U.S. forgives 40k student loans | Hacker News Reader

U.S. forgives 40k student loans

reuters.com

182 pointslxm470 comments

Please, please, please take note before commenting: These are being forgiven under the Public Service Loan Forgiveness program, created in 2007 (fifteen years ago), which eliminates your remaining debt after you've made ten years of payments while working in the public sector (government or non-profit). This has nothing to do with current debates around loan forgiveness.

That's where the 40,000 in the headline comes from. But the article also says this:

> Several thousand borrowers with older loans will also receive forgiveness through income-driven repayment (IDR) forgiveness, plus another 3.6 million borrowers will receive at least three years of additional credit toward IDR forgiveness, the Education Department said in a statement.

I'll believe it when I see it. I vividly remember getting "credits" for $1 from fafsa, so if it's anything like that, it will be meaningless.

I think you might be misremembering, because the FAFSA is just the application you fill out to apply for student aid. Maybe the Department of Education issued the credits?

45 million folks in the US have student loans so even some action for 3.6 million folks isn’t a large percentage.

So since it's only 8% it's fine?

How many 8% increments can there be until we're allowed to be against this?

I'm against any percentage of funneling taxpayer money to college administrators.

Reduce tuition, don't rubber stamp federal loans while letting administrators increase costs.

Student debt is massive, yes, but why are so few people asking where that money actually went? A cursory search says student loan debt is roughly $1.6 trillion dollars and there are around 4,000 to 6,000 colleges/universities. This is a rough number and the actual amount depends on your criteria, but the gist is that you have a ton of money flowing into a relatively small pool. Yes, I know not every dollar of loans goes to the school, but I really have to beg the question on what these institutions have done with all this money.

Seems like any discussion about forgiving debt should involve going after some of these universities themselves.

In the case of my alum, I think I can tell you: they spent it on housing and amenities to attract more students (quantity, not quality). I watched it happen while I attended. A university operates under the same principles as any other business in this case. Administrators are not innocent here, but they do have to live within the system and work with the incentives they are provided. Loans are made available to students and parents to shop around. This is a big part of what has created the upward pressure on tuition. We’ve revitalized a lot of state school campuses while letting their academics rot. Parents and students see fancy common areas, gyms, cafeterias and living spaces when they visit campuses then use that to decide where to go unless they’re very focused on the education, which they’re likely not because most very focused students require less financial help. If that money had been given to the administrators we are often so quick to villify, this picture may be a very different one.

University administrative costs have blown up with all of the easy to acquire loan money.

Just a few highly paid and many mildly paid bureaucrats doing things which don’t need to be done… or in some cases doing very little at all (I’ve heard stories)

Also lots of fundraising and shiny new buildings which are more advertisements than useful expansions.

This is a great question that no one is really asking. Too much of the conversation revolves around what’s fair for student borrowers and not enough on what in the world these universities have done with all of that money.

My alma mater needed to bring their student center into compliance on the last ~50 years of building code changes. The project was estimated to cost high-8-figures, for nothing but code compliance.

Instead, they spent $120,000,000 renovating it to be shiny and modern and also up to code. I don't understand why it was so expensive, but I'll assume it's not an order of magnitude away from true cost.

$1.6 trillion is "only" a few hundred million per school. If the cost of renovating one building is any indication, it's easy for a university to use up that much money.

Just housing and feeding around 50 million borrowers while they attend school for 4-ish years ends up being a damn lot of money.

I think we already have a solution built into the legal system: Lemon Laws.

From the Great Wiki in the Sky: "Lemon laws are laws that provide a remedy for purchasers of cars and other consumer goods in order to compensate for products that repeatedly fail to meet standards of quality and performance."

Obviously, these degrees did not meet the standards of quality to make "productive members of society" so the universities should have to "buy them back", preferably using their own endowments.

In the short term, it would hurt them immensely - which is deserved for selling a "product" that wasn't worthwhile but in the long term, it would mean that they're more likely to a) keep prices more reasonable and b) make a higher quality "product".

Or repeal the Clinton-era law that made student loan debt non-dischargeable in bankruptcy. In that way, potential lenders would have incentive to determine ability to repay.

This is just the Education department doing what it is required to do under various federal programs that have (pretty much by definition) existed for over a decade.

We can have a productive conversation about whether those programs were too generous or had unintended consequences, but millions of people have structured their finances around these programs and the rules in them - it's a rug-pull to suddenly have regrets and oppose the policies only now that the remaining balances are being wiped out.

Yeah it's like this with the people who want to kill Social Security as well. How are people who are supposed to retire in 10 years going to do so if you kill Social Security in 5? Retirement preparation starts when people are in their 20s, so any changes to SS that do not include an equivalent replacement need to be planned 50-60 years in advance.

I'm all for contributing to admin salaries. I'd even go so far as to say state-funded schools shouldn't charge tuition at all.

That said, I have to agree that tuition definitely seems bloated and many admins make absurd salaries.

Until that's fixed, which seems unlikely in the near future, how do we fix the issue of massive debt that hangs over people for their whole lives?

The obvious solution would be to reduce tuition and other costs, but now we're in a loop. It seems like an intractable problem.

Why not do both?

Forgiving past loans for graduated students does not put future money into the hands of college administrators unless you continue issuing and forgiving future loans.

Fixing the grift and providing relief to those who were grifted should be two sides of the same coin.

Sure, do both. But the relief, as it were, needs to come after the fix.

And frankly, rather than just give a relatively privileged subset of the population some money, we might as well crank up that printing press again and just got a $10K check to every last citizen, student loans or not. Might as well be equitable about it.

If you’re against wasting taxes spend your time typing about but defense boondoggles which actually waste tax payer money not a trillion owed to the government which it wasn’t ever going to get back anyways.

That's whataboutism. I'm also against that, but it's not the topic.

Submit an article about it, I'll for sure post my opinions on the matter.

Does this mean full-time public service workers with pre-PSLF loans, or are the feds debating broadening the scope of loan forgiveness to include persons in other careers as well?

