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Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? I made the choice to go to a slightly less prestigiou

Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? I made the choice to go to a slightly less prestigious school so I wouldn't have to go into debt for college. I also worked all through college to pay for my expenses. Should I now be punished for that decision? Why should we make people's financial mistakes consequence-free? I think the government should get out of the student loan industry entirely: stop subsidizing them and making interest rates a political issue. Let the market signal which degrees are valuable and which aren't. But also make them dischargeable in bankruptcy. At least then there would be a consequence for people deciding to take out expensive loans for education.

toomuchtodo 10y ago
TL;DR The health of the economy is more important than your moral high ground. Same reason we let people walk away from homes (or not walk away, simply not be able to afford them), but we'll still give them a mortgage 3 years after their foreclosure; the economy needs the monetary velocity to survive.
- bsbechtel 10y ago
  >>When the Fed could just poof more money into existence? I hope you realize it doesn't quite work like that.
  - toomuchtodo 10y ago
    I removed that part because it wasn't relevant, but it does work exactly that way. The Federal Reserve simply credits the bank's reserve account from thin air. Fiat currency is a shared delusion of value with invisible hands exerting forces to enforce certain behaviors (the Federal Reserve attempts to stoke inflation in order for the economy to reach full employment, arguably unsuccessfully, while technology and cheap Chinese labor is having enormous deflationary effects, with the result being real estate and equities turning yet again into asset bubbles); never be fooled that we're somehow "losing" value by forgiving debts at the national government level.
    - dragonwriter 10y ago
      > Federal Reserve attempts to stoke inflation in order for the economy to reach full employment No, the Federal Reserve attempts to provide easy money to spur employment, balancing that goal against the competing goal of controlling inflation. The Fed does not try to stoke inflation to drive employment (especially since inflation doesn't drive employment, though employment can help drive inflation.)
      - toomuchtodo 10y ago
        You're right, I misspoke. The Federal Reserve, through its mandate to obtain full employment conditions, creates inflation as a side effect.
        codyb 10y ago
        Inflation's been really low recently.
        toomuchtodo 10y ago
        We've barely scratched full employment. Who knows how long we'll be able to maintain it. The Fed has no room to cut rates if a slowdown occurs without going negative and several economic indicators are pointing to a slowdown.
  - CyberDildonics 10y ago
    Right. "Buying 0 interest treasuries" is what the Bank of Japan calls it.
    - toomuchtodo 10y ago
      Interesting tidbit: We're way passed that with the BoJ. They're the majority shareholder of 55 companies on the Nikkei. http://www.bloomberg.com/news/articles/2016-08-14/the-tokyo-whale-s-unstoppable-rise-to-shareholder-no-1-in-japan http://www.bloomberg.com/news/articles/2016-08-14/the-tokyo-... That's right. The Bank Of Japan is printing money to prop of the value of top companies trading on Japan's exchange. Think about the macroeconomic causes and consequences of that.
      - ZoeZoeBee 10y ago
        Even Better think about the consequences of Japan's aging population relying upon the Japanese Government Pension Investment Fund, being propped up by the JCBs purchase of equities. >The GPIF’s results are seen as a gauge of broad market performance, as the fund owns nearly 1% of global equity markets and more than 7% of the Japanese stock market. Domestic and foreign equities comprised 44% of the portfolio at the end of March, below its 50% target weighting for the asset class, the fund said in a statement. http://www.wsj.com/articles/japans-gpif-pension-fund-suffers-worst-year-since-2008-financial-crisis-1469773998 http://www.wsj.com/articles/japans-gpif-pension-fund-suffers... There is this can they keep on kicking, hoping to out run the "current" malaise but you can't escape the Great Graying when your economies are dependent upon constant expansion.
  - ArkyBeagle 10y ago
    Google "William F. Hummel money" and read the whole thing. Technically, money is created when a bank writes a loan, but the Fed does meta-meta(-meta?) money creation on a global scale.
- morgante 10y ago
  > Same reason we let people walk away from homes (or not walk away, simply not be able to afford them) Like I said in my comment, I recognize that there needs to be some option for people who can't possibly repay their student loans. Defaulting on your mortgage is not consequence-free: you lose your home and hurt your credit. We don't let people just forgive their mortgages and keep their homes without hurting their credit, but that's what a lot of people are advocating for student loans. We should treat student loan debt like any other debt.
  - deegles 10y ago
    How would one repossess an education? Isn't that the reason student loans are not dischargeable?
    - morgante 10y ago
      Like toomuchtodo mentions, we could treat it like other unsecured debt (like credit card debt). Just because it's unsecured doesn't mean we shouldn't be able to discharge it with bankruptcy. Get the government out of the loan business and the market will correct itself. You won't be able to get a loan for a useless degree and if you end up being unable to pay off your loan you can go through normal bankruptcy proceedings and their consequences.
      - ChemicalWarfare 10y ago
        Upvoted. But. The argument against this could be that due to the unsecured nature of the six-figure (potentially) debt the free market rates will be insane effectively reducing access to higher ed for those who can't afford it without the loans. Then again, if less ppl could afford a degree in Queer Musicology (does exist - https://www.musicology.ucla.edu/mission-and-history-1 https://www.musicology.ucla.edu/mission-and-history-1) or let's say Environmental Studies etc maybe the supply and demand would even out so that'll be a good thing.
        dragonwriter 10y ago
- gozur88 10y ago
  >TL;DR The health of the economy is more important than your moral high ground. Will the economy be more healthy? I see little evidence for the assertion. It's possible the damage done by all that debt cancellation will be greater than any benefit.
  - toomuchtodo 10y ago
    Student loan debt that can't be discharged drags down discretionary spending, spending which drives the economy. Cancelling the debt might cause a negligible amount of inflation. http://www.businessinsider.com/3-charts-explain-the-effect-of-student-loans-on-the-economy-2015-5 http://www.businessinsider.com/3-charts-explain-the-effect-o... http://time.com/10577/student-loans-are-ruining-your-life-now-theyre-ruining-the-economy-too/ http://time.com/10577/student-loans-are-ruining-your-life-no...
    - ArkyBeagle 10y ago
      The projected amount of inflation probably still won't push growth into the Fed's target.
- nstj 10y ago
  What does this have to do with the velocity of money? If the students continue to pay off their debt then the money flows to their creditors, who will use put it to work in the economy. If the debt is forgiven then it won't go to their creditors and will instead go to those who had student loans who will similarly spend it. Is there another reason that forgiving student loans improves the health of an economy?
  - ArkyBeagle 10y ago
    For a student, they can either spend money on educational debt service or they can buy other things. "Buy other things" presumably increases monetary velocity.
    - nstj 10y ago
      But if the investor receives the cash from the student as payment of their loan, they have to do something with that cash too (buy dinner at Per Se, grab a new Vertu phone, lend the money to a startup so that the startup can spend the money on consuming goods and services, etc)
      - ArkyBeagle 10y ago
        Presumably, the Fed will send new money to Treasury for this, which will actually inflate the currency just a wee smidgen ( and in an economy in which the Fed's growth targets go chronically unmet this is no sin - quite the opposite). Otherwise... While there is an element of truth to that, see "the marginal value of a dollar". You "spend" your ten millionth dollar quite differently than you spend your ten thousandth. Some of these guys for whom money is simply a means of keeping score won't change their consumption patterns much no matter what. If you want to increase velocity, the way to do it is cause more cash to be in the hands of broke people.
        nstj 10y ago
        My bad, that makes a difference (ie: if you're increasing the monetary base, there will indeed be a change in spending - and theoretically it could even result in a lower velocity of money, as the money base might increase proportionally more than the increase in GDP). I didn't realise that Treasury actually held this paper. Still, I'm hesitant to draw the conclusion that giving cash to someone with a high MPC results in a markedly higher amount of consumption/expenditure in the economy, as if alternatively that cash was invested by someone with a high MPS it would be eventually spent anyway. Of course there would be some frictional element to this (money needs to be transferred when invested, etc) but I posit that more is made of this than should be.
jonahrd 10y ago
You may be right that it's a poor financial decision, but I still hope to one day live in a country where people can pursue education in any subject matter (not just STEM/other money makers) for the pure purpose of educational fulfillment. That can only be done with a system that helps pay for education instead of letting the market decide which degrees are most valuable in terms of pure capitalistic measures
- outside1234 10y ago
  Let me know when you find the hole in the ground that is shooting money up into the air that enables us to have luxuries like this. Frankly, we have thousands of other problems, highlighted by basic health care, that we should probably prioritize first.
  - white-flame 10y ago
    Note that this is literal in some cases. Norway, being one of the major neo-socialist successes, is also a major oil exporter in the region. They have holes in the ground shooting money up that help enable social programs.
    - friendlygrammar 10y ago
      >neo-socialist This isn't a word and Norway isn't socialist.
      - the_watcher 10y ago
        It has a Wikipedia page, a Wiktionary page, and copious references to it by well known publications.
        friendlygrammar 10y ago
        https://en.wikipedia.org/wiki/Neosocialism https://en.wikipedia.org/wiki/Neosocialism Clearly the two "well known" publications (the most preeminent Marxist journals) listed in that wikipedia article and the fact that the wikipedia article's definition of neo socialism has absolutely nothing to do with Norways economic model point to the fact that the parent comment definitely didn't make up that word out of thin air. Norway is not socialist, neosocialist, or whatever dumb made up "socialism" you people try to come up with. Also something having a wiki page on any website and being used in a couple of journals does not make something a term/word. It only indicates that someone wants it to be a term/word.
viraptor 10y ago
