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When Unpaid Student Loan Bills Mean You Can No Longer Work

250 points by SQL2219 9y ago

rayiner 9y ago
The dismal quality of state government is a damning indictment of federalism. Any idiot would realize that blocking someone’s professional license is a completely counter productive way to collect on a debt. It’s no comfort to realize that the same people who make laws like this also craft laws regulating key aspects of our economy, from zoning and construction to policing.
zipwitch 9y ago
Well-connected banks and major corporations who make bad decisions and financially crash get bailouts. Citizens who make similar mistakes when they're young get their lives destroyed. Makes it pretty clear who "our" government really serves.
- jdavis703 9y ago
  When major banks fail they take out major parts of the economy. I'm sure we all remember the mayhem the big banks caused in the Great Recession. Secondly, the bailouts the banks received were loans -- they've now been repaid with interest, and the federal government has wound up making a profit. I'm no banker or Wall Street apologist, the big banks and executives should've faced large punishments for their role in the fraud that triggered the economic crisis. But we also need to be pragmatic and realize that the Bush and Obama administrations had very limited choices to fix the recession, which was made worse because banks basiclly stopped lending any money. By all means let's elect politicians who will regulate and break up big banks, but let's not score cheap populism points by deriding economic policy without proposing a viable alternative.
  - mjevans 9y ago
    Those banks made bad decisions and instead of paying the cost (in evolutionary capitalism) of being frozen, orderly split up and re-processed among members of the market to re-define their value factor the banks were rewarded. I had hoped that they would be properly refactored so that the people could benefit from that change instead of the corporations. Maybe if that had happened the correction our house pricing so desperately needs could have happened.
  - dreamdu5t 9y ago
    So a viable solution to student debt is for the government to forgive it all?
    - eropple 9y ago
      Realistically, I think that's going to have to be what happens. The horse is out of the barn. We can close the door through reforming student loan programs, but we have to bring the horse back, first. I say this as somebody who graduated college in 2010 with fairly minimal debt that I've already paid off. I was extremely lucky in my choice of career (and knowing I wanted to do it at the time) and I made better choices than most with regards to picking colleges and what school I attended, and so it kinda pisses me off a little bit--but me being pissed off is distinctly secondary to we have saddled two entire generations with impossible debts in the chase for "employability".
    - conanbatt 9y ago
      A viable one is to let students default on their debt. Then colleges incentives to survive on tuition will align to the students capacity to increase their income. There shouldn't be (considerable) debt going into dead-end college studies.
  - adekok 9y ago
    > When major banks fail they take out major parts of the economy. Sure. So... do the bankers go to jail? Nope. They get bonuses. It's a great scam. They play with your money. If they lose, oh well, the government will bail them out. If they win, they keep the money. And either way, the people in charge get large bonuses. Only Iceland chose to charge the bankers who engaged in predatory / illegal behavior. Every other country pretty gave them a handshake, and a pat on the back. And it's still ongoing. https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-bank-bailout/#46feafd52d83 https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-... Look, if the bank is "too big to fail", by all means bail them out. But nationalize it, fire the idiots in charge, and sell off the assets to people who aren't robber barons.
    - slavik81 9y ago
      They let Lehman Brothers die. The results of that were awful. They did more or less what you suggest with the next failure, AIG, which was bought by the government for a song. The government has since sold their shares, making 22 billion dollars profit off that bailout. The government did so well from the deal that the old CEO is trying to sue on the basis that the terms were unfair. After that, the government offered to buy assets from banks to ensure they had enough cash to keep doing business (TARP). Every bank was asked to participate because the government didn't want to single out the weakest ones. They were concerned the stigma would drive away business and push them over the edge. In the end, the government sold off the TARP assets they bought and made another 15 billion dollars profit off that. The bailouts were not that expensive. What was tremendously expensive was the impact of businesses all around the world shaking in fear of being short on cash and unable to secure a loan. That caused them to reduce spending, but one person's spending is another's income. That caused a spiral of dropping incomes and cutting costs. That's where layoffs, bankruptcies, and wage freezes came from. Government revenue dropped significantly too as tax money comes from sales and income. Banks should be smaller. Hell, companies in general should be smaller. We have far too many oligopolies and near-monopolies. Not enough competition. The problem is finding agreement on the specifics. We got a whole slew of new regulations in Dodd-Frank and Basel III, but nobody outside of financial experts know or understand them. The general public doesn't agree on much more than that they hate bankers. I know there's a few common things often pointed to, like reinstating Glass-Steagall, but there's plenty of disagreement there too. For one, I don't think it would have made much difference in this crisis. The counterparty risks that dominated this crisis were all in the investment sides of the companies anyways. It seems more like a pet cause than an actual solution. I guess the problem is that politics is broken. Ideally, smart, well-informed people would discuss these things and the public would listen and support the best ideas. That's not how politics works these days, though. Party ideology is basically religion at this point. Fix the government and everything else flows from there. But, that's easier said than done. The American government is fractured and broken because American society is fractured and broken. It's not clear how to make it whole again.
  - eli_gottlieb 9y ago
    >When major banks fail they take out major parts of the economy. When the working class is bankrupt or in debt peonage, it takes out major parts of the economy.
  - andrepd 9y ago
    All that rationalization and apologism fails when you consider this simple fact: there has been no one convicted of criminal wrongdoing in the US for bringing about the Great Recession. Much to the contrary, the persons in charge, the persons responsible for great hardship caused to billions of people worldwide for the past decade, they got big fat bonuses that not you or I could ever dream of making, perhaps not even in a lifetime of work. Note I'm not talking about banks as institution, I'm talking about personal responsibility and accountability. That alone shows how much of a farce everything is, how the super-rich and powerful simply play by a different set of rules. Yeah sure, the government had to step in to prevent an even bigger catastrophe. But if indeed it were the case that the people responsible were even for a moment under any threat of actual punishment for their crimes, it would not have all been swept under the rug, and the people in charge simply finding employment elsewhere.
