It's not that easy. What's to stop everyone from defaulting?
Typically, a loan with interest is a gamble. You want to get your money back with a return. If you loan money you want to ensure you will get your money back by qualifying the applicant. There is a risk though because they might not pay it back, thus you increase the interest rate according to how qualified the loan is. Good investors really focus on getting a qualified applicant (one that can pay it back). Sometimes they don't get their money back and they are forced to write it off - it is apart of the loan business.
Basically, I am not trying to be insulting but I will end up explaining how a loan works - so I will stop there.
With college loans ALL basic loan concepts are wrong. You cannot default on a college loan by law. It follows you through marriage, bankruptcy, or even service in Afghanistan. The people which made these poor loans know they made poor loans backed by the US government. Thus, they have lobbyists pushing congress to ensure student loans are 'unforgivable'. SO! Investing in a student loan is a damn good deal. You have 0 chance of someone defaulting because it is illegal to default. The loan has zero risk. This is why tuition has exploded and why we have a crisis.
So, if you want to major in 18th century French Dance at Yale for 190k - there isn't an investor willing to stop you.
People need jobs and you have a job shortage.
College is seen to be the best/only option for a middle class life - which is driving people to college.
College is not free in America. So people need to pay, but job pay is concentrated in certain fields, and any hitch in the process means that payment schedule gets extended.
To a certain extent, the problem is of course having loans.
But that would just make the main problem obvious - life is expensive and there’s now fewer ways to make a middle class life.
This is like the Indian job market- You are either a STEM / law/ CA / or bust.
I propose that the government should have an anti NEET law (for 'working age' people), that is, someone should always be in Employment, Education or Training. It was either to complete the acronym, or the latter two are differentiated between theory education and trade-school education.
The education/training parts are pretty simple; a minimum 'living wage' (for ACTUAL living, not fake numbers) and housing near the education/training site will be provided in exchange for participating in the education/training. This payment also applies to child student dependents of legal guardians (usually parents) and is their "tax credit" replacement.
The employment part is a combination of publicly paid internships and/or work directly for the public good. In both cases the employee is a civil servant and any "works" they create become the public domain; unless the median pay rate for that job is paid to the government as a "temp" placement fee.
While I'm at it, part time workers receive pro-rated benefits funding and the option to buy from (any of) their employer's benefits pool(s). Partial work shouldn't be an excuse to deny benefits.
If benefits are fully socialized (E.G. single payer primary health cost coverage) then the above can still apply to over the top benefits.
Bad news for art history departments and copious law schools, but good news for nursing, aircraft maintenance, computer science, chemical engineering areas.
The answer to the OPs question is obvious to someone who understands loans (“the same things that keep everyone from defaulting on every loan”).
So, isn’t it actually a dumb question? Or rhetorical, and since its obvious and adds nothing, it seems best to just ignore it.
The original US student loan program gave loans which could be defaulted on just like any other loan. So, maybe a better question would be “why did the US congress change the rules just for student loans?”
If student loans can be defaulted, it doesn't matter what the investor thinks or what interest you get or if you're backed up by the government or not.
Even if you study [insert profitable degree], the rational action to do after graduating is to default, since students typically don't have much to lose.
When those same poor people are crushed with insurmountable amounts of undefaultable debt that follows them for life, they don't fondly think "well, at least I didn't have to grind out a low paying job back in the day".
That is bad?
Or am I missing something? Original question, what's stopping everyone from defaulting right after graduation?
On the other hand, college loans are given out with zero consideration of that. You're just as eligible to take out tons of loans as a poor person majoring in underwater basket weaving as you are are getting a CS degree from Stanford. Even though those have very different probabilities of being able to repay them.
What happens when a lender decides you're unqualified for a student loan?
[0]: https://www.nerdwallet.com/blog/credit-cards/credit-card-bil...
For lots of colleges, I agree. However, lots of people who come from well to do families have their entire colleges paid for by their parents even today with high tuition costs and thus top colleges could still increase feas as rich parents can afford it whereas poor people would have to grind out for years in low paying jobs just to afford the chance to go to the rich schools. Without guaranteed loans, poor students would practically never have the opportunity to go to rich schools.
Solved in what way though? The end solution state might be one where loans are less available, further entrenching generational income inequality.
Community colleges will take more of a lead, tuition will plummet, kids will enter the work force without a “unforgivable” loan.
In a society where academic qualification is more and more required, making loans harder to get will only drive the poorest people to even more desperate actions to ensure their kids get a chance in life.
Don't get me wrong, the debt situation should be resolved (e.g. by making ALL education free, like in Europe), but the core problem of society that "undereducated" people are left to compete for menial tasks must also be fixed.
