The Upside And The Downside

As I wrote in yesterday’s post, there are good and bad things that come from new technology and new innovations.

The challenge for many of us is that the promoters of the technology only want to talk about the upside. And often the media responds by focusing on the downside. It is hard to find a balanced take on things.

Let’s take this Bloomberg article on ISAs in which students trade a percentage of future earnings to fund tuition. The headline is “College Grads Sell Stakes in Themselves to Wall Street.” Which of course, is the negative narrative on this innovation in financing education.

As my colleague Nick pointed out to me this morning, “the stories often seem to ignore the reverse: how hard it can be to carry a large amount of debt, which is the situation that the vast majority of student loan holders find themselves in.”

The whole ISA movement is a reaction to the student debt crisis that many in this country have found themselves in.

Certainly there are questions that need to be asked about ISAs and the model will evolve and adjust over time.

But to throw ISAs under the bus by suggesting that “students are selling themselves to wall street” is the kind of negative narrative that doesn’t help anyone.


Comments (Archived):

  1. Pieter

    I believe it’s time to work on affordable options for education that carry the same amount of credibility. Looking at it from all angles is important to get creative and find new solutions.

  2. Eric Satz

    Easy to read in a negative light but I don’t. Professional golfers and tennis players have done this forever. If you have enough going on that others are willing to finance your future with *equity* that’s a good thing.

    1. awaldstein

      Neither do I.We need lots of different options and this one makes sense to me.How are you my friend? Been too long.

      1. Eric Satz

        super, thanks. you? inflight to your hometown now.

        1. awaldstein

          you know how to contact me.late afternoon glass of wine is almost always possible when in beautiful in NY today.

          1. Eric Satz

            finish around 630ish. depending on timing of dinner may be able to swing a cocktail. will text. best, e

    2. JamesHRH

      I met a guy about 20 years ago who played a season on the Gold Coast tour, realized he could not putt at a pro level & ‘paid back my sponsors, bought a new car & called it a day.’

    3. Pointsandfigures

      Traders do it too.

  3. William Mougayar

    Snazzy headlines sell eyeballs. And a bit of drama. That’s always been the case for all media. The “Man Bites Dog” principle lives on.

    1. awaldstein

      This will never change. Partisanship will not lesson.Good ideas, well presented cut through the shit and find their audience. People–lots of them need a solution.Complaining about the media is in the same category of lamenting aging. Not very helpful nor satisfying to me at least.

      1. William Mougayar

        I was implying it was a reality.

        1. awaldstein

          You are right–it is!Nor is it going to change. And it doesn’t really matter as more and more I believe we all have to move on and create new solutions, new outlets, for a new world and leave the rest of the shit be.It’s like fixing advertising with the blockchain, why bother? Find and make something new and better.

  4. Pointsandfigures

    They’ve done it for grad school for years. Why not do this with immigration? If a corporation wants you, let them pay for you and your family to immigrate. You do a private negotiation with the company on yrs of service etc.Military academies also require at least five years of service. ROTC requires years of service after graduation.It’s a willful choice not a forced one

    1. BillMcNeely

      Works in Kuwait. I started off with 10 day business visa. If the company decided to keep me it got extended to 3 months. At the end of 3 months, the company had to decided if they still wanted me. If they did, I got sent out of the country to process for a 1 year visa for 4 years. Once I had a visa, I signed a 1 year contract and was given a moving allowance for my family. If I failed to complete the year I would pay the company back for the visa and the moving allowance.It really urks me when visa sponsorship is a no go for hiring people from overseas in this country.Corporate America has to be part of the immigration issue. Can’t be there just for the benefit of cheap labor and tax handouts. Hence the backlash against capitalism at the moment here in the US.Work visas could solve a lot. Gets people in the country legally for a purpose. Allows people to draw benefits for a set time and expense.Having work visas could help highlight the benefits of citizenship to US citizens themselves in the process.

