Just Say No to College

Thiel Fellowship winner Paul Gu skipped higher education to develop a new means of financing higher education.

Paul Gu is the winner of a Thiel Fellowship-a two-year $100,000 grant designed to encourage teenagers to skip college and pursue scientific or entrepreneurial projects in the real world. He is also the founder of Upstart, a human capital contract firm that allows investors to fund an individual's education in exchange for a share of their future earnings. Gu spoke with reason intern Michael Bruschini in August about his experience with the Thiel fellowship, his start-up, and the future of higher education.

Q: You came here from China at six without any knowledge of English. How did you climb the ladder to attend Yale and become a Thiel Fellow?

A: I developed a streak for independent thinking early on and generally preferred to try beating the system instead of doing what I was told. I loved my time at Yale, but after two years, it was obvious to me that I was more of a self-learner and was getting impatient to get in the "real world." So when I saw the Thiel opportunity come along, it was a no-brainer for me.

Q: Why did you decide to start Upstart?

A: With a bit of a quant-finance/economics background, I was naturally curious about problems with risk management. After some thinking, I realized that [financial] asset class diversification was overlooking the single largest financial risk anyone faces-their own career!

Q: What kind of impact do you think Upstart could have on the student loan system and alternative education financing?

A: One big concern with the student loan industry is that it is future-income agnostic. The extreme example is the person who takes out $200,000 in loans and majors in a subject not in high demand by the job market. From a purely economic perspective, you probably have many people who are paying too much and not getting enough out of their educations. Income sharing contracts could completely change the incentives. Upstarts are able to raise more capital if their projected income is higher, and their backers have a strong incentive to help them succeed. Schools and the student industry today don't do that.

Q: How do you plan to make your programs more attractive than the federal student loan programs?

A: With enough subsidization, federal student loans will be cheaper than anything the private sector can offer. That said, there is a limit to subsidized loans, and many students borrow from private lenders too. The fundamental advantage of Upstart is that it is less risky and more flexible for the borrower than any kind of debt.

Q: Some will say it sounds like indentured servitude. How do you respond?

A: Investors don't get to decide what upstarts do. Beyond that, the essence of indentured servitude is the loss of freedom to make important life choices. Upstart aims to do the very opposite. Unlike debt, which forces people to follow certain career paths and lifestyles in order to make fixed monthly payments, Upstart payments are inherently flexible and easy. With capital from Upstart and the non-distortionary income-based payments, upstarts have a much greater ability to make the best choices for their life.

Q: Will there be a high rate of return for investors?

A: The important thing to remember is that investing in individual incomes is much lower risk than investing in companies-especially early-stage-because individuals find new jobs when companies fail.

Comments

[Bardas Phocas]

Spent ten minutes checking out Upstart.com. A fascinating idea. Surprisingly short timeframe (5 and 10 years) and decent estimated return (8%).

I can see how this could incentivize a lot of network effect. If I invest in a smart, ambitious person, they're going to get all the contacts, support and free advertising I can throw at them. The recipients are not just getting money but also a built in network of support and boosters.

[Tulpa (LAOL-VA)]

Except the backers get to pick and choose who they're going to invest in. Suppose you're an investor and there are two "investments" graduating from high school: a smooth-talking attractive white guy who has a good shot at moving up the ranks quickly into a high-paid executive position, vs. an awkward, dumpy black girl who's just as smart, but is probably not going to make it past mid-ranked engineer in 10 years, and may take time off to have a baby.

Sure, they could finance the girl's social education and pay for a makeover, but why spend money to make less money? Not good business.

The point of subsidized student loans is that they're NOT tied to the likelihood of a high income in the future, because society needs skilled workers in positions that are not well-compensated. I do support restricting subsidies to certain fields that are socially needed like the hard sciences, engineering, and various trades like plumbing and carpentry etc.

[PM]

I do support restricting subsidies to certain fields that are socially needed like the hard sciences, engineering, and various trades like plumbing and carpentry etc.

Thankfully we have Top Men who know the perfect distribution of every occupation in the labor force. That kind of shit is way too important to be left to the vagaries of the market.

[Tulpa (LAOL-VA)]

The market is perfectly free to finance the educations that it traditionally has: kids in wealthy families, and in this case, people with a high likelihood of getting executive positions.

The point of subsidized student loans is to finance more risky students with possibly lower income potential. What I'm proposing is to control the risk, which we don't do now. I know "market failure" is akin to blasphemy around these parts, but it does exist.

[PM]

The point of subsidized student loans is to finance more risky students with possibly lower income potential.

The point of subsidized loans of any kind is to provide financing at favorable terms when the market won't in order to meet some arbitrarily decided upon value that is greater than the market. Failure of the market to meet any given person's social goals is not a "market failure". Petty fascism doesn't become less fascist just because it's petty.

[Tulpa (LAOL-VA)]

Market failure occurs when there is a possible allocation of resources that is more efficient than that chosen by the market. Employers starving for American engineers and scientists would indicate it's happening.

[PM]

Employers starving for American engineers and scientists would indicate it's happening.

Uh, no. An imbalance of supply and demand is not a market failure. It's a discovery process. When supply falls below demand, price increases until new producers are attracted to the market to exploit the rising prices, eventually enough producers enter the market that supply exceeds demand, prices fall, and around and around we go.

If American firms are really short of engineers, wages in engineering should be skyrocketing and both private loan makers and engineering firms themselves would have a vested interest in subsidizing the supply of engineers until it is optimal.

