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Cancel student loan debt?

I can't see how this plan, or broader plans to deal with the crippling costs of higher education in this country, wouldn't be a boon to the economy.

Younger generations are servicing student loans rather than consuming in the economy.
 
See my edit.

Any one-time debt amnesty will just push the can down the road and potentially make things worse.
Colleges must have an incentive not to charge more than what can reasonably paid back.
 
The Great Zaganza said:
See my edit.

Any one-time debt amnesty will just push the can down the road and potentially make things worse.
Colleges must have an incentive not to charge more than what can reasonably paid back.
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Sure, something must be done to stop the feeding frenzy of colleges spending wildly knowing that tuition will be covered by loans that aren't really doing any due diligence to ensure repayment is possible.

Kicking the can down the road is preferable to doing nothing, and we're talking about a large swath of the population that is crippled by student debt. A large, sweeping action like this might be exactly the thing needed to drag this issue to the forefront of public debate.
 
A nice idea, but it's slapping a bandage on the symptoms rather than treating the underlying problem.

Giving employers incentives to stop requiring college degrees for jobs that don't actually need them would do more. Higher education is stuffed full of people who shouldn't be there paying way too much for degrees that aren't necessary in subjects that aren't important. If Joe Sixpack went to trade school to become Joe the Plumber that would benefit him and society far more than him borrowing a fortune to get a degree in English to become Joe McEmployee, minimum wage debtor.
 
TragicMonkey said:
A nice idea, but it's slapping a bandage on the symptoms rather than treating the underlying problem.

Giving employers incentives to stop requiring college degrees for jobs that don't actually need them would do more. Higher education is stuffed full of people who shouldn't be there paying way too much for degrees that aren't necessary in subjects that aren't important. If Joe Sixpack went to trade school to become Joe the Plumber that would benefit him and society far more than him borrowing a fortune to get a degree in English to become Joe McEmployee, minimum wage debtor.
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How are you going to stop employers from requiring unnecessary credentials?

I suppose a tighter labor market with a more politically powerful labor class could be an effective counterweight to the capricious demands of management, but I don't see anyone in power calling for that. The supposed left party in this country has spent the last few decades undermining the power of trade unions and distancing itself from working class politics, and the power of the working class is practically nonexistant.

So long as the working class is atomized as it is now, there's no way to push back on senseless demands from the managerial classes.

Everyone joining the IWW is a goal I can get behind, but doesn't strike me as plausible. ;)
 
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Canceling student loan debt is effectively compelling then the lender to subsidize education. Not only that, but to subsidize education that is manifestly unproductive. If this is is going to be an investment in education, I'd like to see some articulation of the idea of a return on the investment. And some explanation of why the return can't be realized in the usual way, by the entrepreneur paying back their investors.

Or if it's going to be a laying off of bad debt, I'd like to see some acknowledgement that it is bad debt. That these were bad investments and we won't be making them any more.
 
SuburbanTurkey said:
How are you going to stop employers from requiring unnecessary credentials?
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I said nothing about "requiring", I said "give incentives". Tax credits for hiring employees who don't have degrees if the work doesn't actually need them. I've had about fifteen jobs in four different career fields, none of which actually utilized the subject I got my bachelor's degree in. All of them, however, wanted me to have a bachelor's degree, they didn't care in what.

Requiring unnecessary degrees is at best a pointless waste, but at worst it's a hidden method of keeping the lower class from getting into the middle class. My employers didn't give a damn about my degree except that it meant I was probably middle class. They wanted to exclude trash. Perhaps not consciously, I really hope, but that's the practical effect. The practice is outdated, wasteful of resources, and needs to die out.
 
If the notion of COLLEGE IS FOR EVERYONE cannot be overcome, then how about a hybrid approach? Encourage everyone to go through two years of learning a trade first, then move on to college if they want to? That way a) some people would decide to skip college and just start working and b) even the people who do go to college have something to fall back on if their history degree proves not to sufficient to keep them employed. There are simply too many people in college who shouldn't really be there, and too many people emerging from college with no tangible benefits. Teach them something that they can use to feed themselves with first, then do the extras if and when it's feasible for them.
 
Oh I am so conflicted about this.

1. Yes the current college loan cycle is straight up mob shakedown level of shady and exploitive.
2. But it exists because we decided that going to college was some sort of inherent right.
3. I'm pretty sure the same people screaming for student loan debt cancellation now are the same ones that were/would be screaming for "More student loans! Everyone should go to college!" a few decades ago. It seems like "So what happens if people can't pay these loans back?" is a question you ask before you start giving out loans, not after.

