tag:blogger.com,1999:blog-31670799.post6927586022110458141..comments2023-11-02T09:44:15.693-04:00Comments on The Center for College Affordability and Productivity: Equity Not Debt: New Approaches to College FinancingCenter for College Affordability and Productivityhttp://www.blogger.com/profile/18041956958538598371noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-31670799.post-9104010509384614132010-01-05T16:41:03.198-05:002010-01-05T16:41:03.198-05:00I would think that a good amount of the funding of...I would think that a good amount of the funding of higher education is already funded by equity investment(s) and other financial instruments. The investment in the future of our children is, by many, started around the time a child is born and the parents begin putting money into investments. The problem however is that a good many people don't plan, don't invest, or can't invest because their wages are consumed by bills - possibly because they are not living within their means. Possibly because they are stuck in poverty. This is nothing new.<br /><br />I have not read the transcript, but it sounds to me like Buffet was talking without having thought through such an idea. But then, that's what a lot of wealthy people do; they shoot their mouths off about how they are going to save the world using money - as if money fixes all problems. And to rely on a man to invest in a student, or students, is perilous. What's to keep him from selling his stake and who would buy it? I can see many problems with such a proposal, not the least of which is many, many substitute products.<br /><br />We do indirectly invest in people when we purchase stock in a company. But that is about the only (questionable) parallel with Buffet's boast.Overlookhttps://www.blogger.com/profile/00674812142533678988noreply@blogger.comtag:blogger.com,1999:blog-31670799.post-47992846831425154302010-01-04T22:05:54.640-05:002010-01-04T22:05:54.640-05:00I have some wonkish concerns about that.
1. If th...I have some wonkish concerns about that.<br /><br />1. If this became common-place then we would have a large portion of the populace, the most educated portion, with a 10% higher marginal tax rate. That could be very bad for work incentives.<br /><br />2. If you are willing to invest and other people are, then there must be a belief that the returns would be above the market average, i.e. above the rate of return you could get offering students loans. So this would be a bad deal for students compare to the loans (aside from those who plan to exploit it by moral hazard and the benefit from taking on their risk).<br /><br />I think there is some value in a risk-neutral body taking on the student's risk. But the trade-off to assuming their risk is creating moral hazard both in terms of finishing college and finding productive employment.Stevehttps://www.blogger.com/profile/10230344931186858123noreply@blogger.com