They aren't changing the scope at all- they're just fixing some problems that meant people who should have gotten their loans forgiven but didn't will finally get that problem corrected, and they're granting credits for people who are already in the system. This will now allow a single person outside of that program to benefit, and it won't add new people to the program.

This may change with future actions, but quite frankly it's kind of embarrassing that they're claiming this is a win when all they did was follow through on a promise made years ago that was basically ignored.

Seeing tons of comments about what people THINK an article says or about their opinion on something related is causing me to use this site less and less.

Completely agree that some of the comments are off the wall. But in all fairness the Ruerters article doesn't highlight the public sector part enough. To learn more you'd have to do your own research to find that PSLF has stringent requirements.

IMO this is more an example of how bad journalism can have damaging effect on even a well versed audience.

Most of the people who "get" the article already knew what the PSLF was (I suspected it from the headline alone).

In this case I also think the article was really thin on details. Some people get $10,000 written off, others get some other limit to how much they will pay and so on. No clear details I could see about what the limits are and who will be targeted. There probably are details somewhere but this was not really answering my questions.

its 100% intentional on the administrations part. this is their 'creative' way of trying to not meet their campaign promise. highly annoying.

He still has time to do loan forgiveness "helicopter money" style. But even if all we got was an expansion of targeted relief programs I think it totally counts as fulfilling his talking point. The issue with student debt is that for some people there's no way out, but generally speaking college-educated people are more well-off and forgiving all debt would be a regressive stimulus that targets the wealthier side of the population. Targeted relief is a great way around that.

this isn't targetted relief. this is shit that was already suppose to be done.

also regressive stimulus are not even a thing. maybe you're thinking of regressive taxes? which still wouldn't be right.

>also regressive stimulus are not even a thing. maybe you're thinking of regressive taxes?

Regressive taxes favor the rich over the poor. By "regressive stimulus" I'm presuming he's talking about stimulus that favors the rich (eg. well off layers/doctors with high student loan debt but high earning potential) over people with modest student loans but low earning potential.

No. The previous guy installed people in the DOE that made it virtually impossible to forgive the loans even after they jumped through all the hoops to qualify under the law.

All Biden's administration is doing here is ungumming people who were eligible years ago. This is cleanup from the prior administration

I'm aware. and but these things are being trotted out by people as 'look hes (biden) done so much!!'

when in reality: hes done jack shit except what already is suppose to happen!

I promise you biden's PR group is the force behind these articles.

As demonstrated by the last admin it doesnt have to happen so feel free to complain about the current President doing “jack shit” until the last guy wins the next election…

Sometimes keeping promises are important.

Exactly, this is pure PR the headline should be “Government Fulfills Terms of Loans it Failed to Meet”

Alternative could also be “government obfuscates prices for education and certain types of labor by offering nebulous benefit, the cost of which can be subject to much manipulation for purposes of presenting it as a low cost benefit”.

It would be straight forward to simply pay for higher education expenses directly, with much less bureaucracy and more transparent pricing, allowing for better allocation of society’s resources. But, as always, that would reduce the avenues for corruption, and so the politically viable option is the circuitous option.

This is the Cal system before Reagan basically. Generated more than a few Nobels in addition to the educational mission.

California state university tuition was heavily subsidized by taxpayers 50 years ago. It’s less subsidized today and it’s still over 50% taxpayer funding. That feels like the opposite of transparent pricing.

This is a good point. The Public Service Loan Forgiveness (PSLF) Program is like the GI Bill, but they pay off your college debt after service instead of paying your college after service.

Its an interesting piece of legislation to see, and strongly implies former senator Joe Bidens initial student debt legislation was beginning to have seriously negative repercussions at the federal level for employee retention and hiring not even 5 years into its inception.

Back in 2005 Biden supported and stumped for a bill that stripped students of bankruptcy protections and led the country into a 1.7 trillion dollar student debt crisis. Watching President Joe Biden offer token debt forgiveness in 2022 is a little bit infuriating to watch as he could easily have spent the last seventeen years working to reform his mistake. If i had to weigh in on the sudden rise of student debt forgiveness under the current administration id say its political. inflation, gas prices, housing shortages, and supply chain issues have made it all the more practical to take action now and shore up the old midterm voter appeal.

If you had actually read the article, you would have seen that the loans were forgiven under a student loan forgiveness program introduced in 2007.

i read the article.

the point im making is that the federal government enacted forgiveness for its employees only 2 years after the 2005 reform to make discharging student loans impossible.

you can learn more about the 2005 bankruptcy reform act here: https://www.lawb.uscourts.gov/bankruptcy-reform-act-2005

> are being forgiven under the Public Service Loan Forgiveness program, created in 2007 ... nothing to do with current debates around loan forgiveness

Well, FWIW, I'd never heard of that program before now, but I'm not super happy about it, either.

Idk why you dont like the program but generally speaking this program is only needed because civil servants get paid absurdly low salaries.

There are a lot of different versions of these income-based repayment programs, dating back to the early 00s at least. They are all structured similarly but have differing eligibility cutoffs and rules. Typically they involved making payments on your loans for 20-25 years at some maximum % of your income before the remaining balance is forgiven. PSLF has a shorter forgiveness window (10 years) but you need to make 120 payments while working some job that is socially useful but not-market-optimal like public service or working for a nonprofit.

FWIW, IBR systems they are a common policy suggestion from both conservatives and liberals (with differing priorities / rules).

What then is the point of the article? To tout something implemented by another administration? I haven't been employed by the taxpayers so who cares?

Comments like these boggle my mind. This is news. This is reporting. Literally taking what is done and sharing it with the masses: X did Y. That's it.

Did you know this happened before this article? No. Does your caring change the fact that it's news? No.

"What's the point of the article?" To inform. That this needs to be questioned is upsetting.

Oh, but it is so much more than “X did Y”. The choice of which facts to report, when, and how, has huge impact on what people come to believe.

There are a thousand ways to deceive while uttering nothing but true statements. The question to ask is not “is the headline literally true?”, but “what does the headline cause people to believe?”

