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- Marc Andreessen and Ben Horowitz spoke at length in a podcast about American higher education.
- The founders of the famed VC firm A16z agreed that a college education costs more than it is worth.
- Andreessen also took issue with student loan forgiveness, calling it "a series of bailouts."
Marc Andreessen thinks student loan borrowers who received loan forgiveness are akin to companies and banks that got government bailouts rescuing them from bankruptcy.
In a two-hour podcast titled "Crisis in Higher Ed & Why Universities Still Matter," published by his firm Andreessen Horowitz, Andreessen took issue with people having some or all of their outstanding student debt erased in actions by the Biden administration.
Noting that federal student loans are the one form of debt that a person can not avoid through personal bankruptcy, Andreessen said "You now have direct bailouts."
"In the last three years, the current administration has been doing a series of bailouts, where they've been doing arbitrary, top down erasure of the debt, which you know they call it 'forgiveness,'" Andreessen said. "This is a very clever word, which makes it sound wonderful of course. But what it means is just that other taxpayers, other people, are gonna foot the bill for it."
Andreessen used the term bailout to describe what's better known as loan forgiveness several times, despite the formal definition of bailout being "when the government gives financial support to rescue a company that is in financial trouble and possibly at risk for bankruptcy," according to Cornell's Legal Information Institute.
Last year, the Biden administration stepped in to take over a failed Silicon Valley Bank after a bank run on deposits. Andreessen Horowitz is a major SVB customer, and the bank also invested billions in the firm's funds. So when regulators stepped in, and the Federal Deposit Insurance Corporation said that SVB's depositors wouldn't lose their deposits — despite its $250,000 deposit insurance cap — A16z benefited from that government action.
The Biden Administration also had a broader student debt relief plan struck down by the US Supreme Court last year, and it has moved forward with targeted relief programs based on specific borrower criteria. The loss of repayment is expected to add to the federal deficit, but there is conflicting research on what if any, negative ramifications there may be for the broader economy.
In response to Andreessen's issue with student loan forgiveness, A16z cofounder Ben Horowitz responded with the argument that, although the action provides relief for some, it does not address "the real issue." That, according to Horowitz, is "that for a large swath of the population college is not worth the money."
"What's happened is for a huge percentage of the degrees, the degree is worth less than than the job," Horowitz continued. "So, basically we as a society are running a scam and ripping off a huge percentage of our young people who are going to college with the clear expectation that they're going to get a higher quality job and they'll be able to pay for college. That's absolutely not the case and that's the real issue."
Horowitz added that with all of the recent advances in technology, including things like OpenAI's ChatGPT and generative AI, technology that A16z invests in, a college education should cost much less.
"There is no knowledge that you can't get from your smartphone very cheaply and easily," Horowitz said, "so why am I paying $300,000 for the credential?"