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Debt forgiveness for student loans is a horrible idea. It perpetuates choosing degrees that will in 90% of cases never have enough of a return to pay for the l

Debt forgiveness for student loans is a horrible idea. It perpetuates choosing degrees that will in 90% of cases never have enough of a return to pay for the loan itself. Look, I’m not against choosing whatever degree you want. But fiduciary responsibility is doing even a tiny bit of research to see the LTV of that degree. Unless there is out and out fraud, very little of student loans should be forgiven.

jonahbenton 5y ago
Nearly all of these forgiven loans were likely issued under fraudulent pretenses.
- deleted 5y ago
  [deleted]
thaumasiotes 5y ago
> But fiduciary responsibility is doing even a tiny bit of research to see the LTV of that degree. How are you going to measure it? Philosophy majors tend to have good life outcomes. Is that because they were trained in philosophy? Why would training as a chef be less valuable than training as a philosopher?
- hellcow 5y ago
  Presumably if the average earnings of "people who obtained a philosophy degree" is higher than those who trained as a chef, then lenders would be willing to pay more for that education. That seems like a trivial thing for lenders to track and learn over time.
  - thaumasiotes 5y ago
    We're not talking about the lenders investigating the value of making a loan. We're talking about the student investigating the value of obtaining a degree. >>> Look, I’m not against choosing whatever degree you want. But fiduciary responsibility is doing even a tiny bit of research to see the LTV of that degree.
    - chii 5y ago
      > talking about the student investigating the value of obtaining a degree Under a system where there was no gov't guarantee, the students won't be the bottlenecks - the lending institutions would be. And any loans that a student _could_ obtain under that scheme would necessarily be profitable to the lender, and thus the lender gets to do the research. The students could too - but whatever the students find, if that doesn't match up with the lender's own research/analysis, the loan won't happen.
      - thaumasiotes 5y ago
        So what? We're talking about bad behavior by the students. The question is how the students would avoid this bad behavior. Where do lenders come into it?
        chii 5y ago
        > The question is how the students would avoid this bad behavior. they would avoid bad behaviour by the lenders not enabling it. The lender's incentive must align with the student's incentive - getting a paying job that a degree would enable.
        thaumasiotes 5y ago
        But lenders aren't interested in this question at all. We've already covered this: - A philosophy major -- the degree -- is a poor investment on the part of the student. - A philosophy major -- the student -- is a good investment on the part of the lender. The incentives of the lender and the student are not aligned. It doesn't matter what the philosophy student wants to spend his borrowed money on -- he's creditworthy! If you loaned him money for gambling he'd still pay you back. So how does the creditworthy prospective student determine which degrees are valuable and which aren't?
        chii 5y ago
        > So how does the creditworthy prospective student determine which degrees are valuable and which aren't? valueable to who? If the student is credit worthy, then they can pay back the loan, which means they aren't making a bad decision to study something they want to. The current status quo with the gov't backed loans is that uncredit-worthy students still gets loans, which results in the situation you tried to describe - someone borrowing to get an education with which they cannot repay the loans. If that student wasn't backed by the gov't guarantee, noone would have lent, or would've only lent some small amount that is likely to be repaid.
ajross 5y ago
> It perpetuates choosing degrees that will in 90% of cases never have enough of a return to pay for the loan itself. Alternatively, it's fairly winding down the adverse effects of government-sanctioned programs that saddled people with debt for the promise of degrees that will in 90% of cases never have enough of a return to pay for the loan itself. No one argues that these were bad loans and bad degrees. We all agree they shouldn't have been written and that we shouldn't be doing that going forward. But there are still a bunch of young adults out there with unsustainable debt. Isn't that a problem worth doing, well, something about?
causalmodels 5y ago
The article itself states that forgiveness is coming because these institutions defrauded their students
zozbot234 5y ago
Student loans are a horrible idea then, because plenty of students choose degrees with very crappy earning potential anyway. Most of them manage to deal with their debt burden one way or the other, but the for-profit college population has a harder time doing that.
- core-utility 5y ago
  Yes, you're hitting the core of the problem. Loan issuance should be based on ability to provide a career with a return that can reasonably pay the loan. No bank would issue a loan for a major with crappy earning potential, so why does the government?
- azth 5y ago
  Loans (interest bearing ones) have been a known parasitic and immoral practice for thousands of years as they're prohibited in the three major religions (Islam Judaism, and Christianity). The sooner we get rid of for profit loans the better.
  - chii 5y ago
    Not all loans are parasitic - and i dont care for morality arguments since different cultures and belief systems produces different moral systems, and hence not a very objective method of measurement. Loans that produce higher profit than the interest payment is a good (aka, non-parasitic) loan. The student loans _could_ be good, or could be parasitic - it depends on the degree. Unfortunately, because of gov't guarantees and backing, the risk of the loans is offloaded to the taxpayers, but the profits taken by the private institutes. This is what makes it parasitic in most cases. If a private entity is not willing to make the loan, then the gov't shouldn't either. Then naturally, only the non-parasitic loans would be given.
    - azth 5y ago
