8 ms·

Student loan forgiveness would be a bailout for elites

26 points by RickJWagner 6y ago

cafard 6y ago
The elites who paid out to Corinthian Colleges etc.?
exabrial 6y ago
I have tried to explain how student loan forgiveness would actually work to deaf ears. There is no universe where a multi billion dollar bank is going to let billions of dollars of loans evaporate. They have all the connections in government and the all the right people out to dinner to prevent that. Instead, the banks will get their bad loans paid off by the taxpayer. This further incentivizes them to embark on worthless loans as they know there can feel a nearly infinite stream of money into their pockets. The best solution is education: nobody should take out a 70k loan for a job that could only pay 30k. The second is default: lenders should feel the sting of making bad loans and_should not_ be rewarded for bad behavior and taking advantage of kids.
- nextaccountic 6y ago
  > The second is default: lenders should feel the sting of making bad loans and_should not_ be rewarded for bad behavior and taking advantage of kids. This would require being able to get rid of student loans during bankruptcy. Maybe the best policy is to just allow that.
  - Pet_Ant 6y ago
    But the problem is how do you have someone with no assets get access to capital to allow them to build a better life? One approach is free education of course, but I think the context here is to make it work within a free market system.
    - finnthehuman 6y ago
      >But the problem is how do you have someone with no assets get access to capital to allow them to build a better life? Reduce the cost of building a better life. If lenders don't want to make non-guarenteed student loans, then the schools will have to figure out how to lower prices or deal with sharply declining demand. The ballooning administrative overhead at American universities is a well known phenomenon. Guaranteed student loans means there is little downward pressure on it.
    - ggoss 6y ago
      At least for public universities, how about sidestepping the lenders entirely, and replacinh tuition with payment of a fixed percent (say 20%) of 10-year post-graduation income? Aside from the effects that wealth can have on early education (which can't really be dealt with effectively so late in the education process anyways), this would eliminate wealth as a barrier to higher education or to continuity of higher education, and protect students from both predatory lenders and misleading marketing by universities. This would also incentivize colleges to invest more heavily into the aspects of education that actually contribute to career success (e.g. practical skills over fancier stadiums) and to rebalance the number of degrees they offer in each field to what is actually valued by society. For example, if they graduate too many people with degrees in communication, and only half get jobs and pay for the education, then maybe they offered too many communication degrees. Likewise, if every mechanical engineer graduated paid highly for their educations in the 10 years post graduation, they should consider offering more of those degrees. Interestingly, this would incentivize high-value education without any more information than level-of-payment; if, for some unknown reason, all of a university's 'basket weaving' graduates make tens of millions after graduation, then you don't need to know how they made so much money to know that you did something right in how you educated them.
  - zug_zug 6y ago
    At which point nobody would ever give out student loans anymore, and bankruptcy would be the logical choice, even for those who can afford college. And then of course every single generation from now on will ask for student loan forgiveness. Unless it was paid for by the the government. In which case colleges will keep 10xing prices (as they already did in the last generation), for a subpar education, and have taxpayers foot the bill. Soon people will be asking for autoloan forgiveness. At a certain point, if colleges are making enough off of students from taxpayers, they will be incentivized to eventually start offering perks to students to come to the college, like kickbacks, automatic 4.0 for 4 years of partying paid for by taxes. Or maybe more than 4 years.
    - mywittyname 6y ago
      > At which point nobody would ever give out student loans anymore, and bankruptcy would be the logical choice, even for those who can afford college. I bet they would. This is a completely solveable problem without going to the extreme of "no bankruptcy ever." Make bankruptcy contingent upon working for one year per year of schooling. If you still don't have a job that pays well enough to cover your loans and living expenses, then bankruptcy is totally appropriate. Doctors and lawyers won't be eligible until well into their career. That prevents people from immediately declaring bankruptcy. Also, bankruptcy sucks a lot more now than it did in the 70s when this policy was put into place. Bankruptcy now prevents you from renting apartments, buying cars/houses, or getting certain jobs. Anyone declaring bankruptcy after college is looking at being in their 30s before they become truly financially independent. I can't think of a worse system than what we have now. Bankruptcy is a really important component of a functioning financial system, and, IMHO, the lack of bankruptcy for student loans is one of the primary drivers of excessive student loan debt.
