Please, please, please take note before commenting: These are being forgiven under the Public Service Loan Forgiveness program, created in 2007 (fifteen years ago), which eliminates your remaining debt after you've made ten years of payments while working in the public sector (government or non-profit). This has nothing to do with current debates around loan forgiveness.
That's where the 40,000 in the headline comes from. But the article also says this:
> Several thousand borrowers with older loans will also receive forgiveness through income-driven repayment (IDR) forgiveness, plus another 3.6 million borrowers will receive at least three years of additional credit toward IDR forgiveness, the Education Department said in a statement.
I think you might be misremembering, because the FAFSA is just the application you fill out to apply for student aid. Maybe the Department of Education issued the credits?
Student debt is massive, yes, but why are so few people asking where that money actually went? A cursory search says student loan debt is roughly $1.6 trillion dollars and there are around 4,000 to 6,000 colleges/universities. This is a rough number and the actual amount depends on your criteria, but the gist is that you have a ton of money flowing into a relatively small pool. Yes, I know not every dollar of loans goes to the school, but I really have to beg the question on what these institutions have done with all this money.
Seems like any discussion about forgiving debt should involve going after some of these universities themselves.
In the case of my alum, I think I can tell you: they spent it on housing and amenities to attract more students (quantity, not quality). I watched it happen while I attended. A university operates under the same principles as any other business in this case. Administrators are not innocent here, but they do have to live within the system and work with the incentives they are provided. Loans are made available to students and parents to shop around. This is a big part of what has created the upward pressure on tuition. We’ve revitalized a lot of state school campuses while letting their academics rot. Parents and students see fancy common areas, gyms, cafeterias and living spaces when they visit campuses then use that to decide where to go unless they’re very focused on the education, which they’re likely not because most very focused students require less financial help. If that money had been given to the administrators we are often so quick to villify, this picture may be a very different one.
Turns out "alum" is the gender neutral term for a graduate, not the school. I should've used "alma mater" here. I've never had a chance to learn latin properly and it shows :)
University administrative costs have blown up with all of the easy to acquire loan money.
Just a few highly paid and many mildly paid bureaucrats doing things which don’t need to be done… or in some cases doing very little at all (I’ve heard stories)
Also lots of fundraising and shiny new buildings which are more advertisements than useful expansions.
This is a great question that no one is really asking. Too much of the conversation revolves around what’s fair for student borrowers and not enough on what in the world these universities have done with all of that money.
My alma mater needed to bring their student center into compliance on the last ~50 years of building code changes. The project was estimated to cost high-8-figures, for nothing but code compliance.
Instead, they spent $120,000,000 renovating it to be shiny and modern and also up to code. I don't understand why it was so expensive, but I'll assume it's not an order of magnitude away from true cost.
$1.6 trillion is "only" a few hundred million per school. If the cost of renovating one building is any indication, it's easy for a university to use up that much money.
I thought college was expensive until I looked into historical tuition prior to the modern era. Turns out our grand parents, parents, and siblings just lived in a golden age of fair wages and massively affordable and available education.
I am younger than your grandparents but I have children that range for 14-31 and I can tell you that I could afford to go to college based on what I made as a short order cook but my kids would not have been able to earn enough to even pay for school much less have enough left over for life.
It sure feels like schools have taken advantage of the student loan programs to increase fees and tuition while at the same time lowering the admission standards to put even more asses in seats.
I think we already have a solution built into the legal system: Lemon Laws.
From the Great Wiki in the Sky: "Lemon laws are laws that provide a remedy for purchasers of cars and other consumer goods in order to compensate for products that repeatedly fail to meet standards of quality and performance."
Obviously, these degrees did not meet the standards of quality to make "productive members of society" so the universities should have to "buy them back", preferably using their own endowments.
In the short term, it would hurt them immensely - which is deserved for selling a "product" that wasn't worthwhile but in the long term, it would mean that they're more likely to a) keep prices more reasonable and b) make a higher quality "product".
Or repeal the Clinton-era law that made student loan debt non-dischargeable in bankruptcy. In that way, potential lenders would have incentive to determine ability to repay.
>would have incentive to determine ability to repay.
It's a mixed bag. On one hand it should decrease costs and incentivize students into choosing better career plans (ie. not going to college just because), but it will also mean disadvantaged students won't be able to attend because their projected credit risk is so high.
The problem that law was meant to address was that most of the debt being discharged came from a relatively small pool of students who attended very expensive or prestigious schools.
If they had set a limit for discharge to the value of the median cost of tuition, it might have prevented the runaway train of inflated costs in the education and perhaps even medical sector, outside of what was caused by malpractice insurance rates in the 70s.
Also, individualizing risk to the students irrespective of degree choices and economics without dutifully notifying students isn't ethical behavior, especially when they are responsible for the magnitude of the risk by not controlling costs or advocating for the value of the students they graduate.
This is just the Education department doing what it is required to do under various federal programs that have (pretty much by definition) existed for over a decade.
We can have a productive conversation about whether those programs were too generous or had unintended consequences, but millions of people have structured their finances around these programs and the rules in them - it's a rug-pull to suddenly have regrets and oppose the policies only now that the remaining balances are being wiped out.
Yeah it's like this with the people who want to kill Social Security as well. How are people who are supposed to retire in 10 years going to do so if you kill Social Security in 5? Retirement preparation starts when people are in their 20s, so any changes to SS that do not include an equivalent replacement need to be planned 50-60 years in advance.
Forgiving past loans for graduated students does not put future money into the hands of college administrators unless you continue issuing and forgiving future loans.
Fixing the grift and providing relief to those who were grifted should be two sides of the same coin.
Sure, do both. But the relief, as it were, needs to come after the fix.
And frankly, rather than just give a relatively privileged subset of the population some money, we might as well crank up that printing press again and just got a $10K check to every last citizen, student loans or not. Might as well be equitable about it.
If you’re against wasting taxes spend your time typing about but defense boondoggles which actually waste tax payer money not a trillion owed to the government which it wasn’t ever going to get back anyways.
Does this mean full-time public service workers with pre-PSLF loans, or are the feds debating broadening the scope of loan forgiveness to include persons in other careers as well?
They aren't changing the scope at all- they're just fixing some problems that meant people who should have gotten their loans forgiven but didn't will finally get that problem corrected, and they're granting credits for people who are already in the system. This will now allow a single person outside of that program to benefit, and it won't add new people to the program.
This may change with future actions, but quite frankly it's kind of embarrassing that they're claiming this is a win when all they did was follow through on a promise made years ago that was basically ignored.
Seeing tons of comments about what people THINK an article says or about their opinion on something related is causing me to use this site less and less.
Completely agree that some of the comments are off the wall. But in all fairness the Ruerters article doesn't highlight the public sector part enough. To learn more you'd have to do your own research to find that PSLF has stringent requirements.
IMO this is more an example of how bad journalism can have damaging effect on even a well versed audience.
In this case I also think the article was really thin on details. Some people get $10,000 written off, others get some other limit to how much they will pay and so on. No clear details I could see about what the limits are and who will be targeted. There probably are details somewhere but this was not really answering my questions.
He still has time to do loan forgiveness "helicopter money" style. But even if all we got was an expansion of targeted relief programs I think it totally counts as fulfilling his talking point. The issue with student debt is that for some people there's no way out, but generally speaking college-educated people are more well-off and forgiving all debt would be a regressive stimulus that targets the wealthier side of the population. Targeted relief is a great way around that.
>also regressive stimulus are not even a thing. maybe you're thinking of regressive taxes?
Regressive taxes favor the rich over the poor. By "regressive stimulus" I'm presuming he's talking about stimulus that favors the rich (eg. well off layers/doctors with high student loan debt but high earning potential) over people with modest student loans but low earning potential.
Yes, that's exactly what I'm talking about. It's amazing how easy communication is when your words aren't interpreted in the most obtuse and uncharitable way by extreme progressives
words have meaning; using them correctly in context matters. the fact of the matter is the term you used has nothing to do with stimulus'. you were attempting to imply that forgiveness somehow harms the lower classes when it categorically doesnt.
the only person being 'uncharitable' here is you; attempting to label someone calling out your BS position as 'extreme' and then attempting to categorically label an entire political spectrum with the same brush.
which still isn't correct. it doesn't hurt the poor that the upper middle class will also receive this benefit. regressive taxes do. in fact this policy still helps the lower income class because many of them will also benefit from it and far more than the upper middle class.
No. The previous guy installed people in the DOE that made it virtually impossible to forgive the loans even after they jumped through all the hoops to qualify under the law.
All Biden's administration is doing here is ungumming people who were eligible years ago. This is cleanup from the prior administration
As demonstrated by the last admin it doesnt have to happen so feel free to complain about the current President doing “jack shit” until the last guy wins the next election…
Have fun blaming the "last guy" for almost everything, that sure worked out so far for the "current guy's" approval rating and will definitely not help the last guy win if he was to try again. This is even more ridiculous than even the "thanks Obama" reflexive blaming conservatives had.
I don't think you realize how self defeating and ineffective it is to find every tiny reason to deflect blame from "your team". Saying that "actually.... Biden couldn't do it because of some officials in the DoE and totally couldn't have known that this was possible when he made the promise, oops!" is such a cop out. It's obvious that the Biden team knew exactly how the DoE worked, and if x or y promise is feasible or not.
Alternative could also be “government obfuscates prices for education and certain types of labor by offering nebulous benefit, the cost of which can be subject to much manipulation for purposes of presenting it as a low cost benefit”.
It would be straight forward to simply pay for higher education expenses directly, with much less bureaucracy and more transparent pricing, allowing for better allocation of society’s resources. But, as always, that would reduce the avenues for corruption, and so the politically viable option is the circuitous option.
California state university tuition was heavily subsidized by taxpayers 50 years ago. It’s less subsidized today and it’s still over 50% taxpayer funding. That feels like the opposite of transparent pricing.
This is a good point. The Public Service Loan Forgiveness (PSLF) Program is like the GI Bill, but they pay off your college debt after service instead of paying your college after service.
Its an interesting piece of legislation to see, and strongly implies former senator Joe Bidens initial student debt legislation was beginning to have seriously negative repercussions at the federal level for employee retention and hiring not even 5 years into its inception.
Back in 2005 Biden supported and stumped for a bill that stripped students of bankruptcy protections and led the country into a 1.7 trillion dollar student debt crisis. Watching President Joe Biden offer token debt forgiveness in 2022 is a little bit infuriating to watch as he could easily have spent the last seventeen years working to reform his mistake. If i had to weigh in on the sudden rise of student debt forgiveness under the current administration id say its political. inflation, gas prices, housing shortages, and supply chain issues have made it all the more practical to take action now and shore up the old midterm voter appeal.
the point im making is that the federal government enacted forgiveness for its employees only 2 years after the 2005 reform to make discharging student loans impossible.
There are a lot of different versions of these income-based repayment programs, dating back to the early 00s at least. They are all structured similarly but have differing eligibility cutoffs and rules. Typically they involved making payments on your loans for 20-25 years at some maximum % of your income before the remaining balance is forgiven. PSLF has a shorter forgiveness window (10 years) but you need to make 120 payments while working some job that is socially useful but not-market-optimal like public service or working for a nonprofit.
FWIW, IBR systems they are a common policy suggestion from both conservatives and liberals (with differing priorities / rules).
Oh, but it is so much more than “X did Y”. The choice of which facts to report, when, and how, has huge impact on what people come to believe.
There are a thousand ways to deceive while uttering nothing but true statements. The question to ask is not “is the headline literally true?”, but “what does the headline cause people to believe?”
It is news to me yes and yet, by any definition of news I understand, a measure taken in 2007 is continuing is not. To further make my point, the original commenter felt the need, correctly I think to clarify that the article is not discussing a new policy! "What's the point of the article?" is a short way of asking both what the author wishes to communicate, why and most importantly what the intention is. I had hoped my asking the question in the first place would be a clue that I dont buy that it is just "to inform"
It wasn't just the Trump administration; it was clear there were significant problems with the way the program was administered well before the first loans were supposed to start qualifying in 2017. Among other things, the Bush and Obama administrations that created and administrated the program provided no guidance and no oversight to the companies overseeing the loans, so the companies made it effectively impossible to qualify.
Hard disagree. The Obama administration drastically altered federal student loans worked, end-to-end. One of the largest changes was to get the DoE directly into the market of lending and holding student loan debt. Cutting out servicers like Navient, and costing them tons of money in lost subsidies and essentially nationalizing the industry.
Policies such as Public Search Loan Forgiveness, Pay as You Earn (PAYE), Perkins Loan cancellation, and several others were part of the Student Aid Bill of Rights. Having the government hold student loan debt is foundational to making these policies work.
This was a key policy platform of the Obama administration. It's less widely known about, compared to ACA, but still an important one. And this is probably the reason that it's been a day-one policy issue for the Biden administration.
> And this is probably the reason that it's been a day-one policy issue for the Biden administration
Here on day 455 of the Biden administration (who, by the way, was the least interested in resolving the student loan issue among his Democratic Primary rivals), it sure doesn't look like it was a "day one" issue.
I know someone who is enrolled in this program - unfucking it has been an ongoing task since very early in the administration. But like many things, it takes a bit to figure out how to untangle a program that was actively sabotaged for four years prior.
Come work for the permanent undemocratic bureaucracy, and you'll even your student loans forgiven.
But if you decide to go down the path of becoming a kulak, the student loans will be with you even if you go bankrupt.
I'm curious where the sudden bump to 40k comes from. According to Wikipedia [1]:
> The Department of Education reported that 2,215 borrowers had the remainder of their respective student loans forgiven under the program as of April 30, 2020.
[1]: https://en.m.wikipedia.org/wiki/Public_Servic
FAANG has plenty of private XKeyscore wrong-think APIs that the bureaucracy utilizes under the auspices of "fraud prevention" to filter out "bad thinkers" from various activities. Welcome to fascism, folks.
It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.
Exactly. Plug the hole first (or concurrently), and then worry about bailing water. Additionally, as others have mentioned, it needs to be done in such a way that we aren't punishing those who have been responsible and made sacrifices to pay off their loans.