- deleted 9y ago
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- markshead 9y ago
  > Citizens who make similar mistakes when they're young get their lives destroyed. Except in this case the mistake is that the government is willing to guarantee huge loans made to an 18-year-old. There are colleges out there that you can graduate with only a couple thousand dollars of debt and there are other colleges where you can graduate with hundreds of thousands of dollars of debt. A potential fix would be to limit the amount of government-backed student loans to something people can reasonably pay off. If students want to go beyond that, they would need to convince a bank that funding the more extravagant tuition was a reasonable risk to take. With the government-backed student loans, you rely on an 18-year-old to accurately do the risk analysis themselves and the current situation seems to indicate many aren't good at doing this.
  - gergles 9y ago
    > A potential fix would be to limit the amount of government-backed student loans to something people can reasonably pay off. They DO limit the amount of government-backed loans you can take for an undergraduate degree to $31,000 (or $57,500 if you can convince TPTB that you are 'independent', which is much harder than it sounds.) Other loans don't have limits, but aren't government backed. They're private loans but get many of the same privileges, including that the loans aren't dischargeable in bankruptcy. This sort of makes sense, because you can't repossess a degree, but it also sort of doesn't because of the points you made.
    - derefr 9y ago
      Insofar as bankruptcy itself was meant to be an "escape hatch" to avoid designing forgiveness into every element of the system, adding any situation where bankruptcy is impossible seems like it destroys the purpose of having bankruptcy exist in the first place. I mean, I get the real problem: just-graduated students have no assets, but a lot of debt, so they have no disincentive from declaring bankruptcy. Hard to come up with a solution to that, since—if the just-graduated student had assets—they'd just be able to pay the debt with them.
      - mejin 9y ago
- dominotw 9y ago
  Bank bailout was not done out of kindness towards banks. It was done to save the economy from free fall. Infact some banks like JPM were forced to accept bail out even though they didn't want or need a bailout.
SQL2219 9y ago
Modern day debtors' prison.
robert_foss 9y ago
I would call this as yet another consequence of not having free education.
- randomdata 9y ago
  I would call it a consequence of supply management. Once you get past the headline, you soon see this has nothing to do with education at all. Rather, these professions have created a regulatory environment where only those who buy into it are allowed to participate. This artificially limits the supply of workers to artificially inflate incomes. If the 'quota' was freely accessible to anyone then the whole reason for the supply management would be lost altogether.
  - nickthemagicman 9y ago
    This is not exclusive of the issue of thread parent. Regulatory licensing hurdles AND education both have major issues.
    - randomdata 9y ago
      I see no issue with the education system. You can learn anything you want on demand, for what is basically no cost whatsoever (other than your time and minor incidentals), with virtually no barrier to entry. The credentialing and licensing process is horribly broken, but only related to education to the extent that we have decided to sometimes link them together. There is no intrinsic relationship between them.
      - abiox 9y ago
        > I see no issue with the education system. You can learn anything you want on demand, for what is basically no cost whatsoever (other than your time and minor incidentals), with virtually no barrier to entry. are you referring to the internet as "the education system"?
        9y ago
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teslabox 9y ago
The education industry is kind of a racket. The state pays to send children to 13 years of schooling, but at the end they haven't learned much of anything. Someone here at HN had this comment about their experience: "Really just screw public school in general. The whole place was 95% waste of time followed by a 'congratulatory' piece of paper." -https://news.ycombinator.com/item?id=14047919 https://news.ycombinator.com/item?id=14047919 If a politician was courageous, and didn't care about getting re-elected, they'd point out that the system could be fixed by getting rid of Kindergarten, replacing 1st and 2nd grade with structured activities instead of 'classroom time' (prison for children), replacing high school with something more like community college, and allowing the remaining years to be much more flexible - conducted for the learner's benefit, rather than the system's... But school has been transformed from an important social institution into a jobs project. Children & teachers are both trapped.
- loceng 9y ago
  In the end this would be more efficient than the existing system, where it only seems efficient because no one's really keeping track of the qualitative.
- lukeschlather 9y ago
  The system cannot easily be fixed. Some students might be able to get by with just 12 years of schooling, for some jobs. Some students may need 18 years of schooling to be able to effectively hold down a minimum-wage job. Most students who go into skilled trades probably need at least 12 years of schooling. But knowing which 12 years is the hard part. Sure, somebody who knows they want to be an electrician at the age of 10 can probably be competent by 18, but we shouldn't be locking people into that kind of flat job progression. Even if we accept that simple trade schools are the ideal, I'd still argue we should be encouraging people to study a liberal mix of arts taking 17-20 years (just with liberal arts mixing trades instead of academics.)
  - fpisfun 9y ago
    This type of stuff is hard to figure out but where I currently live there are a lot of people who would be much better off if they were locked into a career progression to become an electrician at age 10.
throwanem 9y ago
The two photos in that article tell two different stories. I wonder why.
- abiox 9y ago
  what is the difference, and why is the difference noteworthy such that you wonder about it?
  - throwanem 9y ago
    One is set in a spare hospital corridor. Its subject wears scrubs and a woebegone expression. The sense is one of desperation - of at best a forlorn hope, if not of hopelessness outright. It is in every respect commensurate with the textual depiction of the subject as someone struggling nobly under an unjustly imposed burden. The other is lush, full of color and interest and expensive appointments: fine curtains, musical instruments, a leather sofa. Its subject wears a stylish outfit and a look that lies somewhere between a smirk and a sneer. One need not read a subtext of entitlement into the image. Entitlement is the whole of its text. Yet these photographs depict two people whose situations the article they accompany would have us regard as effectively parallel. It's an odd juxtaposition, and one whose origin in mere happenstance would surprise me greatly of so consummately professional an A-list blog as this. The cliché is that a picture is worth a thousand words. These two pictures are worth two very different thousands of words. Such things do happen by accident, but not, I think, at the New York Times. So I'm curious about the purpose that underlay their selection.
    - throwawayjava 9y ago
