Cancel student loan debt?

[Meadmaker]

One problem with bankruptcy as a "solution" is that you have to have a certain amount of money to afford bankruptcy.

That's crazy. It's true, but it's crazy. The idea that you cannot afford to go to court is an appalling aspect of American life. The idea that you cannot afford to declare bankruptcy is just absurd.

It's not a problem for student loans. it's a problem for American life in general.

 

[rdwight]

One, I'm not trying to sidestep your points. I think your points are excellent. Two, I was just curious about laws that leave a lot of discretion in the hands of a single individual and how in practice, that is adjudicated.

My experiences in courtrooms shows that people of color are treated more harshly by the system at almost every turn. Most of it does not seem to be deliberate racism but unconscious preferences and learned stereotypes. Poor whites are mistreated by the system as well.

Understood. It is definitely something that I wouldn't be surprised to be another statistically burdensome feature that POC experience within this system. Due to their lower representation in the overall college loan stats, coupled with lower net worth to afford bankruptcy and higher level counseling, as well as the prevalence of bad information about the ability to actually dispose of this debt through bankruptcy it seems like low hanging fruit in the scheme of things.

While the undue burden being at the judges discretion is definitely not an optimal situation, the fact that 50% that attempt it have met that burden actually seems.. decent? With the average student loan monthly payments being in the 200-300 a month range, after discharging other debts and the payments that go with them it would make sense that a lot of people wouldn't meet what a bankruptcy judge would determine to be an undue burden.

 

[Meadmaker]

And it's not like personal bankruptcy fixes all your problems--you'll have bad credit afterwards, that you'll have to rebuild.

"Having bad credit" ought to just mean you can't borrow money. If you can't pay your bills, then maybe borrowing money isn't such a good idea anyway, and lending money to you seems like a very bad idea indeed.

Sadly, it can mean more than that, possibly even affecting job prospects, which is just ridiculous.

 

[Meadmaker]

I think the whole premise of the student loan program is wrong. Allowing an 18 year old who has never held a job to borrow 100,000 dollars is nuts.

Maybe a better way of doing things is to identify 18 year olds who, if they had an education, have the potential for contributing something more to society. Then, we provide them an education, for free, but when they use that education to make money, we tax them at a sufficiently high rate that they end up paying off the cost of their education, and more, with their profits.

But, to turn that idea into an actual program that would make sense, we would have to acknowledge that some people are higher potential than others, and also that if someone else is paying for your education, "what you want to do" is not really the key criterion for choosing a course of study. I think society should fund the education of a few, very talented, musicians, but I would rather fund the education of doctors, nurses, scientists, and engineers. Both aspects of that are politically unsavory.

Meanwhile, we also need to take advantage of the ways that technology has provided to make it easier and cheaper to bring knowledge and instructors to a greater number of students, i.e. the various means for online learning that couldn't have been done just 20 years ago. Yes, there has to still be hands on learning, in person with instructors, but we don't have to use the same format for education that was developed in the middle ages when the only way to learn from a master was go to where he was at and listen to him talk.

 

[pgwenthold]

One aspect that has not been discussed in this thread is that a huge amount of student debt, and, in particular, the defaulted student debt is due to predatory "for profit" outfits (I refuse to call them universities") which (not 18 yo) students attend for a couple of semesters, at most, doing largely crappy on-line courses, and then leave without any degree or skills of any sort.

Students graduating from 4-year public universities are not a significant risk. Sure, some of them default, but then again, so do people who get approved for mortgages.

 

[acbytesla]

While the undue burden being at the judges discretion is definitely not an optimal situation, the fact that 50% that attempt it have met that burden actually seems.. decent? With the average student loan monthly payments being in the 200-300 a month range, after discharging other debts and the payments that go with them it would make sense that a lot of people wouldn't meet what a bankruptcy judge would determine to be an undue burden.

Does it? Until I was about 30. I barely had an extra nickel. A traffic ticket was a financial disaster. And despite having a college degree, it was hard getting a job that paid a living wage.

