Cancel student loan debt?

[acbytesla]

Of course, the question becomes is such a hardship actually useful in any way. Is society served well by putting otherwise good students into situations where they are more likely to fail for purely financial reasons? Is it a good thing that someone less dedicated than you were would not have made it? Is a student failing out because they can't balance their studies and a full time job a useful culling of the student population?

Struggle for the sake of struggle has no societal value, but our puritanical nation loves it.

There's a scene at the end of West Wing episode 20 hours in America where Toby and Josh meet a man in a Indiana hotel bar who accompanied his daughter on a tour of Notre Dame. He was concerned that he wouldn't be able to pay for it. He talked about hard it was to make enough money to pay for his daughter's college. He said he didn't mind it was hard, but did it have to be this hard? If it could be just a little easier.

This idea that struggle is good and builds character has merit. But frankly, I'm sick of hearing it from people who's struggle has been minor to non-existent. You can only put so many straws on the back of your beast of burden before the animal will quit or collapse.

 

[JoeMorgue]

I am noticing an unexamined assumption in these discussions, that a large part of the problem is students using these loans to get impractical degrees.

Is there any way we can look closer at that? Are graduates of theoretically more lucrative fields struggling in paying back their loans? If that is the case, focusing on choice of degree would be missing the target, I think.

What exactly do you want us to prove? Isn't this sort of true by definition?

Again unless we want to pretend that people aren't going to college for financial reasons (which makes zero sense in modern context) if you go into X amount of debt to get a degree but don't make X amount + buffer in order to pay it back, you aren't getting out of it what you want.

Again I get that "Well they went into debt to get smarter, not to get a better job, so we can't run a cost-benefit analysis on it" sounds all good and noble, but it ignores reality.

 

[rdwight]

In the aggregate that is likely true. But is it still true on a school by school basis? What about the departments at particular school? What if you drill down to the degree program level? That is the data a student needs before borrowing tons of cash.

Of course there will be outliers. Average and median earnings by major are available, although you would be better off checking your local wanted ads to find more accurate predictions. If you pursue a major with low paying outlooks and decide to go to the most expensive out of state private school, you will also be averaged in with those that made more prudent financial choices. To point out this wasn't a bad decision in hindsight but at the time it was made should not be controversial. If you have studies that refute what I said please provide them.

And yet Honda won't give them a fairly well secured loan to buy a Civic. Why?

Because they are not federally guaranteed maybe? It they were and high school graduates had the choice of a Honda, BMW, Bentley etc, we would not be talking about how the ones that chose the more expensive option did not understand how debt works and were too busy with lacrosse practice to do the research. Society might encourage them to get a car because it has benefits for them. Access to more jobs/places than they could otherwise reach. Freedom to choose between those. Anything more should be given the thought and consideration it deserves. By and large, I actually think it is.

 

[acbytesla]

What exactly do you want us to prove? Isn't this sort of true by definition?

Again unless we want to pretend that people aren't going to college for financial reasons (which makes zero sense in modern context) if you go into X amount of debt to get a degree but don't make X amount + buffer in order to pay it back, you aren't getting out of it what you want.

Again I get that "Well they went into debt to get smarter, not to get a better job, so we can't run a cost-benefit analysis on it" sounds all good and noble, but it ignores reality.

I think most people go to college for financial reasons. They want a good job to get ahead. I went to college thinking I would become a lawyer and perhaps enter politics. But I also wanted money so I could buy things. You don't think that is high on the list why people attend college? People get a degree to separate themselves from the riff raff. To prosper.

Or do you think this isn't true?

 

[gnome]

What exactly do you want us to prove? Isn't this sort of true by definition?

Again unless we want to pretend that people aren't going to college for financial reasons (which makes zero sense in modern context) if you go into X amount of debt to get a degree but don't make X amount + buffer in order to pay it back, you aren't getting out of it what you want.

Again I get that "Well they went into debt to get smarter, not to get a better job, so we can't run a cost-benefit analysis on it" sounds all good and noble, but it ignores reality.

I don't dispute that. What I'm trying to screen for is whether the choice of degree is as large a factor as we reason it out to be. It would make sense for it to, but if we look at the results is it ACTUALLY true?

If the solution proposed is "Don't pick left-handed basket weaving", I'd like to test that by excluding all those degrees and observing the remaining population. Does the problem still exist among the "sensible" choices?