      The only non-parasitic loans are those given at 0% interest, which is inline with the three religions. Of course the follow up question is how would you run a bank or business that profits from loans? The answer is: you don't. Society is strictly better off without such parasites. There are other ways for true risk sharing such as paying someone with a business idea cash in exchange for a portion of his business. If it succeeds, both parties benefit, if it doesn't, both parties lose. > and hence not a very objective method of measurement. It is very possible to measure the outcome of such system. Look at our current financial system today how corrupt it is, and compare it to the financial laws that Islam defines and the financial health of the resulting societies in each. Wall St would have to be shut down because of the immoral and parasitic practices it engages in (shorting, selling what you don't own, options, selling debt for debt, loans and mortgages, money printing (we know who's in bed with the fed) etc. etc.). The problem is that people keep believing they can patch the system to make it work out, but in actuality, the system only benefits a select few at the top, while everyone else suffers. The end is not going to be pretty when it all comes crashing down.
canyonero 5y ago
> Debt forgiveness for student loans is a horrible idea. This comment reeks of privilege. It ignores the fact that vulnerable people, poor people may have made a decision to to try to improve their future at a young age, say 17 or 18, and are forced to live in debt when their situation isn’t improved or worsens over time. Loan forgiveness should be a tool that can be used to relieve suffering and/or stagnation in some circumstances. Hardly a horrible idea.
- D13Fd 5y ago
  I'm pretty sure that a very high number of the people who would get general college loan forgiveness are privileged people who made poor choices.
  - canyonero 5y ago
    Anyone in a privileged position is not going to be incurring tens to hundreds of thousands of student loan debt because they don't have to. The people disproportionately affected by student loans and are borrowing huge chunks of money to pay for school, don't have it. How do you see that as privilege?
    - D13Fd 5y ago
      That sounds like a very narrow definition of privilege, if it only includes people who can afford to drop tens to hundreds of thousands of dollars on college without loans.
  - noahtallen 5y ago
    It’s important to note that the age at which one accepts the massive financial burden of university is around 17 years old or even younger. So you aren’t even legally considered an adult. At the same time, you likely have most people in authority positions in your life trying to get you to go to college. So whether or not it’s a poor choice doesn’t really matter. The impact of that choice is really too difficult to understand until later in life, at which point it’s too late. The end result, and really the only thing that matters, is that young people in America are royally fucked, and many aspects of that are outside of their control. Bad societal things tend to happen when a certain class/generation gets completely screwed over (many examples throughout history, including the French Revolution and World War II.) Which is why it’s important to solve the issue instead of blaming people. With student loan forgiveness specifically, there are more options than just forgive everyone. We need to change how federal loans work moving forward to avoid more problems. At the same time, you could forgive loans if the total dollar amount you’ve paid matches the principle of the loan. (Lots of people are on repayment plans where they only chip away at interest.) But the real question is why would it be a bad thing to allow young people to have an extra several hundred to thousand dollars per month? Obviously there would be a huge economic impact. Ok the one hand, people could spend more on local businesses, which would almost definitely be good. More spending in general is good for the economy. On the other hand, more people start being able to afford “expensive things” like houses, which are very scarce. In those markets, competition would increase, highlighting the scarcity we already have. But the root problem isn’t that people can suddenly afford a better life, but that we’re putting up with scarcity in several parts of the economy. If we also made economic or policy changes to promote abundance (e.g. an abundance of new housing above and beyond population growth), that problem also goes away. We all want to live in a better world, I’d hope. Public student loan repayments are regressive and have no place in this better world unless they’re changed drastically.
Clubber 5y ago
>Unless there is out and out fraud, very little of student loans should be forgiven. We should only be subsidizing loans for degrees that have a decent chance on being able to pay the loan back. A lot of these degrees are fraudulent in that regard. I know higher education is supposed to be more than a trade school, but when student loans are concerned, viability in the workforce needs to be taken into consideration. Of course, companies used to prioritize and hire people with degrees regardless of what the degree was in because it proved they were teachable. I'm not sure why that isn't the case any longer.
duffyjp 5y ago
I grew up in the 80's, and was told by everyone "don't worry about money, do what you love." It was ingrained by parents, educators, media. Around 2000 when my friends and I went to school a few picked expensive private school art degrees, English lit etc. Thank goodness I'm a nerd and chose CS, because I did it with absolutely no regard to earning potential. What I'm getting at is that with all the fallout of the loan crisis, I think there's a lot more awareness of what higher education is for the 99%. Let the uber-rich learn extinct languages and medieval cooking, the rest of us need jobs.
- rayiner 5y ago
  > I grew up in the 80's, and was told by everyone "don't worry about money, do what you love." It was ingrained by parents, educators, media. The Boomers fucked up American culture in so many different ways.
- etempleton 5y ago
  Very few undergrads are majoring in the liberal arts and humanities today compared to even 10 years ago in the United States. Post the Great Recession the focus on getting a well paying job has become the ultimate goal of parents and their children when entering college and so the sciences, business, and the social sciences are all in vogue. Many colleges, to their credit, are shifting their focus more and more to outcomes and average salary potential.

