Better ways to pay for college: Rubio and Clinton on reform of higher education - Polidicks

[IMG]http://cdn.static-economist.com/sites/default/files/imagecache/original-size/images/print-edition/20150822_LDC481.png[/IMG] [QUOTE]America is home to the world’s best universities. But taken as a whole, its higher-education system is marred by soaring costs, stratospheric student debt and patchy performance. Tuition fees have doubled in real terms in the past 20 years. Student debt has trebled in the past decade, to $1.2 trillion. A recent study of academic achievement at college found that 45% of America’s students made no discernible academic progress in their first two years. Sorting out this mess demands three things: reforms that bear down on costs, that encourage students to make more informed choices about their future and that match repayments to borrowers’ ability to pay. Mrs Clinton’s plan meets the third of those aims, and nods at the first. She proposes capping the repayment of college loans at a maximum of 10% of income over 20 years. If a loan is not paid off by then the government will pick up the tab. The estimated bill for her scheme, which would push America further towards a model used in Britain and Australia, comes to $350 billion over ten years. Income-based loan repayments make sense. But if government still picks up the tab for defaults, there is little pressure on colleges to curb costs and students to choose wisely. Mrs Clinton’s answer is to make subsidies to colleges contingent on reducing costs. Mr Rubio deals with the three reform priorities more comprehensively. He wants to encourage the take-up of online education platforms to curb costs and has good ideas for how to spread information on the earnings associated with particular degrees. But his boldest proposal is to link repayment of university funding to income by using equity financing, an idea floated by Milton Friedman in 1955. Under Mr Rubio’s plan, private investors would pay for a student’s education in return for a claim on a chunk of his future earnings. Just as dividends accruing to a shareholder depend on a firm’s profits, so a student’s subsequent payments to the investor would rise and fall with his income. Equity financing would lead to more informed choices because investors would be less willing to fund courses and colleges that offer low returns. And it would squeeze costs because unpopular courses would have to trim their spending[/QUOTE] [QUOTE]The more substantive problems involve information asymmetries and moral hazard. Prospective students know better than any investor what they plan to do with their lives. A lawyer who financed his study by issuing equity could, on graduating, afford to choose whether to join a well-paying law firm or to become a public defender without having that decision influenced by the need to repay a mound of debt. From society’s point of view, that freedom to choose has benefits: a debt-laden graduate is less likely to take a risk on setting up a new company and more likely to head for Wall Street instead. But from the investor’s perspective, the risk that students might offer low returns would need to be compensated for by other students pursuing more remunerative paths. People who think they will do well in later life also have an incentive to opt for the certainty of fixed debt repayments rather than face the possibility of handing over big chunks of future income. Again, there are potential solutions: some fintech startups have experimented with models of future income that enable students with better earnings potential to give up a smaller share of income in return for the same amount of funding as those with dimmer prospects. Resolving these difficulties will take time and ingenuity. And whatever happens, it makes sense to have a combination of debt and equity, and of private and public money, in the mix. That’s why Mrs Clinton’s proposals are a sensible start, but Mr Rubio’s ideas are worth serious debate.[/QUOTE] [url]http://www.economist.com/news/leaders/21661663-hillary-clinton-and-especially-marco-rubio-have-promising-ideas-how-finance-university[/url]

Doesn't sound like fixing the issue, but just simply elongating this whole mess of a system.

Hmm, how about finding ways to lower the cost as much as possible instead? Also what on earth is going on in Rubio's plan? No way.

Anything out of Marcos mouth are bad by default. Also here is a great way to fix the issue of high student debt; make education free.

[QUOTE=gastyne;48515809]Also here is a great way to fix the issue of high student debt; make education free.[/QUOTE] So don't pay the staff and faculty that worked their asses and pay out of them too to teach the next generation that'll get in and out scott free? Yeah, THAT tottaly won't cause problems, not at all "comrade." [editline]22nd August 2015[/editline] Nor the fact that said staff and Faculty, at the end of the day, need to eat and sleep somewhere and the money for that doesn't grow on a tree.

[QUOTE=gastyne;48515809] Also here is a great way to fix the issue of high student debt; make education free.[/QUOTE] Cannot work in the United States. Taxpayers would not be able to support the tens of millions of college students. Either education would have to be dumbed down severely (see: have extremely low standards) or go the opposite and have it be a prized thing that a tiny percentage of the population can partake in. It works in places like Europe because you don't have a lot of the population and economic issues that the US does. You cannot simply "make it free", it won't work.