  5. Conrad Leonard

    For nearly 30 years now in Australia we have had essentially the state-run version of the ISA business model as the primary means by which students pay for their tertiary education. Nothing up-front, with a contract to repay the cost of the study out of taxable income in future. The loan is indexed to CPI, and the higher you earn, the faster you repay. If you don’t cross the earnings threshold you may never have to repay. A very progressive model for funding education if you ask me.

    1. DJL

      In the United States we have political leaders that do not even know that their own government took over student loan finance. She is HEAD of the House Financial Services Committee! That might tell you why some things don’t work in the US.https://www.washingtontimes

  6. curtissumpter

    This to me is hilarious and anathema and will eventually lead to a huge reckoning with massive blow back. You’ll see poor kids paying a personal tax to wealthy people for the privilege of attending universities that were funded by tax payers to begin with.When you have minorities doing it, it will smack of indentured servitude or worse. People will get greedier and greedier with their terms and the very visible burden will look and feel wrong.In a day and age when everybody’s talking about income inequality the last thing you want is investors imposing personal taxes on the young and non-wealthy.Politically it’ll be disastrous. AOC, Sanders, and Right Wing Populists will have a super salient selling point. Some will call it slavery for education.This. Is. Stupid.

    1. Conrad Leonard

      Yes, I think you’ve made Fred’s point about unhelpful caricatures very well.

      1. curtissumpter

        Unhelpful caricatures can just be the truth.Is there any room for the truth?Sometimes the truth is just ugly. Fred’s a financier. So to put this in a financiers vernacular with a commonly used phrase. ‘you can put lipstick on a pig. But sometimes a pig is just a pig.’

        1. iggyfanlo

          You insult the very people you claim should be protected. These students are simply being given another option to get their educationIf your point is that the education is poor value like some online colleges of the past, I may tend to agree.But if your point is that giving options to people is wrong because they aren’t sophisticated enough to evaluate them, then I believe you are condescending to them

          1. curtissumpter

            People may be educated enough. They may not be. But I’ll tell you who definitely isn’t educated enough: 17 year olds.I’ll say that with no shame and no caveat. A 17 year old is not educated enough to sign away a percentage of their earnings for the next 5+ years of their lives. No. No they’re not.

          2. iggyfanlo

            Then by simple inference they should also not be able to take out student loans. By most measures that’s an even bigger financial commitment.So they pay cash or they go home?Or if they’re very lucky one of the very few with grants or full scholarships?I believe your position on financing college education has a logical outcome that is far from optimal for offering education to all those that would like one.

          3. curtissumpter

            My position is simple and traditional.Loans are made by lenders knowing that they can lose their investment by not lending wisely. However the industry and the government have short circuited this mechanism by disallowing loans to be discharged through bankruptcy. Now lenders make loans with no risk and borrowers have no choice but to borrow b/c educators know the academy is the most assured way to a better life and therefore continously raise prices.The key is to put risk back into the system. Allow loans to be discharged in bankruptcy proceedings. Lenders will lend less frequently but educators will lower costs because they will still need students. Students will be forced to be more careful with their debt burdens. Sanity will be restored.This option of ISAs is very troubling. Lenders have a very long record of being unseemly. This is a very very very very very ugly picture: people working for lenders, sharecropping in essence. This is hideous.

          4. iggyfanlo

            I appreciate your position, but I can say with some experience (was involved with origination and securitization of all types of loans, including mortgages, personal, student, etc (tens of billions of $), the amount of student loans available to students without federal backing or insurance would fall by more than 90%.In essence, it would disappear with federal backing or parental co-signing. For the same reasons that you say a 17-yr old cannot make good decisions, no lender would take that risk.So I believe (and I assume others) that what you call share-cropping, I call financing. It’s been true for venture capital, venture debt, high yield debt, IPOs,… they all are future value exchanged for risk today.Also, since your alternative is not feasible, then what do you suggest?

