5 ms·

Debt cannot be cancelled, only transferred.

guywithahat 4y ago
Yeah this title doesn't really make sense, and seeing as ITT Tech is now defunct it looks as though taxpayers (funded with a new 1.9 billion dollar funding allocation) will be picking up the tab, and people who worked hard and paid off their loans early won't be seeing anything. I feel like a much better option would have been to make loans private and defaultable (so that if you get a loan it's not government money, and if you plan to get a worthless major private banks can simply charge you more for your loan or even refuse to give loans for a certain degree). ITT Tech was known to be a bad school for a long time and this would have been preventable through a freer market
- lapcat 4y ago
  > funded with a new 1.9 billion dollar funding allocation That's not how it works. The money was already disbursed from past taxpayers to ITT many years ago. No new money is getting disbursed now. (Not to mention that it would require an act of Congress to allocate more money.) Cancelation of debt held by the federal government just means less incoming government revenue in the future. But that revenue was never guaranteed to come back anyway, because many student loan debtors can't afford to pay back their debt, and some die never paying it off. (One of the fastest growing groups of student loan debtors is senior citizens. Some are getting their Social Security garnished.)
  - dominotw 4y ago
    > was never guaranteed to come back anyway do you know what % gets back. This data looks like really hard to find. (One article says around 40-50% [1]) So its a loss of 750-900 million in revenue to the govt? 1. https://www.credible.com/blog/statistics/average-time-to-repay-student-loans-statistics/ https://www.credible.com/blog/statistics/average-time-to-rep...
    - lapcat 4y ago
      I don't know the % total. But I did find that student loan payments were $70 billion per year (in 2019, before the suspension of payments). Which is only 4% of the outstanding debt. And of course new debt keeps getting issued every year. https://slate.com/business/2021/03/student-loan-total-annual-government-payments.html https://slate.com/business/2021/03/student-loan-total-annual...
    - wahern 4y ago
      Most student loans are repaid. That fact is indeed difficult to discover online. (I'd paste a link, but it'd take awhile to track down, again. You learn more about how much intentional and unintentional bias there is by pouring through published reports yourself, anyhow.) The average student loan debt burden at graduation is also much lower compared to commonly cited statistics--e.g. $~30k circa 2021 according to https://educationdata.org/average-student-loan-debt-by-year https://educationdata.org/average-student-loan-debt-by-year, but I'm not sure if those figures include graduate loans. For 4-year undergraduate programs at public universities the average is lower still--~$26k (see https://www.aplu.org/our-work/5-archived-projects/college-costs-tuition-and-financial-aid/publicuvalues/student-debt.html https://www.aplu.org/our-work/5-archived-projects/college-co....). And note that these are averages; medians are significantly lower (on the order of $5-10k, IIRC) but almost as bothersome to find as the percentage of student who pay off their loans. Published statistics are highly misleading because once a loan balance is repaid in full its no longer included in statistics. IOW, statistics only include outstanding balances, and over time that group increasingly skews toward the small subset that are never able to reach a $0 balance. That subset naturally also skews toward much higher outstanding balances, both because they skew toward much higher balances at graduation, but also because their inability to bring it down to $0 strongly correlates with inability to bring down the balance at all, and thus face balances inflated by compounding interest. Similarly, students who never had to borrow (wealthier parents, or poor enough to receive free rides through grants and scholarships) are excluded from balance numbers--42% for 4-year public universities according to https://www.aplu.org/our-work/5-archived-projects/college-costs-tuition-and-financial-aid/publicuvalues/publicuvalues-resources/q2/debtcapimage.jpg.png https://www.aplu.org/our-work/5-archived-projects/college-co... (via link above). Another major bias factor is that many statistics (perhaps most?) aggregate data for both undergraduate and graduate students, the latter usually including business, law, and medicine. (Occasionally you'll see reports disaggregating medical and sometimes law students.) Graduate students tend to have much larger balances. Many of them also tend to have much more earning power, but those who pay off their balances disappear from the data (see above). Graduate program data is irrelevant to the question on most people's minds--is college (i.e. undergraduate) worth it?