- ac29 6y ago
  There are multiple kinds of student loans in the US, but for the most common kind, the "bank" is just the US Treasury (via the Dept of Education). Any forgiveness of loans still would arguably be paid off by the taxpayer, but I think you're imagining loan forgiveness being more complex than it actually is.
- RestlessMind 6y ago
  I believe a better solution is to cap the loan repayments to at most 10% of the borrower's Adjusted Gross Income (AGI) each year for a duration of at most 10 years after graduation. You will automatically see lenders recalibrating loans to what a degree is actually worth in the job market. That would induce universities to change fees as well.
  - exabrial 6y ago
    I think this would be a great start. Banks will definitely find a way around it, but the instant impact would really affect their economics.
MeinBlutIstBlau 6y ago
I love the twitter metrics how paying off all student debt would suddenly creat jobs, people would be all middle class, and gov't taxation would soar. What these 1st semester economics majors forget is suddenly you'd have an influx of people seeking degrees. Employers know that so they'll either A. Decrease wages, or B. Increase the requirements/duties because of heavy competition. Another thing, wiping out debt just doesn't magically make jobs. People who make more than you but don't have enough time to do something do. Somehow I fail to see how a few noisy self entitled afflueza stricken college kids who wanted a degree it bullshitology now deserve a kickback because they were dumb and didn't make a right choice in life. While I agree with another commenter, banks should be able to feel the sting of the default as well as the federal gov't in terms of backed student loans. Not only would college degrees not be required for many jobs simply due to the lack of them in general, but students wouldn't waste their time with nanny state experience of college anyway. Nor would they have absurd debt with a worthless degree. And colleges are just as complacent. They market this stuff to be "rewarding" and whatnot but lie through their teeth about the sheer economics about it.
Shivetya 6y ago
I have no issue with forgiving the first ten thousand spent on college. I do think that if we go the route of paying for college that government treat it like medicare. Assign rates based on course and hours reward and set maximums for a degree. You can damn well bet colleges will rush to meet the requirements after some initial bellyaching. There may even be some degrees which would not qualify. Regardless there should be a cap regardless of degree. Too many colleges are sitting on billions in endowments and are effectively hedge funds that happen to run universities. Harvard is approaching fifty billion dollars. Besides their endowments many are excused from paying local taxes which puts the cost on the everyday average citizen. We should also investigate clawing back loan money for where the student cannot pay and the load values beyond a certain amount from the university
belval 6y ago
I understand that this is a sensitive topic for people in the US (not from the US), but I am making this comment in good faith. The current situation notwithstanding, why should the government forgive student loans? Shouldn't the responsability lie with the student to actually do the math and not graduate in pottery at 20k$/year since there is no chance of ever paying it back? Don't get me wrong, I think tuition should be much lower in the US to avoid the situation entirely (much like we do in Canada), but it's not like the debt magically appeared, they had to apply to college knowing what it would cost, chose to take on debt and then the government should "fix" that bad decision for them?
- ntsplnkv2 6y ago
  Expecting 18 year olds coming from relatively poor families to understand debt is a tall order in the US.
  - Google234 6y ago
    If you aren’t capable of understanding debt you should t go to college.
    - rendall 6y ago
      Your moral judgment notwithstanding, here we are, discussing the problem of people unable to pay their expensive guaranteed loans. Perhaps your proposal is that, before someone takes out a loan, they take and pass a course that covers interest rates, credit scores, expected income, alternatives, and other such issues? Is that what you meant?
    - rychco 6y ago
      I won't speculate whether it has anything to do with politics or financial literacy, but for many people in the US, debt is a widely accepted cost of participating in society. I am fortunate enough not to have any debt, but many of my peers will regularly go into debt in excess of $100K in order to afford the cost of higher education and a home. Debt is just an ordinary part of life in the US.
stephen_cagle 6y ago
Or maybe we should just do 2 things: 1) Allow student loans to be forgiven in bankruptcy like any other debt. I am tickled that this article makes an argument about "moral hazards"; ignoring the fact that student loans are unlike almost any other loan in that they can not be removed with a bankruptcy. That is not a moral hazard, that is a moral abomination. 2) Slowly get out of the business of having the federal government guarantee loans without regard to expected payment. We need to keep the immediate expectations in play to not upset too much. However, any loan made without consideration of repayment potential is absurd. Either just provide a grant or don't provide money.
