House of Lords reform dropped

[Jon Miller]

People with out college degrees find those difficult to deal with too, Jon

Let me put it this way: if there were no people who found that their college education wasn't providing them much more value than what they paid for it, would you think that was a good thing?

There is a huge difference in how you can handle shocks based on a savings of 'one years income' '0' and '-one years income'.

It is a really easy simulation to do.

JM

[Jon Miller]

Having high tuition takes money from the have nots (young students) and gives it to the haves (people who make more money, which are older wealthier people).

Additionally, if you look at tuition versus cost per student you will see that nations which charge more in tuition also spend more to education their populace (per educated member).

JM

[Kuciwalker]

Oh please, the reason for the old UK system was because it was realized that it is considerably easier for children with rich parents to get to university, regardless of intellect or talent. The parents wealth not only tends to lead to a much higher quality education, but when it comes to things like day to day living/travel/opportunities while at university they are much easier to manage for the rich.

1) We have a well-developed system of student loans. People actually avail themselves of this. It allows people to realize the financial value of their human capital immediately, before starting a job, and invest that money in an education.

2) Your observation ("it's easier for the rich to afford stuff") is true of every single sphere of life. That's the entire point of being rich. If being rich didn't mean that you got more/better stuff then who would bother? Taken to its final conclusion your position is literally socialism.

This creates a much heavier burder on the poor to receive the same chances, which on this side of the Atlantic is something we tend to frown on.

The rich going to school makes it harder for the poor to? Are you suggesting that education is a scarce resource that the rich outbid the poor for? If so, then how is that different from every other good on the planet which is also a scarce resource?

The entire point of wealth is to grant preferred access to scarce resources.

[Jon Miller]

We have student loans here too, but it also acts as a deterrent to the poorer kids because if you've come from a world where £20,000 is a fortune, the idea of coming out of university owing that kind of money is a major turn off.

Yes, many people in south africa would never consider taking a loan even if it would delay their education for years (and the unemployment rate can be very high if you don't have an education which is in demand) and it was less than half of what their expected first years income (once they graduated).

I expect that the very poor (urban african-americans) in america view things similarly.

JM

[Dauphin]

We have student loans here too, but it also acts as a deterrent to the poorer kids because if you've come from a world where £20,000 is a fortune, the idea of coming out of university owing that kind of money is a major turn off.

If you get to earn £20,000 a year (where that is a major fortune to you), is paying £30 a month in student loan repayments a major turn off?

Heck, it seems from a google search that if you haven't paid them off after 25 years, they get written off anyway.

[Jon Miller]

The rich going to school makes it harder for the poor to? Are you suggesting that education is a scarce resource that the rich outbid the poor for? If so, then how is that different from every other good on the planet which is also a scarce resource?

The entire point of wealth is to grant preferred access to scarce resources.

This isn't so advantage to the government, which is why it is in the government's interest to provide free education (which is very different than subsidizing it by loans).

JM

[Jon Miller]

If you get to earn £20,000 a year (where that is a major fortune to you), is paying £30 a month in student loan repayments a major turn off?

I can tell you for a fact that people in South Africa would delay their education for years (if their expected income after education was 20k a year, which is much much higher than the median income (which is for the uneducated masses)) so as to not take even 10k in loans...

JM

[Kuciwalker]

Having high tuition takes money from the have nots (young students) and gives it to the haves (people who make more money, which are older wealthier people).

You are wrong. Students are not "have nots". That you think otherwise reveals you as completely un-self aware.

Additionally, if you look at tuition versus cost per student you will see that nations which charge more in tuition also spend more to education their populace (per educated member).

I don't even understand where you are going with this.

[Kuciwalker]

Those students will already do well.

No, I am point out that simply by being smart enough to be accepted to university someone already has already demonstrated greater than average wealth, even if they come from nothing.

[Kuciwalker]

We have student loans here too, but it also acts as a deterrent to the poorer kids because if you've come from a world where £20,000 is a fortune, the idea of coming out of university owing that kind of money is a major turn off.

Student loans should be a deterrent to anyone! That's the entire point of prices! Prices deter people from taking scarce resources so that only people who think they are worth the price take them!

[Dauphin]

I can tell you for a fact that people in South Africa would delay their education for years (if their expected income after education was 20k a year, which is much much higher than the median income (which is for the uneducated masses)) so as to not take even 10k in loans...

JM

The loan repayment system is different in the UK, as I already said.... the amount you owe is almost irrelevant.

[Jon Miller]

It should take Kuci less than an hour to write up a simulation with the following:

starting assets of +20, 0, -20, -60
incomes of 20, 40, 60
shocks of $(one_year_income), 10k (car?), 10k (medical), 10k (second medical) [probably additional ones of family/etc should be here, but those are reasonable]
put a generous interest rate of 5%, make the initial loan (if it exists) have an interest rate of 5% but make any future 'loans' have interest rates of ~20%
remember that for someone to retire living the life that they 'expect' they should be saving ~50% of their income

You can play with the chances for the shocks a little, but the initial starting assets can play a huge role.

JM

[Jon Miller]

Student loans should be a deterrent to anyone! That's the entire point of prices! Prices deter people from taking scarce resources so that only people who think they are worth the price take them!

It means that poor people will not take them, even if an outside rational observer would see that it was worth it to take them.

You need to get away from your view of people as rational economic actors. It is not at all true.

JM

[Jon Miller]

No, I am point out that simply by being smart enough to be accepted to university someone already has already demonstrated greater than average wealth, even if they come from nothing.

This does not have to be true. It is possible to give strong degrees to greater than 50% of the population.

And before you say it is inefficient, Sweden has a better rate of innovation/etc than we do (despite being more entrepreneur and business 'unfriendly').

JM
(and sweden even has a poor elementary/high school system)
(and I know swedes/etc who gladly come to the US to earn more money, so they even lose out (the cost of education) due to this effect)

[Jon Miller]

You are wrong. Students are not "have nots". That you think otherwise reveals you as completely un-self aware.

They are. They are young.

I don't even understand where you are going with this.

It is inefficient.

If you go for the market based solution you have worse outcomes, your outcomes cost more, and you have greater inequality.

Education and Health are two areas where the market has shown itself to be inefficient.

JM