College Rules! But Student Loans are a Hot Mess!

The U. S. government makes student loans because our economy benefits enormously: Improved human capital. Higher earnings for taxpayers. Innovation and productivity gains. (Side note: Education has also been a $50 billion per year “export” because so many international students come here.) Meanwhile, colleges are basically getting blank checks for whatever tuition prices they pull out of the air. So there’s all this upside for the government and cash flowing to colleges, but student borrowers are left holding the bag. Kathryn Edwards thinks we can do better, and in a way that preserves what makes the American college experience great for students and the country. ✨ Support the Optimist Economy podcast at: https://optimisteconomy.substack.com/subscribe or https://buymeacoffee.com/optimisteconomy ✨ Complete show notes with links to articles and data at optimisteconomy.com https://optimisteconomy.substack.com. You can also find Optimist Economy on: TikTok https://www.tiktok.com/@optimist_economy YouTube https://www.youtube.com/@optimist_economy Instagram https://www.instagram.com/optimist_economy/

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  Episodes are dropped. Episodes are dropped. God, I thought that was just like-

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  With, with mics.

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  No.

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  God, we're criminally nerdy, Robin.

• 0:58Speaker 03

  Hello and welcome to Optimist Economy. I'm Catherine.

• 1:01Robin Rauzi?

  I'm Robin.

• 1:03Speaker 03

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• 1:15Robin Rauzi?

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• 1:31Speaker 03

  Absolutely buoyed by it, and also need to thank the people who have written reviews for us, wherever they get their podcasts. And I need to shout out one person in particular who wrote a truly chef's kiss, perfect, outstanding review for us, that just asked, "Is it true Catherine testified in front of Congress?"

• 1:53Speaker 03

  This was such, this is such a good burn. I like had to check that my siblings didn't post it under some kind of alternative identity because I was like, oh, man, whoever this person is, like, kudos to you, sir. That was amazing.

• 2:08Robin Rauzi?

  Nicely done. You'll all be happy to know that I posted a link to Catherine's testimony on YouTube on optimist economy.com. So if you don't believe me, if you don't believe her, it's there.

• 2:19Speaker 03

  Maybe it's not in our best interest to encourage sassy and sarcastic reviews, but I like, I straight up lulled. Like, I just, I saw it and I just like, I lost it.

• 2:29Robin Rauzi?

  Excellent, excellent.

• 2:30Speaker 03

  Very much appreciated. And I was like, man, people are listening.

• 2:33Robin Rauzi?

  I didn't see that. That's a good one.

• 2:34Speaker 03

  And they're making fun of me. That's how we know we're building a community of optimists. Because just because you're optimist does not mean you're not sarcastic or angry.

• 2:41Robin Rauzi?

  True that.

• 2:44Speaker 03

  Okay, so, retcon?

• 2:46Robin Rauzi?

  Yeah, retcon.

• 2:47Speaker 03

  I have a, a short retcon, which is that in the episode where we talked about fertility, and then even afterwards, in the childcare episode, it's tricky to characterize the policy coming out of the Trump administration, because as I learned recently, technically there is none. So, most of the reporting on the policies like the maternity medal, the Fulbright Scholarship, using money that is currently going to childcare and putting it towards subsidizing stay at home moms, all of those are things that are being floated and pitched to the administration, but do not technically represent current administration policy. So, you know, someone, well, a couple of people pointed this out. One of them pointed

• 3:30Speaker 03

  out of like, I don't think you characterized this correctly. And the other listener pointed out that this is kind of their strategy of really baiting people into getting mad about something that they have plausible deniability over. And they were like, it's a trap and you fell right into it.

• 3:45Robin Rauzi?

  I think we'll, we'll, we'll know soon because they're, they're going to roll out a policy, or an executive order, or some sort of report, and it's supposed to come soon.

• 3:54Speaker 03

  But, yeah, it's a good note, though, that, that there is like obfuscation and deniability and, you know, you know, I mean, journalists are, I mean, not that they don't know this, but they are manipulated in the kind of press process of what gets attention and when news is released. And it's hard to stay on top of that.

• 4:16Robin Rauzi?

  I have a couple of retcons. First, I was in Spokane recently and I realized that I'd said that you could get childcare there for $700 a month. And then I actually talked to the executive director of that childcare center and she said, not for full-time care. Full-time care at that high-quality early education center in downtown Spokane is $2,000 and up a month for full-time care.

• 4:40Speaker 03

  Okay.

• 4:41Robin Rauzi?

  So, don't everybody move to Spokane looking for cheap childcare.

• 4:44Speaker 03

  I also feel a lot less bitter. Oh, man.

• 4:47Robin Rauzi?

  Good.

• 4:47Speaker 03

  It's so hard, though, because this is the thing about paying so much for childcare, is that it's, you know you don't have another option, but it's so hard not to feel stupid. Like, wait, was there actually a miracle place that was cheap and good and better and I just never found it? And it's amazing how much parents are able to internalize this terrible private for-sale market as their fault.

• 5:06Robin Rauzi?

  Yeah.

• 5:07Speaker 03

  And politicians will do that for you. We don't need to do it on their behalf. So, it's not your fault. Even if it turns out you were overpaying for care, that's still not your fault. It's always going to be the public policy fault that they haven't done something about it already.

• 5:21Robin Rauzi?

  Okay. Terms and conditions?

• 5:23Speaker 03

  Terms and conditions. What did you look up this week?

• 5:25Robin Rauzi?

  Well, I looked up nightian uncertainty, which just made me realize, I know, don't ask, just made me realize that economists just name terms after themselves. Like, I

• 5:36Speaker 03

  Hundred, yeah.

• 5:37Robin Rauzi?

  Nightian uncertainty is named after some guy named Knight, but it's basically the unknown unknowns, right? It's like the difference between known risks and the unknown unknowns.

• 5:46Speaker 03

  Mm-hmm.

• 5:47Robin Rauzi?

  I don't know why you guys, there are a lot of, I think.

• 5:50Speaker 03

  Oh, we, economists love it. Of economists in the 1960s, this guy, Knight, was wildly influential. Like, he was either their advisor, or they just, they loved him.

• 6:01Robin Rauzi?

  Mentor, yeah.

• 6:02Speaker 03

  The mentor. Like, he was just like, the coolest guy. And everybody loved him. And so you have this big, like, nightian influence. You could just call it uncertainty, or uncertainty with no probability attached to it, or you could call it nightian.

• 6:16Robin Rauzi?

  Nightian uncertainty, exactly. That was exactly my takeaway, and I'm not an economist.

• 6:22Speaker 03

  Not an economist? Why do you get to name stuff after yourselves? Yeah, they all do. We just put names on stuff.

• 6:27Robin Rauzi?

  Yeah.

• 6:28Speaker 03

  I could give you, like, two dozen examples of, like, so this is named after another guy. Although, I don't know, if someone was like, there's a rouseian principle, like, wouldn't you want to flex and assign something rousey?

• 6:41Robin Rauzi?

  I wondered if he had named it that, or if, if in sort of honor of somebody who explained something, which it's not like an astronomer discovering a planet and naming it after him or herself.

• 6:52Speaker 03

  Which is like, okay, what about your mom? Come on.

• 6:55Robin Rauzi?

  Yeah.

• 6:56Speaker 03

  Okay, so, okay, those are our terms and conditions. I didn't, uh, I did look up something, but it's also an economic term that's dreadfully boring. So how about this? I'm going to subtweet my term and condition, which dates back to a conversation that started before we started recording, that I learned the, the difference between lie and lay today.

• 7:15Robin Rauzi?

  Are you ready to use it correctly?