I'm not opposed to student loan forgiveness, but I don't think it's nearly as popular as many progressives would like to believe as a standalone proposal. Come up with some qualifications and limitations for reimbursing past loan payments, as well as a systemic fix for the future, and I'd be all for it.
All that being said, is it still wise to forgive student loans at this particular time? Originally, the pitch was that it would help act as a stimulus during the pandemic downturn. Now that we're dealing with the opposite situation, I don't see the rush. Maybe a bill could be passed that had a delayed or gradual effect.
Could it be possible that this is being done more as a way to garner votes for the midterms? Someone else commented that this affects like only a tiny fraction of people w/ student loan, but it does make for a good headline, judging by the number of comments here.
I am starting to think this is a sign of a big weakness in the American system. These half baked actions are evident in health care, security, and all other categories. I think it has to do with the fact that there are so many parties acting in bad faith that it is hard to get comprehensive legislation that addresses the problem as a whole vs just piecemeal bits and pieces because that is all that can be pushed through. I don't know what the solution to this is other than a complete reset of the system (which itself would require the existing system to produce and pass)
Of course a spoon makes a crappy can opener if you try and use it for that job.
Institutions get designed around their mandate. If you're trying to run a school system you wouldn't invent a court. If you were trying to deal with violations of law you wouldn't create a school board.
The federal government's mandate was to manage issues that arise between states and each other, between states and other countries and to a lesser extent, to prevent the states from violating the rights of their inhabitants and its architecture reflects that mandate. Over the years the federal government has expanded in scope far beyond the types of issues it was designed with the intent of managing. Expecting that system to provide decisive action on issues that are outside of what the system was designed for is unrealistic.
Agreed. Your comment reminds me of this great quote:
“Simple, clear purpose and principles give rise to complex and intelligent behavior. Complex rules and regulations give rise to simple and stupid behavior.”
– Dee Hock
The hubris of creating complex rules to outsmart a problem leads to the creation of yet more complex rules to solve its own shortcomings.
The problem is that you can't ram down income redistribution schemes in places like New York without watching all the income earners move to another state. No rational person is going to subject themselves to being robbed like that, they will leave (like I did with NYC). The key is to do it at a national level so you can shove it down everyones throats concurrently and give them no way to escape your shitty systems. Then you can appeal to your larger base of voters who are benefiting from stealing from a smaller number of people who are providing all of the resources, or a least until the government runs out of other peoples money to use as bribes.
This is a joke. Let's assume you have a technology that doubles productivity. Two guys work 20 hours each or one guy works 40 hours and the other one does not. In the first scenario nobody complains that they are the bread winner. In the second scenario, the bread winner complains about a problem he himself caused by hogging the entire 40 hour work week. I am assuming that the economy isn't growing by the way.
I'm not convinced that's as true as you think it is. Sure, some people will move, but presumably people have reasons other than the tax rate that they want to live in a place like New York and so, presumably, they will stay as long as they value those things more than lower taxes.
I'm sure there is the equivalent of a laffer curve by which intangibles are valued subjectively like that. At some point of government overreach people leave... and they are leaving in droves.
I always assume that people who make blanket statements like this imagine they're actually providing real value, and that they're one of the few doing so.
Yes, voters simultaneously want benefits and low taxes. And this is how you do it, give the benefit subject to numerous qualifying conditions, and make it a loan, so cash flow is not affected today and hence tax impact is low.
See defined benefit pensions, higher education loans, military benefits, 401k/employer health plan tax benefits. All of these things could have middlemen removed, but they remain to obfuscate costs and who is getting how much of the benefit.
Maybe every 25 years or so the legislature and president should all be given final terms all at once, meaning they can’t serve in similar roles again.
This would give an opportunity for hard decisions to be made, but it’d also discourage anyone new from running in the years up to it. It’d be interesting to see what would happen.
>> It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.
A wise man once told me "The first thing you should do when you find yourself in a hole is stop digging". This is my standard response to the student loan crisis and many others.
I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it. That's how it is supposed to work. We don't typically reward people for digging themselves into a hole by bailing them out. Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.
We do, actually, at least in the US. It's called bankruptcy. We generally recognize that sometimes despite best intentions, debts become unpayable and in these cases, the debts get restructured and creditors are frequently wiped out (which is fair, since both borrower and lender take risks).
Student loans can't be discharged through bankruptcy unless the borrower is permanently disabled. It's entirely possible to end up in default on a loan for a degree you never obtained, paying a loan your entire life, without ever decreasing the principal. Unsurprisingly, this rubs people the wrong way.
It should be on the university and college, if you must have private higher education, and not just make it free. State that the institution and/or potential employers must give out a loan that will cover the entire cost of education, which can be paid back with x% of income for 120 months of full time employment. If the student cannot find a job, or is not desirable for a given industry with the degree, and has to take a waiter job, they still owe x% of their wages, but the absolute value of that will be much lower.
Now, the university will stop offering loans for worthless degrees, and they will only give you a loan for things they think you can actually succeed in, ensuring that there is huge incentive for everyone to ensure the student succeeds if they end up needing a loan.
Private cash payments can still be made to take whatever underwater basket weaving major you like, but you can’t go into debt for a degree that will bind you for the rest of your life.
I think it would need to be more nuanced than that if we want to escape second order effects.
The first is that if the college bears risks for financed students, the first seats will always go to people who can afford to not use financing. It'd be like the legacy system, but out in the open and encouraged by regulation.
The second is that it will likely make it harder to climb the social ladder. I'm too sleep-deprived today to find sources, but I would imagine that students that can afford to not work while in school tend to do better. Likewise, I would bet that wealthier students tend to do better by nature of connections. If your dad/mom is an engineer, and you want to be an engineer, you've already got connections.
It also pushes people towards the military, if the GI Bill is the only way for normal people from poor families to afford college. It's a little dark that wealthy families can pay their children's way, but poor families have to risk them dying to do the same thing.
I like the basis of the idea, I just think it needs a bit more nuance to prevent wealth inequality getting worse than it already is.
Yeah, these are all good points, and I agree. But the bottom line is that currently no one profiting from the situation has any skin in the game, so when they start doing more harm than good, they have no natural alignments that would make them self correct.
I'm pretty sure the folks who are for a debt jubilee are also for reforming bankruptcy rules, and there are folks who are in favor of reforming bankruptcy rules that aren't for a complete jubilee.
I was pointing out that we already have a legal and moral framework for discharging debts that can't be repaid.
So first off, remember that the people taking out the loans are typically between 17 and 20. I don't know about you, but when I was 18 I was a fucking idiot. I mean I still am, but more so back then. I would be surprised if you weren't (and you probably aren't even the median case!). Also consider that a lot can happen in 4 years, especially at that age. Your interests typically rapidly change, you learn more about who you are, and you may underestimate your future earnings (especially given that schools tell you that you'll earn so much because of your degree and their connections). But there's some other issues.
- Interest rates have gone up
- Cost of schools have risen
- The government holds most student debt
- It is still usually a good deal to get an education, but the deal is rapidly becoming less of one (the value of the deal is even changing for people in the middle of education or even graduated)
- The clauses on the debt are getting stronger, being almost impossible to cancel the debt and leading to people never being able to pay off their loans.
- The loans are predatory and becoming more so (when I took mine out a decade ago I had the option to pick "fixed rate" or "variable" but that wasn't actually fixed _interest_ rate)
- Schools are promising scholarships and then not giving them (my school would constantly schedule me for meeting with the financial aid office, a requirement, the week after the deadline and wouldn't schedule me before)
- We're better understanding the major impact on our economy when a generation that is in their prime earnings age is still not consuming and instead paying off debt.
- An educated population results in a happy and effective civilization (especially if one of your main exports is technology)
I think there's a lot of good reasons that people are pissed off. Our generations specifically was told "go to college and you'll get a good job and have a stress free life." But we quickly found that going to college doesn't lead to a good job and we can't get the same things our parents did. Jobs are harder to get, they don't pay as much, and housing is insanely priced. So basically people are pissed about a lot of stuff and a whole messed up system, and most young people are either: in college, avoided it because cost, or recently graduated. Considering that, it is unsurprising that it is a major focus.
Also I should add, some bailouts work. Pretty much what people are saying here is "this has gotten out of hand. You need to bail us out so we can effectively participate in society."
The age argument is an interesting one. Should we be redefining what the age of majority is? Because if 18 year olds aren't competent enough to make borrowing choices for college, it follows that there are plenty of other consequences they shouldn't face.
The barrier is always complicated. There's also other issues, like financial literacy. I come from a upper middle class and still fell prey to the "fixed interest" claim. I'm pretty sure kids from families less well off are going to fall prone to even more egregious predatory tactics. It gets complicated really fast because one of the major goals we want from education is it to provide a means to climb the socioeconomical ladder. If we use predatory tactics in any form, then we're biasing towards targeting those people even more. Beyond that, with age, it is hard for an 18 year old to conceptually understand a 10 year loan. I'd argue that you don't start to understand that magnitude till 30 (You've lived 10 years as an adult). But that's way too late to take out a school loan.
The problem comes down to a simple one and I'll put it in the form of a question (this question generalizes to a lot of other areas too btw):
Is a deal/agreement fair when one side has an elite team of lawyers and psychologists and the other team has a high school degree?
I honestly think this is a question a lot of us, especially working for big tech companies, need to internalize and address. I'm not sure there are any easy answers either, because whichever side you fall on (I'm assuming people will say "{yes,no}, but..." instead of a strict black and white answer) there are nuances that are going to play major roles and tip the scales. I'll hint at my personal answer by saying I agree with Blackstone.
As to the question of "bail us out so we can participate in society" I think that is a little different. I think the problem is that the structure has rapidly changed and become out of hand. Incentives were misaligned. We tried to create a system where everyone could get the means to attend college but that incentivized an environment that creates predatory lending and increased financial obligations (upwards of 1k% increases). There's clearly something wrong with the system. I think many people claim to have the answers but I'm sure these are all far too naive. Something this complicated isn't going to have trivial solutions.
In the US, an 18 year old is too young to drink, old enough to vote, old enough to send to war, old enough to be tried as an adult in a court of law, and too young to rent a car.
It seems our age of majority is already an arbitrary measure.
Unless students are educated in financial literacy and professional life as part of the curriculum, I'm not sure we can expect them to be making competent, experience-based decisions on the cost benefit of education on a 20+ year timescale.
And that's not to mention that many loan providers use predatory tactics, including the companies that administer federal loans.
> I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it.
Saddling _teenagers_ with such debt is problematic in many ways. For many of my peers they were not ready/cut out for college but still had the debt + schooling jammed down their throats because "it's what you're suppose to do."
Then, there's the cost to quality situation... I got nailed with this one - accredited private college with little oversight with a _horrible_ program for my area of study. We're talking two professors for the entire subject, and most of the courses they had advertised in their catalog hadn't been offered in over _seven_ years. Lots of people's time at school was just jumping through hoops for an "education" with very little value to their eventual career.
Cost has gone through the roof - administrative costs for colleges have skyrocketed. I've worked in marketing for schools - they're businesses before they're educational facilities. They're profit seeking through tuition, grants, donations, etc. Don't even get me started on sports...
> We don't typically reward people for digging themselves into a hole by bailing them out.
They were put through an incredibly profit-seeking system that operates in it's own self interest to get as much tuition as possible. Just like the healthcare industry, we've let administrative costs and middlemen drive the price of an education up while whittling the quality of it down.
100% they were not the only ones digging the hole that they find themselves in. Additionally, I have a hard time nailing 17-18 year olds to the cross for poor decisions in regards to their "digging" activities.
> Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.
And, just saying - yes this happens!! We consistently cut breaks to the interests of capital (large corporations, the rich w/taxes). Regardless of how any of us feel about it, this will continue to happen. So if our corporate benefactors are getting help, why can't a citizen with/seeking an education get some help too?
> Saddling _teenagers_ with such debt is problematic in many ways.
So perhaps the solution involves some combination of 1) raising the age at which someone is considered an adult until it does not end with "teen", and 2) not giving loans to people with no plausible way to repay it, and/or 3) requiring a cosigner who is both older and better funded.
Maybe we take away blanket guarantees for student loans, make them dischargeable in bankruptcy, make the interest rate and borrowing limit based on plausible future income, things like that.
I agree with these things in practice, but I feel they ignores the root of the problem:
Cost.
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The joke of a school I went to now costs upward of $38k/yr base (not sure what room/food on top of that is). Hell state schools are upwards of $20k a year even with financial aid...
Maybe higher education shouldn't be this expensive across the board so people wouldn't be saddled with crippling high-risk debt while they're arguably still children.
I can tell you whatever the %#%$ I got was NOT worth anywhere near that in tuition... gen-eds were effectively highschool 2.0, and I was learning more in-industry than I was in the classroom at the time for my main area of study.
To think people are getting charged $38k+/yr for that just pisses me off. Even if it was an objectively good education + program - it's still too expensive.
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Also one more thing I want to address in your response: what about economically disenfranchised peoples? If we implement the ideals you lay out I can easily see that being a huge barrier. I personally believe these folks should have access to higher education too - which is why I strongly support things like financial aid, grants, scholarships, etc.
If we make it into a more traditional loan I think it would potentially discriminate against students who come from less-than-ideal backgrounds.
It's just something that can be presented in a very divisive way for each party to easily capture sizable market shares of the electorate. It became a "valuable" problematic to put forward when the group of people who struggle to pay off their loan became big enough to make it worth it politically.
The way this works is that you just have to define something to be a "necessity" in the public consciousness, because there's a prevailing intuition that it's illegitimate to be asked to pay for anything that fits that description. Medical bills are a necessity, so it's illegitimate to be asked to pay them. You have to go to college to get a good job, so it's illegitimate to be asked to pay for an education. You need a place to live, so high rents are also illegitimate. And so on.
And also reimburse the people who sacrificed to pay theirs off or avoid them in the first place. I’d donate my reimbursement if they did, but of course they won’t.
Demanding "even-stevens" all the time doesn't help the situation at all. The people that were able to pay off their loan debt were people who chose a degree that would be able to make significant money, were talented enough to land a great job in a field without a lot, or had the circumstances that let them finish a degree where others were unable to.