[QUOTE=Zillamaster55;48516247]Cannot work in the United States. Taxpayers would not be able to support the tens of millions of college students. [/QUOTE] Of course they wont because almost all of it goes to the already way too big military spending which can afford a cut.

Bernie Sander's plan to add a tax to high stake stocks sounded pretty legit compared to these retarded plans.

Doesn't only 2% of tax payer money go towards education?

[QUOTE=3noneTwo;48515764]Hmm, how about finding ways to lower the cost as much as possible instead? Also what on earth is going on in Rubio's plan? No way.[/QUOTE] Why not? Literally the only difference is that Hillary's plan uses the government as the financier and has a cap of 10% and 20 years. Rubio's plan is simply offering another financial tool that someone would have as an option. At the very least your financing institution has an interest in you doing well--monetarily anyway--versus 'pay me back now, the only way is to finish the loan or die (if you have no cosigner)'.

[QUOTE]Under Mr Rubio’s plan, private investors would pay for a student’s education in return for a claim on a chunk of his future earnings. [/QUOTE] NO NO NO NO NO NO a second income tax based on educational attainment fuck that

[QUOTE=gastyne;48516359]Of course they wont because almost all of it goes to the already way too big military spending which can afford a cut.[/QUOTE] Does that have to get brought up any time something America related is mentioned. Also you're a Swede, you can enjoy not having to worry about College because you're not an American, YOU don't get to deal with this problem from your cozy computer chair, folks like me and Zilla have to because we're both young hot studs that wanna learn and earn jobs.

[QUOTE=UserDirk580;48516406]Why not? Literally the only difference is that Hillary's plan uses the government as the financier and has a cap of 10% and 20 years. Rubio's plan is simply offering another financial tool that someone would have as an option. At the very least your financing institution has an interest in you doing well--monetarily anyway--versus 'pay me back now, the only way is to finish the loan or die (if you have no cosigner)'.[/QUOTE] Hillary's plan is [I]why[/I] I said "lower the cost as much as possible instead". The way it's described, it sounds like it does [I]nothing[/I] about the cost of the college course, it just puts a 20-year timer on loan debt. Meanwhile, Rubio's plan? The idea that a percentage of a student's future earnings is claimed by some private investor? And that it relies on these investors, who can decide [I]not[/I] to fund, based on the return they get from previous investments in students from similar courses? What about the students who can't get an investor to pay for their education? [I]Fuck all of that[/I]. Lower the cost of education, outright. Higher education should not have cost-prohibitive barriers. No amount of debt-waving or private investment will solve USA's issue of the initial cost of higher education.

[QUOTE=Pvt. Martin;48516455]Does that have to get brought up any time something America related is mentioned.[/QUOTE] Well yeah, because it's such a simple solution for you guys. You could not only bring your nation up to standards with the rest of the developed world, you could also become one of the nicest countries to live in if you were to put some of that military money into health and education.

[QUOTE=Pvt. Martin;48516455]Does that have to get brought up any time something America related is mentioned.[/QUOTE] Yeah because it's a problem that you all seem to ignore whenever making "we're poor" comments. "oh we're poor, we can't afford social programs, don't mind our heavily inflated military spending"

[QUOTE=Zillamaster55;48516247]Cannot work in the United States. Taxpayers would not be able to support the tens of millions of college students. Either education would have to be dumbed down severely (see: have extremely low standards) or go the opposite and have it be a prized thing that a tiny percentage of the population can partake in. It works in places like Europe because you don't have a lot of the population and economic issues that the US does. You cannot simply "make it free", it won't work.[/QUOTE] Population doesn't really affect if we can or cannot. What really doesn't help is our mentality that every person should go to college. We have ridiculous amounts of students only going on the whim of their parents just to fail within the first year. At a estimated cost of $60-70 billion dollars per year to make it free for public universities at current tuition levels, it isn't impossible. Also if you really think it will cheapen the education to be worse, it really isn't that stellar to begin with. I studied a semester in Germany (which is free) and it was basically the same if not better.

