9 ms·

This is going to be a problem. Student debt cannot be discharged in bankruptcy, debtors simply garnish wages. Terrible things will happen with a young overburd

by kneel 10y ago

This is going to be a problem. Student debt cannot be discharged in bankruptcy, debtors simply garnish wages. Terrible things will happen with a young overburdened workforce slaving away for their debt. Politicians are already trying to figure out how to squeeze more social security taxes out of them. This is bad for the economy, likely to cause extreme class warfare and social upheaval.

shams93 10y ago
What you're getting in LA is tent cities of young people who can't live at home with their parents. You have an entire generaton of working young people who can't afford rent. Its producing a mean society, anarchy is more the outcome than class war, the war of off against all and the growth of a feral meaness in society.
moomin 10y ago
Indeed. If it were discharged through bankruptcy, I think we'd see lenders making much more critical decisions (and a lot of firms who talk a good game but add no value going out of business).
charlieflowers 10y ago
Actually, as long as they don't revolt, it's great for the economy. (It's unethical to dupe a whole generation into indentured servitude ... but great for the economy). These people will have to work. No sabbaticals to find themselves, or time off to spend with a newborn. They'll have to put up with every pointy haired boss and dysfunctional workplace they encounter (at least until they can find another job). Every day of their lives will boost the GDP. (But it sure sucks for them that their culture didn't steer them down a smarter road when they were 18 and didn't know better).
- imron 10y ago
  It's not that great for the economy. Economies go great when people are spending money. If a large part of your discretionary income goes to paying off student loans instead of spending on other things, and you put off buying a house or having children due to financial insecurity caused by student loans, then the economy suffers.
  - kakarot 10y ago
    I think he has confused the US economy with its controlling parties.
  - velodrome 10y ago
    Agreed. The US is primarily consumption driven economy. This could lead to behavioral conditioning that could affect future growth (e.g. depression era, silent generation). https://blog.dol.gov/2016/11/03/spending-habits-generation https://blog.dol.gov/2016/11/03/spending-habits-generation https://medium.com/generations-of-spending/meager-spending-and-the-silent-generation-9d71a696630#.98vv4byl4 https://medium.com/generations-of-spending/meager-spending-a... Those of the silent generation are what can be most accurately described as frugal spendors. Again, this tendency is rooted in their surroundings as they grew and developed within the society around them that was facing hard and desperate times.
  - tedsanders 10y ago
    Your comment is full of assertions, but not evidence or explanation. My own assertions: (1) GDP measures production. If debtors are incentived to produce more, GDP rises. (2) The spending of debtors doesn't fall. It is just directed toward different sectors (education and financial products instead of housing, etc.). (3) Every dollar lost by a debtor is a dollar earned by a creditor. These dollars don't disappear from the system. And even if creditors tend to churn money less than debtors, inflation targeting by the Fed should fully counter any changes in the aggregate velocity of money. Now, it's possible you're right and I'm wrong. But I think it takes a much more sophisticated (and justified) argument than what you are asserting.
    - 19238998191 10y ago
      I agree that a sophisticated argument would take longer. Regarding (3): The money does not disappear, but what is done with it? Already excess money in the hands of the 1% is just going into real estate, the stock market and stupid VC companies. All this is not particularly good for the real economy.
      - 10y ago
- chaverma 10y ago
  But isn't a large amount of debt that isn't transitioning whether by getting paid back or written off by the creditor bad for the economy? I'm no economist but my intuition is that these unmoving debts represent money that should exist but doesn't. Since student debt is unusual in that it can't be discharged by bankruptcy it will stay in limbo longer than other kinds. It's reasonable to think that in time much of it will get paid back but there are other kinds of investments that would perform better, and hence the economy would have been better off had these loans not been made and the money were spent on something else. Also to your comment about sabbaticals and other less productive activities, is that really the common case? I believe that underemployment via career choices and local demand for skills would be more common.
- perfunctory 10y ago
  Not sure why you are being downvoted. Perhaps because people tend to equate "good for the economy" with "good for well-being", which is not necessarily the case.
- ekianjo 10y ago
  boosting gdp this way does not create much value. Its when private wealth flourishes that you have better network effects in an economy.
- leereeves 10y ago
  Until they vote to change the laws and cancel all that debt.
- deleted 10y ago
  [deleted]
- rm_-rf_slash 10y ago
  People with no money can't buy things. Who will employ them if there are no customers?
- marcosdumay 10y ago
  An entire generation that can't assume any slight risk for getting a better job or starting a company? No needed sabbatical for updating their knowledge (those aren't all just for fun, you know), no capacity to care for children. Looks like a huge boost to an economy. Besides, let's not forget that economies are made of people.
gst 10y ago
> This is going to be a problem. Student debt cannot be discharged in bankruptcy, debtors simply garnish wages. I studied in Austria so I'm not too familiar with how student loans in the US work, but as far as I know the Income Based Repayment program limits your monthly payments to a given percentage of your income. You can't discharge those debts, but an upper bound on the monthly payments doesn't sound too bad either.
- metasean 10y ago
  But the interest keeps compounding, which means the person is going to be paying a still sizable portion of their income for a significantly longer timeframe. This is money that arguably would be spent on housing, family, and retirement, e.g. things that provide significant societal and personal stability.
cryoshon 10y ago
>with a young overburdened workforce slaving away for their debt this is already the reality for many americans. eventually they'll riot

by kneel 10y ago

shams93 10y ago

What you're getting in LA is tent cities of young people who can't live at home with their parents. You have an entire generaton of working young people who can't afford rent. Its producing a mean society, anarchy is more the outcome than class war, the war of off against all and the growth of a feral meaness in society.