The government subsidizing education in particular fields actually retards that process by allocating resources in a different way than the market is indicating, making the market less efficient at discovery by definition. It's almost as if central planners don't have enough information to properly allocate resources throughout the economy. But that's nonsense, right?

[Tulpa (LAOL-VA)]

Yes I'm aware how supply and demand works in the simplistic case, like with potato chips.

Doesn't work that way when it takes 4-8 years to produce a product, with a significant chance that the product will not be made even with the time and money investment. Engineers aren't potato chips.

Engineering firms aren't going to invest in engineers who then go work for another company, either. Another example of market failure.

[Brian]

Tupla:

Yes I'm aware how supply and demand works in the simplistic case, like with potato chips.

Doesn't work that way when it takes 4-8 years to produce a product, with a significant chance that the product will not be made even with the time and money investment. Engineers aren't potato chips.

So, if you wanted to start a company making a new kind of snack, how long do you think it would take? More than a few years? If so, then is there market failure in the snack industry?

It can take lots of time in lots of industries to produce a product, and there's frequently significant risk the product won't be made, or profitable when it is made. This is true in the technology industry, in particular. Is it suffering from market failure?

Engineering firms aren't going to invest in engineers who then go work for another company, either. Another example of market failure.

Is that market failure? Or is that rationality? Why should an engineering firm invest in someone for no return for themselves? And, if they don't, how is that deemed less efficient, and, thus, market failure?

Establishing market failure requires more than just establishing subjective dislike. Otherwise, if you dislike efficiency, then market success is market failure.

[PM]

Establishing market failure requires more than just establishing subjective dislike.

"I'm saying when the Top Men dislike it, that means that it is not subjective."

/Tulpa

[Tulpa (LAOL-VA)]

Is that market failure? Or is that rationality?

They're not mutually exclusive -- a group of individuals each individually maximizing his own self-interest can lead to a suboptimal outcome for every member of the group. e.g. the Prisoners' Dilemma. The issue there as here is one of trust.

[VG Zaytsev]

a group of individuals each individually maximizing his own self-interest can lead to a suboptimal outcome for every member of the group. e.g. the Prisoners' Dilemma. The issue there as here is one of trust.

The prisoner's dilemma occurs in specific coercive situations and is not applicable to situations involving voluntary exchange, aka free markets.

[Tulpa (LAOL-VA)]

The prisoner's dilemma occurs in specific coercive situations and is not applicable to situations involving voluntary exchange, aka free markets.

The classic statement of the dilemma is indeed a coercive situation, but there are noncoercive situations that match it perfectly from a game-theoretic perspective. All that is required is that cooperation benefits both players but there is a risk of the other player being untrustworthy.

[PM]

All that is required is that cooperation benefits both players but there is a risk of the other player being untrustworthy.

Er, not exactly. Exercising the optimal play for each individual player would have to create a sub-optimal outcome for each individual player in order for it to be a true prisoner's dilemma construction. That's the actual cause of the risk of untrustworthiness. And that risk is introduced by the cops in the simple game analogy.

[Tulpa (LAOL-VA)]

Again the particular telling of the dilemma that's most popular involves coercion because that makes it simple and easily understood. That doesn't mean it has to involve coercion. Another example is the tragedy of the commons, which involves no coercion whatsoever.

[PM]

Another example is the tragedy of the commons, which involves no coercion whatsoever.

I'd say that the government taking ownership of something and then administering access to it involves some level of coercion, or force.

At any rate, it's difficult to produce an orthodox prisoner's dilemma game in a completely free market scenario (competitive pricing strategies between firms in a market leading to sub-optimal profit maximization for each participant probably being the closest example), and even if you did it would be extremely generous to call it a "market failure" (to the extent that the term itself isn't a total bullshit concept that ignores the subjectivity of value) because it would be unlikely to be persistent (brief imbalances in resource allocation aren't market failures). And in any case, engineering firms failing to invest in engineers and leave them free to go work at a competing company is not an example of either.

[Brian]

Do you believe that engineering firms and higher education are analogous to the prisoners dilemma? If so, why? You hint that it is, but you don't explain why. Otherwise, it's an interesting red herring.

The prisoners dilemma shows that, in an artificial, theoretical situation, in which coordination is explicitly impossible, rational actors can achieve suboptimal outcomes.

A blind, deaf basketball team has difficulty coordinating, and achieves suboptimal outcomes. Does that say something about engineering and higher education, too?

[Tulpa (LAOL-VA)]

There are analogues to the prisoners' dilemma where coordination is possible but the parties don't trust each other. The tragedy of the commons is a noncoercive example.

If everybody agrees not to dump their trash in the park, then the park is nice for everyone and utility is maximized. But if you don't trust your neighbors to not dump trash in the park, it doesn't make sense for you to refrain from it yourself.

[Brian]

Tulpa:

There are analogues to the prisoners' dilemma where coordination is possible but the parties don't trust each other. The tragedy of the commons is a noncoercive example.

This is wrong on a few levels. First, the prisoner's dilemma isn't about trust. It's about incentives, information, and cooperation. In the classic setup, where the prisoners choose without knowing the choice of the other, rational self-interest requires them to betray each other. Even if they trust each other and convince each other not to betray each other, each individual would still be better off choosing to betray the other. If the other prisoner was duped, then all the better.