          5. curtissumpter

            I disagree with your premise. I’m a developer in FinTech and I’ve worked in FInTech for 5+years.Loans used to be able to be discharged in bankruptcy and the loan market was just fine. Google: Adam Ruins Everything Student Loans. So I won’t belabor this point.And I’m glad you brought up the sharecropping point. There’s a difference between VCs, High Yield, and ISAs.VCs and High Yield are investing in a corporation. You can walk away from a corporation. That’s exactly how it’s designed.You can’t walk away from you. When they want a percentage of your income they want a percentage of you in essence. And I’m pretty sure the bankruptcy laws aren’t equipped to deal with corporations who have equity positions in people.Let me say that again: equity positions in people. Equity is a synonym for ownership.Does that term not rock you? Does it not move you in a queezy fashion? Does it not make you nauseous?

          6. iggyfanlo

            Quite the contrary.I’d MUCH prefer equity (which has no voting rights) to debt that is non-forgivable in a bankruptcy.As a many-time entrepreneur, I would have loved equity as an option (not forced function) for any avenue.And as an individual, I’d like more financing options. Think house down payment or such.

          7. curtissumpter

            You fundamentally don’t see the difference between an asset (a house, a corporation, a website) than a person?To tell you the truth I’m not even sure this is Constitutional.Every American has the right to life, liberty, and the right to own property. You can’t relinquish your rights even if you want to. In essence these kids would be relinquishing part of their income potential, in essence part of their right to own property.I’m not even sure this is legal.But I’m 100% sure it’s amoral.I couldn’t look my family in the eye and tell the people I love I own a portfolio of people.”Hey Sara.””Daddy, What’d you do today?””I had to talk to some of my investments. Bob Brown. Cindy Lassiter. Erica Goodstein. Jim Morris.””Daddy, you own people?”I’m never having this conversation. If you want to I’ll pray for you brother. I’ll pray for you.

          8. iggyfanlo

            I’ll use your phrasing from above….In essence these kids would be relinquishing part of their income potential, in essence part of their right to own property.What do you think debt is? Or for that matter any financial obligation?These kids would be relinquishing part of their income to pay back interest and principal on the debt they took out.You see them as distinctly different things… they are just shades of gray on a balance sheet, whether corporate or personal entity.

          9. curtissumpter

            Debt is an obligation.Equity is potential.It’s totally fine to own a corporations potential. That’s what equity is.It’s totally wrong to own another persons potential.We fought a war over it.This whole conversation makes me nauseous.

  7. curtissumpter

    I just have to say the key to lowering education costs is not finding innovative ways to finance education.When I hear people in finance innovating I get super nervous. That’s what they said about Synthetic CDOs.The way to lower education costs and lower the debt burden is simple. Reinstate the bankruptcy laws that allow for student debt to be discharge in bankruptcy. The problem is that education is necessary but there is no risk for lenders and educators know that education is a necessity, leading to unchecked price increases.The system needs a way to penalize bad lenders (lenders who don’t accurately measure risk) and for lenders to discipline universities by not supporting their price increases through loan approvals.That’s the solution. Not this.

    1. Conrad Leonard

      The way I read your argument is “the way to lower education costs is to increase the risk to lenders”? It’s pretty hard to figure how that would work. But it’s all besides the point because I don’t believe anyone’s making the argument that ISA’s will lower education costs. The arguments in favour of ISA’s are about accessibility, downside protection, and consequently uptake rates. Lower cost is a different (and equally valuable) problem to solve.

      1. curtissumpter

        I appreciate your point.But I think you’d have to agree there’d be no market for ISAs if the price of education (and thus the debt burden) were manageable.ISAs are Robitussin. I’m saying “Just cure the goddamned cold.”

        1. JamesHRH

          Fred is right that this narrative is inexcusable. It is typical lazy #faketake MSM BS.Financial innovation in education is not being driven by Wall St. Its being driven by entrepreneurs.Check this out: https://lambdaschool.comFour year college degrees are expensive because their product is perceived as a Golden Ticket to success. The thing no one wants to hear is that 80% of current and future US college degree holders have no business being in college. Especially in any non professional or non technical (science) area.The other thing no one wants to hear is something that Fred admitted to here @ AVC: the value of his MIT degree is completely driven by its social aspects:- the people who were students with him;- the faculty who taught him & their social connections ;- the brand recognition of MIT ( MIT = Smarty McSmartPants ).The engineering stuff was pretty much a commodity.And, in a interesting counter intuitive twist that makes marketing people worth their weight in platinum, the ability to access the learning for free online…..drove up the value of the social aspects of a college degree.How much would you pay to set yourself or your child up in a social circle of movers, shakers & touchdown makers or to tie yourself to a brand association that lasts decades?A lot, as recent criminal charges have shown.

