Forgiving Student Loan Debt Discussion

[OldShooter]

... Going to the cheaper school, like most in life, can often end up with getting what you paid for.

That's a completely different issue.

My issue is virtually ALL of these schools have increased their costs wildly in excess of even health care inflation. Naïve student borrowers, enabled by the government, keep shoveling money in the feeding trough and the students end up screwed.

Just winging it here, but I might go back 20 years for each school's baseline tuition, fees, room & board. Then calculate a today's "should-cost" number by applying 20 years of CPI or even CPI + 1%. Each school would then be tasked to make progress (by some criteria) towards their should-cost number as a condition of students being able to borrow to attend. No progress, no student loan money. This would take a legion of bureaucrats and a deafening amount of weeping and wailing, but it would shine the schools' high beams on cost control and eventually reduce the burden on students.

 

[USGrant1962]

...
I've only seen ideas floated that would limit forgiveness to well under $10K and not for lawyers or doctors. That's about the same amount as legit tax credits and other handouts given to all kinds of people except for the lower taxes given to the wealthy which got bigger handouts.
...

Not true. The HEROES Act includes a provision to forgive a full $10K. And two senior Senators and two junior House Members have publicly proposed that the President-elect forgive $50K under (dubious) executive order authority.

 

[akl432]

"Not the kids' fault. Naive borrower??"

Same could be said for the 20 yr old financing the slightly used Camaro at 27pct. Shall we forgive that also?

5k on a GAP credit card. Should that be forgiven?

My question is: where is the line? How do we define? Is it age? BC 18 year olds can sign binding contracts in the USA.


Or is it loan product: payday advance place, car finance, t mobile for an iphone, mortgage, or college tuition?

+ 1. Couldn't agree more!

 

[akl432]

Naïve student borrowers, enabled by the government, keep shoveling money in the feeding trough and the students end up screwed.

I respectfully disagree. No one forced them to take out the loans. I disagree that they were "naive" and "enabled by the government." IMO they should take personal responsibility and accept accountability for their actions. Many of us worked hard to pay for our school, and/or earned scholarships that required many years of sacrifices. Why should I pay for someone else's loans?

 

[Car-Guy]

^^^^ Well said

 

[LOL!]

I suppose there should no bail-outs of pension funds whether public or private as well.

 

[OldShooter]

I respectfully disagree. No one forced them to take out the loans. I disagree that they were "naive" and "enabled by the government." ...

We'll have to agree to disagree on this point. They are (largely) children with immature brains (physiological fact) and absolutely no sense of what they are getting themselves into. "All the other kids are doing it." They see no risk or and have no concern. You're asking for something they don' know really how to give.

Here is a good read: https://www.urmc.rochester.edu/encyclopedia/content.aspx?ContentTypeID=1&ContentID=3051 "The rational part of a teen’s brain isn’t fully developed and won’t be until age 25 or so."

If we were talking about 25+YD adults with some real world experience I would agree with you.

Edit: To be clear, my points here are basically that the educational establishment is the primary culprit. There was a trough full of money put in front of them and they gorged on it. Total lack of personal responsibility or accountability, to use your words. I am not convinced pro or con on how to deal with their student victims.

 

[Dash man]

We'll have to agree to disagree on this point. They are (largely) children with immature brains (physiological fact) and absolutely no sense of what they are getting themselves into. "All the other kids are doing it." They see no risk or and have no concern. You're asking for something they don' know really how to give.

Here is a good read: https://www.urmc.rochester.edu/encyclopedia/content.aspx?ContentTypeID=1&ContentID=3051 "The rational part of a teen’s brain isn’t fully developed and won’t be until age 25 or so."

If we were talking about 25+YD adults with some real world experience I would agree with you.

I don’t know your experience, but I’ve seen many graduate from school with little or no debt. They worked hard at a job while also going to school. They didn’t treat it as a party experience or right of passage. They were taught from a young age the value of a good work ethic. Many went into the military to pay for college, others waited tables or scooped ice cream. A former roommate of mine got his pilot’s license and instructor rating and gave flight lessons to earn his way through school, getting more ratings along the way.
At 18 they can vote, fight and sign contracts. If they needed guidance they should know to get it and not sign blindly.

