Meaning that society's resources are allocated efficiently. Example of a -EV loan:

Student is extended a loan to go to college
Student learns nothing useful
Student pays loan back after school (or doesn't pay it back, I think its irrelevant to my point)

In this case the capital extended to the student was not used to produce goods or services at a higher rate than he/she would have without the loan. It amounted to people passing money back and forth to each other.

ok. So then what makes you, or anyone else, believe that the decision to give EVERYONE money to go to a 4 year public undergrad institution is a good idea. Wouldn't this drive some people who learn nothing that is ultimately beneficial to college? Wouldn't you risk people who would be better served by private schools going to public schools because the price gap has widened even further?

CDL,

He's not disagreeing with you. He's saying that things like grad school loans are +EV for all involved, undergrads not so much. The "Student loan burden" involves -EV loans for things that are not economically beneficial to anyone other than bankers and connected industries. The more there is a movement to publicly fund these things, the worse it is for society while the political class as well as the elites further their power. "Good intentions" does not equal good policy.

Correct. I think that is probably a horrific idea for the reasons you and I have laid out.

The people who are actually unable to pay back their loans are typically the ones that are not using an advanced degree even though they paid for it. If you took out 200k to become a computer programmer you are probably able to pay your loan off. If you took out 200k to study Renaissance Art then you are probably struggling to foot the bill. The people who are hurt most by having to pay for their own schooling are also the ones who are benefiting society the least after graduating as they have elected to study fields that are not as important to society.

By paying for everyone's college we pay for college for those who don't go into fields that are valued as highly by society and take any burden away from them. While we also improve the situation for those who do go into fields we value they are not the ones who are the subject of current debates on the burden of student loans.

ok cool. I think we are on the same page now that free tuition is -EV in that the +EV situations are often +EV even at current costs. I think many others still disagree though.

got it

I agree that in general a loan to a med student or something is generally +EV for all. The person taking the loan can now afford to pursue a field that they otherwise couldn't, the person underwriting it profits, and society benefits from another doctor.

I mean what is the point of loans in society? It is so that people who don't have capital can get capital in order to make more capital. Creditors bear the default risk of borrowers and to compensate charge a rate that should make them a profit. Creditors are happy because they profit, borrowers are happy because they bettered their life, society benefits because $1 of output was turned into $1.25 of output.

This has broken down in the credit market for student loans. Under normal market conditions creditors should wise up and stop offering loans to people that they can't profit off of.

Now the gov't may step in and say wait a minute too many people aren't bettering their lives from private loans and since education is so important we will become a creditor. Now do we really believe that the government and all its inefficiencies will do a better job allocating resources than the private market whose entire business model is predicated on doing just that?

But I think Bernie is just making a philosophical point that college education at an undergraduate level should be more important than having a home.

Yeah I am a massive believer in education and some might find that inconsistent with my post above. But I believe the answer is in improving the educational system itself by training better teachers, making better schools, and in people improving their life skills with or without formal education. In that sense it is an investment. Extending credit to people who do not deserve it is not an investment under our current educational system.

I agree with this. I also believe you are using credit to include any tuition free programs funded by tax dollars which makes sense, but correct me if I am wrong.

So let's make the case for Bernie: Everyone goes to college for free.

Now we have to fund that with taxes. So you have to prove that the gain of universal free college is greater than the loss of taking money from people who were planning on using it in society elsewhere.

Bernie would probably argue that it funds itself due to people educating themselves who otherwise wouldn't. So in addition to the above, you have to prove that the gain in expected future output is higher than the current future output + cost to taxpayers.

Furthermore, if this is the case then why doesn't the private market choose to give out student loans willy nilly to everyone?

I've done a 180 on trade professions. When I was in high school I was all "Of course I'm going to college, I'm smart!" like every a-hole 17 year old. I looked down on stuff like being a plumber. I don't at all now. I had a friend in HS who went to one year of community college, somehow got into the pipefitters union, and now makes something like $85 an hour.

I didn't even major in something ridiculous like sociology in undergrad, I majored in biology. But when I graduated and went to work at a biotech, I basically had to learn every technique required for the job on the job. I guess I understood the science of everything, but they didn't teach us **** that would let us walk right into a place and start working. There are parties though.