    2. Anne Libby

      Yes, and we should also be asking a question — why has the cost of education increased so much in the last generation?Has education improved, relative to the increase in cost?

      1. curtissumpter

        Costs are a function of inputs. Price is a function of cost and value.That’s what’s so mindboggling to me Anne. The costs of universities is relatively stagnant. Chalk hasn’t gotten more expensive. Universities aren’t buying more land. Most are land grant universities. Their tax burden hasn’t increased. Professors aren’t being paid a lot more from what I see. Educational outcomes haven’t improved.It appears just to be straight value skimming. The perceived value of an education has gone up and so we’ll raise our prices accordingly.I don’t get it.

        1. Anne Libby

          Me neither! It’s hard to see what has changed. (And in fact, professor jobs are more precarious than they were — many are adjuncts, paid by the course, and may not receive benefits.)I graduated from a private university in the 1980s, financing my first year with money I made working in restaurants during a gap year (while living rent-free with my family.)My peers and I worked summer jobs in retail, restaurants, lifeguarding and such, because this kind of money made a sizeable dent in the cost of college.This would not be possible today, and I think about this a lot. Not just for the kids in my own family, but with what the young people I work with contend with in terms of debt.”Innovation” around lowering costs seems limited to unproven (to date) experiments with online degrees. IMO this will not democratize education, but further drive a wedge between the people who are able to finance the in-person experience — the one with network effects that help you career-wise — and those who do not have that option.

          1. JamesHRH

            Its a demand problem.Rice U in Houston accepts <2000 undergrads a year. This year they had 22,000 applicants.You’d raise the rates in the face of that wave of demand, wouldn’t you?The USC brand experience is, apparently, worth $500,000 of non-tuition based investment…….

      2. Richard

        This is exactly the question to be asked and answered.

    3. iggyfanlo

      Curtis you seem like an earnest and sincere person, but your problem is apparently with capitalism not with ISAs; which is a fair debate, but saying that financial innovation is dangerous for people to CHOOSE is infantilizing everyone…

    4. Richard

      Colleges should also be regulated like Banks and insurance companies. Academics hacs too cozy of a relationship with politicians.

  8. creative group

    CONTRIBUTORS:Is the supposed negative narrative regarding the ISA true?Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

  9. J. Lightfield

    Kind of hearkens back to the days of guilds, apprenticeships and patrons. Which suggests that an investment is education needs to be tightly tied to work output rather than as a financial investment expressed as a percentage of ROI.

  10. DJL

    There is a fundamental mismatch between the cost and value of an education in the modern market. Kids are over-paying for 4 year degrees that will take them years to pay back (if they are able.) Meanwhile we have millions of skilled labor jobs that go unfilled. So the higher education system is creating a “product” that costs too much and does not fit the market.The big question is this: Where is the pressure on the higher education system to lower costs? How about holding them accountable for the value of the degrees they produce, like we hold companies accountable for the products and returns they produce? We have tens of thousands of tenured professors who never had to worry about losing their jobs.While it is has become essential to think about refinancing education. It’s time to put pressure on the university system. No political party is close to taking this on.

    1. iggyfanlo

      Why do we keep looking for political solutions to obvious market problems? The college scam scandal spells it out so clearly.People are buying a brand and credibility with a “top college degree”, not an education. Market can and have found an easy technological solution, but consumers don’t care… it’s like paying $500 for sneakers… they’re not 10X better just status symbols and signaling behavior…I’m reading here that some people want to legislate against brand preference or financial innovation…This is the same tired old story about public television versus network or cable or NetFlix… the quality of the education or content may be the same, but consumer preference is obvious…33

