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Comment by game_the0ry | Hacker News Reader

I anticipate there will be a lot of comments about how these folks should not have gone to an expensive private uni, could have made choices to avoid debt, the burden is on the borrower and it is their responsibility, etc - all true and valid points.

However, the US is approaching a situation where the student loan problem will be an "everyone" problem, not just a borrower - I believe a ~$1.6 Trillion debt burden is a significant enough drag on the economy to be felt by everyone, and will be more painful not only for borrowers who can not pay but also non-borrowers who are indirectly affected.

The money that could have been used to pay for housing, services, etc, will instead go to student loans. If I was a local business owner, I would think about that. If you are homeowner, imagine what the price of you home could be if buyers did not have student loans.

I hope people realize this soon.

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> I believe a ~$1.6 Trillion debt burden is a significant enough drag on the economy to be felt by everyone

If you're implying that this debt should be cancelled, note that it doesn't go away if the President decides to cancel it. It just gets passed on to the broader tax base in the form of more national debt.

The reason student loans are a problem for the US is that the government keeps on pumping money into higher education but has no incentives for them to control costs. Universities have fairly inelastic supply, so they can swallow up most the money the government pumps in. Cancelling student loans would just exacerbate this.

Why does the massive regulatory giveaway to student loan lenders continue to be a given? Why does everything have to be some sort of top-down bailout? The straightforward approach is to extend bankruptcy protection to student loans, and let the courts sort out the mess based on need. Some bondholders will end up losing, but the risk of the regulatory giveaway disappearing should have been priced in to begin with.

> The straightforward approach is to extend bankruptcy protection to student loans, and let the courts sort out the mess out based on need.

Agreed.

Actually it does go away. A sovereign country can only go bankrupt when its currency stops being respected. Unless/until that happens, it can spend whatever it wants on its own people.

A country that can afford trillions in tax cuts for the very rich, financial stimulus, and defence spending can easily afford a one-off loan jubilee.

The real reasons this won't happen are political. Loans are a slaver's whip, and financial freedom is a horror that can't be tolerated for those who live below decks and need to be available to work on demand.

> Loans are a slaver's whip, and financial freedom is a horror that can't be tolerated for those who live below decks and need to be available to work on demand.

The joke here is believing that college graduates are the slaves. What about the 2/3 of the population who have no degree and will earn significantly less through their life, who struggle from paycheck to paycheck and can't even look forward to eventually paying off a student loan?

> The real reasons this won't happen are political. Loans are a slaver's whip, and financial freedom is a horror that can't be tolerated for those who live below decks and need to be available to work on demand.

Comparing degree-holders who willingly took on loans to slaves, and with such wildly inflammatory rhetoric, is absurdly (and typically) out of touch.

Degree holders are the managerial class. It is essentially a prerequisite to be part of the elite class. Those below the decks in our society are those who never had a chance at higher education. The exact same people who would be paying more taxes to pay for a hand out to the professional class if loans were forgiven.

"Comparing degree-holders who willingly took on loans to slaves, and with such wildly inflammatory rhetoric, is absurdly (and typically) out of touch."

I wonder who is out of touch.

"besides being able to borrow on personal security, an individual might sell himself or a family member into slavery...Slavery was the standard penalty for failure to pay off a debt"

https://en.wikipedia.org/wiki/Voluntary_slavery

The parent's point stands. If you print money, you get inflation. That just turns into a tax for everyone that holds cash. Inflation also raises interest rates, which is a tax on people directly (ie. the amount they pay to banks) and indirectly (the interest government borrows at).

> If you're implying that this debt should be cancelled, note that it doesn't go away if the President decides to cancel it. It just gets passed on to the broader tax base in the form of more national debt.

Student loans end up in the same place whether they are cancelled or the borrower can't pay back - unpaid and eventually written off.

So bail them out cause it will trickle down to those less fortunate? I've heard that somewhere before. Only about 12 percent of Americans have student loans and the largest burden is among those with advanced degrees.