Here's my thing. What are we sending people to college for?

If it's just a vague "Well it's better if everyone is educated" well yeah that's true, hell it's basically a truism, but it's 2020. We could give everyone a Chromebook and 4 years of internet access free and they could get the same level of education from various free websites.

If we're doing it for the job market then we need to do it in a way that makes sense financially.
 
SuburbanTurkey said:
I can't see how this plan, or broader plans to deal with the crippling costs of higher education in this country, wouldn't be a boon to the economy.

Younger generations are servicing student loans rather than consuming in the economy.
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Well, the lender whose debt is being serviced is consuming in the economy, so that evens out.

The real problem is that younger generations aren't producing in the economy, which is why they aren't able to service their loans.
 
TragicMonkey said:
A nice idea, but it's slapping a bandage on the symptoms rather than treating the underlying problem.

Giving employers incentives to stop requiring college degrees for jobs that don't actually need them would do more. Higher education is stuffed full of people who shouldn't be there paying way too much for degrees that aren't necessary in subjects that aren't important.
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I think the problem is that employers probably see intelligence to be a trait that is preferred in an employee (depending on your definition of "intelligent"... able to learn new facts, function under pressure as during exams, etc.), so they use a college degree as an indicator that yes, the employee is smart (even if the degree isn't relevant to the job at hand). Granted, not all "smart" people went to college, and not everyone who went to college is particularly "smart" (I heard Wharton produced a real moron for example), but there is probably SOME correlation there.

Otherwise, how can a prospective employee convince a prospective employer "Yes, I'm smart... I didn't just spend my youth eating lead paint chips", especially early in their work history. Doing well in an interview may only show the prospective employee is charismatic/able to bluff well, and employment history can be hard to follow up on.
 
JoeMorgue said:
Oh I am so conflicted about this.

1. Yes the current college loan cycle is straight up mob shakedown level of shady and exploitive.
2. But it exists because we decided that going to college was some sort of inherent right.
3. I'm pretty sure the same people screaming for student loan debt cancellation now are the same ones that were/would be screaming for "More student loans! Everyone should go to college!" a few decades ago. It seems like "So what happens if people can't pay these loans back?" is a question you ask before you start giving out loans, not after.
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But again, even if we keep the proportion of the population that goes to college equal - tuition has gotten more expensive. Much, much, much more expensive.

College tuition rates have been rising about twice as fast as regular inflation. That really starts to add up over time.

Tuition Inflation
Tuition inflation is the annual rate of increase in college costs. College costs tend to increase, on average, by about twice the consumer inflation rate.
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tuition inflation is about 3.5% to 4.0% higher than CPI-U. The average tuition inflation rate is 7.4%, double the average CPI-U of 3.7%.
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College costs for a child are 4 to 8 times greater than the parent’s college costs.
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To me at least, the higher tuition rates are the elephant in the room. All of us thinking about what our cohort paid for college is meaningless in the current situation. The current generations, our kids and grandkids, are facing vastly higher college costs than we did.
 
Checkmite said:
How do you figure? A forgiven loan is written off; it's not as if the federal government would be paying out the outstanding balance of the forgiven loans, since the creditor is itself.
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So, taxpayers. The government raises money from taxes, and loans it to this guy. Instead of this guy paying it back, with interest, it turns into free money. Taxpayers bought this guy an education that is manifestly unproductive. Maybe that's good public policy, but if it is, there needs to be a good public policy argument for it. Not just "free money that didn't cost anybody anything". Which is obviously untrue anyway, so I'm not sure why you went there.

And if it *is* good public policy, let's talk about investments, not loans. We're investing in this guy's education. His degree will make him more productive. He'll contribute more to society. We will have a measurable payoff, either in dividends he pays back to us as investors, or in productivity that he pays forward into the economy.

Forgiving a debt is essentially saying that the lender ****** up, the arrangement isn't working, and the expected benefits will not be realized. If that's true, then yes, we should consider forgiving the debt. We should also consider letting the lender eat the loss, as an appropriate consequence of their bad investment. But either way, first and foremost, we should consider why and how the arrangement failed, and what steps to take to avoid making similarly bad investments in the future.

If we're going to be giving gifts to people because we think they can't pay back a loan, and won't pay out a return on investment, we should be clear about what we're doing, and why.
 