 

[OldShooter]

I don’t know your experience, but I’ve seen many graduate from school with little or no debt. They worked hard at a job while also going to school. They didn’t treat it as a party experience or right of passage. They were taught from a young age the value of a good work ethic. Many went into the military to pay for college, others waited tables or scooped ice cream. A former roommate of mine got his pilot’s license and instructor rating and gave flight lessons to earn his way through school, getting more ratings along the way.
At 18 they can vote, fight and sign contracts. If they needed guidance they should know to get it and not sign blindly.

Yup. All true. Some graduate with no debt due to full ride athletic scholarships. But these are not typical. The evidence is the number of more typical students graduating with debts, especially in subjects where there is zero chance of economic payback. But I am not taking a position on whether their debt should be forgiven; I am simply saying that the government and the schools conned the majority into naively borrowing, filling the feeding trough that allowed the schools increase costs almost without limit. Certainly you're not defending costs that have risen far above even health care inflation.

 

[Time2]

I am struggling with the information and trying to understand what is going on with the talk about forgiving or reducing student loan debt. I am not sure if all the claims on either side are completely valid...



5. Forgiveness is not fair.

Quite valid!
I paid for what little debt* I had, I'll have paid close to $300k of tuition for my kids by the the end of 2021. I'm sure as a high school graduate I earned less than 90% of people with a college degree.


*I borrowed about $300 back in the 70s for some community college classes. I paid it back, but interesting the college came after me wanting me to pay. My filing system had not been perfected and only found one receipt. I made it clear I paid the entire bill and I finally got a call saying the found my payment and yes, I had paid it.

 

[Dash man]

Certainly you're not defending costs that have risen far above even health care inflation.

Healthcare and education both have had huge inflation because of government “help.” Creating the middleman causes everyone to get greedy.

 

[Time2]

The only way I’d consider it is if Universities had some skin in the game. Fund the debt relief with a special tax on their endowments. And let’s see some scrutiny of university president and staff salaries like we have of some CEO’s.

Uhh! I like that.

And the rich universities with huge endowments should be taxed at a higher percentage to fund the debt relief, than universities with smaller endowments.



I'm very interested in starting a movement to push for Credit Card debt relief. So many people are stuck under crushing CC debt. They just can't get ahead! /s/

 

[Time2]

I'm on the fence on this. I have both a Niece and a Nephew that took out students loans and ended using the money JUST TO SURVIVE. They never finished their degree and to this day, can't get a regular job without their pay be garnished or even if they found a W-2 job, file taxes without their refund being taken.

They can't get out of that hole. It breaks my heart. I've been thinking of paying it off for them but I'm not at that point. Dunno.

They are only in the hole until they work at a W-2 job long enough to pay off the bill. It's like us working a W-2 job and never seeing 30% of our income because it goes into investments. We live on the 70% that is left. We just do it, so can they.
Your post is written like maybe they are working under the table to avoid paying back what they owe.

 

[CardsFan]

We'll have to agree to disagree on this point. They are (largely) children with immature brains (physiological fact) and absolutely no sense of what they are getting themselves into. "All the other kids are doing it." They see no risk or and have no concern. You're asking for something they don' know really how to give.

Here is a good read: https://www.urmc.rochester.edu/encyclopedia/content.aspx?ContentTypeID=1&ContentID=3051 "The rational part of a teen’s brain isn’t fully developed and won’t be until age 25 or so."

If we were talking about 25+YD adults with some real world experience I would agree with you.

Edit: To be clear, my points here are basically that the educational establishment is the primary culprit. There was a trough full of money put in front of them and they gorged on it. Total lack of personal responsibility or accountability, to use your words. I am not convinced pro or con on how to deal with their student victims.

Yet, they are qualified to vote. Either they are immature, or they are able to make decisions. You can't have it both ways.

 

[pacergal]

I have no problem with it.
From what I have heard/read, it's about $10,000 being talked about, along with a better loan forgiveness plan. I do think a well thought out plan is warranted, right now there is too much speculation, so it makes it hard to make a definitive decision.

I also believe that somehow the tuition costs need to be tackled.

So many other "bailouts" have happened for other businesses, why not help folks who are trying to help themselves improve?

As I always told my kids, Fair does not mean Equal. Sometimes you get a little more, sometimes a little less.

Do we stop pension bailouts? Stop ACA subsidies? There seems to be plenty of government money/taxes for those and not everyone benefits.