 

[Dr. Keith]

There's a scene at the end of West Wing episode 20 hours in America where Toby and Josh meet a man in a Indiana hotel bar who accompanied his daughter on a tour of Notre Dame. He was concerned that he wouldn't be able to pay for it. He talked about hard it was to make enough money to pay for his daughter's college. He said he didn't mind it was hard, but did it have to be this hard? If it could be just a little easier.

At over $75k per year, of course it is hard. That is more than most people make in a year. Much less can afford to spend on college per year for four years.

And yet, should I as a taxpayer be paying to make that easier? I don't think so. It is a private university with an endowment of almost $14B and an undergraduate enrollment of less than 9k. I'll pass on that handout, if you don't mind.

 

[JoeMorgue]

I don't dispute that. What I'm trying to screen for is whether the choice of degree is as large a factor as we reason it out to be. It would make sense for it to, but if we look at the results is it ACTUALLY true?

If the solution proposed is "Don't pick left-handed basket weaving", I'd like to test that by excluding all those degrees and observing the remaining population. Does the problem still exist among the "sensible" choices?

I'm not following (no snark.)

If you spend X amount (either of your own money or government money) to get a degree, but then can't get a job in that degree... then well what are disagreeing about?

If you want me to prove that some degrees make more money than other degrees... I mean isn't that obvious as well?

 

[TurkeysGhost]

I would guess that this whole student debt thing is just one small part of the larger evaporation of the middle class generally.

Good paying jobs aren't as common as they once were, both for college educated people and for high school graduates. The manufacturing jobs that once would have offered decent wages, benefits, and perhaps even union protection have all gone overseas. Everyone looking to make more than minimum wage at some service sector job is being pushed into college or other schooling, and the glut of labor means that employers can be more picky and spend less effort training generally educated people for specific jobs.

Even if some reform meant that less people pursued less valuable degrees, that would only mean more people competing for somewhat fixed set of profitable careers. Law school is an excellent example of this. There are just way too many new lawyers graduating compared to entry level legal jobs. A career that once seemed to a clear path to the professional class has now become an extremely harsh job market. Getting more people into higher education doesn't mean that our economy will grow in the need for skilled or professional labor, it may just mean these already scarce jobs become even more competitive.

The student loan crisis seems like just a small subset of the larger problem of how our economy has failed to transition after the collapse of domestic manufacturing that helped provide good jobs to so many.

 

[acbytesla]

At over $75k per year, of course it is hard. That is more than most people make in a year. Much less can afford to spend on college per year for four years.

And yet, should I as a taxpayer be paying to make that easier? I don't think so. It is a private university with an endowment of almost $14B and an undergraduate enrollment of less than 9k. I'll pass on that handout, if you don't mind.

Yeah I noticed that the use of Notre Dame as an example wasn't the best since it is very expensive. The point was more about struggle and how it's ok that it's hard, but did it have to be that hard.

Also in the episode, the solution they came up with was too make tuition tax deductible, a solution that doesn't help the poor as the deduction doesn't help them.

 

[theprestige]

With the renewed conversation starting with Biden's incoming administration, what do you all feel about the push for 50k in student loan forgiveness being proposed by the progressive side of the party? To be clear this is being advertised as being possible by executive order, not any act of the legislative branch.

Five pages of general discussion, it's probably time to bring it back around to the OP and look at some specifics in light of the ideas we've exchanged.

So.

What are the specifics of this "push for loan forgiveness" from the "progressive side of the party"? Who's making this push? What's their reasoning? What benefit to society do they expect us to see from this forgiveness? What trade-offs do they see, and what arguments do they make for why those trade-offs are worth it?

It may turn out that those of us who are against student loan forgiveness in general would be in favor of this particular plan at this particular time. And vice-versa. Those of us vehemently in favor of student loan forgiveness may discover that the details of this particular plan (or lack thereof) make it a non-starter even for them.

 

[theprestige]

Yeah I noticed that the use of Notre Dame as an example wasn't the best since it is very expensive. The point was more about struggle and how it's ok that it's hard, but did it have to be that hard.

Also in the episode, the solution they came up with was too make tuition tax deductible, a solution that doesn't help the poor as the deduction doesn't help them.

I don't think Sorkin was saying that it's okay to make things hard on purpose in order to edify people through struggle or whatever. I think he's saying that a lot of what's good in life requires some hard work, and is good only because of the hard work that people choose to put into it. Including a college education and a degree from Notre Dame. But does a degree from Notre Dame really have to be that hard to get?

