Cancel student loan debt?

[TurkeysGhost]

SGM is being a bit vague about the details of their education-driven business plan, so I'm not sure that they're actually being priced out of education. As best I can tell, the degree in question is supposed to be profitable, and a career in a related field would make the education loan totally affordable, but for whatever reason SGM opted not to go that route after taking out a loan for that purpose.

If I opt not to make a profitable investment with borrowed money, I don't think it makes sense to say that my inability to repay the loan is because I was priced out of profitable investments.

If colleges are lying about the value of the degrees they confer, then we should probably stop student loans altogether. We should probably also investigate whether people in SGM's position have a good case to bring suit against their college for fraud, or if we as lenders should hold them accountable for not doing their due diligence before spending the money they borrowed from us.

I get that bad luck happens and sometimes it doesn't work out. I get that debt forgiveness is sometimes the right thing to do, in both financial and humanitarian terms. But if I loan money for a profitable purpose, and the borrower ends up not turning a profit, I'd like to at least find out WTF happened to the investment we understood when the loan was made.

Looking at this from a bird's eye view, we have a pretty good idea why so many student borrowers can't pay back their loans. It's a combination of inflating tuition rates as government slash their funding, uncontrolled spending by these schools all competiting for top ranking (and for student loan dollars), a glut of students attending these institutions as other opportunities for gainful employment evaporate, and a general slipping of economic conditions punctuated by financial disasters such as those in 2008 or the current one in 2020.

The student loan situation is just one smaller piece of the larger phenomena of younger generations being generally worse off economically, in pretty much every measure, than the generations that preceded them.

 

[JoeMorgue]

Right now the total (Federally backed, I'm sure weird edge cases of other types of student loans exist but those are outside the scope of this discussion) of all student loans in the US is 1.6 trillion dollars.

Since the start of the Corona Virus the US Government has already spent 2.3 Trillion bailing out businesses.

So anyone and everyone who wants to have a big discussion about "moral responsibility" now but didn't then can flounce off at high speed in any convenient direction. I rather lost my patience with "I want to have a big moral debate when you get an arm cut off and need help that I didn't want to have when I stubbed my toe and got help" as a trolling tactic.

That being said I still stand behind my earlier point that giving this kind of mass debt forgiveness without really questioning hard whether or not we should be putting people into this kind of debt (and no "LOL just give them the money" isn't an answer) is not reasonable.

 

[Beelzebuddy]

Part of the nature of loaning money to people is that some will make poor choices. Student loans is one of the few areas that investors have completely insulated themselves from any risk, so they don’t really need to know what happened or even try and understand what went wrong, since there’s no problem on their end.

Don't be ridiculous, everyone knows that college students are pillars of fiscal responsibility whose lives are pretty much set and will never experience any significant changes.

Any injustice must therefore be due to the personal failings of individual students and not the industries which depend this assumption to perform as advertised.

 

[TurkeysGhost]

That being said I still stand behind my earlier point that giving this kind of mass debt forgiveness without really questioning hard whether or not we should be putting people into this kind of debt (and no "LOL just give them the money" isn't an answer) is not reasonable.

Agreed, but that's the political situation right now. At best the Biden administration is offering small sum, not even total relief. The idea that there would be serious restructuring of how colleges are funded is completely out of question for these people. Before you even factor in Republican ghouls stopping it, you have to concede that Biden and other conservative Democrats are idoelogically opposed to such measures. The current left boundary for this conversation limits us almost entirely to token gestures without meaningful reform.

There's really no reason for this thread remain wedded to political reality, because nothing substantial is on offer. My bet is that some pointless, means-tested nonsense that only helps a small minority of student borrowers is what is offered and this is further negotiated down to nothing, or totally stonewalled, by a Republican Senate. The situation will almost certainly continue unresolved as it is now.

 

[Emily's Cat]

I'll try explaining one last time. Take the token gesture of needing to pull pins from a carpet or nails from some boards. Sure, you can run a magnet over the carpet for a long time or take a hammer to the nails to pull them out, but you've just bought yourself a MRI machine. You spent a LOT of money on it! Surely it can repay you a little by pulling the metal from the carpet and boards really quick, right? As long as it doesn't feel too full of itself.

