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Obama's student loan proposal

Discussion in 'Sports and News' started by Dick Whitman, May 10, 2013.

  1. Dick Whitman

    Dick Whitman Well-Known Member

    It is if your return on investment eclipses the amount of the loan. Not just financial, but you have to include the psychological utility you gain from whatever the degree credentials you to do. Maybe you have a burning desire to teach. You can't teach without a degree. Hence, student loans may be a rational debt to take on, because they the utility you derive from the credential they earn you outweighs the utility you sacrifice - the cost of the loan.

    No one answer for this.
     
  2. Dick Whitman

    Dick Whitman Well-Known Member

    Possibly, because it's a drag on the economy right now.
     
  3. doctorquant

    doctorquant Well-Known Member

    This isn't just directed at you Mark ... and mods, I apologize because this may come across as political ... but how is this plan any different from progressive taxation? Bill and Tom each borrowed some amount ... each received the same education ... why is it perceived as so unfair that Bill has to pay twice as much for his education as Tom when very few blink an eye at the fact that Bill has to pay twice as much (or more) for everything else? Again, I'm not arguing for or against progressive taxation ... just curious as to why so many see this plan as so dramatically different (justice-wise) from the status quo?
     
  4. doctorquant

    doctorquant Well-Known Member

    They already have that ... sort of. The Public Service Loan Forgiveness Program:

    http://www.studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

    You make 10 years worth of on-time payments (and these are (or can be) income-adjusted) and your loans are forgiven completely.
     
  5. Mark2010

    Mark2010 Active Member

    Oh, I agree. That's my point. It's an inequitable way of doing things.
     
  6. Mark2010

    Mark2010 Active Member

    I agree with you. There's the big "IF". I've just met too many people --- self and family members included --- whose return never justified the investment. College wasn't all that great for me and my degree certainly didn't make me wealthy, but at least I didn't take on a boatload of debt while doing it.

    I've known people in white collar professions who took on upwards of $100k school debt and then couldn't make it as a doctor, lawyer, etc. and are pretty well stuck with the debt for the rest of their lives.
     
  7. printit

    printit Member

    Clinton's plan was talked about in The Naked Economist by Charles Wheelan. As I recall, it was an opt-in program that would have been good for lower paying jobs (like teaching) and bad for higher paying jobs (medicine, investing). So, as anyone who has ever read an econ book should have guessed, a bunch of future teachers signed up and next to no future doctors/investors, etc. signed up. The program was quickly dropped.

    The real problem in education is that the price has increased significantly without the quality increasing significantly. I went to an in-state school in the late 90s for undergrad and paid $1000 and change a semester. That same school today charges $8472 a semester. I doubt it is 8 times better today than it was 15 years ago. If you are a state school, and most/all of your money is coming from state funding and student loans that are guaranteed by the state, what should be determining your price?
     
  8. waterytart

    waterytart Active Member

    Seems to me the notion that each pays the same percentage of his income is closer to the flat tax beloved of conservatives than to progressive taxation.
     
  9. Dick Whitman

    Dick Whitman Well-Known Member

    Are you sure the quality hasn't increased? At least the quality of the results? The income gap between the educated and non-educated continues to widen. Hence, a college degree today is more valuable than it was when you went.
     
  10. doctorquant

    doctorquant Well-Known Member

    You have to be really careful with these comparisons over time. In many states the underlying mechanisms by which higher education is funded have changed dramatically. In my home state, since my days as an undergraduate, the state has (relatively speaking) funded the institution less and the student more. So many, many more students get direct state aid -- in the form of scholarships, etc. -- but the institutions they attend get relatively less than they did before. It makes for a very difficult apples-to-apples comparison.
     
  11. RickStain

    RickStain Well-Known Member

    The issue is that the people being asked to make these sort of utility calculations are helicopter parents and teenagers, neither of whom are particularly rational.
     
  12. College is for sucks.
     
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