I agree with the conclusion, but: > other people's bad financial decisions? This is different than someone taking a bad loan on their own. This is the case of your parents and grandparents, your government, the schools, the newspapers, etc. all effectively telling you that it's a good idea to invest in education. So good that in a country that loves its liberties and independence so much people will fight against public health care, the government will do the work to guarantee that you can get your education loan. Surely they can't be all wrong... I cannot honestly blame people for believing the lie in this case.
- morgante 10y ago
  > Surely they can't be all wrong... I cannot honestly blame people for believing the lie in this case. I absolutely can. I grew up listening to all those same messages and hearing all the same things. I also realized that it might be a good idea to do some college research and to apply for various scholarships. High school seniors aren't babies. If they're good enough to get into a college, they should be smart enough to do the minimal research which it takes to find out which degrees are valuable and which aren't. There are tons of resources online to learn about this stuff.
  - ant6n 10y ago
    Bla bla I'm a more rugged individual than others... Screw everybody else!
    - nec4b 10y ago
      So your solution is to screw him, because he was prudent?
- wang_li 10y ago
  > This is the case of your parents and grandparents, your government, the schools, the newspapers, etc. all effectively telling you that it's a good idea to invest in education. I'm pretty sure that absolutely no one anywhere tells their kid, go to Columbia University, live full time in Manhattan, take an extra three years to finish your bachelors, study pottery making, live entirely off of student loans. Aim for at least $400,000 in debt when you finish. No one ever says that. Ever. (As a random data point, the average student debt in 2015 was $35,000. That doesn't seem like an insurmountable bill.)
metaphorm 10y ago
> Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? you've got a serious lack of perspective if that's what you think this is
- pjschlic 10y ago
  Could I ask for a little clarification about your critique? I understand what his perspective is: socializing the cost is a moral hazard (people will make different decisions if they don't have to pay the cost of them). That's the perspective I assume GP has, as I feel similarly. If what you are implying is that the eventual result of non-forgiveness is access to education only for the wealthy, I would disagree - there are other options, none of which are perfect that I'm aware. That said, I'm trying to figure out what reasoned argument you might be making with this statement which might be an exercise in futility.
  - metaphorm 10y ago
    The "moral hazard" argument holds very little water with me in this era. We've bailed out big banks despite the moral hazard, because it was necessary or else the consequences would have been ever worse. I think a similar argument is applicable to student loan debt, except that student debtors are a much more sympathetic and deserving beneficiary than big banks ever were. The simple truth is that the world isn't a fair place and doing the right thing is not the same thing as doing the fair thing. Fair is "everybody gets treated equally". That just isn't how things work in the real world. Right is "to the best of our ability, we try to help people get what they need." That's something we can really aspire to. Doing the right thing.
- refurb 10y ago
  That exactly what this is. Person A goes to school, takes out loans, diligently pays them back. Person B does the exact same thing, but gets his/her loans forgiven. How is that fair?
  - joshkpeterson 10y ago
MrQuincle 10y ago
Schools can charge a lot because other people pay a lot. As individual you cannot single-handedly decide to pay less. Compared to Europe the education system in the US looks like a system that is trying to get as much money out of young adults as possible rather than getting as many people as possible an affordable education.
- morgante 10y ago
  There are vast differences in the cost and benefits of different degrees. Nobody forces you to go to an expensive, low-benefit university. In fact, there are lots of free calculators which will show you the expected earnings and cost of different degrees. You can single-handedly decide to go to a cheap community college for the first 2 years.
  - tuna-piano 10y ago
    But why even care about cost at all if college will be free anyway (loan forgiveness)?
  - MrQuincle 10y ago
    My wife went to Ohio State, and although its tuition is "only" 10k a year, compare that with 1k overseas. If we will have kids the question where they get their education is a nobrainer. Apart from that she also went to Columbia University. Totally overpriced in my opinion, but it made her really happy. Because of her decision back then, now, as a couple we have a "second mortgage". Not all financial decisions in your life are under your own control.
- beachstartup 10y ago
  > Compared to Europe the education system in the US looks like a system that is trying to get as much money out of young adults as possible rather than getting as many people as possible an affordable education. the private college system is what you are describing. the community college and public university system does exactly that, but nobody talks about it, because it's un-glamorous and un-dramatic.
WheelsAtLarge 10y ago
Bad financial decisions are nothing new. People are constantly getting loans for things they can't afford like homes, cars, credit card debt and so on. I used to feel the same way as you. But we need to stop loading young adults with debt that can never be dismissed. Young adults are easy prey. Student's are for the most part clueless on what it means to be in debt without being able to pay for it. Mostly student's are desperate to afford their dream school or study for the one profession that will increase their pay check and are willing to sign a simple contract to get it. Luckily some of us know early on that we must get trained in a marketable skill to pay back the loan. Greek studies or French literature will not cut it these days. Not all of us are that lucky to know it. We need to look at the lenders and schools too. They don't care who they lend to because they have a guaranteed repayment. This leads to predatory lending for lenders. Schools don't care what they teach. This leads to nice to know classes. They will always find student dreamers that will major in (name you silly major here.) The supply and demand curve has gotten out of wack. Maybe only certain majors and schools can be eligible for loans as a start. Also, how is it that a student can go to school from K-12 and not have a skill. High schools need to be responsible too. I took a year of Calculus in high school. It's nice to know it yet it has not lead to a pay check. I'm sure there are other more productive ways to spend a year of school. Indebted students are a symptom of the bigger problem on how to train society's future workers. It's time to do something about it. Debt forgiveness and a reform to the educational system is a great place to start. BTW, free higher education is not the answer. Look at what happens to the K-12 graduates. Free higher education will only extend that system without much results. Yes, student's are stupid and it sucks that some will get a free ride but they are only a part of a bigger problem. We need to look at the problem more broadly.
- morgante 10y ago
  > Student's are for the most part clueless on what it means to be in debt without being able to pay for it. I give students more credit than you do. If you're capable of going to college, you should be capable of understanding compound interest. > The supply and demand curve has gotten out of wack. I agree completely. Get the government out of this business and we'd see realistic supply and demand. It'd be much easier to get a loan for a CS degree and a degree in CS would cost a lot more than one in English literature. Instead, we have the ridiculous status quo where the latter costs almost exactly the same as the former despite vast differences in value.
mgkimsal 10y ago
"for other people's bad financial decisions" Why is making loans to people that have, statistically, a very low chance of paying off somehow not also a "bad financial decision"? We pay for "bad financial decisions" regardless of who makes them - debt forgiveness for individuals or bank bailouts when they get in over their heads. Banks only lend for education because it's not dischargeable - there's no penalty for the bank making a 'bad decision' because they'll get their money one way or another. Yes, make all student debt able to be discharged in bankruptcy, and we'll see a different dynamic play out. However... there are more predatory lenders out there that specifically target the newly bankrupt so... it may not 'cure' all issues, just shift some of the burden around. EDIT: had meant to add that we already pay for people's bad health decisions via insurance pools, and we already pay for people's bad life decisions via prisons.
- dpark 10y ago
  > Why is making loans to people that have, statistically, a very low chance of paying off somehow not also a "bad financial decision"? It's important to recognize that you're talking about the federal government and not really banks. Whether it's a bad decision to issue student loans to people who are unlikely to pay them back is irrelevant to the parent question about fairness. The government doesn't have money of its own. It has your money, and my money. There is no scenario in which the government gets penalized for poor lending practices. The citizens get penalized, and that's why people who were conservative with their educational loans and expenses tend to be less than impressed with the idea of writing of a trillion dollars in student loans. That trillion dollars is largely going to come from the pockets of people who aren't carrying student loans.
  - Blackthorn 10y ago
    When I took out my student loans it absolutely was the banks. Federal takeover is only a recent thing.
- morgante 10y ago
  > Why is making loans to people that have, statistically, a very low chance of paying off somehow not also a "bad financial decision"? I agree that the government shouldn't be making bad loans to people who are unlikely to pay them back. In fact, that's exactly what I said in my comment: the government should get out of the loan business. Unfortunately, loan forgiveness would mean me (a current taxpayer) having to pay for the past poor decisions of students. > We pay for "bad financial decisions" regardless of who makes them - debt forgiveness for individuals or bank bailouts when they get in over their heads. Banks pay significant penalties for bailouts, while people seem to want debt forgiveness with 0 repercussions. Not to mention this whole issue of banks is orthogonal because most loans are from the government. If we let the bankruptcy system handle it, people could get out of their loans but there would still be consequences.
deleted 10y ago
[deleted]
ocschwar 10y ago
"Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions?" Bad financial decisions that they made at age 18 with heavy pressure from everyone around them? I got bigger fish to fry.
thowawy91316 10y ago