    2. sigmaalgebra

      What you seem to want is not a research university but a teaching college, community college, or trade school — we have lots of those, too.The main shortage in US education is just GOOD STUDENTS.Tenure doesn’t mean much: E.g., it does NOT come with automatic cost of living increases. Also academic politics is GRIM.The research university system is a lot like professional athletics if take away several zeros from the potential money to be had: A good research university career has the guy bring in RESEARCH GRANTS where about 60% goes to university “overhead” and the rest goes to lab equipment, professional travel, support of grad students, and, yes, finally, the prof’s salary. It’s a LOT of really hard work; the significant job security is from the publications record, professional reputation, i.e., rock star quality, i.e., they are always free agents, and the real status of their career is their most recent job offers elsewhere and research grants and next to nothing to do with tenure.For the right wingers in the audience, the system is wildly, intensely COMPETITIVE.But the most highly regarded academic degrees are from the best research universities, and that is not completely wrong — there is a point there.But good students pay little or no tuition. When I was a grad student and teaching, I lived well and saved some money.

      1. DJL

        I get your point. But why do college costs continue to go up at rates way beyond inflation? Why are the “big rich” universities not under scrutiny from the Democrats? (Oh, because that is where they went to school!)

        1. sigmaalgebra

          It’s been a while since I was in a college or university, as a professor and longer as a student. I know when I was a professor, in Columbus, OH, a standard single-family house cost at least six times my annual income from the university. In a year or two, I did enough consulting to double my income, but it still didn’t much feel like buying a house was reasonable. Some of the profs who had been there a long time had nice houses: Just how they did that I don’t know.In the US buying a house usually takes a mortgage, but as Wall Street plays financial games and DC goes for absurd foreign adventures, the economy gets messed up, with depression so that people don’t have the money or inflation so that interest rates are too high, and, net, apparently there have been mostly just fleeting intervals when could buy a house on anything like the income of an assistant professor.Net, I never saw a way for a professor to buy a house.Best I can tell, in the US, houses get bought because the wives go to work and the couple delays and then fails to have children. Some such IS true on average since in the US we are going extinct. Dad never had trouble buying a house; just what is different now I don’t know.I saw one pair of profs buy a nice house and have two kids, but they both worked, having the kids and getting tenure was a struggle, and they had some significant bucks from their parents.Net, although college costs have gone way up, I don’t see the professors making much money.To some extent, the colleges waste money on grass, trees, fountains, string quartet concerts, theatrical plays, a limo for the president, etc., but I can believe the waste is not much worse than other organizations of that size.One old guess was that colleges and universities were seen as so good that they deserved subsidies from churches, foundations, alumni, governments, earnings on endowments, licensing, the football team, etc.And they were seen as so good that they had to give scholarships to good students with little or no money.Finally it dawned on them that they should charge what the market would pay — people with money should pay more. If want to pay less, then be a good student. That is, for the charity, don’t let the rich students have that and make them pay.So, the list price went WAY up — maybe there were also some other reasons for that price increase — and then the actual price went way down for good students with little money.One place I am tempted to scream is where US families who struggle to pay for college for their own children pay taxes to subsidize US college educations for students from poor countries where their family was living on $1000 a year. Sure, if some Saudi prince wants to pay big bucks, okay, but why tax US citizens to pay for college to compete with their own children? Bummer.There are credible reports that there were some business/government national plans for this scam, having the NSF write into research grants that so many students had to be supported and, hint, hint, hint, could get the students from East Asia, South Asia, etc.With the higher list prices, apparently enough students were too poor to pay the list price and not good enough as students to get scholarships, etc., so some politicians came out with the student loan thingy. So, the college got list price, the student wasn’t very good at academics, and the taxpayers paid.So, how come families can’t afford college but CAN afford to pay taxes for loans for college? Sounds like some of the student loans were funny money, printed, etc. But I’m sure the colleges got paid in real, green stuff, nothing funny. My guess is that the tax payers got ripped off. Or, okay, with our progressive tax system, maybe only the wealthy families paid for those student loans.So, now supposedly there are a lot of student loans outstanding, some $trillions. So, as might expect, Fauxcahontas, Beto Bozo, AOC, etc. are all screaming for free college for all.In this master plan, there is at least one river with no