      This is the most odd post I've read in quite a while. I was going to reply defending the subject of the article -- a middle-class person with hobbies and a home who fell on some temporary bad luck and was pounded into the ground by an objectively bad confluence of policies. But then I realized you think blue and red pigments are symbols of extravagance, and even in 1905 I'd be pretty lost on how to reply to that...?
Arubis 9y ago
From the article, it sounds as if records are pretty informally kept in most cases, if at all. I’d be interested in how this breaks down across gender lines. When I think of (jobs requiring licensure) INTERSECTION (jobs that don’t pay enough to pay down student loans), I come up with non-doctorate level healing/helping professions, like nursing, social work, and education, all of which are predominantly female.
Sniffnoy 9y ago
This just seems completely irrational. Do lenders imagine they're more likely to recover their money this way? This article needs more information to explain how something so completely irrational-sounding could arise. Questions I still have after reading this article: * Are we specifically talking about loans by the government, or student loans in general? * If the latter, does the lender have any say in this, or does the government just do this unilaterally? * How the hell did this happen? Yes, it was part of a bundle of "aggressive collection tactics" but... really, more information is needed here. Is this, like, a case of the government having the wrong incentives, needing more to look tough than to actually recover their money? If this applies to private loans, what did private lenders have to say about this at the time? Etc.
- nawitus 9y ago
  "This just seems completely irrational. Do lenders imagine they're more likely to recover their money this way?" In theory this punishment can increase the total number of loans paid, even if the individuals who default and lose their jobs won't be able to pay their loans back. Why? Perhaps the fear of the punishment incentives loaners to not default.
  - Sniffnoy 9y ago
    I mean, yes, I understand that line of reasoning, but like... were any actual calculations done? This just seems like such a bad idea when (as is pointed out in the article) there are plenty of other things you could do in such a case that won't so adversely affect your ability to recover your money.
- danjoc 9y ago
  >Do lenders imagine they're more likely to recover their money this way? When the mob cripples/kills a gambler who can't pay, they're not trying to get the money back. They're sending a message to other gamblers.
  - derefr 9y ago
    Gamblers are under a very autonomous incentive structure: they want to gamble, and they can be scared into not doing so by consequences that would befall them personally. Student loans don't work like this, I think, because most kids going to college aren't doing so because they want to. Instead, they think they need to, either because their parents demand it, or society demands it. When you think you need to do something (i.e. there are no other options/routes to not-dying), adding risks to it doesn't have any effect on the math.
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emilfihlman 9y ago
I find absolutely ridiculous that a license can be taken away because of not having money. It is unbelievable.
protomyth 9y ago
In North Dakota's defense, the law here was probably put into place when the Bank of North Dakota was doing the majority of loans (SLND). It was really, really hard to default since you could get a deferment with a phone call or change your payment amount the same way. I had about 5 years (various lengths over the loan) where I didn't pay on my student loans because my take home was too low. I don't know what the situation is now but SLND was really, really easy to get to something that was acceptable. [edit] hold the heck up: The section of the North Dakota Century Code these websites are quoting is 28-25-11 which has the title "28-25-11. Property applied - Wages exempt - Suspension of recreational licenses for nonpayment of defaulted state guaranteed student loans." - note the word recreational www.legis.nd.gov/cencode/t28c25.pdf - no hunting for you - The court may withhold or suspend any certificate, permit, or license issued by lottery, tag, electronically, or over the counter by the director of the game and fish department which the judgment debtor is required to obtain before engaging in a recreational activity.
kirykl 9y ago
Isn’t this what garnishment is for? Garnish their wages if necessary why revoke the ability to work
- Celarnor 9y ago
  There's garnishment limits. Since they have to leave you with at least 30 hours worth of minimum-wage earnings per week, a lot of people who can't afford their loans are effectively un-garnishable.
lisper 9y ago
This is another example of society putting morality above practical considerations. The result is cutting our nose off to spite our face. The moral calculus is: people who welch on their debts are cheating. Cheaters must be punished. The most effective way to punish someone who hasn't actually committed a crime is to strip them of their "privilege" to work. The net result is to make it even harder for them to pay their debt, which nobody actually wants. This is not an isolated example. Another is the way in which "cheating" is discouraged in school. If one kids convinces another kid to do their homework for them, that's called cheating and it's punished. But in fact the ability to persuade other people to work for you and negotiate a deal where both sides feel like they've come out ahead is one of the most valuable skills a person can develop. What the education system calls "cheating" is often budding entrepreneurship, and it really ought to be encouraged. But it isn't.
- zanny 9y ago
  If society put its morals in front of its face they would abolish bankruptcy and let people drown in debt. Society doesn't because those writing the rules like having bankruptcy protection. But at the same time, the electorate dictating laws is also way past college age, but also wants their kids to be guaranteed to go to school (and if student loans weren't protected there would be dramatically less money for kids to go into lifelong debt with). If they are in debt for the rest of their lives... thats their problem, but I'll be damned if my kids are not going to college!
qwerty456127 9y ago
Whether it's about a student loan or some other kind ow loan, how exactly are people supposed to pay with their professional licenses suspended? Isn't this policy purely nonsensical? Doesn't suspending such a license in such a case mean preventing the person from ever repaying the debt actually? Isn't it in the best interests of a creditor to help their debtors earn money rather than to prevent them from earning?
- Asooka 9y ago
  The idea is to set an example. You basically write off this debtor, in the interest of encouraging your other million debtors to think before defaulting on their loans.
  - qwerty456127 9y ago
    Thanks. This way it makes at least some sense. But isn't it a way too brutal and still a way irrational from the society point of view? Effectively ridding a skilled person of a life, setting them broke and probably homeless as the result at the same time while funding other peoples welfare and undertaking all kinds of efforts to solve homelessness and joblessness problems on the other hand?
    - bbarn 9y ago
      The article states that those with inability to pay were able to get their licenses back by entering into a payment arrangement. This is targeted at negligent non-payers, not people unable to pay.
lkjlakjsdf 9y ago
I'm not sure what california's policy is but I have licensed work with 5 defaulted school loans, and nothing has happened in 5 years
- nether 9y ago
  > I have licensed work What does this mean?
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bbarn 9y ago