It isn't about entitlement, or superiority, it's about using the tool for what it's good for. While you're sticking nails to the supermagnet, you're not taking scans of sick people. You also just might damage your shiny new MRI machine, and then what of all the money you spent on it? People already do service. Like my teacher classmate, service is best done along the lines of what the money went to pay for.

Serious question here, because I think the monkeys are busy talking past each other.

You took out loans and got a degree. Now that you have that degree, you have been unable to find a job in that field - correct?

Assuming that is correct, you are in a position where you have amassed a large amount of debt in good faith, but have found yourself in a position where repaying that debt is a significant burden to your well-being.

Now... if I understand the situation correctly... wouldn't it seem like a benefit to you if you could cancel some of that debt by spend one day a week doing some sort of public service (charity work, helping people do taxes, filing work at a municipal court, after-school support and tutoring in an underprivileged area, lugging around files for a public defender, be creative here)?

Given that you are unable to find lucrative work in your field in order to pay off your debt, wouldn't the exchange of service for debt cancellation be a reasonable alternative to simply being stuck in debt forever?

 

[Emily's Cat]

Why stuck with only proposals that inherently pretend that the work a graduate actually studied for doesn't count as work?

If I had got my degree in ancient greek philosophy... I'm not sure that holding out to find a job in that field with a load of debt hanging over my head is a hill I ought to be dying on.

 

[TragicMonkey]

Looking at this from a bird's eye view, we have a pretty good idea why so many student borrowers can't pay back their loans. It's a combination of inflating tuition rates as government slash their funding, uncontrolled spending by these schools all competiting for top ranking (and for student loan dollars), a glut of students attending these institutions as other opportunities for gainful employment evaporate, and a general slipping of economic conditions punctuated by financial disasters such as those in 2008 or the current one in 2020.

The student loan situation is just one smaller piece of the larger phenomena of younger generations being generally worse off economically, in pretty much every measure, than the generations that preceded them.

I think the weak link in the chain is between graduating with a degree and getting a decent job. It's not easy. And not getting a job at all, or getting a job that pays too little, makes everything worse for the borrower, the lender, and society as a whole. So I favor any solution that involves greater focus on helping the graduates secure decent jobs. It's certainly in the lenders' best interests. I think schools can and should do a lot more than just chucking (mostly young) people out into the world with a funny hat, a piece of paper, and nothing else. Can't colleges do some networking for their students? Make some partnerships with businesses, arrange starting positions, provide assistance for the next step?

I'm sure some schools do some of that. Mine certainly didn't.

 

[Modified]

I think the weak link in the chain is between graduating with a degree and getting a decent job. It's not easy. And not getting a job at all, or getting a job that pays too little, makes everything worse for the borrower, the lender, and society as a whole. So I favor any solution that involves greater focus on helping the graduates secure decent jobs. It's certainly in the lenders' best interests. I think schools can and should do a lot more than just chucking (mostly young) people out into the world with a funny hat, a piece of paper, and nothing else. Can't colleges do some networking for their students? Make some partnerships with businesses, arrange starting positions, provide assistance for the next step?

I'm sure some schools do some of that. Mine certainly didn't.

In technical fields, systems that encourage undergraduate research would help a lot.

 

[Silly Green Monkey]

Serious question here, because I think the monkeys are busy talking past each other.

You took out loans and got a degree. Now that you have that degree, you have been unable to find a job in that field - correct?

Assuming that is correct, you are in a position where you have amassed a large amount of debt in good faith, but have found yourself in a position where repaying that debt is a significant burden to your well-being.

Now... if I understand the situation correctly... wouldn't it seem like a benefit to you if you could cancel some of that debt by spend one day a week doing some sort of public service (charity work, helping people do taxes, filing work at a municipal court, after-school support and tutoring in an underprivileged area, lugging around files for a public defender, be creative here)?

Given that you are unable to find lucrative work in your field in order to pay off your debt, wouldn't the exchange of service for debt cancellation be a reasonable alternative to simply being stuck in debt forever?