Which is only the case because we handed out so many diplomas that it became a stigma not to have one... Which happened because we handed out student loans too easily. It's causing the problem more than it's solving it.
(Also it doesn't help that the least risky students are out of the pool by either parents funding or scholarships)
My big beef is that Bush 2 and Congressional Republicans saw this coming, and in 2005 changed bankruptcy law severely curtailing, specifically students, from declaring bankruptcy.
"2005 bankruptcy reform bill making private student loans nondischargeable"
"Many debtors will have to work out repayment plans instead of having their obligations erased in bankruptcy court under the law"
It's a much higher bar for a student to successfully claim hardship than other debtors as a result.
http://www.nbcnews.com/id/7575010/ns/business-personal_finan...
http://www.slate.com/blogs/moneybox/2015/04/16/student_loans...
I've been watching The Vietnam War documentary. Nothing angers me more than hearing Presidentsspeak about "re-election" in the same sentences as they speak about mass casualty campaigns as if it's one of the primary strategic considerations of a war that kills hundreds of thousands.
Politicians who have insulated themselves from the effects of the economy, the same way they insulate themselves from the effects of war, will be forever out of touch and therefore incapable of properly representing their people.
Was it the Abrams Doctrine, I think, that described the purpose of Total War being that decision makers think twice because its their children, their constituencies, their local, State, and Federal economies that pay the price of war? Maybe the same concept needs to exist for education, healthcare, and climate change. Not that Total War exists anymore...
There's an interesting parallel with the cost of healthcare. Increases in costs for both seem to outstrip inflation year over year. And there's lots of of people making lots of money in both sectors. And yet nobody in either sector seems to be able to say exactly why the costs are increasing at the untenable rates they are. The only thing Washington ever seems to do is kick the can down the road.
If you ask people what’s most important for them, health ranks very high, often is #1. So, once you’re rich enough to pay for food, clothing, and living, almost all extra money should go to health, rather than, say, dining at three star restaurants, wearing tailor-made clothing, or four day working weeks.
Also, automation makes things that can be automated cheaper, and, hence, things that can’t (or aren’t yet) relatively more expensive. Education, day care centers and healthcare fall in the latter category.
Well yes an increase in consumer prices for health care results in an increase in health care spending as a percentage of GDP. But that's not what I referring to. I was referring to the fact that the price for basic services and components far outstrip the rate of inflation inflation. Here's one example - generic drugs. A generic drug, barring a supply chain disruption should at most keep with pace with inflation. Using an ancient antibiotic such as doxycycline:
"The price that hospitals and pharmacies pay for a bottle of 500 tablets of doxycycline, a decades-old antibiotic, rose to $1,849 in April, from $20 in October 2013"[1].
There are many other such example regarding run of the mill generic drugs.
Here's another example - a visit to see a primary care physician for either a either a yearly checkup or for because one has caught the flu. During an office visit a patience sees a doctor for maybe 5 to 10 minutes and nurse practitioner for maybe another 10 minutes. Maybe the doctor writes a prescription, updates the patients charts or might additionally refer them to a specialist. None of these activities involves cutting edge technology and the routines of such visits haven't fundamentally changed in years. Yet the price of these office visits has risen 14% in recent year.[2]
Lastly the premiums for the same basic health plane HMO, PPO etc have also continued far outstripped despite the fact that copays and deductibles - the out of pocket portion for consumers have risen not decreased. So it's not even though Americans are paying more for increased coverage or paying more for increased quality they are paying more for less.
[1] https://www.nytimes.com/2014/10/08/business/officials-questi...
[2] http://www.healthcostinstitute.org/report/2016-health-care-c...
So is food, water and plumbing, but those costs decreased.
Providers charge whatever they want, because they know you really don't have a choice and that insurance is picking up the bill, and if insurance won't pay you can go after the patient. Patients don't have any way to price shop (it's usually impossible to know the cost of a procedure or service before you get it, nor what will really be covered by insurance) and are insulated from most of the costs by their insurance.
In education, a huge chunk of the tab is covered by loans, which makes students price-insensitive, and the institution has no real incentive to hold costs down, in fact they actually use the fancy rec center and stadium to attract students. They can also run up the gen-ed courseload to artificially increase the amount of time it takes to graduate. Students have no real flexibility here either, because it's not like you can take a class at another university because it's too much, or choose to pass on a gen-ed.