[QUOTE=POLOPOZOZO;48516425]NO NO NO NO NO NO a second income tax based on educational attainment fuck that[/QUOTE] A second 'income tax' to pay back the investor who funded your tertiary education. What, would you expect the student to take the investor's money and not give anything back in return? Hell when you think about it, the current progressive tax system already works like that. You go to college to get a good job, and at that job you earn more than you otherwise would without college, so you pay a higher effective rate of tax. Only difference with Rubio's idea is that some of that money which may otherwise be tax is instead a dividend going to an investor. [editline]23rd August 2015[/editline] [QUOTE=Tudd;48516384]Bernie Sander's plan to add a tax to high stake stocks sounded pretty legit compared to these retarded plans.[/QUOTE] No it's an awful plan because it's self-defeating. His idea was that high-frequency trading was bad and would disincentivise the act by placing a tax on it, with the revenue to fund free community college education. However if the tax worked as intended, the revenue for funding community college would eventually dry up as arbitragers and other investors would give up the practice, which would also shock financial markets by threatening the liquidity of financial assets.

Legalize weed everywhere and tax it for education. Free education for everyone! woo

[QUOTE=Pvt. Martin;48516119]So don't pay the staff and faculty that worked their asses and pay out of them too to teach the next generation that'll get in and out scott free? [/QUOTE] You know they still get paid right? There are a number of countries with entire free tertiary education and they still somehow have professors and faculty staff there to run the places. It's called "actually taxing people and spending it properly". Something that I can't say I've ever seen your right-wing consider. And something your left-wing is confused by because they are nowhere near left enough to do it well. [editline]22nd August 2015[/editline] [QUOTE=POLOPOZOZO;48516425]NO NO NO NO NO NO a second income tax based on educational attainment fuck that[/QUOTE] It's essentially how our student loan system works over here. We take a government regulated loan out from a specific company, and once graduated we pay back a fraction (and it is a tiny fraction) of our pay check towards the loan. But only if we're earning over a certain threshold (mine is £15k, newer students have a £19k one I think). It works quite well as if you would be in any form of poverty you wouldn't be paying the loan back anyway, only those who can afford the tiny amount per month will be paying it. And if you can't pay any of it off in a 10 (I think) year period it's stricken off anyway.

[QUOTE=redBadger;48516709]Legalize weed everywhere and tax it for education. Free education for everyone! woo[/QUOTE] I get you're being sarcastic, but anyways as with healthcare in the US the biggest problem isn't how it's funded but what are the funds used for, where are the inefficiencies, where is the waste, where are the costs spiralling out of control etc. Would rather see a market-based system that is efficient over a single-payer system that isn't.

[QUOTE=Antdawg;48516677]A second 'income tax' to pay back the investor who funded your tertiary education. What, would you expect the student to take the investor's money and not give anything back in return?[/QUOTE] No I would expect for the student to be smart in financing college and take out a minimal amount of loans which could be paid back early on, within years of graduating, with lifetime earnings far exceeding the cost of the loans. [QUOTE]Hell when you think about it, the current progressive tax system already works like that. You go to college to get a good job, and at that job you earn more than you otherwise would without college, so you pay a higher effective rate of tax. [/QUOTE] So you'd have to pay wealthy institutional investors on top of an already progressive income tax, FOR LIFE. [QUOTE]Only difference with Rubio's idea is that some of that money which may otherwise be tax is instead a dividend going to an investor.[/QUOTE] So you too can become a shady private investor for some chump in college so that they too can become shady private investors! That's like a nation wide pyramid scheme. We're already paying to prop up baby boomers on FICA taxes for programs with no guarantee that we'll have them ourselves. Taxes which are completely unavoidable even with tax-advantaged retirement accounts. [editline]22nd August 2015[/editline] [QUOTE=hexpunK;48516743] It's essentially how our student loan system works over here. We take a government regulated loan out from a specific company, and once graduated we pay back a fraction (and it is a tiny fraction) of our pay check towards the loan. But only if we're earning over a certain threshold (mine is £15k, newer students have a £19k one I think). It works quite well as if you would be in any form of poverty you wouldn't be paying the loan back anyway, only those who can afford the tiny amount per month will be paying it. And if you can't pay any of it off in a 10 (I think) year period it's stricken off anyway.[/QUOTE] This sounds like the Clinton plan, not Rubio's.