 

[oneill225]

Unworkable

It can only happen if the government is going to offer free college to everyone. That is the logical next step after student loan forgiveness and I think the proponents of forgiving poor life decisions realize that it is a way to get the free tuition ball rolling.

It may sound good to "forgive" a gullible student with a worthless degree, but as a practical matter, it will not happen. It is a Pandora's box of unsustainable spending.

 

[HarveyS]

It's not the kids' fault. They are naïve borrowers. What society needs to do is to put that cap on higher education institutions' prices. Why we as a society continue to accept increases without limit is a mystery to me.

I'll have more to add in a minute or two, but want to ask: Should we also cap new car prices? Seems to me there are lots of folks in trouble with car loans.

 

[Time2]

Not true. The HEROES Act includes a provision to forgive a full $10K. And two senior Senators and two junior House Members have publicly proposed that the President-elect forgive $50K under (dubious) executive order authority.

We want names!

 

[HarveyS]

A lot of support here for lower cost colleges, in-state, etc., and in general I agree with that.

But for a lot of the STEM fields, and higher income aspirational degrees, WHERE you get it is as important as what you get. The big companies setup internships and recruiting at the "it" schools.

Stanford grad? Walk right up my dear. CS program grad at South Florida U after 2 years at the community college? Yeah, we'll get back to you.

Recruiters push pursue and push the shiny resumes harder than State U. People like to pick doctors with Ivy League certificates on the wall. Senior VP's like to pick people from their alma maters.

Going to the cheaper school, like most in life, can often end up with getting what you paid for.

Well, that's the common thought. In reality, as many current CEOs went to U Kentucky as Stanford, Princeton or Harvard. The most current CEO's went to UT-Austin. See https://www.usnews.com/education/be...ere-the-top-fortune-500-ceos-attended-college

I agree that where you went will open doors. However, it does not guarantee success.

In my experience Sr VP's don't hire entry level. When they pick their teams they pick based on experience, not where someone got their undergrad. At the same time, I don't think most people don't ask where their lawyer, doctor, or kid's 3rd grade teacher got their undergrad.

 

[Jerry1]

We want names!

MOD HAT ON

Please be careful not to get into politics.

MOD HAT OFF

 

[pb4uski]

Yet, they are qualified to vote. Either they are immature, or they are able to make decisions. You can't have it both ways.

Huh? What in the world makes you think that one has to be mature in order to vote? The right to vote and legally enter into contracts is based solely on age.... maturity has nothing to do with it. It's pretty well established that the maturity isn't fully developed at age 18.

 

[CardsFan]

Huh? What in the world makes you think that one has to be mature in order to vote? The right to vote and legally enter into contracts is based solely on age.... maturity has nothing to do with it. It's pretty well established that the maturity isn't fully developed at age 18.

Well, you kind of made my point.

They have a legal right to do both, mature or not.

Contracts are binding.

OldShooter implied that the "children with immature brains (physiological fact) and absolutely no sense of what they are getting themselves into" were not competent to enter into these agreements.

I will leave it at that.

 

[HarveyS]

This post hit a nerve, in case you couldn't tell. No, we should absolutely not forgive student's loan debts.

I have actually studied this based on data published in the WSJ. Lots of people like to talk about the "crisis" that is Student Loan Debt (SLD). In reality, there is no crisis.

Comparing graduates in 1985 (when I graduated) to today, the difference in average SLD is about $16,000 in inflation adjusted $. In 1985 the average was about $7,500 and today the average is about $32,000. (The average student loan debt for recent college graduates is more than $30,000, according to U.S News data. By Emma Kerr, Reporter Sept. 15, 2020).

Yes, tuition has risen at ridiculous rates. And fees are everywhere (labs, library, fitness, access, ......that just raise the cost of higher education. But the demon nobody wants to talk about is housing. Kid 1 just graduated from college and her last year she lived in a high-rise, 4BD, 4BA apartment. Included was doorman, utilities, elevators, pool, granite counter tops, stainless appliances, W/D in the apt., balcony, etc.. If I lived like that it would have cost me $400 (inflation adjusted) more per month. I lived in slumlord, uni housing. One place literally had no heat and we relied on heat rising from the first floor apartment (and this was in upstate NY).


Oh, and today dining halls and food courts on her campus had many options, not just the simple style of 1985 - mystery meat and a side salad. What about the outdoor heated pool and the 3 story climbing wall at the gym? And the yoga studios, etc. I don't remember those amenities in 1981 when I arrived as a freshman. But, they were there in 2016 for DD.