• 7:20Speaker 03

  I'm not. I just, you told it to me, but that doesn't mean that I understand what it is or want to use it. I think this goes back to my W legacy, that if I use something incorrectly, I'm happy to learn it, but I'm not happy to use it. So I don't.

• 7:34Robin Rauzi?

  It is the epitome of your discomfort.

• 7:36Speaker 03

  Come on. Everybody I went to high school with knows exactly what I'm talking about. Yes, it is the epitome of my nervousness. Robin's really helpful with things like, you don't talk good grammar.

• 7:49Robin Rauzi?

  For our listeners, the difference between lie and lay, lie is present tense, lay is past tense. We're talking about reclining, as in, I am going to lie down on the bed. That's the use here.

• 8:00Speaker 03

  Is the equivalent of sit and sat, actually?

• 8:03Robin Rauzi?

  The equivalent of sit and sat, I think, is the easiest way for me to.

• 8:06Speaker 03

  And it's I and I.

• 8:07Robin Rauzi?

  Think about it. It's I and I and A.

• 8:09Speaker 03

  Okay, all right.

• 8:10Robin Rauzi?

  Lie is the present tense, lay is the past tense. Sit is the present tense, sat is the past tense. All right. So today, we're, we're doing a pitch session today, right?

• 8:20Speaker 03

  We are doing a pitch session. I am pitching you about student loans.

• 8:25Robin Rauzi?

  Student loans. So I have to tell you, like, I'm a little confused about the entire status of student loans these days.

• 8:33Speaker 03

  You and every borrower in this country.

• 8:34Robin Rauzi?

  Because, yeah, it just seems it has changed so much. And there's been, I mean, there's, there's two things. I think there's student loans and there's student debt. And there's been, like, moments of peak concern about the levels of student debt. But that also just became really wrapped up in like loan forgiveness and that there was a period of time where just payments were suspended during the pandemic and they just started collecting payments or insisting that people make payments again recently. And the repayment part is really a big tangled mess. But that's, is that what you want, is that what you want to talk about?

• 9:09Speaker 03

  I mean, I wanted, I wanted to talk about two things that were actually not that. So.

• 9:15Robin Rauzi?

  Okay.

• 9:17Speaker 03

  This is not meant to sound callous to people who are struggling under the weight of student debt. In some ways, it's a different policy question because I think there's two things I want to talk about, but one of them is, I think this past five years has been in some ways evidence of just how broken and messed up our student loan system is. And how angry people feel about it on both people who have been through the process and then also people, how much, how angry people are about student loan forgiveness and how unfair they think it is. That's, I think what I want to talk about is like blue sky, like our current system of student loans is not successful, so we need to go into the future. And the reasons for not success are so varied.

• 10:01Speaker 03

  I mean, there are economists who will tell you, student loans are one reason why college tuition is skyrocketing.

• 10:08Robin Rauzi?

  Oh, yeah. I mean, that, that, yeah, that it's essentially an unlimited pot of money that we're letting parents and, and, and students draw on and it's just driving up the cost.

• 10:19Speaker 03

  Our student loan system, the way that it is, has a lot of casualties and a lot of consequences. And I think that you could spend a lot of time talking about the casualties and consequences, but I think we should talk about how to solve it. This is an optimistic economy.

• 10:32Robin Rauzi?

  Yeah, yeah, yeah. It's solvable, yeah.

• 10:34Speaker 03

  Yay, better, better, better. So the first thing, I think this is almost like a Maybe like a public service announcement, but I wrote a column on student loans going into collection and I pointed out that it's an incredibly two-faced move by the federal government because the larger pot of money in terms of who owes the federal government money is absolutely people who cheat on their taxes.

• 11:00Robin Rauzi?

  There's way more of them.

• 11:01Speaker 03

  There's, yeah, there's more of them.

• 11:03Robin Rauzi?

  And they owe more.

• 11:04Speaker 03

  They owe a lot more. So it's like $600 billion a year in uncollected taxes and we know how to get that money back. It's through IRS funding and broader auditing and that enforcement money is being cut as we're sending student loan borrowers into debt collection, which by the end of the summer should mean garnished wages if they have a job. So it's a very like coldly cruel, I don't care, you owe money, I take it for student borrowers and a, well, we wouldn't want to interfere in people's lives if they're cheating the federal government and learning they can get away with it. And so I pointed out that this was deeply hypocritical and in nowhere in the column do I say we should forgive

• 11:48Speaker 03

  student loans. All I say is that this is not

• 11:52Robin Rauzi?

  Yeah.

• 11:53Speaker 03

  fair. It's not effective.

• 11:54Robin Rauzi?

  And it's not the right target.

• 11:55Speaker 03

  It's not their

• 11:56Robin Rauzi?

  If your concern is, is actual revenue.

• 11:58Speaker 03

  Yeah, it's not, it doesn't have an economic or an efficiency justification and it's not fair. So it's just, it's just mean. I never say forgive student loans and the vitriol I got back for this column was incredible. Not even saying that student loans should be forgiven, just talking about student loans.

• 12:16Robin Rauzi?

  Using the two words together, student and loan. It's triggering. It's triggering for people.

• 12:21Speaker 03

  Triggering. And I think that there's an aspect here where this is like, these are the new, this is not going to sound the way that I mean it to, but like, fuck it, it's a podcast. It's not like we're recording. There's so many ways in which student loan borrowers who can't pay back their debts are like the new welfare queens. They're absolutely hated. They're mythologized as like lazy kids who like didn't finish their degree in French literature, who like don't understand personal finance. It's entirely their fault. It's entirely their choices and they are hated. Part of that is that they became politicized because Biden championed them.

• 13:00Robin Rauzi?

  Yeah, you know, you try to help people and they become a political target.

• 13:03Speaker 03

  Yeah, I think it's friendly fire, right?

• 13:05Robin Rauzi?

  I've been to all sorts of people.

• 13:06Speaker 03

  Student loan borrowers who are hated by deeply conservative people because Biden was trying to help you. You are in incredible company.

• 13:15Speaker 03

  But I do think that there's also a different strand there of like, it's not my fault as a taxpayer to pay for the things that you can't do. And it is ultimately about like your human failure and your personal failure that becomes my taxpayer problem. All that stuff is there.

• 13:34Robin Rauzi?

  Maybe I'm just oversimplifying, but it also seems like there's kind of a, you know, an anti-elitist thing too. And I think that this cuts both ways, right? It's like you borrowed money to go to college and then you didn't get a job that you could pay it back. Well, like you wasted your education. Or conversely, I didn't go to college and you got all this money from the government to go to college and you're not paying it back. Like, there's like misunderstanding and distrust to go around.

• 14:00Speaker 03

  Yeah, and there's less of this idea of like, wow, if you went to college and then you couldn't pay it back, I wonder if something horrible has happened, either in the economy or in your personal life, that would make it hard for you to succeed. And maybe there is an aspect to which not being able to earn a lot of money is out of an individual person's control. People don't see that part. They just see the personal responsibility. So the personal responsibility on student loans, it's there. So all that said, do I actually want to forgive student loans?

• 14:29Robin Rauzi?

  Well, go ahead, tell me what you think.

• 14:31Speaker 03

  I actually think we just should redesign the whole system, top to bottom. And if there is a forgiveness of student loans, it's basically buying ourself out of the prior current system. So like, whatever we have now, it has to end. You can't transition to something new without.

• 14:47Robin Rauzi?

  Ending what you had.

