Who gains most from canceling student debt? | Hacker News Reader

Who gains most from canceling student debt?

bloomberg.com

7 pointssloanesturz22 comments

Addressing the issue - where graduates w/o job experience aren't ever considered for positions in their field and eventually stop trying because applying for jobs doesn't buy food - could be helpful.

I completely agree with canceling student debt, after the student serves a tour on the armed services. What a great policy that would be...

https://myarmybenefits.us.army.mil/Benefit-Library/Federal-B...

I don't see why paid edu in exchange for Gov work commitments isn't broadly available across most fields.

I agree you should only get free college if you participate in bombing some goat farmers for oil first

Bombing weddings on behalf of repressive regimes doesn't qualify? That seems unfair.

You don't even need to be in the armed forces to get loan forgiveness or repayment assistance now. GWB & Obama both signed bills into law that also extend these benefits to members of AmeriCorps.

https://www.nationalservice.gov/sites/default/files/document...

So completely discriminate against anyone with a serious medical condition or a disability?

The Democrats because it ultimately buys “indentured servant” votes. Same result for mass legalization of illegal immigrants.

I mean the US doesn't even have socialized healthcare. There's no way you're going to get tax paying americans to hop on the socialize education bandwagon when the assumption is the average college student that holds debt got a degree in acrobatic water polo...

The one message that did stand out to me and we kind of have it already was this: "That system should be reformed going forward, with a shift toward income-based repayment." While we do have that, I think having a standard percentage having to be paid as opposed to case-by-case scenarios of individuals dealing with it themselves.

The funniest thing to me is how the average student handles debt. From my knowledge working at a bank and seeing non-working students, they couldn't budget a single checking account. A lot of them have this misinterpretation of finances as though "that is money I can use freely whenever." Not only do none of these kids know personal finance, they don't even know basic accounting principles. Most traditional students are either A: affluent and risk averse meaning they don't incur debt; B: affluent but also take out loans because "why not"; or C: low income and treat debt as a means to get free money. I have rarely ever if at all met a student who has a budget, does double entry accounting for their finances, and properly manages debt.

I just feel like the government in this scenario, both sides, would never just pay off the debt of all student loans. It's just not profitable and the economy's student loan bubble hasn't burst yet, which will be the only way they would do something. Honestly the only way for banks to truly take a total loss is if the person with the loan dies before it's paid seeing as you can't dissolve it by declaring bankruptcy.

However we shouldn't be looking entirely at students for this. Colleges are the most liable here. No other institution in the United States can act with such free autonomy while siphoning tax payers income. Also they can just jack up prices that in the private sector would be considered price gouging. The cost of doing business in education has certainly not increased. Another thing colleges do is they routinely play pretend and lie to you that the "job placement rate" for a program has anything to do with the field they're in or that it was the degree that got them the job. It really takes a keen and jaded individual to see through these just blatant lies! College institutions are extraordinarily predatory.

A large part of why education is so expensive is massive state level cuts to public colleges. Some states have cut their budget by 2/3 even though the number of students has gone up 3x since the 70's.

The truth is, for state schools, the government largely funded our parents education. Now most of that money has been taken away and replaced with un-dischargable loans. I see it as a grift of the old generations on the young. If you look at it that way, the government should definitely discharge a large fraction of the cost

College is expansive because loans are super easy, and are guaranteed.

Basically zero risk for colleges.

Sources? There's a ton of research showing that state funding for colleges has declined significantly as enrollment has increased, accounting for a large fraction of tuition increase.

I have trouble explaining this to my parents enough though it's clearly true. They don't like the reality that their votes to "cut taxes" for 30 years has doomed their own children to a decade of debt and not being able to afford a house.

Banks are guaranteed payment on the student loans they issue (yes there are exceptions but that’s not the norm). The norm is that either the student pays back the loan, or, the government pays back the loan. That’s why banks have decided to loan out 200k plus loans to 18 year olds. State schools or private schools, it doesn’t matter. If the customer is willing to pay more money for the same product (because loan sizes from banks keep growing), then there is an opportunity to raise prices. Sure costs have gone up for schools over the years, so have expectations for what schools provide (more amenities, more staff, more sports programs, etc). That’s only a fraction of the reason for hire school prices.

If you capped how much banks could loan on guarantee, you’d see prices for schools drop pretty sharp. Mark Cuban has talked about this a bunch over the years.

I think this is a symptom of the problem. Schools needed a new revenue source when states cut funding and college enrollment skyrocketed. They turned to government loans to avoid raising taxes.

I'm not a history buff but this is how I interpret us reaching out current situation. Undischargeable loans is debt slavery and should be abolished. The very purpose of bankruptcy is to prevent situations like this.

The realistic outcomes are either government bailing itself out on discharged loans (after all, the school has already been paid). Or, probably a better decision, increasing state school funding to the dollars per student that existed in decades prior. Option 2 would be extremely difficult politically until mellenials overtake baby boomers as the dominant voting bloc in a decade or two

This is purely speculative but from this source of data showing the amount of people in college now as opposed to pre-guaranteed loan days, I'd agree.

http://www.newstrategist.com/wp-content/uploads/2017/01/BB8....

When you give the masses an easy way to go to school and colleges (which are basically educational guilds nowadays) started upping the costs immensely. Colleges knew the writing was on the wall now that students didn't just need to save money and work using solely their own capital. They could get it by the government. The only one who truly bore the risk was the government backed borrowers.

These effects are all intertwined. It used to be easy to go to college because it was cheap. It was cheap largely (not entirely) because it was government funded. As more people caught on to how great a deal it was, funding simultaneously dropped while enrollment exploded.

The cost crises led to our crazy loan system.

All speculative, but individual pieces of evidence I've found point to this being likely

That is actually an interesting way to put it though. I'm curious though if the number of public colleges we have today existed to the extent in which they do because of the loans or because of the government funding.

Also, in a way of looking at it, the loans are essentially pre-emptive taxation. So theoretically the people who we're going to fund these things are taxed directly instead of everybody, even those who don't go to college and get the benefit from it.

I argue it was cheaper because colleges were more efficient.

Easy money leads to bloat.

100-200k a year is not a sane cost for most degrees.

Shifting who pays it hides the problem and makes it worse.

Couldn't it be both less government funding + more government guaranteed loans?

It's both. There was an education funding crisis because of declining funding and increased enrollment. This led directly to predatory non dischargeable loans.

I'm utterly convinced it's all the aftermath of our extremely large boomer generation that began voting against education funding as soon as they graduated. For decades state schools were mostly funded by the government as they are in most other countries. Dependence on loans is new and pretty unique to the US. I really see it as the old stealing from the young in this case.

This is true, and shouldn't have been down-modded.

The article mentions the book Room to Grow which has low rating on GoodReads. Has anyone read it?

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