It is news to me yes and yet, by any definition of news I understand, a measure taken in 2007 is continuing is not. To further make my point, the original commenter felt the need, correctly I think to clarify that the article is not discussing a new policy! "What's the point of the article?" is a short way of asking both what the author wishes to communicate, why and most importantly what the intention is. I had hoped my asking the question in the first place would be a clue that I dont buy that it is just "to inform"

The PSLF has been very badly administered to date. The Biden administration is finally applying it the way it was intended.

I believe a lot of this wave of forgiveness is due to correcting/removing the road blocks for this program put into place by Devos in previous years.

The article refers to these as "historical failures" but I think that being very generous.

It wasn't just the Trump administration; it was clear there were significant problems with the way the program was administered well before the first loans were supposed to start qualifying in 2017. Among other things, the Bush and Obama administrations that created and administrated the program provided no guidance and no oversight to the companies overseeing the loans, so the companies made it effectively impossible to qualify.

Hard disagree. The Obama administration drastically altered federal student loans worked, end-to-end. One of the largest changes was to get the DoE directly into the market of lending and holding student loan debt. Cutting out servicers like Navient, and costing them tons of money in lost subsidies and essentially nationalizing the industry.

Policies such as Public Search Loan Forgiveness, Pay as You Earn (PAYE), Perkins Loan cancellation, and several others were part of the Student Aid Bill of Rights. Having the government hold student loan debt is foundational to making these policies work.

This was a key policy platform of the Obama administration. It's less widely known about, compared to ACA, but still an important one. And this is probably the reason that it's been a day-one policy issue for the Biden administration.

> And this is probably the reason that it's been a day-one policy issue for the Biden administration

Here on day 455 of the Biden administration (who, by the way, was the least interested in resolving the student loan issue among his Democratic Primary rivals), it sure doesn't look like it was a "day one" issue.

I know someone who is enrolled in this program - unfucking it has been an ongoing task since very early in the administration. But like many things, it takes a bit to figure out how to untangle a program that was actively sabotaged for four years prior.

> Public Service Loan Forgiveness program

Come work for the permanent undemocratic bureaucracy, and you'll even your student loans forgiven. But if you decide to go down the path of becoming a kulak, the student loans will be with you even if you go bankrupt.

I'm curious where the sudden bump to 40k comes from. According to Wikipedia [1]:

> The Department of Education reported that 2,215 borrowers had the remainder of their respective student loans forgiven under the program as of April 30, 2020. [1]: https://en.m.wikipedia.org/wiki/Public_Servic

FAANG has plenty of private XKeyscore wrong-think APIs that the bureaucracy utilizes under the auspices of "fraud prevention" to filter out "bad thinkers" from various activities. Welcome to fascism, folks.

It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.

Exactly. Plug the hole first (or concurrently), and then worry about bailing water. Additionally, as others have mentioned, it needs to be done in such a way that we aren't punishing those who have been responsible and made sacrifices to pay off their loans.

I'm not opposed to student loan forgiveness, but I don't think it's nearly as popular as many progressives would like to believe as a standalone proposal. Come up with some qualifications and limitations for reimbursing past loan payments, as well as a systemic fix for the future, and I'd be all for it.

All that being said, is it still wise to forgive student loans at this particular time? Originally, the pitch was that it would help act as a stimulus during the pandemic downturn. Now that we're dealing with the opposite situation, I don't see the rush. Maybe a bill could be passed that had a delayed or gradual effect.

Could it be possible that this is being done more as a way to garner votes for the midterms? Someone else commented that this affects like only a tiny fraction of people w/ student loan, but it does make for a good headline, judging by the number of comments here.

I am starting to think this is a sign of a big weakness in the American system. These half baked actions are evident in health care, security, and all other categories. I think it has to do with the fact that there are so many parties acting in bad faith that it is hard to get comprehensive legislation that addresses the problem as a whole vs just piecemeal bits and pieces because that is all that can be pushed through. I don't know what the solution to this is other than a complete reset of the system (which itself would require the existing system to produce and pass)

>> It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.

A wise man once told me "The first thing you should do when you find yourself in a hole is stop digging". This is my standard response to the student loan crisis and many others.

You should put him in touch with the guy who won't stop digging a tunnel from the other front page thread

I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it. That's how it is supposed to work. We don't typically reward people for digging themselves into a hole by bailing them out. Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.

We do, actually, at least in the US. It's called bankruptcy. We generally recognize that sometimes despite best intentions, debts become unpayable and in these cases, the debts get restructured and creditors are frequently wiped out (which is fair, since both borrower and lender take risks).

Student loans can't be discharged through bankruptcy unless the borrower is permanently disabled. It's entirely possible to end up in default on a loan for a degree you never obtained, paying a loan your entire life, without ever decreasing the principal. Unsurprisingly, this rubs people the wrong way.

So first off, remember that the people taking out the loans are typically between 17 and 20. I don't know about you, but when I was 18 I was a fucking idiot. I mean I still am, but more so back then. I would be surprised if you weren't (and you probably aren't even the median case!). Also consider that a lot can happen in 4 years, especially at that age. Your interests typically rapidly change, you learn more about who you are, and you may underestimate your future earnings (especially given that schools tell you that you'll earn so much because of your degree and their connections). But there's some other issues.

- Interest rates have gone up

- Cost of schools have risen

- The government holds most student debt

- It is still usually a good deal to get an education, but the deal is rapidly becoming less of one (the value of the deal is even changing for people in the middle of education or even graduated)

- The clauses on the debt are getting stronger, being almost impossible to cancel the debt and leading to people never being able to pay off their loans.

- The loans are predatory and becoming more so (when I took mine out a decade ago I had the option to pick "fixed rate" or "variable" but that wasn't actually fixed _interest_ rate)

- Schools are promising scholarships and then not giving them (my school would constantly schedule me for meeting with the financial aid office, a requirement, the week after the deadline and wouldn't schedule me before)

- We're better understanding the major impact on our economy when a generation that is in their prime earnings age is still not consuming and instead paying off debt.