Well, don't bail out the advanced degree holders.

I like your rhetoric of the liberal POV as actually conservative - "trickle down". But it's not working.

Just because a position is held by some progressives in the US to appeal to their young student base does not make it a 'liberal position'.

Those with just Bachelors degrees still make almost twice as much as those without (average 38k vs 64k). And their median net worth is more than 2x those with just HS diplomas (74k vs 198k). Arguing that the poor should help bail out those more wealthy than them is extremely regressive any way you slice it.

EDIT: To those saying 'why not just tax the rich more': That comes at the cost of (again) more equal and broad uses for that money - that doesn't make a regressive policy less regressive it just pushes the can down the road. We're talking about a 1.7T bailout for just 12% of Americans with far higher than average earning potential.

Well, if it's specifically about taxing the poor - we could levy a higher tax on the ultra-rich and earmark how that funding is used.

FWIW I actually think you make a good point, but it's ignoring the fact that the ultra-rich are grossly (I'd argue an order of magnitude) undertaxed right now.

> ultra-rich are grossly (I'd argue an order of magnitude) undertaxed right now

Couldn't agree more on that point. I don't however think earmarking 1.7T for a very select 12% of Americans that have a far higher than average earning potential fixes the problem with the policy though. That 1.7T could be used in far broader more equal ways.

It's an old rhetorical tactic to pitt one class of poor vs the other while ignoring the elephant in the room. For eg - Pitting rural white Americans against Mexican immigrants. You could just raise the minimum wage - a solution that would be "class warfare".

You can have the rich pay for undergraduate degrees instead of the poor - as you have conveniently assumed. A rather hilarious assumption given that tax slabs for the poor are the lowest.

Pitting one class of poor/middle class against the other is a fairly well known conservative tactic. Intraclass "warfare" is what conservatives want to focus on, instead of the big elephant- interclass "warfare".

> Just because a position is held by some progressives in the US to appeal to their young student base does not make it a 'liberal position'.

Well, yeah, liberal and progressive positions are generally opposed.

Agreed though only in the past few years (and primarily only in the USA) have progressives started to push against classical liberalism towards more illiberal views, that has not generally been the case in the past.

I’m not talking about classical liberalism (which has no coherent clear application out of the context of the time and conditions around the mid-18th to early 19th Century; there's an infinite number of mutually incompatible applications of it to other contexts, including most of the modern American political spectrum.)

I’m talking about liberal and progressive as modern American political factions (which in major partisan terms, though the factions aren't tightly bound to a major party, map roughly to the right and left wings of the Democratic Party.)

> Only about 12 percent

IIRC the fed puts it at more like 30%. But your point stands.

Its 12.9% as of May 2021

https://www.nerdwallet.com/article/loans/student-loans/how-m...

I think you are thinking about the percent of Americans with a bachelor's degree (32.1%).

You're right (though the estimate seems to vary depending on who is reporting it, for some reason). What I saw was 30% of attendees take on student loans to pay for their education, according to the fed [0]. I misinterpreted that to mean that 30% had student loans right now.

[0] https://www.investopedia.com/student-loan-debt-2019-statisti...

Allow students loans to be forgiven 10 years after graduation through bankruptcy.

Then expensive programs that don’t have a career path to support them will have trouble getting students needing financial aid.

This is a much more palatable option than just wholesale debt forgiveness. I think there could be a lot of bipartisan support for a policy like this. It doesn't fix the problem entirely, but it finally frees people from the life sentence of their student loans. I would imagine the collection rates would be almost zero for any borrowers in this situation, anyway.

> If you are homeowner, imagine what the price of you home could be if buyers did not have student loans.

Are you saying student loan reduces house price? Sound like a win.

Imagine what the price of your house could be if a mortgage loan was guaranteed by the US government. You could set a price wherever you want, the buyers could get a loan from a lender for any amount.

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