- kardos 6y ago
  Re 1, the argument against discharging student loans in bankruptcy is that it incentivizes declaring bankruptcy upon graduation
  - nine_zeros 6y ago
    >Re 1, the argument against discharging student loans in bankruptcy is that it incentivizes declaring bankruptcy upon graduation And that is a risk assessment lenders would need to make. This is how all debt works. Without avenues of discharge, this debt is like slavery.
    - jmpman 6y ago
      Without loans, the ability to climb to another economic tier exists only for those able to work hard, get academic scholarships, plan efficiently, study hard. Discharging student loans in bankruptcy, will make it so that nobody will lend to students. I wouldn’t. Would you? I could see a loan program where the terms can be no more then 20% of a graduates income for more than 7 years. But, then would we allow the lenders to discriminate on which degrees they’ll fund? Would you fund a degree in computer science? Maybe? Political science? Is the student studying to be a lawyer? Ok. Art History? Probably not. Even with a limit of 20% over 7 years, that’s roughly equivalent to 1.4 years of wages. Should the loan cover tuition and living expenses for 4 years of college? That’s a heck of a deal.
Proven 6y ago
Which bailout wasn't?
deleted 6y ago
[deleted]
wpdev_63 6y ago
Student loans should be able to go into bankruptcy to correct the market. That's it. Nothing else is needed. It would fix the problem with the diploma mills and degrees that don't recoup the investment. Obviously people would declare bankruptcy the day they graduate so there needs to be a special type of process for discharging the loans. There's income based financing and there is loan discharge after a certain time so you're never in a 'spot' not to 'pay' them but the gov't is propping up the market and that needs to end.
helen___keller 6y ago
> Forgiving student loans with such a broad stroke would create tremendous moral hazard. Individuals who scrimped for years, forgoing dinners with friends and vacations and fancy phones to pay off their student loans, would effectively feel ripped off knowing that had they only been more profligate, the federal government would have wiped away all of their debt. Those who were much less careful about their spending patterns, on the other hand, would feel vindicated. This line of reasoning is nonsense. Paying off tens of thousands of dollars of loans is much more about finding a decently salaried job than it is about holding onto your phone for an extra two years. > In addition, it would, in effect, mean a huge injection into the higher education racket that would encourage colleges and universities to raise tuition even higher. I do agree with this. I think the strongest argument that debt cancellation should be done from the legislative branch is that it needs to be coupled with legislation to prevent the future generation from becoming over-indebted in the first place, rather than leaving incentives as-is. > On top of this, for a Democratic Party that likes to present itself as the party of the worker, it would be a tremendous wealth transfer to the elites. College graduates tend to come from wealthier families and tend to be more well off and connected. A recent Brookings Institution analysis of Federal Reserve data found: “The highest-income 40% of households (those with incomes above $74,000) owe almost 60% of the outstanding education debt and make almost three-quarters of the payments. The lowest-income 40% of households hold just under 20 percent of the outstanding debt and make only 10% of the payments.” It's a bit disingenuous to call this "elites" when we're talking about actually 40% of the country (per the articles' numbers), but there's some truth here that the top 40% of households certainly have more stability and safety net to help their indebted children. So let's call cancelling student debt what it is: a bailout mostly for the middle and upper-middle class. > It would also be quite the spectacle, after years of blasting Trump for executive overreach and calling for more bipartisanship, if Biden came right out of the gate with such an extraordinary power grab. I feel like this line of discourse needs to die. Every president in my memory has been "blasted" for executive overreach. The tools to actually prevent executive overreach belong to the legislative branch, so why are we blaming executives for trying to execute on their agenda?
- jakelazaroff 6y ago
  There’s a different way of looking at the impact on households of different income levels: how much debt do they have relative to their income? Broadly speaking, that top 40% pays back more than their share of the debt. That tells me that people in that bracket pay it off relatively quickly and are replaced with new debtors, whereas the bottom 60% takes significantly longer to pay off their debt. I paid my loans off about four or five years after I graduated. Forgiving my loans would have been nice but not life changing. But if you’re a family in that lower 40% bracket who struggles to pay your loans off for decades, forgiveness would impact your life more — even if the amount of money was less in absolute terms.