Do some people make bad decisions about degree choice? - Yes
Do some people drop out of school because it's too hard or because of other circumstances (unexpected baby, financial hardship, etc) - Yes
Do those people who either have made bad decisions, had less fortunate circumstances than others, or a combination of both deserve to live under a mountain of debt for the rest of their life? - No
One other thing people don't consider is that Most 18 year olds don't have a good grasp on money or what they want to do in general and in my hometown (poor county in WV) there was a TON of pressure to go to college if you didn't know what you want to do. Kids don't know better to not get into debt for a degree because everyone tells them not to worry about it. There is a serious problem with financial education in the US.
You can help out people who made a bad decision or had bad luck without being so uptight about how everything has to be complete "fair". The world isn't fair from the time we're born till the time we die.
A pretty substantial portion of this "civilization" thing is ensuring social stability. I won't say that this is going to be the hair that broke the camel's back. And I would agree with you entirely on the idea that kids shouldn't be assuming $40k of debt liability as children. But there's a lot of potential destabilizing effects downstream from this in many domains. What won't destabilize society is indicating it was volitional to accept the loan terms and to pursue a degree of nebulous worth.
I wouldn't agree that having a "worthless" degree is some sisyphian burden, my SO went into college and has two trash degrees, but also had all of the prerequisite credits to trivially segue into a meaningful career and a masters. Her loans are paid.
I, on the other hand, am in the middle of my post-secondary after toiling 5 prime years away to avoid debt. The proposition that I could've foregone that sacrifice and been toting around a degree and work experience without full time work throughout school, free of charge - is infuriating.
And this is discounting a thousandfold other paths. What about the blue collar parents that clawed their way up to the middle class, ultimately paying their kid's way through school at a relatively great expense? Or the single father who took out a second mortgage to put his daughter through school? Or an infinity of other possibilities that can't be written into a survey?
That’s all fine and dandy until you realize the people who where smart and careful have to foot the bill for those who weren’t.
I was smart and sacrificed a little by going to community college so I wouldn’t have debt. I was also smart enough to get a degree in stem where jobs are actually available and in demand.
Why should I have to foot the bill for someone who just partied and got a useless degree? I did everything in my power to avoid student loans because I knew they where insane, I shouldn’t have to pay for others student loans because they didn’t think about any of this.
How much do you really think this is taking out of your pocket? You are paying for others all the time with your taxes, which can’t be selective for the system to function
If the 1.6 trillion in debt was divided evenly among every human in the US it would be 4k. If we’re ball-parking and say that the top 20% of earners would foot the bill it’d be about 64k per household.
You can't practically quantify this. If we forgive current loans, you could assess a dollar value - but what you can't do is project what those individuals will do once that debt is forgiven. Buy a new car? Take out new loans? Shopping spree? Or what precedent it sets for the public contemporaneously. Or what precedent it sets for the future. What we're not doing is working in a vacuum.
It's the principle that matters. A society that rewards bad decisions and punishes (or ignores) good decisions is bad and we should not allow our society to be like that.
> until you realize the people who where smart and careful have to foot the bill for those who weren’t.
> Why should I have to foot the bill for someone who just partied and got a useless degree?
Because you're a human being and recognise that while here you made no mistakes and had no bad luck, perhaps someone could have done that or had that. It's called decency, and you have it not because it benefits you. You have it because it benefits everyone.
Forgiving student loans doesn't benefit everyone, it benefits the people in proportion to their student loan debt, which is to say it disproportionately benefits the upper classes including a lot of people (like me) who could pay off their debt but instead they invest it in the stock market where the returns outpace the interest.
Student loan forgiveness is both unfair and regressive.
I have had plenty of bad luck, and made plenty of stupid decisions. Some of them financial. Nobody bailed them out. I'd be in a better place today if someone had. That's for sure. But do I think that makes for sound macroeconomic policy? No.
Fine, then let's use a needs-based mechanism so that we don't exclude needy people who just didn't have the means to go to school in the first place or reward people like me who are doing fine but didn't pay off our loans because it's more lucrative to invest the money in the stock market. Student loan forgiveness isn't merely unjust, it's ineffective for antipoverty. Moreover, "tough luck, life ain't fair" is a great rationale for ignoring poverty and injustice altogether.
> One other thing people don't consider is that Most 18 year olds don't have a good grasp on money or what they want to do in general and in my hometown (poor county in WV) there was a TON of pressure to go to college if you didn't know what you want to do. Kids don't know better to not get into debt for a degree because everyone tells them not to worry about it. There is a serious problem with financial education in the US.
Agreed. I grew up working class in the midwest. The working class kids who went to college generally did fine because we worked and didn't live like we were earning 6 figures. The upper- and upper-middle-class kids were the ones who were getting Starbucks every day, living in dorms, paying for meal plans, going out to eat every other night, working fewer than 8 hours/week, skipping class, majoring in fine arts, etc and financing it all on debt (my wife is in the latter group and she has considerable loan debt that we're currently investing).
> people who either have made bad decisions, had less fortunate circumstances than others, or a combination of both deserve to live under a mountain of debt for the rest of their life? - No
Why does this logic only apply to people who made bad decisions and had less fortunate circumstances or a combination of both only apply to people who did so in the context of taking out student loans? If making bad decisions and having less fortunate circumstances is grounds for student loan forgiveness, why isn't it grounds for credit card debt forgiveness? Or home or auto loan forgiveness?
Because our public school system is a propaganda machine for getting students to go to college.
They tell high school students...people who are legally still children that the most important thing is to go to college. They tell them if they can't afford it, they can just get loans.
And now people are surprised and blame the kids when they do as their teachers told them and rack up 5 or sometimes even 6 figures of student loan debt before they're even old enough to drink.
Fucking stop and pause for a moment and really consider that. Counselors, teachers, and all other high school staff pushing kids to go to college, and then when they do, people come along and tell them it was a bad decision? What?
I don't think it's as malicious as you're implying. Educators went to school at a time when people who went to college earned dramatically more than those who didn't and they were pretty much guaranteed job placements. That's still true today in aggregate, although probably to a lesser extent. They also didn't anticipate that universities would become predatory with respect to ballooning costs and stagnating or declining educational quality. Moreover, they didn't realize that the kids they were referring to college were part of a flood of students who would saturate the job market with degree-holders (lowering the value of a degree with respect to job placement). Further still, they didn't know that the subprime mortgage bubble existed much less that it would burst in '07-'08.
The lenders would be more choosy as to who they give money to. (Kinda like the mortgage crisis)
There should be a situation where a lender refuses to give a prospective student $125k towards an education that would never result in repayment due to the available jobs from that type of education.
If people could default on these loans, what incentive is there for lenders to agree to the loans in the first place? If you're a lender, why would you agree to a $50K loan to a teenager with no credit who can just default?
The same reason a bank offers a home mortgage? They expect to get a return on their investment.
Sure some student loans are going to get discharged and the lender will take a loss (just like with mortgages). But lenders with good enough actuaries are going to price their loans so that they make more than they lose and ideally the worse lenders will go out of business.
They only give it to you if you have a downpayment, proof of income, and they can reclaim the asset if you default on payments.
None of those aspects apply to student loans. What's going to happen is loans will require cosigners and poorer students will be cut off from access to higher education unless they can get scholarships.
You can get mortgages without a downpayment. You'll often end up with higher interest payments though (IIRC PIM goes away once you have ~20% equity). That said you could ask students to take a gap year to have money for a downpayment (not everybody in my class was in my generation).
Proof of income would require them to have a job which I think a lot of students do (albeit work-study pays less than tuition costs). But is it really too much to ask a loan issuer to do the math on if a student can reliable pay the loan back?
Reclaiming an asset is harder though but its an unsecured loan so by definition there isn't any asset to reclaim.
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> What's going to happen is loans will require cosigners and poorer students will be cut off from access to higher education unless they can get scholarships.
If the goal is for everybody (or more people) to get an education then it should just be subsidized in a normal fashion. No need to trap people in decades+ of debt.
That said, I would suspect you'd see more people getting bachelor degrees subsidized by their jobs instead of just the masters. Which is what the article is really about, a bunch of government employees are having their DOE loans forgiven as the former students have met their end of the agreement.
> poorer students will be cut off from access to higher education unless they can get scholarships.
(trying to understand) How is it any different right now? Students likely to default right now are poor, and may not even be in a position to pay the debt. But the debt still stays active.
> If people could default on these loans, what incentive is there for lenders to agree to the loans in the first place?
One thing I can think of is that the schools should be the lenders themselves. The interest rate should be capped off and the debt should be dischargeable in bankruptcies. This will lead them to deny loans for unemployable degrees.
Student loans should be discharged on personal bankruptcy. All of the other examples you give can be written off like that. Student loans, however, are rarely discharged by judges on those processes.
I'm strongly against student loan forgiveness, but I support this measure. Society offers a life vest in the form of bankruptcy to people who are financially drowning. That's as it should be. No need for new, ad hoc solutions to this problem.
Because student loans are one of the few types of debt that cannot be discharged in bankruptcy. There is an avenue, through our current legal system, to get out from under credit card debt or a mortgage one cannot afford. That avenue is unavailable to student loan borrowers.
The problem is that the people it benefits the most are disproportionately in the upper classes (they took out the most debt). Student loan forgiveness doesn't do what most people think it will do. https://knowledge.wharton.upenn.edu/article/how-student-loan...
I'm not inherently opposed to allowing for bankruptcy on student loans, but it will probably have a similar effect--banks won't want to lend to people with no credit or income and college will mostly only be affordable for the kids whose parents can pay for it. It's probably not much worse than the status quo, but my instinct is that we need to account for employability in the financing equation. A teenager shouldn't be able to take out $100K in debt to finance a Master's of Theater. If that's by allowing bankruptcy such that banks have skin in the game to avoid these kinds of debts, then that's probably fine with me (although banks had this same kind of skin in the game leading up to the subprime mortgage crisis and they still fucked over the whole country, so careful regulation is probably needed if we go this route).
bankruptcy has regulation already. you have to actually show an inability to pay, etc.
i'm not suggesting terminating the federal loan program either. just make it possible to default to get out of these situations to ensure they are not predatory.
I paid my student loans off recently, as I didn't expect the pause to get pushed back again, so I acknowledge I am biased here.
What other loans should the government be forgiving for people's poor decisions? Should the government have paid off all mortgages in 2008? I'd say people that bought in the years or months leading up to the housing crash didn't make particularly bad decisions either, yet I personally know a few different families that never recovered.
Some people drop out, and I agree that those people should have a way to lessen the burden of student debt, but I don't know that people who choose degrees with low financial value should get a free pass more so than people that take on any other particular debt.
> You can help out people who made a bad decision or had bad luck
Yes. Make loans dischargeable in bankruptcy. I support that. Or make repayment based on income, which is already is, so the burden is bearable. But just forgiving bad decisions? That's not a precedent I think we need to set, especially not until we do something to fix the underlying problem. Otherwise the next bailout will be 10x as big.
> And also reimburse the people who sacrificed to pay theirs off or avoid them in the first place.
Most of the loans in this specific program were forgiven in exchange for at least 10 years of specific public sector jobs. Those jobs usually come with a reduced compensation in exchange for the loan forgiveness.
I have a few friends who went this route as lawyers because they prefer helping out in the public sector instead of doing corporate lawyering stuff or the other options.
They definitely did not come out financially ahead by going this route, even with the massive loan forgiveness.
I was talking about general student loan forgiveness. I don't have a problem with certain targeted forgiveness programs (especially those which amount to compensation for work, as you describe).
Student loan forgiveness and universal education are distinct issues. I oppose the former (even though I would benefit from it to the tune of $30K) but not the latter.
I oppose student loan forgiveness because it punishes people who were responsible and rewards people who were irresponsible. Moreover, it disproportionately rewards the upper classes who are more likely to have more debt--it's regressive. If we decide we want to help people who are burdened, let's mail checks based on need (whether their need is a result of student loan debt or not) and those of us who are doing fine can pay those checks with our taxes. Student loan forgiveness is just welfare for the upper classes (me included!).
How is loan forgiveness doing anything for the next generation?
Fixing the current shit show that is college tuition/loan is a completely different problem from the forgiving of existing loans. AFAIK the 1st one has quasi-unanimous support, while the 2nd one is clearly very debatable.
Well what about us that didn't have loans and cash-flowed it? I have saved enough cash for my kids education by not buying new cars, no vacations, etc.. Seems I am punished for being frugal. I should blown it all and let the tax payer foot the bill.
I see this as basically just making amends for the failures of the PSLF program. This is for the folks who made years of payments expecting to get loan forgiveness after 10 years as promised, only to then be told none of the payments counted because they didn’t read the fine print or simply because of the loan servicer’s incompetence.
If democrats wanted that, they would write a bill to do so. Not everything has to be bundled up in a multi trillion dollar bill that involves a ton of other unrelated things. The reason they haven't done that is because they don't really want to.
Whoa whoa, don't crap on politician's favorite do-nothing-but-promote-everything method of working! If enough people realized what was really going on, our politicians might actually have to start working for us!
There were a couple other things with a few more dollars allocated in Build Back Better, if I recall, perhaps worthy of more criticism than community college for everyone. Anyway, I wonder how much of the student loan debt is from community college, both as total dollar figure and per borrower. Something tells me that in-state tuition for community college isn’t where all the underwater borrowers went to school.
free community college is already a thing, it's called 'Pell Grants'
republicans don't want to talk about it because it's free money that works, and democrats don't want to talk about it because there's no reason to expand it
Side rant (though somewhat similar to colpabar's reply):
The Democrats tried to govern like they had a large majority, when they had 5 (I think) seats in the House, and a 50/50 Senate. Of course it failed! If you need every single vote, you can only go as far as the least-willing member will let you go.
The Democrats never should have tried to govern that way. They should have been coalition building, trying to find some common ground where they could do some things. Instead, they acted like they could dictate their agenda to Congress. Both Biden and Pelosi should have known better; they have decades of experience in Congress.