Segnosaur said:
I think the problem is that employers probably see intelligence to be a trait that is preferred in an employee (depending on your definition of "intelligent"... able to learn new facts, function under pressure as during exams, etc.), so they use a college degree as an indicator that yes, the employee is smart (even if the degree isn't relevant to the job at hand). Granted, not all "smart" people went to college, and not everyone who went to college is particularly "smart" (I heard Wharton produced a real moron for example), but there is probably SOME correlation there.

Otherwise, how can a prospective employee convince a prospective employer "Yes, I'm smart... I didn't just spend my youth eating lead paint chips", especially early in their work history. Doing well in an interview may only show the prospective employee is charismatic/able to bluff well, and employment history can be hard to follow up on.
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Trial periods after hiring, application tests. Both would serve far better for actually determining whether the candidate can do the actual job than possession of a degree from somewhere, even if college degree programs weren't plagued with grade inflation.

Who would you rather have working for your insurance company, Candidate A who passed an insurance work test with a 95% score and did well in their week-long trial period, or Candidate B who says she has a piece of paper (you'll have to verify it) from Generic College of Somewhere that proves she got acceptable grades in several courses about German literature?
 
Can we cancel mortgage debt, too? It sure would help a lot of people.



Anyway, the whole scheme is a mess. Who decided that it was a good idea to let 18 year olds pile up as much debt as they wanted? That seems like a recipe for disaster, and it turns out to be right.

Instead of just forgiving the debt, how about letting it be voidable by bankruptcy? That alone would get rid of a lot of the abuse of the program.
 
acbytesla said:
Well money for loan forgiveness and/or free tuition doesn't come out of thin air... Tax payers do end up paying at least something for it. And with plenty of competing priorities (covid relief, health care, infrastructure), education may take a back seat to more immediate concerns.

That doesn't necessarily make free tuition/debt forgiveness a bad idea, and there are certainly some benefits to society. But I don't think it is a bad thing to look at costs and benefits of various options.
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Yes in fact it does. There is a huge difference between macroeconomics and microeconomics. You think we had that Trillion dollars we used for COVID relief or for the debt incurred during WW2? So, we incur debt? The economy grows and we pay it off in 20 years with inflated dollars.

This is not a simple issue. I'm not saying we should or shouldn't do it. I'm just saying it simply isn't true that helping students pay off debt necessarily hurts others.
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The ability for a government to take on debt is not unlimited. High debt loads can make lenders wary about purchasing government-backed securities (which affects the cost of borrowing). In extreme cases it ends up triggering austerity measures.

Furthermore, the idea that "the government can just let inflation and growth take care of the debt" is faulty... The borrowed money isn't "Idle", it gets increased through interest (and interest rates can sometimes exceed growth rates) And eventually it does have to get paid back.
 
theprestige said:
Canceling student loan debt is effectively compelling then the lender to subsidize education. Not only that, but to subsidize education that is manifestly unproductive. If this is is going to be an investment in education, I'd like to see some articulation of the idea of a return on the investment. And some explanation of why the return can't be realized in the usual way, by the entrepreneur paying back their investors.

Or if it's going to be a laying off of bad debt, I'd like to see some acknowledgement that it is bad debt. That these were bad investments and we won't be making them any more.
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Did you go to college Prestige? Was it manifestly unproductive?
 
It's probably time to consider whether college or other higher education beyond high school should just be free.

We don't really have an economy anymore where a normal person with just a high school degree can make a decent living, which absolutely was true in the past. The free public school education (K-12) that we provide today does not provide the same opportunity that it did in the past.

If it's necessary to have specific job skills to make a living wage, be that college education or training in a skilled trade, wouldn't it be beneficial for the entire society to make such schooling publicly available to all those who are academically qualified? What benefit is there to preventing people without money from acquiring the training to improve their productivity and income?
 
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I mentioned earlier - does anyone know what the loan forgiveness eligibility would be? What does it take to become eligible for this program?

Is this really a freebee, or is this recognition that unlike most other debts, student loan debts cannot be discharged through bankruptcy?



ETA: We have a thing that is necessary for society - college. The cost of that thing rises as a rate twice that of the regular inflation rate. As a result, the cost of that thing now pushes even above median income middle class households into debt, significant debt (I expect paying for my two kids to go to college to cost nearly as much as my house and to delay my retirement by about five years, that is if I pay for it as my parents mostly paid for mine). Unlike most debts, that debt cannot be discharged through bankruptcy, it stays with one forever.

I feel like college costs vs. loans vs. lack of bankruptcy protection is reaching the breaking point. This is not about an every increasing proportion of the population wanting to go to college. This is about holding steady in the face of ever greater costs and consumer-hostile lending practices.
 
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