For those reasons, I'm particularly sensitive to the issues of the working poor. The idea of using bankruptcy to discharge my college loans seemed like a pipe dream as I couldn't afford to pay a lawyer. Dr. Keith's point hits home for me.

I see why this myth is particularly pervasive. You may or may not be able to have your debts discharged. But only after you incur substantially more debt. The people that really are facing an "undue" burden never make it to court.

 

[acbytesla]

I think the whole premise of the student loan program is wrong. Allowing an 18 year old who has never held a job to borrow 100,000 dollars is nuts.

Maybe a better way of doing things is to identify 18 year olds who, if they had an education, have the potential for contributing something more to society. Then, we provide them an education, for free, but when they use that education to make money, we tax them at a sufficiently high rate that they end up paying off the cost of their education, and more, with their profits.

But, to turn that idea into an actual program that would make sense, we would have to acknowledge that some people are higher potential than others, and also that if someone else is paying for your education, "what you want to do" is not really the key criterion for choosing a course of study. I think society should fund the education of a few, very talented, musicians, but I would rather fund the education of doctors, nurses, scientists, and engineers. Both aspects of that are politically unsavory.

Meanwhile, we also need to take advantage of the ways that technology has provided to make it easier and cheaper to bring knowledge and instructors to a greater number of students, i.e. the various means for online learning that couldn't have been done just 20 years ago. Yes, there has to still be hands on learning, in person with instructors, but we don't have to use the same format for education that was developed in the middle ages when the only way to learn from a master was go to where he was at and listen to him talk.

I want more PUBLIC vocational education. And I think it should be free or at least inexpensive.

 

[rdwight]

One aspect that has not been discussed in this thread is that a huge amount of student debt, and, in particular, the defaulted student debt is due to predatory "for profit" outfits (I refuse to call them universities") which (not 18 yo) students attend for a couple of semesters, at most, doing largely crappy on-line courses, and then leave without any degree or skills of any sort.

I think this is an important aspect of making any action on this much more targeted. We can weed out those that would fit this criteria by only offering loan forgiveness to those with incomes in a certain range as well as loans within a certain amount. Maybe some need of overlap in both really. Those with less than 10k in original debt (not counting added interest) with incomes averaging less than 30k seems like a starting approach.

Does it? Until I was about 30. I barely had an extra nickel. A traffic ticket was a financial disaster. And despite having a college degree, it was hard getting a job that paid a living wage.
For those reasons, I'm particularly sensitive to the issues of the working poor. The idea of using bankruptcy to discharge my college loans seemed like a pipe dream as I couldn't afford to pay a lawyer. Dr. Keith's point hits home for me.

To me it does. I do base this on the assumption that the student loans weren't the only reasoning for the bankruptcy of course. And this is in light of programs that allow for those without the income to support payments to have their payments lowered to as low as 0$, and have the balance forgiven after 20 years. If you qualify for such a program, do you think a judge will see your unwillingness to use it as an undue burden? If you are in said program, do you think the program itself is still not enough support?

This probably sounds harsh, but I lack sympathy for those that over the course of their working careers will make an incredible amount more money than their undereducated peers. I know of no study that finds college graduates over the course of their working career making less than their "crippling debt + interest".

They will have access to jobs HS grads will not be considered for. They can switch companies regularly which allows for starting salaries that exceed what would be an average salary increase by those that are more pigeon holed into one job. They can demand a higher salary and can move up easier in companies that have educational requirements in managerial positions.

I am slowly getting on board with a lower level of loan forgiveness that focuses on those that did not finish degrees, or have limited income over the course of years.

 

[TurkeysGhost]

I think this is an important aspect of making any action on this much more targeted. We can weed out those that would fit this criteria by only offering loan forgiveness to those with incomes in a certain range as well as loans within a certain amount. Maybe some need of overlap in both really. Those with less than 10k in original debt (not counting added interest) with incomes averaging less than 30k seems like a starting approach.





To me it does. I do base this on the assumption that the student loans weren't the only reasoning for the bankruptcy of course. And this is in light of programs that allow for those without the income to support payments to have their payments lowered to as low as 0$, and have the balance forgiven after 20 years. If you qualify for such a program, do you think a judge will see your unwillingness to use it as an undue burden? If you are in said program, do you think the program itself is still not enough support?