Why did they do this? You could argue that they did it because they knew that no Republican would ever cooperate on anything. But if that was the reason, they still should have gone for what they could get through the members they had, not going for the moon.
Or you could suspect that they wanted to blame the Republicans (and maybe the more conservative Democrats) for their lack of progress, as a tactic to win the next election. Well, from all the indications so far, that's not working out for them.
> The Democrats never should have tried to govern that way. They should have been coalition building, trying to find some common ground where they could do some things.
> So why did they take the approach they took?
The Republicans set that precedent (trying to govern like they had a large majority). I don't mean that as a "the other side does it too", just that each side has become increasingly vindictive of the other, making it much more difficult to work together when doing so is necessary to get anything done at all. We will continue to see power swaps with the winning side spinning its wheels while shutting the other side out.
> each side has become increasingly vindictive of the other
For a number of reasons, no doubt. But partly I blame the efforts to remove pork from legislation. We thought that was a good idea, without realizing that it was the basis of compromise. When each little piece of legislation comes through on its own, there is no incentive to compromise, but just play tribal politics instead.
Yes. Additionally, it's crazy that we're singling out this specific type of debt for forgiveness. What exactly is the criteria that makes this debt different from others?
Is it because it's taken on when you're young and unable to understand the risks? If that's the case, I gambled away a LOT of money when I was 22 on casino credit, and I made the mistake of paying off my markers - I should have waited for the "you made a poor decision when you were young" forgiveness train to arrive.
The same could be said for those parasitic $500 "Student Credit Card" offers we all received when we were young, or the kids who decide to finance that brand new Mustang they can't afford at loan shark rates due to no credit history. Why not forgive it all, if the standard is "they were young and didn't know any better"?
And why stop at youth? It's pretty ageist to assume only the young are financially illiterate. There are plenty of older people who make poorly informed financial decisions. Bail them out too? When all the 5/1 ARMs written at 1.6% a year ago for homebuyers barely on the bubble of serviceability reset, we should definitely forgive them for their idiocy as well.
Yes! And if they stopped issuing these loans, tuitions will drop quickly. Im against loan forgiveness, but if they’re going to do it that also need to stop backing these loans.
I know we're currently in the Church of Paul Graham, where college is useless and it's all about the startup grind. But college is known to lead to better outcomes on average for people who go to college, and there is an intrinsic value, to both individuals and society, in receiving an education.
High school is free, for example, and it's not worthless.
> But college is known to lead to better outcomes on average for people who go to college
That largely depends on the field you're studying. STEM? Sure. Perhaps not for software engineering, because that these days can be entirely self-taught,if you're a person capable of it.
But everything else? Probably worthless. A gender studies or liberal arts degree is not going to make you money.
STEM has the highest class mobility, but even just an associates degree is shown to have a net positive outcome. For example of societal benefits and savings, education (yes, even in topics you may not deem 'useful') reduces crime.
And is everything else really 'worthless?' Do we not need lawyers? Social workers? Teachers? Tutors? Librarians? Student debt is a barrier to solving teacher shortages, and not everyone is teaching STEM.
STEM degrees are liberal arts degrees. "Liberal arts" is what is called "a traditional western education," which encompasses all of the sciences.
> Liberal arts education (from Latin liberalis "free" and ars "art or principled practice")[1] is the traditional academic program in Western higher education.[2] Liberal arts takes the term art in the sense of a learned skill rather than specifically the fine arts. Liberal arts education can refer to studies in a liberal arts degree program or to a university education more generally. Such a course of study contrasts with those that are principally vocational, professional, or technical.
This program is for people working in the public sector. It's not known at the time of issuing the loan whether the student will quality for loan forgiveness.
This sounds like an attitude og “If you believe your driving to fast, open the door and jump out the car. Pushing the brake won’t bring you to a stop immediately”
This loan forgiveness is for a very specific subset of lenders who have been making payments for 10 years but not yet paid of the loans. Eliminating loans all together would not have put them or society in a better position, it would just mean that next semester there would be hardly any new students accepted at any higher education and the entire education sector in the US would be bracing for impact and trying to figure out how on earth they are going to continue while their normal revenue disappears overnight.
The really crazy thing would be to end the student loan system without providing an alternative. If you do that, only kids with rich parents get to go to college.
The current system is far from perfect but it enables kids to attend college regardless of their parents' wealth. Any replacement system needs to enable that too.
The private market would just require people to be more responsible about taking out loans. If people that take out loans for basket weaving often don't pay them back nobody would give out a loan for basket weaving. If someone is on their 5th major or college without completing any credit they won't get any more loans without having some backing.
We are talking about 18-year-old kids with no assets and likely no income, who have potentially never had a job, asking to borrow thousands of dollars because they believe (but cannot prove) that they will graduate college several years from now and make enough money to pay it back. Any banker who would give them a loan on normal terms would be an idiot.
The only reason this works is that student loan terms are uniquely different from the terms for other loans. That is what makes the risk acceptable to lenders. Change that, and guess what -- nobody gets loans.
But there is a important point here too - these loans are issued with too low of an interest rate BECAUSE they are guaranteed by the government.
Drop that guarantee and the interest rate is going to float to more of a credit card level, which will make them prohibitive for funding tuition, which will put an extreme downward pressure on tuition rates.
Getting the DoE into the student loan market was intentional and is seen as the first step to reworking the entire system. Navient et al are keen to keep the gravy train rolling.
If we're going to be forgiving loans, we shouldn't be giving them out in the first place. Otherwise, we're going to be in the same spot in one generation's time.
Just stop guaranteeing them, let students default on them. All these guaranteed loans that can't be discharged allows academic institutions to ratchet up the price. Let them calculate risk and price them accordingly.
The guarantee is the only reason the loans are made. Otherwise, you're lending a lot of money to someone with no income and no assets, and no one will want to make that loan.
They'd actually have to underwrite on the basis of the value of a degree -- yeah, no one is going to lend money to the same people who wouldn't be able to repay their loans after graduation. That's good!
This is a slippery slope though. This effectively turns universities into career-training centers. Eventually enrollment in less-profitable subjects, like dance and art, will decrease, forcing colleges to drop it from their programming.
Then suddenly we have a society that does not appreciate art or dance or whatever other subjects were dropped.
This is the slippery slope - creditors get to decide what others know and learn and pay attention to. Knowledge is no longer widely available - the experts (professors) might still teach at a college, but will be forced to either pivot or leave when the university slashes their programs. They could teach privately or for free, but I am guessing the number of students who they would normally teach drops significantly.
This is not a problem. Tooo many kids graduate with degrees in which they cannot find decently paying jobs, so they end up in a different field altogether. Why have that initial non-starter in the first place and place them into a career that has better potential in the first place?
Once there are too few people in the arts, demand will incentivize more people to get into that field.
Moreover, don't we currently have a problem where we don't have enough students going into STEM?
Is this really a problem though? Wouldn't arts programs simply move to being something offered to and studied by those wealthy enough to do so? I'm genuinely curious.
> Eventually enrollment in less-profitable subjects, like dance and art, will decrease, forcing colleges to drop it from their programming.
If this is the goal, then the far simpler solution is for the government to explicitly budget a set number of grants for the most promising students in those fields to study specific subjects that supposedly have social value but low economic returns.
It certainly doesn't make sense to subsidize loans for hundreds of marginal students to study "business administration" or "hospitality" at a tier four regional college to get one brilliant dance major at Carnegie Mellon.
Far more efficient for the government to say "we have 800 fully funded dance scholarships, 4000 art history scholarships, 2000 classics scholarships, etc. We're going to assign these scholarships to the most promising graduating high school students in these fields. And the scholarships will only be paid for top-tier universities that have demonstrated consistent excellence in these areas."
That would by far subsidize a much higher level of cultural discourse at a tiny fraction of the cost of the current student loan system.
> This effectively turns universities into career-training centers.
Isn't that the case already? Aren't most university students looking to increase their career prospects? Wasn't that the whole point of telling generations of kids to go to college, so that they'll get better jobs?
If the program turns out successful students, I don't see why not? If the program turns out unmarketable skills, sure, charge through the roof and steer kids away from a useless degree.
Why not? I'm a university employee. Grad student, so maybe skewed a bit (are we talking about more permanent administrative employees? They I guess have different interests, since they aren't transient like me).
1) I'm going to, absent some massive political shift, vote for Democrats for the rest of my life anyway. So, they don't really have to play for my vote.
2) Playing around with boring stuff like tweaking market forces around by changing how loans work is sufficiently indirect that blame can probably be dodged.
3) We're all aware that the current system is pretty bad, a new solution that at least purports to be an attempt at something better can be sold to me pretty easily.
3a) Keep in mind that, at least in the STEM departments, the instructors are there for essentially irrational reasons -- they could make much more money in industry. At least some of the motivation is to produce interesting science and help students, paycheck be damned. Changes that hurt the last while helping the first two will probably be accepted with only minimal grumbling as long as they aren't too painful.
+1. Defaults exist for a reason - they force the lender to think about whether someone can pay off a debt or not, and we got here by giving everyone a loan, whether they could pay it off or not.
This create market driven dynamics in which degrees basically are tailor made for industry. This approach disincentivizes pure research for scientific purposes.
In any case, if there is a specific need for specific research, I'm sure the gov can figure out a way to incentivize particular useful tracks which the market ignores. Grants programs, etc.
Companies value people who can apply the scientific method (experimental design, data gathering, data analysis, etc). They hire people who have acquired this specific knowledge often through grants. Whether these subsidies lead to application of the specific knowledge gained through the grant underwriting process is debatable. Companies will hire people who studied something that requires the scientific method for which there is maybe no market, and make them apply that approach to things for which there is a market.
A future where universities looked more like community colleges situated next to research institutes, rather than weirdly blending the two, could be neat.
Have people really interested in teaching rather than research teach the 100/200-level courses. The scientists next door can teach seniors and juniors, and show up for guest lectures.
> This create market driven dynamics in which degrees basically are tailor made for industry. This approach disincentivizes pure research for scientific purposes.
Good, there is nothing wrong with all that. Degrees should exist so people find jobs in the real world. Research can be funded by the government itself. Absolutely no need for government backed student loans in either cases. People who want to go to private universities can get a regular bank loan, that's how it works in the rest of the world. The US system is unique and predatory.
Pure research for scientific purposes is done by Ph.D. students and is already funded by research grants. Student loans are not part of the equation here.
Universities are tax exempt, and highly profitable. Many have endowments over $1 billion [1]. Yet, the average cost in state is $10,000 per year, and almost $30,000 if out of state. For comparison, the tuition at Oxford College, one of the most prestigious institutions in the world, is $12,000 per year.
Student loans may be considered even predatory [2], adding to the injury.
There should be a better mechanism to allow people to go to college in the US, without subjecting them to half a lifetime of debt.
Are you complaining about the massive amount of not-really-loans given to small and not small during COVID?
Right? You're vociferously complaining about that frequent game played by corporations with outsized lobbying abilities to get loans that aren't really ever expected to be paid? How much was that in the grand scheme of printing money by the fed, a billion?
Or are you angry about little poor people getting a pittance of money in the grand scheme of things?
It is so strange how much people shrug off corporate handouts, but get up in arms when poor folks get a pittance from the government.
Edit: my tone was a bit harsh, probably because I get this knee jerk reaction.
It's probably because corporations are like gods. You can't kill them. They are omnipresent. With data hoovering, they are some form of omniscient. They are tireless, sleepless, don't require air, water, or food. The modern way to kill a corporation is probably so serpentine that it puts the best D&D plot to kill a god to shame. They don't technically have a physical body. They have servants, followers, a clergy, and power. They can cast "summon army of retainer lawyers" and send you to hell.
Who are we to question if the god of money hands the god of cars magic printed-but-never-actually-printed numbers that aren't based in something?
I think most people who'd like to get rid of the loans would also like to provide additional help to make college less elitist. Easy loans are just the local optimum we need to get out of.
If it only becomes for the rich, that's a problem. If it only is for those who can earn merit scholarships (plus a smattering of rich flunkies to pay the bills), is that necessarily a problem?
Plus, colleges and universities will think twice about increasingly charging an egregious amount for tuition if people aren't willing to buy their product no matter the price.
Maybe for the bottom schools but there are enough rich parents to pay/cosign a loan for like the top 50 schools and I highly doubt they would reduce tuition/spending and risk hurting their rankings.
Who cares about the top 50 schools? I went to Hofstra University, graduated with no debt (worked while going there and commuted by bus!) and I did just fine. I’ll be damned if I’ll subsidize someone else’s 4-year country club experience at a “top school”. Noting terrible will happen if only kids with rich parents went to them.
If you can earn $53k plus living expenses in after tax dollars all while going to school then you are not the typical college student. Someone would be subsidizing your education if you get out of that debt free.
No matter how many loans or funding you get, it'll always be impossible for everyone to go to the top 50 schools, unless you simply outlaw all schools outside of the top 50.
That is not the point. The point is that kids whose parents cannot pay/cosign a loan can currently get into the top 50 schools but without the government backing the loans, none of them would likely be able to get in at all leaving the top schools only for rich kids.
Nope, that is not how unsecured personal loans work. Those depend on your credit which most students don't have much/any and your debt-to-income which is normally infinite for students because they don't work.
They were cancelled because it turns out the schools were scams. So it was a situation where the students got into a lot of debt, and got nothing(like an education or a worthwhile diploma) in return.
Do you think the schools aren't punished for being scams, and they're just free to keep scamming students? And debt relief helps the debtor, not the original receiver of the funds.
> On August 25, 2016, the U.S. Department of Education banned ITT Tech from enrolling students who receive federal aid. The Department also doubled the surety funds that ITT Tech was required to have, and to produce those funds within 30 days. Stock markets reacted with a punishing 35% drop, which triggered a halt in trading, raising concerns about whether ITT Educational would be able to survive this latest decision.[73] On September 6, 2016, ITT Tech ceased operations and closed all of its locations, issuing a statement that attributed the closing to the Department of Education's actions.[28]
I don’t know the Us system at all but it sounds like what they are doing are rewarding public service workers (eg teachers?) or charity workers which likely don’t get paid well by cancelling their debt after a set time period of otherwise good behaviour.