• 14:48Speaker 03

  Ending what you have. And somehow, ending what we have has to include something for people who like, hey, this system actually sucks. This was not the right way to do it. We never thought about it that much on the front end, and so we need to do something better. And that might mean acknowledging that some people are given a really bad turn. So I, I think in the context of building a new policy system, there is something that has to be done for people who are having a hard time with their loans. And it's not a blanket forgiveness. But I, I do think something has to be done to transition out of this current system. Like, you can't punish people for 30 years when the government has moved on to an entirely new student loan system that like obviates people like you existing.

• 15:24Robin Rauzi?

  Yeah.

• 15:25Speaker 03

  But you get punished for it for three decades. Oh, my God, they're garnishing social security benefits, which means there are poor bastards out there who have not paid off their loans as they're collecting social security, which either means they're 67.

• 15:37Robin Rauzi?

  They're disabled.

• 15:38Speaker 03

  Or they're disabled. And I was like, oh, Christ, that is really tough. And also, a lot of those people, the amount that they owe is larger than they borrowed.

• 15:47Robin Rauzi?

  And they, and they've even probably paid back the amount that they borrowed.

• 15:51Speaker 03

  But they haven't paid back the interest.

• 15:52Robin Rauzi?

  Yeah. We should also point out that student loans are, are not dischargeable in bankruptcy.

• 15:58Speaker 03

  No.

• 15:59Robin Rauzi?

  Which is unlike almost any kind of debt, right?

• 16:03Speaker 03

  What else isn't dischargeable? This is a good retcon. What is not, what, what debt is not dischargeable in a bankruptcy? There's only a few types, there's only a few types of loans that will garnish your wages, too. It's like taxes and student loans will garnish your wages. Taxes, student loans.

• 16:17Robin Rauzi?

  Child, child support.

• 16:19Speaker 03

  Child support, alimony. Maybe not even alimony.

• 16:21Robin Rauzi?

  And that was just to, the idea being, I guess, students would be young, they could just not pay, they could go into bankruptcy almost immediately if they would get their loans discharged, and they would just be back on track to their regular.

• 16:33Speaker 03

  You know, that's just what's amazing.

• 16:34Robin Rauzi?

  As if that was how, as if that was happening.

• 16:36Speaker 03

  As if that was happening. But like, also, what a remarkably deep dive into a potential negative incentive effect of such a shitty design system. We have thought about no part of this well, except for the slim possibility that a young person is going to game the bankruptcy court in order to get out of student loans and effectively lock themselves out of their ability to borrow for a decade in exchange for not paying back their student loans. And that is the possibility we planned the system around. Like, my God. All right. So, so Blue Sky.

• 17:07Robin Rauzi?

  Yeah.

• 17:07Speaker 03

  Everything you know about student loans, what you paid, what someone else paid. Like what your friend paid, whatever.

• 17:14Robin Rauzi?

  Put it aside.

• 17:14Speaker 03

  Just put it all aside.

• 17:15Robin Rauzi?

  Okay.

• 17:16Speaker 03

  There are two questions we have to ask when designing a blue sky system or taking a blue sky approach to how the government helps with the tuition fee and cost of living that is required to go to experience higher education.

• 17:34Speaker 03

  One, does the government benefit from your investment in higher education? And two, does the government bear any fault for the lack of individual return to higher education investments? So you go to college, is that good from the government's perspective? Like you go to college and you don't make that much money. Is the government-

• 17:56Robin Rauzi?

  You don't get the big bump that you were expecting.

• 17:58Speaker 03

  Yeah, you don't get the college bump. Is the government at all responsible for that?

• 18:02Robin Rauzi?

  Right.

• 18:02Speaker 03

  If the answer to both of those questions are yes, which I think they are, then you have to kind of rethink the system and change the financing, the co-financing of higher education in order to reflect that the government has more skin in the game, both ways, than they recognize through the current system.

• 18:22Robin Rauzi?

  Because the current system places essentially all the risk on the student slash borrower. You know, if you don't make enough money, it's your problem. And if you don't, I mean, I guess there's income dependent repayment.

• 18:34Speaker 03

  Yeah, but like when you go to college, whether it's a community college, a for-profit trade school, a two-year school, a four-year school, you get a postgraduate degree of any type, the government benefits from that because they benefit from you having higher human capital, you earning on average more money, you being a higher taxpayer. Like they benefit from you in so many ways, not just the things that you learn and how that's applied via productivity. Or via innovation and creativity in the economy, but they see it back through higher tax dollars. Like the government, there's a reason why they're in this game in the first place.

• 19:10Robin Rauzi?

  Right.

• 19:10Speaker 03

  But they

• 19:11Robin Rauzi?

  The reason why states built universities in the first place.

• 19:14Speaker 03

  Yeah, but they don't take the same approach to that investment not working. It's like, well, that's all an individual failure. And the way that they manage the market, the way that they maybe don't regulate colleges, that they're writing a blank tuition check to via student loans, they're like, oh, well, none of that's our fault. That's all an 18 year old kid's fault. This is, to me, is the argument of like, look, the government benefits and they were part of the problem. Like, they benefit from it winning and they're partly to blame from it losing. So like, this is why we both need to have them there, but do better than the current system.

• 19:46Robin Rauzi?

  Okay. Are you going to try to spell out what your system looks like?

• 19:50Speaker 03

  Well, I think this is my, like, if I'm trying to make a persuasive case, the first part is like, all right, answer to these two questions. They're both yes. Like, the government needs to be involved in student loans. So this

• 20:00Robin Rauzi?

  Why do you, okay, so answer the second part of that then, more, which is why, why do you think the federal government has some responsibility if people aren't able to, I mean, the government is in it because they want the benefits. Why do you think they have some responsibility? And what do you think that responsibility is if those benefits don't follow?

• 20:16Speaker 03

  So this is great lead in to what I think is the second part, which is kind of like the diagnosis of the current system of like, let's do a, what do they call it when they do like a meeting? It's always used in the military. Like, we're doing a meeting and we're gonna

• 20:30Robin Rauzi?

  Hot wash.

• 20:31Speaker 03

  A hot wash. Yes. Let's do a

• 20:33Robin Rauzi?

  Robin term.

• 20:34Speaker 03

  I, this is a Robin term. Let's do a hot wash of the current higher ed cost in student loan state of the world. And in our hot wash, we are going to look at the federal government's behavior and look to see if maybe they made some mistakes along the way.

• 20:49Robin Rauzi?

  Okay. So for our listeners, a hot, a hot wash is like an after action report, right? So after something's done, after something happens, It comes from the military. It means like while the gun is still hot, you clean it before it gets all gritty.

• 21:01Speaker 03

  That's where it comes from?

• 21:02Robin Rauzi?

  Yeah, it's a military term. But it got adopted into government and it's, it's kind of, you know, it's, it's sort of government jargon.

• 21:08Speaker 03

  I just imagine that 75% of meetings at the Pentagon have hot wash in the subject line.

• 21:13Robin Rauzi?

  I love it. Yeah.

• 21:15Speaker 03

  So the hot, the hot, so I think the answer to this-

• 21:18Robin Rauzi?

  The hot wash on-

• 21:19Speaker 03

  The hot wash-

• 21:20Robin Rauzi?

  I don't know, it's like, like I don't think you can hot wash a student loan program that's 10 years old, I guess is what I'm saying.

• 21:24Speaker 03

  Yeah. Okay. Damn it. It's almost like this is your professional job to be a real stickler about word use. So-

• 21:31Robin Rauzi?

  But I do love the word. So-

• 21:32Speaker 03

  All right. Well, your heart's torn here. Robin, do I get to use it or not?

• 21:37Robin Rauzi?

  All right.

• 21:38Speaker 03

  Maybe not hot wash, but spiritual hot wash.

• 21:42Robin Rauzi?

