8 ms·

i predict we’re going to have to bail these people out. once a critical mass of americans do something idiotic, it becomes politically expedient to bail them ou

i predict we’re going to have to bail these people out. once a critical mass of americans do something idiotic, it becomes politically expedient to bail them out and blame the companies for greed. this is a direct response of the government providing unlimited loans to anyone

lazulicurio 8y ago
Not to be too cynical, but I seriously doubt that the individual borrowers will be bailed out. The government will instead provide liquidity to the servicing companies so they can repackage and resell the loans. Nobody really cares about the borrowers; it's all about keeping the companies in business.
toomuchtodo 8y ago
We will bail them out when enough voters vote for candidates who support zeroing out this debt, and write it off as a policy mistake. We’ve wasted trillions on unproductive military initiatives in the Middle East, this would be relatively minor in comparison. The economic productivity realized by these debtors able to be full economic participants instead of having student loan drag for a lifetime outweighs the moral hazard.
- goodells 8y ago
  I can see two distinct groups of people who would take issue with this, not that they'll necessarily have their way: - people who were realistic about their finances and did not take on debt to "drag for a lifetime" in the first place. Why should the "rich" and/or reckless kids who lived in overpriced dorms with unnecessary amenities get bailed out when "I was smart and didn't screw myself from the start"? - people who were able to afford a university education out the gate and were not burdened by any or much debt in the first place (and their parents!). Why should the "poor" and/or reckless kids who reached for something they couldn't & shouldn't have been able to afford get bailed out when "I worked hard to provide for myself / my family from the start"?
  - rosterface 8y ago
    As a member of the first group, I agree with you. I really don't like the idea of subsidizing what I consider other people's bad decisions. I was able to make financially reasonable decisions, which often involved sacrifice, and chose to focus on a viable career. I don't want to spend my hard earned money supporting people who didn't do that. I did not come from money and came from a pretty awful environment so I know this is a possible outcome for most people.
    - troutwine 8y ago
      Also a member of the first group and I disagree with the conclusion. I'd be very happy to see all current student debt forgiven and subsidies to university programs improved. Good on you, though, for getting through an education without debt. That's a real accomplishment. There are for sure a good number of people who get an education for a viable career and wind up with loans that spiral out of control, especially in a country with spotty healthcare or perhaps because they exited school during the Great Recession and got stuck in intern-hell. Point being, there's a good number of folks with student loan debt they can't easily manage who made all the right decisions but got a bad break somewhere. Also, this doesn't even consider people who do civically valuable work but having extremely low earning potential. Are there some people who took out great quantities of loans with no concern for their future? Absolutely. Should such people be hounded by this lack of foresight at the age of 19 into their old age? I'd argue no. Even if you can't find sympathy for the indebted, I'd also argue that very few societies in history have managed to stay cohesive with a large, indebted underclass, let alone prosperous and achieving their potential.
      - rosterface 8y ago
        Actually, I don't have a degree. That's sort of my point. It's very possible to just enter the labor market and make money if you work hard and smart. I'm a developer but I know plenty of people I grew up with who went on to be: military people, plumbers, cops... > there's a good number of folks with student loan debt they can't easily manage who made all the right decisions but got a bad break somewhere. I don't think it's ever the right decision to take out a massive amount of debt. Even to study something you love. You can't fight against the real world economics of that decision. I saw the option to get what I considered to be a lifetime's worth of debt and looked for alternatives. Lots of people who come from lower class backgrounds do the same. I think it's going to be very hard to get those people on board with paying off other people's student debt.
- alkibiades 8y ago
  the only way i’d support that is if the government gets out of the loan game and if we get rid of the provisions that prevent people from filing bankruptcy on the loans.
  - toomuchtodo 8y ago