Which sounds equitable to me, although I’ll never understand why high school is free but university isnt.
I agree in theory. If the U.S. were a company dedicated to profit for its shareholders, then it certainly shouldn't give out bad loans.
However, since the U.S. is a country dedicated to the benefit of its citizens then it's absolutely okay to provide loans as a form of social welfare, and accept a higher than normal rate of default. After all, providing these loans instead of the market was the entire point of the exercise.
I'm a UK guy in my 50's. I went to uni (the US term for college) in '83. At the time I was in the minority of the population. I was given a grant of £3000pa and was able to make ends meet. I might have lived in, shall we say, the most salubrious of environments, but I emerged without debt.
Same thing when I did my masters and PhD a few years after that.
I basically caught the tail end of uni, when it was for the minority of folk. I shake my head at the monster that higher education has become. I'm hardly in the loop anymore, but I've noticed that the UK want to nickel-and-dime the students with tuition fees, graduation fees, and whatever fee that they seem to concoct on an ongoing basis. The US seems even worse, with books costing 100's of bucks.
Shocking. Truly shocking. The whole thing is a shameful scam, and no-one is calling it out for what it is. The truth is, one rarely /needs/ a university education. It's really just a piece of paper to get you into an office job - if you're lucky.
The problem is, now that everyone's got a degree, they're not particularly valuable in their own right. It's a foot in the door to a club that keeps upping its membership fees.
Dare I say it, but it was better when a uni education was the preserve of the elite few. Now, I appreciate it that this is going to rankle a lot of sensibilities about "fairness". If fewer people had a uni education, then it wouldn't be considered quite so important, as employers would have to take what they could get rather than insisting on a degree. Plus it would also put an end to a large swathe of the population starting their young adult life with a small mortgage.
In my eyes, what we're seeing today is morally unconscionable. Lambs to the slaughter.
I find myself in a very funny situation where I have a very high paying and great job, that I got without any education. Now that I want to emigrate to Japan, I need a degree, so I am going to study in Finland as real estate is cheap and I can get a degree for free there before moving. I literally just need that piece of paper.
I don’t think Saul Goodman went to Finland for his degree. But seriously, it’s dumb. People with years of demonstrated expertise and progressive responsibility denied opportunity to apply for jobs because they simply don’t meet the MQ of the piece of paper. If you go back for it in the US you’ll be confronted with extraordinary cost, silly pledges for DEI, and all the rest.
Of course, the current UK student loan system has several features that make it far more favourable to students than the USA:
-Tuition fees are capped at £9250 per year (approx $12,100), even for prestigious universities. A typical degree in the UK lasts for three years.
-An additional loan is available for living costs. The amount available varies based on household income.
-Loan repayment is linked to earnings. You only need to repay while you're earning £27,295 or more per year. If you're unemployed or on a wage below that, you don't have to pay anything back, so the debt is much less likely to cause financial hardship.
-Repayments are typically automatically deducted from wages (for workers who are salaried and only have one employer), so there is little admin involved in payment (the repayment rate is 9% of the salary above the £27,295 threshold).
-Loans are written off 30 years after graduation. It is predicted that most people won't actually pay off the loan, so it's seen by many as a sort of "graduate tax".
Some downsides:
-The interest rate is very high (especially given the current inflation rate), and interest starts building up while a student is studying.
-Even if the repayment terms are favourable and should be seen as a "graduate tax", rather than a loan, it's still the case that people will have a debt for 30 years of their career.
-A lot of the loans look set to be written off (as people won't earn enough to pay them off). This cost is met by the taxpayer.
> Dare I say it, but it was better when a uni education was the preserve of the elite few.
I agree, but there is fundamentally no reason this level of education need be restricted to the elite few today even if we ran the clock backwards on everything related to university. We live in the information age now. I can have access, for free, to all the educational material of any university in the world. I can't have access to their equipment[0], and I can't have access to their professors[1], but the only real problem with that today is that I don't get a piece of paper at the end that says I got a piece of paper from a university.
[0] Could be solved with some kind of rental program I guess, at least for equipment that isn't ridiculously rare and valuable.
[1] How much access do the students have these days? From what I hear, TAs do a lot of the actual interacting with students part.
Is this a by-product of reduced government funding? I know my state school received less funding from our state over time and that's where I thought tuition and fees had to make up the shortfall [1]. In turn universities increased frivolous spending on housing, sports and facilities that serve little education purpose but are intended to attract more tuition paying students.
Unfortunately no politician will have the guts to do this.
This is why people are skeptical of the federal government getting involved in just about anything.
They passed this program to help students afford school, and it’s done the opposite. It was also passed as a revenue neutral program of loans that would be repaid, now they’re increasingly being forgiven or put into forbearance.
Now to fix it, someone will have to feel significant pain, most likely both the educators and low-income students.
People are skeptical of the federal government getting involved because of decades of propaganda and underfunding. Bad roads? Well, Congress and the states won't raise the fuel tax. Bad education? Congress lets loans go to shite diploma mills that have owners who make big campaign contributions. Just look at how underfunded (intentionally) the IRS is. How audits are primarily focused on the bottom 50% of earners, while the top 50% skate. The Federal government does a great job at many things, when given clear legislation, and funding. Unfortunately, Reagan did a great job with his BS about "I'm from the government and I'm here to help."
> Bad roads? Well, Congress and the states won't raise the fuel tax.
We overbuilt infrastructure based on Government accounting practices that don't adhere to Generally Accepted Accounting Principles (GAAP or US GAAP). Representatives get elected based on promises of new roads and highways, not on successful stewardship of what we have. People realize this misaligned incentive, that isn't propaganda.
> Bad education? Congress lets loans go to shite diploma mills
For profit schools account for 10% of students[1] and 15% of loans[2]. They're a problem in several ways but not the root cause.
> Just look at how underfunded (intentionally) the IRS is. How audits are primarily focused on the bottom 50% of earners, while the top 50% skate.
I agree that the IRS wrongly targets working class people, but the rest of this is wrong. The tax to GDP ratio in the US has been constant for decades, and we have the most progressive tax code in the OECD[3]. The US obtains more of its revenue from income taxes than any other OECD nation by a factor of 2 in percentage terms. We have no VAT which is regressive, and almost every other OECD nation has one.
Americans distrust government for a lot of historical reasons. We are the 2nd largest democracy that was a former European colony, and our founders fought a revolution against a remote and disconnected government. Most large waves or immigrants to the US were fleeing some sort of government oppression. We also should remember that some 14% of the population was officially discriminated against by the government in living memory. The war on drugs also give people plenty of reasons to be suspicious about the government. We're an individualistic society that is multi-ethnic, multi-racial, multi-cultural and people practice a range of religions it should come as no surprise that people are wary of Washington.
1. Govt Reps get elected for a lot of things. Maintaining our roads, bridges and infrastructure are always buzzwords during elections.
2. Your link to Brookings just reinforces the issue. For profit schools account for 10% of students, borrow more often compared to public school students, and borrow more money. The Fed link shows that these students default more; they also are higher in pure dollar terms when it comes to Pell grants and Stafford loans. There's no good defense for profit schools.
3. Our tax to GDP has been constant for decades. Wow. I guess that wouldn't coincide with the Republican and Grover Norquist's efforts to "drown the baby in the bath tub?" A tax code can be "progressive" in theory while in practice it's regressive since the wealthy can shelter so much of their income. By underfunding the IRS, we're leaving money on the table. That's what the rich want, and since they largely control Congress, that's what they get.
4. If you look at trust in government, it was in the mid 70% range up until 1960. So obviously all the people in 1950 were so scarred by how poorly the British Parliament treated us in the 1700s. The drop in trust dropped during the Vietnam War when both parties continually lied to the American people, and since then has hovered in the 30% range for 40 years. But it's pretty clear that one party has had a platform for over 40 years to diminish the accomplishments of the Federal Government (except the Military), to starve it of funds, to politicize it's agencies. The other party sees the Government as a solution to many problems that are simply too large for individuals to solve.
> Govt Reps get elected for a lot of things. Maintaining our roads, bridges and infrastructure are always buzzwords during elections.
You're arguing against conventional political wisdom wrt the US, so I think the onus is on you to provide a better argument than sometimes the conventional wisdom is wrong.
> Your link to Brookings just reinforces the issue. For profit schools account for 10% of students, borrow more often compared to public school students, and borrow more money. The Fed link shows that these students default more; they also are higher in pure dollar terms when it comes to Pell grants and Stafford loans. There's no good defense for profit schools.
Your original comment was that loans to for profit colleges were the cause of bad education. I'm pointing out that they account for a tiny fraction of all degrees. You aren't making an argument here that shows the margins driving overall outcomes. The loan amounts aren't really relevant to the quality, or at least you aren't making that argument. I actually don't think the federal government should be in the lending game for education. It's too indirect and creates perverse incentives.
> Our tax to GDP has been constant for decades. Wow. I guess that wouldn't coincide with the Republican and Grover Norquist's efforts to "drown the baby in the bath tub?"
Yes, federal receipts as a percentage of GDP have vacillated between 14% and 19% since 1944 averaging around 17%. Grover Norquist's Tax Reform Act in '85 was followed by a 5 year uptick in federal tax receipts. Countries that capture more tax as a percentage of GDP do so through VAT.
> A tax code can be "progressive" in theory while in practice it's regressive since the wealthy can shelter so much of their income
The top 50% of earners pay 97% of federal income taxes in the US, which is the vast majority of federal revenue. That is definitionally a progressive tax scheme, in fact the most progressive globally by any measure. To argue otherwise is to deny basic confirmable facts. If your argument is about the 400 wealthiest families in America, then that's something else entirely, but it doesn't make the tax regime regressive.
> If you look at trust in government, it was in the mid 70% range up until 1960
You're looking at a measure that only starts after WWII, and probably in those early years excluded racial minorities.
> So obviously all the people in 1950 were so scarred by how poorly the British Parliament treated us in the 1700s.
This isn't an argument, it's jus reductio ad absurdum and misrepresents my argument about the cultural and historical roots of skepticism of government.
> The drop in trust dropped during the Vietnam War when both parties continually lied to the American people, and since then has hovered in the 30% range for 40 years
Can you blame anyone for being upset about Vietnam, Watergate, and the Cuban Missile Crisis?
> But it's pretty clear that one party has had a platform for over 40 years to diminish the accomplishments of the Federal Government (except the Military), to starve it of funds, to politicize it's agencies.
I think it's pretty clear that both political parties have been behind some rotten shit since Vietnam. Both parties were in favor of the drug war, needless foreign adventurism, the bungling of trade liberalization, and a raft of other stupid things.
I would argue that both parties see government as a cudgel to bludgeon their adversaries with, and not as a tool with witch to achieve social good. As far as I can tell they're both obsessed with fighting culture war battles and have very little interest in the practical concerns of governance.
The only reason that income tax is the primary source of revenue is because of the cap on payroll taxes that allows the rich to avoid paying as much as the middle class.
It primarily funds Social Security. How is that part of "our wacky welfare system?" If you consider it a secondary income tax, then it really shows how regressive our tax system is since the rich don't pay the same rate.
It’s a tiny portion of federal revenue, which as pointed out and cited is predominantly funded by income tax. It also doesn’t straightforwardly find Social Security. It funds a portion of pay outs to current recipients, something like ~90%, with the rest coming from general funds. That portion is decreasing as demographics shift. It’s sort of a weird cash transfer program that’s presented as some sort of lock box. We could lift the cap to make SS more solvent past the 2040s, but it would still be a small portion of federal revenue compared to income tax which is highly progressive.
I don’t understand how you’re even arguing that income tax isn’t highly progressive here, every tax expert and economist disagrees with you. It’s just basic accounting. Most federal revenue is from income tax and most of it comes from the top quintile of income earners.
"tiny portion of federal revenue?" It's 36% of all Federal revenue. It used to constitute almost 80% of Federal revenue in the 40's/50's, but the cap has made its contributions drop.
The Federal income tax is progressive, but only if you ignore that the payroll taxes are highly regressive income taxes. When you look at them as a whole, it's readily apparent that the overall Federal income tax system is regressive.
You're reading that chart incorrectly, it was like 5% in the 40s and 50s not 80%. I meant historically tiny, and should have been clear, though it is larger now. Yes, payroll tax is regressive, but only 6.2% and the cap rises every year.
> it's readily apparent that the overall Federal income tax system is regressive
It clearly is not, as 57% Americans paid no income tax last year (up from ~47%), and 19% (up from 17%) paid neither income tax nor payroll tax. So somewhere in the neighborhood of 38% of Americans paid payroll tax but not income tax meaning their federal tax burden was quite low. If you roll in the payroll tax the effective federal rates are still quite progressive[1]. Even Piketty and Saez note that the tax system when everything is accounted for is still progressive in the US[2] and they're accounting for wealth accumulation and not just income. If you want to include things like Piketty and Saez, you should probably include transfers, entitlements, and welfare, which makes the system look even more progressive in total. There's a good wikipedia article on the topic [3].
I'm not sure how you can argue against the conclusions of the CBO, Saez and Piketty who are the most prominent socialist economists in the world right now, and the Brookings Institute. Basically everyone who studies the topic disagrees with you, including people who greatly disagree with one another.
For example: forgive the first $10k of every student loan and offer every taxpayer who paid off their loans a refundable tax credit for the same. In the same stroke, make 10% of loans granted in the year following enactment dischargeable in bankruptcy, limit federal guarantees to 90% of the loan value and reduce subsidies by 10%. That goes to 20% (80%) the next year, 30% (70%) the next, et cetera.
You aren't changing the terms of an extant contract. Lenders and schools have time to adapt. The program pays for itself and then some.
This is a bad plan. Why would any 21 year old ever pay? Just ignore this debt until it is discharged. So you have to wait 7 years to buy a house? That sounds like no big deal.
What we should do is have the fed define a maximum allowable charge for the school loan that can be protected by the government. Pick some number, like $10K a year all in. Any other school loans can be discharged as they aren't protected or schools could try to force the parents to co-sign. But either way, the government stops propping up runaway tuition inflation.