The sad truth about healthcare is there's just too many middlemen all taking their cut and it all adds up. Hospitals, drug companies, insurance companies, doctors all need to make their cut, and by the time the service is delivered it's extremely expensive. Most other countries impose a lot more price controls, reduce the number of middlemen, and provide doctors with free education to increase the supply and remove the need to repay their own steep student loans (iirc you are looking at about $400k these days). Fixing the problem involves taking on a number of very powerful lobbying groups at the same time and is going to piss off a lot of people whose gravy-train would come to an end.
In schools, the problem largely comes down to reducing the amount of administrators and reducing the spend on non-essential facilities (rec center, stadium, etc). The actual teachers themselves are usually overworked and underpaid, the money is disappearing at an institution/administration level.
The university did put forward that it would save them $300k per year in energy costs, which means that at the cost of $69 million it'll only take them 210 years to make their money back.
https://www.mlive.com/news/kalamazoo/index.ssf/2010/05/weste...
They are currently planning to tear down 12 student dorms and rebuild them at a cost of $55-75k per bed.
https://www.mlive.com/news/kalamazoo/index.ssf/2017/09/weste...
That's the kind of thing that drives up costs.
Anyone else seeing a trend here?
Its not, what should be controversial is the manner in which we are educating children. University based schooling is not the only way to obtain education, nor IMO is it is the best
Personal we should be bringing back more vocational studies, more apprenticeships, and utilizing the ever increasing technology with things likes MOOC to bring the costs of education way down.
I also not believe it should take 16+ years of a persons life to educate them.
There are massive amounts of waste, inefficiencies, tradition in education that need to be eliminated.
All of these are made worse not better by the modern belief that every single student should get a degree, and that is the right of every student to have someone else pay for that degree.
We need to fix the fundamental issues in education first, most people however just want to throw more tax payer money at the problem and hope that by making the people in the work force poorer everything will get better.
But these are just both band aids on America's problems. We are infested with a religion that denies science and education, and we have a political party controlled by 3 families that feel entitled to as much as they can have at the expense of the entire nation. We would need to limit the power of money in politics and reform public education to raise a generation that can see the right for what it is.
Term limits are necessary, there should be no such thing as a "career politician". A politician should be required to have actual skills, and not just a nice smile.
Experience with politics is meaningless, there should be NO establishment. It is always the new guy who reveals the truth to the people, which is a good thing. Experience only results in being able to lie to the public, to further the establishment. Otherwise it becomes us vs them.
People will do anything to maintain power. It should be one year and out, nobody should be able to get rich by becoming a politician.
A good first step would be to get rid of Diane Feinstein.
They don’t prevent people from becoming a “career politicians”, they just make it so that the career is less predictable or stable: new careerists are constantly being churned up from local politics and put into important committee chair jobs (etc.) where they have no relevant competence or experience, the top legislative leaders only last for a couple years, and the most experienced legislators get dumped out the top, often to become paid lobbyists. This encourages short-term legislation including bills mashed together that don’t make sense. Civility/comity is undermined, because legislators don’t need to keep working together years into the future.
To compensate legislators have to lean a lot more on their staff (who are the only people around with some clue about the context). The executive branch gains power at the expense of the legislature, because (a) executive officials are often more experience, (b) the executive can outlast an uncooperative legislative leadership by just waiting a couple years, (c) term-limited legislators have a more precarious career and might be looking for an appointment to a next job.
Our system was originally designed specifically to avoid professional politicians. The initial articles of confederation included term limits. It was only removed after substantial debate. An anonymous essay penned in response to this decision suggested that people who were elected for long periods of time would become "inattentive to the public good, callous, selfish, and the fountain of corruption" continuing with,"Even good men in office, in time, imperceptibly lose sight of the people, and gradually fall into measures prejudicial to them." It's a shame they did not sign their name to the writing as I think we could label this view as fundamentally and absolutely correct. It's perhaps ironic that term limits were likely stripped from the articles not in good faith, but by those earliest 'special interests' who longed be the first professional politicians. The same interests that perhaps drove those stating truth-hoods to do so under the guise of anonymity.
And that problem is endemic to the whole system of professional politicking. Rather than focusing on 'the mission' politicians end up focusing on themselves and getting elected again. In an ideal democracy that would mean they have to work to appease the people. In reality, most of the electorate is grossly uninformed or misinformed. Generally all that matters when getting elected is money. And where does money come from? Not from the masses, it comes from special interests and top dollar donors. An issue only compounded, though not inherently caused, by the variety of ways to avoid any donation limitations such as messaging through 'independent' politician action committees.
Athens picked their Senators by lot, and we probably should consider it.
There are plenty of decent Americans but we also have too many that are juvenile, superficial, ignorant and aggressively incurious.