    Yes, I would agree with this, along with government providing for free community college as well as subsidizing trade schools. Fresh slate and we start over as a country on the right foot for education delivery.
    - briandear 8y ago
      I am a fiscal conservative, but I absolutely can get behind the free community college idea. It would be a net gain for the economy in my opinion as we could significantly reduce student loans to strictly means-tested criteria.
      - dorchadas 8y ago
        There's also a lot of jobs that don't really need degrees, either. One of the main ones I'm thinking of is teachers. Anyone can learn to teach, and an apprenticeship program might be better at actually getting good teachers (plus, it would let them see a few years in the classroom, meaning that they can decide if it's for them early on, and then leave before they start, hopefully decreasing teacher turnover rate). Then you could add specialization at all levels for subject area, and so they do their apprenticeship in the area they want to teach. Oh, and stop elementary school teachers from being generalists while we're at it; that's where a lot of the problem with basic math ability lies, from my experience as a high school math teacher. These teachers honestly have to take the state-mandated tests multiple times because of basic high school level math, yet we expect them to teach kids well...
    - pkaye 8y ago
      In California, community college is $46/unit. Typical full time enrollment is 12-15 units. And low income individuals get that fully covered. They are in the process of making the first year of community college fully subsidized for all residents.
- Mountain_Skies 8y ago
  It would be easier to get the public to agree to this once the root cause is corrected. Getting loan forgiveness while continuing to issue loans that too often end up in default status is going to be a difficult sell. Writing off as a policy mistake might be possible but only if the policy mistake is corrected first or simultaneously.
- johnchristopher 8y ago
  Won't it backfire in some way ? Banks and house sellers rising their prices because these debt free people now can get better credit ?
tramGG 8y ago
cancel the debt, and move towards free colleges.
- mempko 8y ago
  Now sure why you are downvoted. This is by far the best option.
  - tramGG 8y ago
    yeah, weird right?
- Mountain_Skies 8y ago
  Not unless the budgets of these schools are brought under control first. A pipeline of seemingly free money is at least partially responsible for creating the current mess. Making it "free" with no restriction on how much will be spent on "free" is going to lead to even more runaway growth in the cost of providing education.
  - AngryData 8y ago
    They could easily set a limit based on headcount, similar to public schools. The only problem I see with that is people purposefully defunding the system and turning it into a bigger bureaucratic hell like many public schools have become.
- joejerryronnie 8y ago
  Can I add my mortgage debt to this please? I want in on the free stuff too!
  - deleted 8y ago
    [deleted]
- twblalock 8y ago
  I paid off my student loans. If people who didn't pay off their loans get forgiveness, I should be entitled to a refund.
sschueller 8y ago
Who are be baling out? The middlemen? Aren't these loans almost all government backed? Meaning if the loan defaults the government pays the creditor?
- trikonasana 8y ago
  Not all of them, but a good chunk of them are. A lot of student debt is sold to big banks without the students every really knowing. Banks then package them together and sell them again, allowing themselves to make even more loans. The same people that tanked the economy in 2007-2008, and then got bailed out by the taxpayer, are now the primary debt holders of many student loans. The difference is that people with student loans have no way out. We punish those trying to educate themselves and reward those who exploited uninformed borrowers.
- ddebernardy 8y ago
  > Meaning if the loan defaults the government pays the creditor? Yes. And therein lies the problem insofar as I'm aware, because you then owe the money to the US government and you cannot declare bankruptcy on the US government. You can escape paying a ludicrous mortgage or car loan or what have you by declaring bankruptcy. You cannot do the same with the US government, which will garner your wages for all you're worth for the rest of your life if you don't pay back your student loan.
tracer4201 8y ago
If the system provides easy access to cash backed by the US government without disambiguating loan candidates from those who are high risk vs lower risk, how is greed not a factor?
- alkibiades 8y ago
  capitalism is built on greed. it’s like a simple AI with an optimization function for money. the problem is when the govt steps in and aligns incentives such that the greedy/profitable thing to do is to saddle people with debt because its zero risk for the lender
siedes 8y ago
Too educated to fail. :-)