We have to also look at why some of the cost is through the roof. When I was in school, housing was block buildings with bunk beds and a bathroom for the whole floor. Cafeteria was 2 choices and drinks. Now, everyone has a private bedroom and living room to hang out in and their own apartment bathroom. Cafeteria is like a commercial buffet with all you can eat Nutella. That money has to come from somewhere. People want it to feel like a 4 year cruise ship. That is one reason that the costs are out of control.
This is also one factor in our healthcare. Everyone wants lower prices but they also want an Urgent Care on every corner so they can go when it is convenient to them. Someone has to pay for that building and staff to sit there all day waiting for customers to show up. Everyone seems to want it both ways and never stop to consider their complicity.
The schools should also have some skin in the game. If a former student defaults on their loan then the school should have to eat part of the cost, and schools (or particular majors) with high default rates shouldn't be eligible for loans at all. This would fix the problem of irresponsible schools encouraging students to take on huge loans that leave them stuck in debt for decades.
Agreed but, if someone tried this you know the schools and media would blast this as "Party X Robbing from Education, hurting students, the next generation", etc. It's tiresome.
There's a reason the federal government is as involved as it is. When I started college, lots of students dropped out because they didn't have the money. My first semester, maybe five students I interacted with dropped out within a few weeks. "Going back home to work. The loan didn't come through." That was back in the old days, when tuition was cheap, before states decided to end support for university education.
The better policy would have two parts:
- A maximum (like 7%) of your after-tax income can go to student loan repayment.
- Colleges have to partially repay loans they took for tuition if after five years the student isn't on track to pay the loan off. This would align the incentives of the college with those of the student. It would bring a fast end to students that borrow to pay $75,000 a year for worthless programs.
This is the answer. Lenders would then have to do proper qualification on borrowers, would be more limited in their lending, and this would put downward pressure on tuition.
So unsecured personal loans? Those depend on your credit which most students don't have much/any and your debt-to-income which is normally infinite for students because they don't work. You would massively screw over kids whose parents cannot pay/co-sign a normal loan as it would force them to work and study.
Also, you normally cannot get very much with such low income and cherry on top, they have awful interest rates which range from about 6% to 36%. The APR on loans for borrowers with excellent credit is around 12%; it's about 29% for bad credit borrowers which students with no credit are likely to be.
As an example: say you work at target for 2 8 hour days on the weekend making 15 an hour and with a 36% debt-to-income ratio limit, you could afford a payment of $374.4 a month. $15,000 punched in a 30 year repayment at 29% interest rate equals a $362.57 payment. So you might be able to do it but I would hate to be working every single day between weekend work and weekly school and that is assuming an entire 4 year degree could be pushed to to $15,000.
Colleges already have a mechanism for determining chance of success in college, and degrees have data on the average income after graduation. It would be trivial for private lenders to take into account the school, factors in standard college applications, the degree, and expected income to make a loan decision instead of relying on credit, debt-to-income, etc.
And just hope students don't default right after they graduate? You realize how picky they'd have to get? 40% of undergrads drop out [0] who would probably all default alone which is completely unworkable to be profitable considering credit card default rates are between 1.5 and 7 percent [1] and look at the interest rates they charge.
It would also create a massive false negative problem where kids whom could have succeeded never got to go to college because banks would get so picky if they even were too somehow make a loan like that work.
This was very normal and possible when I went to college. I could work part time during the year, full time in the summer, and pay my tuition. It didn't leave much free time but it was possible and a lot of people did it.
These days tuition is so high at most universities that it just isn't possible. Yet they are not actually teaching anything more or any better than they were back then. It's just way more expensive.
This way, American universities have large amounts of funds available to provide the best education, best facilities, hire the best professors and that's why America simply has the best universities worldwide and it is paid by their students?
It also mostly only paid by students who can afford it. Students from weaker social backgrounds only have to pay a small fraction of the normal tuition fees.
As well, 77% of people with student loans have less than $40,000 in debt and 57% have below $20,000 in debt. $20,000 can be paid off within 2 years with a normal graduate job if one wants to pay them off early.
I ended up working 60 hour weeks to not take out student loans. People talk about having a good time at college but all I remember is getting up at 4am to go to my first job, doing class all day and working my second job until 10pm. No spring breaks and no summers or holidays because I could work those hours to stay out of debt. It is hard to have much sympathy for people asking for student loan forgiveness.
On the plus side I ended up graduating with $20 and no debt.
I worked full time thru college for bad pay and still needed 30k in student loans to make it out with my degree. I went to a state school, nothing fancy.
I hardly ever had fun in college, it was awful. The working world is waaaaaaay better for me.
Not everyone who has loan debt just partied away on borrowed cash.
You're absolutely correct. The people in my life who are the most vocal about loan forgiveness treated their time at university like a party, but that is not a representative sample.
I agree. I also remember working Friday/Saturday nights in the lab (as that was the only time I got to work on my projects), while everybody went out clubbing.
And we're definitely in a spot right now where folks that can pay off their loan are holding off in case the US forgives all loans or something. A perverse incentive that is going to boost the number of student loans that are not paid off.
Not just that, but with interest rates at zero and inflation at 8.5% per year (and growing!) it is incredibly stupid to pay even a single penny of federal loan debt early, unless you have a really good need to polish your credit score.
Federal student loan debts are getting cheaper by the minute, why pay more now?
This attitude, as stated, is one of the fundamental evils, I think (the implication being "If I can't have it, nobody can", or, in this case, "If I didn't get it when it was relevant to me, nobody can"). In this case, the core grievance is valid ("I think there's a better way to address the problem"), but this expression of it makes the problem into the super common "us vs them" where "them" is defined by the terrible cultural obsession with the concept of "deserved" punishment and personal responsibility in an unqualified, absolutist manner ("He committed a crime, he deserves anything that happens", "He failed to pay a loan, he deserves anything that happens", "She had sex, she deserves anything that happens", etc).
The way you present the problem is inaccurate to me. It's not "I can't have it so nobody can" or "I couldn't have it back then, so nobody should have it now.".
It is: "At the time, these were the rules, I ran the numbers, was responsible and ended up limiting my opportunities. Others, who were not responsible, now not only have more opportunities thanks to their degree but will also end up not paying for it".
I'm sorry, but to me it feels extremely unfair that people who frivolously took loans will now end up being ahead of people who - at the same time - decided to be more financially responsible. You can't retroactively change the rules and expect people to take it quietly.
The problem is made even worse because in the case of student loans, there is nothing to repossess.
This has nothing to do with changing the rules now.
>The reality is that rewarding bad behavior and punishing good behavior
You are confusing a societal failure with a moral one: we have failed as a society by forcing those that pursue higher education to bear the entire cost of that education and we have failed to guarantee a role for those people in our society that pays well enough to pay off an inflated loan for that cost.
These are not individual moral failures. Everyone that is not able to pay off their student loans is not a bad person. Student loans are a bad system for educating people. They were introduced when higher education was desegregated and opened to women. When the white men at the reigns of the government no longer saw fit to fund public higher education for people that were not white men.
Once again this is not the issue, either my post was unclear or you didn't read it carefully.
I definitely do want the system to be fixed for future generations to not go through this. I do not want past generations to get a free pass. Loan forgiveness does nothing for future generations of students.
>Loan forgiveness does nothing for future generations of students.
Loan forgiveness unlocks the spending potential of an entire generation. People have been holding off on buying their first home or having their first child because of the burden of their loans.
Rewarding people who have worked for decades to climb out of that situation by lifting those who didn't do the same to the same financial position doesn't exactly encourage upward mobility, either.
People who have paid their student loan debt are in exactly the same situation they were after this forgiveness than they were before: that is, they have no student loan debt.
People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible. Very different.
> People who have paid their student loan debt are in exactly the same situation they were after this forgiveness than they were before: that is, they have no student loan debt.
You're missing the point, either deliberately or on accident.
(Prefacing this with: we should keep and honor the terms of the existing PSLF program that students relied on when taking on debt.) There's no particular reason people with current loan debt, but ineligible for PSLF, should get a wealth transfer from other taxpayers with similar income, net worth, and expenses -- but no current student loan debt.
> People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible.
In fact, a hypothetical student debt forgiveness event like GP was discussing would punish those who responsibly paid off their student debts relative to similar-earning classmates who did not.
>In fact, a hypothetical student debt forgiveness event like GP was discussing would punish those who responsibly paid off their student debts relative to similar-earning classmates who did not.
Punish how? This word keeps being used but it does not fit any definition of punish I'm familiar with. I'm not being obtuse.
Some background of where I'm coming from: Worked 40+hrs/week for $7.25 to $10/hr from 2005 to 2009 to get a four year degree from a state school. Graduated with $35,000 in student loan debt myself and about $20,000 in debt through Parent Plus loans. My parents sent me some money for rent on occasion, but overall -- that's how I di it.
I also paid off all my student loans, and my parent plus loans.
If someone graduated with $100,000 debt because they partied all the time, didn't work, and tomorrow Biden just gave them a tax-free forgiveness....
I am not punished by this. At all. It has no impact on my life whatsoever. I made the best choice I could make with my circumstances, and I paid off my loans because at the time that was the best way to secure my future. The day before the party-guy got his $100k write-off and the day after, I wake up in the same house, with the same car, with the same job, with the same spouse. My life doesn't change at all.
> If someone graduated with $100,000 debt because they partied all the time, didn't work, and tomorrow Biden just gave them a tax-free forgiveness....
> I am not punished by this.
Imagine a fair and equitable spending program that distributed $100k to everyone. It's fair, and people with debt could use it to pay off their loans (you could even require it to be used to pay off student loans first). If your goal is to help people with loans pay off their debts, it is an effective program. It's also obviously fair.
Then, tax 100% of the distribution for people without student loan balances. This is the step that imposes a punitive expense, relative to a fair program, on people without student loans.
That's what these proposals look like. There's no particular reason recent college students as a group should be the sole recipients of a wealth transfer.
They are not, though. You wrote your comment as though every proposal is necessarily a tax on everyone that does not have student loans.
This is an entirely made up claim. A hypothetical strawman useful to only those that seek to victimize themselves when this topic comes up. Student debt is a contractual arrangement between the government and the borrower. It can simply be ended. The government has the power to do that without imposing a tax on everyone else.
> The government can simply write off the student debt
And now those people have 1.75 trillion dollars more to spend on the economy instead of paying debts which creates inflation which is effectively a tax on everyone with cash and bonds. There is no free lunch with the economy, just distortions.
If student spending inflates the economy to the point where there is significant impact on the dollar, what you are saying is we NEED this generation debt-burdened so the rest of us can live decently. If that is true we never really had a functional economy in the first place.
We need to grapple with that truth instead of perpetuating this suffering.
Congratulations, you will eventually own a house and car. I'm sure you paid quite a handsome price on that house to ensure the people formerly living in it could live off the proceeds for the rest of their lives. What will your peers own when they pay off their student loans?
Banks deemed you creditworthy because you make enough to pay these loans off. We're currently discussing the people that don't make enough to pay their student loans off.
Do you think they should be forever renters? Carless in public transportation deserts?
A functional economy allows people to thrive by participating in it. It is not dependent on an artificially created underclass of people in debt to purchase no asset.
> We're currently discussing the people that don't make enough to pay their student loans off.
If we are only discussing just those people, then I think it is a different story. I could get behind a x% of income over y% of years and if it not paid off in the end it is cancelled deal.
However, usually when I see people talking about cancelling student debt they mean wiping the slate clean for everyone even those who just graduated that can pay.
What type of student loan cancellation program are you thinking we should implement?
"People who have paid their student loan debt are in exactly the same situation they were after this forgiveness than they were before"
Not:
"People who have paid their student loan debt are in exactly the same situation as those whose loans were forgiven"
You may have a valid point about why it's bad that the two people are in different situations (if you elaborate), but the parent did not say that the two people are in the same situation.
Correct - both people in your scenario end up having no student loan debt.
But Person A, who paid their $30k loan in full, now has $30k less to spend on a home, a car, savings, etc.
Person B, who did not pay their $30k, now has effectively $30k more in buying power either immediately or spread across what would otherwise have been their repayment timeline.
Person A's responsibility for their obligation has set them back $30k, while Person B's lack of responsibility for making payments has put them ahead $30k. Maybe we shouldn't call it a direct punishment, but they're certainly coming out of the scenario worse off than their counterpart.
>Maybe we shouldn't call it a direct punishment, but they're certainly coming out of the scenario worse off than their counterpart.
It's hard for me not to sound flippant when I say this, but -- this is life. As far as I'm concerned, anyone who has the means to pay off their student loans themselves practically won the lottery and they should be thankful they're not totally fucked like those who need the forgiveness.
There's an ugly, underlying impression I get from this discussion that is oddly reminiscent of the "welfare queen" stereotype.
>As far as I'm concerned, anyone who has the means to pay off their student loans themselves practically won the lottery and they should be thankful they're not totally fucked like those who need the forgiveness.
Let me share my personal experience with you so I can try to shed some light on our varying interpretations of what "won the lottery" means. I went to college full-time, four days a week, and was a commuter. I was responsible for my entire car payment, my parking pass, my books/material, and for taking out a loan for tuition. I took it upon myself to get a part-time job while continuing to study and go to class for four and a half years. I then got a full-time job upon graduating and lived very frugally for two years with a huge chunk of my paychecks going towards paying off my car and student loans. The thought of paying interest killed me, and I did everything in my power to put every penny I could afford towards paying down my debt. I didn't go on vacations, didn't spend money frivolously on a new iPhone every year, didn't buy anything that wasn't necessary until my obligations were fulfilled.
Now let's revisit Person B (and to be clear, I personally know a Person B who's a close friend of mine who fits this description). They did not consistently work in college, but partied, went to festivals, took vacations, had a much easier schedule not having to factor in a job. They then graduate just like me. They have a few hundred dollars more every month that can go towards more vacations than I had the option to take, a more expensive car that I could not afford to buy, and more discretionary spending power than I had during that time. They work a job now, but have yet to begin repaying their loans yet (I understand the pandemic was a once-in-a-lifetime situation, but even so, there's a grace period after graduating where you aren't forced to pay). And even when payments resume, they will likely pay the bare minimum each month because they now have the prospect of having that debt potentially forgiven in its entirety.