jonahbenton 5y ago

Nearly all of these forgiven loans were likely issued under fraudulent pretenses.

deleted 5y ago
[deleted]

thaumasiotes 5y ago

> But fiduciary responsibility is doing even a tiny bit of research to see the LTV of that degree. How are you going to measure it? Philosophy majors tend to have good life outcomes. Is that because they were trained in philosophy? Why would training as a chef be less valuable than training as a philosopher?

hellcow 5y ago
Presumably if the average earnings of "people who obtained a philosophy degree" is higher than those who trained as a chef, then lenders would be willing to pay more for that education. That seems like a trivial thing for lenders to track and learn over time.
- thaumasiotes 5y ago
  We're not talking about the lenders investigating the value of making a loan. We're talking about the student investigating the value of obtaining a degree. >>> Look, I’m not against choosing whatever degree you want. But fiduciary responsibility is doing even a tiny bit of research to see the LTV of that degree.
  - chii 5y ago
    > talking about the student investigating the value of obtaining a degree Under a system where there was no gov't guarantee, the students won't be the bottlenecks - the lending institutions would be. And any loans that a student _could_ obtain under that scheme would necessarily be profitable to the lender, and thus the lender gets to do the research. The students could too - but whatever the students find, if that doesn't match up with the lender's own research/analysis, the loan won't happen.
    - thaumasiotes 5y ago
      So what? We're talking about bad behavior by the students. The question is how the students would avoid this bad behavior. Where do lenders come into it?
      - chii 5y ago
        > The question is how the students would avoid this bad behavior. they would avoid bad behaviour by the lenders not enabling it. The lender's incentive must align with the student's incentive - getting a paying job that a degree would enable.
        thaumasiotes 5y ago
        But lenders aren't interested in this question at all. We've already covered this: - A philosophy major -- the degree -- is a poor investment on the part of the student. - A philosophy major -- the student -- is a good investment on the part of the lender. The incentives of the lender and the student are not aligned. It doesn't matter what the philosophy student wants to spend his borrowed money on -- he's creditworthy! If you loaned him money for gambling he'd still pay you back. So how does the creditworthy prospective student determine which degrees are valuable and which aren't?
        chii 5y ago
        > So how does the creditworthy prospective student determine which degrees are valuable and which aren't? valueable to who? If the student is credit worthy, then they can pay back the loan, which means they aren't making a bad decision to study something they want to. The current status quo with the gov't backed loans is that uncredit-worthy students still gets loans, which results in the situation you tried to describe - someone borrowing to get an education with which they cannot repay the loans. If that student wasn't backed by the gov't guarantee, noone would have lent, or would've only lent some small amount that is likely to be repaid.

