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Can you please not fulminate on HN? The site guidelines ask you not to, and your comments unfortunately have a lot of this.

HN is supposed to be for curious conversation. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit more to heart, we'd appreciate it.

The frugal little wouldn't lose anything. They'd gain less, which is not the same. Every single day there are people taking really stupid risks and winning due to luck. Do you feel penalised because you took less risks?

If cancelling student debt solves real problems for the population on average, but makes a few idiots multimillionaires by accident... I'm all for it.

Where do you think the money comes from to pay off this debt? The debt doesn't just disappear into thin air

I'm out of my depth here; if I'm wrong I would love to be educated.

My assumption is that the debt holders would be the ones losing. I don't know about you, but I don't hold any person's medical or education debt. In my estimation, these are ultimately all held by the rich and powerful fat cats- owners of banks, etc.

The vast majority of student loan debt in the US is owned by the federal government. The "fat cats" who will be stuck holding the bag are the taxpayers.

Thanks. I just looked and yup, 92 of student loans are owned by the government. That seems.... very bad for all sorts of reasons.

No. We all end up paying, because the student loan debt they are talking about cancelling is ultimately held by the federal government.

We'd be taking things from the bucket of "the people who borrowed have to pay it back" and putting it into the bucket of "we all have to pay it back through increased taxes."

What if the deal for debt cancellation was a 5% tax increase for those whose debt was cancelled for the remainder of their lives? Whenever you calculate tax, forgiven debtors pay 5% more.

It's solely U.S. government. Any discussed debt cancellation never included private loans. And if it did, the U.S. government would pay off the holder of the private loan, not just cancel the debt.

Indirectly from taxes. However the context here / the premise of the article is that the one off payment is worth it in exchange for long-term boost in the economy and freeing people from obligations holding them back.

>Every single day there are people taking really stupid risks and winning due to luck. Do you feel penalised because you took less risks?

Yes, actually. If people were YOLOing away their savings on DOGE and meme stocks and the government picked up the tab, but the responsible passive investors like me got no assistance because I didn't experience any losses, I'd be pretty mad.

All cancelling student loans does is transfer money from the college educated to the non-college educated.

And student loans can already be put on thirty year plan, or setup for income based repayment. No one is starving because of their student loans, they're just having to purchase a house a little later in life than if they didn't borrow a bunch of money.

> There is no "cancelling" debt. There's only forcing other people to pay.

No, there is actually cancelling debt.

There is also forcing someone else to pay, but that’s a different thing.

Its probably the case that only some (such as government-held portion) of the debt at issue could Constitutionally be cancelled, in the strict sense, though.

> The incentives here are entirely backwards.

Because its not (unlike, say, bankruptcy), an ongoing thing available to people in the future, it has negligible incentive effect. Even as precedent, the expectation “if a set of debts across society becomes sufficiently onerous, they may be cancelled for everyone” creates very little incentive for anyone.

> Because its not... an ongoing thing available to people in the future

So the debt gets cancelled then banks and institutions restart their vicious cycle of predatory education price and predatory education loans?

What exactly is the goal here?

> What exactly is the goal here?

To mitigate the social harms resulting from the current debt load that have accumulated over decades as part of a process that includes development of policies to prevent getting back to the same state.

(Some of which actually may already have been adopted, as all of the debt areas at issue have seen policy reforms over the last decades that could be part of that, though most cancellation advocates would argue—and I would agree, even though I don't necessarily agree with “cancel it all”—that further work remains to be done.)

> as part of a process that includes development of policies to prevent getting back to the same state.

Can you give an example? I may just be out of the loop.

> Can you give an example?

Considering just the educational side:

For policies that have already been put in place, the 2016 revision (partially undone by the 2019 revision) of the Borrower Defense rules are an example.

For not-yet-implemented rules that have been proposed, rules imposing total cost limits on programs accepting federal loans, or imposing other cost and quality requirements on such programs, are common. As are simpler reforms like making income contingent plans the default repayment plan, and other rules governing direct loan servicing (an issue with the student debt crisis haa been servicers active directing borrowers into deferment rather than income contingent plans.)

Yeah, but the most likely outcome is removing the current debt load without making the changes that prevent things getting back to the same state. The result will be that everybody rushes gleefully back into the same state, expecting to be rescued again.

At least, that's what seems "most likely" to me...

> No, there is actually cancelling debt. There is also forcing someone else to pay, but that’s a different thing.