It really does take experience, connections, networks, and skill to accomplish things in legislatures. Same with getting elected.
The problem is in order to become #2, you have to become #1.
Unless we as voters become far more informed and drastically change the way we evaluate candidates I don't think we'll get #2 skillsets from politicians who also don't have the qualities many term limit advocates despise.
Think evolution algorithm on a government scale.
This is not the case in other fields such as Engineering, Medicine, Education, or Law. More experienced engineers, doctors, lawyers, and educators tend to be better at their craft. Failing to keep up with new methodology/technology is also a problem.
It's almost like the quality of the person is more important than their age or seniority.
Now, I don't have any first-hand experience with legislatures. However, based on analogies in fields I'm more familiar with, I am a bit suspicious of the claim that there aren't any advantages to seniority and experience.
Also, consider this concrete question: would term limits fix the student debt problem? I don't see any arguments in this thread that it would.
Student loans fuel retirement accounts for old people.
Lack of upward mobility helps old rich people.
Tax cuts for the rich by and large help old people.
We have a nation governed by geezers who only care about geezers.
You can consider this in a really simple, but also regular and real, scenario. You're faced by a decision. One choice you think is bad for the country but is strongly supported by various special interest groups who will likely run major positive advertising and other positive 'propaganda' for you, if you go that route. The other decision is good for the nation but vehemently opposed by these same interests. You can expect negative advertising and other consequences should you go this route. It's not hard to see which decision a "professional" politician is going to pick, regardless of whether they're 20 or 90 years old.
Ideally this would all be a nonstarter since you stay in office by getting elected. So do what's good and you get elected again, right? But this goes out the window when people are so easily swayed by the media and misinformation. A very large chunk of people don't measure the results of the nation independently, just based on what they hear in the media or by easily exploited emotional responses.
The highest level of government is the worst place I can think of to have a cadre of amateurs running the show.
Where you err deeply is if you believe their skillset is about running the country.
It's not. It's about getting re-elected and trafficking influence.
Attend some public hearings. Watch how the experienced lobbyists and administrators run circles around legislators.
I now advocate for professional legislators (full time gig) with sufficient staff to tackle the size and complexity of modern governance.
How about instead of "professional legislators " you advocate the reduction of government both in size and complexity. that seems to be a better option IMO
Why are they necessary? How is claiming they are necessary not inherently impugning the concept of self-rule, how is it not inherently illiberal and arbitrary? What kind of base ideology are you subscribing to? Why shouldn't there be a career politician? What are examples of "actual skills" that you think should apply for proper legislating or executing or judging laws?
As someone who did study political science and law, I find term limits in law to be an abomination. A cheat. A long term destroyer of trust and institutional knowledge. You want actual skills, but you refuse to grant a person with such actual skills the position of a professional, with a career. It's an illogical position.
I doubt there is some Dunning-Kruger effect really going on with STEM folks and politics, although the blinders on approach I consistently see makes it superficially appear like that might be possible. Instead I think it's discomfort with the fact there are multiple ideologies, and you must choose, and it is that which will guide your future decision making on policy. Without the choise, you're vaporware. And without adversarialism, you're milquetoast. In both politics and law, the adversarial system is mandatory. I get way more suspicious when two ideological factions agree with each other from the outset on something than when they're adversarial and compelled to compromise. There is no compromise and there is no innovation without adversarialism.
I miss Feynman though. There was a guy with a very good balance between comfort not knowing, and discomfort not knowing. Lack of hubris, and yet no lack of ambition to learn.
Just for this, I am obligated to upvote.
Father Time is undefeated.
Term limits do exist and are called elections. Every single election is a chance to vote someone out of office who hasn't done a good job. The thing that has essentially broken elections as term limits is partisan gerrymandering.
If we set 2 term limits, it would just mean that the corporate elite would just buy a new politician every 2 terms rather than buying a politician for 6 or more terms.
If you wanted to run for a political office. You'd need money. So who has money? And now you are beholden to the wealthy.
It's amazing when you think about it. We can no longer ever have a populist or independent president or congressman really. Because of the money needed to run for office.
Having a max age limit make more sense or remove the seniority rules used to appoint key committee chairs.
They key thing would be strict maximum $ limits for elections and give candidates free time on the tv networks.
If you kneecap politicians, which are somewhat more accountable to us voters, you empower administrators and lobbyists.
If you want more accountability, empower politicians, so they aren't so beholden to monied interests. Public financing of campaigns, for starters. Increase their staffing, so they can manage the work load. Etc.