ajross 5y ago

> It perpetuates choosing degrees that will in 90% of cases never have enough of a return to pay for the loan itself. Alternatively, it's fairly winding down the adverse effects of government-sanctioned programs that saddled people with debt for the promise of degrees that will in 90% of cases never have enough of a return to pay for the loan itself. No one argues that these were bad loans and bad degrees. We all agree they shouldn't have been written and that we shouldn't be doing that going forward. But there are still a bunch of young adults out there with unsustainable debt. Isn't that a problem worth doing, well, something about?

causalmodels 5y ago

The article itself states that forgiveness is coming because these institutions defrauded their students

zozbot234 5y ago

Student loans are a horrible idea then, because plenty of students choose degrees with very crappy earning potential anyway. Most of them manage to deal with their debt burden one way or the other, but the for-profit college population has a harder time doing that.

core-utility 5y ago
Yes, you're hitting the core of the problem. Loan issuance should be based on ability to provide a career with a return that can reasonably pay the loan. No bank would issue a loan for a major with crappy earning potential, so why does the government?
azth 5y ago
Loans (interest bearing ones) have been a known parasitic and immoral practice for thousands of years as they're prohibited in the three major religions (Islam Judaism, and Christianity). The sooner we get rid of for profit loans the better.
- chii 5y ago
  Not all loans are parasitic - and i dont care for morality arguments since different cultures and belief systems produces different moral systems, and hence not a very objective method of measurement. Loans that produce higher profit than the interest payment is a good (aka, non-parasitic) loan. The student loans _could_ be good, or could be parasitic - it depends on the degree. Unfortunately, because of gov't guarantees and backing, the risk of the loans is offloaded to the taxpayers, but the profits taken by the private institutes. This is what makes it parasitic in most cases. If a private entity is not willing to make the loan, then the gov't shouldn't either. Then naturally, only the non-parasitic loans would be given.
  - azth 5y ago
    The only non-parasitic loans are those given at 0% interest, which is inline with the three religions. Of course the follow up question is how would you run a bank or business that profits from loans? The answer is: you don't. Society is strictly better off without such parasites. There are other ways for true risk sharing such as paying someone with a business idea cash in exchange for a portion of his business. If it succeeds, both parties benefit, if it doesn't, both parties lose. > and hence not a very objective method of measurement. It is very possible to measure the outcome of such system. Look at our current financial system today how corrupt it is, and compare it to the financial laws that Islam defines and the financial health of the resulting societies in each. Wall St would have to be shut down because of the immoral and parasitic practices it engages in (shorting, selling what you don't own, options, selling debt for debt, loans and mortgages, money printing (we know who's in bed with the fed) etc. etc.). The problem is that people keep believing they can patch the system to make it work out, but in actuality, the system only benefits a select few at the top, while everyone else suffers. The end is not going to be pretty when it all comes crashing down.

canyonero 5y ago

> Debt forgiveness for student loans is a horrible idea. This comment reeks of privilege. It ignores the fact that vulnerable people, poor people may have made a decision to to try to improve their future at a young age, say 17 or 18, and are forced to live in debt when their situation isn’t improved or worsens over time. Loan forgiveness should be a tool that can be used to relieve suffering and/or stagnation in some circumstances. Hardly a horrible idea.