In the classic scenario, they should only choose not to betray the other if they have shared interest in each other's well-being, i.e., they don't want to benefit at the other's expense. Trust has nothing to do with it.

Now, if they have more information, and can know the decision of the other prisoner as they make their own, then they are incentivized to do the opposite: to coordinate and choose the optimal outcome. Trust has nothing to do with it, since only an irrational person would choose to betray the other, forcing the other to betray them in return.

Can you actually show some issue at work in engineers and higher education? Again, you're not explaining your analogy; you're just labeling them analogous. That's just begging the question.

[Tulpa (LAOL-VA)]

So, if you wanted to start a company making a new kind of snack, how long do you think it would take? More than a few years?

Not a great analogy. Venture capitalists would want an eternal share of the profits -- and probably a majority thereof --, not just 5-10 years, where I could just lolligag on growing the company until the time was up.

[Brian]

Tulpa:

Not a great analogy. Venture capitalists would want an eternal share of the profits -- and probably a majority thereof --, not just 5-10 years, where I could just lolligag on growing the company until the time was up.

Sorry, but that's incorrect. Venture capitalist usually want profits on their own personal schedules, not "eternal" shares (whatever that means).

Frequently, venture capitalists will fund a startup tech company just to get it up off the ground and attractive for other, large corporations to buy them. In this case, they just want profit in the share value of the company, as that value grows between founding and sale date, which can be 4, 5, or 10 years, or more, or less.

And, I'm not sure what "I could just lolligag on growing the company until the time was up" even corresponds to. I don't think venture capital is ever structured around to incentivize lolligagging, and that's not only because all venture capitalists are interested in "eternal" profits (again, whatever that means).

(cont'd)

[Brian]

Tulpa:

Doesn't work that way when it takes 4-8 years to produce a product, with a significant chance that the product will not be made even with the time and money investment. Engineers aren't potato chips.

Engineering firms aren't going to invest in engineers who then go work for another company, either. Another example of market failure.

Still, we're just chasing your red herrings again. Your original argument was, essentially, that engineering firms and higher education create market failure because
1. It takes 4-8 years to produce a product, with a significant chance that the product will not be made even with the time and money investment.

2. Engineering firms aren't going to invest in engineers who then go work for another company, either.

These are contradicted by markets without failure. You're ignoring the technology industry examples pointed out before, where venture capital frequently pursues risky products on large timelines, and where companies frequently invest in employees and interns who can then work for other companies.

Instead of taking these issues on directly, you've just brought up red herring ideas about prisoner's dilemmas, tragedies of the commons, and complained about other people's analogies. If that's as strong as the argument gets, and doesn't address the ore of the counter-argument, then I think it's definitely the weaker of the two.

[PM]

Engineers aren't potato chips.

Yep. Labor is totally different from anything else supplied by the market. Because nothing else on the market takes multiple years to produce... (except, like, nearly all major capital goods).

Engineering firms aren't going to invest in engineers who then go work for another company, either. Another example of market failure.

Because basing education financing on future employment for a fixed period of time would be, like, totally wrong. Oh, and of course in-house training would be absurd. How would we know if an engineer trained in-house was any good? He wouldn't have even have government-approved credentials from a government-approved provider of government-approved credentials! MARKET FAILURE!

Jesus Christ bro, you are seriously economically illiterate.

[VG Zaytsev]

Yes I'm aware how supply and demand works in the simplistic case, like with potato chips.

Doesn't work that way when it takes 4-8 years to produce a product, with a significant chance that the product will not be made even with the time and money investment. Engineers aren't potato chips.

You are ignoring that the discovery process is an ongoing one and that the supply-demand would not have become so imbalanced without government intervention in the first place.

[PM]

While that's completely true in this case, there are products that require 4, 8, or even more years to go from production to delivery even without any government intervention, and the market still manages to function for those products. Large time scale simply doesn't negate the market - regardless of whether the deliverable is an aircraft carrier, a power plant, or an engineering grad.

[OneOut]

It works that way when developing oil fields and mines.

[Tejicano]

Antidotal maybe, but from the point I was enrolled in a full time engineering curriculum and maintained at least a 3.0 GPA a major oil company sent me a check at the start of each semester which, at the time, was enough to more than cover the cost of tuition and books. I did complete the degree and graduate but didn't even end up going into the oil industry.

Some companies do put their own money into incentivizing students to pursue engineering degrees without regard to their own direct benefit.

[wadair]

What you call market failure to me is just assumptions gone awry. When the real world responds in a way that is different from your predictions, it is not a failure of the market but a failure of your predictions.

[Greenthumb]

This engineer sure wishes he was a potato chip.

[Sy]

"The point of subsidized student loans is to finance more risky students with possibly lower income potential."

I'm pretty sure the "idea" behind subsidized loans was to generate a larger labor pool for technical trades. In return, the gov't gets a larger percentage of the population in higher tax brackets.

[Sy]

"The point of subsidized student loans is that they're NOT tied to the likelihood of a high income in the future, because society needs skilled workers in positions that are not well-compensated. "

No, the exact opposite is true. Student loans are subsidized because of the demand for educated labor in technical fields which are almost always high-income.

[Tulpa (LAOL-VA)]

High-income relative to what?

[Sy]

Relative to your retarded statement:

"The point of subsidized student loans is to finance more risky students with possibly lower income potential."