Yes, student loans are a disaster in this country, but of all things.. nursing is used as the example here? Nursing is one of the easier ways to get value out of an education. A fresh graduate with a 4 year BSN can make ~70K to start, and nearly every major metro has an affordable community college nursing program. This isn't underwater basket weaving here, this is a very marketable skill that requires a fairly low cost (compared to many fields) amount of schooling. The article also states the program is in fact successful at getting people to repay loans, and that people truly unable to pay simply had to enter into a payment arrangement to get their licenses reinstated. This sounds more like people flat out not paying their loans, more than being unable to because of a predatory student loan culture. It's the exact same thing they do to child support non-payers in most states, and it works because the reality is rarely true inability to pay - and when it is, the states are generally sane about it and have programs to accommodate. Pitchforks are coming out way too fast about this, I think.
Overtonwindow 9y ago
It seems like having a license to work is more about barriers than making things safer.
uiri 9y ago
South Dakota is kind of crazy when it comes to this. They cross references people who hold SD drivers licenses with student loan debt databases and buys up the debt. If people fall behind at all, they get a letter warning them that their license will be suspended in 30 days unless they pay up. South Dakota is a very rural state. There are no metros like NYC, SF, or Seattle where you can rely on public transit to get around. http://www.ksfy.com/content/news/State-law-sparks-student-debt-controversy-446255773.html http://www.ksfy.com/content/news/State-law-sparks-student-de...
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qwerty456127 9y ago
I believe that legal barriers restricting qualified people's working rights are the next big thing ought to be abolished after slavery has been. Hopefully in future every person that actually can and wants to do a job will be legally allowed to apply, no matter what.
abalashov 9y ago
I’m surprised how little attention is given to the fact that things like this are a side effect of a car-based society. If you don’t build a world where people depend on their cars to do absolutely anything or to economically function, restricting their freedom isn’t nearly as easy. I mean, to the residents of most European towns and cities, this statement sounds absurd. So you took away my driving licence: so what?
- zanny 9y ago
  Trick is the residents of those European towns and cities are going to school for free or nearly no cost that they can pay for in real time, don't have to declare bankruptcy if they break a bone a month out of college, and don't need to invest in a car to be able to go anywhere. I really feel the future is in Europe. The winners of American capitalism might be burning a great fire, but it has no kindle to last. Most of Europe burns calmer but more sustainably, at learn in terms of having an educated and skilled population that isn't endemically mentally ill or drug addicted from all the abuses of their society.
- alistairSH 9y ago
  Don’t forget that states are also revoking professionsl licensee. Not just drivers licenses.
exabrial 9y ago
So... Don't get student loans, but if you do, don't borrow an amount your career wont pay for?
hourislate 9y ago
I live in Texas (DFW). I pay close to 10k a year to the school district. They spent over 2 million dollars on my sons high school this summer to replace the grass on the football field with artificial turf. They also destroyed what looked like a brand new baseball field to replace it with a brand new baseball field. Across the street at the middle school they also replaced the grass with artificial turf for the grade 6-8 kids. The football field is of the same caliber as the Dallas Cowboys use. My son told me a couple of days ago that the PC's in his computer lab are complete garbage and barely work (I bought him an Mac Airbook for his birthday) so he uses his own laptop. He says the lab equipment(physics, Chemistry, Biology) is also marginal. The ignorant fools in my district just passed a Bond Election for like 300 million dollars for God only knows what. My taxes went up by about $500 bucks to the school district. It now almost costs the same amount to send one kid to High School as it does to send the other kid to UoT (Dallas). Where does it end? I don't know.
- throwawayjava 9y ago
  I address some of your specific concerns below, but here's a tip: be loud and be involved. At a lot of districts, especially in Texas, sports facilities receive a ton of resources because the sports-obsessed parents are loud and make it clear that they vote. But this requires civic-mindedness. You have to care a decade before your kid is in school, and continue caring a decade after, if anything's going to change. That's why sports get so many resources at some districts -- the sports -obsessed parents stay involved long before and long after their kids are out of school. I'm not sure what to say except "welcome to democracy". (e: you might expect things would be better if education were privatized, but in reality the private schools seem even more obsessed with sports, and have their own high school version of the university amenities wars. So I'm skeptical that market mechanisms wouldn't end up behaving similarly to democratic mechanisms.) > They spent over 2 million dollars on my sons high school this summer to replace the grass on the football field with artificial turf. Artificial turf can be cheaper in the long run for primary use athletic fields, which get a lot of abuse and therefore require a lot of ongoing maintenance. You're trading a ~30+ year amortized cost for a single fixed cost, so the number can get pretty high while still working out in the black. $2 million is high for a single field, though. Did it include e.g. upgrades to the stadium seating? And I don't see why a middle school would need turf. I tend to think the sports component of American high schools is stupid. But if it's going to exist, turf can be a cost-efficient choice. WRT the other stuff, again, see "get involved" and "be loud". > The ignorant fools in my district just passed a Bond Election for like 300 million dollars for God only knows what This is generally public information. 300 million sounds like district-wide significant building upgrades. These things usually mix "invisible but important" stuff (routers, HVAC upgrades, etc.) with "visible, high impact" stuff. I'd be surprised if those science and computer labs aren't included? > It now almost costs the same amount to send one kid to High School as it does to send the other kid to UoT (Dallas). Frankly, if you step back for a second, you'd expect K12 education to be more expensive than college. In one case you're lecturing to huge rooms of adults, in the other you're teaching small classes. But that's a whole different conversation...
peralp 9y ago
While not directly related, Bryan Caplan of George Mason University argues that pushing everyone to college doesn't make sense and most of what's learned in school is a waste of time from the job market perspective. The degree is about signaling how competent someone is instead of the useful skills and knowledge obtained via education. The link to the podcast from 2014 better represents this nuanced argument. http://www.econtalk.org/archives/2014/04/bryan_caplan_on.html http://www.econtalk.org/archives/2014/04/bryan_caplan_on.htm... His book on the topic will be released in January 2018 https://www.amazon.com/Case-against-Education-System-Waste/dp/0691174652 https://www.amazon.com/Case-against-Education-System-Waste/d...