You're not alone. I graduated college a few years ago. My parents made too much to qualify for need-based aid, but too little to be able to actually afford it (living in the NYC sphere, you can earn decent money and still struggle). I too picked a lesser-tier school because it was more affordable. My parents paid for my food, and the occasional rent payment, but the rest was on me. So, I took out loans. I started college in 2006, and graduated in 2012. Why did it take me so long? Partially because I switched majors to one that would yield a stronger career (read: tech), and partially because I worked my backside off for years, including a full year away on an engineering internship. I worked 20+ hours each week during school doing remote engineering so I could graduate without debt. I regret working so much. Some of my grades suffered because I was oversubscribed, and the work time meant I didn't have much of a social life. I applied for every merit scholarship for which I was eligible, and 33% of my college expense ended up being paid for by one I was fortunate to be granted. The paid-for months were the best. So I agree with the question: Why should other kids have it easy when I busted my ass? My answer is nuanced. Kids who coasted through school on piles of debt while enjoying the ample time it afforded should not get away scot-free. Nevertheless, it is in society's best interest to help them out. Like it or not, we live in a capitalist and consumer-driven society. Debt is holding people back, as the WSJ article described. We all benefit when people can get out from under their debt and contribute, and we also all benefit when everyone is educated (even if it costs each of us something). Society has a right to expect something in return, however. My college scholarship was from the federal government, and it came with a service requirement. It was a fair deal. They paid part of my way, and I owed them part of my time. I worked in a job I picked that was relevant to their interests, and contributed to their cause, while starting my career. Both sides won. My ideal solution would allow citizens to dispel student loans through public service. Unlike making student debt eligible for bankruptcy, public service wouldn't be punitive. The deal would be that you have give back to society if you want society to have your back. We should bring back the Civilian Conservation Corps, and the Works Projects Administration. We have crumbling infrastructure? No problem: put graduates to work fixing it. They can earn minimal wages while getting student loans reduced for each month worked. They'll dispel their loans, have a job (an issue for many), learn practical life skills, and we'll all benefit from public works that make the country stronger. We can have shining bridges, beautiful parks, and an educated citizenry with the agency to move forward and pursue their higher ambitions. Some countries have mandatory military service. Is asking for a few years of service so much for those who want to dispel their loans?
brianwawok 10y ago
So I don't weigh 600 pounds and smoke. But I have to pay higher health insurance premiums than I rightfully should. Why don't they get consequences? It's a tricky problem. To both provide consequences and support the weak amoung us.
- morgante 10y ago
  > So I don't weigh 600 pounds and smoke. But I have to pay higher health insurance premiums than I rightfully should. Why don't they get consequences? Moral hazard and consequences are exactly why smoking is one of the few things which are allowed to affect premiums under ACA.
  - brianwawok 10y ago
    But overweight is not.
GarrisonPrime 10y ago
I agree. I'll just say though, that when jobs are very scarce, people are broke, and everyone and their brother keeps saying "get an education to improve your job prospects", then what do you expect the swarms of unemployed young people to do? We should absolutely stop subsidizing this craziness though.
- morgante 10y ago
  > I'll just say though, that when jobs are very scarce, people are broke, and everyone and their brother keeps saying "get an education to improve your job prospects", then what do you expect the swarms of unemployed young people to do? Get a degree in something useful (ex. CS) instead of political science or musical theater.
branchless 10y ago
The problem is the credit. The state underwrites all loans so more people go to uni. It reaches a critical mass where all employees start demanding a degree before you can even speak to them. At this point would-be-graduates know degrees are often not worth it but they become a toll tax. You have to pay for the degree or you can't play. Really I don't blame young people for this. There are too many degrees and too much money is being created to pay for them. The state loves this, it creates lots of money and it ties people into debt which seems to be the entire aim of western states now as they want to work people hard all the time. If you attain financial independence through non-debt you might decide not to work 40 hours a week. Then the establishment can't cream off your labour, and they hate that.
stevenkovar 10y ago
I think it's fine to subsidize education through government programs. Instead, remove the standard of requiring certain levels of education. Perhaps require industry-specific credentials that can be earned through exam or internship for most jobs. College should be about personal exploration over career preparation—at least in the bachelors level. Students can complete credentials as part of their final semester Senior curriculum or on their own time.
- michaelbuddy 10y ago
  Apprenticeships.
  - stevenkovar 10y ago
    Not as common in a white collar setting (in the US at least).
zeveb 10y ago
> Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? Not just that: this is, ultimately, a giveaway to the academic classes, who have lucked into the business of selling things to unwise consumers spending someone else's money. When these loans are forgiven (let's not fool ourselves: they will be), the federal government will have moved $1.3 trillion into the coffers of colleges, universities, professors, junior assistant vice-provosts of diversity affairs, athletic coaches and the whole panoply of 21st-century academia.
- Haven_Monahan 10y ago
  This. This. THIS. Federally-backed student loans, undischargeable and given to all and sundry, to be spent wherever on whatever, is a gigantic short in the moral-hazard circuit. I would throw an actual party for any dictator in the US who would do to the colleges what Henry VIII did to the monasteries.
  - gozur88 10y ago
    >Federally-backed student loans, undischargeable and given to all and sundry, to be spent wherever on whatever, is a gigantic short in the moral-hazard circuit. I'm not sure you're using the term "moral hazard" correctly. If the loans were dischargeable that would be a moral hazard, because the smart thing to do would be to borrow up to your eyeballs and then declare bankruptcy ten years later on graduation day.
    - dpark 10y ago
      Is it not also a moral hazard to lend unceasingly knowing that you'll destroy the economy before taking a hit on the bad loans you've issued?
      - deleted 10y ago
        [deleted]
      - gozur88 10y ago
alasdair_ 10y ago
The issue is that unlike every other form of debt, student loans are bankruptcy proof.
alasdair_ 10y ago
The issue is that unlike every other form of debt, student loans are bankruptcy proof.
the_watcher 10y ago
I have student debt that I irresponsibly took out (I am thankfully able to manage it with diligence and patience), and I am with you on the moral hazard. I'm also 100% with you getting the government out of the loan industry, particularly if they continue to insist on not using any kind of ROI estimate for actual dispersal of the loans. That said, you're just sticking your head in the sand if you can't see the structural risks associated with the sheet volume of student debt out there that simply cannot be walked away from.
x2398dh1 10y ago
I kind of empathize with you since I did the same...but just because I feel angry, does that dictate what's moral overall? Here's an interesting question. Does someone who served in the military, peace corps, Americacorps or whatever have a higher, "moral high ground," for having served the country, for a super-reduced wage, over one who has not? Using your same logic, we should have anyone who did not do that pay a, "non-participation fee." We really just all live in a society with lots of winners and losers, different personalities, people who were unlucky because they got cancer, others who are descendants of the Rockerfellers, etc. Individual moral decisions, good or bad, don't automatically take precedence over moral decisions about the aggregate.
- morgante 10y ago
  > Using your same logic, we should have anyone who did not do that pay a, "non-participation fee." Err, we do. It's called taxes, which fund the military. More importantly, joining the peace corps is a choice. Nobody compels you to do it. Taxes are not: if student loans are forgiven, I'm being forced to pay for other people's financial decisions. I find that much more objectionable than my voluntary charitable contributions.
  - reader5000 10y ago
    To be fair, you are being forced to pay for your poor investment decisions as a taxpayer. That is, you as the taxpayer are the person who wrote all the terrible loans, wildly inflated tuition, and destroyed the spending capacity of an entire generation of young people. Kids arent making poor financial decisions, theyre just doing what society demands of them to get jobs. It is your financing that makes the system the clusterfuck it is. So yeah, the American taxpayer should be the one to eat it.
  - x2398dh1 10y ago
    People in the military pay taxes as well. My argument still stands according to your logic - those who did not participate in the military should pay higher taxes. You may not like being forced into something, I may not like being forced into something, a criminal may not like being put in jail - but there are certain rules on the aggregate which are set up not for the individual, but to benefit society as a whole. There are situations in which the ethics of upholding a society overtake those of an individual (e.g. the prevention of returning to a, "state of nature," argument.) Beyond that, in our situation, there are multiple extenuating circumstances of for-profit universities who had lobbied the Federal Government to gain special treatment which would grant them the capability to be funded via student loans. Those Universities then went on to employ extremely unethical practices, preying on those who did not have the proper background or capacity to choose. Mind you, this was all done with Federal money, sanctioned by your and my tax dollars, which we have no choice in paying, as you stated. What we do have a choice in, is saying that a certain percentage of student loans should be forgiven due to extenuating circumstances such as unethical for-profit educational institutions, educational institutions such as ITTTI which went out of business, etc. I think the underlying assumption that people are making here on this discussion is falling prey to the, "slippery slope," fallacy in that ALL student debt should be forgiven, when in reality perhaps only a certain percentage should be, due to the high incidence of unethical educational institution degree-awarding growth which occurred subsequent to the 2008 economic collapse. What you will see on here is a lot of people making appeals to the economic benefits of making a decision which benefits a larger aggregate of the population. If you can't stomach that, then you should at least watch the latest Frontline Documentary on For-Profit Schools, and read the Wikipedia Articles on various for-profit schools which have recently gone out of business, like ITTTI.
gerbilly 10y ago
>Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? You are undoubtedly not the only one who feels this way. It's very natural. However, in the west sometimes I think we forget how lucky we are, and that the rest of the world often pays for our bad decisions and with much more than money. I would rather pay their student loans and be grateful for what I have as a white western person, which puts me on a privilege level well above a large proportion of humanity.[1] I am _not_ trying to preach, just giving you some food for thought. [1] And this is why here in Canada, I am pleased to pay for other people's healthcare too.