bridge and an effort to go a bridge too far: High end academics does its research; looking back we see some terrific results from quantum mechanics for the transistors for computers, etc., medical science, medicine, public health, materials science from Kevlar to carbon fiber, metals for blades in jet engines, and more. So, the broad claim is that the research is good stuff. And the high end universities all want to be the best in the research. And somehow the students want to go to those high end research universities.With that research university stuff in place on one side of the river, there is the economy on the other side, and the students need to make money in that economy. Then usually it’s not so clear just how what is learned at a research university contributes to a student being able to make money in the economy. Actually, I’ve seen little evidence that anyone in college education ever sat down and carefully worked out how their college could do things that were good for the ability of the graduates to do well in the economy, e.g., at least not go extinct, at least buy a house and raise a family.So, a student goes to college, with whatever financial support they have, at whatever college they can get into, gets out, and then tries to make money from all that college time, money, and effort.I know; I know; it is possible to argue that on average the college grads make more money than the rest. But the real causes may not be what they learned in college but what they got from their family about how to make money.E.g., it appears that for now about the best way to build a family is to move to a suburb of a mid sized city in one of the flyover states and get a unionized trade job for a very stable employer, e.g., electric utility, aluminum mill, etc. So, college has next to nothing to do with it. Sure, some of the plastic on the wires or some of the glass in the optical fiber may have at some point depended on some college or Ph.D. work, but there is a chance that the union guy who pulls that cable is doing better than the Ph.D. who did the crucial, core technical work.My solution is to build a business: I’m plenty good at computing and applied math, and now we have lots of good, cheap computing and the Internet. So, my idea is to do some new applied math to have a much better way for people to find stuff they like on the Internet. I did the math and wrote the software. But the motherboard of my development computer quit. So, I’m building another development computer, also my first server. For that, the latest is (i) needed to clear the CMOS to get rid of some fatal memory errors, (ii) get around an occasional fatal error from the Northbridge, (iii) get a keyboard I’m efficient with [I don’t like all the new ones; like an old one I have; but had to do some epoxy work on the space bar torsion bar], (iv) pick the right version of the Microsoft .NET Framework, likely old 4.5 but maybe a later version, and download that, (v) download the latest or enough patches for Windows 7 64 bit Professional (the latest version of Windows I want to try to work with), (vi) download a suitable version of SQL Server and get it working with my old database, (vii) get the router my ISP gave me configured so that I can do file sharing between my computers, … As I “build” this server, I keep notes on what I did, what happened, etc. — yesterday the file of notes had 26,500 lines — a LOT of work, JUST to get a computer working.Point: There’s a LOT of system management mud wrestling a long way from the work unique to my startup and much farther away from anything taught in college.For my startup, my Ph.D. and other studies are just crucial, but I am unsure just how that fact might be important for US national directions in higher education.But, I can tell the difference in people who have gone through a STEM field Master’s or Ph.D.: Maybe the issue is “brain training”: One could claim that research is good brain training and have the students take courses from some good researchers so that the students can get some good brain training. Then take that brain training into the economy and use it to make whatever progress is needed.Or, if higher education is expensive, then consider the cost of being without it.All that said, hint, don’t tell anyone, in academic research, it’s possible to game the system, and a lot of profs do just that; maybe then their students don’t get very good brain training!Also, research academics can be so narrow and specialized and so far from the rest of life and the economy that some of the people who do really well there might not be good sources of brain training.Yup, after I publish Girls 101 for Dummies — Boys do much the same for higher education and making money!Of course, the media should be all over this, passing out really good information instead of their garbage as I’ve described often enough here.But for the narrow point, my understanding is that a good student can get all the college degrees they want paying little or nothing in tuition and, for their last degrees, get those from some of the best research universities. A good student can start in a community college, go to a state supported teaching college, go to a university for a Master’s, etc.Last night the update part of Windows 7 told me about 100+ updates — gee, I thought with some of the other updates I did in the last few days I got them all, but, apparently, nope, there are 100+ little ones.Before doing those, uh, I want to back up the installed instance of Windows I do have in case anything goes wrong. So, I will need “recovery media”, a “password reset disk’, etc.Back to it.