[QUOTE=hexpunK;48516743] It's essentially how our student loan system works over here. We take a government regulated loan out from a specific company, and once graduated we pay back a fraction (and it is a tiny fraction) of our pay check towards the loan. But only if we're earning over a certain threshold (mine is £15k, newer students have a £19k one I think). It works quite well as if you would be in any form of poverty you wouldn't be paying the loan back anyway, only those who can afford the tiny amount per month will be paying it. And if you can't pay any of it off in a 10 (I think) year period it's stricken off anyway.[/QUOTE] Yes, but this is America, "wealthiest country on Earth" (actually more accurate to say "more rich people live here than anywhere else despite 'oppressive' tax rates!"). The general consensus with fiscal conservatives believing that any money you've earned (whether through work or investment) you were directly entitled to basically means such a system here would work like so: [img]http://i.imgur.com/208yAs1.jpg[/img] [editline]22nd August 2015[/editline] [QUOTE=POLOPOZOZO;48516425]NO NO NO NO NO NO a second income tax based on educational attainment fuck that[/QUOTE] "It's not technically debt if we just make you give us a percentage of your earnings. :^)"

[QUOTE=Pvt. Martin;48516455]Does that have to get brought up any time something America related is mentioned. Also you're a Swede, you can enjoy not having to worry about College because you're not an American, YOU don't get to deal with this problem from your cozy computer chair, folks like me and Zilla have to because we're both young hot studs that wanna learn and earn jobs.[/QUOTE] So you are arguing against your own cause then?? We are all human and we all have education and money to buy services with. America isnt a magical place where money doesnt work like it does everywhere else.

[QUOTE=Zillamaster55;48516247]Cannot work in the United States. Taxpayers would not be able to support the tens of millions of college students. Either education would have to be dumbed down severely (see: have extremely low standards) or go the opposite and have it be a prized thing that a tiny percentage of the population can partake in. It works in places like Europe because you don't have a lot of the population and economic issues that the US does. You cannot simply "make it free", it won't work.[/QUOTE] It absolutely can work in the US. Don't ever say that. The only reason something "cannot work in the US" is because people like you believe it can't. First and foremost, colleges need to cut costs, especially on administration. American colleges are ranked very high in the world, but they are expensive and they maintain that prestige by making their students pay the exorbitant fees. In particular, colleges spend a lot of money maintaining redundant administrative positions or construction. Second, more money would need to be diverted from other budgets. In particular, the defense budget is still immense and completely unnecessary. Finally, taxes would probably go up slightly, but because that cost is distributed among the 300+ million Americans to pay for the several million in college, it would be cheaper for the individual than actually paying tuition (however, some people wouldn't go to college and they might view the tax as unnecessary.) It worked in Europe because they shouldered the debt at first, but the free college allowed them to build a very educated workforce that made a lot of money off of lucrative service jobs. Those people then made more money, which meant more money was made in taxes for the government, which was then reciprocated into the universities. It is a self-fulfilling prophecy.

[QUOTE=BananaFoam;48517409]It worked in Europe because they shouldered the debt at first, but the free college allowed them to build a very educated workforce that made a lot of money off of lucrative service jobs. Those people then made more money, which meant more money was made in taxes for the government, which was then reciprocated into the universities. It is a self-fulfilling prophecy.[/QUOTE] Yet the US has a higher or equal proportion of college graduates when compared to most of Europe. (The only European countries ahead of us are Norway, UK, and Ireland) So, no, Europe didn't generally have any more people graduating college because of their policies, therefore making more money in order to pay taxes.

[quote]Under Mr Rubio’s plan, private investors would pay for a student’s education in return for a claim on a chunk of his future earnings. Just as dividends accruing to a shareholder depend on a firm’s profits, so a student’s subsequent payments to the investor would rise and fall with his income. Equity financing would lead to more informed choices because investors would be less willing to fund courses and colleges that offer low returns. And it would squeeze costs because unpopular courses would have to trim their spending[/quote] this sounds awful lol. it would kill any non STEM degrees

[QUOTE=Wayword;48517617]this sounds awful lol. it would kill any non STEM degrees[/QUOTE] That's the point. We don't need hundreds of thousands of people with a BS in psychology when the market is already saturated. Why do you think graduate unemployment is so high?

