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by engrsrce
5014 days ago
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People who request and get loans are "victims" of "risk structure"? My parents told me "this is what we can afford, the rest is on you. If you earn $xx,xxx then xxx is about how much you can afford to pay per month." Seems to me that a large part of the problem is that we're letting 18-22 yr olds make career and financial decisions without adult mentor/parental input. |
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Take law school for example. At a top school, you've got say a 70% chance at getting a job at a big firm starting at $150k+, and a 30% chance of ending up at a small firm making $45k. The ~$200k tuition for law school is, at least purely financially, generally worth it for the people in the former group, and not worth it for people in the latter group. The expected return, weighted by that 70% risk factor is still positive. Purely objectively, for a risk-neutral person it makes sense to take on the $200k of debt for a degree from a top school.
But it really sucks for the people who aren't in that 30%. They didn't make an irrational decision to attend law school, but they still got badly burned because the process creates winners and losers in a very stark way.
The problem is the educational system. Schools should not be charging as much as they do. The market is supposed to drive costs down, but the cost of a legal education has skyrocketed since the 1950's despite being more or less the same exact process it has been for 150 years. You have seen this across the whole spectrum of degrees.