- morgante 10y ago
  > I would rather pay their student loans and be grateful for what I have as a white western person, which puts me on a privilege level well above a large proportion of humanity. I am very aware of my privilege. In fact, that's why I donate at least 10% of my income to charities operating in the developing world. That's actually part of why loan forgiveness galls me so much. It's offering a subsidy to people who are actually some of the most privileged people in the world. College-educated Americans are hardly an underprivileged group. There's also a choice aspect of this. Going into huge debt for college is a decision, as opposed to being born into an underdeveloped nation or falling victim to illness. [0]
  - gerbilly 10y ago
    > There's also a choice aspect of this. Points taken above. I'll just point out that the focus on fairness is a strong human trait, and IMHO it is a trait that we over-express. Often our notion of fairness is very biased as well. We are most likely to recognize situations that are unfair against us, but easily gloss over all the unfair advantages we may have. An anecdote: One time I was complaining to my grandmother that something wasn't fair, what did I do to deserve this... etc.[1] And she said: "Don't say that. If we got just a fraction of what we had coming to us for our sins, we'd be in big trouble!" If we insist that things should be fair, let's be very careful about what we wish for. [1] She was the most upstanding, hardworking honest person I have ever met, and a whole community agrees with me. And even though her point was made from within a religious framework, I think it is very applicable. She died almost 20 years ago, and she would have been 100 years old today. She is greatly missed. I also realize it's a bit of an imposition to mention this in your thread. I just wanted to insert a reference to a remarkable individual on this anniversary. Her name is Thérèse Pilon.
st3v3r 10y ago
"Should I now be punished for that decision?" You're not being punished, in any sense of the word.
- morgante 10y ago
  Of course I am. I had to pay an initial cost (avoiding loans) and then am further being forced to pay for other people's decisions through taxes.
  - granfalloon 10y ago
    Come on, that's so disingenuous. "Punishment," as the word is most commonly used (and defined), implies a harm is being inflicted due to some fault or bad act by the punished. You can say it's "unfair," or "undeserved," or like you say below, that it "discourages people from making a financially prudent decision". But no one wants to "punish" you -- that would be absurd.
  - 2bitencryption 10y ago
    Punishment is a consequence for your actions. You would be paying regardless of your own decisions. You are not being punished, you are being forced to contribute. If that's the way your fellow citizens vote, that is how it will be (though I doubt it will happen soon).
    - morgante 10y ago
      > Punishment is a consequence for your actions. Right. That's why I said I was being punished for choosing to avoid loans. It's what makes loan forgiveness such a moral hazard: we discourage people for making the financially prudent decision to avoid crippling debt. If I had instead borrowed money to finance my education, I could have gotten it forgiven and avoided this punishment.
  - st3v3r 10y ago
    No, you are not. Not in any sense of the word.
majormajor 10y ago
Thinking the government shouldn't be involved as a matter of principle is fine, but in terms of policy recommendations, you have to balance that against the evident dislike of the current situation by substantial parts of the voting public. If you set up the situation so that students can get themselves into crippling debt due to the market, you should realistically recognize that this might result in people with different underlying assumptions deciding that those students/former-students should get bailed out. So maybe it's better to just figure out ways to preempt the problem, which leaving it to the market (often a fairly abusive place for the less-informed or less-wealthy) doesn't really do. Making them dischargable in bankruptcy would be a very useful change here, but where I disagree is that the market would be good at usefully signalling "this is a valuable degree" or "this isn't a valuable degree."
btilly 10y ago
I think the government should get out of the student loan industry entirely: stop subsidizing them and making interest rates a political issue. Let the market signal which degrees are valuable and which aren't. But also make them dischargeable in bankruptcy. At least then there would be a consequence for people deciding to take out expensive loans for education. In economic models, one of the biggest reasons for soaring tuition is increased ability to pay. So every move to increase how easy it is to take out student loans causes tuition to go up which causes pressure to make it easier to take out student loans. Therefore the expected result of your policy is outrage, short term dislocation, and then greatly reduced tuition. Which will move money from academic administration to the rest of the economy.
- morgante 10y ago
  Exactly. It would in the end be better for everyone except for overpaid administrators.
- x0x0 10y ago
  There have also been massive cuts in state aid. Frankly, having the federal government instead of state governments pay for college seems better -- the fed always captures benefits (increased tax money) while if you leave the state you grew up in, the state takes a bath on you.
  - btilly 10y ago
    I disbelieve. The cuts in state aid were mostly due to the 2008 financial crisis. However over decades, tuition has been rising significantly faster than inflation, while state aid has mostly kept up with inflation. Furthermore rising tuition is not just a phenomena of state schools. Private universities have seen tuition skyrocket over the decades by similar percentages as public schools, and they never received state aid.
    - mjevans 10y ago
      They did receive 'aid' in two forms: * Student loans that cannot be discharged via bankruptcy. * Student loans that are more accessible thanks to both government loans and lending policies that encourage banks and credit unions to furnish student loans.
analog31 10y ago
I can't think of a scenario for resolving the problem of college funding, that won't seem unfair to somebody. There will be winners and losers, guaranteed. And as others have pointed out, a continued demand recession punishes all of us. Should each of us support the status quo, because we don't to give up our little piece? Are we in a Nash equilibrium? You might be the one who made a bad financial decision. A loan might have made you richer in the long run. ;-)
Jimmy 10y ago
>Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? Not at all! These people are called "conservatives".
- refurb 10y ago
  Goldman Sachs made some pretty bad financial decisions as well. So you're OK with paying for their mistakes?
  - Jimmy 10y ago
    I don't know what Goldman Sachs did and I don't know who should pay for it. I'm not very informed about economics.
  - michaelbuddy 10y ago
    Why did you word your question so rudely as an assumption? Bank bailouts were largely a political class decision. Rare was it that conservative citizens voiced favor for bailouts.
tunesmith 10y ago
While there are certainly people that go into extreme amounts of student loan debt due to picking prestigious colleges, I don't think that is the real crisis here. Isn't debt also increasing for the vast majority of college students who are in whatever the middle-quintile of average students are? I think a student from a middle class family (meaning loans and not grants) should be able to attend four years of an in-state college, get a full education, perhaps work a part-time job but also have time for the kind of valuable extracurricular activities that are a part of the college experience, and graduate, without going into an unreasonable amount of debt. But it sounds like the reality is that that amount of debt, for that scenario, has climbed quite a bit.
- mjevans 10y ago
  You must have gone to college before 1990. The price of tuition practically /skyrocketed/ after it become impossible to discharge student loan debts. Worse we've had two recent 'recession' periods and had insufficient recovery since then. It is extremely difficult for those entering the workforce to find entry-level jobs, and the competition for those seeking part time jobs means anyone going to college is automatically 'overqualified' (source, my own personal experience; over a decade ago, and I DOUBT it's gotten any better since!) This chart shows part of the story: https://en.wikipedia.org/wiki/College_tuition_in_the_United_States#Growth_of_college_costs https://en.wikipedia.org/wiki/College_tuition_in_the_United_... https://en.wikipedia.org/wiki/File:InflationTuitionMedicalGeneral1978to2008.png https://en.wikipedia.org/wiki/File:InflationTuitionMedicalGe... "... All rates are computed relative to 1978. [51] Cost of living increased roughly 3.25-fold during this time; medical costs inflated roughly 6-fold; but college tuition and fees inflation approached 10-fold. Another way to say this is that whereas medical costs inflated at twice the rate of cost-of-living, college tuition and fees inflated at four times the rate of cost-of-living inflation. Thus, even after controlling for the effects of general inflation, 2008 college tuition and fees posed three times the burden as in 1978."
banusaur 10y ago
I took out loans for college. After a few years out working, I've just about paid them off. 4 months to go and I'm finished. Even though I worked hard to pay back everything with interest, I still wouldn't wish the experience on anybody. I don't understand how funding other people's education is somehow a "punishment" to me.
imgabe 10y ago
> Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? Yes, this is called living in a society.
- michaelbuddy 10y ago
  Society can only work when there is trust and self reliance. Usurping from those who are responsible with their money rips this fabric. If you assume we all should be ok with this because 'society' then why not make it a voluntary bailout and see how far it goes. This would be a bailout at gunpoint because that's how laws and taxes boil down.
  - imgabe 10y ago
    Would you say society is not working now then? There's plenty of mistrust and people who are not self-reliant. By your definition we don't currently have and have never in human history had, a working society.
damptowel 10y ago
I think you misunderstand the magnitude of the problem. Put it another way: will you carry the burden of chronic credit bubbles through decades of reduced economic activity? Everyone, including good financial actors, will share in collateral damage. The resulting unemployment will make existing debt harder to pay off, and there's A LOT of it! http://i.imgur.com/yU9b1Ta.png http://i.imgur.com/yU9b1Ta.png These things really, really shouldn't happen in the first place, but when they do, the systemic effects should be prioritized over individual gains.
mempko 10y ago
How would you exactly be paying for other people's decision? If you think your tax money is spent to fund the federal government, then you will be surprised to find out that the federal government doesn't use tax money for paying for anything. Only downside would be more economic activity because well educated people can spend more of their money on things....oh wait, that isn't a downside.