Perhaps, were that an option. However, anything other than absolute scut work sounds like-----a job. That if I'm doing for free, for some nebulous ticking down of a number in a cloud somewhere, someone else isn't going to get paid for. Either the 'service' is punitive, or it's eliminating jobs that would actually help someone by giving them experience in their field. It also means that those who are doing these jobs, stealing jobs from those who need them, will be excoriated for doing so. Really, 'service' is actually something that people are already doing, like my teaching classmate. It's an idea that's already in play and is being done better.

 

[TragicMonkey]

In technical fields, systems that encourage undergraduate research would help a lot.

I was thinking more of the non-technical fields. We have all these companies saying they want their jobs' candidates to have a degree! any degree!....well, let them prove it by hiring these degreed persons straight out of college. The colleges, if they have confidence in the value of these degrees, will surely find nothing to object to in arranging such a scheme. Let the schools guarantee the value of their degreed graduates by staking their academic reputuation on their immediate employability. In a transparent, easily-measurable metric that can be compared to other schools.

Unless both the employers and the schools want to admit they're lying about how great degrees are?

 

[rdwight]

I'm with tragicmonkey in that I really don't understand the pushback to his proposal. If it was voluntary, I KNOW it would be a popular program. 50k in debt? 500 hours of community service. For those that don't want to do so, let them wallow in debt. I can guarantee that would not be the case for the vast majority. And there is already a network to accomplish this. Do you really think this would be an added burden to have additional workers in this field to have supervised? When I was younger and had to do community service, being my charming self I let time pass until i found myself in court. Next bit a community service I had to literally pay out of pocket to go out with convicts from the local prison. And they were doing it just for the fresh air.

But sure, say making it compulsory is harmful. Let's make it voluntary and see how many sign up. I know I would. I know people that owed less to to courts that had to spend time in jail that would sacrifice hours towards community service vs that but weren't given the option. Let's start paying off their IOU's first since student loan recipients are obviously too proud. For a hypothetical, this seems eye opening to the backlash received and not really changing my mind at all.

 

[rdwight]

The question in my mind with cancelling student debt, or free college education of any sort, is how is it going to work fiscally? We simply cannot keep running the government by increasing debt forever. A point will be reached where the government will have to choose between default and hyperinflation (sort of a would you prefer to be hanged or beheaded type of decision). While Biden could maybe cancel student debt by executive order, he cannot raise taxes that way. Getting any kind of tax increase through a GOP controlled Senate will be just about impossible. That is going to place some limits on a whole lot of stuff that the progressive wing of the Democrats want to do. Even with a 50/50 Senate, Republicans will only need to turn one Democratic senator to win a vote.

Sorry for the delay of a response. To be fair, the proposals given do give an avenue to covering the cost. You can disagree with those tax proposals, but most do look to actually fund from revenue vs debt. If the ability to fund through taxation is struck down, and instead is funded through debt through the executive, that does seem like a combined fault. Ultimatums aren't good for policy, but policy wise I am not sure it is anything but a finger pointing contest if the ability to fund falls on one side while the other refuses to settle on the better choice.

 

[Beelzebuddy]

I'm with tragicmonkey in that I really don't understand the pushback to his proposal.

Because it's punitive in motivation. TragicMonkey had the presence of mind not to explicitly describe it in those terms, but you've just gone and compared it favorably to Community Service sentences, which are literal punishments. You're saying "this is how much someone should be punished to be forgiven a debt."

Hey, how about in lieu of something done in lieu of jail, we just have jail? We'll build a special comfy jail just for people carrying large amounts of debt, which we'll call "student loan sanctuaries," and anyone who feels unable to pay their loans can just spend some time in a sanctuary. It's voluntary!

Or what about cutting off a finger, like the Yakuza demand for losing large amounts of money? How much is a pinkie worth? A million dollars? I'll bet I can find enough takers for that to satisfy your popularity criterion.

Obviously this is hyperbole, but whether it's community service or cutting off a finger, the motivation behind demanding that other people be punished to earn forgiveness is the same, and society's better off without it.