iron0013 6y ago
There are a lot of poor and lower middle class people struggling under massive student loans.
throwaway189262 6y ago
I disagree for several reasons. 1) Those with loans are not elites. Elites have their parents pay for school, they don't need loans. 2) budgets for public colleges have been annihilated over the last ~20 years. State governments used to pay a much larger share of tuition. Bailing out students loan debt would pay some of this gap indirectly 3) student loans cannot be discharged in bankruptcy, unlike any other type of debt. "Debt slavery" is real. I know people that have permanently fled the country because there is no other escape from crushing debt. 4) Democrats are very limited in what they can do for relief. With Republicans stonewalling the Senate, they're basically limited to direct one-time payments. It's basically this or nothing
- hhas01 6y ago
  Washington Examiner says that student debt relief would be a Bad Thing? At this point I think it not unfair to take whatever a Republican mouthpiece is claiming and conclude the polar opposite. There was a time when America invested in the education of its children as a way to lift up the country as a whole. But that was a long, long time ago, in political years at least. Certainly, I can see how encouraging an educated populace could be undesireable to a group that’s just spent the last five decades slowly laying the road to a one-party state. I mean, just look at the GOP base. The party of Lincoln is dead; nothing now but Bozo Haram and Kmart Rouge as far as the eye can see. And those who’ve learned their history already know what that sort likes to make of such “intellectual bourgeoisie”: fertilizer.
  - RickJWagner 6y ago
    So much wrong here. The party of Lincoln, in the last 4 years has: - Given record funding to historically Black colleges - Seen record low unemployment for Blacks and Hispanics - Pushed through judicial reform Etc. There is good to be seen, if it is critically examined.
    - hhas01 6y ago
      https://www.politifact.com/factchecks/2020/oct/27/donald-trump/trumps-exaggerated-claim-he-saved-hbcus-2019-fundi/ https://www.politifact.com/factchecks/2020/oct/27/donald-tru... https://www.epi.org/indicators/state-unemployment-race-ethnicity/ https://www.epi.org/indicators/state-unemployment-race-ethni... https://www.theguardian.com/commentisfree/2020/oct/14/the-problem-with-amy-coney-barretts-nomination-isnt-timing-its-her-views https://www.theguardian.com/commentisfree/2020/oct/14/the-pr... https://www.scientificamerican.com/report/the-black-lives-matter-movement/ https://www.scientificamerican.com/report/the-black-lives-ma... https://en.wikipedia.org/wiki/Southern_strategy https://en.wikipedia.org/wiki/Southern_strategy https://www.amazon.com/Alt-America-Radical-Right-Trump/dp/1786634236 https://www.amazon.com/Alt-America-Radical-Right-Trump/dp/17... Really, dude. The Republican party shucked off all moral rights to Lincoln’s name after 1965, when it chose to sell out its principles in exchange for naked power. There’s nothing left now but a cancerous soup of proto fascists, theocrats, oligarch bootboys, and full-time professional liars, lying to the millions of Americans who want to be lied to. Which I’m not, so you can cram your GOP beer goggles where the sun don’t shine, because you’re just not that good at it.
tkuraku 6y ago
I wholeheartedly agree with the sentiment of this article. In addition to this kind of policy being elitist I also think it is racist. Those attending higher education tend to be from more well off backgrounds and white. This is where the whole affirmative action thing started, under representation of minorities in higher education. It is a snub to those who could not attend college due to their socioeconomic background. There are many struggling people who never attended college and don't have student loans, what about them? EDIT: I would directly benefit from this as I have student loans, but if I could make the decision to forgive student loans like this I would say no.
baggy_trough 6y ago
It would be better for society if $50k was sent to almost any other imaginable group, such as those in poverty.
zomg 6y ago
The real question is: How did we get here? The problem is, as I see it, and have been clamoring about for over a decade plus now, is a matter of supply and demand. The price of tuition is skyrocketing because the source of tuition is just a few clicks away online, in the form of a loan, generally always backed by the government. If there's no incentive to "shop around" because you can "just get a loan" then the same can be said about a college and how they decide to price themselves. More supply of money (loans) means prices will always go UP. This is common economic sense. To correct this imbalance, the higher education market needs more competition and that only happens if prices go DOWN, which only happens if LESS money is loaned to students from the government. This would cause tuition to go down because there would be less applicants who have a loan for tuition. Lastly, I'd also add that it doesn't help there are many, many, many generations of young people who think that they need to go to college to be "successful". That couldn't be farther from the truth and it's shameful that society continues to push this idea.