This doesn't mean that everyone should get a college degree

There really should be extremely available career counseling starting at about 8th grade. There is still this prevailing attitude "just work hard in school and everything will work itself out" which just doesn't work anymore. People do that and end up with a shiny diploma, debt, and no ****ing idea what to do. It's great to read books and all, but what is your JOB going to be? You kind of have to have one.

random post from today at a blog I check every once in a while about higher education (tho i disagree with the blog a lot of the time and think there is a good amount of partisan cheerleading)

not a whole lot of substance on solutions but the stats are still pretty hard to take as acceptable

http://www.lawyersgunsmoneyblog.com/...pportunities-2

paul campos has written really good stuff on the law school scam which might be the worst in terms of money going in and expected return...certainly some schools are absolutely no hopers and taking advantage of morons

Concur counselling and guidance is super lacking.

I wish I knew earlier about things like pensions. Makes so many government jobs look pretty elite. Being able to retire at 50 with basically full salary or 75% of a ridiculous salary is so much damn gravy.

And, yeah, 4 years of income in trade, plus career advancement, vs. 4 years of debt saddled with interest is a pretty big starting point advantage. Also the trade person is likely to be paid more for several additional years also. Add in 9-5 type hours or overtime and suddenly it's not such a slam dunk case which has the higher NPV.

Just exchanged emails today with a real estate developer and he commented on a lot of this stuff. In his line of work they generally have to wait a month for qualified carpenters to start wood frame construction and clients can get pissy when they see nothing happening on their project. Also said that somewhere along the line "higher education" came to be a synonym for college and that there is just a huge marketing issue getting kids into trades even though he knows many people that did indeed get into them that are making like $80k being welders and pipefitters before some of their peers are even out of undergrad. He's a big fan of lower corporate taxes and some kind of tax credit for training programs if companies do it themselves to get the workforce where it needs to be.

And Osis he also said that in his experience guidance counselors don't even treat it as an option until some kids realize they might be washing out in late high school and college maybe is not for them. Treating trades or technical schools as a realistic, potentially quite profitable option depending on the student from a younger age is a big deal. In his mind it's purely a marketing problem.

I agree with him for the most part. I would say there is a significant hurdle to overcoming the stigma of blue collar work as lower class or only for people who aren't that smart, but I suppose that could be rolled up into marketing. The other issue is most teenagers don't realize the opportunities available with or without college or have realistic expectations about earnings in any career fields so they associate the intelligence required for certain careers with high pay even though that's not a perfect correlation.

I think its obvious to everyone who isn't delusional that we have terrible career guidance and personal finance guidance for kids and youth in this country and we would all be better off if that improved dramatically.

This is what my dad did. He's worked as a civil engineer for the state for 30 something years and will retire in a few at 65. I think he gets 75% of his salary after that, which is solid because he has to be at the top of the pay scale by now. People get mad about state pensions though. Even though you make less than in a private company and often people take the jobs for the benefits, people get heated. Oregon state employees even had to forgo basic pay raises (basically inflation raises) for a couple years a while back to keep their pensions. It was hilarious, almost along the lines of a "Dey tik our jebs" uprising.

People should get mad about state pensions though. It actually is a giveaway opposed to calling repealing a tax a giveaway.

I think people are more upset about pensions for people like teachers and postal workers, which, yeah I agree. You hauling envelopes around for 40 years making 60k/yr should not qualify you for a free retirement. Replace that **** with something-%-matching 401ks. Most pensions are underfunded anyways.

I think people get most upset about firefighters and police rigging their pensions which are sometimes absurdly exploitable with guys taking enormous amounts of overtime in their last two years to lock in their pensions at very high levels. Additionally, it's not uncommon for a guy with 28 years in to get a nice promotion for his final two years and then get his pension based on that farewell promotion rate.

+ public sector unions are "negotiating" with a lot of the people they helped get elected afaict unless i'm missing something. seems kind of inevitable

But they also have to work a lot harder generally. White collar is the greatest.