toomuchtodo 10y ago

TL;DR The health of the economy is more important than your moral high ground. Same reason we let people walk away from homes (or not walk away, simply not be able to afford them), but we'll still give them a mortgage 3 years after their foreclosure; the economy needs the monetary velocity to survive.

bsbechtel 10y ago
>>When the Fed could just poof more money into existence? I hope you realize it doesn't quite work like that.
- toomuchtodo 10y ago
  I removed that part because it wasn't relevant, but it does work exactly that way. The Federal Reserve simply credits the bank's reserve account from thin air. Fiat currency is a shared delusion of value with invisible hands exerting forces to enforce certain behaviors (the Federal Reserve attempts to stoke inflation in order for the economy to reach full employment, arguably unsuccessfully, while technology and cheap Chinese labor is having enormous deflationary effects, with the result being real estate and equities turning yet again into asset bubbles); never be fooled that we're somehow "losing" value by forgiving debts at the national government level.
  - dragonwriter 10y ago
    > Federal Reserve attempts to stoke inflation in order for the economy to reach full employment No, the Federal Reserve attempts to provide easy money to spur employment, balancing that goal against the competing goal of controlling inflation. The Fed does not try to stoke inflation to drive employment (especially since inflation doesn't drive employment, though employment can help drive inflation.)
    - toomuchtodo 10y ago
      You're right, I misspoke. The Federal Reserve, through its mandate to obtain full employment conditions, creates inflation as a side effect.
      - codyb 10y ago
        Inflation's been really low recently.
        toomuchtodo 10y ago
        We've barely scratched full employment. Who knows how long we'll be able to maintain it. The Fed has no room to cut rates if a slowdown occurs without going negative and several economic indicators are pointing to a slowdown.
- CyberDildonics 10y ago
  Right. "Buying 0 interest treasuries" is what the Bank of Japan calls it.
  - toomuchtodo 10y ago
    Interesting tidbit: We're way passed that with the BoJ. They're the majority shareholder of 55 companies on the Nikkei. http://www.bloomberg.com/news/articles/2016-08-14/the-tokyo-whale-s-unstoppable-rise-to-shareholder-no-1-in-japan http://www.bloomberg.com/news/articles/2016-08-14/the-tokyo-... That's right. The Bank Of Japan is printing money to prop of the value of top companies trading on Japan's exchange. Think about the macroeconomic causes and consequences of that.
    - ZoeZoeBee 10y ago
      Even Better think about the consequences of Japan's aging population relying upon the Japanese Government Pension Investment Fund, being propped up by the JCBs purchase of equities. >The GPIF’s results are seen as a gauge of broad market performance, as the fund owns nearly 1% of global equity markets and more than 7% of the Japanese stock market. Domestic and foreign equities comprised 44% of the portfolio at the end of March, below its 50% target weighting for the asset class, the fund said in a statement. http://www.wsj.com/articles/japans-gpif-pension-fund-suffers-worst-year-since-2008-financial-crisis-1469773998 http://www.wsj.com/articles/japans-gpif-pension-fund-suffers... There is this can they keep on kicking, hoping to out run the "current" malaise but you can't escape the Great Graying when your economies are dependent upon constant expansion.
- ArkyBeagle 10y ago
  Google "William F. Hummel money" and read the whole thing. Technically, money is created when a bank writes a loan, but the Fed does meta-meta(-meta?) money creation on a global scale.
morgante 10y ago
> Same reason we let people walk away from homes (or not walk away, simply not be able to afford them) Like I said in my comment, I recognize that there needs to be some option for people who can't possibly repay their student loans. Defaulting on your mortgage is not consequence-free: you lose your home and hurt your credit. We don't let people just forgive their mortgages and keep their homes without hurting their credit, but that's what a lot of people are advocating for student loans. We should treat student loan debt like any other debt.
- deegles 10y ago
  How would one repossess an education? Isn't that the reason student loans are not dischargeable?
  - morgante 10y ago
    Like toomuchtodo mentions, we could treat it like other unsecured debt (like credit card debt). Just because it's unsecured doesn't mean we shouldn't be able to discharge it with bankruptcy. Get the government out of the loan business and the market will correct itself. You won't be able to get a loan for a useless degree and if you end up being unable to pay off your loan you can go through normal bankruptcy proceedings and their consequences.
    - ChemicalWarfare 10y ago
      Upvoted. But. The argument against this could be that due to the unsecured nature of the six-figure (potentially) debt the free market rates will be insane effectively reducing access to higher ed for those who can't afford it without the loans. Then again, if less ppl could afford a degree in Queer Musicology (does exist - https://www.musicology.ucla.edu/mission-and-history-1 https://www.musicology.ucla.edu/mission-and-history-1) or let's say Environmental Studies etc maybe the supply and demand would even out so that'll be a good thing.
      - dragonwriter 10y ago
gozur88 10y ago
>TL;DR The health of the economy is more important than your moral high ground. Will the economy be more healthy? I see little evidence for the assertion. It's possible the damage done by all that debt cancellation will be greater than any benefit.
- toomuchtodo 10y ago
  Student loan debt that can't be discharged drags down discretionary spending, spending which drives the economy. Cancelling the debt might cause a negligible amount of inflation. http://www.businessinsider.com/3-charts-explain-the-effect-of-student-loans-on-the-economy-2015-5 http://www.businessinsider.com/3-charts-explain-the-effect-o... http://time.com/10577/student-loans-are-ruining-your-life-now-theyre-ruining-the-economy-too/ http://time.com/10577/student-loans-are-ruining-your-life-no...
  - ArkyBeagle 10y ago
    The projected amount of inflation probably still won't push growth into the Fed's target.
nstj 10y ago
What does this have to do with the velocity of money? If the students continue to pay off their debt then the money flows to their creditors, who will use put it to work in the economy. If the debt is forgiven then it won't go to their creditors and will instead go to those who had student loans who will similarly spend it. Is there another reason that forgiving student loans improves the health of an economy?
- ArkyBeagle 10y ago
  For a student, they can either spend money on educational debt service or they can buy other things. "Buy other things" presumably increases monetary velocity.
  - nstj 10y ago
    But if the investor receives the cash from the student as payment of their loan, they have to do something with that cash too (buy dinner at Per Se, grab a new Vertu phone, lend the money to a startup so that the startup can spend the money on consuming goods and services, etc)
    - ArkyBeagle 10y ago
      Presumably, the Fed will send new money to Treasury for this, which will actually inflate the currency just a wee smidgen ( and in an economy in which the Fed's growth targets go chronically unmet this is no sin - quite the opposite). Otherwise... While there is an element of truth to that, see "the marginal value of a dollar". You "spend" your ten millionth dollar quite differently than you spend your ten thousandth. Some of these guys for whom money is simply a means of keeping score won't change their consumption patterns much no matter what. If you want to increase velocity, the way to do it is cause more cash to be in the hands of broke people.
      - nstj 10y ago
        My bad, that makes a difference (ie: if you're increasing the monetary base, there will indeed be a change in spending - and theoretically it could even result in a lower velocity of money, as the money base might increase proportionally more than the increase in GDP). I didn't realise that Treasury actually held this paper. Still, I'm hesitant to draw the conclusion that giving cash to someone with a high MPC results in a markedly higher amount of consumption/expenditure in the economy, as if alternatively that cash was invested by someone with a high MPS it would be eventually spent anyway. Of course there would be some frictional element to this (money needs to be transferred when invested, etc) but I posit that more is made of this than should be.

jonahrd 10y ago

You may be right that it's a poor financial decision, but I still hope to one day live in a country where people can pursue education in any subject matter (not just STEM/other money makers) for the pure purpose of educational fulfillment. That can only be done with a system that helps pay for education instead of letting the market decide which degrees are most valuable in terms of pure capitalistic measures

outside1234 10y ago
Let me know when you find the hole in the ground that is shooting money up into the air that enables us to have luxuries like this. Frankly, we have thousands of other problems, highlighted by basic health care, that we should probably prioritize first.
- white-flame 10y ago
  Note that this is literal in some cases. Norway, being one of the major neo-socialist successes, is also a major oil exporter in the region. They have holes in the ground shooting money up that help enable social programs.
  - friendlygrammar 10y ago
    >neo-socialist This isn't a word and Norway isn't socialist.
    - the_watcher 10y ago
      It has a Wikipedia page, a Wiktionary page, and copious references to it by well known publications.
      - friendlygrammar 10y ago
        https://en.wikipedia.org/wiki/Neosocialism https://en.wikipedia.org/wiki/Neosocialism Clearly the two "well known" publications (the most preeminent Marxist journals) listed in that wikipedia article and the fact that the wikipedia article's definition of neo socialism has absolutely nothing to do with Norways economic model point to the fact that the parent comment definitely didn't make up that word out of thin air. Norway is not socialist, neosocialist, or whatever dumb made up "socialism" you people try to come up with. Also something having a wiki page on any website and being used in a couple of journals does not make something a term/word. It only indicates that someone wants it to be a term/word.