  We're gonna reflect.

• 21:43Speaker 03

  So if you were to point to the federal government and say, listen, this is your fault.

• 21:49Robin Rauzi?

  Yeah.

• 21:50Speaker 03

  There would be a couple of things that you would point to. If you were like making a case against the federal government. So the first, I think, point you would make is that the federal government has backed away from investments in higher education. Not necessarily backed away, but like changed the composition. So a truly formative moment for the US economy and for higher education in particular is the GI Bill.

• 22:13Robin Rauzi?

  Sure.

• 22:14Speaker 03

  Which after World War II helped veterans go to college at free or near free rates. And if you read histories of the GI Bill, one thing they'll tell you is they didn't like necessarily let black people use it. And the second thing they'll tell you is that the enrollment, like the number of people who took advantage of the GI Bill was 10 times what they thought it would be. Like they thought this would be a small benefit that maybe some people who were inclined for college would go. It was seen as like a relatively elite institution. It was not something that they expected. You know, I think it was eight million people took it up. And that was like blew away what they thought was going to happen. So the government got in in a big way in the GI Bill. And this occurs-

• 22:58Speaker 03

  Kind of to kickstarts an era in which the federal and state governments invested heavily in college. And they did this through financially supporting public institutes of higher learning. They built the US community college system, which no other country has a community college system like we do. And a lot of them are very jealous of it. But we made these massive capital costs. They were trying to, like, they couldn't build campuses fast enough. And then they just pulled back. And supporting, you know, higher

• 23:29Robin Rauzi?

  This is kind of money that was going specifically to pay people's tuition.

• 23:33Speaker 03

  It was both. Like, they supported, yeah, they supported capital investments. They, you know, they had grants and they, that investments shifted over time to, instead of directly supporting institution of higher education, they would give students loans. And then certain schools through things like the NIH and the NSF and the Department of Energy and so on would get research grants.

• 23:57Robin Rauzi?

  And that was all post-GI bill?

• 24:00Speaker 03

  Yeah.

• 24:01Robin Rauzi?

  Okay.

• 24:01Speaker 03

  So one thing to point out to the federal government would be that you switched who benefited from your largess. From being students and

• 24:10Robin Rauzi?

  To being institutions.

• 24:11Speaker 03

  To being institutions. And then the second part of that would be, and you put absolutely no strings on that money.

• 24:17Robin Rauzi?

  Well, grants have strings on them. I mean, they're very specific.

• 24:20Speaker 03

  Grants have string on them for the people who receive them, yes. But there is almost no oversight on schools who have gotten, you know, the current student loan portfolio for the US is 1.6 trillion dollars. That money did not come with any type of quality control. Any type of student outcomes from your school have to looks like X, Y, or Z, or you have to hit these benchmarks. It didn't have come with any restrictions on how they spend tuition money. And it didn't come with any restrictions on how much they charge. So like, we're going to write you a check via this 18-year-old kid. And you can spend it on whatever you want. You can spend however much of it you want. And we're not going to do really anything to assess the quality of education you're providing

• 25:05Speaker 03

  or the outcomes of students afterwards.

• 25:09Speaker 03

  And so I think you could make a case like this was a mistake. You gave universities way too much freedom in how they spend this money. They have more freedom over how they spend your student loan money via tuition collected than they spend on endowments. So like someone gives money to the school, they tell you the school exactly how they can use it.

• 25:30Robin Rauzi?

  Right.

• 25:30Speaker 03

  Not so for tuition, even if it comes from student loans. So they, you know, you gave schools a blank check. And a lot of economists have argued that the almost limitless portfolio of federal student loans has gone to schools that in ways that allowed them to accelerate tuition increases. And I think even among that set of economists, there is a group that would argue, and they use that to both keep their tuition inflated as well as spend it on things like amenities as opposed to

• 25:59Robin Rauzi?

  To bolster their competition with other schools, right?

• 26:02Speaker 03

  Yeah. In some ways, schools are like one of the most vicious sellers that you have ever come across. Because they don't have transparent pricing, right? They have posted tuition and then they'll say no one pays sticker. And they use the total break between what you could possibly pay and what you actually pay, which of course, they don't tell you what they, you will actually pay until after

• 26:25Robin Rauzi?

  Yeah, until you're enrolled.

• 26:26Speaker 03

  Yeah, admitted or enrolled. So you don't even know, like you couldn't comparison shop schools because you don't know how much they cost. So in theory, the federal government is like, look, like, we don't need to take a firm hand with universities because they have to compete for students. But they're not, students are not in a fair fight here. Because universities use so much obfuscation around tuition in order to basically curate their student set. And they use discounts to tuition and like special scholarships in order to get exactly who they want. They don't tell you what you're going to get. So you can't comparison shop. You couldn't say like.

• 27:03Robin Rauzi?

  No, and then you have to accept by, I mean, this is not true necessarily if you're going to community college or if you're going to, but if you're going to an elite college, you have a deadline, you have to make a decision and you may not have all the information you need before you have to buy.

• 27:16Speaker 03

  Yeah. So you're this borrower, AKA student, doesn't have all the information and the school has no limits on what they can do. And the federal government in the meantime is the one bankrolling it. So I think that for me, the argument of like, is the federal government to blame is like, yeah, man.

• 27:32Robin Rauzi?

  Because you didn't, you didn't regulate any of this.

• 27:34Speaker 03

  You didn't regulate any of this and you, and you chose not to, even as student debt started to get really high and we started to have really alarming reports that this debt was starting to jeopardize the return to a college education, you still haven't acted. And universities haven't felt any type of firm hand from a true policy sense other than what like, the Trump administration is doing is just like punitive. It has nothing to do with a student loan portfolio. That's, it's completely different. I think, I'm talking about real policy, like actual policy.

• 28:07Robin Rauzi?

  Well, did you read, I mean, have you read the, the Republican plan to redo the student loan situation? I mean, it actually is making a couple of the same points you do about basically not writing so many blank checks and trying to cap the amount of, you know, and I, I don't know if these are good ideas or bad ideas, right? Like cap the total amount of, of money that students at an undergraduate level can borrow, cap the amount of money their parents can borrow, because parents are also getting into trouble with these loans. Also benchmarking the kind of value, but specifically the value of certain types of degrees, which seems very difficult to me. You know, it's like those philosophy majors who become lawyers, they make a lot of money. Those philosophy majors who become freelance philosophers, maybe not.

• 28:50Speaker 03

  Yeah.

• 28:50Robin Rauzi?

  But anyway, like that, some of the ideas seem a little, a little mushy to me, but they're trying to get universities to have skin in the game, right?

• 28:57Speaker 03

  Yeah. And I think.

• 28:58Robin Rauzi?

  Which is different.

• 28:59Speaker 03

  Which is different. Of course, they're like, blame them. And I'm like, no, blame government. Or, hold on, this is me, blame both. Yeah.

• 29:06Robin Rauzi?

  Yeah. Yeah. I mean, which, yeah, again, plenty of blame to go around here. But the, yeah, their idea is that, and again, I don't know if this will. Wind up in any bill or not, but that universities whose students have high rates of default would get punished.

• 29:21Speaker 03

  Yes, and that's, I mean, in some ways, you've seen them do this after the fact, when they go after for-profit schools that are very predatory. And so I think Kamala Harris, her big win as Attorney General was Corinthian College.

• 29:35Robin Rauzi?

  Mm-hmm.