  11. CTC911CTC

    Is there ever any other type of narrative in the popular press?

  12. sigmaalgebra

    ForBut to throw ISAs under the bus by suggesting that “students are selling themselves to wall street” is the kind of negative narrative that doesn’t help anyone.WRONG!!!!!! It is exactly, a great example, of the greatest “help” a HUGE area of our society can think of for themselves!!!!! That area? The MEDIA!!So, this example is just a small, special case of their usual grabbing people by the heart, the gut, and below the belt so that their eyeballs are sure to follow and result in AD REVENUE!!! For this, the media play on the main interest of people — people! And they use art as in its definition “the communication, interpretation of human experience, emotion” and, in particular, threat and scandal, in particular, “Wall Street” as in cold, heartless, cruel, crass, money-mad, amoral, threatening, frequently disastrously (crashes of 1929, 2007) irresponsible Wall Street.Then the example, heart, gut, and below the belt, as usual is below the shoulders and NEVER between the ears. It’s just raw emotion with a minimum of information and awash in distortion, at best half truths, etc. And, yes, it is “an enemy of the people”.A great example is the NYT — on paper can’t compete with Charmin and on the Internet useless for wrapping dead fish heads. It runs Bernays style continuing “narratives” where they create a story and an audience and then feed it, one easy to write “story” after another. Their biggest such flim, flam, fraud is their long screaming about human caused catastrophic “global warming”, oops, when those predictions flopped, change that to “climate change”. Here they play on a standard, old trick of much of religion — make people feel afraid of sinning. So, the people don’t want to go through the trilogy of transgression (sin), retribution (suffering), redemption (via sacrifice, expensive, but often a financial gain for the church). So, the NYT wants to create and exploit a new religion, earth-worship, precious, delicate, 100% pure, all-natural, shall we say, “virginal”, earth!So, yup, such garbage claims do “help” a LOT of people — the MEDIA!!!Since we can be sure that the media is doing all they can to get as much attention as possible by describing threats and the best they have is this nonsense about college costs and Wall Street, we have that this trivial nonsense is the worst threat they can find which in effect gives the current state of life a big time clean bill of health.Realize that the media doesn’t wait until they have meaningful content. Instead each day they pump out about the same volume of words, images, and minutes. If they have something important, then maybe they will pump it out, but that is on average no more than 1 day in 100, 1%, and the other 99+ days they just pump out the best sewage they have. So, it’s 99+% sewage. So each day, glance at the stuff, nearly always smell the sewage, and QUIT wasting time with their nonsense.There actually really IS important content to cover, but the NYT, etc. media is so full of traditional nonsense and English majors that they are for modern times functional idiots and act that way. E.g., the NYT expert Tom Friedman on global warming gets a grade of flat F in the first lecture in the 101 level of the greenhouse effect: He claims that CO2 absorbs sunlight. Okay, we can test this: Go outside with lots of sunlight, exhale CO2, and see if it casts a shadow as it absorbs the sunlight. Hint: It doesn’t. DONE.There really is important information to report, e.g., the US economy is so sick-o that people are so poor that they fail at family formation, we have too few children, and, net, on average, are literally, rapidly going EXTINCT, which is about the biggest problem of all, one HECK of a lot bigger than this Wall Street thingy.On education costs, that’s another AOC, Beto Bozo, wack-o attention scam: In fact, the US, especially NYC, is just awash in education, at all levels, for free or nearly so. Besides, in fact, much of the best education is just from self study where don’t need courses, credits, grades, time, travel, and money. Just get the books, cheap and used if want, and study the darned material. E.g., for linear algebra, commonly coveted on Hacker News, as recently from me here at AVC, study Nering and Halmos but could also study Strang, Hoffman and Kunze, and Horn. And there are many others. Work all those exercises and be able to prove all those theorems and will know that material better than nearly anyone teaching it or using it and better than really necessary. Similarly for a LOT of material. Then, if want, arrange to get some certification via whatever means, maybe college degrees.Lesson: MEDIA is 99+% sewage, smelly bait for the ad hook. 99+% of the time, IGNORE it.