This probably sounds harsh, but I lack sympathy for those that over the course of their working careers will make an incredible amount more money than their undereducated peers. I know of no study that finds college graduates over the course of their working career making less than their "crippling debt + interest".
They will have access to jobs HS grads will not be considered for. They can switch companies regularly which allows for starting salaries that exceed what would be an average salary increase by those that are more pigeon holed into one job. They can demand a higher salary and can move up easier in companies that have educational requirements in managerial positions.

I am slowly getting on board with a lower level of loan forgiveness that focuses on those that did not finish degrees, or have limited income over the course of years.

There are wide categories of public service jobs in which the PSLF debt forgiveness program is largely seen as absolutely necessary for these careers to be viable.

For example, social workers are often not paid much and are required to have expensive Master's degrees as a prerequisite for the job. Many government jobs require post-secondary education and while they often have good non-salary benefits, the pay is often not comparable to private sector jobs of similar education requirement. It's hard to imagine anyone that isn't already wealthy being able to afford being a social worker if they did not have this 10 year loan forgiveness scheme.

I suppose we can scorn these people for willingly choosing a job that is notorious for being under-payed, but I imagine a desire to serve the community and vulnerable people plays a big role in the choice to enter these jobs.

 

[Dr. Keith]

Are you saying we shouldn't loan students money?

I made a post in which I posited that we should not be lending sub-par students money to go to private or out-of-state schools. It is not nice, I get it, but it is reality.

If you can't get into a good affordable college then maybe college isn't the best use of your time or our money.

 

[acbytesla]

I think this is an important aspect of making any action on this much more targeted. We can weed out those that would fit this criteria by only offering loan forgiveness to those with incomes in a certain range as well as loans within a certain amount. Maybe some need of overlap in both really. Those with less than 10k in original debt (not counting added interest) with incomes averaging less than 30k seems like a starting approach.

To me it does. I do base this on the assumption that the student loans weren't the only reasoning for the bankruptcy of course. And this is in light of programs that allow for those without the income to support payments to have their payments lowered to as low as 0$, and have the balance forgiven after 20 years. If you qualify for such a program, do you think a judge will see your unwillingness to use it as an undue burden? If you are in said program, do you think the program itself is still not enough support?

This probably sounds harsh, but I lack sympathy for those that over the course of their working careers will make an incredible amount more money than their undereducated peers. I know of no study that finds college graduates over the course of their working career making less than their "crippling debt + interest".

They will have access to jobs HS grads will not be considered for. They can switch companies regularly which allows for starting salaries that exceed what would be an average salary increase by those that are more pigeon holed into one job. They can demand a higher salary and can move up easier in companies that have educational requirements in managerial positions.

I am slowly getting on board with a lower level of loan forgiveness that focuses on those that did not finish degrees, or have limited income over the course of years.

I agree with all of that but I'm one of those people with almost worthless degrees. Political Science.

 

[acbytesla]

I made a post in which I posited that we should not be lending sub-par students money to go to private or out-of-state schools. It is not nice, I get it, but it is reality.

If you can't get into a good affordable college then maybe college isn't the best use of your time or our money.

Education isn't for just the best students. It's for society as a whole. How else do you create an educated/trained workforce? How do we provide a ladder for people to advance?

 

[Meadmaker]

Education isn't for just the best students. It's for society as a whole. How else do you create an educated/trained workforce? How do we provide a ladder for people to advance?

But suppose my heart was set on studying art.

In my opinion, art is valuable to society. Art education is valuable for creating the next generation of artists.

As it turns out, I'm a pretty lousy artist. I was fortunate to grow up in the '70s, when art teachers were all about saying, "It doesn't need to be a picture. It can just be a design!" I made a lot of designs. Some of them started out as pictures, and ended up as designs.

So, should my 18 year old self have been allowed to study art at public expense? I think not. It would have been a waste of taxpayers' money and my time.