26 points by RickJWagner 6y ago

The elites who paid out to Corinthian Colleges etc.?

I have tried to explain how student loan forgiveness would actually work to deaf ears. There is no universe where a multi billion dollar bank is going to let billions of dollars of loans evaporate. They have all the connections in government and the all the right people out to dinner to prevent that. Instead, the banks will get their bad loans paid off by the taxpayer. This further incentivizes them to embark on worthless loans as they know there can feel a nearly infinite stream of money into their pockets. The best solution is education: nobody should take out a 70k loan for a job that could only pay 30k. The second is default: lenders should feel the sting of making bad loans and_should not_ be rewarded for bad behavior and taking advantage of kids.

nextaccountic 6y ago
> The second is default: lenders should feel the sting of making bad loans and_should not_ be rewarded for bad behavior and taking advantage of kids. This would require being able to get rid of student loans during bankruptcy. Maybe the best policy is to just allow that.
- Pet_Ant 6y ago
  But the problem is how do you have someone with no assets get access to capital to allow them to build a better life? One approach is free education of course, but I think the context here is to make it work within a free market system.
  - finnthehuman 6y ago
    >But the problem is how do you have someone with no assets get access to capital to allow them to build a better life? Reduce the cost of building a better life. If lenders don't want to make non-guarenteed student loans, then the schools will have to figure out how to lower prices or deal with sharply declining demand. The ballooning administrative overhead at American universities is a well known phenomenon. Guaranteed student loans means there is little downward pressure on it.
  - ggoss 6y ago
    At least for public universities, how about sidestepping the lenders entirely, and replacinh tuition with payment of a fixed percent (say 20%) of 10-year post-graduation income? Aside from the effects that wealth can have on early education (which can't really be dealt with effectively so late in the education process anyways), this would eliminate wealth as a barrier to higher education or to continuity of higher education, and protect students from both predatory lenders and misleading marketing by universities. This would also incentivize colleges to invest more heavily into the aspects of education that actually contribute to career success (e.g. practical skills over fancier stadiums) and to rebalance the number of degrees they offer in each field to what is actually valued by society. For example, if they graduate too many people with degrees in communication, and only half get jobs and pay for the education, then maybe they offered too many communication degrees. Likewise, if every mechanical engineer graduated paid highly for their educations in the 10 years post graduation, they should consider offering more of those degrees. Interestingly, this would incentivize high-value education without any more information than level-of-payment; if, for some unknown reason, all of a university's 'basket weaving' graduates make tens of millions after graduation, then you don't need to know how they made so much money to know that you did something right in how you educated them.
- zug_zug 6y ago
  At which point nobody would ever give out student loans anymore, and bankruptcy would be the logical choice, even for those who can afford college. And then of course every single generation from now on will ask for student loan forgiveness. Unless it was paid for by the the government. In which case colleges will keep 10xing prices (as they already did in the last generation), for a subpar education, and have taxpayers foot the bill. Soon people will be asking for autoloan forgiveness. At a certain point, if colleges are making enough off of students from taxpayers, they will be incentivized to eventually start offering perks to students to come to the college, like kickbacks, automatic 4.0 for 4 years of partying paid for by taxes. Or maybe more than 4 years.
  - mywittyname 6y ago
    > At which point nobody would ever give out student loans anymore, and bankruptcy would be the logical choice, even for those who can afford college. I bet they would. This is a completely solveable problem without going to the extreme of "no bankruptcy ever." Make bankruptcy contingent upon working for one year per year of schooling. If you still don't have a job that pays well enough to cover your loans and living expenses, then bankruptcy is totally appropriate. Doctors and lawyers won't be eligible until well into their career. That prevents people from immediately declaring bankruptcy. Also, bankruptcy sucks a lot more now than it did in the 70s when this policy was put into place. Bankruptcy now prevents you from renting apartments, buying cars/houses, or getting certain jobs. Anyone declaring bankruptcy after college is looking at being in their 30s before they become truly financially independent. I can't think of a worse system than what we have now. Bankruptcy is a really important component of a functioning financial system, and, IMHO, the lack of bankruptcy for student loans is one of the primary drivers of excessive student loan debt.
ac29 6y ago
There are multiple kinds of student loans in the US, but for the most common kind, the "bank" is just the US Treasury (via the Dept of Education). Any forgiveness of loans still would arguably be paid off by the taxpayer, but I think you're imagining loan forgiveness being more complex than it actually is.
RestlessMind 6y ago
I believe a better solution is to cap the loan repayments to at most 10% of the borrower's Adjusted Gross Income (AGI) each year for a duration of at most 10 years after graduation. You will automatically see lenders recalibrating loans to what a degree is actually worth in the job market. That would induce universities to change fees as well.
- exabrial 6y ago
  I think this would be a great start. Banks will definitely find a way around it, but the instant impact would really affect their economics.