And to that, my answer, at least in the Sorkin-verse, is "yes, it does have to be that hard." Because look here: You (the character in the scene, who's complaining about how hard it is) are in fact willing to pay for it. You are in fact doing the hard work to get it. If you didn't think it was worth that much effort, you wouldn't do it. No, Notre Dame doesn't have to make tuition that expensive. But here you are, working hard, paying the tuition. So why should they lower it?

 

[gnome]

I'm not following (no snark.)

If you spend X amount (either of your own money or government money) to get a degree, but then can't get a job in that degree... then well what are disagreeing about?

If you want me to prove that some degrees make more money than other degrees... I mean isn't that obvious as well?

I'll try to explain more clearly. I want you check if there's an imbalance between incurred debt and later prosperity that exists even if one makes smarter choices of degree. To question the idea that investing loans into a poor choice is the entire issue and avoiding that is the solution.

Consider SuburbanTurkey's words after your post here, that may say what I'm looking for better than I can.

 

[gnome]

I don't think Sorkin was saying that it's okay to make things hard on purpose in order to edify people through struggle or whatever. I think he's saying that a lot of what's good in life requires some hard work, and is good only because of the hard work that people choose to put into it. Including a college education and a degree from Notre Dame. But does a degree from Notre Dame really have to be that hard to get?

And to that, my answer, at least in the Sorkin-verse, is "yes, it does have to be that hard." Because look here: You (the character in the scene, who's complaining about how hard it is) are in fact willing to pay for it. You are in fact doing the hard work to get it. If you didn't think it was worth that much effort, you wouldn't do it. No, Notre Dame doesn't have to make tuition that expensive. But here you are, working hard, paying the tuition. So why should they lower it?

I would rather make it difficult by having it be an impressive academic achievement, than a financial achievement. If we have a choice, of what benefit is a financial hurdle?

I don't presume that a high quality Ivy League education can be provided to all--I'm speaking to the narrower point proposing that it's a feature for it to be expensive. I don't think so.

 

[theprestige]

I would rather make it difficult by having it be an impressive academic achievement, than a financial achievement. If we have a choice, of what benefit is a financial hurdle?

I don't presume that a high quality Ivy League education can be provided to all--I'm speaking to the narrower point proposing that it's a feature for it to be expensive. I don't think so.

An impressive academic achievement comes from impressive academic challenges. And impressive academic challenges come from people who put in a lot of hard work, and have decades of hard-earned experience, in creating impressive academic achievements. They deserve to benefit from this highly desirable service they bring to the table. That's the benefit of the financial hurdle: You paying these people what their time and effort is worth.

Right? Only a douchebag says, "I want you to provide me the highest-quality academic achievements humanly possible... But I don't see why you can't charge me community college remedial course rates for it."

You want an actual gold-plated diploma, don't complain when the cost of the gold is factored into the cost of the diploma.

The feature is that it's a really good education. The expense is a totally expected and understandable side effect and sign of that feature.

 

[rdwight]

Five pages of general discussion, it's probably time to bring it back around to the OP and look at some specifics in light of the ideas we've exchanged.

So.

What are the specifics of this "push for loan forgiveness" from the "progressive side of the party"? Who's making this push? What's their reasoning? What benefit to society do they expect us to see from this forgiveness? What trade-offs do they see, and what arguments do they make for why those trade-offs are worth it?

It may turn out that those of us who are against student loan forgiveness in general would be in favor of this particular plan at this particular time. And vice-versa. Those of us vehemently in favor of student loan forgiveness may discover that the details of this particular plan (or lack thereof) make it a non-starter even for them.

Good plan. Alright so I would assume the foundations would be on one of these three proposals.

Joe Bidens - THE BIDEN PLAN FOR EDUCATION BEYOND HIGH SCHOOL

More than halve payments on undergraduate federal student loans by simplifying and increasing the generosity of today’s income-based repayment program.

Biden will create a new, simple program which offers $10,000 of undergraduate or graduate student debt relief for every year of national or community service, up to five years. Individuals working in schools, government, and other non-profit settings will be automatically enrolled in this forgiveness program; up to five years of prior national or community service will also qualify.

Crack down on private lenders profiteering off of students and allow individuals holding private loans to discharge them in bankruptcy.

Elizabeth Warren - MY PLAN TO CANCEL STUDENT LOAN DEBT ON DAY ONE OF MY PRESIDENCY

It cancels $50,000 in student loan debt for every person with household income under $100,000.

It provides substantial debt cancellation for every person with household income between $100,000 and $250,000. The $50,000 cancellation amount phases out by $1 for every $3 in income above $100,000, so, for example, a person with household income of $130,000 gets $40,000 in cancellation, while a person with household income of $160,000 gets $30,000 in cancellation.