And what about good artists, with real talent? Well, we do need artists, or at least our lives will be better if we have artists as part of our society. However, we don't need a lot of them. Not everyone who can make a better than average ceramic pot ought to be allowed to study pottery making at public expense.

So, instead, what we do is we tell 18 year olds that if they really want to do that, they can borrow the money to follow their dreams, even if they aren't really awesome at it. Such is the genesis of the student debt problem.

 

[acbytesla]

But suppose my heart was set on studying art.

In my opinion, art is valuable to society. Art education is valuable for creating the next generation of artists.

As it turns out, I'm a pretty lousy artist. I was fortunate to grow up in the '70s, when art teachers were all about saying, "It doesn't need to be a picture. It can just be a design!" I made a lot of designs. Some of them started out as pictures, and ended up as designs.

So, should my 18 year old self have been allowed to study art at public expense? I think not. It would have been a waste of taxpayers' money and my time.

And what about good artists, with real talent? Well, we do need artists, or at least our lives will be better if we have artists as part of our society. However, we don't need a lot of them. Not everyone who can make a better than average ceramic pot ought to be allowed to study pottery making at public expense.

So, instead, what we do is we tell 18 year olds that if they really want to do that, they can borrow the money to follow their dreams, even if they aren't really awesome at it. Such is the genesis of the student debt problem.

I get it. Art is too subjective for me to have a good answer for that.

Keep in mind that Van Gogh never sold a painting while he was alive. I find Pollock's work absurd. Most of my life I didn't appreciate art at all. As I have gotten older, my perspective has changed in so many ways. I use to think art was an absurd field of study and a waste of time and money. But I now see the benefits of art education. We need creative people as opposed to someone like me without a creative bone in my body.

There are web sites to design, business logos to be made, photographs and movies to be made, etc, etc.

 

[gnome]

Something I haven't seen discussed--would student debt be less of an issue at a lower interest rate? Considering that it's basically co-signed by the government, I've never understood why it isn't a very low interest rate. It's almost a zero-risk investment, and yet I hear people having to pay back numbers as high as 8%. Or maybe higher? I can't recall exactly. But why isn't it something like 2%?

 

[Dr. Keith]

Education isn't for just the best students. It's for society as a whole. How else do you create an educated/trained workforce? How do we provide a ladder for people to advance?

That is what we have community colleges for. And I think they should be as accessible as possible. They were very accessible when I was in school and helped me tremendously.

Public universities are rightfully selective about admissions. My home state has done a good job of making them accessible to the best students from any part of the state, and that is how it should be. Those students deserve the support of the taxpayers in that path. And those paths are somewhat affordable.

But, the kids who don't make it into the state universities are then left to choose not going to college, community colleges, out-of-state options, or private institutions. The latter two options are significantly more expensive than the in-state universities and currently the taxpayer is supporting these students who are less likely to be successful in pursuing these more expensive options. This is not good policy. The taxpayer should not be throwing more money at students who are less likely to benefit from further education. It is a fundamentally unsound decision for the tax payer as an investor and the student as a debtor. It is a waste of the student's time and financial future.

If you had a bad high school career because your parents kicked you out of the house or some other circumstance of life, then when you feel stable enough to focus on such things, go to a community college and earn a good GPA on some meaningful credits that will transfer to the degree you had your heart set on. If you can build up an academic record of success then the state should be willing to support your further academic pursuits.

But if the student was never really good at school and has never really done well, then borrowing $200k to attend some half-assed private college isn't going to make them any better at school and isn't a good investment of taxpayer funds or the student's time. They end up in massive debt with either a worthless degree or just a bunch of haphazard credits. That isn't a win for anyone. In many ways, that is why we are where we are.

I'm OK with some forgiveness, but only after we have addressed the current problem. Because I think forgiveness will only exacerbate the current problem.

 

[Dr. Keith]

Something I haven't seen discussed--would student debt be less of an issue at a lower interest rate? Considering that it's basically co-signed by the government, I've never understood why it isn't a very low interest rate. It's almost a zero-risk investment, and yet I hear people having to pay back numbers as high as 8%. Or maybe higher? I can't recall exactly. But why isn't it something like 2%?