MeinBlutIstBlau 6y ago

I love the twitter metrics how paying off all student debt would suddenly creat jobs, people would be all middle class, and gov't taxation would soar. What these 1st semester economics majors forget is suddenly you'd have an influx of people seeking degrees. Employers know that so they'll either A. Decrease wages, or B. Increase the requirements/duties because of heavy competition. Another thing, wiping out debt just doesn't magically make jobs. People who make more than you but don't have enough time to do something do. Somehow I fail to see how a few noisy self entitled afflueza stricken college kids who wanted a degree it bullshitology now deserve a kickback because they were dumb and didn't make a right choice in life. While I agree with another commenter, banks should be able to feel the sting of the default as well as the federal gov't in terms of backed student loans. Not only would college degrees not be required for many jobs simply due to the lack of them in general, but students wouldn't waste their time with nanny state experience of college anyway. Nor would they have absurd debt with a worthless degree. And colleges are just as complacent. They market this stuff to be "rewarding" and whatnot but lie through their teeth about the sheer economics about it.

Shivetya 6y ago

I have no issue with forgiving the first ten thousand spent on college. I do think that if we go the route of paying for college that government treat it like medicare. Assign rates based on course and hours reward and set maximums for a degree. You can damn well bet colleges will rush to meet the requirements after some initial bellyaching. There may even be some degrees which would not qualify. Regardless there should be a cap regardless of degree. Too many colleges are sitting on billions in endowments and are effectively hedge funds that happen to run universities. Harvard is approaching fifty billion dollars. Besides their endowments many are excused from paying local taxes which puts the cost on the everyday average citizen. We should also investigate clawing back loan money for where the student cannot pay and the load values beyond a certain amount from the university

belval 6y ago

I understand that this is a sensitive topic for people in the US (not from the US), but I am making this comment in good faith. The current situation notwithstanding, why should the government forgive student loans? Shouldn't the responsability lie with the student to actually do the math and not graduate in pottery at 20k$/year since there is no chance of ever paying it back? Don't get me wrong, I think tuition should be much lower in the US to avoid the situation entirely (much like we do in Canada), but it's not like the debt magically appeared, they had to apply to college knowing what it would cost, chose to take on debt and then the government should "fix" that bad decision for them?

ntsplnkv2 6y ago
Expecting 18 year olds coming from relatively poor families to understand debt is a tall order in the US.
- Google234 6y ago
  If you aren’t capable of understanding debt you should t go to college.
  - rendall 6y ago
    Your moral judgment notwithstanding, here we are, discussing the problem of people unable to pay their expensive guaranteed loans. Perhaps your proposal is that, before someone takes out a loan, they take and pass a course that covers interest rates, credit scores, expected income, alternatives, and other such issues? Is that what you meant?
  - rychco 6y ago
    I won't speculate whether it has anything to do with politics or financial literacy, but for many people in the US, debt is a widely accepted cost of participating in society. I am fortunate enough not to have any debt, but many of my peers will regularly go into debt in excess of $100K in order to afford the cost of higher education and a home. Debt is just an ordinary part of life in the US.

stephen_cagle 6y ago

Or maybe we should just do 2 things: 1) Allow student loans to be forgiven in bankruptcy like any other debt. I am tickled that this article makes an argument about "moral hazards"; ignoring the fact that student loans are unlike almost any other loan in that they can not be removed with a bankruptcy. That is not a moral hazard, that is a moral abomination. 2) Slowly get out of the business of having the federal government guarantee loans without regard to expected payment. We need to keep the immediate expectations in play to not upset too much. However, any loan made without consideration of repayment potential is absurd. Either just provide a grant or don't provide money.

