm not sure I would be equipped to handle 30 children without lots of training. Teaching someone how to teach 3rd-grade math is not that difficult. Teaching someone to start building positive learning habits with 8-9-year-olds sounds incredibly complicated.

I might be reading into your post too much but it seems like you think STEM grads are superior to non-stem grads. I don't buy that. STEM grads have a specialty that is in demand in the labor market. It doesn't make STEM grads better then non-STEM grads.

You may be right about elementary school teachers, I'm thinking more about high school STEM teachers specifically. Although the grade school teachers in my city seem to struggle even with fractions [0].

Only one of my high school math teachers seemed to have any idea what math was about (not just regurgitating formulas, but deriving them and proving them from a set of axioms and only then using those formulas to solve free-form real-world problems).

My High School CS teacher was a geography teacher who just read one chapter ahead in the CS textbook and had no idea what he was talking about.

Being good at teaching seems kind of useless when you don't know anything to teach.

[0] https://www.thestar.com/yourtoronto/education/2016/05/13/for...

Well, the real question is marginal value - if we taught more software engineers, they might not bring in much income or create much GDP.

If you're asserting that teachers are as valuable as software engineers to society, then the question becomes: why doesn't society compensate them accordingly?

Given the hard core attempt to subvert eduction going on in the public schools, maybe. At least with software you’ll have logic, math, and history. https://www.reddit.com/r/conspiracy/comments/dqd6ca/activist...

You should take a moment and read that individuals post. It is well researched. Just because it’s from r/conspiracy doesn’t mean you should skip it.

It’s a metaphor for a degree that does not generate an income. https://en.m.wikipedia.org/wiki/Underwater_basket_weaving

Regarding income-based repayment, I think Purdue was experimenting with this, and may still be. I haven't heard of any significant government involvement in that program.


I didn't know that, thanks for passing it along. The reason I think the government needs to be involved is because this isn't going to be financially viable for every student at every college and therefore private banks won't want to participate. Purdue seems to have found a way around that by funding the program themselves but I wonder if that self funding is scalable.

The ad hominem hyperbole turned me against your much simpler - add moral hazard - argument. Do tell, which universities provide this degree in basket weaving that you denigrate? Sure, you may have drawn on this often invoked mythical degree as a standin for courses of study that you see as useless and valueless but implicitly know would quickly and easily get called out for revealing your bias about obviously subjective determinations of worth. Maybe basket weaving is really art or history or the study of native cultures. And there are plenty of smart people who have been 2.6 GPA students at some point, as GPA is not a measure of intelligence but an abstraction that simply measures one's ability to adhere to and excel at a fairly arbitrary framework.

Moral hazard may or may not be a simple, good solution but your argument for it, as presented, disincentivizes me from even considering it, since so much seemed to be missed in the argument, the same was probably true for consideration of the solution.

Those colleges exist, but they exist in the form of for-profits like Strayer and University of Phoenix. They prey on veterans and marginalized folks, many of whom don’t get jobs that can a pay off the debt afterward. It’s not “basket weaving”

U of Chicago is ranked #6 in US 2.7 GPA morons are nor likely to be accepted.

> The .gov backs student loans. And, they are non-dischargeable. So, it is zero risk for the lender to give loan to the 2.7 GPA moron getting a worthless basket weaving degree from the local private lib arts school for $100k. So, they give as many loans as possible, since they can't lose (taxpayer on the hook).

The only lender who is allowed to issue government-backed student loans for many years is the federal government, and their policy on what loans they’ll issue and on what terms are set in law, not a response to market incentives.

>So, it is zero risk for the lender to give loan to the 2.7 GPA moron getting a worthless basket weaving degree from the local private lib arts school for $100k.

I don't see how any degree LAC, Computer Science, Math etc is worth risking a dischargeable loan for from a bank's perspective. There's no reason to single out LAC degrees, which by the way can be pretty useful.

The smartest thing for any student to do is declare bankruptcy right away after college when they have nothing and risk losing nothing. That makes no loan worth giving, which is the problem.

This. To the lender, it's a virtually risk-free loan and a very high yielding one at that (10%+ interest). I don't think there is even a way of discharging it, even death.

>Make student loans dischargeable in bankruptcy

And watch default rates rise, and interest rates on these unsecured loans skyrocket, so that very few can go to college, and even more people get screwed by them due to higher rates.

Or people will simply not get loans, since they'd become too risky, and less people will get college skills, likely hurting the entire economy over time.

Educating people is a good national goal. Balancing the various pieces is much harder than simplistic changes to the current system.

Or keep them private but set a max cost per year. You can't give student loans and have no control over the price.

I mean, you're not wrong. I'd say 9/10. Its pretty easy to see the parallels to gov involvement in many other areas, where they create a special type of problem, by only being partially involved. Then everyone can stake out their positions, and just work on fighting over the middle of the issue, never letting gov be involved enough to be effective, nor entirely removed enough to let the market fix it.

Its the worst kind of half assed capitalism, that only benefits the political class. Kinda like our healthcare system, among others.

The government isn't guaranteeing the loans, it's making the loans. It is the lender.

Loans for education are different from loans for a house or car since your lender cant repossess your degree/the connections you made while in school, which is the original reason these loans were made to be non dischargeable.

The Government should stop backing student loans. Tuitions will drop like a rock.

The government giving anyone and everyone money and guaranteeing it is the problem. I don't think the bankruptcy plan works. A lot of people would just not pay.

That's exactly the point. Lenders would stop lending to people who couldn't/wouldn't pay.

In all countries? Here, we don't have that, the cost is fixed and so are the loans.

I totally agree but unfortunately a lot of people can take the same situation and twist it up to fit their own views.

Where I live we just passed a minimum wage increase. A fairly substantial one that keeps up with the rest of the country by increasing every year until we hit 15 an hour in a few years. It's been a couple of years into it and someone asked why local restaurants are ending services, closing some locations, increasing prices, shrinking their menus, and basically cutting costs. I saw a lot of answers that boiled down to "greed" and my favorite was "labor costs are increasing" because of "late stage capitalism".

I wouldn't be surprised if a lot of answers you see in the wild involves doing exactly what we've been doing but on a larger scale.

Kind of off topic, but I'm very much a fan of the "shrinking their menus" effect. Restaurants have way too many things on their menus. This usually means that they aren't very good at those things leading to lower quality food. Smaller menus generally mean a restaurant is going to be more focused, and able to produce quality food. I'm all for quality food.

Yeah from what I understand it's actually a good thing. I also love the small menu restaurants, especially the smaller hole in the wall places since you know it's probably going to be great stuff.

Loans should not be guaranteed by the government. Banks should be able to tell shitheads no.


I don't like that line, either, but it's not an excuse to get personal and nasty.

It's a nasty line.

Really, I think this site underestimates the value of "Go fuck yourself" when someone says stuff like that. Being polite isn't going to help them pull their head out of their ass.

That approach is against site guidelines, and for good reason. If one nasty comment is grounds to engage in a flamewar, this place is going to lose any ability to have a reasoned conversation.

I mean, if you reply "Go fuck yourself" you are probably done with the thread, not planning engaging further with the asshole.

Really, my point is that there is too much effort to engage assholerly as if it is actually reasoned conversation, when it is just assholery. Maybe we could go with the milder "This is ridiculous" as a reply or something.

Just downvote and flag. If it's genuinely negative behavior, the mods will usually deal with it.

If you're going to reply, it's better to give the uninformed reader some idea why it's ridiculous, rather than just the bare claim that it is. But hey, I just told someone that their post was "paranoid drivel", so I'm maybe not the best one to talk...

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