How are these different things?

-Money was disbursed to the university. That money came from somewhere!

-If the loan gets canceled and the student does not pay it back, those who contributed the disbursed the money are the ones being forced to pay.

I think the difference is this: If you owe me money, I can cancel your debt. But if I won't cancel it, you could also end the debt by forcing dragonwriter to pay me. That's different because there's a third party involved.

Corporations get cancelable million dollar Covid loans that they used to buy their own stock. A proposal to help people pay off their student loans is treated with shock and awe.

However, it would be more fair to simply give every taxpayer $5000 or whatever is decided (like it ever will be) that can be used to pay off loans or for whatever they please.

Bob, 35 years old, is an excellent cook (but not a great businessman). He takes out an SBA loan to start a restaurant (failure rate for restaurants: very, very high). The restaurant goes belly up. Bob is allowed to file bankruptcy and walk away from the debt.

Jim, 50 years old, watches "house-flipping" shows on cable TV and decides that he wants to be a real estate baron. He starts flipping houses using VA/FHA loans. The real estate market tanks. Jim is allowed to file bankruptcy and walk away from the debt.

Dave, 18 years old, isn't a very good student, but every authority figure in his life (parents, teachers, ministers, you name it) tells him he HAS to have a college education. He takes out government loans to get one in a field with easy classes but low employability. But unlike Bob and Jim, Dave isn't allowed to file bankruptcy and walk away from the debt.

Can you justify Dave being held to a higher standard than Bob and Jim?

I've asked this question many times, but have never seen a convincing answer.

The lender takes Bob's business and Jim's house. How is the lender going to take Dave's degree?

Dave is the only one of the three who could keep the asset after declaring bankruptcy, if that were allowed.

In this scenario, Dave's degree is likely worth little or nothing, so I'm skeptical that allowing him to keep it represents any kind of real advantage.

But laws aren't made only for this scenario. If student loans were dischargeable in bankruptcy, the financially optimal decision would be to borrow as much as possible while in school, then declare bankruptcy immediately after graduation.

And if you would suggest that the bankruptcy court should consider the value of the degree, I would respond that the appropriate time for that is before lending the money.

> If student loans were dischargeable in bankruptcy, the financially optimal decision would be to borrow as much as possible while in school, then declare bankruptcy immediately after graduation.

Bankruptcies stay on your credit report for seven years. That doesn't sound particularly "financially optimal" to me, or likely to anyone else.

Think you're a little mixed up if you think everyone in serious student debt spent those years partying and not studying.

> There is no "cancelling" debt. There's only forcing other people to pay.

Not really, given that in the US, the central bank could just take over those public loans, not collect on them, and likely not much would happen. They’ve already proven that during Covid with corporate bonds.

The real issue with cancelling student loans is that it doesn’t fix the tuition cost for the next generation. We need a 20-year tuition freeze.

>Not really, given that in the US, the central bank could just take over those public loans, not collect on them, and likely not much would happen.

Isn't that just helicopter money with extra steps?

This is not really helicopter money in that sense, you’re not giving out unallocated free money, you’re just doing cash flow relief.

I think there is a good argument to make that cancelling that debt, and fixing the US college system, would likely result in more innovation: folks who come from (lower) middle class backgrounds could finally take more risk and try new jobs / start startups that they can’t today because of the money they need to put into debt service.

> This is not really helicopter money in that sense, you’re not giving out unallocated free money, you’re just doing cash flow relief.

That's if you're only looking at the repayment stage of the loan in isolation. The way loans work is that:

1. you get money upfront in exchange for nothing

2. you pay it back

If you take out the second step ("cash flow relief"), then all you have left is "you get money upfront in exchange for nothing" which is the definition of helicopter money.

"People have suffered, therefore we must continue to make people suffer so the previous suffering wasn't for nothing."

You can say I'm straw-maning, but it's hard to see your argument as anything else.

Here is another way to phrase it.

Should we tax the poor(people who didn't get a college degree) to pay off the debts of the middle class and upper middle class?

Or if we're going to hand out large sums of money why should the front of the line be college educated individuals who went to private colleges?

Ok, fair points.

My main concern is really just to lower college tuition. I don't know how people keep putting up with it, but we are essentially enslaving an entire generation with debt as soon as they actually gain some agency.

Maybe instead of paying the debts with tax dollars, we force universities to eat the cost, or at least some of it? If you could declare bankruptcy on your college debt, it might make universities think twice about charging such high tuition. Or it would just make them selective, I don't know.

