It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.
Exactly. Plug the hole first (or concurrently), and then worry about bailing water. Additionally, as others have mentioned, it needs to be done in such a way that we aren't punishing those who have been responsible and made sacrifices to pay off their loans.
I'm not opposed to student loan forgiveness, but I don't think it's nearly as popular as many progressives would like to believe as a standalone proposal. Come up with some qualifications and limitations for reimbursing past loan payments, as well as a systemic fix for the future, and I'd be all for it.
All that being said, is it still wise to forgive student loans at this particular time? Originally, the pitch was that it would help act as a stimulus during the pandemic downturn. Now that we're dealing with the opposite situation, I don't see the rush. Maybe a bill could be passed that had a delayed or gradual effect.
Could it be possible that this is being done more as a way to garner votes for the midterms? Someone else commented that this affects like only a tiny fraction of people w/ student loan, but it does make for a good headline, judging by the number of comments here.
I am starting to think this is a sign of a big weakness in the American system. These half baked actions are evident in health care, security, and all other categories. I think it has to do with the fact that there are so many parties acting in bad faith that it is hard to get comprehensive legislation that addresses the problem as a whole vs just piecemeal bits and pieces because that is all that can be pushed through. I don't know what the solution to this is other than a complete reset of the system (which itself would require the existing system to produce and pass)
>> It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.
A wise man once told me "The first thing you should do when you find yourself in a hole is stop digging". This is my standard response to the student loan crisis and many others.
I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it. That's how it is supposed to work. We don't typically reward people for digging themselves into a hole by bailing them out. Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.
We do, actually, at least in the US. It's called bankruptcy. We generally recognize that sometimes despite best intentions, debts become unpayable and in these cases, the debts get restructured and creditors are frequently wiped out (which is fair, since both borrower and lender take risks).
Student loans can't be discharged through bankruptcy unless the borrower is permanently disabled. It's entirely possible to end up in default on a loan for a degree you never obtained, paying a loan your entire life, without ever decreasing the principal. Unsurprisingly, this rubs people the wrong way.
So first off, remember that the people taking out the loans are typically between 17 and 20. I don't know about you, but when I was 18 I was a fucking idiot. I mean I still am, but more so back then. I would be surprised if you weren't (and you probably aren't even the median case!). Also consider that a lot can happen in 4 years, especially at that age. Your interests typically rapidly change, you learn more about who you are, and you may underestimate your future earnings (especially given that schools tell you that you'll earn so much because of your degree and their connections). But there's some other issues.
- Interest rates have gone up
- Cost of schools have risen
- The government holds most student debt
- It is still usually a good deal to get an education, but the deal is rapidly becoming less of one (the value of the deal is even changing for people in the middle of education or even graduated)
- The clauses on the debt are getting stronger, being almost impossible to cancel the debt and leading to people never being able to pay off their loans.
- The loans are predatory and becoming more so (when I took mine out a decade ago I had the option to pick "fixed rate" or "variable" but that wasn't actually fixed _interest_ rate)
- Schools are promising scholarships and then not giving them (my school would constantly schedule me for meeting with the financial aid office, a requirement, the week after the deadline and wouldn't schedule me before)
- We're better understanding the major impact on our economy when a generation that is in their prime earnings age is still not consuming and instead paying off debt.
- An educated population results in a happy and effective civilization (especially if one of your main exports is technology)
I think there's a lot of good reasons that people are pissed off. Our generations specifically was told "go to college and you'll get a good job and have a stress free life." But we quickly found that going to college doesn't lead to a good job and we can't get the same things our parents did. Jobs are harder to get, they don't pay as much, and housing is insanely priced. So basically people are pissed about a lot of stuff and a whole messed up system, and most young people are either: in college, avoided it because cost, or recently graduated. Considering that, it is unsurprising that it is a major focus.
Also I should add, some bailouts work. Pretty much what people are saying here is "this has gotten out of hand. You need to bail us out so we can effectively participate in society."
> I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it.
Saddling _teenagers_ with such debt is problematic in many ways. For many of my peers they were not ready/cut out for college but still had the debt + schooling jammed down their throats because "it's what you're suppose to do."