lazulicurio 8y ago

Not to be too cynical, but I seriously doubt that the individual borrowers will be bailed out. The government will instead provide liquidity to the servicing companies so they can repackage and resell the loans. Nobody really cares about the borrowers; it's all about keeping the companies in business.

toomuchtodo 8y ago

We will bail them out when enough voters vote for candidates who support zeroing out this debt, and write it off as a policy mistake. We’ve wasted trillions on unproductive military initiatives in the Middle East, this would be relatively minor in comparison. The economic productivity realized by these debtors able to be full economic participants instead of having student loan drag for a lifetime outweighs the moral hazard.

goodells 8y ago
I can see two distinct groups of people who would take issue with this, not that they'll necessarily have their way: - people who were realistic about their finances and did not take on debt to "drag for a lifetime" in the first place. Why should the "rich" and/or reckless kids who lived in overpriced dorms with unnecessary amenities get bailed out when "I was smart and didn't screw myself from the start"? - people who were able to afford a university education out the gate and were not burdened by any or much debt in the first place (and their parents!). Why should the "poor" and/or reckless kids who reached for something they couldn't & shouldn't have been able to afford get bailed out when "I worked hard to provide for myself / my family from the start"?
- rosterface 8y ago
  As a member of the first group, I agree with you. I really don't like the idea of subsidizing what I consider other people's bad decisions. I was able to make financially reasonable decisions, which often involved sacrifice, and chose to focus on a viable career. I don't want to spend my hard earned money supporting people who didn't do that. I did not come from money and came from a pretty awful environment so I know this is a possible outcome for most people.
  - troutwine 8y ago
    Also a member of the first group and I disagree with the conclusion. I'd be very happy to see all current student debt forgiven and subsidies to university programs improved. Good on you, though, for getting through an education without debt. That's a real accomplishment. There are for sure a good number of people who get an education for a viable career and wind up with loans that spiral out of control, especially in a country with spotty healthcare or perhaps because they exited school during the Great Recession and got stuck in intern-hell. Point being, there's a good number of folks with student loan debt they can't easily manage who made all the right decisions but got a bad break somewhere. Also, this doesn't even consider people who do civically valuable work but having extremely low earning potential. Are there some people who took out great quantities of loans with no concern for their future? Absolutely. Should such people be hounded by this lack of foresight at the age of 19 into their old age? I'd argue no. Even if you can't find sympathy for the indebted, I'd also argue that very few societies in history have managed to stay cohesive with a large, indebted underclass, let alone prosperous and achieving their potential.
    - rosterface 8y ago
      Actually, I don't have a degree. That's sort of my point. It's very possible to just enter the labor market and make money if you work hard and smart. I'm a developer but I know plenty of people I grew up with who went on to be: military people, plumbers, cops... > there's a good number of folks with student loan debt they can't easily manage who made all the right decisions but got a bad break somewhere. I don't think it's ever the right decision to take out a massive amount of debt. Even to study something you love. You can't fight against the real world economics of that decision. I saw the option to get what I considered to be a lifetime's worth of debt and looked for alternatives. Lots of people who come from lower class backgrounds do the same. I think it's going to be very hard to get those people on board with paying off other people's student debt.
alkibiades 8y ago
the only way i’d support that is if the government gets out of the loan game and if we get rid of the provisions that prevent people from filing bankruptcy on the loans.
- toomuchtodo 8y ago
  Yes, I would agree with this, along with government providing for free community college as well as subsidizing trade schools. Fresh slate and we start over as a country on the right foot for education delivery.
  - briandear 8y ago
    I am a fiscal conservative, but I absolutely can get behind the free community college idea. It would be a net gain for the economy in my opinion as we could significantly reduce student loans to strictly means-tested criteria.
    - dorchadas 8y ago
      There's also a lot of jobs that don't really need degrees, either. One of the main ones I'm thinking of is teachers. Anyone can learn to teach, and an apprenticeship program might be better at actually getting good teachers (plus, it would let them see a few years in the classroom, meaning that they can decide if it's for them early on, and then leave before they start, hopefully decreasing teacher turnover rate). Then you could add specialization at all levels for subject area, and so they do their apprenticeship in the area they want to teach. Oh, and stop elementary school teachers from being generalists while we're at it; that's where a lot of the problem with basic math ability lies, from my experience as a high school math teacher. These teachers honestly have to take the state-mandated tests multiple times because of basic high school level math, yet we expect them to teach kids well...
  - pkaye 8y ago
    In California, community college is $46/unit. Typical full time enrollment is 12-15 units. And low income individuals get that fully covered. They are in the process of making the first year of community college fully subsidized for all residents.
Mountain_Skies 8y ago
It would be easier to get the public to agree to this once the root cause is corrected. Getting loan forgiveness while continuing to issue loans that too often end up in default status is going to be a difficult sell. Writing off as a policy mistake might be possible but only if the policy mistake is corrected first or simultaneously.
johnchristopher 8y ago
Won't it backfire in some way ? Banks and house sellers rising their prices because these debt free people now can get better credit ?

tramGG 8y ago

cancel the debt, and move towards free colleges.

mempko 8y ago
Now sure why you are downvoted. This is by far the best option.
- tramGG 8y ago
  yeah, weird right?
Mountain_Skies 8y ago
Not unless the budgets of these schools are brought under control first. A pipeline of seemingly free money is at least partially responsible for creating the current mess. Making it "free" with no restriction on how much will be spent on "free" is going to lead to even more runaway growth in the cost of providing education.
- AngryData 8y ago
  They could easily set a limit based on headcount, similar to public schools. The only problem I see with that is people purposefully defunding the system and turning it into a bigger bureaucratic hell like many public schools have become.
joejerryronnie 8y ago
Can I add my mortgage debt to this please? I want in on the free stuff too!
- deleted 8y ago
  [deleted]
twblalock 8y ago
I paid off my student loans. If people who didn't pay off their loans get forgiveness, I should be entitled to a refund.

sschueller 8y ago

Who are be baling out? The middlemen? Aren't these loans almost all government backed? Meaning if the loan defaults the government pays the creditor?

trikonasana 8y ago
Not all of them, but a good chunk of them are. A lot of student debt is sold to big banks without the students every really knowing. Banks then package them together and sell them again, allowing themselves to make even more loans. The same people that tanked the economy in 2007-2008, and then got bailed out by the taxpayer, are now the primary debt holders of many student loans. The difference is that people with student loans have no way out. We punish those trying to educate themselves and reward those who exploited uninformed borrowers.
ddebernardy 8y ago
> Meaning if the loan defaults the government pays the creditor? Yes. And therein lies the problem insofar as I'm aware, because you then owe the money to the US government and you cannot declare bankruptcy on the US government. You can escape paying a ludicrous mortgage or car loan or what have you by declaring bankruptcy. You cannot do the same with the US government, which will garner your wages for all you're worth for the rest of your life if you don't pay back your student loan.

tracer4201 8y ago

If the system provides easy access to cash backed by the US government without disambiguating loan candidates from those who are high risk vs lower risk, how is greed not a factor?

alkibiades 8y ago
capitalism is built on greed. it’s like a simple AI with an optimization function for money. the problem is when the govt steps in and aligns incentives such that the greedy/profitable thing to do is to saddle people with debt because its zero risk for the lender

siedes 8y ago

Too educated to fail. :-)