Term limits is the last of your problems
I realize, that at least in some analysis, this did not happen in Michigan. (just reduction of lobbyist spending was 13%, but politicians with less experience consulted with them more -- See page 19 of [1] ).
However, I think the number of years in service, plus preliminary background requirements for staff members, plus other adjustments, still need to be made for a proper term-limit system.
Fundamentally, I believe, there are no small (defined as less than 1000), humans that should be permanently place in the position of distributing tax dollars, or military control.
These two things will produce corruption no matter how 'intellectually clean' a person is, entering the position.
US, UK and other countries claiming to be the 'moral compasses' for the world to follow, need to figure out how to switch from the class of politicians to the 'statesman' .
Whereas, I see a politician as somebody who makes is their job/career, vs statesman -- who view their work as a poorly (or insignificantly) compensated service for 8-12 years.
[1] http://www.msae.org/Portals/0/PDF/Term%20Limits%20White%20Pa...
California used, until recently, to have such a supermajority requirement for the budget—not all legislation, just the one piece of legislation that is an annual must-pass.
It was the primary source of perennial budget crisis, and, it let a unified minority party that held it's unity (usually Republicans, because they usually were in the minority and almost always more unified in the state than Democrats) to dictate terms so long as they were more willing than the majority to hold the state hostage.
Plus, conversely, it also makes the majority party less accountable, because they can always blame the intransigence of the minority and the disastrous consequences of not reaching some deal for the actual contents of whatever deal is reached. A supermajority doesn't mean everyone owns the results, it means no one does.
Consensus would be nice in a less polarized, partisan context.
The primary driver for our partisanship is our winner-takes-all form of elections. Switching to approval voting for executive (one position) races and proportional representation of assemblies (house, councils) would dramatically reduce partisanship. Which would maybe then enable more consensus driven governance.
One can hope.
I'd assert that things that need to change would have broad support, and that change would happen. Stuff without broad support, well, maybe that's not as important as we think it is.
i mean, sure. the American reinvestment act wouldn't have passed - and a bunch of the other stimulus packages. Of course, glass steagall wouldn't have been repealed in the first place.
I think if you want anything to be resistant to byzantine failure, it's making laws. shrug. They didn't ask me.
In setting a fixed term limit, we would risk weakening the check that the legislative represents against the executive.
Term limits don’t work.
The only “problem” solved would be that of occasionally having people that are even nominally accountable to the electorate who have the experience and skills in the system and the personal powerbase to standup to the permanent class of lobbyists and other unaccountable, interested experts.
Student loan forgiveness is a solution that only helps a narrow slice of those affected by the student loan problem. It's not something that just affects those making payments, it affects literally everyone who ever had a loan.
Jubilees are only going to decrease repayment rates (why would I pay if it's going to be forgiven next year) and drive up costs further (the government is paying, so why not renovate the athletic center?).
The first step needs to be getting college costs under control, I'm not sure there needs to be another step. If you took out $100k in loans to pursue a degree in the arts, well, that's your problem.
250k for med school, sure. 100k for undergrad in women's studies - no government guarantees for you
I'm sure there's enough data already on the RoI of various programs. Seems like there should be a floor / bar based on the RoI for programs to qualify for government backed loans to students.
It isn’t just the defaulter’s problem when they default. That loan was securitized and exists in our retirement accounts. That default increase the cost of credit in that market, so loans cost more for the rest of us.
Anyway, not arguing we should erase all student debt. It, we have to acknowledge the problem is bigger than a few people’s bad financial choices.
By all means argue for a solution that also helps people who made sacrifice in the past, but people who didn't or couldn't being left to suffer is not a solution.
To be clear - I get you are not saying you don't want to solve this because of that, but unfortunately that sentiment often results in policy actually being set like that.
We should always be asking 'how can we pull everyone up' not 'are they going through what I did'. Even if it ends up not benefiting you directly, we all benefit from a better society.
If we could get past the initial point and start implementing stuff like that, it'd give people more faith that it doesn't just invalidate their effort.
I didn't "suffer", I just fulfilled the obligations I signed up for when I signed up to my loans.
2/ Objectively, what is the likelihood that continuing the status quo crashes the system?
3/ What are the long term consequences from potential solutions? E.g., if current debts are forgiven/cancelled, would lenders refuse to lend for colleges? Would well off people with significant debt take advantage of the system we're protecting, leading to less trust in it, which could cause it's own collapse movement?
The defensible logic is that we don't really know that current student debt will "crash the system", and we definitely don't know what the 2nd and 3rd order consequences would be if any of the solutions were implemented.