• 29:35Speaker 03

  These are basically places that were like, oh, the federal government's writing blank checks to anyone who goes to college. Well, we're now a college and we're going to charge everyone for like, what is basically a garbage education. And think about it, that took lawsuits to stop. And then it took another act of Congress to say, well, if we've closed a school for being predatory and exploitative, we have to have a separate piece of legislation to say, and people who owe money from those schools get to have their loans forgiven. So clearly, the government understands on some level-

• 30:08Robin Rauzi?

  That they were giving loans for people buying junker cars.

• 30:11Speaker 03

  Yes, yeah. And they could do a better job-

• 30:13Robin Rauzi?

  And calling it a Cadillac.

• 30:15Speaker 03

  Yeah, I mean, consider the difference between, you know, getting a student loan versus buying a house. I mean, the government is heavily involved in the mortgage market. You can, you can get an actual loan that is guaranteed by the government, the FHA, the VA, and the USDA loans. Those are guaranteed by the government. But then if you get a conventional loan that is conforming-

• 30:42Robin Rauzi?

  Mm-hmm.

• 30:43Speaker 03

  It gets, it gets bought by-

• 30:45Robin Rauzi?

  Bought by-

• 30:45Speaker 03

  By Fannie and Freddie, the government-backed enterprises. So really quick for people who aren't familiar on the mortgage market, when you go to a lender, a mortgage lender, you want to buy a house, you have to go to someone and they say whether or not you're creditworthy, how much you can borrow, what kind of rate you would get, and so on. Those mortgage lenders are essentially doing the dirty work on your ability to borrow and the house as an investment. So not only do they dig through your personal finances, your tax returns, and so on, to say that you would be basically good for the money that you're being lent, they also go and check the house, and they get the house appraised. And so if you, if it came back that like, you're buying a house that's $100,000 overvalued in their mind, they, I mean, they won't give you a loan for it.

• 31:30Robin Rauzi?

  Right.

• 31:30Speaker 03

  So there's lots of vetting of the market to make sure that the amount being borrowed is roughly matched to the qualifications of the borrower and the worthiness of the investment. And the government is like- Absolutely, behind all of this. It's got its fingers in the till. It's like so many quality controls. None of that happens for your student loans.

• 31:51Robin Rauzi?

  Right. Yeah.

• 31:53Speaker 03

  So this, for me, is the real argument of like, yeah, look, hate student borrowers for being bad at job. I get it, you're better than them. But like, the government has absolutely messed up here, and we need to do better. And I don't know how we move past where we are now without recognizing that there are casualties to the government's true dereliction of duty, and how they treat higher education institutions, and how higher education institutions treat their students. So I think that, to me, is like the key argument of like, okay, and if you get there, then there's just like so much on the table of what we can do. And how to reform higher ed financing is, it's like a wild ride of different. So yeah, there is, I think one proposal is to basically keep the system we have now,

• 32:38Speaker 03

  but add a lot more restrictions on universities. That would be kind of what Republicans are floating, which I think is like, at a minimum, do that. But another one is to basically make the student loan market a lot closer to the mortgage market. Where you have like longer terms, lower rates, like a government backstopping for the resale markets, and like kind of a, an appraiser who would basically put some for-profit schools out of business and put a cap on things. Now, that's one. And then the other one is to go with the either incredibly libertarian or incredibly big government approach of income sharing agreements. Have you heard of these?

• 33:21Robin Rauzi?

  Yeah, I have.

• 33:22Speaker 03

  What was the eye roll, the, ugh?

• 33:24Robin Rauzi?

  Well, I think because they were floated as this idea that they, especially in, for people looking at technology jobs, right? That was then the really popular use of it, was that you would get a loan to go get an education, and then either private enterprise, or sometimes companies were themselves paying for it, and that they would just basically garnish your wages to get their money back.

• 33:48Speaker 03

  Yeah, so it was a, it's a Milton Friedman proposal.

• 33:52Robin Rauzi?

  Is it really?

• 33:52Speaker 03

  Actually, yeah, it goes back to him. And the idea is you don't pay tuition. And in exchange, you pay a portion of your income, whatever your income is, for a fixed amount of time.

• 34:06Robin Rauzi?

  So like 10% of your income for 20 years or whatever.

• 34:09Speaker 03

  Well, that would be incredible. I think they're more like 5% for seven years or something like that. But like if you lose your

• 34:14Robin Rauzi?

  Well, that would be better.

• 34:15Speaker 03

  Yeah, but like if you lose your job, if you end up working at like a corporate attorney, like they just, like however successful you are, they just get like basically a cut of it.

• 34:26Robin Rauzi?

  Oh, so if you lose your job and you're making zero income, you don't have to make any payments and you don't have to make it up later, the clock is still ticking on your seven years.

• 34:33Speaker 03

  The clock is still ticking. So it's just that all of all the money you make for seven years, they get a, they get a cut.

• 34:39Robin Rauzi?

  I just feel like the private market was trying to do this and it didn't work out.

• 34:42Speaker 03

  Yeah, well, I mean, the Consumer Financial Protection Bureau was like, it's a loan. And we need to regulate it. And they were like, it's not a loan. It's a financial agreement that doesn't involve debt. And they're like, are you kidding me?

• 34:54Robin Rauzi?

  Right.

• 34:54Speaker 03

  And a lot of, a lot of, a lot of ISAs in like the way that they have been, to the extent that we have income sharing agreements today, they have really come out of the private sector. There's companies involved. It's, it's a lot of private schools. Some public ones are starting to get into it, but it's, it's all coming from the schools or corporations.

• 35:16Robin Rauzi?

  Right.

• 35:16Speaker 03

  Or some type of financial backers.

• 35:19Robin Rauzi?

  And they're all trying to make money on it. Like it's not, it's not, it's not about the goodness of their heart or trying to get people more education.

• 35:26Speaker 03

  Some of them will tell you that they have a hard time recruiting students because they're afraid of student loans. And so they're trying to come up with an alternative financing that can help students because, or, or students have bad credit and then they don't get to go to college. So it affects a lot of places. It started to show up first were things like trade schools where you weren't coming out for a four-year degree, your mom and dad weren't half-bankrolling you, or that wasn't really an option. These were like people who were independently living or who couldn't borrow, who, who wanted to get some type of post-secondary degree. Yeah, and I think in that world, you had people who were like truly heroic, doing amazing things with this program to make post-secondary education great. And then, you know, you've got an unregulated financial market, so you also had shysters.

• 36:10Robin Rauzi?

  Yeah.

• 36:10Speaker 03

  And exploiters. And I think that the basic idea is you make universities have a skin in the game. Right? Where their fate rests with yours. And if you graduate.

• 36:23Robin Rauzi?

  Their fate, yours is the students.

• 36:25Speaker 03

  Yeah, like you, the student. If you don't do well, your school doesn't do well. And so then they have to make sure you do well. And a lot of the arguments people make against this is that it would like lead to like no more humanities.

• 36:37Robin Rauzi?

  Right.

• 36:37Speaker 03

  You know, students would be really pressed into becoming engineers or going in STEM. And I think it's a, it's, to me, it's a valid point because for all of its faults and failings, the US higher education system is awesome. And it's so American. Like, you could not get a degree that you get in the United States anywhere else in the world because we have so much freedom over how our higher ed is structured. Like where you go, what you study, what's in the degree, did you take a language?

• 37:07Robin Rauzi?

  Create a class, what the.

• 37:08Speaker 03

  Yeah, I mean.

• 37:08Robin Rauzi?

  What the requirements are to graduate.

• 37:10Speaker 03

  Like, I remember the first time I talked to a student from South America who told me like, "Oh, yeah, well, you pick lawyer and you only take law classes for five years." And I was like, "Oh, my God."

• 37:21Speaker 03

  Drive me into the back of a truck. This sounds terrible. Or, or, or, you know, you have places like Germany.