250 points by SQL2219 9y ago

The dismal quality of state government is a damning indictment of federalism. Any idiot would realize that blocking someone’s professional license is a completely counter productive way to collect on a debt. It’s no comfort to realize that the same people who make laws like this also craft laws regulating key aspects of our economy, from zoning and construction to policing.

zipwitch 9y ago

Well-connected banks and major corporations who make bad decisions and financially crash get bailouts. Citizens who make similar mistakes when they're young get their lives destroyed. Makes it pretty clear who "our" government really serves.

jdavis703 9y ago
When major banks fail they take out major parts of the economy. I'm sure we all remember the mayhem the big banks caused in the Great Recession. Secondly, the bailouts the banks received were loans -- they've now been repaid with interest, and the federal government has wound up making a profit. I'm no banker or Wall Street apologist, the big banks and executives should've faced large punishments for their role in the fraud that triggered the economic crisis. But we also need to be pragmatic and realize that the Bush and Obama administrations had very limited choices to fix the recession, which was made worse because banks basiclly stopped lending any money. By all means let's elect politicians who will regulate and break up big banks, but let's not score cheap populism points by deriding economic policy without proposing a viable alternative.
- mjevans 9y ago
  Those banks made bad decisions and instead of paying the cost (in evolutionary capitalism) of being frozen, orderly split up and re-processed among members of the market to re-define their value factor the banks were rewarded. I had hoped that they would be properly refactored so that the people could benefit from that change instead of the corporations. Maybe if that had happened the correction our house pricing so desperately needs could have happened.
- dreamdu5t 9y ago
  So a viable solution to student debt is for the government to forgive it all?
  - eropple 9y ago
    Realistically, I think that's going to have to be what happens. The horse is out of the barn. We can close the door through reforming student loan programs, but we have to bring the horse back, first. I say this as somebody who graduated college in 2010 with fairly minimal debt that I've already paid off. I was extremely lucky in my choice of career (and knowing I wanted to do it at the time) and I made better choices than most with regards to picking colleges and what school I attended, and so it kinda pisses me off a little bit--but me being pissed off is distinctly secondary to we have saddled two entire generations with impossible debts in the chase for "employability".
  - conanbatt 9y ago
    A viable one is to let students default on their debt. Then colleges incentives to survive on tuition will align to the students capacity to increase their income. There shouldn't be (considerable) debt going into dead-end college studies.
- adekok 9y ago
  > When major banks fail they take out major parts of the economy. Sure. So... do the bankers go to jail? Nope. They get bonuses. It's a great scam. They play with your money. If they lose, oh well, the government will bail them out. If they win, they keep the money. And either way, the people in charge get large bonuses. Only Iceland chose to charge the bankers who engaged in predatory / illegal behavior. Every other country pretty gave them a handshake, and a pat on the back. And it's still ongoing. https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-bank-bailout/#46feafd52d83 https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-... Look, if the bank is "too big to fail", by all means bail them out. But nationalize it, fire the idiots in charge, and sell off the assets to people who aren't robber barons.
  - slavik81 9y ago
    They let Lehman Brothers die. The results of that were awful. They did more or less what you suggest with the next failure, AIG, which was bought by the government for a song. The government has since sold their shares, making 22 billion dollars profit off that bailout. The government did so well from the deal that the old CEO is trying to sue on the basis that the terms were unfair. After that, the government offered to buy assets from banks to ensure they had enough cash to keep doing business (TARP). Every bank was asked to participate because the government didn't want to single out the weakest ones. They were concerned the stigma would drive away business and push them over the edge. In the end, the government sold off the TARP assets they bought and made another 15 billion dollars profit off that. The bailouts were not that expensive. What was tremendously expensive was the impact of businesses all around the world shaking in fear of being short on cash and unable to secure a loan. That caused them to reduce spending, but one person's spending is another's income. That caused a spiral of dropping incomes and cutting costs. That's where layoffs, bankruptcies, and wage freezes came from. Government revenue dropped significantly too as tax money comes from sales and income. Banks should be smaller. Hell, companies in general should be smaller. We have far too many oligopolies and near-monopolies. Not enough competition. The problem is finding agreement on the specifics. We got a whole slew of new regulations in Dodd-Frank and Basel III, but nobody outside of financial experts know or understand them. The general public doesn't agree on much more than that they hate bankers. I know there's a few common things often pointed to, like reinstating Glass-Steagall, but there's plenty of disagreement there too. For one, I don't think it would have made much difference in this crisis. The counterparty risks that dominated this crisis were all in the investment sides of the companies anyways. It seems more like a pet cause than an actual solution. I guess the problem is that politics is broken. Ideally, smart, well-informed people would discuss these things and the public would listen and support the best ideas. That's not how politics works these days, though. Party ideology is basically religion at this point. Fix the government and everything else flows from there. But, that's easier said than done. The American government is fractured and broken because American society is fractured and broken. It's not clear how to make it whole again.
- eli_gottlieb 9y ago
  >When major banks fail they take out major parts of the economy. When the working class is bankrupt or in debt peonage, it takes out major parts of the economy.
- andrepd 9y ago
  All that rationalization and apologism fails when you consider this simple fact: there has been no one convicted of criminal wrongdoing in the US for bringing about the Great Recession. Much to the contrary, the persons in charge, the persons responsible for great hardship caused to billions of people worldwide for the past decade, they got big fat bonuses that not you or I could ever dream of making, perhaps not even in a lifetime of work. Note I'm not talking about banks as institution, I'm talking about personal responsibility and accountability. That alone shows how much of a farce everything is, how the super-rich and powerful simply play by a different set of rules. Yeah sure, the government had to step in to prevent an even bigger catastrophe. But if indeed it were the case that the people responsible were even for a moment under any threat of actual punishment for their crimes, it would not have all been swept under the rug, and the people in charge simply finding employment elsewhere.
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markshead 9y ago
> Citizens who make similar mistakes when they're young get their lives destroyed. Except in this case the mistake is that the government is willing to guarantee huge loans made to an 18-year-old. There are colleges out there that you can graduate with only a couple thousand dollars of debt and there are other colleges where you can graduate with hundreds of thousands of dollars of debt. A potential fix would be to limit the amount of government-backed student loans to something people can reasonably pay off. If students want to go beyond that, they would need to convince a bank that funding the more extravagant tuition was a reasonable risk to take. With the government-backed student loans, you rely on an 18-year-old to accurately do the risk analysis themselves and the current situation seems to indicate many aren't good at doing this.
- gergles 9y ago
  > A potential fix would be to limit the amount of government-backed student loans to something people can reasonably pay off. They DO limit the amount of government-backed loans you can take for an undergraduate degree to $31,000 (or $57,500 if you can convince TPTB that you are 'independent', which is much harder than it sounds.) Other loans don't have limits, but aren't government backed. They're private loans but get many of the same privileges, including that the loans aren't dischargeable in bankruptcy. This sort of makes sense, because you can't repossess a degree, but it also sort of doesn't because of the points you made.
  - derefr 9y ago
    Insofar as bankruptcy itself was meant to be an "escape hatch" to avoid designing forgiveness into every element of the system, adding any situation where bankruptcy is impossible seems like it destroys the purpose of having bankruptcy exist in the first place. I mean, I get the real problem: just-graduated students have no assets, but a lot of debt, so they have no disincentive from declaring bankruptcy. Hard to come up with a solution to that, since—if the just-graduated student had assets—they'd just be able to pay the debt with them.
    - mejin 9y ago
dominotw 9y ago
Bank bailout was not done out of kindness towards banks. It was done to save the economy from free fall. Infact some banks like JPM were forced to accept bail out even though they didn't want or need a bailout.