My rates were very low, but there are several different types of student loans. It has been decades since I looked at it carefully, but some are more subsidized than others, IIRC. I think I had two different types of student loans, but I couldn't tell you what they were even if it were a multiple choice test and you gave me a clean scantron and a nicely sharpened #2 pencil.

 

[acbytesla]

That is what we have community colleges for. And I think they should be as accessible as possible. They were very accessible when I was in school and helped me tremendously.

Public universities are rightfully selective about admissions. My home state has done a good job of making them accessible to the best students from any part of the state, and that is how it should be. Those students deserve the support of the taxpayers in that path. And those paths are somewhat affordable.

But, the kids who don't make it into the state universities are then left to choose not going to college, community colleges, out-of-state options, or private institutions. The latter two options are significantly more expensive than the in-state universities and currently the taxpayer is supporting these students who are less likely to be successful in pursuing these more expensive options. This is not good policy. The taxpayer should not be throwing more money at students who are less likely to benefit from further education. It is a fundamentally unsound decision for the tax payer as an investor and the student as a debtor. It is a waste of the student's time and financial future.

If you had a bad high school career because your parents kicked you out of the house or some other circumstance of life, then when you feel stable enough to focus on such things, go to a community college and earn a good GPA on some meaningful credits that will transfer to the degree you had your heart set on. If you can build up an academic record of success then the state should be willing to support your further academic pursuits.

But if the student was never really good at school and has never really done well, then borrowing $200k to attend some half-assed private college isn't going to make them any better at school and isn't a good investment of taxpayer funds or the student's time. They end up in massive debt with either a worthless degree or just a bunch of haphazard credits. That isn't a win for anyone. In many ways, that is why we are where we are.

I'm OK with some forgiveness, but only after we have addressed the current problem. Because I think forgiveness will only exacerbate the current problem.

I'm not really talking about people that attend expensive private colleges. I'm talking about those community college students. Even that is a chunk of change. I'm also not convinced State schools do all that good a job in admissions.

 

[ponderingturtle]

That is what we have community colleges for. And I think they should be as accessible as possible. They were very accessible when I was in school and helped me tremendously.

Public universities are rightfully selective about admissions. My home state has done a good job of making them accessible to the best students from any part of the state, and that is how it should be. Those students deserve the support of the taxpayers in that path. And those paths are somewhat affordable.

But, the kids who don't make it into the state universities are then left to choose not going to college, community colleges, out-of-state options, or private institutions. The latter two options are significantly more expensive than the in-state universities and currently the taxpayer is supporting these students who are less likely to be successful in pursuing these more expensive options. This is not good policy. The taxpayer should not be throwing more money at students who are less likely to benefit from further education. It is a fundamentally unsound decision for the tax payer as an investor and the student as a debtor. It is a waste of the student's time and financial future.

If you had a bad high school career because your parents kicked you out of the house or some other circumstance of life, then when you feel stable enough to focus on such things, go to a community college and earn a good GPA on some meaningful credits that will transfer to the degree you had your heart set on. If you can build up an academic record of success then the state should be willing to support your further academic pursuits.

But if the student was never really good at school and has never really done well, then borrowing $200k to attend some half-assed private college isn't going to make them any better at school and isn't a good investment of taxpayer funds or the student's time. They end up in massive debt with either a worthless degree or just a bunch of haphazard credits. That isn't a win for anyone. In many ways, that is why we are where we are.

I'm OK with some forgiveness, but only after we have addressed the current problem. Because I think forgiveness will only exacerbate the current problem.

What about inexpensive private schools, states have cut their support from their universities so much that many of those schools get as much in federal grants as states spend on their university system. And of course few of those state schools set up the schedules to be very accessible to students who are working full time.

 

[cosmicaug]

My rates were very low, but there are several different types of student loans. It has been decades since I looked at it carefully, but some are more subsidized than others, IIRC. I think I had two different types of student loans, but I couldn't tell you what they were even if it were a multiple choice test and you gave me a clean scantron and a nicely sharpened #2 pencil.

I seem to have some that are 2.43% & some that are 6.8%.