  13. jason wright

    The upside and the downside, the inside and the outside. Not a great system.

  14. brentjanderson

    One of the critical pieces is aligned incentives. It’s not enough to take a university (e.g. Purdue) and offer an ISA on top of it. The terms still come out very expensive for the student, and not much better than a student loan. 10 years is a long time to carry a debt.Lambda School also offers ISAs, but is built around aligned incentives. You don’t pay if you don’t get a job making $50k/year or more. The most you will pay is $30k. For a US-based student, it’s 17% of salary for two years and then you’re done. No payments if you are between jobs, and the ISA expires completely after five years. Lambda School is more like an investment fund, and makes zero money unless students are getting into (and staying in) high-paying jobs. They even have a (limited availability) stipend option where you get paid $2k/month for the 9-month program, with a $50k cap and 10% over 5 years.Other ISA programs lack those aligned incentives. Without outcomes (job placement), an ISA is just a different take on the student loan crisis. If students are attending institutions to get an education so that they can get a job (and not just for the sake of personal enrichment), then aligned incentives are the key factor in making ISAs work.

  15. Richard

    There should be a financial literacy class and test that students need to pass before becoming eligible for financial loans and financial aid. We mandate safety classes for all types of activities, borrowing for college should be one of them.

    1. Salt Shaker

      THIS. I think students casually enter into these loan agreements cause it’s normative today how many fund their college education. The devil is in the details. There should be required reading and a signature on a separate student loan doc that outlines current default rates and a hypothetical payment schedule based on projected income levels and interest. I’ve got two nieces in debt up to their eyeballs w/ student loans and both are hardly making a dent paying down their premium. I too took out modest loans for college but that was also in an era where there was far more job stability. These kids get somewhat hoodwinked w/ out any required learning or a full understanding of the potential consequences of their action. Caveat Emptor isn’t an acceptable explanation.

  16. kenberger

    I don’t really see how this headline is negative. The notion that Wall St would want a part of me, as a young student, would have been a compliment.And I was pretty used to the sponsorship model since childhood, in our Little League team where we’d wear a company logo on our uniforms.(I’m quoting from this in the post:“College Grads Sell Stakes in Themselves to Wall Street.” Which of course, is the negative narrative on this innovation in financing education.)

  17. Kirsten Lambertsen

    Agree with your sentiment. Rational discussion benefits everyone. Is everyone willing to extend the same to AOC, Warren, etc.?

  18. Lawrence Brass

    Debt as a commodity is an interesting concept.Debt as an expropriable commodity is even more interesting.Would anyone sell her vote if his student debt is cleared?In this line of thought, can 1.5 trillion be the price for the US 2020 Presidency?

  19. Michael Elling

    Our children (and many of the parents) are slaves to capitalism. The system is rigged in favor of the corporations. But as that won’t change unless there are broader socio-economic and political changes (and a complete rethink as to how people learn), at least re-institute apprenticeship programs beginning at 16 and lower the drinking age to 18. And I mean that seriously. We can also implement a mandatory 2-year public service program (pick your top 3 fields and localities–local, state, national–and implement a lottery system) in return for reduced tax levels that will provide paths to necessary skills as well as fostering a greater sense of being American. That will separate the wheat from the chaff in the college system and break the network effects that have led to out of control tuition levels.

  20. Richard

    Middle income families subsidizing that which they can’t afford to pay for for thier own family ? Now that’s financial engineering!

  21. Richard

    Middle income is not a number it is approximately when you have less than 5k / yr income net of taxes, 10-20% for retirement, Health insurance, long term Heath insurance, housing, food, clothing, education.The marginal benefit of income beyond 5k / yr is the real differentiator.We can talk about cost of education and healthcare all day long, but nothing comes close to taxes and the cost of housing. Why we created a system to incentivized high cost housing and taxes on families is criminal.

  22. Richard

    Don’t know if you noticed but the European economy is a mess and only is working for the rich.