SQL2219 9y ago

Modern day debtors' prison.

robert_foss 9y ago

I would call this as yet another consequence of not having free education.

randomdata 9y ago
I would call it a consequence of supply management. Once you get past the headline, you soon see this has nothing to do with education at all. Rather, these professions have created a regulatory environment where only those who buy into it are allowed to participate. This artificially limits the supply of workers to artificially inflate incomes. If the 'quota' was freely accessible to anyone then the whole reason for the supply management would be lost altogether.
- nickthemagicman 9y ago
  This is not exclusive of the issue of thread parent. Regulatory licensing hurdles AND education both have major issues.
  - randomdata 9y ago
    I see no issue with the education system. You can learn anything you want on demand, for what is basically no cost whatsoever (other than your time and minor incidentals), with virtually no barrier to entry. The credentialing and licensing process is horribly broken, but only related to education to the extent that we have decided to sometimes link them together. There is no intrinsic relationship between them.
    - abiox 9y ago
      > I see no issue with the education system. You can learn anything you want on demand, for what is basically no cost whatsoever (other than your time and minor incidentals), with virtually no barrier to entry. are you referring to the internet as "the education system"?
      - 9y ago

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teslabox 9y ago

The education industry is kind of a racket. The state pays to send children to 13 years of schooling, but at the end they haven't learned much of anything. Someone here at HN had this comment about their experience: "Really just screw public school in general. The whole place was 95% waste of time followed by a 'congratulatory' piece of paper." -https://news.ycombinator.com/item?id=14047919 https://news.ycombinator.com/item?id=14047919 If a politician was courageous, and didn't care about getting re-elected, they'd point out that the system could be fixed by getting rid of Kindergarten, replacing 1st and 2nd grade with structured activities instead of 'classroom time' (prison for children), replacing high school with something more like community college, and allowing the remaining years to be much more flexible - conducted for the learner's benefit, rather than the system's... But school has been transformed from an important social institution into a jobs project. Children & teachers are both trapped.

loceng 9y ago
In the end this would be more efficient than the existing system, where it only seems efficient because no one's really keeping track of the qualitative.
lukeschlather 9y ago
The system cannot easily be fixed. Some students might be able to get by with just 12 years of schooling, for some jobs. Some students may need 18 years of schooling to be able to effectively hold down a minimum-wage job. Most students who go into skilled trades probably need at least 12 years of schooling. But knowing which 12 years is the hard part. Sure, somebody who knows they want to be an electrician at the age of 10 can probably be competent by 18, but we shouldn't be locking people into that kind of flat job progression. Even if we accept that simple trade schools are the ideal, I'd still argue we should be encouraging people to study a liberal mix of arts taking 17-20 years (just with liberal arts mixing trades instead of academics.)
- fpisfun 9y ago
  This type of stuff is hard to figure out but where I currently live there are a lot of people who would be much better off if they were locked into a career progression to become an electrician at age 10.

throwanem 9y ago

The two photos in that article tell two different stories. I wonder why.

abiox 9y ago
what is the difference, and why is the difference noteworthy such that you wonder about it?
- throwanem 9y ago
  One is set in a spare hospital corridor. Its subject wears scrubs and a woebegone expression. The sense is one of desperation - of at best a forlorn hope, if not of hopelessness outright. It is in every respect commensurate with the textual depiction of the subject as someone struggling nobly under an unjustly imposed burden. The other is lush, full of color and interest and expensive appointments: fine curtains, musical instruments, a leather sofa. Its subject wears a stylish outfit and a look that lies somewhere between a smirk and a sneer. One need not read a subtext of entitlement into the image. Entitlement is the whole of its text. Yet these photographs depict two people whose situations the article they accompany would have us regard as effectively parallel. It's an odd juxtaposition, and one whose origin in mere happenstance would surprise me greatly of so consummately professional an A-list blog as this. The cliché is that a picture is worth a thousand words. These two pictures are worth two very different thousands of words. Such things do happen by accident, but not, I think, at the New York Times. So I'm curious about the purpose that underlay their selection.
  - throwawayjava 9y ago
    This is the most odd post I've read in quite a while. I was going to reply defending the subject of the article -- a middle-class person with hobbies and a home who fell on some temporary bad luck and was pounded into the ground by an objectively bad confluence of policies. But then I realized you think blue and red pigments are symbols of extravagance, and even in 1905 I'd be pretty lost on how to reply to that...?

