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Comment by DoreenMichele | Hacker News Reader

I don't think so. It was once thought that student loans would be some panacea lifting poor people out of poverty by giving them access to education and the end result is lots of people overburdened by debt while waiting tables because so many people have degrees that a degree isn't remotely some kind of reasonable assurance that you can get a job in a particular field.

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UBI is not a loan. Student loans have to be paid back and they also only resulted sun universities rising tuition. Education does not fix poverty. Money fixes poverty.

> UBI is not a loan

Right: UBI together with any reasonable funding mechanism is a structural force working against economic inequality.

In other words: a large-scale income redistribution that has no realistic probability of adoption in the American political landscape.

There are lots of large-scale income redistributions that have been adopted in the US (including EITC, which, while not a UBI, was directly inspired by Negative Income Tax, and earlier name for a policy exactly equivalent to UBI), and the American political landscape changes over time, largely through activism; civil rights, or even abolition, were once things with “no realistic probability of adoption in the American political landscape”, too.

The EITC is a $70-75bn program in the context of a $1.5tn income tax - it is not, as such, the kind of large-scale redistribution that we're talking about for a UBI.

I also would characterize it as the absolute opposite of a UBI: it is paid only to people who are working; and is more rooted in the history of offsetting increasing FICA taxes for low-income households than in the NIT experiments.

Obviously it's hard to prognosticate about the future, but right now the "more left" of the parties with credible possibilities of election success in the U.S. has chosen $400,000 as the income level above which taxes can increase. There's simply no way you can create a UBI on that basis.

> Obviously it's hard to prognosticate about the future, but right now the "more left" of the parties with credible possibilities of election success in the U.S. has chosen $400,000 as the income level above which taxes can increase. There's simply no way you can create a UBI on that basis.

$200/month UBI, while obviously not a full, mature UBI, would approximately equal the maximum benefit of general assistance (means tested welfare for adults without dependents) in most of the US, and could probably be done with net tax increases in only that range (though the increases would need to go beyond just “regular” income tax and also include things like ending the favorable tax treatment of capital over labor income.)

But, in any case, there is very likely a sea change coming in the Democratic Party, which is currently led by Boomers (and some Silents) who came into their political prime during and before the 1990s neoliberal consensus; the Boomer demographic wave is crashing and the Millennials (Gen X is both smaller and more Republican than the Millenials, so less relevant to the future direction of the Democrats) have a rather different understanding of political possibility not grounded in nostalgia for a bipartisan era that has long passed.

There is no evidence that student loans led to colleges raising tuition, as opposed to other causes.

No evidence?

https://www.newyorkfed.org/medialibrary/media/research/staff...

We find that increases in institution-specific subsidized (unsubsidized) loan maximums lead to a sticker- price increase of about 60 (40) cents on the dollar.

---

It is basic supply and demand. How could universities charge so much if no one could pay for it? They would have to lower prices.

I swear, the "facts" that are flatly asserted on this site, with zero questioning or critical thought, seem roughly equivalent to the "election was stolen!" facts that you find in other echo chambers.

Correlation does not mean causation. Tuition prices were already on their way up before 2007 (as the paper targets). I suspect that this is because in the 80s and 90s the data showed that a 4-year degrees increased income substantially, and tons of people applied for colleges.

Student loans and grants existed before 2007.

Did tons of people apply for colleges because they heard about the data?

"Education does not fix poverty."

What the OP said was that education was once thought to be the magic bullet against poverty, much like UBI is now.

People always dream of solving complicated problems with "one weird trick". If it fails, another one will appear.

The problem is Clinton making student loans undischargeable via bankruptcy. That meant it was risk free for lenders to give student loans. That meant institutions could double or triple tuition without any fears because everyone could get an easy loan.

The entire system is predatory and cancelling student debt is not the solution because it just means the lenders make all their profits off the backs of taxpayers. The real solution is to make student loans dischargable and for lenders to bear the risk of debt again. Then the markets will return back to normal.

Agreed. This is what is called "Socialism for the Rich".

> undischargeable via bankruptcy

What I don't get is why more people trapped by student loans don't just leave the country and set up life elsewhere. Debt is country specific. If you're in debt in country A, you can move to country B and start anew.

Undischargeable debt is only an encumbrance on income earned in the country in which you owe the debt.

First, it’s a lot to ask of someone to leave the country where their friends and family live. Many aren’t interested in doing that.

Immigrating elsewhere is also not easy if you’re in a less in demand profession. Of course these are the ones where it’s most likely to have unsupportable amounts of debt.