- An educated population results in a happy and effective civilization (especially if one of your main exports is technology)

I think there's a lot of good reasons that people are pissed off. Our generations specifically was told "go to college and you'll get a good job and have a stress free life." But we quickly found that going to college doesn't lead to a good job and we can't get the same things our parents did. Jobs are harder to get, they don't pay as much, and housing is insanely priced. So basically people are pissed about a lot of stuff and a whole messed up system, and most young people are either: in college, avoided it because cost, or recently graduated. Considering that, it is unsurprising that it is a major focus.

Also I should add, some bailouts work. Pretty much what people are saying here is "this has gotten out of hand. You need to bail us out so we can effectively participate in society."

100% in good faith:

> I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it.

Saddling _teenagers_ with such debt is problematic in many ways. For many of my peers they were not ready/cut out for college but still had the debt + schooling jammed down their throats because "it's what you're suppose to do."

Then, there's the cost to quality situation... I got nailed with this one - accredited private college with little oversight with a _horrible_ program for my area of study. We're talking two professors for the entire subject, and most of the courses they had advertised in their catalog hadn't been offered in over _seven_ years. Lots of people's time at school was just jumping through hoops for an "education" with very little value to their eventual career.

Cost has gone through the roof - administrative costs for colleges have skyrocketed. I've worked in marketing for schools - they're businesses before they're educational facilities. They're profit seeking through tuition, grants, donations, etc. Don't even get me started on sports...

> We don't typically reward people for digging themselves into a hole by bailing them out.

They were put through an incredibly profit-seeking system that operates in it's own self interest to get as much tuition as possible. Just like the healthcare industry, we've let administrative costs and middlemen drive the price of an education up while whittling the quality of it down.

100% they were not the only ones digging the hole that they find themselves in. Additionally, I have a hard time nailing 17-18 year olds to the cross for poor decisions in regards to their "digging" activities.

> Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.

And, just saying - yes this happens!! We consistently cut breaks to the interests of capital (large corporations, the rich w/taxes). Regardless of how any of us feel about it, this will continue to happen. So if our corporate benefactors are getting help, why can't a citizen with/seeking an education get some help too?

It's just something that can be presented in a very divisive way for each party to easily capture sizable market shares of the electorate. It became a "valuable" problematic to put forward when the group of people who struggle to pay off their loan became big enough to make it worth it politically.

The way this works is that you just have to define something to be a "necessity" in the public consciousness, because there's a prevailing intuition that it's illegitimate to be asked to pay for anything that fits that description. Medical bills are a necessity, so it's illegitimate to be asked to pay them. You have to go to college to get a good job, so it's illegitimate to be asked to pay for an education. You need a place to live, so high rents are also illegitimate. And so on.

And also reimburse the people who sacrificed to pay theirs off or avoid them in the first place. I’d donate my reimbursement if they did, but of course they won’t.

I see this as basically just making amends for the failures of the PSLF program. This is for the folks who made years of payments expecting to get loan forgiveness after 10 years as promised, only to then be told none of the payments counted because they didn’t read the fine print or simply because of the loan servicer’s incompetence.

Free community college was in build back better, 49 republicans and Joe Manchin killed it.

Yes. Additionally, it's crazy that we're singling out this specific type of debt for forgiveness. What exactly is the criteria that makes this debt different from others?

Is it because it's taken on when you're young and unable to understand the risks? If that's the case, I gambled away a LOT of money when I was 22 on casino credit, and I made the mistake of paying off my markers - I should have waited for the "you made a poor decision when you were young" forgiveness train to arrive.

The same could be said for those parasitic $500 "Student Credit Card" offers we all received when we were young, or the kids who decide to finance that brand new Mustang they can't afford at loan shark rates due to no credit history. Why not forgive it all, if the standard is "they were young and didn't know any better"?

And why stop at youth? It's pretty ageist to assume only the young are financially illiterate. There are plenty of older people who make poorly informed financial decisions. Bail them out too? When all the 5/1 ARMs written at 1.6% a year ago for homebuyers barely on the bubble of serviceability reset, we should definitely forgive them for their idiocy as well.

Yes! And if they stopped issuing these loans, tuitions will drop quickly. Im against loan forgiveness, but if they’re going to do it that also need to stop backing these loans.

School should just be free in the US, as it is in other civilized countries.

This program is for people working in the public sector. It's not known at the time of issuing the loan whether the student will quality for loan forgiveness.

This sounds like an attitude og “If you believe your driving to fast, open the door and jump out the car. Pushing the brake won’t bring you to a stop immediately”

This loan forgiveness is for a very specific subset of lenders who have been making payments for 10 years but not yet paid of the loans. Eliminating loans all together would not have put them or society in a better position, it would just mean that next semester there would be hardly any new students accepted at any higher education and the entire education sector in the US would be bracing for impact and trying to figure out how on earth they are going to continue while their normal revenue disappears overnight.

If anything would be crazy, that would be it.

Yes, I would rather see student loan reform rather than repayment with no other changes. It's a bandaid otherwise.

The really crazy thing would be to end the student loan system without providing an alternative. If you do that, only kids with rich parents get to go to college.

The current system is far from perfect but it enables kids to attend college regardless of their parents' wealth. Any replacement system needs to enable that too.

If the entire point of this public policy is to create votes for whoever is implementing it, this is exactly the dynamic you'd expect to see.

To a politican about the only thing better than a vote buying scheme is perpetual vote buying scheme.

> the government should stop handing them out

Minor nit: The gov't doesn't give the loans, they underwrite & insure the loans.

If we're going to be forgiving loans, we shouldn't be giving them out in the first place. Otherwise, we're going to be in the same spot in one generation's time.

Just stop guaranteeing them, let students default on them. All these guaranteed loans that can't be discharged allows academic institutions to ratchet up the price. Let them calculate risk and price them accordingly.

The guarantee is the only reason the loans are made. Otherwise, you're lending a lot of money to someone with no income and no assets, and no one will want to make that loan.

They'd actually have to underwrite on the basis of the value of a degree -- yeah, no one is going to lend money to the same people who wouldn't be able to repay their loans after graduation. That's good!

This is a slippery slope though. This effectively turns universities into career-training centers. Eventually enrollment in less-profitable subjects, like dance and art, will decrease, forcing colleges to drop it from their programming.