D13Fd 5y ago
I'm pretty sure that a very high number of the people who would get general college loan forgiveness are privileged people who made poor choices.
- canyonero 5y ago
  Anyone in a privileged position is not going to be incurring tens to hundreds of thousands of student loan debt because they don't have to. The people disproportionately affected by student loans and are borrowing huge chunks of money to pay for school, don't have it. How do you see that as privilege?
  - D13Fd 5y ago
    That sounds like a very narrow definition of privilege, if it only includes people who can afford to drop tens to hundreds of thousands of dollars on college without loans.
- noahtallen 5y ago
  It’s important to note that the age at which one accepts the massive financial burden of university is around 17 years old or even younger. So you aren’t even legally considered an adult. At the same time, you likely have most people in authority positions in your life trying to get you to go to college. So whether or not it’s a poor choice doesn’t really matter. The impact of that choice is really too difficult to understand until later in life, at which point it’s too late. The end result, and really the only thing that matters, is that young people in America are royally fucked, and many aspects of that are outside of their control. Bad societal things tend to happen when a certain class/generation gets completely screwed over (many examples throughout history, including the French Revolution and World War II.) Which is why it’s important to solve the issue instead of blaming people. With student loan forgiveness specifically, there are more options than just forgive everyone. We need to change how federal loans work moving forward to avoid more problems. At the same time, you could forgive loans if the total dollar amount you’ve paid matches the principle of the loan. (Lots of people are on repayment plans where they only chip away at interest.) But the real question is why would it be a bad thing to allow young people to have an extra several hundred to thousand dollars per month? Obviously there would be a huge economic impact. Ok the one hand, people could spend more on local businesses, which would almost definitely be good. More spending in general is good for the economy. On the other hand, more people start being able to afford “expensive things” like houses, which are very scarce. In those markets, competition would increase, highlighting the scarcity we already have. But the root problem isn’t that people can suddenly afford a better life, but that we’re putting up with scarcity in several parts of the economy. If we also made economic or policy changes to promote abundance (e.g. an abundance of new housing above and beyond population growth), that problem also goes away. We all want to live in a better world, I’d hope. Public student loan repayments are regressive and have no place in this better world unless they’re changed drastically.

Clubber 5y ago

>Unless there is out and out fraud, very little of student loans should be forgiven. We should only be subsidizing loans for degrees that have a decent chance on being able to pay the loan back. A lot of these degrees are fraudulent in that regard. I know higher education is supposed to be more than a trade school, but when student loans are concerned, viability in the workforce needs to be taken into consideration. Of course, companies used to prioritize and hire people with degrees regardless of what the degree was in because it proved they were teachable. I'm not sure why that isn't the case any longer.

duffyjp 5y ago

I grew up in the 80's, and was told by everyone "don't worry about money, do what you love." It was ingrained by parents, educators, media. Around 2000 when my friends and I went to school a few picked expensive private school art degrees, English lit etc. Thank goodness I'm a nerd and chose CS, because I did it with absolutely no regard to earning potential. What I'm getting at is that with all the fallout of the loan crisis, I think there's a lot more awareness of what higher education is for the 99%. Let the uber-rich learn extinct languages and medieval cooking, the rest of us need jobs.

rayiner 5y ago
> I grew up in the 80's, and was told by everyone "don't worry about money, do what you love." It was ingrained by parents, educators, media. The Boomers fucked up American culture in so many different ways.
etempleton 5y ago
Very few undergrads are majoring in the liberal arts and humanities today compared to even 10 years ago in the United States. Post the Great Recession the focus on getting a well paying job has become the ultimate goal of parents and their children when entering college and so the sciences, business, and the social sciences are all in vogue. Many colleges, to their credit, are shifting their focus more and more to outcomes and average salary potential.