[Tulpa (LAOL-VA)]

Well that's my point. If I'm getting back a percentage of income, with not even a promise (much less a guarantee) of getting the money back that I put in, I'm only going for really high-earners, not a $100,000/yr engineer.

And I'm sure as hell not investing in a kid who might go to grad school after college!

[Sy]

That's good to know. I better doublecheck with Wells Fargo to make sure that they know I listed "biochemistry" and not "executive management" on my private loan.

[Tulpa (LAOL-VA)]

Presumably Wells Fargo is getting a fixed repayment, not a percentage of your income. Their only consideration was whether you'd make enough to pay the loan off.

By private do you mean totally unsubsidized, unguaranteed? Those are fucking hard to get. Congrats.

[Sy]

"By private do you mean totally unsubsidized, unguaranteed? Those are fucking hard to get. Congrats."

So, in your scenario it'd be okay for the government to get a fixed percentage of my income for life yet it wouldn't be okay for a business to do it? Whatever.

At any rate, it's about as unsubsidized as you can get, I imagine. The APR is more than double that FAFSA bullshit.

[Tulpa (LAOL-VA)]

I'm not really a fan of the income tax, but come on. The income tax pays for the survival and upkeep of the society you depend on to make your income (plus a shitload of waste and campaign contribution payback, of course) for your entire life.

If you don't like it, come up with an alternative and convince people to accept it. Or move to Singapore.

[PM]

The income tax pays for the survival and upkeep of the society you depend on to make your income

Lol. Don we now our leather jacket and life preserver. Tulpa has officially jumped the shark.

Price we pay for civilization, right breh?

[Brian]

Makes one wonder how Tulpa explains the survival and upkeep of society before the 16th amendment in 1913.

[Black&Yellow]

"If you don't like it, come up with an alternative and convince people to accept it. Or move to Singapore."

"the love it or leave it" fallacy. The state steals from me but I have to leave?

[PM]

Wells Fargo is getting a fixed repayment, not a percentage of your income. Their only consideration was whether you'd make enough to pay the loan off.

Do you understand how absurd that statement is? Their fixed repayment is going to be a percentage of his future income. They evaluated his earning potential to ensure that percentage would not be prohibitively high, such that he might default. The entire exercise is designed to figure out at what income level his debt repayment will represent X% of his income, such that X is an amount he will likely be able to afford without defaulting. Whether you calculate that percentage based on imperfect information ahead of time, or take the exact percentage based on completely information after the fact, it doesn't really matter.

[Tulpa (LAOL-VA)]

Uh, no PM, you're the one whose statement is absurd.

Wells Fargo is getting paid back in full, plus interest, unless he defaults, in which case they can savage his credit rating and garnish wages, etc. Assuming $100k a year is enough to allow him to repay, there's no difference between his making $100k a year and $10m a year. Even if he dropped out after 3.5 years and worked at McDonalds for the rest of his life, they'd be able to get a lot of that money back.

Whereas, in this Upstart.com system, the backer is totally screwed if he goes to grad school or quits school and works at McDonalds. They can't even threaten him with bad credit. So there needs to be a huge reward to balance out that risk, which means they're only going to take people who have a potential of earning really really big bucks.

[Sy]

The only reason the consequences are so miniscule is because of government interference in the loan market. You're fully aware of that, I'm sure. I'm not surprised you're clamoring for "balance" while failing to understand that companies CAN'T impose proper consequences for defaulting.

[PM]

The only reason the consequences are so miniscule is because of government interference in the loan market.

There's that.

Even if he dropped out after 3.5 years and worked at McDonalds for the rest of his life, they'd be able to get a lot of that money back.

They'd be waiting decades to see back half their principle, let alone any profit. That's the last thing in the world Wells Fargo wants, and it's a risk they have to balance as much as Upstart or anybody else. They just have more legal resources at their disposal to make a miniscule recovery, as you point out (and as Sy goes on to explain for you).

[PM]

Another implication of this that you ignore is what Bardas Phocas pointed out in the first place: the potential upside in some kid graduating and attaining a better income level might actually foster a mentorship environment where the financial backer has an economic interest in seeing a kid succeed instead of drop out and go work at McDonald's and stay broke the rest of his life making bankruptcy payments, whereas Wells Fargo has a lot less incentive to give a shit.

[Tulpa (LAOL-VA)]

"Economic interest in seeing the kid succeed" == "Economic disaster if the kid decides to quit"

The fact that you're expecting the investor to pay even more money/time is not going to make it more attractive for the investor.

[PM]

"Economic disaster if the kid decides to quit"

Let's maybe get some perspective. 100k in tuition ain't exactly an 'economic disaster', especially not at scale.

The fact that you're expecting the investor to pay even more money/time is not going to make it more attractive for the investor.

That's the cool thing about this program as compared to government-susidized student loans: nobody is forcing them to participate.

[Tulpa (LAOL-VA)]

nobody is forcing them to participate.

Precisely my point. They'll invest in potential CEO material and nothing else.

[PM]

Precisely my point. They'll invest in potential CEO material and nothing else.

Most importantly: Who cares?

Secondarily, very likely not true. Potential CEO material generally doesn't need to cloud fund its education, and the number of bankable million dollar+ CEOs is an infinitesimally small part of the market anyway.

[Brian]

Tupla:

nobody is forcing them to participate.

Precisely my point. They'll invest in potential CEO material and nothing else.

Based on this analysis, in a relatively free stock market, investors will invest in the potential mega-corporation material, and nothing else.