Then suddenly we have a society that does not appreciate art or dance or whatever other subjects were dropped.

This is the slippery slope - creditors get to decide what others know and learn and pay attention to. Knowledge is no longer widely available - the experts (professors) might still teach at a college, but will be forced to either pivot or leave when the university slashes their programs. They could teach privately or for free, but I am guessing the number of students who they would normally teach drops significantly.

This is not a problem. Tooo many kids graduate with degrees in which they cannot find decently paying jobs, so they end up in a different field altogether. Why have that initial non-starter in the first place and place them into a career that has better potential in the first place?

Once there are too few people in the arts, demand will incentivize more people to get into that field.

Moreover, don't we currently have a problem where we don't have enough students going into STEM?

Is this really a problem though? Wouldn't arts programs simply move to being something offered to and studied by those wealthy enough to do so? I'm genuinely curious.

> Eventually enrollment in less-profitable subjects, like dance and art, will decrease, forcing colleges to drop it from their programming.

If this is the goal, then the far simpler solution is for the government to explicitly budget a set number of grants for the most promising students in those fields to study specific subjects that supposedly have social value but low economic returns.

It certainly doesn't make sense to subsidize loans for hundreds of marginal students to study "business administration" or "hospitality" at a tier four regional college to get one brilliant dance major at Carnegie Mellon.

Far more efficient for the government to say "we have 800 fully funded dance scholarships, 4000 art history scholarships, 2000 classics scholarships, etc. We're going to assign these scholarships to the most promising graduating high school students in these fields. And the scholarships will only be paid for top-tier universities that have demonstrated consistent excellence in these areas."

That would by far subsidize a much higher level of cultural discourse at a tiny fraction of the cost of the current student loan system.

> Then suddenly we have a society that does not appreciate art or dance or whatever other subjects were dropped.

The assumption that you need a college degree in art to appreciate art is kinda ... out there.

> This effectively turns universities into career-training centers.

It's no change. That was already the premise of underwriting non-dischargeable loans.

> Then suddenly we have a society that does not appreciate art or dance or whatever other subjects were dropped.

Again, no change. If they were valued enough to support an expensive college degree, career prospects would be less dim.

> This effectively turns universities into career-training centers.

Isn't that the case already? Aren't most university students looking to increase their career prospects? Wasn't that the whole point of telling generations of kids to go to college, so that they'll get better jobs?

If the program turns out successful students, I don't see why not? If the program turns out unmarketable skills, sure, charge through the roof and steer kids away from a useless degree.

Good. Accelerate and force the "everyone must go to college" issue. Revert it to scholarship-only (plus the rich dunces who can afford full tuition).

And then the colleges will have to reduce prices or go out of business.

University employees are, unfortunately or not, consistent one party voting blocs. Cuts to them are highly unlikely.

Why not? I'm a university employee. Grad student, so maybe skewed a bit (are we talking about more permanent administrative employees? They I guess have different interests, since they aren't transient like me).

1) I'm going to, absent some massive political shift, vote for Democrats for the rest of my life anyway. So, they don't really have to play for my vote.

2) Playing around with boring stuff like tweaking market forces around by changing how loans work is sufficiently indirect that blame can probably be dodged.

3) We're all aware that the current system is pretty bad, a new solution that at least purports to be an attempt at something better can be sold to me pretty easily.

3a) Keep in mind that, at least in the STEM departments, the instructors are there for essentially irrational reasons -- they could make much more money in industry. At least some of the motivation is to produce interesting science and help students, paycheck be damned. Changes that hurt the last while helping the first two will probably be accepted with only minimal grumbling as long as they aren't too painful.

+1. Defaults exist for a reason - they force the lender to think about whether someone can pay off a debt or not, and we got here by giving everyone a loan, whether they could pay it off or not.

This create market driven dynamics in which degrees basically are tailor made for industry. This approach disincentivizes pure research for scientific purposes.

You're saying companies DON'T want researchers?

In any case, if there is a specific need for specific research, I'm sure the gov can figure out a way to incentivize particular useful tracks which the market ignores. Grants programs, etc.

Companies value people who can apply the scientific method (experimental design, data gathering, data analysis, etc). They hire people who have acquired this specific knowledge often through grants. Whether these subsidies lead to application of the specific knowledge gained through the grant underwriting process is debatable. Companies will hire people who studied something that requires the scientific method for which there is maybe no market, and make them apply that approach to things for which there is a market.

There is a tension between the two purposes universities have: To train students and to do research.

I want both, but I have a hard time disapproving of more focus on training students, as they are the true customers of universities.

A future where universities looked more like community colleges situated next to research institutes, rather than weirdly blending the two, could be neat.

Have people really interested in teaching rather than research teach the 100/200-level courses. The scientists next door can teach seniors and juniors, and show up for guest lectures.

> This create market driven dynamics in which degrees basically are tailor made for industry. This approach disincentivizes pure research for scientific purposes.

Good, there is nothing wrong with all that. Degrees should exist so people find jobs in the real world. Research can be funded by the government itself. Absolutely no need for government backed student loans in either cases. People who want to go to private universities can get a regular bank loan, that's how it works in the rest of the world. The US system is unique and predatory.

Pure research for scientific purposes is done by Ph.D. students and is already funded by research grants. Student loans are not part of the equation here.

This is the correct answer

The cost of higher education in the US is a joke.

Universities are tax exempt, and highly profitable. Many have endowments over $1 billion [1]. Yet, the average cost in state is $10,000 per year, and almost $30,000 if out of state. For comparison, the tuition at Oxford College, one of the most prestigious institutions in the world, is $12,000 per year.

Student loans may be considered even predatory [2], adding to the injury.

There should be a better mechanism to allow people to go to college in the US, without subjecting them to half a lifetime of debt.

[1] https://en.m.wikipedia.org/wiki/List_of_colleges_and_univers...

[2] https://abcnews.go.com/US/wireStory/navient-settles-predator...

I always found the following expression amusing:

"Universities are actually hedge funds that happen to have a school attached to them".

