[andreyk]

Seems like a good overview, but I do find this bit unclear: "But why don’t market forces correct these issues?

The answer lies in the unique shield that non-dischargeable student loans provide to educational institutions and lenders.

In a normal market, if a product consistently fails to deliver value, consumers stop buying it. Producers either improve or go out of business. But in the world of higher education, this feedback loop is broken.

Colleges and universities, shielded by the guarantee of student loan money, have no real incentive to improve their product or direct students to majors that have an ability to pay back their loans.

They can raise tuition year after year, even as the value of their degrees stagnates or declines. "

Sure, colleges can charge a lot due to loans, but they are still competing with each other and differences in tuition could make a big difference. I went to Georgia Tech over other universities because it was in-state and Georgia has generous scholarships for students with good grades. So why does competition among schools not lower costs?

[tway_GdBRwW]

> But why don’t market forces correct these issues?

Another theory: The value creation is not linked to the value capture. So market forces make a bad feedback loop.

Look, I'm totally pro business, but business is only "good" at allocating capital when value capture and creation are linked. Education isn't like that. The closest we have are the bootcamp schools, where they take a cut out of your first 2 year's salary if you find a job or nothing if you don't.

When capture/creation are not linked, you need a different social organization method. "Government" or "Religion/non-profit" come to mind. Perhaps others have additional suggestions.

[imtringued]

The fundamental problem in job education is that it needs to be linked to the needs of future employers, but those employers do not have an incentive to hire workers and train them, thereby aligning the education program with the needs of the employers. Employers do not want to pay for training, because employees can leave at any point, so they decided to let employees go to university and pay for their own education. This then leads to a misalignment between what people elect to receive an education in and what employers want, because people aren't mind readers and know exactly what will make their boss five years into the future happy. So what happens instead is that higher education becomes purely about standardising worker skills, so that each worker is a replaceable cog according to their degree. This means you can just hire X amount of Y degree holders instead of caring about their individual skills.

[MarketingJason]

I ran a coding bootcamp school that had both your typical pay-upfront and later added an option like you outline. I can't speak for all programs, but schools use an affiliate third party lender for those "free" loan programs.

It was relatively new for us when I left, so I never saw the aftermath. I know it worked out well for some students, but my biggest concern was ensuring payments only kicked in if the job was "in-industry or field". My logic was the value isn't there if you go to a coding bootcamp only to not use the skills.

I was still worried they'd basically ask "do you use a computer?" and consider it in-field.

Another issue here is we had folks just looking to up-skill and the value return was harder to gauge if they were returning or continuing to work their job. This was mostly limited to our part-time program so we didn't offer the delayed-loan for it.

[recursivecaveat]

Apparently yeah at least arguably the most prominent boot camp takes a verry broad stance on 'related' occupations for income sharing: https://www.sandofsky.com/lambda-school/

[candiddevmike]

I don't know about nationally but my local universities are having year over year enrollment decreases. I think there are some market forces in play, but they aren't reducing tuition, just making the universities ask for more state or local tax money.

[agosz]

> I went to Georgia Tech over other universities because it was in-state and Georgia has generous scholarships for students with good grades. So why does competition among schools not lower costs?

All the schools have access to loans that are guaranteed to be repaid. We still have the mindset that degrees are required for employment (I'm not commenting on whether that's good or bad; that's just the current cultural mindset). Because of this, schools have no incentives to control costs. The students will go regardless because they have access to money that will pay for the tuition, no matter how much it costs. There's no penalty for the universities to raise costs because they will get students anyways.

[hinkley]

Also people get their first loan when they’ve just been legally considered adults. Nobody knows for sure they’ll be able to start paying these back in five years.

You buy a car so you can work and eat. These are very straightforward causes and effects. No car no job. Buy car that costs << than job. Done. Buy an education and you get more bills, not more income, for years. You might not even finish.

[spencerchubb]

Sure there may competition among suppliers. When you artificially inflate demand, the price will still go up. One does not negate the other