• 37:28Robin Rauzi?

  Right.

• 37:29Speaker 03

  Incredible apprenticeship and like middle skills, blue collar training programs. And this is true in a lot of European countries. You basically have to decide if you're going to college by like 13.

• 37:40Robin Rauzi?

  Yeah.

• 37:41Speaker 03

  Because you either go to the college high school.

• 37:44Robin Rauzi?

  College prep high school or pre-trade high school.

• 37:46Speaker 03

  Yeah, you either go to the trade high school or the prep high school. And they're not the same and you can't switch. And if you change your mind, too bad.

• 37:53Robin Rauzi?

  I know. Unlike, you know, the United States, we had vocational, we had vocational education in the little town I grew up in. And a lot of people did it and they'd done very well for themselves and, you know, start working right out of school. But if they decided after 10 years, you know, as running a hair salon, that they don't want to do that anymore, you can still go back to college in the United States.

• 38:11Speaker 03

  Yeah, but you don't, like, if you go to a trade high school in other countries, it's not clear you get to ever, you never get to go. So the US has a ton of freedom, including over what you study. And like, take it from someone who was basically a humanities major and now has a PhD in STEM. Like, you don't have to be a freshman STEM. It doesn't matter that I like, when did I take a math class and when? Like, I had the freedom to follow what I loved and what I fell in love with to, you know, whatever education conclusion I wanted. And I didn't have to decide to be an economist at 13. And I wouldn't have been one.

• 38:49Robin Rauzi?

  No, all people would do is what their parents did.

• 38:52Speaker 03

  Yeah.

• 38:53Robin Rauzi?

  Because it's all you know.

• 38:54Speaker 03

  Because it's all you know. And I, like, I, to the number of careers I abandoned before and during college, and then honestly, the first two years after, I mean, it's just like, like, seven different careers, some of them a lot bigger timeline than others, but like, man, did I, was I, did I walk away from a lot? And then, like, here I am with a PhD and I run my own business, like, I'm, I'm a successful person. It's because I had so much choice and freedom to find out what I wanted to do and not the opposite. So a lot of the, how we, how we fix the finance of higher ed rests on this, like, but how do we keep it special? Like, how do we keep it American?

• 39:29Robin Rauzi?

  Yeah. And how do we, I mean, it's one of the best, best exports we have, right? I mean, people come from all over the world to go to school here because of this system.

• 39:37Speaker 03

  What's crazy is that if you're a student from abroad in America, we basically count all of your spending as an export.

• 39:44Robin Rauzi?

  If you're a student, I'm wait, wait, we count all of your spending? Yeah, right. Exactly.

• 39:50Speaker 03

  Yeah, like, you spend tuition.

• 39:52Robin Rauzi?

  I had to go in Poland.

• 39:53Speaker 03

  Yeah, yeah, so you, you come from England, you come to the US, you pay full freight tuition, you go to the University of Wisconsin, go Bucky, right? All of that counts as an export.

• 40:04Robin Rauzi?

  Right. It's as if we have exported that education and it's been bought by a foreigner.

• 40:08Speaker 03

  Yeah, that, that little piece of education that you bought is technically counted on our trade balance as an export, which is why education services is one of the biggest trade surpluses we have.

• 40:19Robin Rauzi?

  Yeah.

• 40:20Speaker 03

  Because technically, we export so much education, even though I'm still right here. So that's confusing.

• 40:26Robin Rauzi?

  It is confusing, but it's also, I mean, it's also soft political power. It's goodwill around the world.

• 40:32Speaker 03

  Oh, yeah, and people, people love coming here.

• 40:34Robin Rauzi?

  Yeah.

• 40:34Speaker 03

  You know, they don't make movies about college in France. Okay, like, not the way they'll make it about America. Like, the American college experience is like, that's crazy. I want that. Yeah, I mean, you want to preserve something. So like, so I went to UT Austin. Go Longhorns. Yeah.

• 40:50Robin Rauzi?

  I did not.

• 40:51Speaker 03

  I would say Texas, Texas. And then you're supposed to say yee-haw.

• 40:55Robin Rauzi?

  Okay, you want to practice that?

• 40:56Speaker 03

  No, I just, I feel like you're not into it. Like, it's, it's got to stay special.

• 41:00Robin Rauzi?

  I know.

• 41:01Speaker 03

  It's a chant that millions of people.

• 41:02Robin Rauzi?

  Saying yee-haw with my Ohio accent probably wouldn't.

• 41:07Speaker 03

  But my undergraduate program had a degree. It was an honors program. And for whatever brilliant reason, they decided to name this honors program Plan Two. And that is the name of the major. And it's.

• 41:23Robin Rauzi?

  You have a BA in Plan Two?

• 41:25Speaker 03

  I have a BA in Plan Two. And, yeah, I mean, obviously, people.

• 41:29Robin Rauzi?

  That sounds a little right. That sounds like a little Soviet.

• 41:30Speaker 03

  I know, doesn't it? And the joke was like, I don't have a major, but I plan to.

• 41:36Speaker 03

  Uh huh, uh huh. It's good. Yeah, there's cleverness there. But the major itself is like, I can't even say what it was. It's basically humanities. Like, the whole idea was that you, you got access to, like, really small discussion classes. Where I took biology, I took math, I took physics, I took languages. I took a Russian lit discussion class. So like, none of them added up to a major. So they were like, well, we just have to call it Plan Two. Because like, these people basically studied nothing and everything.

• 42:04Robin Rauzi?

  A little of everything, yeah.

• 42:05Speaker 03

  A little of everything. I remember joking at like.

• 42:07Robin Rauzi?

  Which is what a liberal arts education essentially is. And it's a way to get that at a big university.

• 42:12Speaker 03

  Yes, it's a truly liberal arts, majorless occupation. We used to joke like, I'm studying to be good at dinner parties, like.

• 42:20Speaker 03

  Or Jeopardy, that was another one we used to joke around of like,

• 42:22Robin Rauzi?

  This is the pre Jeopardy major.

• 42:24Speaker 03

  This is the pre, I'm in pre Jeopardy. But like, yeah. Or pre Trivial Pursuit. But I had this incredibly broad education during which I picked like five different careers. And then afterwards, I took an econ stat class that was a requirement in order to take a government class that I really wanted to take on public policy. And so I had to take the econ stat class and the econ stat class was taught by an economics professor and it was like the pre econometrics class. And this professor was like, what are you gonna do with your life? And I was like, I think I'm gonna study international relations and get some master's degrees. And he was like, stop.

• 43:06Speaker 03

  You need to be an economist. And I was like, that sounds tough. I'm probably not gonna do that, but you're hilarious. And then like three years later, I was like, so can you write me a letter for an econ PhD? And also can you kind of gloss over the fact that I haven't taken math in eight years? And also I don't understand economics. Okay, thanks. He wrote me what I assume is an amazing letter because I actually got into a PhD program and I was the only person in my program that did not have a math undergraduate degree or math undergraduate minor. It was like math, physics. And I'm like, well, what I learned from my Russian Lit junior seminar on the master in margarita is that actually Russian Lit might not prepare you for econometric theory.

• 43:51Speaker 03

  So, you know, but like, that was my journey.

• 43:56Robin Rauzi?

  Yeah, everybody's got their journey.

• 43:57Speaker 03

  And if you plan too much, people don't get to have a journey and you're never gonna plan as well as people plan for themselves.

• 44:04Robin Rauzi?