This is false. It's a gross oversimplification. It's incredibly challenging to pick the next potential CEO of a successful company. You can be a CEO today, if you want. Just start a company and declare yourself CEO. It's not hard.

The difficulty is choosing ones that are going to be successful and make you a profit. People frequently diversify their investments with the expectations that the winners will offset the losers. And the highest reward means taking on the highest risk. This is why people get into startups, as well as Coca-Cola.

Also, potential CEOs only need so much money to start up. It make sense to borrow, maybe, half a million for education, or maybe tens of millions to start a company. It wouldn't make sense to borrow $3 trillion dollars unless he has something very special in mind. Only so much money can chase potential, relatively low-risk CEOs, and then they can charge less interest. Once that dries up, people have to find investment opportunities elsewhere. Money opens up for a lot of people at a lot of risk levels.

[Tulpa (LAOL-VA)]

No shit they have more legal resources at their disposal -- because the borrower is explicitly promising to pay back the loan plus interest. That's the point. A traditional lender's likelihood of getting screwed is far less. An Upstart investor can get a payback of $0 without the borrower violating the agreement at all.

[PM]

A traditional lender's likelihood of getting screwed is far less.

Given the default rate on federal student loans, I wouldn't be so sure.

An Upstart investor can get a payback of $0 without the borrower violating the agreement at all.

Only if the student generates literally no income for 4-8 years after they drop out.

[Tulpa (LAOL-VA)]

The $0 case is an extreme one, but even a person earning $30000 a year isn't going to generate close to enough to pay the investor back -- and unlike the bank they have a limited window to collect. Plus, the backer payments are dischargeable in bankruptcy.

[PM]

The $0 case is an extreme one, but even a person earning $30000 a year isn't going to generate close to enough to pay the investor back

Well no kidding! An Upstart backer would be foolish to piss away his money on a kid who seems likely to only earn 30k a year in the same way a conventional lender would, and he might still get stuck with a 30k/year dud the same way a conventional lender might. Risk can be priced. And the price probably isn't as high as you're suggesting.

and unlike the bank they have a limited window to collect. Plus, the backer payments are dischargeable in bankruptcy.

This is what we were getting at earlier. The conventional lender is given a privileged status among lenders in that student loans can't be discharged. Hence they are able to price risk differently; they've got a competitive advantage via regulatory capture. That doesn't necessarily mean there's no market for the un-privileged.

[Brian]

Tupla:

The $0 case is an extreme one, but even a person earning $30000 a year isn't going to generate close to enough to pay the investor back -- and unlike the bank they have a limited window to collect. Plus, the backer payments are dischargeable in bankruptcy.

This is why lone payments and rates are set as a function of risk. Regardless of how bad the worst-case scenario is, the idea is to make the interest rate attractive enough to offset it. And people can take high and low interest rates and the scarcity of potential lenders as signals to the potential risk and reward of the investment.

It's not all pigeon holed to produce market failure. The world doesn't run on risk free propositions.

[Tulpa (LAOL-VA)]

The only reason the consequences are so miniscule is because of government interference in the loan market.

Wait, what? That's the way the guy set up his business. If he wanted to go with a more traditional credit model he could have -- though that would be a pretty shitty deal for the students, having to pay a guaranteed payment PLUS a percentage of your income.

[PM]

That's the way the guy set up his business.

Uh, yeah, that was kinda the point. Different businesses have different access to financial recovery options because of arbitrary distinctions imposed by the government. "If you don't like it, you're free to not go into business" is every bit as stupid a response as it sounds.

[Tulpa (LAOL-VA)]

Different businesses have different access to financial recovery options because of arbitrary distinctions imposed by the government.

The contract language that Upstart uses is imposed by the government? Really?

[PM]

The contract language that Upstart uses is imposed by the government? Really?

As I explained above, the fact that conventional student loan debt is treated differently from other types of debt, including an Upstart income-sharing agreement, in bankruptcy and collection law is not a creation of Upstart,

[Tulpa (LAOL-VA)]

So .... wait. Are you in favor of making student loans dischargeable in bankruptcy, or making no loans (or repayment agreements) dischargeable in bankruptcy? The former would result in no student loans to non-wealthy kids, while the latter would negate the entire purpose of bankruptcy law.

[PM]

It's totally irrelevant to the particular discussion we're having (Oh, Tulpa...), but personally I think all debt should be dischargeable in bankruptcy - as you point out, leaving certain debts non-dischargeable defeats the entire purpose (or actually, I guess you can only see the logic in this when all debt is non-dischargeable, even though the principle is the same regardless).

The former would result in no student loans to non-wealthy kids

Doubtful. And it's interesting that you brought race into it, even though creditworthiness is a function of financial standing alone (I'd be surprised if Oprah's college-bound children, if she had any children, would have a more difficult time securing loans than Jamie Dimon's; then again, I doubt either one would need loans to make tuition). But even if true, so what? The inability to pay for something doesn't give one a claim to it. Poor people got priced out of the housing market too. We decided to "correct" that "market failure" using the same remedy you're suggesting for student loans. As it turns out, preventing the market from pricing risk doesn't actually make it go away. Observe my shocked face.

[PM]

*My apologies, I was reading quickly and jumbled "non-wealthy kids, while..." in your post into "non-wealthy white kids..."

The rest stands.