moomin 10y ago

Indeed. If it were discharged through bankruptcy, I think we'd see lenders making much more critical decisions (and a lot of firms who talk a good game but add no value going out of business).

charlieflowers 10y ago

Actually, as long as they don't revolt, it's great for the economy. (It's unethical to dupe a whole generation into indentured servitude ... but great for the economy). These people will have to work. No sabbaticals to find themselves, or time off to spend with a newborn. They'll have to put up with every pointy haired boss and dysfunctional workplace they encounter (at least until they can find another job). Every day of their lives will boost the GDP. (But it sure sucks for them that their culture didn't steer them down a smarter road when they were 18 and didn't know better).

imron 10y ago
It's not that great for the economy. Economies go great when people are spending money. If a large part of your discretionary income goes to paying off student loans instead of spending on other things, and you put off buying a house or having children due to financial insecurity caused by student loans, then the economy suffers.
- kakarot 10y ago
  I think he has confused the US economy with its controlling parties.
- velodrome 10y ago
  Agreed. The US is primarily consumption driven economy. This could lead to behavioral conditioning that could affect future growth (e.g. depression era, silent generation). https://blog.dol.gov/2016/11/03/spending-habits-generation https://blog.dol.gov/2016/11/03/spending-habits-generation https://medium.com/generations-of-spending/meager-spending-and-the-silent-generation-9d71a696630#.98vv4byl4 https://medium.com/generations-of-spending/meager-spending-a... Those of the silent generation are what can be most accurately described as frugal spendors. Again, this tendency is rooted in their surroundings as they grew and developed within the society around them that was facing hard and desperate times.
- tedsanders 10y ago
  Your comment is full of assertions, but not evidence or explanation. My own assertions: (1) GDP measures production. If debtors are incentived to produce more, GDP rises. (2) The spending of debtors doesn't fall. It is just directed toward different sectors (education and financial products instead of housing, etc.). (3) Every dollar lost by a debtor is a dollar earned by a creditor. These dollars don't disappear from the system. And even if creditors tend to churn money less than debtors, inflation targeting by the Fed should fully counter any changes in the aggregate velocity of money. Now, it's possible you're right and I'm wrong. But I think it takes a much more sophisticated (and justified) argument than what you are asserting.
  - 19238998191 10y ago
    I agree that a sophisticated argument would take longer. Regarding (3): The money does not disappear, but what is done with it? Already excess money in the hands of the 1% is just going into real estate, the stock market and stupid VC companies. All this is not particularly good for the real economy.
    - 10y ago
chaverma 10y ago
But isn't a large amount of debt that isn't transitioning whether by getting paid back or written off by the creditor bad for the economy? I'm no economist but my intuition is that these unmoving debts represent money that should exist but doesn't. Since student debt is unusual in that it can't be discharged by bankruptcy it will stay in limbo longer than other kinds. It's reasonable to think that in time much of it will get paid back but there are other kinds of investments that would perform better, and hence the economy would have been better off had these loans not been made and the money were spent on something else. Also to your comment about sabbaticals and other less productive activities, is that really the common case? I believe that underemployment via career choices and local demand for skills would be more common.
perfunctory 10y ago
Not sure why you are being downvoted. Perhaps because people tend to equate "good for the economy" with "good for well-being", which is not necessarily the case.
ekianjo 10y ago
boosting gdp this way does not create much value. Its when private wealth flourishes that you have better network effects in an economy.
leereeves 10y ago
Until they vote to change the laws and cancel all that debt.
deleted 10y ago
[deleted]
rm_-rf_slash 10y ago
People with no money can't buy things. Who will employ them if there are no customers?
marcosdumay 10y ago
An entire generation that can't assume any slight risk for getting a better job or starting a company? No needed sabbatical for updating their knowledge (those aren't all just for fun, you know), no capacity to care for children. Looks like a huge boost to an economy. Besides, let's not forget that economies are made of people.

gst 10y ago

> This is going to be a problem. Student debt cannot be discharged in bankruptcy, debtors simply garnish wages. I studied in Austria so I'm not too familiar with how student loans in the US work, but as far as I know the Income Based Repayment program limits your monthly payments to a given percentage of your income. You can't discharge those debts, but an upper bound on the monthly payments doesn't sound too bad either.

metasean 10y ago
But the interest keeps compounding, which means the person is going to be paying a still sizable portion of their income for a significantly longer timeframe. This is money that arguably would be spent on housing, family, and retirement, e.g. things that provide significant societal and personal stability.

cryoshon 10y ago

>with a young overburdened workforce slaving away for their debt this is already the reality for many americans. eventually they'll riot