How do you tell me with a straight face that I won the lottery, and that Person B is actually the one who is "fucked" (as you so eloquently put it) and needs the forgiveness?
Well, that is a fair point. I think the US Government should give me 1 billion dollars. This actually is a Pareto-optimal action too, since I will then have 1 billion dollars and the rest of you will be no worse off. In fact, you will be exactly the same amount off as before.
How about the govt just obey the terms of the agreement they made? This program has been on the books since 2007. Anyone who didn’t use it made their own decision.
It is a case of "me me me" indeed. This is why people support canceling existing loans instead of changing the college tuition/loan system. They don't want to fix things for future generations, they want to fix their own problem with their own student loan and move on.
My master plan is to eventually have 13 graduate level Master's degrees under my belt. Why you may ask? If one is enrolled as a full time "student", the student loan monthly payments are paused. Since, at least for me, I can handle being a full time Master student and also my full time remote-only job, this isn't an issue.
The reason I am doing this is because there is $1.6 trillion in student loan debt; the government is definitely not seeing most of that money. Someone will have to come in and save us all. And well, I am willing to bet 13 master's degrees on this.
I assume you’re joking, but just in case: in-school deferment only automatically applies to federal loans. For private loans, you have to apply and they can reject you or put a cap on the deferment duration. For federal loans, your eligibility depends on income and has an aggregate maximum of $138,500 including your undergraduate federal loans.
It's news in that they're actually unblocking programs which actually had been long legislatively approved paths for forgiveness and were already supposed to have been operating to this end for years.
It's not news in that these are not new categories of, nor expansions of previous commitments to student loan forgiveness.
When you look at the overall stats of student loans, a increasing number of them (a majority!) look like they will be never paid off over their lifetime, and we are still in a situation where if an individual has a small loan problem it's the responsibility of an individual. But if an entire class or multiple-generations (or a big enough individual loan), has problems, then it's a problem for the bank - in this case the US gov't and an even bigger problem of our overall society and providing an sustainable economically competitive skilled labor pool.
It used to be that for PSLF you had to make 120 sequential "on-time" payments and if your loan provider claimed (correctly or incorrectly) that one of them was late then the clock would reset, making it next to impossible for anyone to claim the benefit. A 10-year clock that can be reset at any time by the bank isn't good.
I believe they fixed it (possibly temporarily) so that the clock no longer resets.
This is a partial fix. The full fix would be to have PLSF pay out incrementally, say 10% after each 12 payments.
The real solution is to stop figleafing the problem and have the government handle all aspects of the loans directly without the involvement of any banks.
The government already has a large department of the Treasury that handles this kind of thing.
> Several thousand borrowers with older loans will also receive forgiveness through income-driven repayment (IDR) forgiveness, plus another 3.6 million borrowers will receive at least three years of additional credit toward IDR forgiveness, the Education Department said in a statement.
I think this is the actual news. Although it doesn't state what the selection process is.
I know folks who have worked towards PSLF and ended up getting screwed because they weren't on the right repayment plan. Absolutely devastating to find out you've spent ten years working on something only to have it fall apart because you checked the wrong box once. And apparently this is a very, very easy mistake to make.
Particularly a while ago it was nearly impossible to utilize the program because it was a bureaucratic and underfunded mess. So the number who qualified was effectively zero.
Now it's marginally less terrible and actually forgiving some people's loans.
Specifically, the previous Dept of Ed administration torpedoed the program. When the first class of PSLF candidates hit the 10 yr mark in 2017, 99% were rejected [0].
I hope every single person who is vocal about cancelling student debt, but doesn’t talk about fixing the underlying problems, recognizes that they’re just another generation of unremarkable hypocrites.
It’s a real problem deserving a real solution. Well beyond people just sticking their hands out, saying “gimme!”
You might wonder whether it's actually regressive for people who have college degrees (or who at least attempted to get one) -- overwhelmingly not the neediest people in our society, even if I do sympathize with how terrible our student loan system is -- to be targeted for help from the government!
Why is the government so afraid of allowing new student loans being issued to go into bankruptcy? Wouldn't this solve most issues going forward?
Separate note: instead of loan forgiveness programs, just pay for people's school up front if they go into these public sector jobs. Then if they quit before the end of their contract, they're on the hook for whatever. Same as the military academies system. Free college, 5 years of service, and you're done. I'm guessing they don't because they can weasel their way out of paying the forgiveness later through technicalities / miring the candidates with red tape, and the program is actually in bad faith.
There's a couple reasons why not to do this, primarily flexibility. The program is expressly designed to allow people to move between positions, as long as they remain in a state, federal, local, tribal or 501c3 job. Those jobs also aren't guaranteed, nor is the government obligated to find you a posting.
The program wasn't started in bad faith, spent some time there under the Trump administration where it was effectively non-functional, and is now functioning again.
They should require banks to forgive loans, rather than forgiving Federally-backed loans.
If you require banks to forgive loans (or if you allow loans to be dischargeable in bankruptcy), you create an incentive for the banks to loan money only for college education that results in useful careers. The Federal government is immune to market forces, so forgiving Federal loans just means you encourage the type of college degrees that are not useful.
Not convinced - a sensible bank will look at the likelihood of a person to get a good job after their education, and might conclude that while choosing Engineering over Art History is a factor, there are far stronger factors like
- parents wealth and social position
- wealth of parents of peer group at the university
- skin colour, gender
- propensity for drug alcohol abuse in the family
- heart and other medical conditions that might result in early death
We choose welfare insurance at the state level to avoid / correct these undesirable features of our current society, not to continues them into the next generation
Then the government should handle the loans directly and not involve the banks at all.
All other debt can be discharged in bankruptcy, so the banks have free reign to be racist on mortgages and credit cards, but somehow student loans is the problem?
Also see who asked for student loans to be non-dischargeable hmmm.
You're missing the point of the PSLF. It's intended to provide incentives for highly qualified people to choose public service rather than go into lucrative careers. These are considered "useful" careers, but they don't pay well. For instance, I currently work as an individual contributor platform developer for the US Air Force and I make more than the 4-star chief of the entire Air Force, yet presumably he has more of an impact on the country at large than I do. I believe the president is the only federal employee with a higher salary than me. The purpose of programs like this is to make sure we still have people willing to work for the government at all, given everything else they need to give up to do it.
Personally, I think we should just raise government salaries to be competitive. I'm personally getting sick of being paid 60% of my worth to the private market by my job doing science at the university.
> Some 43.4 million borrowers are carrying about $1.6 trillion in outstanding student loans from the Federal Loan Portfolio, an average of more than $37,000 each, according to the Education Data Initiative.
And yet the content of a college education can be had for free on YouTube. Colleges don't sell education, they sell a credential.
Public policy has been lagging behind technological reality for decades on this one.
I wonder what the pause in student loans has done to contribute toward inflation? I would be paying 200 dollars a month right now, but no way I'm paying 0% interest loans that may get partially forgiven one day.
1. Are paying/had paid their mortgage properly. Usually implies being down to earth and choosing a home you can actually afford.
2. Paid their student loans.
3. File and pay their taxes properly.
4. Have never went unemployed, or better yet, they're self-employed.
5. Never played stock market bets, as they're more conservative and prefer to save money in a predictable way through the years/decades (yes, decades).
6. Didn't get bailed out for COVID as they were not eligible because of 4, or they didn't need it because of 5 and their own savings bailed them out.
They should feel really pissed off right now, with just cause.
This is about a 15 year old program and nothing to do with current political sentiment. Those same people always had the choice of complying with this program as well.
It was a tangential comment and I never mentioned politics, at all. 15 year old program or not, what do citizens who meet all those things I mentioned get in return?
Please don't tell me it is "the satisfaction of knowing that their hard work and taxes benefit others who are less fortunate than them".
I don't view it as getting something in return. They made a choice. The people complying with this other program made a choice. Both choices result in less debt they have to worry about. This leads me to think we're having a different conversation than the one you want to have.
Kid A is the ideal student, never gets in trouble, always send assignments in time and comes out really well in all tests.
Kid B is the complete opposite and is basically a mess (for whatever reason).
At the end of the school year you decide to give both students the same grade. You (could) justify it by saying that this measure is going to motivate Kid B to behave more like Kid A.
Nice, but, how do you think Kid A is going to feel? What if, instead, it makes Kid A behave more like Kid B onwards. You don't want this to happen.
Not only that, but they worked in government or non-profit (under a specific definition of both of these) long-term while making 120 non delinquent loan payments (10 years) only if the loan is a specific type of loan. These people are by government definition not a 'mess.'
>They should feel really pissed off right now, with just cause.
I watched my entire generation party, travel, and generally screw around on free debt for 4 years while I was working my ass off to build a career and barely surviving.
I paid off my student loans each month until I was 34. I did it, and it made me stronger. Making other citizens pay for your loans is selfish, and it will come back to bite the people who accept this largess.
I know every European seems to ask this of every American but what is the resistance to a welfare state? if you look at a government as investing in its citizens like a VC fund, then providing education and medical care is sensible, and some will turn out fine and others will be Bezos and then you can get your investment back via tax.
I am honestly trying to avoid the flame war here - but I do it know how else to frame the question?
The biggest misconception is that America could have a European welfare state if we just taxed the rich. The reality is the rich in America only pay slightly lower taxes than their European counterparts.
In Germany top income tax rate is 50%. In the US, it's 37% if you live in Texas and 56% if you live in California. In Germany long-term capital gains is 25%. In the US, it's 24%. In the US the corporate tax rate is 21%. In Germany it's actually lower at 16%.
The primary difference between Germany and the US is not taxes on the wealthy. It's that the German middle class pays significantly more than the American middle class. A couple with two children, each earning $65k/year will pay 28% of their income in taxes. Then on top of that they'll pay 19% in VAT tax on nearly every purchase. Effectively for every Euro earned, they're left with post-tax purchasing power of 59 cents.
In contrast, the same family in America will only pay 11% of their income in taxes. Depending on state sales tax comes in at 7%, and unlike VAT at most applies to maybe half their budget. For every $1 of income, this American household is left with 85 cents of post-tax purchasing power.
And that's the main difference right there. European welfare states are powered by taxes on the middle and upper-middle that are simply unacceptable to the average American voter. Imagine a politician running on a policy of tripling middle class taxes. It doesn't matter how much single-payer healthcare, free university education, and expanded public transit they promised. Americans would simply never vote for that.
America is a welfare state. If you truly can't afford to go to college, the government will pay for you to go. Look up FAFSA.
If you can't afford medical care, the government will provide it for you. Look up Medicaid.
People pay into Social Security for Retirement, Social Security Disability if you get disabled, Medicare is universal healthcare for anyone 65 or older. Affordable Care Act subsidizes healthcare for anyone else that can't afford it.
I could go on and on and on. There is no black and white - we are just another shade of gray out there.
We see ourselves as a nation of immigrants. Where you came from, perhaps you had a social contract passed down through generations of the history of your people/ tribe/ ethnic group. But you gave that up when you came here.
Americans see themselves as the descendents of their own unique "first generation" ancestor who broke ties with his people of origin and came here to stand on his own two feet. We don't see ourselves as responsible for YOUR first generation ancestor's home country problems or failure to make it here. We may in our newly formed ethnic enclaves take care of each other, but that's opt in. Patriotism to us is about preserving that independence- not a shared lineage. I am generalizing here obviously, but you were asking a kind of zeitgeist question. Hope I help something click for you.
I don't believe it's sustainable. I don't believe it's sustainable here, and I don't believe it's sustainable there either (in fact, as far as I can tell, we've starting to see the cracks in the European welfare state for a while now). We have some welfare state-like programs here - social security, for example, is supposed to provide guaranteed retirement income to the elderly. Both of my grandfathers lived on it for decades before they passed. My father collects it now, but it's not enough to survive, even at his meager standard of living, so he works as a security guard at 72 (and yes, I've offered to let him come live with me but he's too proud to accept). I don't believe that there will be anything left over when I try to collect it in 20 years. If it was actually free, there wouldn't be any reason to be upset, but my social security payments are far higher than what I contribute to my actual 401(k) retirement plan that I do expect to be able to live off of when I'm ready to retire. The welfare state takes everything and eventually provides nothing.
Personally, I’m concerned about our government’s track record of mismanagement and infighting that is detached from the needs of the people. Without that implicit trust, giving them more power is a general concern. Speaking geopolitically, the US military is the most powerful force in history including present day and our economy is the largest globally, which makes us coveted by those who seek to wield power for their own benefit, more so than your average Europe country. If the US were to fall to tyranny, that’d put everyone else at risk. Again, less of that risk with your average European country.
If I lived somewhere like Sweden where there is heavy taxation with equally heavy social benefits, I’d probably be fine with the arrangement and wouldn’t fight it. Sounds nice.
I’m not trying to equate welfare with tyranny, of course. The use of bread and circuses has been associated with the downfall of empires to sway public opinion with a short term good at a long term cost. If you start disrupting our major economic systems like that, we’re more likely to dissolve and those with power would use that weakening to their advantage.
> I’m not trying to equate welfare with tyranny, of course.
But that's exactly what your first paragraph did, at least in the case of the US.
Why do you think welfare "works" for Sweden and would not work for the US? Is Sweden tyrannical?
Expanding government power isn’t inherently tyrannical. But tyrants expand government power for their own benefit.
There’s nothing inherently tyrannical about bread or circuses (unless you’re gluten intolerant or fear clowns). Are you familiar with the use of bread and circuses in the Roman Empire?
“The evil was not in bread and circuses, per se, but in the willingness of the people to sell their rights as free men for full bellies and the excitement of the games which would serve to distract them from the other human hungers which bread and circuses can never appease.”
Besides that, I think I already addressed your point if reread with good will.