  Yeah, I mean, I just think of college as just being exactly that experience that you're talking about where in an ideal world, and again, this is not the experience that everybody has. A lot of people go to local colleges, community colleges, they, you know, they are commuter students, they don't have to live in the dorm. But you you're exposed to, you know, people who who have ideas about their career. My my freshman roommate was a biomedical engineering major. And we were like, in so many ways, we came from small towns in the Midwest. But I was like, I don't even know what biomedical engineering is.

• 44:34Speaker 03

  Also, how'd you pick it at 18? Like, where'd that come from?

• 44:36Robin Rauzi?

  Exactly, like.

• 44:38Speaker 03

  I think this is the part, maybe this is the risk, and less so 19 uncertainty. But like, this is the risk that like, the beauty and risk of higher education in the US is that the federal government has this like, find yourself system that is, you know, to a degree unregulated, to a to a degree unplanned, with the notion that if you sent a lot of bright people to a place and got them together, you know, they are going to arrive at a human capital investment that's better than anything you could come up with.

• 45:11Robin Rauzi?

  Right.

• 45:11Speaker 03

  And that is a risk. And if you wanted college to be less risky, you would make it centrally planned.

• 45:17Robin Rauzi?

  Right.

• 45:17Speaker 03

  You would make us Germany, you would make us Argentina, you would take away, you know.

• 45:22Robin Rauzi?

  Fifteen percent of graduates are gonna have to be engineers.

• 45:25Speaker 03

  Yeah, you would have like, we need this many engineers and this many people in STEM, and we need.

• 45:29Robin Rauzi?

  This many people are gonna be doctors, pre-med.

• 45:31Speaker 03

  Yeah, and this many pre-law. And you would have portioned out degrees based on what you saw as necessary staffing requirements for occupations, and you could ruin all this magic and have less risk to the college degree. And I think my, like, this whole thing that goes back to higher ed financing is that the government benefits so much from the amount of risk that they put into this investment. They get it back. They don't get it back for every student, but they get it back. And so if it doesn't work out for some students, like.

• 45:59Robin Rauzi?

  Yeah.

• 46:00Speaker 03

  What do you want to do? Like, do you either want to ruin what it means to have college in America? Or are you gonna possibly admit that maybe like, you didn't take the right step here? Or like, you you didn't regulate the people charging this money and let them get away with highway robbery and non-transparent pricing and like, preying on 18-year-olds who don't know how to borrow? Like. This is what the government gets out of it is like us like reminiscing about like our real dumb degrees. And here we are like very successful people because we went to college like this is what they get. So this like investment in return in risk, it all comes back to like can the government be better?

• 46:41Speaker 03

  And does being better, can you do it in a way that like preserves what makes colleges great? And I think the answer is an obvious yes. Like there's no reason why our college experience, you know, needed to have $55,000 a year tuition.

• 46:55Robin Rauzi?

  Yeah.

• 46:56Speaker 03

  Absolutely not. There's no reason why we couldn't have our college experience if the government said, and by the way, if you graduate like 20% of people unemployed after five years, like we won't give you money anymore. Like I don't, I think you could still preserve so much of what makes universities great, maybe lose like nice gyms, lose dorms.

• 47:14Robin Rauzi?

  Rock climbing walls.

• 47:15Speaker 03

  Lose dorms that are nicer than my first four apartments. You could lose a lot of these high end amenities and still have college. I remember I was at GW in DC, this is like 15 years ago, visiting a friend. And a group of us like went up to her dorm while she got something and then like we were going down to dinner, I think. And one of the guys who came up with me was like, man, this is crazy. You go to college and your standard of living goes up.

• 47:43Robin Rauzi?

  Yeah.

• 47:44Speaker 03

  And that's what college is today. So I think there's a way to like keep the magic.

• 47:49Robin Rauzi?

  It's funny, it's like you're not a starving student anymore. You're like, you're starving after you graduate, but when you're in school, you know, some places you're getting organic food and made by, you know, hired chefs or whatever, you know, not everywhere, obviously, but.

• 48:03Speaker 03

  Oh God, I go back to UT Austin's campus and I'm just like, I'm sorry, what the fuck? Like what, I'm like truly, truly, what the hell? So I, yeah, I guess. I could talk about this for a long time. I know you could about athletics. But I, this, this to me is, there are like steps to how much you want to remake higher ed financing. You could do the just let's be tighter on schools and how they spend their money and how they charge students and make sure they're decent schools.

• 48:30Robin Rauzi?

  And make sure they're transparent about the cost.

• 48:33Speaker 03

  Yeah, transparent fixed pricing. You don't get to charge kids different amount of money. Too bad. I, like, that's something I think colleges would like, we can't survive unless we can charge students different amount of money. And I would be like, honestly, my pulse hasn't even gone up. I don't care at all. You charge sticker price and that's what you charge everyone. Almost every other business in the country has to charge one price. And here we are with a thriving economy and you people are the only ones that are sinking ship. So you know what? No. You have to charge everyone the same amount of money. You'll be fine. Um, but yeah, you could, so the first I think is like, you know, step one, let's add a lot more oversight in regulation for people who accept federal loans, and I would say federal grants.

• 49:12Speaker 03

  Step two would be to have a more kind of like radical higher ed realignment with something like income share agreements. Like you could truly remake the way it's financed. What's funny is that the only versions we have now are private versions, but there are lots of proposals to basically run higher ed like social security that you get before you pay for. Instead of schools running an income share agreement, states would. And if you go to any public institution in the state, you pay back like 3% of your earnings and it goes into a fund and that fund is what funds higher education.

• 49:52Robin Rauzi?

  Oh.

• 49:53Speaker 03

  So it's all.

• 49:54Robin Rauzi?

  These are just proposals in certain states?

• 49:56Speaker 03

  Yeah. So I know the, there's a think tank in Washington state and like 15 years ago, they were testifying in front of their state legislature saying, you just need to move to an income, to a, they didn't call it income share, but they called it a social insurance model. And the thing about the social insurance model is that it would fund all public education, like two-year, four-year, a community college, and it all goes in. And in theory, it would fund like their med schools, their law schools. And this is actually my favorite proposal.

• 50:28Robin Rauzi?

  It's really interesting from a state that has no income tax.

• 50:31Speaker 03

  Yeah, isn't it? Well, you would, yeah, everybody collects payroll taxes. So you just, they collect unemployment insurance, so they figure it out.

• 50:37Robin Rauzi?

  And they're doing, actually, they are doing that kind of similar thing for long-term care insurance in Washington State.

• 50:43Speaker 03

  Yeah, I think Washington State, I wouldn't be surprised if this does happen, they would be one of the first movers. I think Vermont looked at it too, because there's this whole thing we haven't talked about this entire time, which is that so much of the debt comes from med school. And like, a really clean way to help with student debt issues is just you need to make med school free. And I do think doctors are more important than a lot of other professions, and we should, and med school should probably be free, and nursing school to a certain degree. But, I mean, one thing that drives costs in our healthcare system is that you have doctors that come out with a half a million-

• 51:18Robin Rauzi?

  Two hundred thousand dollars, yeah.

• 51:20Speaker 03

  Oh, yeah, they come out with half a million dollars in debt. And so they're like, "Well, I need to make seven hundred thousand dollars a year because like, look at my debt payments." And you definitely scare people off from going to med school because the debt is so high. So probably med school should be free. I feel very like, and it's okay if lawyers have to pay, or if MBAs have to pay, or if PhDs like me have to pay. I don't really care. We're coming up on some pretty severe doctor shortages. The OB stat that you mentioned is terrifying of the lack of OB care in most counties in the country. So like, nope.

• 51:51Robin Rauzi?

  And family doctors, general practitioners, you know, they can't make enough money, so they're not, doctors aren't going into those fields at all, even though they're probably, in some ways, the most satisfying.