  - junofan 4y ago
    No. Federal government accounts debt on accrual basis. The loans were recorded as 0. This action records an immediate deficit.
    - lapcat 4y ago
      Eh, does the accounting really matter? It's not like the federal budget is anywhere near balanced anyway. What really matters is when and how much the federal government is paying out to schools, and when and how much the debtors are paying back to the federal government. The actual cash flow. This all seems pretty insane: on pages 9 and 10 of "An explanation of the budgetary changes under credit reform", it looks like one hand of the government, which is on budget, borrows from another hand hand of the government, which is off budget? ¯\_(ツ)_/¯ My mind is going, I can feel it. https://www.cbo.gov/sites/default/files/102nd-congress-1991-1992/reports/7916.pdf https://www.cbo.gov/sites/default/files/102nd-congress-1991-... Anyway, since Congress changed the accounting method from cash to accrual in 1990, they can just change it back if they happen to not like the current deficit numbers. ;-)
      - guywithahat 4y ago
        We're currently experiencing ~8% inflation; it very much does matter. Someone has to pay it, which means it'll happen either as a tax or inflation
        lapcat 4y ago
        > Someone has to pay it It. What is "it"? Pay what, exactly?
  - nradov 4y ago
    So will students who already paid their debts be receiving refunds? Or are responsible borrowers being played for suckers as usual?
    - lapcat 4y ago
      Well, all borrowers are being played for suckers by the rich kids who don't have to borrow.
    - Proven 4y ago
- landemva 4y ago
  Clinton signed law to make these student loan debts non-dischargeable. Apparently this was a gift to his Wall Street backers. https://thehill.com/blogs/congress-blog/economy-budget/283625-how-the-clinton-administration-made-it-harder-on-student/ https://thehill.com/blogs/congress-blog/economy-budget/28362...

Yeah this title doesn't really make sense, and seeing as ITT Tech is now defunct it looks as though taxpayers (funded with a new 1.9 billion dollar funding allocation) will be picking up the tab, and people who worked hard and paid off their loans early won't be seeing anything. I feel like a much better option would have been to make loans private and defaultable (so that if you get a loan it's not government money, and if you plan to get a worthless major private banks can simply charge you more for your loan or even refuse to give loans for a certain degree). ITT Tech was known to be a bad school for a long time and this would have been preventable through a freer market

lapcat 4y ago
> funded with a new 1.9 billion dollar funding allocation That's not how it works. The money was already disbursed from past taxpayers to ITT many years ago. No new money is getting disbursed now. (Not to mention that it would require an act of Congress to allocate more money.) Cancelation of debt held by the federal government just means less incoming government revenue in the future. But that revenue was never guaranteed to come back anyway, because many student loan debtors can't afford to pay back their debt, and some die never paying it off. (One of the fastest growing groups of student loan debtors is senior citizens. Some are getting their Social Security garnished.)
- dominotw 4y ago
  > was never guaranteed to come back anyway do you know what % gets back. This data looks like really hard to find. (One article says around 40-50% [1]) So its a loss of 750-900 million in revenue to the govt? 1. https://www.credible.com/blog/statistics/average-time-to-repay-student-loans-statistics/ https://www.credible.com/blog/statistics/average-time-to-rep...
  - lapcat 4y ago
    I don't know the % total. But I did find that student loan payments were $70 billion per year (in 2019, before the suspension of payments). Which is only 4% of the outstanding debt. And of course new debt keeps getting issued every year. https://slate.com/business/2021/03/student-loan-total-annual-government-payments.html https://slate.com/business/2021/03/student-loan-total-annual...