If you’re a US citizen, you are still required to pay taxes on your global income no matter where you live in the world. If you ever get a tax refund, it can be garnished for federal student loans that are in default.

"If you’re a US citizen, you are still required to pay taxes on your global income no matter where you live in the world."

The first 108 000 dollars that you make elsewhere are exempt. You can live quite comfortably in most of Europe on 108 000 dollars brutto.

A vast majority of people are simply not "trapped" to that extent. They're better off staying and paying down their debt with the increased incomes they can earn in the U.S. The unavailability of bankruptcy is only ever an issue for a small fraction of basically non-traditional students, either at for-profit colleges or pursuing some sort of professional education that ends up not recouping the expenses involved.

A significant, maybe half, Ill have to look of student loan debt is held by people who didn't graduate and thus gained no economical advantage from the debt.

I’m seeing 1976 as the date student loans became non-dischargeable [0] via amendments to the Higher Education Act of 1965. I think I know why you’re confused though because the Wikipedia entry on the Higher Education Act doesn’t include a section on the ‘76 amendments and instead skips straight to the ‘92 amendments (which would have been HW, not Clinton). Still, it looks like the parent poster is right that Clinton did make some questionable additions to the Act during his tenure in 1998 [1].

[0] https://www.tateesq.com/learn/student-loan-bankruptcy-law-hi....

[1] https://en.m.wikipedia.org/wiki/Higher_Education_Act_of_1965

And then the top 20 schools will only end up taking rich kids whose parents can pay/co-sign as I highly doubt they would massively cut costs and perceptibly decrease their rankings to make it cheap enough that lenders would risk giving loans to poor kids.

So I calculate da possible total cost that could be done in [0]. University of Chicago has an average cost of tuition after aid at $27,315 and that does not even include housing or food! 1-(15000/(27,315*4)) = a 86% reduction in costs and then you have to use the $665.6 of your weekend target money for food and shelter. They wouldn't even try.

[0]: https://news.ycombinator.com/item?id=30403200

[1]: https://www.google.com/search?q=average+cost+university+of+c...

> The problem is Clinton making student loans undischargeable via bankruptcy.

Bill Clinton’s first federal office was the Presidency, and he was sworn in in 1993.

The federal law that made student loans non- (well, actually, less) dischargeable was passed in 1976, 17 years before that, while he was running what would become his first successful electoral campaign, for Attorney-General of Arkansas.

That because you don’t understand the law. What Clinton did was make it practically impossible to discharge the debt. You can still discharge the debt today but it’s incredibly difficult and very rare. What Bill Clinton did was turn it practically impossible which is the problem.

So unsecured personal loans? Those depend on your credit which most students don't have much/any and your debt-to-income which is normally infinite for students because they don't work. You would massively screw over kids whose parents cannot pay/co-sign a normal loan as it would force them to work and study.

Also, you normally cannot get very much with such low income and cherry on top, they have awful interest rates which range from about 6% to 36%. The APR on loans for borrowers with excellent credit is around 12%; it's about 29% for bad credit borrowers which students with no credit are likely to be.

Edit: If you work at target for 2 8 hour days on the weekend making 15 an hour and with a 36% debt-to-income ratio limit, you could afford a payment of $374.4 a month. $15,000 punched in a 30 year repayment at 29% interest rate equals a $362.57 payment with $0.07 interest. So you might be able to do it but it would hate to be working every single day between weekend work and weekly school.

Giving people money earmarked for education doesn't lift them out of poverty, because education is just a relative advantage in the job market.* A rising tide does not lift any boat's level relative to the water.

[*] In theory, education makes a society produce more on an absolute level -- but only in theory.

Giving people UBI is completely different. UBI is in itself a direct cure to poverty. The people receiving UBI are no longer poor at all. UBI abolishes poverty. You no longer have the issue of "the poor" anymore, as it's a category that does not exist.

UBI is like giving food to a starving person. It directly cures the starvation. It reverses the very condition of starvation itself.

Unlike the indirect approach to addressing poverty, there's no question about whether it would work. The remaining question is whether our economy depends on poverty as a negative incentive much like it depends on prison.

You explained why UBI wouldn't work in your own answer!

"Money is just a relative advantage in the market."

If everybody has $x, then competitive products/services will increase by $x in cost! (By "competitive" I mean those than cannot be easily scaled, like housing, education, medicine.)

All of those can be easily scaled though. They are all simply protected industries with entrenched incumbents weilding political power to maintain their status quo at the expense of everyone else. We could easily have 10x more doctors, houses, and quality educators if the artificial barriers to entry were lowered or removed.

