Comment by jedberg
20 hours ago
Or, crazy idea, have the government pay all tuition up front for everyone and then collect an extra .5% on your income tax for every semester you attend (or .33% for every quarter). Obviously you'd have to put some limits on what colleges can charge to get paid from that pool of money.
Then you can't go broke from debt because it's a percent of your income, but it's also not "free" to address those who have concerns with that.
You could apply it to all outstanding school loan balances too. Get your loans paid off in exchange for an extra 4% income tax.
I actually quite like the system we have in the UK.
Graduates pay roughly 9% of their income above £27k towards debt repayment, and the remaining balance is written off after 30 years. Typical tuition fees are just over £9k per year.
This strikes a nice balance between encouraging people to carefully consider alternative non-university careers whilst also not preventing too many people from not being able to afford it.
Note my numbers are approximate because they can vary depending on when & where a person went to university a couple of other factors. Also I do think the system could be slightly improved (especially around maintenance loans) but on the whole has a good structure.
Australia's system is similar, albeit the tuition fees are higher (capped depending on the degree and set by the government). You take out a government-backed loan and which is around CPI and then pay it back at an increasing % based on your income, between I think 1.5% above a certain threshold and 10% by a second, higher one.
There's been some issues with it, but no system is perfect and the thrust of it is aligned with the dual public-private structure that Australia seems to prefer (see also: medicare vs private health insurance).
It would be a good system if the interest rate on the loan wasn't absolutely insane.
My student loan in Sweden (I maxed it out at over $30k total for 5 years) had an interest rate of below 2% for the whole period. Currently it's just above 1%. The student loan interest rate is fixed to a small amount above the interbank rate. The key is 1) I didn't have to borrow for tuition, just the books and noodles. 2) the state lends me the money, I don't have to fish around the loan market.
It was funny when they capped the rate at 7% recently. The calculated rate of RPI + 3% reached 14% and it became just a bit too obvious that it's a scam. Luckily I went in 2009 when tuition was 3.5k.
That subsidizes useless degrees, low quality colleges, and punishes people who work in vocations (likely providing more value to society), among some other issues.
How does it punish vocations?
just a guess, but upfront money needs to come from somewhere, presumably everyone else that is working, including vocations.
Make this .5% go directly to the university. Will incentivize universities to teach more useful skills
It would incentivize them to only offer majors that lead to high incomes. By pooling the money it removes that issue.
jobs that pay well are a signal that there is high demand for this skill in our society and that more people need to develops these skills.
Why would we not want universities to respond to that signal?
3 replies →
What makes a skill useful?
MIT is rich and can certainly front the money. If it’s such a great idea, let them do it.
Sounds similar to how it works here in Australia