  - wahern 4y ago
    Most student loans are repaid. That fact is indeed difficult to discover online. (I'd paste a link, but it'd take awhile to track down, again. You learn more about how much intentional and unintentional bias there is by pouring through published reports yourself, anyhow.) The average student loan debt burden at graduation is also much lower compared to commonly cited statistics--e.g. $~30k circa 2021 according to https://educationdata.org/average-student-loan-debt-by-year https://educationdata.org/average-student-loan-debt-by-year, but I'm not sure if those figures include graduate loans. For 4-year undergraduate programs at public universities the average is lower still--~$26k (see https://www.aplu.org/our-work/5-archived-projects/college-costs-tuition-and-financial-aid/publicuvalues/student-debt.html https://www.aplu.org/our-work/5-archived-projects/college-co....). And note that these are averages; medians are significantly lower (on the order of $5-10k, IIRC) but almost as bothersome to find as the percentage of student who pay off their loans. Published statistics are highly misleading because once a loan balance is repaid in full its no longer included in statistics. IOW, statistics only include outstanding balances, and over time that group increasingly skews toward the small subset that are never able to reach a $0 balance. That subset naturally also skews toward much higher outstanding balances, both because they skew toward much higher balances at graduation, but also because their inability to bring it down to $0 strongly correlates with inability to bring down the balance at all, and thus face balances inflated by compounding interest. Similarly, students who never had to borrow (wealthier parents, or poor enough to receive free rides through grants and scholarships) are excluded from balance numbers--42% for 4-year public universities according to https://www.aplu.org/our-work/5-archived-projects/college-costs-tuition-and-financial-aid/publicuvalues/publicuvalues-resources/q2/debtcapimage.jpg.png https://www.aplu.org/our-work/5-archived-projects/college-co... (via link above). Another major bias factor is that many statistics (perhaps most?) aggregate data for both undergraduate and graduate students, the latter usually including business, law, and medicine. (Occasionally you'll see reports disaggregating medical and sometimes law students.) Graduate students tend to have much larger balances. Many of them also tend to have much more earning power, but those who pay off their balances disappear from the data (see above). Graduate program data is irrelevant to the question on most people's minds--is college (i.e. undergraduate) worth it?
- junofan 4y ago
  No. Federal government accounts debt on accrual basis. The loans were recorded as 0. This action records an immediate deficit.
  - lapcat 4y ago
    Eh, does the accounting really matter? It's not like the federal budget is anywhere near balanced anyway. What really matters is when and how much the federal government is paying out to schools, and when and how much the debtors are paying back to the federal government. The actual cash flow. This all seems pretty insane: on pages 9 and 10 of "An explanation of the budgetary changes under credit reform", it looks like one hand of the government, which is on budget, borrows from another hand hand of the government, which is off budget? ¯\_(ツ)_/¯ My mind is going, I can feel it. https://www.cbo.gov/sites/default/files/102nd-congress-1991-1992/reports/7916.pdf https://www.cbo.gov/sites/default/files/102nd-congress-1991-... Anyway, since Congress changed the accounting method from cash to accrual in 1990, they can just change it back if they happen to not like the current deficit numbers. ;-)
    - guywithahat 4y ago
      We're currently experiencing ~8% inflation; it very much does matter. Someone has to pay it, which means it'll happen either as a tax or inflation
      - lapcat 4y ago
        > Someone has to pay it It. What is "it"? Pay what, exactly?
- nradov 4y ago
  So will students who already paid their debts be receiving refunds? Or are responsible borrowers being played for suckers as usual?
  - lapcat 4y ago
    Well, all borrowers are being played for suckers by the rich kids who don't have to borrow.
  - Proven 4y ago
landemva 4y ago
Clinton signed law to make these student loan debts non-dischargeable. Apparently this was a gift to his Wall Street backers. https://thehill.com/blogs/congress-blog/economy-budget/283625-how-the-clinton-administration-made-it-harder-on-student/ https://thehill.com/blogs/congress-blog/economy-budget/28362...