2. An economy where a major portion of debtors are unable to discharge their loans (due to the laws presuming student loans as ineligible for discharge), debtors will fall into a cycle of inability to pay debt, inability to qualify for a home, apartment or a vehicle, and potential inability to qualify for a job (credit check) and become increasingly dependent on government programs to stay afloat. This can put a strain on government resources beyond what a simple bankruptcy would do, which is the forced cancellation (discharge) of a debt. Basically, the cost of a bankruptcy (to the economy) is smaller than the cost of an otherwise capable judgment-debtor on welfare/Medicade/SNAP/others.
3. Private student loans, which are effectively no different than unsecured debt, should be presumed dischargeable in bankruptcy. Federal student loans are actually structured quite nicely, except many debtors do not understand the complexities of the multiple forms of loans they carry (perkins, plus, university-managed, subsidized, unsubsidized, private) and rules for one loan type do not necessarily apply to the other.
Colleges would actually benefit from student loan reform, since they could better educate students and parents on standardized loan packages, rather than the large array of loan options available now.
But more directly these people and institutions made a bet, the fact not all bets win is a basic fact of life.
PS: I have negligible student debt at sub inflation interest rates remaining. But, for people with 8+% interest rate loans that interest should very much should be on the table at a minimum.
So of course it's going to crash.
It's like watching a feedback loop in your motor controller, and seeing the numbers start going up, knowing there's too much force in the system to abort it now. It could be an hour before the loud bang comes, but nothing can stop it. If you interrupt it right now, you do less damage right now (still enough to destroy the system of course), but if you let it go, it remains undamaged until it overloads. And you know, you might get really lucky and have the axle melt or something, which avoids the damage. The odds, to put it mildly, don't favor that outcome though.
Technically the better action is to interrupt it, but I've hardly ever seen anyone do that.
For public universities, they were substantially cheaper than private universities due to state subsidies. The tuition has almost doubled over the past 15 years for the few places I checked, but that's only a bit over inflation. Public state universities are still a great deal.
So I think the stats are using a lot of for-profit colleges which skew the numbers up. They are expensive and don't offer a lot. Anyways, I would love to see some actual data and the breakdown of what schools are increasing tuition.
It's about whether rules matter. If people think the rules will be enforced, then we can all make plans based on the rules. If they don't, then all courses of action are on the table. Whatever gets the job done. That's back to rule of the strong.
See: how we treat big banks.
(Not to say we shouldn't have a debt jubilee, but that's what we risk)
See the current trend towards nullifying possession charges for Marijuana. Yes, it sucks for people who got punished under the old rules, and yes, it's not good to say "laws might change and you might 'get away with it'", but sometimes that is better than letting a lot of people suffer.
Despite getting accepted to many top-tier universities (Berkeley, Yale, Rice), I chose to go to an in-state school with a generous scholarship so I could come out of school with very little loans. I sacrificed going to a really great school like Berkeley (and living in California!) so I would save money and not end up in so much debt.
While I fully think that debt is a nondesirable thing to have, and that we do not educate people about debt enough, I don't know if loan forgiveness is the answer. I have personally paid off a close friend's student loans and old medical bills, and guess what? Even after all that she was just as financially irresponsible as before.
As a related situation, I know a few people who come to me asking me for help with rent or medical bills. When I ask them, why don't you have any money, they say it's because their hours were cut, or something else. But when I step back and look at the whole picture, I realize that because they went on an expensive vacation, and went to the bars every other night, and spent lots of money on clothes, that's the real reason they didn't have money. So when they asked me to help pay their rent, they were really asking me to help finance their vacation.
In a similar way, if we (collectively, the taxpayers) pay for the students who can't afford the student loans, we're actually subsidizing whatever the people DID spend their money on, or their choice to go to more expensive schools when less expensive schools are available, perhaps at the cost of those who, like me, chose to save money by going to less expensive schools.
I guess what bothers me is just this sense of entitlement of people that originated from my same social stratum who now argue "the game was rigged" when I never saw evidence of this. (This annoyance of mine BTW does not transfer to disadvantaged folks who did not come from a middle class background... I agree 100% they got a harder lot in life than many of us and are often right to complain.)
And a lot of (all?) places have programs where they'll forgive student loans if one stays a teacher for 10 years -- which, as an aside, always boggled my mind that you have to go into major debt to get a public teaching job that pays peanuts but people happily do it.
Students have an obligation to make sure they are getting a good education for a fair price, and that they can foot the bill.
If they determine the cost is too high, they should not buy from that school. This will eventually fix the problem.
I feel it just sends the wrong message to society if we build these gotchas and loopholes left and right like this to let people make financially bad decisions.