[ETA] I got curious about the typical conversion rate between dollars and hours of community service. In Florida you can "buy off" community service at $10 per hour. The other way, working instead of paying a fine, varies a bit but is below minimum wage.* Do you think as many people would be taking you up on your offer if $50k in debt would take between five and ten thousand hours to work off?

*[ETAA] Ooh, AND doing so typically requires defaulting on the fine, so you'd get to go through bankruptcy anyway just to be considered for the chance to work the loan off at below minimum wage! Or does that magic wand you're waving come with some ability to obviate the social and legal forces that have stapled on all this extra punishment in actual implementation?

 

[lomiller]

Given that you are unable to find lucrative work in your field in order to pay off your debt, wouldn't the exchange of service for debt cancellation be a reasonable alternative to simply being stuck in debt forever?

What you are talking about is indentured servitude. It used to be a real thing but was a disaster. It was second only to slavery in terms of the damage it did to personal freedom and was a massive failure economically.

You took out loans and got a degree. Now that you have that degree, you have been unable to find a job in that field - correct?

Assuming that is correct, you are in a position where you have amassed a large amount of debt in good faith, but have found yourself in a position where repaying that debt is a significant burden to your well-being.

If you had borrowed that money for a business, or a home, or a car, or a casino you could go to a bankruptcy court and have the debts dismissed in whole or in part. Most people in the US are not permitted to do this for student loans.

 

[TragicMonkey]

Because it's punitive in motivation. TragicMonkey had the presence of mind not to explicitly describe it in those terms,

Please stop calling me a liar. It's highly offensive. You are mistaken about my motivation. I have explained myself several times so far. I am very tired of being slandered in this way.

 

[Myriad]

How about this: for every month a degreed graduate works at least 30 hours a week in private employment at or near minimum wage, they're excused from their regular scheduled loan repayment for that month.

The employment can be verified from income tax records. The whole program could even be treated as a tax credit.

Minimum wage jobs are already the jobs that maximize service to society per dollar earned. No one pays minimum wage for work that doesn't need to be done at all. (Well, there might still be some traditional summer-job nepotism going on, but most nepotism nowadays pays far better than minimum wage.)

And should the graduate eventually break into the managerial or professional position their degree qualifies them for, they'll have some actual life experience at the bottom of the wage scale. Not just some BS volunteer fun-time or pretentious internship.

 

[Delvo]

Why stick with only proposals that inherently pretend that the work a graduate is already doing to survive if (s)he didn't get that "lucrative" degree-requiring job doesn't count as work?

(Including those who did get the job they were going for with the degree in the first place but found out it wasn't as "lucrative" as they'd been told it would be?)

Because it's punitive in motivation. TragicMonkey had the presence of mind not to explicitly describe it in those terms, but...

And there's the real answer to my questions. The dishonesty is required in order to excuse the punishing. If you want to do X (in this case, making people's lives worse) but don't want to be seen as wanting to do X, some part of your argument somewhere needs to try to disguise X as not-X.

And like most punitive measures, it's designed to be worse for the poorest, the most in need of the kind of break it pretends to offer, because that's who's already the most likely to be working too much to be able to add more work to their schedules, and/or to lack the reliable transportation to get to yet another obligation in their schedules, et cetera.

 

[TurkeysGhost]

I'm with tragicmonkey in that I really don't understand the pushback to his proposal. If it was voluntary, I KNOW it would be a popular program. 50k in debt? 500 hours of community service. For those that don't want to do so, let them wallow in debt. I can guarantee that would not be the case for the vast majority. And there is already a network to accomplish this. Do you really think this would be an added burden to have additional workers in this field to have supervised? When I was younger and had to do community service, being my charming self I let time pass until i found myself in court. Next bit a community service I had to literally pay out of pocket to go out with convicts from the local prison. And they were doing it just for the fresh air.

But sure, say making it compulsory is harmful. Let's make it voluntary and see how many sign up. I know I would. I know people that owed less to to courts that had to spend time in jail that would sacrifice hours towards community service vs that but weren't given the option. Let's start paying off their IOU's first since student loan recipients are obviously too proud. For a hypothetical, this seems eye opening to the backlash received and not really changing my mind at all.

Sure, it would no doubt be popular.