Then, there's the cost to quality situation... I got nailed with this one - accredited private college with little oversight with a _horrible_ program for my area of study. We're talking two professors for the entire subject, and most of the courses they had advertised in their catalog hadn't been offered in over _seven_ years. Lots of people's time at school was just jumping through hoops for an "education" with very little value to their eventual career.
Cost has gone through the roof - administrative costs for colleges have skyrocketed. I've worked in marketing for schools - they're businesses before they're educational facilities. They're profit seeking through tuition, grants, donations, etc. Don't even get me started on sports...
> We don't typically reward people for digging themselves into a hole by bailing them out.
They were put through an incredibly profit-seeking system that operates in it's own self interest to get as much tuition as possible. Just like the healthcare industry, we've let administrative costs and middlemen drive the price of an education up while whittling the quality of it down.
100% they were not the only ones digging the hole that they find themselves in. Additionally, I have a hard time nailing 17-18 year olds to the cross for poor decisions in regards to their "digging" activities.
> Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.
And, just saying - yes this happens!! We consistently cut breaks to the interests of capital (large corporations, the rich w/taxes). Regardless of how any of us feel about it, this will continue to happen. So if our corporate benefactors are getting help, why can't a citizen with/seeking an education get some help too?
It's just something that can be presented in a very divisive way for each party to easily capture sizable market shares of the electorate. It became a "valuable" problematic to put forward when the group of people who struggle to pay off their loan became big enough to make it worth it politically.
The way this works is that you just have to define something to be a "necessity" in the public consciousness, because there's a prevailing intuition that it's illegitimate to be asked to pay for anything that fits that description. Medical bills are a necessity, so it's illegitimate to be asked to pay them. You have to go to college to get a good job, so it's illegitimate to be asked to pay for an education. You need a place to live, so high rents are also illegitimate. And so on.
And also reimburse the people who sacrificed to pay theirs off or avoid them in the first place. I’d donate my reimbursement if they did, but of course they won’t.
Demanding "even-stevens" all the time doesn't help the situation at all. The people that were able to pay off their loan debt were people who chose a degree that would be able to make significant money, were talented enough to land a great job in a field without a lot, or had the circumstances that let them finish a degree where others were unable to.
Do some people make bad decisions about degree choice? - Yes
Do some people drop out of school because it's too hard or because of other circumstances (unexpected baby, financial hardship, etc) - Yes
Do those people who either have made bad decisions, had less fortunate circumstances than others, or a combination of both deserve to live under a mountain of debt for the rest of their life? - No
One other thing people don't consider is that Most 18 year olds don't have a good grasp on money or what they want to do in general and in my hometown (poor county in WV) there was a TON of pressure to go to college if you didn't know what you want to do. Kids don't know better to not get into debt for a degree because everyone tells them not to worry about it. There is a serious problem with financial education in the US.
You can help out people who made a bad decision or had bad luck without being so uptight about how everything has to be complete "fair". The world isn't fair from the time we're born till the time we die.
> And also reimburse the people who sacrificed to pay theirs off or avoid them in the first place.
Most of the loans in this specific program were forgiven in exchange for at least 10 years of specific public sector jobs. Those jobs usually come with a reduced compensation in exchange for the loan forgiveness.
I have a few friends who went this route as lawyers because they prefer helping out in the public sector instead of doing corporate lawyering stuff or the other options.
They definitely did not come out financially ahead by going this route, even with the massive loan forgiveness.
Well what about us that didn't have loans and cash-flowed it? I have saved enough cash for my kids education by not buying new cars, no vacations, etc.. Seems I am punished for being frugal. I should blown it all and let the tax payer foot the bill.
I see this as basically just making amends for the failures of the PSLF program. This is for the folks who made years of payments expecting to get loan forgiveness after 10 years as promised, only to then be told none of the payments counted because they didn’t read the fine print or simply because of the loan servicer’s incompetence.
If democrats wanted that, they would write a bill to do so. Not everything has to be bundled up in a multi trillion dollar bill that involves a ton of other unrelated things. The reason they haven't done that is because they don't really want to.