Arubis 9y ago

From the article, it sounds as if records are pretty informally kept in most cases, if at all. I’d be interested in how this breaks down across gender lines. When I think of (jobs requiring licensure) INTERSECTION (jobs that don’t pay enough to pay down student loans), I come up with non-doctorate level healing/helping professions, like nursing, social work, and education, all of which are predominantly female.

Sniffnoy 9y ago

This just seems completely irrational. Do lenders imagine they're more likely to recover their money this way? This article needs more information to explain how something so completely irrational-sounding could arise. Questions I still have after reading this article: * Are we specifically talking about loans by the government, or student loans in general? * If the latter, does the lender have any say in this, or does the government just do this unilaterally? * How the hell did this happen? Yes, it was part of a bundle of "aggressive collection tactics" but... really, more information is needed here. Is this, like, a case of the government having the wrong incentives, needing more to look tough than to actually recover their money? If this applies to private loans, what did private lenders have to say about this at the time? Etc.

nawitus 9y ago
"This just seems completely irrational. Do lenders imagine they're more likely to recover their money this way?" In theory this punishment can increase the total number of loans paid, even if the individuals who default and lose their jobs won't be able to pay their loans back. Why? Perhaps the fear of the punishment incentives loaners to not default.
- Sniffnoy 9y ago
  I mean, yes, I understand that line of reasoning, but like... were any actual calculations done? This just seems like such a bad idea when (as is pointed out in the article) there are plenty of other things you could do in such a case that won't so adversely affect your ability to recover your money.
danjoc 9y ago
>Do lenders imagine they're more likely to recover their money this way? When the mob cripples/kills a gambler who can't pay, they're not trying to get the money back. They're sending a message to other gamblers.
- derefr 9y ago
  Gamblers are under a very autonomous incentive structure: they want to gamble, and they can be scared into not doing so by consequences that would befall them personally. Student loans don't work like this, I think, because most kids going to college aren't doing so because they want to. Instead, they think they need to, either because their parents demand it, or society demands it. When you think you need to do something (i.e. there are no other options/routes to not-dying), adding risks to it doesn't have any effect on the math.

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emilfihlman 9y ago

I find absolutely ridiculous that a license can be taken away because of not having money. It is unbelievable.

protomyth 9y ago

In North Dakota's defense, the law here was probably put into place when the Bank of North Dakota was doing the majority of loans (SLND). It was really, really hard to default since you could get a deferment with a phone call or change your payment amount the same way. I had about 5 years (various lengths over the loan) where I didn't pay on my student loans because my take home was too low. I don't know what the situation is now but SLND was really, really easy to get to something that was acceptable. [edit] hold the heck up: The section of the North Dakota Century Code these websites are quoting is 28-25-11 which has the title "28-25-11. Property applied - Wages exempt - Suspension of recreational licenses for nonpayment of defaulted state guaranteed student loans." - note the word recreational www.legis.nd.gov/cencode/t28c25.pdf - no hunting for you - The court may withhold or suspend any certificate, permit, or license issued by lottery, tag, electronically, or over the counter by the director of the game and fish department which the judgment debtor is required to obtain before engaging in a recreational activity.

kirykl 9y ago

Isn’t this what garnishment is for? Garnish their wages if necessary why revoke the ability to work

Celarnor 9y ago
There's garnishment limits. Since they have to leave you with at least 30 hours worth of minimum-wage earnings per week, a lot of people who can't afford their loans are effectively un-garnishable.

lisper 9y ago

This is another example of society putting morality above practical considerations. The result is cutting our nose off to spite our face. The moral calculus is: people who welch on their debts are cheating. Cheaters must be punished. The most effective way to punish someone who hasn't actually committed a crime is to strip them of their "privilege" to work. The net result is to make it even harder for them to pay their debt, which nobody actually wants. This is not an isolated example. Another is the way in which "cheating" is discouraged in school. If one kids convinces another kid to do their homework for them, that's called cheating and it's punished. But in fact the ability to persuade other people to work for you and negotiate a deal where both sides feel like they've come out ahead is one of the most valuable skills a person can develop. What the education system calls "cheating" is often budding entrepreneurship, and it really ought to be encouraged. But it isn't.

zanny 9y ago
If society put its morals in front of its face they would abolish bankruptcy and let people drown in debt. Society doesn't because those writing the rules like having bankruptcy protection. But at the same time, the electorate dictating laws is also way past college age, but also wants their kids to be guaranteed to go to school (and if student loans weren't protected there would be dramatically less money for kids to go into lifelong debt with). If they are in debt for the rest of their lives... thats their problem, but I'll be damned if my kids are not going to college!

qwerty456127 9y ago

Whether it's about a student loan or some other kind ow loan, how exactly are people supposed to pay with their professional licenses suspended? Isn't this policy purely nonsensical? Doesn't suspending such a license in such a case mean preventing the person from ever repaying the debt actually? Isn't it in the best interests of a creditor to help their debtors earn money rather than to prevent them from earning?

Asooka 9y ago
The idea is to set an example. You basically write off this debtor, in the interest of encouraging your other million debtors to think before defaulting on their loans.
- qwerty456127 9y ago
  Thanks. This way it makes at least some sense. But isn't it a way too brutal and still a way irrational from the society point of view? Effectively ridding a skilled person of a life, setting them broke and probably homeless as the result at the same time while funding other peoples welfare and undertaking all kinds of efforts to solve homelessness and joblessness problems on the other hand?
  - bbarn 9y ago
    The article states that those with inability to pay were able to get their licenses back by entering into a payment arrangement. This is targeted at negligent non-payers, not people unable to pay.

lkjlakjsdf 9y ago

I'm not sure what california's policy is but I have licensed work with 5 defaulted school loans, and nothing has happened in 5 years

nether 9y ago
> I have licensed work What does this mean?

