What do you think about Income Share Agreements?
https://www.thesimpledollar.com/loans/student/income-share-a...
Note that "projected lifetime income increase" is generally overestimated. What we do is compare average income of a college graduate with a high school graduate and attribute the difference to college. However people who could get through college likely would have made more than people who couldn't, even if they hadn't gone to college!
At this point the average IQ of a college grad is very close to 100. I guarantee that within the next 30 to 40 years someone will make the shocking discovery that the presence or absence of a degree has no influence on income, success, or happiness.
At that point the ponzi scheme of higher ed can collapse.
There's nothing wrong with designing and implementing an education system for the top 5% of society and the jobs that top 5% will likely have. There is a big problem with a marketing scam along the lines of every American is a temporarily inconvenienced millionaire.
Surely, my favorite waitress at Dennys is making more money as a waitress than she would as a K12 educator, if she could get hired, which she cannot. The degree does not make her a better person nor a better waitress. It does signal that she's in maybe the top 50% of humanity WRT the skills required to get a degree. She's a somewhat better than average person because of who she is, not a meaningless piece of paper for training she will never use. The point of discussing my favorite waitress is we need "something" to signal in the job market who is in the upper half of potential employees, and $100K of debt and four years of labor seem a huge waste on a civilizational level.
[1]https://en.m.wikipedia.org/wiki/The_Case_Against_Education
P.S. Signaling is very profitable for the individual benefitting from the signaling, it just isn't good for society.
I think the (optics) problem is that it's a "more obvious voluntary fractional slavery program". So it's easy to criticize. Of course, because it's a less obvious voluntary fractional slavery program, non-dischargeable loans are simultaneously harder to criticize and harder for people to see the trap they're walking in to.
I wonder how society would react by making student loans forgivable. Would banks stop giving out loans because there is no collateral? Or would they require a cosigner to rope in an adult with collateral to lose? Would schools get cheaper as a result of people not being able to afford the already high tuition, would they become a status symbol for the mid-upper class who can afford it? It is definitely an interesting thought experiment.
Right now, there are students who can come to Perdue who are looking for university as an "investment" in their own future: they want to spend $100k to get more than $100k back over their lifetime. But the fact is, some of those students are studying subjects which will never pay them back for their investment; and others will never make that money back no matter what subjects they study.
So the question is, what incentive does Perdue have with regard to these students, under the "unforgivable student loan" system?
1. From a pure short-term financial perspective, it has an incentive to get as many students in the program as possible.
2. From a reputational point of view, there may be some damage to having lots of students graduate without getting jobs
3. Perdue is made of human beings, many of whom actually have feelings and morals; those people feel much happier when their students' investment pays off, and feel much worse when their students' investments don't pay off.
And the point is, at the moment, for students in the category of people we're talking about, you have #1 fighting #2 and #3. That's always going to be an unstable system where things fluctuate between "terrible" and "not quite so terrible".
Consider the incentives in an ISA system. The incentives are now aligned: Perdue would have a vested interest in the success of their students after graduation: the more money their students make, the higher return they get (up to a point). If a student wants to come in and major in Underwater Basket Weaving, they can say, "Perhaps a degree in in Accounting or Education might be a better choice." And if they do offer Underwater Basket Weaving, they'll be sure to add in classes on the Economics of Underwater Basket Weaving, Advanced Basket Weaving Management, and so on, to make sure that those students are actually prepared to make money after they graduate.
I can‘t resist the feeling this sounds surprisingly related to the concept of free higher education and a higher, progressive income tax, a pretty revolutionary approach we‘ve been doing with limited success over here in Germany.
Then again, that might just be my naïve European perspective on things and since taxes are theft and free education is just for those commies wanting free things, it‘s surely inappropriate for a free country.
What makes you think that "profit motive" or "regulatory capture" will be kinder and more gentle with this approach?
For hundreds and thousands of years Indian farmers had a version of "income sharing". You should research how it went. And please don't respond with "Sure they fucked up but WE will build a better system this time around"
I've read this about socialist countries that have free education. You'll have folks with law degrees driving taxi cabs. It's a waste of resources.
This is really the most important issue. People are spending tons of money on worthless degrees. If they were getting degrees worth something, we wouldn't even be having these discussions.
Many lawyers need to drive taxis to get by. Being a lawyer doesn't mean instant riches unless you land at a high profile firm directly out of school.
Studying law isn't a finite resource either.
The problem with your view is you assume the only way to get educated is via academia. There is a lot of education when you become a mechanic, an electrician, a factory worker, a firefighter, etc. That is not academic. You learn on the job. There are also many certification courses for these fields that run outside of traditional college system.
I believe in free schooling to teach basic, essential skills like reading, computing, math, etc. I'd even argue for a greater emphasis on financial education in K-12. But college is different.
The college system is very expensive, it's heavily subsidized by the state even in the U.S. If it is not teaching people valuable skills that they will be using in their profession, then it is not serving it's purpose. It costs people resources in the form of taxes.
In the meantime, we live in the information age. Teaching people to teach themselves is probably the most valuable skill we can teach.
Education allows one to lead a richer life regardless of ones circumstance. Consider the janitor who took 8 years to get a bachelors degree in classics (after learning English). He admits that now with a degree he’ll probably try to become a janitorial supervisor.
But two things stand out, first there is no shame in a job as a janitor, and second to him the education was an end in itself, not a means to an end.
https://nypost.com/2012/05/13/what-class-columbia-university...
The problem with your view is that it makes the assumption this was, and always has been, the purpose of college. That wasn’t the historical purpose, in particular before the Morrill Act during the Industrial Revolution
This is true for every profession. Is there any job where you pop out of school ready to perform like an expert? Lawyers, doctors, scientists, etc. — all these folks learn to do their jobs on the job, despite their years or decades of training in academia.
> The college system is very expensive, it's heavily subsidized by the state even in the U.S. If it is not teaching people valuable skills that they will be using in their profession, then it is not serving it's purpose.
There is more to life, and to work, than preparing for a profession by learning profession-specific skills.
Wait, what? Since when?
Was once driven by a chap who had a very in depth knowledge of Turkish literature; I spent a good 25min listening to him talk about Orhan Pamuk and Elif Shafak, two writers I had recently read (and liked). Turns out the guy had been a lit professor at tertiary level back in Turkey. And here he was, driving a taxi on a rainy evening in a godforsaken town in the Midlands (UK).
But I also don't think allowing these loans to be discharged in bankruptcy will solve anything (and will arguably make things worse) without systemic changes in the way college is paid for.