Universities are football franchises that happen to have a school attached to them. The pull of NCAA sports is like a black hole.

Are you complaining about the massive amount of not-really-loans given to small and not small during COVID?

Right? You're vociferously complaining about that frequent game played by corporations with outsized lobbying abilities to get loans that aren't really ever expected to be paid? How much was that in the grand scheme of printing money by the fed, a billion?

Or are you angry about little poor people getting a pittance of money in the grand scheme of things?

It is so strange how much people shrug off corporate handouts, but get up in arms when poor folks get a pittance from the government.

Edit: my tone was a bit harsh, probably because I get this knee jerk reaction.

It's probably because corporations are like gods. You can't kill them. They are omnipresent. With data hoovering, they are some form of omniscient. They are tireless, sleepless, don't require air, water, or food. The modern way to kill a corporation is probably so serpentine that it puts the best D&D plot to kill a god to shame. They don't technically have a physical body. They have servants, followers, a clergy, and power. They can cast "summon army of retainer lawyers" and send you to hell.

Who are we to question if the god of money hands the god of cars magic printed-but-never-actually-printed numbers that aren't based in something?

We can dislike both of those things, you know

Hit. The. Nail. On. The. Head.

Is not giving out loans at all necessarily better? Stop giving out loans, and higher education becomes even more elitist and out of reach.

I think most people who'd like to get rid of the loans would also like to provide additional help to make college less elitist. Easy loans are just the local optimum we need to get out of.

If it only becomes for the rich, that's a problem. If it only is for those who can earn merit scholarships (plus a smattering of rich flunkies to pay the bills), is that necessarily a problem?

Or higher education institutions will consider if they really need the ever-growing bubble of useless administrators who empty their coffers.

Plus, colleges and universities will think twice about increasingly charging an egregious amount for tuition if people aren't willing to buy their product no matter the price.

No. Tuitions will drop like a rock.

Maybe for the bottom schools but there are enough rich parents to pay/cosign a loan for like the top 50 schools and I highly doubt they would reduce tuition/spending and risk hurting their rankings.

Who cares about the top 50 schools? I went to Hofstra University, graduated with no debt (worked while going there and commuted by bus!) and I did just fine. I’ll be damned if I’ll subsidize someone else’s 4-year country club experience at a “top school”. Noting terrible will happen if only kids with rich parents went to them.

https://www.hofstra.edu/admission/cost-attendance.html

If you can earn $53k plus living expenses in after tax dollars all while going to school then you are not the typical college student. Someone would be subsidizing your education if you get out of that debt free.

No matter how many loans or funding you get, it'll always be impossible for everyone to go to the top 50 schools, unless you simply outlaw all schools outside of the top 50.

That is not the point. The point is that kids whose parents cannot pay/cosign a loan can currently get into the top 50 schools but without the government backing the loans, none of them would likely be able to get in at all leaving the top schools only for rich kids.

They were cancelled because it turns out the schools were scams. So it was a situation where the students got into a lot of debt, and got nothing(like an education or a worthwhile diploma) in return.

Are the schools no longer scams? All this does is help the schools, if new students think they might not actually have to pay that debt at the end.

Do you think the schools aren't punished for being scams, and they're just free to keep scamming students? And debt relief helps the debtor, not the original receiver of the funds.

Example: https://en.wikipedia.org/wiki/ITT_Technical_Institute#Legal_...

> On August 25, 2016, the U.S. Department of Education banned ITT Tech from enrolling students who receive federal aid. The Department also doubled the surety funds that ITT Tech was required to have, and to produce those funds within 30 days. Stock markets reacted with a punishing 35% drop, which triggered a halt in trading, raising concerns about whether ITT Educational would be able to survive this latest decision.[73] On September 6, 2016, ITT Tech ceased operations and closed all of its locations, issuing a statement that attributed the closing to the Department of Education's actions.[28]

The mistake ITT Tech did was being "for profit" - run it as a non-profit and be satisfied with enriching the management, and sail on.

No, not really. The wikipedia page I linked lays out all of the illegal things they did, which are still illegal for non-profit institutions.

I don’t know the Us system at all but it sounds like what they are doing are rewarding public service workers (eg teachers?) or charity workers which likely don’t get paid well by cancelling their debt after a set time period of otherwise good behaviour. Which sounds equitable to me, although I’ll never understand why high school is free but university isnt.

It's a program to get people, primarily with advanced degrees (i.e. Law, Medicine, Dentistry, PhDs, etc.) who would otherwise go to industry.

You have to work for a state, local, federal or tribal government, or a 501c3 (non-profit) for ten years in order to qualify.

Don't forgive the loans, force the universities to refund the money. I shouldn't be punished for their malfeasance.

Wait until you hear about the upward wealth redistribution through COVID loans...

I agree in theory. If the U.S. were a company dedicated to profit for its shareholders, then it certainly shouldn't give out bad loans.

However, since the U.S. is a country dedicated to the benefit of its citizens then it's absolutely okay to provide loans as a form of social welfare, and accept a higher than normal rate of default. After all, providing these loans instead of the market was the entire point of the exercise.

I'm a UK guy in my 50's. I went to uni (the US term for college) in '83. At the time I was in the minority of the population. I was given a grant of £3000pa and was able to make ends meet. I might have lived in, shall we say, the most salubrious of environments, but I emerged without debt.

Same thing when I did my masters and PhD a few years after that.

I basically caught the tail end of uni, when it was for the minority of folk. I shake my head at the monster that higher education has become. I'm hardly in the loop anymore, but I've noticed that the UK want to nickel-and-dime the students with tuition fees, graduation fees, and whatever fee that they seem to concoct on an ongoing basis. The US seems even worse, with books costing 100's of bucks.

Shocking. Truly shocking. The whole thing is a shameful scam, and no-one is calling it out for what it is. The truth is, one rarely /needs/ a university education. It's really just a piece of paper to get you into an office job - if you're lucky.

The problem is, now that everyone's got a degree, they're not particularly valuable in their own right. It's a foot in the door to a club that keeps upping its membership fees.