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bbarn 9y ago

Yes, student loans are a disaster in this country, but of all things.. nursing is used as the example here? Nursing is one of the easier ways to get value out of an education. A fresh graduate with a 4 year BSN can make ~70K to start, and nearly every major metro has an affordable community college nursing program. This isn't underwater basket weaving here, this is a very marketable skill that requires a fairly low cost (compared to many fields) amount of schooling. The article also states the program is in fact successful at getting people to repay loans, and that people truly unable to pay simply had to enter into a payment arrangement to get their licenses reinstated. This sounds more like people flat out not paying their loans, more than being unable to because of a predatory student loan culture. It's the exact same thing they do to child support non-payers in most states, and it works because the reality is rarely true inability to pay - and when it is, the states are generally sane about it and have programs to accommodate. Pitchforks are coming out way too fast about this, I think.

Overtonwindow 9y ago

It seems like having a license to work is more about barriers than making things safer.

uiri 9y ago

South Dakota is kind of crazy when it comes to this. They cross references people who hold SD drivers licenses with student loan debt databases and buys up the debt. If people fall behind at all, they get a letter warning them that their license will be suspended in 30 days unless they pay up. South Dakota is a very rural state. There are no metros like NYC, SF, or Seattle where you can rely on public transit to get around. http://www.ksfy.com/content/news/State-law-sparks-student-debt-controversy-446255773.html http://www.ksfy.com/content/news/State-law-sparks-student-de...

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qwerty456127 9y ago

I believe that legal barriers restricting qualified people's working rights are the next big thing ought to be abolished after slavery has been. Hopefully in future every person that actually can and wants to do a job will be legally allowed to apply, no matter what.

abalashov 9y ago

I’m surprised how little attention is given to the fact that things like this are a side effect of a car-based society. If you don’t build a world where people depend on their cars to do absolutely anything or to economically function, restricting their freedom isn’t nearly as easy. I mean, to the residents of most European towns and cities, this statement sounds absurd. So you took away my driving licence: so what?

zanny 9y ago
Trick is the residents of those European towns and cities are going to school for free or nearly no cost that they can pay for in real time, don't have to declare bankruptcy if they break a bone a month out of college, and don't need to invest in a car to be able to go anywhere. I really feel the future is in Europe. The winners of American capitalism might be burning a great fire, but it has no kindle to last. Most of Europe burns calmer but more sustainably, at learn in terms of having an educated and skilled population that isn't endemically mentally ill or drug addicted from all the abuses of their society.
alistairSH 9y ago
Don’t forget that states are also revoking professionsl licensee. Not just drivers licenses.

exabrial 9y ago

So... Don't get student loans, but if you do, don't borrow an amount your career wont pay for?

hourislate 9y ago

I live in Texas (DFW). I pay close to 10k a year to the school district. They spent over 2 million dollars on my sons high school this summer to replace the grass on the football field with artificial turf. They also destroyed what looked like a brand new baseball field to replace it with a brand new baseball field. Across the street at the middle school they also replaced the grass with artificial turf for the grade 6-8 kids. The football field is of the same caliber as the Dallas Cowboys use. My son told me a couple of days ago that the PC's in his computer lab are complete garbage and barely work (I bought him an Mac Airbook for his birthday) so he uses his own laptop. He says the lab equipment(physics, Chemistry, Biology) is also marginal. The ignorant fools in my district just passed a Bond Election for like 300 million dollars for God only knows what. My taxes went up by about $500 bucks to the school district. It now almost costs the same amount to send one kid to High School as it does to send the other kid to UoT (Dallas). Where does it end? I don't know.

throwawayjava 9y ago
I address some of your specific concerns below, but here's a tip: be loud and be involved. At a lot of districts, especially in Texas, sports facilities receive a ton of resources because the sports-obsessed parents are loud and make it clear that they vote. But this requires civic-mindedness. You have to care a decade before your kid is in school, and continue caring a decade after, if anything's going to change. That's why sports get so many resources at some districts -- the sports -obsessed parents stay involved long before and long after their kids are out of school. I'm not sure what to say except "welcome to democracy". (e: you might expect things would be better if education were privatized, but in reality the private schools seem even more obsessed with sports, and have their own high school version of the university amenities wars. So I'm skeptical that market mechanisms wouldn't end up behaving similarly to democratic mechanisms.) > They spent over 2 million dollars on my sons high school this summer to replace the grass on the football field with artificial turf. Artificial turf can be cheaper in the long run for primary use athletic fields, which get a lot of abuse and therefore require a lot of ongoing maintenance. You're trading a ~30+ year amortized cost for a single fixed cost, so the number can get pretty high while still working out in the black. $2 million is high for a single field, though. Did it include e.g. upgrades to the stadium seating? And I don't see why a middle school would need turf. I tend to think the sports component of American high schools is stupid. But if it's going to exist, turf can be a cost-efficient choice. WRT the other stuff, again, see "get involved" and "be loud". > The ignorant fools in my district just passed a Bond Election for like 300 million dollars for God only knows what This is generally public information. 300 million sounds like district-wide significant building upgrades. These things usually mix "invisible but important" stuff (routers, HVAC upgrades, etc.) with "visible, high impact" stuff. I'd be surprised if those science and computer labs aren't included? > It now almost costs the same amount to send one kid to High School as it does to send the other kid to UoT (Dallas). Frankly, if you step back for a second, you'd expect K12 education to be more expensive than college. In one case you're lecturing to huge rooms of adults, in the other you're teaching small classes. But that's a whole different conversation...

peralp 9y ago

While not directly related, Bryan Caplan of George Mason University argues that pushing everyone to college doesn't make sense and most of what's learned in school is a waste of time from the job market perspective. The degree is about signaling how competent someone is instead of the useful skills and knowledge obtained via education. The link to the podcast from 2014 better represents this nuanced argument. http://www.econtalk.org/archives/2014/04/bryan_caplan_on.html http://www.econtalk.org/archives/2014/04/bryan_caplan_on.htm... His book on the topic will be released in January 2018 https://www.amazon.com/Case-against-Education-System-Waste/dp/0691174652 https://www.amazon.com/Case-against-Education-System-Waste/d...