[Rob]

The logic behind subsidized student loans was best summarized in Reynolds' Law:

The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we'll have more middle-class people. But homeownership and college aren't causes of middle-class status, they're markers for possessing the kinds of traits ? self-discipline, the ability to defer gratification, etc. ? that let you enter, and stay, in the middle class. Subsidizing the markers doesn't produce the traits; if anything, it undermines them.

[PM]

Some will say it sounds like indentured servitude. How do you respond?

"What's so wrong about indentured servitude?"

(Seriously, what's so wrong about indentured servitude?)

This seems like a simple modification of the concept. Or modernization of it, really. But how is it any worse than having to base your entire career on paying back a conventional student loan? Except that the government doesn't get a cut. Oh wait...

[Ted S.]

Except that the government doesn't get a cut.

Or get you to work for them in exchance for reductions in the loans.

[PM]

Speaking of indentured servitude...

Of course, like anything else, it is purified by the righteousness of the state.

[Tulpa (LAOL-VA)]

Er, the government DOES get a cut of your (higher) income in this case -- probably more than they do for a student loan, considering student loan interest is deductible. There's no deduction for "paying off backers".

[PM]

They get to heist your income from you either way though. And the modest difference it would make to your tax burden deducting student loan interest is more than made up for by the government dependency - a bargain at any price.

[Tulpa (LAOL-VA)]

If your aim is to make someone a govt dependent, the worst thing you can do is send them to college.

I know there has to be an "EEEEEEEEVIL GOVERNMENT" point in this story for you guys, but seriously?

[Sy]

Yeah. Your neighborhood friendly Feds have only your best interest in mind and never do nasty stuff like sanctify school programs with accreditation, licensing schemes for technical fields, or interfere with business's hiring requirements which drive the cost of education through the fucking roof. That's all just made up.

[PM]

True. College educated people never vote for bigger government. Subsidizing loans to millions of students who don't finish college and still wind up stuck paying them back (turns out sometimes when you subsidize bad risk it goes south on you. who'da thunk), and millions more who will spend the next couple decades planning their career around the debt, certainly couldn't have anything less than altruistic motivation. Daddy gub'mint is purely beneficent.

[Tulpa (LAOL-VA)]

Do you have carbon offsets for that strawman?

College educated people never vote for bigger government.

LOL. It's not likely they vote for bigger govt because of their education. The Free Shit Army that BO and company depend on for votes are not highly educated to put it mildly.

[PM]

Do you have carbon offsets for that strawman?

Care to elaborate on what part of any of that post you thought you was a strawman? You are arguing that the government has no selfish motivation for subsidizing student loans and that subsidizing the "right" things for the "right" people is a social good (in fact, a correction of a market failure). If it makes you uncomfortable to see your own argument accurately characterized, perhaps you should pick an argument that isn't so godawfully stupid.

It's not likely they vote for bigger govt because of their education. The Free Shit Army that BO and company depend on for votes are not highly educated to put it mildly.

Your quarrel is with demographic reality, not with me. As it happens, a lot of poor people who are members of the Free Shit Army didn't vote for Obama. Assuming, of course, that voting Republican is actually a vote for smaller government or fewer welfare benefits.

[Eduard van Haalen]

"[Abraham Foxman of the establishment Anti-Defamation League says:] "In the good old days, when someone said something critical or nasty, you could ignore it...Now everyone has a megaphone. Your supporters come and say, 'Did you hear?' You're forced to deal and engage." [in other words, "now I can't set the agenda and sweep awkward stuff under the rug, like I did with pre-9/11 antisemitism by Muslims"]

"From matters of state to determinations of what should and should not offend Jews, the major Jewish organizations have been forced to contend in recent years with individuals or small activist groups that increasingly determine which issues dominate the communal agenda....

"Recent controversies over religious freedom in the military and American recognition of Jerusalem as Israel's capital have been driven not by the country's largest Jewish groups but by individuals who bypass traditional channels of Jewish advocacy....

""There's the decline of mainstream Jewish organizations as the non-Orthodox committed Jewish population shrinks," [Steve] Cohen [of the Berman Jewish Policy Archive] said. "There is organizing in the postmodern age, the ability of social media to link people and to push issues that have resonance to the forefront very quickly. It's not much different from the Arab Spring in Tunisia.""

http://www.jta.org/2013/11/05/.....e-mastodon

[Tulpa (LAOL-VA)]

I would have more respect for the ADL, by which I mean nonzero respect, if they acted as an anti-racism organization rather than a propaganda wing of the Israeli government.

I don't see any German-American organizations trying to bolster their ancestral land government's spin on the Lusitania incident, like the ADL does with the USS Liberty incident.

[Eduard van Haalen]

Man goes to law firm to consult about filing suit over an auto accident. During the consultation in the firm's office the chair the man is sitting on collapses, injuring him. Man sues the law firm for the defective chair. Jury awards damages, based on plaintiff's expert who said the firm should have done regular chair inspections. Florida Supreme Court upholds jury verdict.

The blogger who runs the site "Raised on Hoecakes" comments:

"It seems impossible to hold anyone accountable for inspecting a chair prior to each time it is used, but that is the standard the [Florida] Supreme Court seems to have applied....

"As best we can figure, if this is the standard for "reasonable care" when it comes to office chairs, then every office will have to hire people to inspect every chair each time a visitor or employee sits down.

"After that, the "NAOFI" (National Association of Office Furniture Inspectors) will form, lobbying the legislature for standards in training and certification for chair inspectors.

