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.
--
> 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.