There were a couple other things with a few more dollars allocated in Build Back Better, if I recall, perhaps worthy of more criticism than community college for everyone. Anyway, I wonder how much of the student loan debt is from community college, both as total dollar figure and per borrower. Something tells me that in-state tuition for community college isn’t where all the underwater borrowers went to school.
free community college is already a thing, it's called 'Pell Grants'
republicans don't want to talk about it because it's free money that works, and democrats don't want to talk about it because there's no reason to expand it
Side rant (though somewhat similar to colpabar's reply):
The Democrats tried to govern like they had a large majority, when they had 5 (I think) seats in the House, and a 50/50 Senate. Of course it failed! If you need every single vote, you can only go as far as the least-willing member will let you go.
The Democrats never should have tried to govern that way. They should have been coalition building, trying to find some common ground where they could do some things. Instead, they acted like they could dictate their agenda to Congress. Both Biden and Pelosi should have known better; they have decades of experience in Congress.
Why did they do this? You could argue that they did it because they knew that no Republican would ever cooperate on anything. But if that was the reason, they still should have gone for what they could get through the members they had, not going for the moon.
Or you could suspect that they wanted to blame the Republicans (and maybe the more conservative Democrats) for their lack of progress, as a tactic to win the next election. Well, from all the indications so far, that's not working out for them.
Yes. Additionally, it's crazy that we're singling out this specific type of debt for forgiveness. What exactly is the criteria that makes this debt different from others?
Is it because it's taken on when you're young and unable to understand the risks? If that's the case, I gambled away a LOT of money when I was 22 on casino credit, and I made the mistake of paying off my markers - I should have waited for the "you made a poor decision when you were young" forgiveness train to arrive.
The same could be said for those parasitic $500 "Student Credit Card" offers we all received when we were young, or the kids who decide to finance that brand new Mustang they can't afford at loan shark rates due to no credit history. Why not forgive it all, if the standard is "they were young and didn't know any better"?
And why stop at youth? It's pretty ageist to assume only the young are financially illiterate. There are plenty of older people who make poorly informed financial decisions. Bail them out too? When all the 5/1 ARMs written at 1.6% a year ago for homebuyers barely on the bubble of serviceability reset, we should definitely forgive them for their idiocy as well.
Yes! And if they stopped issuing these loans, tuitions will drop quickly. Im against loan forgiveness, but if they’re going to do it that also need to stop backing these loans.
This program is for people working in the public sector. It's not known at the time of issuing the loan whether the student will quality for loan forgiveness.
This sounds like an attitude og “If you believe your driving to fast, open the door and jump out the car. Pushing the brake won’t bring you to a stop immediately”
This loan forgiveness is for a very specific subset of lenders who have been making payments for 10 years but not yet paid of the loans. Eliminating loans all together would not have put them or society in a better position, it would just mean that next semester there would be hardly any new students accepted at any higher education and the entire education sector in the US would be bracing for impact and trying to figure out how on earth they are going to continue while their normal revenue disappears overnight.
The really crazy thing would be to end the student loan system without providing an alternative. If you do that, only kids with rich parents get to go to college.
The current system is far from perfect but it enables kids to attend college regardless of their parents' wealth. Any replacement system needs to enable that too.
The private market would just require people to be more responsible about taking out loans. If people that take out loans for basket weaving often don't pay them back nobody would give out a loan for basket weaving. If someone is on their 5th major or college without completing any credit they won't get any more loans without having some backing.
But there is a important point here too - these loans are issued with too low of an interest rate BECAUSE they are guaranteed by the government.
Drop that guarantee and the interest rate is going to float to more of a credit card level, which will make them prohibitive for funding tuition, which will put an extreme downward pressure on tuition rates.
Getting the DoE into the student loan market was intentional and is seen as the first step to reworking the entire system. Navient et al are keen to keep the gravy train rolling.
buu700|3 years ago
I'm not opposed to student loan forgiveness, but I don't think it's nearly as popular as many progressives would like to believe as a standalone proposal. Come up with some qualifications and limitations for reimbursing past loan payments, as well as a systemic fix for the future, and I'd be all for it.