viraptor 10y ago

I agree with the conclusion, but: > other people's bad financial decisions? This is different than someone taking a bad loan on their own. This is the case of your parents and grandparents, your government, the schools, the newspapers, etc. all effectively telling you that it's a good idea to invest in education. So good that in a country that loves its liberties and independence so much people will fight against public health care, the government will do the work to guarantee that you can get your education loan. Surely they can't be all wrong... I cannot honestly blame people for believing the lie in this case.

morgante 10y ago
> Surely they can't be all wrong... I cannot honestly blame people for believing the lie in this case. I absolutely can. I grew up listening to all those same messages and hearing all the same things. I also realized that it might be a good idea to do some college research and to apply for various scholarships. High school seniors aren't babies. If they're good enough to get into a college, they should be smart enough to do the minimal research which it takes to find out which degrees are valuable and which aren't. There are tons of resources online to learn about this stuff.
- ant6n 10y ago
  Bla bla I'm a more rugged individual than others... Screw everybody else!
  - nec4b 10y ago
    So your solution is to screw him, because he was prudent?
wang_li 10y ago
> This is the case of your parents and grandparents, your government, the schools, the newspapers, etc. all effectively telling you that it's a good idea to invest in education. I'm pretty sure that absolutely no one anywhere tells their kid, go to Columbia University, live full time in Manhattan, take an extra three years to finish your bachelors, study pottery making, live entirely off of student loans. Aim for at least $400,000 in debt when you finish. No one ever says that. Ever. (As a random data point, the average student debt in 2015 was $35,000. That doesn't seem like an insurmountable bill.)

metaphorm 10y ago

> Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? you've got a serious lack of perspective if that's what you think this is

pjschlic 10y ago
Could I ask for a little clarification about your critique? I understand what his perspective is: socializing the cost is a moral hazard (people will make different decisions if they don't have to pay the cost of them). That's the perspective I assume GP has, as I feel similarly. If what you are implying is that the eventual result of non-forgiveness is access to education only for the wealthy, I would disagree - there are other options, none of which are perfect that I'm aware. That said, I'm trying to figure out what reasoned argument you might be making with this statement which might be an exercise in futility.
- metaphorm 10y ago
  The "moral hazard" argument holds very little water with me in this era. We've bailed out big banks despite the moral hazard, because it was necessary or else the consequences would have been ever worse. I think a similar argument is applicable to student loan debt, except that student debtors are a much more sympathetic and deserving beneficiary than big banks ever were. The simple truth is that the world isn't a fair place and doing the right thing is not the same thing as doing the fair thing. Fair is "everybody gets treated equally". That just isn't how things work in the real world. Right is "to the best of our ability, we try to help people get what they need." That's something we can really aspire to. Doing the right thing.
refurb 10y ago
That exactly what this is. Person A goes to school, takes out loans, diligently pays them back. Person B does the exact same thing, but gets his/her loans forgiven. How is that fair?
- joshkpeterson 10y ago

MrQuincle 10y ago

Schools can charge a lot because other people pay a lot. As individual you cannot single-handedly decide to pay less. Compared to Europe the education system in the US looks like a system that is trying to get as much money out of young adults as possible rather than getting as many people as possible an affordable education.

morgante 10y ago
There are vast differences in the cost and benefits of different degrees. Nobody forces you to go to an expensive, low-benefit university. In fact, there are lots of free calculators which will show you the expected earnings and cost of different degrees. You can single-handedly decide to go to a cheap community college for the first 2 years.
- tuna-piano 10y ago
  But why even care about cost at all if college will be free anyway (loan forgiveness)?
- MrQuincle 10y ago
  My wife went to Ohio State, and although its tuition is "only" 10k a year, compare that with 1k overseas. If we will have kids the question where they get their education is a nobrainer. Apart from that she also went to Columbia University. Totally overpriced in my opinion, but it made her really happy. Because of her decision back then, now, as a couple we have a "second mortgage". Not all financial decisions in your life are under your own control.
beachstartup 10y ago
> Compared to Europe the education system in the US looks like a system that is trying to get as much money out of young adults as possible rather than getting as many people as possible an affordable education. the private college system is what you are describing. the community college and public university system does exactly that, but nobody talks about it, because it's un-glamorous and un-dramatic.

WheelsAtLarge 10y ago

Bad financial decisions are nothing new. People are constantly getting loans for things they can't afford like homes, cars, credit card debt and so on. I used to feel the same way as you. But we need to stop loading young adults with debt that can never be dismissed. Young adults are easy prey. Student's are for the most part clueless on what it means to be in debt without being able to pay for it. Mostly student's are desperate to afford their dream school or study for the one profession that will increase their pay check and are willing to sign a simple contract to get it. Luckily some of us know early on that we must get trained in a marketable skill to pay back the loan. Greek studies or French literature will not cut it these days. Not all of us are that lucky to know it. We need to look at the lenders and schools too. They don't care who they lend to because they have a guaranteed repayment. This leads to predatory lending for lenders. Schools don't care what they teach. This leads to nice to know classes. They will always find student dreamers that will major in (name you silly major here.) The supply and demand curve has gotten out of wack. Maybe only certain majors and schools can be eligible for loans as a start. Also, how is it that a student can go to school from K-12 and not have a skill. High schools need to be responsible too. I took a year of Calculus in high school. It's nice to know it yet it has not lead to a pay check. I'm sure there are other more productive ways to spend a year of school. Indebted students are a symptom of the bigger problem on how to train society's future workers. It's time to do something about it. Debt forgiveness and a reform to the educational system is a great place to start. BTW, free higher education is not the answer. Look at what happens to the K-12 graduates. Free higher education will only extend that system without much results. Yes, student's are stupid and it sucks that some will get a free ride but they are only a part of a bigger problem. We need to look at the problem more broadly.

morgante 10y ago
> Student's are for the most part clueless on what it means to be in debt without being able to pay for it. I give students more credit than you do. If you're capable of going to college, you should be capable of understanding compound interest. > The supply and demand curve has gotten out of wack. I agree completely. Get the government out of this business and we'd see realistic supply and demand. It'd be much easier to get a loan for a CS degree and a degree in CS would cost a lot more than one in English literature. Instead, we have the ridiculous status quo where the latter costs almost exactly the same as the former despite vast differences in value.

mgkimsal 10y ago

"for other people's bad financial decisions" Why is making loans to people that have, statistically, a very low chance of paying off somehow not also a "bad financial decision"? We pay for "bad financial decisions" regardless of who makes them - debt forgiveness for individuals or bank bailouts when they get in over their heads. Banks only lend for education because it's not dischargeable - there's no penalty for the bank making a 'bad decision' because they'll get their money one way or another. Yes, make all student debt able to be discharged in bankruptcy, and we'll see a different dynamic play out. However... there are more predatory lenders out there that specifically target the newly bankrupt so... it may not 'cure' all issues, just shift some of the burden around. EDIT: had meant to add that we already pay for people's bad health decisions via insurance pools, and we already pay for people's bad life decisions via prisons.

dpark 10y ago
> Why is making loans to people that have, statistically, a very low chance of paying off somehow not also a "bad financial decision"? It's important to recognize that you're talking about the federal government and not really banks. Whether it's a bad decision to issue student loans to people who are unlikely to pay them back is irrelevant to the parent question about fairness. The government doesn't have money of its own. It has your money, and my money. There is no scenario in which the government gets penalized for poor lending practices. The citizens get penalized, and that's why people who were conservative with their educational loans and expenses tend to be less than impressed with the idea of writing of a trillion dollars in student loans. That trillion dollars is largely going to come from the pockets of people who aren't carrying student loans.
- Blackthorn 10y ago
  When I took out my student loans it absolutely was the banks. Federal takeover is only a recent thing.
morgante 10y ago
> Why is making loans to people that have, statistically, a very low chance of paying off somehow not also a "bad financial decision"? I agree that the government shouldn't be making bad loans to people who are unlikely to pay them back. In fact, that's exactly what I said in my comment: the government should get out of the loan business. Unfortunately, loan forgiveness would mean me (a current taxpayer) having to pay for the past poor decisions of students. > We pay for "bad financial decisions" regardless of who makes them - debt forgiveness for individuals or bank bailouts when they get in over their heads. Banks pay significant penalties for bailouts, while people seem to want debt forgiveness with 0 repercussions. Not to mention this whole issue of banks is orthogonal because most loans are from the government. If we let the bankruptcy system handle it, people could get out of their loans but there would still be consequences.

deleted 10y ago

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ocschwar 10y ago

"Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions?" Bad financial decisions that they made at age 18 with heavy pressure from everyone around them? I got bigger fish to fry.