Dare I say it, but it was better when a uni education was the preserve of the elite few. Now, I appreciate it that this is going to rankle a lot of sensibilities about "fairness". If fewer people had a uni education, then it wouldn't be considered quite so important, as employers would have to take what they could get rather than insisting on a degree. Plus it would also put an end to a large swathe of the population starting their young adult life with a small mortgage.

In my eyes, what we're seeing today is morally unconscionable. Lambs to the slaughter.

I find myself in a very funny situation where I have a very high paying and great job, that I got without any education. Now that I want to emigrate to Japan, I need a degree, so I am going to study in Finland as real estate is cheap and I can get a degree for free there before moving. I literally just need that piece of paper.

Of course, the current UK student loan system has several features that make it far more favourable to students than the USA:

-Tuition fees are capped at £9250 per year (approx $12,100), even for prestigious universities. A typical degree in the UK lasts for three years.

-An additional loan is available for living costs. The amount available varies based on household income.

-Loan repayment is linked to earnings. You only need to repay while you're earning £27,295 or more per year. If you're unemployed or on a wage below that, you don't have to pay anything back, so the debt is much less likely to cause financial hardship.

-Repayments are typically automatically deducted from wages (for workers who are salaried and only have one employer), so there is little admin involved in payment (the repayment rate is 9% of the salary above the £27,295 threshold).

-Loans are written off 30 years after graduation. It is predicted that most people won't actually pay off the loan, so it's seen by many as a sort of "graduate tax".

Some downsides:

-The interest rate is very high (especially given the current inflation rate), and interest starts building up while a student is studying.

-Even if the repayment terms are favourable and should be seen as a "graduate tax", rather than a loan, it's still the case that people will have a debt for 30 years of their career.

-A lot of the loans look set to be written off (as people won't earn enough to pay them off). This cost is met by the taxpayer.

A college degree, home ownership, etc were incorrectly seen by lawmakers as pathways to success as opposed to signals of success.

> Dare I say it, but it was better when a uni education was the preserve of the elite few.

I agree, but there is fundamentally no reason this level of education need be restricted to the elite few today even if we ran the clock backwards on everything related to university. We live in the information age now. I can have access, for free, to all the educational material of any university in the world. I can't have access to their equipment[0], and I can't have access to their professors[1], but the only real problem with that today is that I don't get a piece of paper at the end that says I got a piece of paper from a university.

[0] Could be solved with some kind of rental program I guess, at least for equipment that isn't ridiculously rare and valuable.

[1] How much access do the students have these days? From what I hear, TAs do a lot of the actual interacting with students part.

Is this a by-product of reduced government funding? I know my state school received less funding from our state over time and that's where I thought tuition and fees had to make up the shortfall [1]. In turn universities increased frivolous spending on housing, sports and facilities that serve little education purpose but are intended to attract more tuition paying students.

[1] https://wispolicyforum.org/research/uw-in-the-21st-century-l...

Now universities can continue to raise tuition and pay the administrative class even more. Uncle Sam has shown they'll pay it on his dime.

End federal involvement in student loan and allow student loan debt to be discharged in bankruptcy. Problem solved.

Unfortunately no politician will have the guts to do this.

This is why people are skeptical of the federal government getting involved in just about anything.

They passed this program to help students afford school, and it’s done the opposite. It was also passed as a revenue neutral program of loans that would be repaid, now they’re increasingly being forgiven or put into forbearance.

Now to fix it, someone will have to feel significant pain, most likely both the educators and low-income students.

People are skeptical of the federal government getting involved because of decades of propaganda and underfunding. Bad roads? Well, Congress and the states won't raise the fuel tax. Bad education? Congress lets loans go to shite diploma mills that have owners who make big campaign contributions. Just look at how underfunded (intentionally) the IRS is. How audits are primarily focused on the bottom 50% of earners, while the top 50% skate. The Federal government does a great job at many things, when given clear legislation, and funding. Unfortunately, Reagan did a great job with his BS about "I'm from the government and I'm here to help."

> Bad roads? Well, Congress and the states won't raise the fuel tax.

We overbuilt infrastructure based on Government accounting practices that don't adhere to Generally Accepted Accounting Principles (GAAP or US GAAP). Representatives get elected based on promises of new roads and highways, not on successful stewardship of what we have. People realize this misaligned incentive, that isn't propaganda.

> Bad education? Congress lets loans go to shite diploma mills

For profit schools account for 10% of students[1] and 15% of loans[2]. They're a problem in several ways but not the root cause.

> Just look at how underfunded (intentionally) the IRS is. How audits are primarily focused on the bottom 50% of earners, while the top 50% skate.

I agree that the IRS wrongly targets working class people, but the rest of this is wrong. The tax to GDP ratio in the US has been constant for decades, and we have the most progressive tax code in the OECD[3]. The US obtains more of its revenue from income taxes than any other OECD nation by a factor of 2 in percentage terms. We have no VAT which is regressive, and almost every other OECD nation has one.

Americans distrust government for a lot of historical reasons. We are the 2nd largest democracy that was a former European colony, and our founders fought a revolution against a remote and disconnected government. Most large waves or immigrants to the US were fleeing some sort of government oppression. We also should remember that some 14% of the population was officially discriminated against by the government in living memory. The war on drugs also give people plenty of reasons to be suspicious about the government. We're an individualistic society that is multi-ethnic, multi-racial, multi-cultural and people practice a range of religions it should come as no surprise that people are wary of Washington.

[1] https://www.brookings.edu/blog/how-we-rise/2021/01/12/the-fo...

[2] https://www.newyorkfed.org/medialibrary/media/research/staff...

[3] https://www.oecd.org/tax/revenue-statistics-united-states.pd...

> no politician will have the guts to do this

There is a grand bargain to be made.

For example: forgive the first $10k of every student loan and offer every taxpayer who paid off their loans a refundable tax credit for the same. In the same stroke, make 10% of loans granted in the year following enactment dischargeable in bankruptcy, limit federal guarantees to 90% of the loan value and reduce subsidies by 10%. That goes to 20% (80%) the next year, 30% (70%) the next, et cetera.