"(Don't get us started on standards on file cabinet weight distribution.)

"It will be a boondoggle for everyone except for those who actually have to pay for it.

"Wonder how much the job of "chair inspector" will pay?"

http://raisedonhoecakes.com/RO.....ign=Buffer

[Live Free or Diet]

Man goes to law firm to consult about filing suit over an auto accident.

I thought sure this was going to turn into a lawyer joke.

[Eduard van Haalen]

I thought it did.

[Brett L]

Aww. Poor litigators got litigated for silly things. Karma is a motherfucking bitch. I'm sure no lawyer has ever sued a business or person for such things and won before.

[Eduard van Haalen]

Listen up, conservatives and libertarians! Ari Fleischer, former press sec'y for George W. Bush, supports ENDA. Now what excuse do you have to oppose this good, conservative law? I mean, he worked for George W. Bush!

"According to a national poll done in September by GOP pollster Alex Lundry on behalf of Project Right Side, a strong majority of Americans (68 percent) said they favored a federal ENDA. Among Republicans, 56 percent nationwide supported the law, while only 32 percent opposed it. Additional statewide polling conducted by conservative pollster Jan van Lohuizen in the battleground states of Pennsylvania, Ohio and New Hampshire confirmed those findings.

"Having been in the private sector since the end of the George W. Bush presidency, I'm not surprised. A large majority of Fortune 500 companies already have nondiscrimination policies on their books. And corporate titans like PepsiCo, Pfizer, Marriott, Alcoa, Bank of America and Nike publicly back the bill.

"Now is time for the government to catch up so that nondiscrimination laws protect workers at all companies, not just some...

"Politically, it's about time for the GOP to do the right thing while acting in a more inclusive and welcoming manner."

http://www.politico.com/story/.....99546.html

[Eduard van Haalen]

(There should be an ellipsis between the first and second paragraphs of the quoted material.)

[DJF]

What did George W Bush ever want to conserve that makes you think he was a conservative?

[OneOut]

broccoli ?

[Brett L]

Oh, well now that you have the right-wing principals... Nope. Still don't care. Private employers should be able to apply whatever standards they wish, no matter how arbitrary, in hiring.

[The Late P Brooks]

I woke up at about 3AM this morning, and couldn't get back to sleep. Turned on the teevee, and found an episode of Star Trek TNG, which worked liked like a knock on the noggin, but not before I was treated to the sight of a young Wesley mincing around the bridge, twirling his gaily colored floral purse and blowing kisses at Riker. Also, a heaping helping of heavyhanded lifeboat ethics claptrap from the blind guy and some wounded Romulan about one's moral duty as a wholly owned cog in the Great Wheel of Society to surrender.

Discuss.

[Tulpa (LAOL-VA)]

BBC America is the shit, ain't it? Though they do severely edit some of the TNG episodes for time. I don't think I can forgive them for the hack-editing they did to the last segment of the series finale a couple of weeks ago.

The Enemy is one of my favorite episodes -- I don't remember the conversation you're talking about. The conversation between Geordi and the Romulan marooned on Galorndon Core was about people with disabilities, under what circumstances one would give one's life, and putting aside political differences to work together to survive.

I'm surprised you're not objecting to Picard and Beverly urging Worf to give his ribosome juice to the other dying Romulan for the good of the Fed, even though he hates Romulans.

[Tulpa (LAOL-VA)]

Ultimately Picard refuses to order Worf to give up his ribosomes, which I found odd, considering he's ordered dozens to hundreds of people to their deaths in the past.

One of the other episodes on last night, Who Watches The Watchers, is easily a candidate for the stupidest, most infuriating episode in the series which remains watchable (ie, excluding total stinkers like Sub Rosa and Justice)

[OldMexican]

Re: Tulpa,

(ie, excluding total stinkers like Sub Rosa and Justice)

Or Masks. Worst idea since Spock's Brain.

[Rhywun]

Since they rotate the same dozen episodes over and over and over again, you'd think they'd want to stretch them out somehow.

[The Late P Brooks]

Q: Some will say it sounds like indentured servitude.

MNG, is that you?

[The Late P Brooks]

Surprise! Today on Melissa Harris Perry's RACISM SQUAD!!!11!, we'll be talking about race and the Republican Party. But first, some heartrending editorializing about cyclones and Man's destruction of the delicate ecobalance of this fragile planet. Also, capitalism is to blame for every single bad thing ever. But first, watch this ten minute string of commercials.

[Sy]

I don't know how you can watch that shit. It'd be half-way doable if she at least had something remotely intelligent or unique to add to the debate or had some entertaining "yes" men panelists on.

[The Late P Brooks]

The point of subsidized student loans is that they're NOT tied to the likelihood of a high income in the future, because society needs skilled workers in positions that are not well-compensated.

Because FAIRNESS! presumably. Or perhaps subsidizing the Vanity Major segment of the "higher education" system will keep a lot of otherwise doomed schools afloat.

[The Late P Brooks]

I don't know how you can watch that shit.

Small doses only.

Sometimes I just want to get a preview of the talking points. Like how they are now blaming the evil insurance companies for His Awesomeness' "mistaken" but sincere belief you could keep your coverage. Strangely, they neglect to draw any meaningful conclusions about what this says regarding the wisdom of putting government bureaucrats up against Sicilians capitalist running dogs when DEATH national socialism is on the line.