kardos 6y ago
Re 1, the argument against discharging student loans in bankruptcy is that it incentivizes declaring bankruptcy upon graduation
- nine_zeros 6y ago
  >Re 1, the argument against discharging student loans in bankruptcy is that it incentivizes declaring bankruptcy upon graduation And that is a risk assessment lenders would need to make. This is how all debt works. Without avenues of discharge, this debt is like slavery.
  - jmpman 6y ago
    Without loans, the ability to climb to another economic tier exists only for those able to work hard, get academic scholarships, plan efficiently, study hard. Discharging student loans in bankruptcy, will make it so that nobody will lend to students. I wouldn’t. Would you? I could see a loan program where the terms can be no more then 20% of a graduates income for more than 7 years. But, then would we allow the lenders to discriminate on which degrees they’ll fund? Would you fund a degree in computer science? Maybe? Political science? Is the student studying to be a lawyer? Ok. Art History? Probably not. Even with a limit of 20% over 7 years, that’s roughly equivalent to 1.4 years of wages. Should the loan cover tuition and living expenses for 4 years of college? That’s a heck of a deal.

Proven 6y ago

Which bailout wasn't?

deleted 6y ago

[deleted]

wpdev_63 6y ago

Student loans should be able to go into bankruptcy to correct the market. That's it. Nothing else is needed. It would fix the problem with the diploma mills and degrees that don't recoup the investment. Obviously people would declare bankruptcy the day they graduate so there needs to be a special type of process for discharging the loans. There's income based financing and there is loan discharge after a certain time so you're never in a 'spot' not to 'pay' them but the gov't is propping up the market and that needs to end.

helen___keller 6y ago

> Forgiving student loans with such a broad stroke would create tremendous moral hazard. Individuals who scrimped for years, forgoing dinners with friends and vacations and fancy phones to pay off their student loans, would effectively feel ripped off knowing that had they only been more profligate, the federal government would have wiped away all of their debt. Those who were much less careful about their spending patterns, on the other hand, would feel vindicated. This line of reasoning is nonsense. Paying off tens of thousands of dollars of loans is much more about finding a decently salaried job than it is about holding onto your phone for an extra two years. > In addition, it would, in effect, mean a huge injection into the higher education racket that would encourage colleges and universities to raise tuition even higher. I do agree with this. I think the strongest argument that debt cancellation should be done from the legislative branch is that it needs to be coupled with legislation to prevent the future generation from becoming over-indebted in the first place, rather than leaving incentives as-is. > On top of this, for a Democratic Party that likes to present itself as the party of the worker, it would be a tremendous wealth transfer to the elites. College graduates tend to come from wealthier families and tend to be more well off and connected. A recent Brookings Institution analysis of Federal Reserve data found: “The highest-income 40% of households (those with incomes above $74,000) owe almost 60% of the outstanding education debt and make almost three-quarters of the payments. The lowest-income 40% of households hold just under 20 percent of the outstanding debt and make only 10% of the payments.” It's a bit disingenuous to call this "elites" when we're talking about actually 40% of the country (per the articles' numbers), but there's some truth here that the top 40% of households certainly have more stability and safety net to help their indebted children. So let's call cancelling student debt what it is: a bailout mostly for the middle and upper-middle class. > It would also be quite the spectacle, after years of blasting Trump for executive overreach and calling for more bipartisanship, if Biden came right out of the gate with such an extraordinary power grab. I feel like this line of discourse needs to die. Every president in my memory has been "blasted" for executive overreach. The tools to actually prevent executive overreach belong to the legislative branch, so why are we blaming executives for trying to execute on their agenda?

jakelazaroff 6y ago
There’s a different way of looking at the impact on households of different income levels: how much debt do they have relative to their income? Broadly speaking, that top 40% pays back more than their share of the debt. That tells me that people in that bracket pay it off relatively quickly and are replaced with new debtors, whereas the bottom 60% takes significantly longer to pay off their debt. I paid my loans off about four or five years after I graduated. Forgiving my loans would have been nice but not life changing. But if you’re a family in that lower 40% bracket who struggles to pay your loans off for decades, forgiveness would impact your life more — even if the amount of money was less in absolute terms.

iron0013 6y ago

There are a lot of poor and lower middle class people struggling under massive student loans.