$16,000 extra SLD. That is $4K/year, or $400/month (+/-). I think that housing and quality of life are what is driving the increase in SLD more than the tuition.

My solution - let the schools underwrite the loans, not the Fed. If the schools really believe in their product, and in their highly selective admissions process that only pick the best, why wouldn't they support the loans?

 

[copyright1997reloaded]

Well, that's the common thought. In reality, as many current CEOs went to U Kentucky as Stanford, Princeton or Harvard. The most current CEO's went to UT-Austin. See https://www.usnews.com/education/be...ere-the-top-fortune-500-ceos-attended-college

I agree that where you went will open doors. However, it does not guarantee success.

In my experience Sr VP's don't hire entry level. When they pick their teams they pick based on experience, not where someone got their undergrad. At the same time, I don't think most people don't ask where their lawyer, doctor, or kid's 3rd grade teacher got their undergrad.

Thanks for posting this.

I graduated from a state related school (but recognized as one of the top 30 public universities today. Working for mega-corp, we had a variety of hires - some from state schools (such as SUNY), and some from places like CMU/MIT/Standford. (This is for computer science related work.) What school you went to might have made a difference getting in, but was quickly meaningless in terms of reputation.

I now teach (full time) at a community college (computer science) after doing 30+ in high tech, including multiple patents and systems that are used years later 365x24. I've found a variety of reasons students go to community college, some good and some bad:
1) Because they can't get in other schools (this is usually NOT the case)
2) Because they can't afford other schools (many times this is the case)
3) Because they are changing careers and going to school while working
4) Because they will be going to a four year school but want to get 2 years done on the cheap
5) Because they don't know what to do with their life and their parents are forcing them to go to school
6)

It helps that my school has a good reputation in terms of STEM areas and transferring to a four year program.

While most students don't fall into this category, I have had some students that I would have hired at mega-corp to work along side me IN A NANO-SECOND. They were that good, and better at 2 years then a lot of students coming out of 4-year higher end schools.

On the pay off student loans front and free college fronts, put me in the "opposed" category - even though either of these programs would help me personally (by having more student demand).

 

[USGrant1962]

This post hit a nerve, in case you couldn't tell. No, we should absolutely not forgive student's loan debts.

I have actually studied this based on data published in the WSJ. Lots of people like to talk about the "crisis" that is Student Loan Debt (SLD). In reality, there is no crisis.

Comparing graduates in 1985 (when I graduated) to today, the difference in average SLD is about $16,000 in inflation adjusted $. In 1985 the average was about $7,500 and today the average is about $32,000. (The average student loan debt for recent college graduates is more than $30,000, according to U.S News data. By Emma Kerr, Reporter Sept. 15, 2020).

Yes, tuition has risen at ridiculous rates. And fees are everywhere (labs, library, fitness, access, ......that just raise the cost of higher education. But the demon nobody wants to talk about is housing. Kid 1 just graduated from college and her last year she lived in a high-rise, 4BD, 4BA apartment. Included was doorman, utilities, elevators, pool, granite counter tops, stainless appliances, W/D in the apt., balcony, etc.. If I lived like that it would have cost me $400 (inflation adjusted) more per month. I lived in slumlord, uni housing. One place literally had no heat and we relied on heat rising from the first floor apartment (and this was in upstate NY).


Oh, and today dining halls and food courts on her campus had many options, not just the simple style of 1985 - mystery meat and a side salad. What about the outdoor heated pool and the 3 story climbing wall at the gym? And the yoga studios, etc. I don't remember those amenities in 1981 when I arrived as a freshman. But, they were there in 2016 for DD.

$16,000 extra SLD. That is $4K/year, or $400/month (+/-). I think that housing and quality of life are what is driving the increase in SLD more than the tuition.

My solution - let the schools underwrite the loans, not the Fed. If the schools really believe in their product, and in their highly selective admissions process that only pick the best, why wouldn't they support the loans?

Dining halls and climbing walls are an overt cause of higher-than-inflation college costs. But studies have shown that the skyrocketing administrator to faculty ratio is a real problem. Here are a couple of old articles, but it has not improved:

https://www.outsidethebeltway.com/university_administrators_outnumber_faculty_/

https://www.huffpost.com/entry/higher-ed-administrators-growth_n_4738584