It offers no debt cancellation to people with household income above $250,000 (the top 5%).

For most Americans, cancellation will take place automatically using data already available to the federal government about income and outstanding student loan debt.

Private student loan debt is also eligible for cancellation, and the federal government will work with borrowers and the holders of this debt to provide relief.

Canceled debt will not be taxed as income.

PAID BY - ULTRA-MILLIONAIRE TAX
Zero additional tax on any household with a net worth of less than $50 million (99.9% of American households)

2% annual tax on household net worth between $50 million and $1 billion

4% annual Billionaire Surtax (6% tax overall) on household net worth above $1 billion

10-Year revenue total of $3.75 trillion

Bernie Sanders - College for All and Cancel All Student Debt

Key Points
Guarantee tuition and debt-free public colleges, universities, HBCUs, Minority Serving Institutions and trade-schools to all.

Cancel all student loan debt for the some 45 million Americans who owe about $1.6 trillion and place a cap on student loan interest rates going forward at 1.88 percent.

Invest $1.3 billion every year in private, non-profit historically black colleges and universities and minority-serving institutions

End equity gaps in higher education attainment. And ensure students are able to cover non-tuition costs of attending school by: expanding Pell Grants to cover non-tuition and fee costs, tripling funding for the Work-Study Program, and more.

PAID BY - This Wall Street speculation tax will raise $2.4 trillion over the next ten years. It works by placing a 0.5 percent tax on stock trades – 50 cents on every $100 of stock – a 0.1 percent fee on bond trades, and a 0.005 percent fee on derivative trades.

Each plan has differences, but it seems that the Biden plan generally was a push for legislation vs executive action. I had to cut and paste his as the highlights weren't necessarily directed at loan forgiveness overall. When i refer to progressives they normally fall between the Warren and Sanders plans, and seem to look for executive action to erase this.

Also to be clear each candidate had other parts of the college funding issue addressed but I focused mainly on the debt forgiveness portion.

 

[Dr. Keith]

Good plan. Alright so I would assume the foundations would be on one of these three proposals.

Thanks for putting this together.

 

[theprestige]

Thanks for putting this together.

Yes indeed. Thank you!

 

[Emily's Cat]

Accreditation is part of the equation, but shouldn't be the end of it.

I think these institutions receiving government money should not just be required to provide high quality education, but track data on whether or not their graduates are actually achieving any kind of meaningful career success. Continued eligibility for government funds could be conditioned on the college actually being a good investment, back by empirical data, for the students that go there and the government that pays for it. They need more skin in the game when it comes to whether or not their degrees are actually worth the money spent on them.

I get where you're coming from, but that needs some rearranging of how student loans work altogether. Currently, the loans are made to the student, not to the institution. The institution has zero skin in the game.

 

[Venom]

Nice summary rdwight.

Regarding the Biden plan, what about a work-study sort of thing repurposed for student loan relief instead? Students get x amount of relief per year for y amount of work in a related field, assuming no prior service. Good for the resume too I'd imagine.

 

[Emily's Cat]

I think I see where you're coming from, and yet there is a possible flip side--should something continue to be a struggle for people just because it's been a struggle in the past? As an analogy, if someone finally puts a disabled ramp in for some stairs, is it unfair to those who had to crawl to the top before?

That isn't a slam dunk--I don't think there's an obviously correct point of view to it.

I think there's a bit of a difference in this one though. Forgiving those loans means that the government loses income... which means they need to make it up some other way... which means that everyone else gets taxed.

Additionally, this isn't introducing a new accommodation where none existed before. There are all kinds of loans out there, for all kinds of reasons. Many people have taken on loans for very good reasons (I once took on a loan so I could pay my dad's back property taxes so he didn't lose his house). Part of taking a loan is agreeing to pay it back. For those people who have been responsible individuals and have made good fiscal decisions, this is a bit of a slap in the face. It's a perverse incentive.

There was a similar situation back on 2008 o so, when the housing market crashed. There were all kinds of things available to provide relief for people who could no longer afford to pay their mortgages. But for those of us who did not overspend on our houses, who didn't buy much more than we could afford... we were screwed. We made responsible, good financial decisions, and we were left with the value of our house upside down and still having to pay our mortgage. Those people who went way overboard with their houses and got into more than they could handle, well, they walked out of it better off.

There's a point where rewarding people for having made bad decisions is really just not a good idea.

I get that education is a bit more complicated, but still. Nee to make sure we're not introducing a negative incentive for good decisions here.