thowawy91316 10y ago

You're not alone. I graduated college a few years ago. My parents made too much to qualify for need-based aid, but too little to be able to actually afford it (living in the NYC sphere, you can earn decent money and still struggle). I too picked a lesser-tier school because it was more affordable. My parents paid for my food, and the occasional rent payment, but the rest was on me. So, I took out loans. I started college in 2006, and graduated in 2012. Why did it take me so long? Partially because I switched majors to one that would yield a stronger career (read: tech), and partially because I worked my backside off for years, including a full year away on an engineering internship. I worked 20+ hours each week during school doing remote engineering so I could graduate without debt. I regret working so much. Some of my grades suffered because I was oversubscribed, and the work time meant I didn't have much of a social life. I applied for every merit scholarship for which I was eligible, and 33% of my college expense ended up being paid for by one I was fortunate to be granted. The paid-for months were the best. So I agree with the question: Why should other kids have it easy when I busted my ass? My answer is nuanced. Kids who coasted through school on piles of debt while enjoying the ample time it afforded should not get away scot-free. Nevertheless, it is in society's best interest to help them out. Like it or not, we live in a capitalist and consumer-driven society. Debt is holding people back, as the WSJ article described. We all benefit when people can get out from under their debt and contribute, and we also all benefit when everyone is educated (even if it costs each of us something). Society has a right to expect something in return, however. My college scholarship was from the federal government, and it came with a service requirement. It was a fair deal. They paid part of my way, and I owed them part of my time. I worked in a job I picked that was relevant to their interests, and contributed to their cause, while starting my career. Both sides won. My ideal solution would allow citizens to dispel student loans through public service. Unlike making student debt eligible for bankruptcy, public service wouldn't be punitive. The deal would be that you have give back to society if you want society to have your back. We should bring back the Civilian Conservation Corps, and the Works Projects Administration. We have crumbling infrastructure? No problem: put graduates to work fixing it. They can earn minimal wages while getting student loans reduced for each month worked. They'll dispel their loans, have a job (an issue for many), learn practical life skills, and we'll all benefit from public works that make the country stronger. We can have shining bridges, beautiful parks, and an educated citizenry with the agency to move forward and pursue their higher ambitions. Some countries have mandatory military service. Is asking for a few years of service so much for those who want to dispel their loans?

brianwawok 10y ago

So I don't weigh 600 pounds and smoke. But I have to pay higher health insurance premiums than I rightfully should. Why don't they get consequences? It's a tricky problem. To both provide consequences and support the weak amoung us.

morgante 10y ago
> So I don't weigh 600 pounds and smoke. But I have to pay higher health insurance premiums than I rightfully should. Why don't they get consequences? Moral hazard and consequences are exactly why smoking is one of the few things which are allowed to affect premiums under ACA.
- brianwawok 10y ago
  But overweight is not.

GarrisonPrime 10y ago

I agree. I'll just say though, that when jobs are very scarce, people are broke, and everyone and their brother keeps saying "get an education to improve your job prospects", then what do you expect the swarms of unemployed young people to do? We should absolutely stop subsidizing this craziness though.

morgante 10y ago
> I'll just say though, that when jobs are very scarce, people are broke, and everyone and their brother keeps saying "get an education to improve your job prospects", then what do you expect the swarms of unemployed young people to do? Get a degree in something useful (ex. CS) instead of political science or musical theater.

branchless 10y ago

The problem is the credit. The state underwrites all loans so more people go to uni. It reaches a critical mass where all employees start demanding a degree before you can even speak to them. At this point would-be-graduates know degrees are often not worth it but they become a toll tax. You have to pay for the degree or you can't play. Really I don't blame young people for this. There are too many degrees and too much money is being created to pay for them. The state loves this, it creates lots of money and it ties people into debt which seems to be the entire aim of western states now as they want to work people hard all the time. If you attain financial independence through non-debt you might decide not to work 40 hours a week. Then the establishment can't cream off your labour, and they hate that.

stevenkovar 10y ago

I think it's fine to subsidize education through government programs. Instead, remove the standard of requiring certain levels of education. Perhaps require industry-specific credentials that can be earned through exam or internship for most jobs. College should be about personal exploration over career preparation—at least in the bachelors level. Students can complete credentials as part of their final semester Senior curriculum or on their own time.

michaelbuddy 10y ago
Apprenticeships.
- stevenkovar 10y ago
  Not as common in a white collar setting (in the US at least).

zeveb 10y ago

> Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? Not just that: this is, ultimately, a giveaway to the academic classes, who have lucked into the business of selling things to unwise consumers spending someone else's money. When these loans are forgiven (let's not fool ourselves: they will be), the federal government will have moved $1.3 trillion into the coffers of colleges, universities, professors, junior assistant vice-provosts of diversity affairs, athletic coaches and the whole panoply of 21st-century academia.

Haven_Monahan 10y ago
This. This. THIS. Federally-backed student loans, undischargeable and given to all and sundry, to be spent wherever on whatever, is a gigantic short in the moral-hazard circuit. I would throw an actual party for any dictator in the US who would do to the colleges what Henry VIII did to the monasteries.
- gozur88 10y ago
  >Federally-backed student loans, undischargeable and given to all and sundry, to be spent wherever on whatever, is a gigantic short in the moral-hazard circuit. I'm not sure you're using the term "moral hazard" correctly. If the loans were dischargeable that would be a moral hazard, because the smart thing to do would be to borrow up to your eyeballs and then declare bankruptcy ten years later on graduation day.
  - dpark 10y ago
    Is it not also a moral hazard to lend unceasingly knowing that you'll destroy the economy before taking a hit on the bad loans you've issued?
    - deleted 10y ago
      [deleted]
    - gozur88 10y ago

alasdair_ 10y ago

The issue is that unlike every other form of debt, student loans are bankruptcy proof.

alasdair_ 10y ago

The issue is that unlike every other form of debt, student loans are bankruptcy proof.

the_watcher 10y ago

I have student debt that I irresponsibly took out (I am thankfully able to manage it with diligence and patience), and I am with you on the moral hazard. I'm also 100% with you getting the government out of the loan industry, particularly if they continue to insist on not using any kind of ROI estimate for actual dispersal of the loans. That said, you're just sticking your head in the sand if you can't see the structural risks associated with the sheet volume of student debt out there that simply cannot be walked away from.

x2398dh1 10y ago

I kind of empathize with you since I did the same...but just because I feel angry, does that dictate what's moral overall? Here's an interesting question. Does someone who served in the military, peace corps, Americacorps or whatever have a higher, "moral high ground," for having served the country, for a super-reduced wage, over one who has not? Using your same logic, we should have anyone who did not do that pay a, "non-participation fee." We really just all live in a society with lots of winners and losers, different personalities, people who were unlucky because they got cancer, others who are descendants of the Rockerfellers, etc. Individual moral decisions, good or bad, don't automatically take precedence over moral decisions about the aggregate.

morgante 10y ago
> Using your same logic, we should have anyone who did not do that pay a, "non-participation fee." Err, we do. It's called taxes, which fund the military. More importantly, joining the peace corps is a choice. Nobody compels you to do it. Taxes are not: if student loans are forgiven, I'm being forced to pay for other people's financial decisions. I find that much more objectionable than my voluntary charitable contributions.
- reader5000 10y ago
  To be fair, you are being forced to pay for your poor investment decisions as a taxpayer. That is, you as the taxpayer are the person who wrote all the terrible loans, wildly inflated tuition, and destroyed the spending capacity of an entire generation of young people. Kids arent making poor financial decisions, theyre just doing what society demands of them to get jobs. It is your financing that makes the system the clusterfuck it is. So yeah, the American taxpayer should be the one to eat it.
- x2398dh1 10y ago
  People in the military pay taxes as well. My argument still stands according to your logic - those who did not participate in the military should pay higher taxes. You may not like being forced into something, I may not like being forced into something, a criminal may not like being put in jail - but there are certain rules on the aggregate which are set up not for the individual, but to benefit society as a whole. There are situations in which the ethics of upholding a society overtake those of an individual (e.g. the prevention of returning to a, "state of nature," argument.) Beyond that, in our situation, there are multiple extenuating circumstances of for-profit universities who had lobbied the Federal Government to gain special treatment which would grant them the capability to be funded via student loans. Those Universities then went on to employ extremely unethical practices, preying on those who did not have the proper background or capacity to choose. Mind you, this was all done with Federal money, sanctioned by your and my tax dollars, which we have no choice in paying, as you stated. What we do have a choice in, is saying that a certain percentage of student loans should be forgiven due to extenuating circumstances such as unethical for-profit educational institutions, educational institutions such as ITTTI which went out of business, etc. I think the underlying assumption that people are making here on this discussion is falling prey to the, "slippery slope," fallacy in that ALL student debt should be forgiven, when in reality perhaps only a certain percentage should be, due to the high incidence of unethical educational institution degree-awarding growth which occurred subsequent to the 2008 economic collapse. What you will see on here is a lot of people making appeals to the economic benefits of making a decision which benefits a larger aggregate of the population. If you can't stomach that, then you should at least watch the latest Frontline Documentary on For-Profit Schools, and read the Wikipedia Articles on various for-profit schools which have recently gone out of business, like ITTTI.

gerbilly 10y ago

>Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? You are undoubtedly not the only one who feels this way. It's very natural. However, in the west sometimes I think we forget how lucky we are, and that the rest of the world often pays for our bad decisions and with much more than money. I would rather pay their student loans and be grateful for what I have as a white western person, which puts me on a privilege level well above a large proportion of humanity.[1] I am _not_ trying to preach, just giving you some food for thought. [1] And this is why here in Canada, I am pleased to pay for other people's healthcare too.