• 52:03Speaker 03

  And the most important, but like, why would I be an ER doctor or a family practitioner or an OB because I can't make as much money? Um, no.

• 52:10Robin Rauzi?

  As a dermatologist.

• 52:11Speaker 03

  Yeah. So, yeah, you, yeah, that's like kind of a little sidebar of like, by the way, there's graduate student loan, it's a whole different thing and med students should be free and other than that, like, but there's like, I, there's definitely a different conversation.

• 52:22Robin Rauzi?

  To be out about.

• 52:23Speaker 03

  Or applying this conversation to community college, I think is not as hard as applying this conversation to graduate school because those are the biggest drivers of like the overall student loan portfolio is just how much certain graduate programs cost.

• 52:37Robin Rauzi?

  Yeah, I did, it just never made sense to me that all of those things are essentially lumped in together. I mean, just even reading these current proposals about trying to set caps, like setting a cap for somebody's undergraduate degree versus their professional degree that's going to take them seven years to finish just seems, it just seems ludicrous to be even thinking about them in the same universe.

• 52:59Speaker 03

  Yeah, it's, it's a, it really should be a different portfolio and a different policy and, um, but I think the economic argument behind it is the same. Like, the government does have skin in the game. They benefit from who is going to school and how it's structured and what that means for our economy and our workforce. And so they, they need to do a better job of assessing the risk. And I think that, I'm bringing this in at the end, but I think med school is like a, it's a very different risk to not have people go to med school. And so I think if you, if you took this type of what does the government get out of it and what does the government contribute to the risk from it, you would come up with like a pretty tailored solution for each kind of major type of college and

• 53:40Speaker 03

  college lending of like two to four year trade school, undergraduates, and then the types of graduates degrees.

• 53:47Robin Rauzi?

  Yeah, just go fix it.

• 53:48Speaker 03

  Just go fix it. Okay. All right. Well, that's it. That is yet another thing we fixed here on Optimist Economy. We just fixed higher education. It's all done now. And that was like, what a, what a Thursday. Um, do you want to just sit and talk about college for another couple hours?

• 54:04Robin Rauzi?

  Okay.

• 54:05Speaker 03

  Let's move on to executive orders.

• 54:07Robin Rauzi?

  Executive orders. First of all, you guys have been sending us executive orders. They're great.

• 54:13Speaker 03

  They're amazing.

• 54:14Robin Rauzi?

  We got an executive order from Erin B. in Salt Lake City, Utah. Her executive order is that all consumer electronics need to be serviceable. If my TV or hairdryer or vacuum breaks, I should be able to try to repair it before having to replace it.

• 54:28Speaker 03

  Endors.

• 54:28Robin Rauzi?

  That is thumbs up for me. That is.

• 54:30Speaker 03

  Is 100% endors.

• 54:32Robin Rauzi?

  Speaking of Salt Lake City, my personal executive order this week is that food in airports should not cost more than the same food if that restaurant is in the same city. And I discovered this actually at the Salt Lake City Airport. I was flying through there last year and had actually strangely affordable meal in a restaurant and it was sitting at the bar next to somebody. And she explained to me that in Salt Lake City, they had a regulation for the concessionaires at the airport that was a limit on how much they could charge that would be different from their local restaurant if they wanted a concession. And then I found this story from the newspaper in Salt Lake City saying that the head of the Salt Lake City Airport had actually brought that from Portland's airport where

• 55:16Robin Rauzi?

  I have never eaten a meal. But anyway, I think that should be universal. You know, gouging people for crappy sandwiches in airports should be a thing of the past.

• 55:25Speaker 03

  Also endorse.

• 55:26Robin Rauzi?

  Excellent.

• 55:27Speaker 03

  Unless there's weird wage effects that come from that, in which case I'd have to rethink it. So it's a conditional endorse. That I like to pay less, but conditional on, I do want to make sure workers are paid more. So, okay. My executive order is downright silly, but I've decided that we need to have a Dolly Parton day.

• 55:47Robin Rauzi?

  We do.

• 55:48Speaker 03

  She is the greatest celebrity the US has ever had, will ever have. No one will ever touch her. I just think that she might be one of the greatest living Americans. And we need a day, not a holiday, like not MLK Day, like not like we get it, like it's not a day off. Like she wouldn't want that, you know? She wouldn't want that. She's humble. I just, I want there to be a drag book day. A drag book rainbow day that we celebrate, kind of like Halloween, where we still go to school, he's still going to work, but like, it is a day. And like, we, we do a lot of crazy shit.

• 56:24Robin Rauzi?

  Like St. Patrick's Day.

• 56:25Speaker 03

  Yeah, kind of, yeah, but like, bigger.

• 56:29Speaker 03

  Because she deserves, she deserves bigger. I just, she's such an American icon. So my executive order is Dolly Parton Day.

• 56:36Robin Rauzi?

  I like it. We like to close our show with our spiritual sponsors. These are the things that are keeping us going this week. Catherine, what's your spiritual sponsor?

• 56:44Speaker 03

  My spiritual sponsor is good Halloween costumes. Like, high-concept, well-executed, makes everybody happy Halloween costumes. In part, this came from a letter we got from a listener, who, in response to my spiritual sponsor being Abby Wambach's header goal at the 2011 World Cup, told us that she dressed up as Abby, and, or she was Megan Rapinoe and a friend was Abby.

• 57:07Robin Rauzi?

  I think it was her girlfriend was, was Megan Rapinoe.

• 57:10Speaker 03

  And she was Abby, and they went to a party dressed as Abby and Megan, and then occasionally they would just like, jump into each other's arms to celebrate the goal. And my comment to Robin was, this is the stuff of lesbian legend.

• 57:21Robin Rauzi?

  Yes.

• 57:21Speaker 03

  And I realized it just hits the sweet spot for me of how much I love good Halloween costumes. And so that is my spiritual sponsor, is thinking about, like, just the best Halloween costumes, when they're well-executed, when they make you laugh, when I'm just like, yeah, man, this is awesome.

• 57:37Robin Rauzi?

  That is great. That is great. I, I am a big admirer of that, and completely incapable of pulling it off. The 1980s were keeping me going this week. So, Rock of the 80s. If you're from LA, which I'm not, but I, you know, I've lived here a long time, KROQ was, is the alternative rock station, and they have a second, high-def radio station on the air here in LA that you can listen to for free, has no ads on it, called Rock of the 80s. And it is like, when you need a hit of The Pretenders, or Squeeze, or The Eurythmics, it is the best. And I took like, a total detour when a freeway ramp was closed. Total detour around the San Gabriel Valley, because I was just going to listen to Rock of the 80s.

• 58:23Speaker 03

  That's amazing.

• 58:24Robin Rauzi?

  So good.

• 58:25Speaker 03

  Well, I love rock of the 80s. I'm very happy about this. And I wish that we had like the rights to some of this music so we could, our outro could just be like the arrhythmics or something.

• 58:36Robin Rauzi?

  I was thinking, yes, I was thinking, yeah, it should be the arrhythmics or the strains from Rio at the beginning, the Duran Duran song.

• 58:43Speaker 03

  Oh, yeah. Even the Ordinary World, Ordinary World from Duran Duran, I think would be just the first like, no, I'm not going to do it. Sorry, I can't sing a tune or hit a note to save my life. So I was about to hum, but then like for posterity, pull it on back.

• 59:05Speaker 03

  I think that's it.

• 59:06Robin Rauzi?

  That's it. So we want to thank, as always, our producer, Sophie.

• 59:10Speaker 03

  And our video engineer and producer, Andy.