All that being said, is it still wise to forgive student loans at this particular time? Originally, the pitch was that it would help act as a stimulus during the pandemic downturn. Now that we're dealing with the opposite situation, I don't see the rush. Maybe a bill could be passed that had a delayed or gradual effect.
janejeon|3 years ago
nebula8804|3 years ago
phkahler|3 years ago
A wise man once told me "The first thing you should do when you find yourself in a hole is stop digging". This is my standard response to the student loan crisis and many others.
pcthrowaway|3 years ago
tejohnso|3 years ago
timssopomo|3 years ago
Student loans can't be discharged through bankruptcy unless the borrower is permanently disabled. It's entirely possible to end up in default on a loan for a degree you never obtained, paying a loan your entire life, without ever decreasing the principal. Unsurprisingly, this rubs people the wrong way.
godelski|3 years ago
- Interest rates have gone up
- Cost of schools have risen
- The government holds most student debt
- It is still usually a good deal to get an education, but the deal is rapidly becoming less of one (the value of the deal is even changing for people in the middle of education or even graduated)
- The clauses on the debt are getting stronger, being almost impossible to cancel the debt and leading to people never being able to pay off their loans.
- The loans are predatory and becoming more so (when I took mine out a decade ago I had the option to pick "fixed rate" or "variable" but that wasn't actually fixed _interest_ rate)
- Schools are promising scholarships and then not giving them (my school would constantly schedule me for meeting with the financial aid office, a requirement, the week after the deadline and wouldn't schedule me before)
- We're better understanding the major impact on our economy when a generation that is in their prime earnings age is still not consuming and instead paying off debt.
- An educated population results in a happy and effective civilization (especially if one of your main exports is technology)
I think there's a lot of good reasons that people are pissed off. Our generations specifically was told "go to college and you'll get a good job and have a stress free life." But we quickly found that going to college doesn't lead to a good job and we can't get the same things our parents did. Jobs are harder to get, they don't pay as much, and housing is insanely priced. So basically people are pissed about a lot of stuff and a whole messed up system, and most young people are either: in college, avoided it because cost, or recently graduated. Considering that, it is unsurprising that it is a major focus.
Also I should add, some bailouts work. Pretty much what people are saying here is "this has gotten out of hand. You need to bail us out so we can effectively participate in society."
folkhack|3 years ago
> I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it.
Saddling _teenagers_ with such debt is problematic in many ways. For many of my peers they were not ready/cut out for college but still had the debt + schooling jammed down their throats because "it's what you're suppose to do."
Then, there's the cost to quality situation... I got nailed with this one - accredited private college with little oversight with a _horrible_ program for my area of study. We're talking two professors for the entire subject, and most of the courses they had advertised in their catalog hadn't been offered in over _seven_ years. Lots of people's time at school was just jumping through hoops for an "education" with very little value to their eventual career.
Cost has gone through the roof - administrative costs for colleges have skyrocketed. I've worked in marketing for schools - they're businesses before they're educational facilities. They're profit seeking through tuition, grants, donations, etc. Don't even get me started on sports...
> We don't typically reward people for digging themselves into a hole by bailing them out.
They were put through an incredibly profit-seeking system that operates in it's own self interest to get as much tuition as possible. Just like the healthcare industry, we've let administrative costs and middlemen drive the price of an education up while whittling the quality of it down.
100% they were not the only ones digging the hole that they find themselves in. Additionally, I have a hard time nailing 17-18 year olds to the cross for poor decisions in regards to their "digging" activities.
> Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.
And, just saying - yes this happens!! We consistently cut breaks to the interests of capital (large corporations, the rich w/taxes). Regardless of how any of us feel about it, this will continue to happen. So if our corporate benefactors are getting help, why can't a citizen with/seeking an education get some help too?
dudul|3 years ago
dionidium|3 years ago
throwaway894345|3 years ago
InitialBP|3 years ago
Do some people make bad decisions about degree choice? - Yes
Do some people drop out of school because it's too hard or because of other circumstances (unexpected baby, financial hardship, etc) - Yes
Do those people who either have made bad decisions, had less fortunate circumstances than others, or a combination of both deserve to live under a mountain of debt for the rest of their life? - No
One other thing people don't consider is that Most 18 year olds don't have a good grasp on money or what they want to do in general and in my hometown (poor county in WV) there was a TON of pressure to go to college if you didn't know what you want to do. Kids don't know better to not get into debt for a degree because everyone tells them not to worry about it. There is a serious problem with financial education in the US.