That's irrelevant to the matter at hand. Scaling them has nothing to do with implementing UBI, and would be a good idea whether or not UBI is implemented. UBI simply does not solve the problem of poverty, or the poor having access to those goods and services.

Scaling them does have to do with UBI, because the argument above is that UBI would not work because the price of some goods and services will rise to compensate because they don't scale. If supply for these critical goods and services is instead increased alongside a progressive UBI deployment, then this wouldn't happen and we'd presumably in a better position afterwards.

When those are scaled, I'll gladly support UBI.

But then UBI won't be needed, as all these will be dirt cheap, like phones ($50 Motorola, not $1500 iPhone).

That doesn't make any sense at all. You need to do some thinking.

But there are poor people who work and have money already, most of them in fact. I am for UBI, but it's nothing like food to the starving. It's a safety net.

Poverty is literally defined as a lack of (low level of) income. You don't ever have poor people who have above-poverty income. That would be like having short people who have above-average height.

Only if price levels stay the same. If they don't, now you have 1000 dollars every month of UBI, but perhaps rent has jumped to 3000 dollars.

UBI would work ceteris paribus, but I am with Georgism on this one: the entire UBI would be eaten by landlords.

Not if you have a land-value tax, where landlords are literally paying for UBI, and even tying UBI amounts paid out to the amount of LVT raised, the higher the rent the more they pay in taxes, therefore the less they charge for rent the more they keep and it balances out...

This is literally part of Georgism philosophy.

True, but I rarely see UBI proposals coupled with land value tax. This combo could work.

I see it quite often but anyone against Ubi for reasons... usually stops responding when it does actually come up because it's an actual solution that might work and they don't want to even entertain the thought that it could be done... it they're rent seekers and would be hurt by it themselves...

It might. I am generally skeptical towards UBI being touted as a social panacea [0] [1], but I would be open towards trying to pull it off in combination with Georgist LTV.

[0] My main reason: there are countries such as Persian Gulf oil sheikhdoms where the citizens get free money or a least well paid jobs-just-in-name that someone else is actually doing, but there wasn't any explosion of personal freedom, social progress or artistic creativity there; a lot of the free money is sunk into drugs and conspicuous consumption.

[1] My next reason: you would have to exclude freshly arrived people, because if any place in the world becomes known for giving significant money to anyone for free, it will become a target of worldwide UBI tourism on an unsustainable scale. Already the people smugglers in Libya etc. are very good at presenting themselves as the "bridges" towards life in the richest parts of Europe.

one other idea I had was making a total new currency where citizens could only have one account, think - one bank account, that account then has a limit on how much total it could hold, therefore billionaires can't even exist in the system.

The coin would use smart contracts to tax all transactions but the tax rate is less for those who hodl less money (have less in savings) and for those who spend more per month (basically giving a leg up to those who spend like the poor, i.e. spend most of their money monthly...

if you combined this w/ govt georgist LVTs I think a fair system could be devised that still has people who are wealthy, but maybe 50 million is the cap, and maybe it goes up to 60 million when the average amount of monthly carryover in accounts is 10k, or something...encouraging more money to flow down, so the caps can go up... Something like this would need to figure out something else for business accounts to get ecommerce flowing and moving in/out of the system, since businesses can easily spend a billion a day or bring more than that in...

Haven't thought that far ahead. I'm also not a blockchain dev...so outside my wheelhouse..

Such poor thinking. Really disturbing when you think about the idea of democracy and requirements for informed public etc.

> Giving people money earmarked for education doesn't lift them out of poverty, because education is just a relative advantage in the job market.* A rising tide does not lift any boat's level relative to the water.

Not true. Every single software team I have worked on wanted to hire more workers but when they are paying me $350K a year, it limits how many people they can hire. If you doubled the supply of SWEs, you'd probably have 2 175k jobs instead of the one.

You can't double the supply by giving people more money for education. You still have the same number of people being bid for, no matter how many people get educational funding.

Absolutely. We'd be so much better off by semi copying Germany's culture of vocational training. And it wouldn't be expensive to do compared to the rather crazy sums we presently throw at higher education. Plus we very much need the skilled labor in a vast array of fields.

Fix K12 education first - that's where the highest plausible effects are. Vocational education can be a part of the picture, but it's actually really hard to do well.

You also have to fix the vocations themselves with better workplace safety laws, non-discrimination, health care, retirement, safety net, unions. A trades person is exposed to high risk if something happens to their bodies and prevents them from working a full career, or there's a cyclic downturn in something like construction.

It doesn't help that we are sending to college a lot of people who don't actually need it and won't profit by it.

The obsession with sending everyone to college was based on a correlation/causation mistake with college degrees and income levels.

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