Basically, if loans don't need to be paid back, what's the point of a loan at all?
It is also the responsibility of the party giving a loan to ensure that the borrower will have the ability to reasonably repay the loan in the future.
During the housing crisis, banks enabled home buyers by providing low interest rates, insanely low income requirements, and small down payments. As a free person with their own free will, it should be your responsibility to decide if an investment is worthwhile, not a no-name bank which most definitely does not have your best interests at heart.
> It is also the responsibility of the party giving a loan to ensure that the borrower will have the ability to reasonably repay the loan in the future.
While it's obviously their goal to ensure that the borrower will be able to repay the loan (why else would they have people jump through so many hoops to get one?), it's by no means their responsibility. The only responsible party here (i.e., the party you can count on) is yourself. Your bank isn't going to find you a job, or put together your resume for you, just so you can repay your loan.
If you label all borrowers who can't pay back their loans as "victims", wouldn't that make the practice of lending itself immoral? In your opinion, why not just outlaw lending completely and be done with it? That way no one can be taken advantage of.
No. It is only immoral to knowingly lend to someone who can't and won't be able to repay the loan.
Perhaps we also shouldn't rescue someone who falls into an open man-hole, because it isn't fair to those of us who know to watch where we're walking?
Fools should be responsible for the consequences of foolish behavior.
The financial sector disagrees.
Agreed, but to that point, I'd imagine that the primary consumers of student loans are people in their late-teens who are on-the-whole less financially responsible than homeowners. And for a lot of those people, they're under a lot of social pressure to go to college despite the fact that it's a gamble that might not pay off.
I would bet it's a small minority of students who actually did seriously consult their parents and whose parents did wisely caution against it (even refusing to sign a parent PLUS loan, a factor not talked about much) but who found a private lender themselves anyway and after graduating can't pay it back. You could protect this minority from itself by raising the age of adulthood, but if we actually agree it's a minority, this won't solve the problem.
My point is it's not good enough to blame stupid non-adult teens when you could blame their adult parents just as easily, and trying to solve the problem at either of those levels (less stupid teens through 'education', or less stupid adults with longer reaching power, or forbidding teens in general from making bad choices) won't work.
Loan forgiveness should not be restricted to teens. I know many adults that could be similarly mislead.
And absolutely it is a minority, which is why student loan forgiveness is workable. Trust me, the banks will still make money, just not as much.
Some loan forgiveness is workable and I think inevitable but it does nothing to stop the problem, it just relieves some people at the expense of others (generalizing to the whole economy) who can take the hit. In that it's kind of a herring. When you find yourself in a hole, you should stop digging as the first thing you do. Loan forgiveness lifts some people out of the hole but incentivizes digging faster.
The party in the best position to know who will and won't be able to repay a particular loan is the lender, who has all the historical data and statistics about previous loans.
You seem very close minded. Everyone can't and shouldn't do a CS degree to "get a job".
Not everyone is as well informed as you were at 18.
This problem doesn't really exist in other first world countries.
Being that student loans in the US are _no longer forgivable_ via bankruptcy or any other means, these student loans are essentially a permanent debt the student will never be free of otherwise, and bear more than a passing resemblance to a class of indentured servitude. Such things are not what any reasonable person had in mind for America.
If you want to fix the problem, stop subsidizing the loans and allow these colleges to die, shrink or reduce costs.
The loan provider is in a much better position to know who will and will not be able to pay back a particular loan.
> If you want to fix the problem, stop subsidizing the loans and allow these colleges to die, shrink or reduce costs.
Perhaps this is better, but seems unrealistic.
They have no reason to care since the government backs the loans.
They are just being subsidized at the expense of folks who are (over a lifetime) much poorer than they are.
The exception is for fields that are zero-sum games, such that an abundance of lawyers, for example, makes it cheaper to defend yourself from a lawsuit but also more likely to be sued.
No thanks, if I'm paying for your education I expect a better discount than "my office is a little bit closer"
Op is right, this is unadulterated bullshit.
Firstly, if the services are in demand why is paying off the loan an issue?
Secondly, they already have the degree paying off loans does not increase the number of graduates.
That is a very good point.
> Secondly, they already have the degree paying off loans does not increase the number of graduates.
It depends on how the debt is forgiven. If government just pays the colleges then it will suck, but suppose they were like "You sold a defective product to millions of people and we are not paying for it. Deal with it". Then colleges will learn to stop offering useless majors and the number of graduates in bullshit will reduce while the number of graduates in useful stuff will increase.
Probably not, but considering that the forgiveness program the government is talking about mainly targets people with debt who can't pay it back - like people who are seriously disabled and can't get a job - you would likely be subsidizing people less privileged than you, which is a good thing.
> If and when they start making money can I expect a discount on their services?
No, but they're not making money now and they won't be in the future and that is why the government is considering discharging their loan debt.
So if I become disabled, will you be paying my mortgage?
I take your position to be that 1. you're in favor of providing financial support to people on disability, but 2. concerned that college-educated people on disability potentially stand to qualify for more benefits than non-college-educated people on disability.
If this program's stated intent was to fully subsidize education for people who would definitely not be able to procure work in their academic area of focus (like subsidizing music degrees for deaf people or whatever), I would concede that the program would be economically counter-productive. Otherwise I think the government should extend more financial assistance to people who are at greater risk of ruin.