You can help out people who made a bad decision or had bad luck without being so uptight about how everything has to be complete "fair". The world isn't fair from the time we're born till the time we die.
PragmaticPulp|3 years ago
Most of the loans in this specific program were forgiven in exchange for at least 10 years of specific public sector jobs. Those jobs usually come with a reduced compensation in exchange for the loan forgiveness.
I have a few friends who went this route as lawyers because they prefer helping out in the public sector instead of doing corporate lawyering stuff or the other options.
They definitely did not come out financially ahead by going this route, even with the massive loan forgiveness.
SSilver2k2|3 years ago
If next year all new college students get free tuition I'm not going to be upset that I had to pay.
I'm going to be happy that they don't have my burden.
We as a society need to push the next generation up, not complain that they don't have it as hard as we do.
*Free Tuition = Tuition paid for by our taxes.
madengr|3 years ago
elpool2|3 years ago
nr2x|3 years ago
colpabar|3 years ago
aksss|3 years ago
smegsicle|3 years ago
republicans don't want to talk about it because it's free money that works, and democrats don't want to talk about it because there's no reason to expand it
AnimalMuppet|3 years ago
The Democrats tried to govern like they had a large majority, when they had 5 (I think) seats in the House, and a 50/50 Senate. Of course it failed! If you need every single vote, you can only go as far as the least-willing member will let you go.
The Democrats never should have tried to govern that way. They should have been coalition building, trying to find some common ground where they could do some things. Instead, they acted like they could dictate their agenda to Congress. Both Biden and Pelosi should have known better; they have decades of experience in Congress.
Why did they do this? You could argue that they did it because they knew that no Republican would ever cooperate on anything. But if that was the reason, they still should have gone for what they could get through the members they had, not going for the moon.
Or you could suspect that they wanted to blame the Republicans (and maybe the more conservative Democrats) for their lack of progress, as a tactic to win the next election. Well, from all the indications so far, that's not working out for them.
So why did they take the approach they took?
caeril|3 years ago
Is it because it's taken on when you're young and unable to understand the risks? If that's the case, I gambled away a LOT of money when I was 22 on casino credit, and I made the mistake of paying off my markers - I should have waited for the "you made a poor decision when you were young" forgiveness train to arrive.
The same could be said for those parasitic $500 "Student Credit Card" offers we all received when we were young, or the kids who decide to finance that brand new Mustang they can't afford at loan shark rates due to no credit history. Why not forgive it all, if the standard is "they were young and didn't know any better"?
And why stop at youth? It's pretty ageist to assume only the young are financially illiterate. There are plenty of older people who make poorly informed financial decisions. Bail them out too? When all the 5/1 ARMs written at 1.6% a year ago for homebuyers barely on the bubble of serviceability reset, we should definitely forgive them for their idiocy as well.
fortran77|3 years ago
pmoriarty|3 years ago
sgjohnson|3 years ago
rockinghigh|3 years ago
isitmadeofglass|3 years ago
This loan forgiveness is for a very specific subset of lenders who have been making payments for 10 years but not yet paid of the loans. Eliminating loans all together would not have put them or society in a better position, it would just mean that next semester there would be hardly any new students accepted at any higher education and the entire education sector in the US would be bracing for impact and trying to figure out how on earth they are going to continue while their normal revenue disappears overnight.
If anything would be crazy, that would be it.
stjohnswarts|3 years ago
twblalock|3 years ago
The current system is far from perfect but it enables kids to attend college regardless of their parents' wealth. Any replacement system needs to enable that too.
ben940830298432|3 years ago
pxmpxm|3 years ago
To a politican about the only thing better than a vote buying scheme is perpetual vote buying scheme.
mr_spothawk|3 years ago
Minor nit: The gov't doesn't give the loans, they underwrite & insure the loans.
loourr|3 years ago
outside1234|3 years ago
Drop that guarantee and the interest rate is going to float to more of a credit card level, which will make them prohibitive for funding tuition, which will put an extreme downward pressure on tuition rates.
mywittyname|3 years ago
Getting the DoE into the student loan market was intentional and is seen as the first step to reworking the entire system. Navient et al are keen to keep the gravy train rolling.