Should we blame those that fall prey to predatory loan practices? Especially at 18, most are not fully equipped to evaluate the debt they are signing up for and its implications.
It seems a better approach would be to look at the root of the problem, which is that easy credit for education has incentivized bad apples to exploit vulnerable people. Just because you were smart enough to not be exploited does not mean others should suffer.
You'll find that in most peace deals, bad people get excused of crimes, but it's necessary for the greater good.
There's certainly a moral hazard, but that's part of the deal - if we do things right, the bad situation won't be repeated.
Your opinion and his are, to me, examples of one of the worst forms of greed: greed with a reasonable excuse. It is rational and I cannot really fault you for feeling that way, but this form of greed makes fixing the problem much harder to solve.
I think there are a lot of issues with the system, not least of which is that it's possible to accrue that much debt without any credit check. But let's not pretend that the system isn't rigged to saddle people with debt.
Thousands of people are filing for bankruptcy every day which – by implication – are getting a break on loans that you would otherwise pay.
The issue is where debtors, who cannot presumably discharge their defaulted student loans in bankruptcy, begin to lose their savings, investments, and ability to stave off financial dependency on the government and become financially dependent on government programs now and into their retirement.
By saying that since you were able to pay your loans in 2018 and therefore most other people should be able to pay is like looking at any bad investment. If you allow people to remain indentured and fall into perpetual dependency on government programs (welfare, SNAP, Medicaid) due to their default or judgment-debtor status, the overall cost of that is projected to be much higher than if they could have been eligible for a partial or full discharge of the debt in 2018.
A bankruptcy prevents a bank from collecting interest. A judgment-debtor on financial assistance from the government is taking far more tax dollars from you than the bank is getting from the tax write-off on the charged-off debt.
Obviously, banks want their money, so they lobby for bankruptcy provisions to keep people indebted. They don't particularly care if the side-effect is the government demanding higher taxes from you to pay for government welfare programs.
The fact is that someone that made poor life decisions is at high risk of doing so again, and their credit rating should permanently reflect this. Otherwise, the loan & bankruptcy system rewards people who go into bankruptcy at the cost of other, more responsible people who are trying to get loans at a reasonable interest rate.
Without this, abuse of the bankruptcy system to "wipe away" student loans would be rampant, and we'd just be kicking the can down the road in a new way again.
Is college only for job training, or is it for something a little different?
I’m not criticizing your viewpoint; as another commenter said, I understand some of the reasons you may hold this view. However, I do not feel that people who majored in, say, English - against their own likely knowledge that it would be difficult to find a job applying the skills they learned directly in search of a job - should suffer because of the debt they incurred. But I also think they should continue to get training in an area that is needed, or work at something for which they are already qualified.
Why shouldn't they face the responsibility for the decisions they made?
That's the crux of the argument, really. Either people are forced to be responsible for their actions or they aren't...doubly so with student loans since they never really go away.
And I'm saying this as someone who got a "worthless" degree (back in the '90s when college was reasonably cheap) and has been in default on one of my loans for well over a decade but has never once asked anyone else to "suffer" over my decision to party, err...pursue a degree without a clear career track. Sure, it would be really, really nice if the good taxpayers subsidized my slacker lifestyle by forgiving my loan but I'm not holding my breath.
Granted, the government has tightened the rules around private student loans and encouraged students to pursue federal-only loans (which offer a ton of benefits compared to private loans), but if you look at the loan practices in 2000-2008, private lenders were effectively fly-by-night and doing everything they could (including questionable advertising) to encourage students to apply for private loans.
I would be OK with slashing interest rates. A loan which has such special status that it can’t even be cleared through bankruptcy should have a remarkably low interest rate.
Something like, every month you make your payment the interest is credited back to the principal. Or perhaps require 6 months of consecutive on-time payments after which interest goes to zero or 1% as long as you keep making regular payments.
Think of it like this: party A defrauds party B (by misrepresenting the value of what they're offering), putting party B into irrecoverable debt in the process. Party A isn't going to give the money back (we can't get humanities professors to return their salaries, not to mention the less visible involved), so party B turns to their side and sees party C standing next to them...
The fraud is between the victim, the perpetraor, and the state. However I don't expect much to happen along those lines because even though what happened was clearly fraud, it's not clear exactly who was responsible or even how a law could be written so that they would have broken any laws. It's like that one scene in the grapes of wrath: when a hundred people each commit a fraction of a crime, you're just about stuck when it comes to holding any of them accountable.