throwaway189262 6y ago

I disagree for several reasons. 1) Those with loans are not elites. Elites have their parents pay for school, they don't need loans. 2) budgets for public colleges have been annihilated over the last ~20 years. State governments used to pay a much larger share of tuition. Bailing out students loan debt would pay some of this gap indirectly 3) student loans cannot be discharged in bankruptcy, unlike any other type of debt. "Debt slavery" is real. I know people that have permanently fled the country because there is no other escape from crushing debt. 4) Democrats are very limited in what they can do for relief. With Republicans stonewalling the Senate, they're basically limited to direct one-time payments. It's basically this or nothing

hhas01 6y ago
Washington Examiner says that student debt relief would be a Bad Thing? At this point I think it not unfair to take whatever a Republican mouthpiece is claiming and conclude the polar opposite. There was a time when America invested in the education of its children as a way to lift up the country as a whole. But that was a long, long time ago, in political years at least. Certainly, I can see how encouraging an educated populace could be undesireable to a group that’s just spent the last five decades slowly laying the road to a one-party state. I mean, just look at the GOP base. The party of Lincoln is dead; nothing now but Bozo Haram and Kmart Rouge as far as the eye can see. And those who’ve learned their history already know what that sort likes to make of such “intellectual bourgeoisie”: fertilizer.
- RickJWagner 6y ago
  So much wrong here. The party of Lincoln, in the last 4 years has: - Given record funding to historically Black colleges - Seen record low unemployment for Blacks and Hispanics - Pushed through judicial reform Etc. There is good to be seen, if it is critically examined.
  - hhas01 6y ago
    https://www.politifact.com/factchecks/2020/oct/27/donald-trump/trumps-exaggerated-claim-he-saved-hbcus-2019-fundi/ https://www.politifact.com/factchecks/2020/oct/27/donald-tru... https://www.epi.org/indicators/state-unemployment-race-ethnicity/ https://www.epi.org/indicators/state-unemployment-race-ethni... https://www.theguardian.com/commentisfree/2020/oct/14/the-problem-with-amy-coney-barretts-nomination-isnt-timing-its-her-views https://www.theguardian.com/commentisfree/2020/oct/14/the-pr... https://www.scientificamerican.com/report/the-black-lives-matter-movement/ https://www.scientificamerican.com/report/the-black-lives-ma... https://en.wikipedia.org/wiki/Southern_strategy https://en.wikipedia.org/wiki/Southern_strategy https://www.amazon.com/Alt-America-Radical-Right-Trump/dp/1786634236 https://www.amazon.com/Alt-America-Radical-Right-Trump/dp/17... Really, dude. The Republican party shucked off all moral rights to Lincoln’s name after 1965, when it chose to sell out its principles in exchange for naked power. There’s nothing left now but a cancerous soup of proto fascists, theocrats, oligarch bootboys, and full-time professional liars, lying to the millions of Americans who want to be lied to. Which I’m not, so you can cram your GOP beer goggles where the sun don’t shine, because you’re just not that good at it.

tkuraku 6y ago

I wholeheartedly agree with the sentiment of this article. In addition to this kind of policy being elitist I also think it is racist. Those attending higher education tend to be from more well off backgrounds and white. This is where the whole affirmative action thing started, under representation of minorities in higher education. It is a snub to those who could not attend college due to their socioeconomic background. There are many struggling people who never attended college and don't have student loans, what about them? EDIT: I would directly benefit from this as I have student loans, but if I could make the decision to forgive student loans like this I would say no.

baggy_trough 6y ago

It would be better for society if $50k was sent to almost any other imaginable group, such as those in poverty.

zomg 6y ago

The real question is: How did we get here? The problem is, as I see it, and have been clamoring about for over a decade plus now, is a matter of supply and demand. The price of tuition is skyrocketing because the source of tuition is just a few clicks away online, in the form of a loan, generally always backed by the government. If there's no incentive to "shop around" because you can "just get a loan" then the same can be said about a college and how they decide to price themselves. More supply of money (loans) means prices will always go UP. This is common economic sense. To correct this imbalance, the higher education market needs more competition and that only happens if prices go DOWN, which only happens if LESS money is loaned to students from the government. This would cause tuition to go down because there would be less applicants who have a loan for tuition. Lastly, I'd also add that it doesn't help there are many, many, many generations of young people who think that they need to go to college to be "successful". That couldn't be farther from the truth and it's shameful that society continues to push this idea.