It's worth noting that during the middle republic and early imperial years (say the 200-200s) Rome was possibly the most unequal (but still successful) society history has known. The senatorial class owned pretty much everything - and they gave it away on a daily basis in return for power - vote for Brutus and get bread to feed your family. It's hard as a free Roman to get a job working for Caser when old Julius has slaves for everything he can possibly need. The jobs available were basically legionnaire or subsistence farmer (the big farms were worked by ... slaves). If people today think immigrants are coming to take their jobs, just imagine how slavery looks
As many liberal policy wonks (not a pejorative) will point out: the American people love their welfare benefits! A common claim is that "A majority of Americans support $POLICY! It polls so well!", wherein $POLICY is broadly a sub-component of "welfare state". I sometimes hear it said with an undertone of exasperation: Why can't policies that are so self-evidently popular get enacted into law?
The challenge isn't getting people to say "Yes" when you ask them "Hey do you want all of this great stuff?" That already happens, per the above popularity of individual benefits.
The challenge is getting people to say "Yes" when you ask them "Hey do you want to pay for the government to give you all of this great stuff?" Those two details: higher taxes and government administration, are what erode support for these policies.
The median US citizen believes that "government run" is a synonym for any of dozen negative adjectives: wasteful, won't work, abused by the rich, bureaucratic, untrustworthy, and so on. Are those true or false in any given instance? Would a private sector alternative would avoid those negatives? The specifics do not matter when people are acting on deeply-entrenched, life-long perceptions.
As for why that perception came to be? That would be a historical thesis of its own, and might be tangential to your question.
This article is about a government program managed so terribly, they did not keep track of payments. You had to call in and trigger a review to be forgiven. These 40k loans forgiven are essentially the lowest hanging fruit.
Why does every European who wants to be successful move to the US? Why is almost every innovative and successful company from the US?
Providing free stuff to layabouts isn't a recipe for success. These "investments" will never pay off. The way to incentivize economic success is via competition.
Unfortunately the US is already far down the path of handouts and participation trophies, and has nurtured an utterly entitled generation who think everything should be handed to them.
The problem is that many US universities are private. So when the government puts money into loans and grants for students, the universities just raise tuition, rather than expanding to accept more students. In the end it's just a transfer from the public to university administrators. To really expand access to education we'd have to have many more public universities.
And anyway, the problem with education isn't that it's not available to enough people. Smart, motivated kids can get a university education even if they're poor. We have enough academics and highly-educated workers for our economic needs. The problem is that it's become a class marker. Many, many people don't want more degrees out there, because it would make their own degree less valuable. Others are desperate to get a degree at any cost, not because it improves their career prospects, but because it confers high status. So taking on huge debt for a useless degree is fine, and in fact good, because it's conspicuous consumption. Of course, debt sucks, so once they have the degree, loan forgiveness is very much in their interest, but not publicly-funded university.
On the larger question, I think it's a cultural thing. America was settled by people leaving stifling societies to go it alone: Europe at first, then the American establishment on the east coast. The frontier is gone, but that value system persists, and self-reliance and independence are hugely important to many people in the US. There's a pretty good argument to be made that American democracy arose because the wilderness was right there and if they didn't get a say in government, people would just move beyond its reach. That culture is has served us well, but we've run out of frontier, and we're starting to feel the social pressures that Europe has had for millennia. There's no escape from the state, so the way to get ahead is to work the system, get a larger share of the pie rather than growing it, and so on. The pushback to that is to demand more fairness from the system, ie, a welfare state.
> The problem is that many US universities are private.
This is false. The cost of tuition at public universities has grown faster over the last 20 years than at private universities, for both in-state and out-of-state students.
The average tuition and fees at private National Universities have jumped 144%.
Out-of-state tuition and fees at public National Universities have risen 171%.
In-state tuition and fees at public National Universities have grown the most, increasing 211%.
I stand corrected. Clearly being private is not a factor if public universities are leeching off the public even more. That amounts to corruption in university governance. <sigh>
We don't want others not like us to get benefits, especially if it's paid out of a common tax pool. Even if it's not, if we're not eligible for the same benefits. The US population has had decades (almost centuries) of us vs them politics within the country.
What the US has is more like "I'm fine with being screwed as long as the others are too" kind of mentality. Look at healthcare. There would be people rejecting Obamacare just because it has "Obama" in its unofficial name, then not be able to pay for treatments.
There is an additional layer to this that some "blue collar" workers feel it is unfair to tax them for education benefits they don't utilize as a working class.
Hopefully we can reframe the debate to include technical skills training like this in addition to university to be inclusive of all of the modern skills people are going to need and that we as a nation need to invest in.
I don’t have an inherent problem with universal higher education or state-sponsored welfare, but the US federal government manages to bungle things. In the case of the federal student loan program, tuition costs have tripled since the early 90s and students who otherwise wouldn’t have gone to school are in many cases saddled with debts on which they can’t default. For many Americans, this doesn’t make for a compelling case for more government.
I am fully on board with this idea.
The government provides education for people who want it.
They better themselves, they better the economy and taxes.
A side benefit is that educated people also better the human race as a whole.
Sure. As someone with a PhD and a few masters in STEM fields, the holy grail of "useful" degrees a la HN here, I trust the academic institutions to vet what is a "valuable" PhD topic on a societal level. If you don't, we have bigger problems than your snarky attitude about the relatively benign amount of money spent on "useless" PhD topics. When in reality the large majority of waste on campuses is on buildings, administration, and other massive Uni programs being driven/subsidized by unfettered access to student loans to the undergraduate population, who will then never be free from those shackles.
Why are people so focused on this straw man? The problem isn't bad humanities degrees or programs. At all. The problem is the cost of higher ed and the number of people going to get a degree that is effectively a certificate to work in the US economy. Then people needing to take out loans to pay these gate-keepers.
A strawman is an intentional misrepresentation of a proposition that is set up because it is easier to defeat than an opponent's real argument.
So where's the strawman? People do get degrees that many people and the labor market itself finds useless. Lots of people get them! No strawman.
The problem is the cost of higher ed and the number of people going to get a degree that is effectively a certificate to work in the US economy
The cost of higher education has been driven by the misguided attempts by the government to make college affordable. As for a degree being necessary to work in the U.S. economy - I know first hand this is not the case. At all. But trying to convince someone with a PhD and "a few masters" of this fact is going to be as successful as trying to convince an 80 year old life-young devout follower of a religion that they're wrong about their religion on their deathbed.
Not trying to vet every single edge case in my five sentence vision statement.
For one thing PhD's teach statistics no matter what's studied...and if more people...you included....were good at statistics to evaluate good policies, the world would be much better off.
>if you look at a government as investing in its citizens like a VC fund, then providing education and medical care is sensible
Be careful what you wish for. if the US was a VC fund, they'll have to not invest in every company they come across and perform due diligence, which probably means excluding disadvantaged people with poor academic records.
We're actually quite fond of corporate welfare but loathe individual welfare. States will try to out compete each other to offer subsidies and tax relief for a giant-corp's new facility but shun much less expensive assistance for poor families. Golden shovels win re-elections! [0]
This framing is on its head because America already has a very generous welfare state and hands out money much more liberally than many European states. Including in education which is why there's such an inflation in education cost. The US even has a more progressive taxation system than most European countries.
In Europe education is largely public and thus its subject to budgetary concerns. It's why Germans go to vocational training and have half as many people in tertiary education, there's no degree or cost inflation.
People in the US who aim for European policies need to understand that it consists not of liberal fiscal policy but of robust public services provided by and largely paid for by the middle and working class.
One question for the economists, how can U.S fight inflation if all I see on the news is the government printing money? As Brazilian I got used to that, the government create popular projects in order to increase the public opinions but it only generates more poverty’s.
Obs: I’m Brazilian and I really don’t know nothing about USA economy and politics but seems the same that happened here.
So tired of government meddling in people's affairs.
So if you work for government you are eligible, in private business not!
That money is going to come out of someone else pocket. In this case it’s going to be more inflation and more taxes.
Where I live (Canada) the system is so complicated that 95% of people don’t even understand how it work. We have to run simulations of typical cases to trace graphs and make a decision.
I don't see allowing bankruptcy as a problem. Companies are in the business of lending to students, that doesn't dry out overnight. There are periods of more risk on, and risk off so there would also be cycles. A car analogy: cars can be repossessed but minus covid area a used car tends to be a bad investment (not an investment at all) - a money looser and even on repossession ends up at a loss. Yet banks still lend out to cars. What happens when banks don't lend? Dealer incentives and financing. Colleges are not going to simply put their hands up and say, well students can't afford us anymore. Colleges, which are in the business of selling degrees, will evolve and find a way to lend money. Their main target market depends on getting these loans.
Whether it be healthcare, housing, or education, the government always responds to rising costs by subsidizing demand rather than helping increase supply or fix incentive structures. Really frustrating but almost inevitable because subsidizing demand is the one "solution" that sounds good to almost everyone involved. The suppliers make more money, some consumers benefit short-term, few understand that this just drives prices up further. Anyone have ideas on ways this cycle could end?
(I realize this article isn't what it seems, but I'm still taking the opportunity to discuss this issue)
When you say "cancelled", do you mean "told the creditors to eat shit" or "we paid the creditors off"? Because everyone thinks #1 is happening, when usually it's #2.
And the student loan debt cycle continues. I'm all for canceling student debt if it is attached to a longterm plan to reduce the cost of higher education so that the next generation is not strapped with the same problem. My cynical side thinks the higher education lobby is deeply entrenched with the Federal Government and loves the never ending conveyer belt of young adults with large bankrolls provided by government backed debt.
All of this seems like a problem of leverage: the government's fiscal policy encouraged people to be levered up, then the fed's monetary policy allowed people to be levered up.
The "value" for any given thing (housing, college) remains similar, but more leverage for everybody means that same thing gets proportionally more expensive.
I don't see any way out of this except for popping the debt bubble.
I have an unpopular opinion that forgiving loans hurts those that did not go to college because of ability or cost. This font read to me like a blanket forgiveness is object to though.
I understand the support from those who’ve already paid off their loans but this does not apply to those who did not go. Also I suspect it depresses wages as people will not need to demand higher wages and this seems to be used to funnel them into government jobs.
One technical question I've never understood about this debate: when the government "forgives" loans like this, what are they actually doing? Is the government paying the creditors off on the debtors' behalf (like a bailout)? Or are they simply declaring a refusal to prosecute the debtors?
I wont support any loan forgiveness. I worked my but off to work fulltime and pay tuition at the sate university. It took 6 years of hard work for a 4 year degree. I graduated with no debt. That my hard work might make me no better off than those who took the easy route, infuriates me.
generally ... American policy is designed by the wealthy of the wealthy and for the wealthy. So unless a problem is effecting the wealthy is has a low chance of getting fixed.
This is fine but I would really like to see an effort to get the rising costs under control. Otherwise colleges will just suck up more money the same way health care is happy to accept subsidies while raising costs.
Canceling student loans will never happen. It’s crazy how so many people have hung their hopes on this event occurring. To the point where they will likely die or become very poor if it doesn’t happen.
They're not forgiving student loans so much as forgiving themselves for not administering them correctly, and then taking steps to rectify the years-long errors.
This is mainly a policy called Public Service Loan Forgiveness which says that IF you make 120 payments on schedule and on time (ten years) AND you work during that time for a qualified 'public service' job (think government, teacher, non-profit) THEN after 10 years the government will pay the remainder of your loan.
There's some other stuff but the majority of it is that, a policy that's been in place for many, many years, but has been a bureaucratic hell to correctly navigate (you need to check each year, perhaps each month, that your payment has been recorded correctly, and reported correctly, etc).
This is not general loan forgiveness by a long shot.
Just to add, the program was a complete failure. 99% of applicants for it were rejected. This news is just that they are trying to fix it, from my understanding.
By working for the government. People must be rewarded for taking jobs that pay more on average, have better benefits on average, and are much harder to be separated from on average.
Sounds ideal in principle (principal?), but low interest/risk on student loans is what allowed tuition to inflate well beyond general inflation in the last several decades.
Which is why they need to allow bankruptcy. If the answer is "students will just declare bankruptcy after graduation" then at least the moral hazard is on the other foot.
I think the solution is to allow student loan debt to be discharged under normal bankruptcy proceedings, on one hand, and to return to c. 1980 costs for a university education, on the other.
The latter requires cuts of administrative salaries across the board in the American higher education system. For example:
> "The university’s highest paid chancellor is UC San Francisco Chancellor Samuel Hawgood, whose salary increased from $795,675 to $819,545. At the bottom of the pay scale are the chancellors of UC Santa Cruz, UC Riverside and UC Merced, whose salaries increased from $394,655 to $406,495."
In contrast, the governor of California makes $220K or so in salary. In 1980 UC tuition was $300 for the academic school year, plus a student services fee of $419. That sums to about $2500 a year inflation-adjusted today. Today's UC tuition is about $12,500 per year. On top of that, a minimal $20,000 per year for rent + food is tacked on. So if this is all paid by loans, ~120K debt is created for a four-year education - unless you have quite wealthy parents of course, then you get out free as a bird.
In reality what's going on here is the conversion of the American 20th century education system - which put America on the leading edge of technological development for over half a century - to the British Empire education system, in which a small aristocratic class attends exclusive colleges to get networked into the posh system of aristocratic class privilege. Everyone else just becomes a victim of the parasitic investment capitalist sector which collects interest on the debt for the next 20 years (oh yes that includes feeding into 401K boomer retirement plans, so there's that lovely angle too).
I am a liberal, but I must say the President Biden is the most chicken-sh@t president in my adult lifetime when it comes to breaking virtually all campaign promises. I voted for him and regret it.
Can Biden forgive my mortgage while he's at it? Why should I be in debt for 30 years, it's very inconvenient. Not everyone has the money to get a fancy university education, even with loans and other financial assistance, so we should be cancelling debt across the board. We should nationalize the banks and print money until all the debt is gone. Or it's racist.
He probably won’t forgive your mortgage but he (and virtually every politician of either party) will give you plenty of free money through the continuation of all the regressive policies that favor property owners to prop up the economy via the “property values always go up!” con game.
So, I am not sure that you need to feel too aggrieved. Cheers!