morgante 10y ago
> I would rather pay their student loans and be grateful for what I have as a white western person, which puts me on a privilege level well above a large proportion of humanity. I am very aware of my privilege. In fact, that's why I donate at least 10% of my income to charities operating in the developing world. That's actually part of why loan forgiveness galls me so much. It's offering a subsidy to people who are actually some of the most privileged people in the world. College-educated Americans are hardly an underprivileged group. There's also a choice aspect of this. Going into huge debt for college is a decision, as opposed to being born into an underdeveloped nation or falling victim to illness. [0]
- gerbilly 10y ago
  > There's also a choice aspect of this. Points taken above. I'll just point out that the focus on fairness is a strong human trait, and IMHO it is a trait that we over-express. Often our notion of fairness is very biased as well. We are most likely to recognize situations that are unfair against us, but easily gloss over all the unfair advantages we may have. An anecdote: One time I was complaining to my grandmother that something wasn't fair, what did I do to deserve this... etc.[1] And she said: "Don't say that. If we got just a fraction of what we had coming to us for our sins, we'd be in big trouble!" If we insist that things should be fair, let's be very careful about what we wish for. [1] She was the most upstanding, hardworking honest person I have ever met, and a whole community agrees with me. And even though her point was made from within a religious framework, I think it is very applicable. She died almost 20 years ago, and she would have been 100 years old today. She is greatly missed. I also realize it's a bit of an imposition to mention this in your thread. I just wanted to insert a reference to a remarkable individual on this anniversary. Her name is Thérèse Pilon.

st3v3r 10y ago

"Should I now be punished for that decision?" You're not being punished, in any sense of the word.

morgante 10y ago
Of course I am. I had to pay an initial cost (avoiding loans) and then am further being forced to pay for other people's decisions through taxes.
- granfalloon 10y ago
  Come on, that's so disingenuous. "Punishment," as the word is most commonly used (and defined), implies a harm is being inflicted due to some fault or bad act by the punished. You can say it's "unfair," or "undeserved," or like you say below, that it "discourages people from making a financially prudent decision". But no one wants to "punish" you -- that would be absurd.
- 2bitencryption 10y ago
  Punishment is a consequence for your actions. You would be paying regardless of your own decisions. You are not being punished, you are being forced to contribute. If that's the way your fellow citizens vote, that is how it will be (though I doubt it will happen soon).
  - morgante 10y ago
    > Punishment is a consequence for your actions. Right. That's why I said I was being punished for choosing to avoid loans. It's what makes loan forgiveness such a moral hazard: we discourage people for making the financially prudent decision to avoid crippling debt. If I had instead borrowed money to finance my education, I could have gotten it forgiven and avoided this punishment.
- st3v3r 10y ago
  No, you are not. Not in any sense of the word.

majormajor 10y ago

Thinking the government shouldn't be involved as a matter of principle is fine, but in terms of policy recommendations, you have to balance that against the evident dislike of the current situation by substantial parts of the voting public. If you set up the situation so that students can get themselves into crippling debt due to the market, you should realistically recognize that this might result in people with different underlying assumptions deciding that those students/former-students should get bailed out. So maybe it's better to just figure out ways to preempt the problem, which leaving it to the market (often a fairly abusive place for the less-informed or less-wealthy) doesn't really do. Making them dischargable in bankruptcy would be a very useful change here, but where I disagree is that the market would be good at usefully signalling "this is a valuable degree" or "this isn't a valuable degree."

btilly 10y ago

I think the government should get out of the student loan industry entirely: stop subsidizing them and making interest rates a political issue. Let the market signal which degrees are valuable and which aren't. But also make them dischargeable in bankruptcy. At least then there would be a consequence for people deciding to take out expensive loans for education. In economic models, one of the biggest reasons for soaring tuition is increased ability to pay. So every move to increase how easy it is to take out student loans causes tuition to go up which causes pressure to make it easier to take out student loans. Therefore the expected result of your policy is outrage, short term dislocation, and then greatly reduced tuition. Which will move money from academic administration to the rest of the economy.

morgante 10y ago
Exactly. It would in the end be better for everyone except for overpaid administrators.
x0x0 10y ago
There have also been massive cuts in state aid. Frankly, having the federal government instead of state governments pay for college seems better -- the fed always captures benefits (increased tax money) while if you leave the state you grew up in, the state takes a bath on you.
- btilly 10y ago
  I disbelieve. The cuts in state aid were mostly due to the 2008 financial crisis. However over decades, tuition has been rising significantly faster than inflation, while state aid has mostly kept up with inflation. Furthermore rising tuition is not just a phenomena of state schools. Private universities have seen tuition skyrocket over the decades by similar percentages as public schools, and they never received state aid.
  - mjevans 10y ago
    They did receive 'aid' in two forms: * Student loans that cannot be discharged via bankruptcy. * Student loans that are more accessible thanks to both government loans and lending policies that encourage banks and credit unions to furnish student loans.

analog31 10y ago

I can't think of a scenario for resolving the problem of college funding, that won't seem unfair to somebody. There will be winners and losers, guaranteed. And as others have pointed out, a continued demand recession punishes all of us. Should each of us support the status quo, because we don't to give up our little piece? Are we in a Nash equilibrium? You might be the one who made a bad financial decision. A loan might have made you richer in the long run. ;-)

Jimmy 10y ago

>Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? Not at all! These people are called "conservatives".

refurb 10y ago
Goldman Sachs made some pretty bad financial decisions as well. So you're OK with paying for their mistakes?
- Jimmy 10y ago
  I don't know what Goldman Sachs did and I don't know who should pay for it. I'm not very informed about economics.
- michaelbuddy 10y ago
  Why did you word your question so rudely as an assumption? Bank bailouts were largely a political class decision. Rare was it that conservative citizens voiced favor for bailouts.

tunesmith 10y ago

While there are certainly people that go into extreme amounts of student loan debt due to picking prestigious colleges, I don't think that is the real crisis here. Isn't debt also increasing for the vast majority of college students who are in whatever the middle-quintile of average students are? I think a student from a middle class family (meaning loans and not grants) should be able to attend four years of an in-state college, get a full education, perhaps work a part-time job but also have time for the kind of valuable extracurricular activities that are a part of the college experience, and graduate, without going into an unreasonable amount of debt. But it sounds like the reality is that that amount of debt, for that scenario, has climbed quite a bit.

mjevans 10y ago
You must have gone to college before 1990. The price of tuition practically /skyrocketed/ after it become impossible to discharge student loan debts. Worse we've had two recent 'recession' periods and had insufficient recovery since then. It is extremely difficult for those entering the workforce to find entry-level jobs, and the competition for those seeking part time jobs means anyone going to college is automatically 'overqualified' (source, my own personal experience; over a decade ago, and I DOUBT it's gotten any better since!) This chart shows part of the story: https://en.wikipedia.org/wiki/College_tuition_in_the_United_States#Growth_of_college_costs https://en.wikipedia.org/wiki/College_tuition_in_the_United_... https://en.wikipedia.org/wiki/File:InflationTuitionMedicalGeneral1978to2008.png https://en.wikipedia.org/wiki/File:InflationTuitionMedicalGe... "... All rates are computed relative to 1978. [51] Cost of living increased roughly 3.25-fold during this time; medical costs inflated roughly 6-fold; but college tuition and fees inflation approached 10-fold. Another way to say this is that whereas medical costs inflated at twice the rate of cost-of-living, college tuition and fees inflated at four times the rate of cost-of-living inflation. Thus, even after controlling for the effects of general inflation, 2008 college tuition and fees posed three times the burden as in 1978."

banusaur 10y ago

I took out loans for college. After a few years out working, I've just about paid them off. 4 months to go and I'm finished. Even though I worked hard to pay back everything with interest, I still wouldn't wish the experience on anybody. I don't understand how funding other people's education is somehow a "punishment" to me.

imgabe 10y ago

> Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? Yes, this is called living in a society.

michaelbuddy 10y ago
Society can only work when there is trust and self reliance. Usurping from those who are responsible with their money rips this fabric. If you assume we all should be ok with this because 'society' then why not make it a voluntary bailout and see how far it goes. This would be a bailout at gunpoint because that's how laws and taxes boil down.
- imgabe 10y ago
  Would you say society is not working now then? There's plenty of mistrust and people who are not self-reliant. By your definition we don't currently have and have never in human history had, a working society.

damptowel 10y ago

I think you misunderstand the magnitude of the problem. Put it another way: will you carry the burden of chronic credit bubbles through decades of reduced economic activity? Everyone, including good financial actors, will share in collateral damage. The resulting unemployment will make existing debt harder to pay off, and there's A LOT of it! http://i.imgur.com/yU9b1Ta.png http://i.imgur.com/yU9b1Ta.png These things really, really shouldn't happen in the first place, but when they do, the systemic effects should be prioritized over individual gains.

mempko 10y ago

How would you exactly be paying for other people's decision? If you think your tax money is spent to fund the federal government, then you will be surprised to find out that the federal government doesn't use tax money for paying for anything. Only downside would be more economic activity because well educated people can spend more of their money on things....oh wait, that isn't a downside.