[QUOTE=Fourm Shark;48521784]talk about finding the worst way possible to deal with a problem[/QUOTE] I dunno about being the worst possible way. Perhaps when we're talking about postgrad and specifically research degrees where the outcome isn't necessarily for an economic purpose. However with undergrad degrees the fact is people want them because they open doors to employment. I reckon equity-based financing of undergrad degrees is something that should be discussed. Perhaps even a governmental approach to equity financing, or a market where private investors compete with each other and the government option is an option of last resort. In the end it's a question about debt versus equity, I think most students would prefer that they might owe someone like 5% of their income for thirty years rather than the daunting fact of graduating with something like $50,000 debt, with interest, and regressive repayments. [editline]23rd August 2015[/editline] Anyways is someone able to explain what happened from 2000-2005 where debt in real terms stopped growing but ended up resuming?

[QUOTE=Pvt. Martin;48516119]So don't pay the staff and faculty that worked their asses and pay out of them too to teach the next generation that'll get in and out scott free? Yeah, THAT tottaly won't cause problems, not at all "comrade." [editline]22nd August 2015[/editline] Nor the fact that said staff and Faculty, at the end of the day, need to eat and sleep somewhere and the money for that doesn't grow on a tree.[/QUOTE] He's not advocating for not paying the teachers at college, but instead putting our tax dollars into making public colleges free like high-school and other pre-secondary education is. We'd probably have to take money out of our military budget to pay for it, but let's be honest here our military is [B]bloated[/B]. [QUOTE=Zillamaster55;48516247]Cannot work in the United States. Taxpayers would not be able to support the tens of millions of college students. Either education would have to be dumbed down severely (see: have extremely low standards) or go the opposite and have it be a prized thing that a tiny percentage of the population can partake in. It works in places like Europe because you don't have a lot of the population and economic issues that the US does. You cannot simply "make it free", it won't work.[/QUOTE] Really? We support thousands and thousands of soldiers, tanks, aircraft, and ships. We can't take a small piece of that pie and apply it to making our people more employable and more educated? Right now higher education [B]is[/B] a prized thing that only a tiny percentage can really take. The rest get buried under student loan debts. Also I'm certain it would work, just because Europe isn't as large as America doesn't mean that it's totally unrelatable. We're the [B]most wealthy country in the world[/B] and you're telling us we cannot afford to pay for our children's education?

[QUOTE=Reshy;48522047]He's not advocating for not paying the teachers at college, but instead putting our tax dollars into making public colleges free like high-school and other pre-secondary education is. We'd probably have to take money out of our military budget to pay for it, but let's be honest here our military is [B]bloated[/B]. Really? We support thousands and thousands of soldiers, tanks, aircraft, and ships. We can't take a small piece of that pie and apply it to making our people more employable and more educated? Right now higher education [B]is[/B] a prized thing that only a tiny percentage can really take. The rest get buried under student loan debts. Also I'm certain it would work, just because Europe isn't as large as America doesn't mean that it's totally unrelatable. We're the [B]most wealthy country in the world[/B] and you're telling us we cannot afford to pay for our children's education?[/QUOTE] I mean yes like with all government programs, the military should always be subject to financial review and have costs cut wherever they are redundant and reforms made wherever they are inefficient, but I don't think you'd be able to completely pay for higher education in the US simply by cutting a chunk out of defence spending. Single-payer higher education also doesn't answer problems such as unmotivated students seeking out degrees and adding burden to the system, or cost inefficiencies. That's not to say that the funding system in American higher education doesn't need reform. Moving to income-based repayment should definitely be a thing. For instance you could have a scheme where federal loans are subject to 2% interest, and students start paying off the loans via the IRS as soon they take them out (reducing how much debt they graduate with - especially the interest fee). The schedule for repayments would be like: - First $50,000 of taxable income: 5% - Balance of taxable income above $50,000: 2.5% - Minimum weekly repayment: $10 per week Eg earn $20,000 per year, your repayments are $1,000 per year or roughly $20 per week. Graduate and earn $80,000 per year and your repayments are (5% of $50,000) $2,500 plus (2.5% of $30,000) $750 = $3,250 per year or around $60 per week. Yes it acts like a regressive income tax but that's the point. It makes the student imminently aware of the cost of their education; adds the price signal. Having the regressive brackets would encourage students to seek out productive degrees (and work harder in them), so that the more income they expect to earn after graduating, the lower their repayment rate. Having the minimum weekly repayment of $10 per week (so if your income is below $10,400 you still pay $10 per week) would further weed out unmotivated students. And before people blast the latter idea, do consider that the student is receiving federal assistance to pay for their degree, so $10 mandatory repayment per week is the least they can do. Or they can just get a private loan.