> all the people who worked hard for the delayed gratification of their long-term planning get penalized and have to pick up the tab for the people who spent 4 years partying without any concern about cost of their education or lifestyle

Are you sure you're not getting these two groups backwards? All the people that I know of who "worked hard and delayed gratification" are precisely the people who are getting penalized by having to jump through hoops that the "partying" type does not seem to have to worry about.

The proponents might respond that it was only partially bad decisions, but much more a degenerate exploitative system that caused people to take on these kinds of debt.

I am not a proponent. I happily make my payments every month while I enjoy my student-loan-enabled job. And yes, I made some decisions that would not appear to be the most intelligent when it comes to loan amounts.

> The incentives here are entirely backwards. All the people who made good decisions…

This was the political talking point that has repeatedly been brought up in the media in the last 2 years with all the student loan talk and it has successfully gotten Biden to back off cancellation of up to $50k for every loan.

There is just something very “Karen” about wanting someone else to suffer because you did, especially premised on the basis that you did everything right and they did everything wrong.

That's a lot of supposition. Who has to pick up the tab? Unless you're a large loan conglomerate, I'm not sure you're picking up any tab.

In a rational economic system those arguments should hold water. We have nothing like that now. Paying attention to the last 20 years of egregious hoarding of wealth should make that clear.

Ignoring the strawmen, the systems at issue (school debt, medical debt and government debt) are nothing like a free market. They are so highly regulated, the abuses so entrenched, its reasonable to consider changing them.

My retirement is invested into a large collection of companies, some of which own these loans. I fully expect that this will cost me. If I had instead not invested for my future and just partied hard I'd be better off.

Yep, your 401k will be indirectly affected by this.

The real fun starts 20-ish years down the line when our elected officials decide to directly seize 401k assets in the name of "equity."

20-ish years from now the average amount of money in a retirement account ought to be in steep decline, year over year. So the good news is they won't be a very attractive target. The bad news is we're going to have a retirement crisis on top of whatever crisis 20 more years of healthcare cost increases causes (assuming we don't fix that between now and then—call it 50/50 odds, because I'm an optimist).

Yes, we do both and yes honest working poor people think about it often. All debt cancellation is regressive. Only wealthy people and children (who are still used to having wealthy parents) support corporate and other “million dollar” bailouts.

If it’s not “million dollar”, just $10-20k or something it wouldn’t require a bailout.

Bailouts are for rich people.

> The terminology of "cancelling" the debt is the most dishonest, twisted abuse of the English language.

This kind of hyperbole is, itself, an example of "dishonest, twisted" language.

> There is no "cancelling" debt. There's only forcing other people to pay.

If I declare a banana to cost $1,000,000 but you can get it for the low price of $1 with a loan of $999,999 today and that loan gets canceled, does that mean someone else has to pay me the remaining sum?

> The incentives here are entirely backwards. All the people who made good decisions around cost-benefit of their education, all the people who made frugal choices, all the people who worked hard for the delayed gratification of their long-term planning get penalized and have to pick up the tab for the people who spent 4 years partying without any concern about cost of their education or lifestyle.

This kind of moralizing about making the right decisions stigmatizes people who couldn't make it through college for financial reasons and weren't able to find a job afterward and pay off their debt. It stigmatizes grad students who started off with good intentions but couldn't make it through the meat grinder. It stigmatizes first generation college students who had to return home after a year or two. All of these people now face student debts that can't be discharged by bankruptcy.

If we agree as a society to invest in war, but we can't invest in our people, then we will reap what we sow.

>If I declare a banana to cost $1,000,000 but you can get it for the low price of $1 with a loan of $999,999 today and that loan gets canceled, does that mean someone else has to pay me the remaining sum?

The contract would likely be ruled invalid for being unconscionable, because the fair market value of a banana is like 50 cents. However, if it was something like 10 cents upfront but $10 later that would likely be upheld.

> If I declare a banana to cost $1,000,000 but you can get it for the low price of $1 with a loan of $999,999 today and that loan gets canceled, does that mean someone else has to pay me the remaining sum?

In this case you are the merchant (university) and the lender, which is not the case with student debt.

Before you make the case that a student can get a gov't backed loan and attend a state university, the other $999,999 has already been disbursed to banana suppliers, equipment, leases, ect. So yes, someone else would have to pay the remaining sum.

Try again.