[Rhywun]

they are now blaming the evil insurance companies for His Awesomeness' "mistaken" but sincere belief you could keep your coverage

I'm curious what twisted logic is needed to arrive at such a conclusion, but not curious enough to sit through that.

[The Late P Brooks]

Ultimately Picard refuses to order Worf to give up his ribosomes, which I found odd, considering he's ordered dozens to hundreds of people to their deaths in the past.

The "dynamics of leadership" on that boat makes me wonder how it ever got out of Low Earth Orbit without being consumed in a gigantic ball of radioactive fire.

[PM]

In pure fiction, post-scarcity utopian communism is totally a thing and totally works.

[Tulpa (LAOL-VA)]

If an alien watched 180 days in the life of a US Navy submarine, and was asked what kind of society the US was, he'd probably conclude it was an authoritarian communist one too.

We really don't know much about what civilian life in the Federation was.

[Isaac Bartram]

Actually, we get plenty of clues as to what civilian life in the Federation was like from Picard's lecture to the tycoon who was unfrozen in the episode where they found the ship with the cryogenic pods.

OTOH, DS9 gives us a different picture.

[Tulpa (LAOL-VA)]

DS9 gives more attention to civilian life, of course.

[The Rt. Hon. Serious Man, Visc]

Since all disease and poverty has been eradicated, and, as Data says in one episode, all drugs can created with the replicators minus the 'harmful effects', why would anyone on Earth work?

Why not just get stoned 24/7 and have wild orgies on the holodeck?

[The Rt. Hon. Serious Man, Visc]

OTOH, DS9 gives us a different picture.

DS9 showed us that in a post-scarcity society a market exists for rare antiques and people with specialized skills.

So Jake Sisko had to barter to get that Willie Mays baseball card for his dad and Sisko's family owns an authentic Creole diner in New Orleans.

[Tulpa (LAOL-VA)]

Whereas Voyager seems like a show describing what would happen if the society in Idiocracy somehow got warp drive.

Or maybe that's the Pakleds?

[kentek]

So, how would payments made by Upstart clients be made? Would they be after-tax? How would that work.
What if the Upstart just declared BK?
Send the Boys from the Car wash?

[Tulpa (LAOL-VA)]

He is also the founder of Upstart, a human capital contract firm that allows investors to fund an individual's education in exchange for a share of their future earnings.

Looking at the "Upstarts" on the website, most of them aren't even looking for money for school, so that's a very poor description of the company by Bruschini. Most of them are looking for ordinary venture capital to start a business or fund research.

[sindeebir]

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do......
http://www.Rush64.com

[PM]

All of the inanity above aside, how about the irony of a kid getting a $100k grant to drop out of college and using it to start a company that finances college? I don't think Peter Thiel is getting the results the program intended.

[Tulpa (LAOL-VA)]

If you look at the Upstarts on the site, very few of them are actually seeking college financing. Most are either looking for startup money or research support, or trying to retire student loans (ie, govt took the initial risk and now they want to pass the smaller risk on).

[OldMexican]

Some will say it [Upstart] sounds like indentured servitude. How do you respond?

I would respond with Buuuurp!

[Tulpa (LAOL-VA)]

And people say libertarians are glib.

[LynchPin1477]

Tulpa, the problem you're envisioning (someone with a high probability of success being backed while someone who is riskier is left without investors) could easily be mitigated if there was a competitive bidding process for upstarts. The "safe bet" would command a higher price, but the result would be a lower ROI (essentially the price of lowing risk). A riskier upstart would, well, be riskier, but with a higher potential ROI. There would be a market for that, just as there is a market for risky venture capital investment, along with a market for lower risk (but lower yield) treasury bonds.

[giavanirsp]

??? ????????? I just got paid $858o working off my computer this month. And if you think that's cool, my divorced friend has twin toddlers and made over $9k her first month. It feels so good making so much money when other people have to work for so much less. This is what I do,

???????? http://www.jobs53.com

[Rhywun]

Your Skynet-to-English translator has a hiccup.

[liberty88]

SMART METERS!!! Watch this short 3 minute video that took place this week.http://www.youtube.com/watch?v=DbQYFKqEzk0

[You've_gotta_be_kidding]

Neat idea but not much of an argument against college. At https://www.upstart.com I could't find a single "upstart" without a college degree, and the vast majority I encountered during my brief looksee have advanced degrees from top-tier & elite universities.

[Tejicano]

I believe that there are some skills which will continue to have value which do not require a college degree. I have encouraged a few people to learn welding - not just ferrous but Ti, Al, alloys, and all the related equipment. Get some hands on experience with machining as well, do some work casting metals, and understand heat treating. Anybody who has covered these skills will always have work if they want it and they will get paid for very minute they are on a job site rather than being paid a salary and being required to work silly-long hours at times.

[taithit]

my co-worker's half-sister makes $81 hourly on the computer. She has been fired for 5 months but last month her pay was $20214 just working on the computer for a few hours. hop over to this website.....
http://WWW.JOBS84.COM

[kathyxon766]

? ? ? ? LIFETIME OPPORTUNITY ? ? ? ? ?
My Boy friend makes $75/hour on the internet. She has been without a job for 6 months but last month her pay was $16453 just working on the internet for a few hours. Straight from the source------------ http://www.jobs53.com

[alaamiah]

Thank you very much

[Waterproofing]

Michael Bruschini in August about his experience with the Thiel fellowship, his start-up,..