I just don't think it would be useful in any way. It's not like these student borrowers are unemployed layabouts. Many are working in jobs that are related to their education, some are working jobs that have nothing to do with their degree. The reason they aren't current on their loans isn't because they're unemployed, it's that their income isn't adequate to repay.

There are plenty of people that are full time employed whose incomes result in IBR repayments that may not even exceed the accruing interest of the loans. Some on are track to repay their loans after decades, some on track to have the bulk of it forgiven once the IBR time period runs out after 25 years.

I don't see much benefit in taking people who are almost certainly working some job, which may have some tangential connection to their education and perhaps a glimmer of hope for a career track, and funneling them off to some make-work tedium that is almost certainly not going to lead to career advancement. Is it better for some part-time substitute teacher/barista to drop those jobs and go stamp license plates for loan repayment? Is it better for someone with a history degree to abandon a low-paying adjunct job to go pick up trash on the freeway?

Plenty of people would take this offer because the loan repayment would probably exceed the value of whatever paltry income they are receiving for a real job, but that's not evidence of this being a good way for the government to utilize labor.

 

[Beelzebuddy]

Please stop calling me a liar. It's highly offensive. You are mistaken about my motivation. I have explained myself several times so far. I am very tired of being slandered in this way.

You keep saying that, but then you talk yourself right back around to it. Ours just isn't a society where larger societal obligations can be handled as pleasantly as mowing your neighbor's lawn to pay him back for watching your cat. It would be a nicer place if it were, but we're not there yet nor will we be any time soon.

What you see as a polite request I see interpreted as mandatory punishment, and I think I can point to enough real-life situations to show that my view is more likely to be correct. And at least one other person agrees with your proposal on the basis of it being punitive just as community service sentences are used today.

 

[Hlafordlaes]

Everything has downsides. I think one initiative, among others, might be government-sponsored internships in private enterprise lasting, say, anywhere from 6 months to 4 years. Under such a scheme, the contract is between the intern and the company at normal rates, and can lead to permanent employment. To qualify, students for their part must remain current on loan payments and have parents whose main income is earned, not unearned. Businesses, to be incentivized, are given zero interest loans, with semiannual principal up front, to cover salary expense, but not payroll taxes. To reduce fraud, employers do have real costs, only easily financed, and they can "place their bets" semiannually with full knowledge of how things are working out. Only 20% of a given companies workforce may comprise such workers. Anyone of any age and debt level may qualify, providing remaining monthly loan payments are greater than or equal to contract length. This ostensibly should have minimal net hit on Treasury. Might help as many as, I dunno, 20%-40% of students?

Aside: On the other hand, and unrelated to any specific debt or loan program...

and in the absence of a guaranteed basic income or large scale public works programs, there is something I quite simply would have loved to have had access to, and which may satisfy the moralizing Right and sticklers for all lunches being paid lunches, or close enough. I think it would be nice, either organized by an NGO, quasi or fully publicly funded, for there to be place where you can go and crush concrete with a sledge hammer, no questions asked, no ID, nada, for $20 an hour. Those unable to swing a hammer can pour new cement and rubble into molds and make new bricks for smashing. Those not wishing anonymity could choose to work in a publicly viewable booth and allow internet fans to tip. I can imagine some guys and gals making, well, *********. Maybe fans can buy the rubble, use it or donate it to construction sites as aggregate.

Say I'm homeless, not ******* hopeless, and don't want to ask for help, don't trust anyone, and just need a way to get started, not with a straight up handout, with no whining, weeping anybodies selling me faith or whatever. I just need some way to man up on my own, get a change of clothes, rent a pad, and look for work while not starving. Feed my littlest. You give me that solution, and I have no shame, do my thing, and move on. Bootstraps, no frills, no wagging fingers.

Sure, costs money. Multiplier effect alone should do wonders for payback, and the homeless have a clean way forward, no questions asked. That homeless Norwegian man who cared for his sick Spanish girlfriend and who used to teach the odd language class at one of our tables in the back of the bar might not have died so young, by golly. Stand up feller, one of the best. Got put down, hard. When some of your best are waste, something ain't working.