There is no fraud when someone can't pay back their student loans. Bankruptcy isn't fraud. Bankruptcy isn't paid for with interest. Bankruptcy is a right that debtors have when their debt gets out of control due to whatever reasons, and sadly us students do not have that option. Bankruptcy is mostly unavailable to us, and when it is available, it's made unavailable by terms that make absolutely zero sense at all.
If I can't find a job, I have absolutely zero way to attempt to pay back student loans in order to show I made an attempt, which would be one measure needed to qualify me for bankruptcy. If I'm barely making enough to support my basic expenses when I do have a job, I can't be expected to prioritize my student loan over my ability to eat or provide shelter for myself. If the bar for showing an attempt at repayment is as low as sending $5 / month, then what's the point in having that restriction on student loans to begin with.
Why was the ability to file for bankruptcy on student loans ever rescinded in the first place? It absolutely was not because there were more and more people trying to defraud the system, unless you somehow twist logic forcefully enough to fit that demented narrative. It was a means to shore up the predictable deficit that would be caused by the Bush tax cuts. Yes, the bush tax cuts. It was not that long ago that the ability to file for bankruptcy on student loans was stolen from us.
If you live in a red state or purple state, then good fucking luck getting any sympathy from the judges with zero qualifications merely elected to their positions when seeking bankruptcy.
The fraud happened when they signed a bunch of kids up on 200k degree plans, under the false pretenses that it would be worth it. It was clear from the start that many of these degrees could not possibly make back their cost, but in the end a bunch of young people fell prey to the information assymetry. That's the premise of the discussion - because if the student loans had been made in full understanding of the consequences, there would be nothing wrong with what was happening! But it seems reasonable to me that the value of these educations was misrepresented.
Imagine if someone could've paid his loans, but was irresponsible and just risked /lost it all in stocks. Not only can he file a capital loss in his tax form to pay less taxes like Trump has done, and now he gets his loans and debt cleared (also like Trump has done).
If the system aids people like that, why should there be anyone who responsibly avoids debt?
Personally, my loans are almost all paid off and any wiping of student loan debt would barely affect me. I can still see how letting the system continue as it is does nothing but funnel money from the public, and students in particular, into the banks pockets. I don't see why we need to protect the banks from any negative results when they have actively subverted the rules
Well, the assumption here is that the money to "bring them up" can just be materialized out of thin air and doesn't have to be taken from other people, in turn.
"I survived a bad system" is not justification for the perpetuation of that system.
And for the record, I get the feeling you've assumed that I support debt forgiveness. I don't, and the moral hazard involved does bother me. But I won't let that stop me from considering strong arguments in favor of it.
But who was really losing 20 years ago were underemployed administrators. There were much fewer of those cushy non-teaching non-research admin jobs.
Or would you rather a non-society where everyone fends for themselves?
Banks, on the other hand, won't be suffering if reforms are made; they will simply not be able to realize as much interest from the loans they issued.
Is that worth doing? Maybe, but don't pretend it has no impact on the people who did pay off their loans.
Education used to be affordable. It is absolutely not impossible to go back. I’m curious to know how long you think education has been this unaffordable, because it’s a pretty new phenomenon. I’m therefore confused why it’s so hard to imagine a world where education is reasonably-priced.
your are rich, compared to other, not in the absolute, if you have 1 million dollars, and everyone else have one million dollars, you are not rich
one way not to punish those who acted responsibility, is by bumping up their credit score, this way, they can get deals on mortgages etc ..., and those who were bailed out, should get their credit score neither penalized or bumped
At a system level, we need to consider people’s demonstrated behavior and look at the practical outcomes of various policy interventions, not decide policy based on moral judgments about whether people deserve their misery.
People are strongly pressured into taking these loans, told that they face much worse life prospects without the education than without the debt, and many of them do not have a full understanding of the risks and opportunities involved. Under the circumstances, many are going to take the loans, whether or not they hear your warning.
When they subsequently can’t pay the debt back, it doesn’t really matter for society whether they are “whining” or not. What matters is that the debts hang around their necks like anchors, preventing them from getting on with their lives, depressing their lifetime earnings, keeping them from buying houses or starting families or taking higher paying jobs, etc., and ultimately making them less capable of paying their own medical bills, supporting their own retirements, and so on.
These are large systemic problems which need to be addressed by large systemic changes, not by punishing people for supposed moral failings by forcing them into poverty.
The controversy is that one political party wants education to be difficult to obtain.
[0] https://en.wikipedia.org/wiki/United_States_presidential_ele...
It shouldn't be controversial that we need an educated population and we need young people who aren't in debt up to their eyeballs. It's time for some hard choices, because the wheels are falling off.