You aren't changing the terms of an extant contract. Lenders and schools have time to adapt. The program pays for itself and then some.

This is a bad plan. Why would any 21 year old ever pay? Just ignore this debt until it is discharged. So you have to wait 7 years to buy a house? That sounds like no big deal.

What we should do is have the fed define a maximum allowable charge for the school loan that can be protected by the government. Pick some number, like $10K a year all in. Any other school loans can be discharged as they aren't protected or schools could try to force the parents to co-sign. But either way, the government stops propping up runaway tuition inflation.

We have to also look at why some of the cost is through the roof. When I was in school, housing was block buildings with bunk beds and a bathroom for the whole floor. Cafeteria was 2 choices and drinks. Now, everyone has a private bedroom and living room to hang out in and their own apartment bathroom. Cafeteria is like a commercial buffet with all you can eat Nutella. That money has to come from somewhere. People want it to feel like a 4 year cruise ship. That is one reason that the costs are out of control.

This is also one factor in our healthcare. Everyone wants lower prices but they also want an Urgent Care on every corner so they can go when it is convenient to them. Someone has to pay for that building and staff to sit there all day waiting for customers to show up. Everyone seems to want it both ways and never stop to consider their complicity.

Federal student loans went unbankruptable in 1976, private ones in 2005.

Did everyone routinely go bankrupt before 1976? I didn't before 2005.

The schools should also have some skin in the game. If a former student defaults on their loan then the school should have to eat part of the cost, and schools (or particular majors) with high default rates shouldn't be eligible for loans at all. This would fix the problem of irresponsible schools encouraging students to take on huge loans that leave them stuck in debt for decades.

Agreed but, if someone tried this you know the schools and media would blast this as "Party X Robbing from Education, hurting students, the next generation", etc. It's tiresome.

There's a reason the federal government is as involved as it is. When I started college, lots of students dropped out because they didn't have the money. My first semester, maybe five students I interacted with dropped out within a few weeks. "Going back home to work. The loan didn't come through." That was back in the old days, when tuition was cheap, before states decided to end support for university education.

The better policy would have two parts:

- A maximum (like 7%) of your after-tax income can go to student loan repayment. - Colleges have to partially repay loans they took for tuition if after five years the student isn't on track to pay the loan off. This would align the incentives of the college with those of the student. It would bring a fast end to students that borrow to pay $75,000 a year for worthless programs.

Amen - tuitions are skyrocketing because of the "free money".

It is also awful public policy to train people to get into debt right out of the gate - this just has all sorts of bad long term consequences.

Debt isn't inherently evil, it's just a tool. But any tool whether it's a hammer or a gun or a student loan can be used for good or evil.

Predatory debt traps are evil. The student loan industry (the schools being the marketers and beneficiaries) seem like predatory debt traps to me.

This is the answer. Lenders would then have to do proper qualification on borrowers, would be more limited in their lending, and this would put downward pressure on tuition.

So unsecured personal loans? Those depend on your credit which most students don't have much/any and your debt-to-income which is normally infinite for students because they don't work. You would massively screw over kids whose parents cannot pay/co-sign a normal loan as it would force them to work and study. Also, you normally cannot get very much with such low income and cherry on top, they have awful interest rates which range from about 6% to 36%. The APR on loans for borrowers with excellent credit is around 12%; it's about 29% for bad credit borrowers which students with no credit are likely to be.

As an example: say you work at target for 2 8 hour days on the weekend making 15 an hour and with a 36% debt-to-income ratio limit, you could afford a payment of $374.4 a month. $15,000 punched in a 30 year repayment at 29% interest rate equals a $362.57 payment. So you might be able to do it but I would hate to be working every single day between weekend work and weekly school and that is assuming an entire 4 year degree could be pushed to to $15,000.

Colleges already have a mechanism for determining chance of success in college, and degrees have data on the average income after graduation. It would be trivial for private lenders to take into account the school, factors in standard college applications, the degree, and expected income to make a loan decision instead of relying on credit, debt-to-income, etc.

And just hope students don't default right after they graduate? You realize how picky they'd have to get? 40% of undergrads drop out [0] who would probably all default alone which is completely unworkable to be profitable considering credit card default rates are between 1.5 and 7 percent [1] and look at the interest rates they charge.

It would also create a massive false negative problem where kids whom could have succeeded never got to go to college because banks would get so picky if they even were too somehow make a loan like that work.

[0]: https://educationdata.org/college-dropout-rates#:~:text=In%2....

[1]: https://fred.stlouisfed.org/series/DRCCLACBS

> ...it would force them to work and study

This was very normal and possible when I went to college. I could work part time during the year, full time in the summer, and pay my tuition. It didn't leave much free time but it was possible and a lot of people did it.

These days tuition is so high at most universities that it just isn't possible. Yet they are not actually teaching anything more or any better than they were back then. It's just way more expensive.

Or just work for a year before college and pay the $15k in cash?

Or cut out the middle-man entirely and have the government provide college education for free.

Fair point and I'm not against free public education, but $15k is also a magical fantasy number to get too if you include housing/food/utilities.

Then poor people won't qualify for loans.

The only solution is some form of price controls, presumably by nationalising some universities or competing against them at the federal level.

However, is that so bad?

This way, American universities have large amounts of funds available to provide the best education, best facilities, hire the best professors and that's why America simply has the best universities worldwide and it is paid by their students?

It also mostly only paid by students who can afford it. Students from weaker social backgrounds only have to pay a small fraction of the normal tuition fees.

As well, 77% of people with student loans have less than $40,000 in debt and 57% have below $20,000 in debt. $20,000 can be paid off within 2 years with a normal graduate job if one wants to pay them off early.

Source from 2019: https://i2.wp.com/www.brookings.edu/wp-content/uploads/2019/...

How about giving back money to people who paid back their loans, possibly going through even greater difficulties to do that.

I ended up working 60 hour weeks to not take out student loans. People talk about having a good time at college but all I remember is getting up at 4am to go to my first job, doing class all day and working my second job until 10pm. No spring breaks and no summers or holidays because I could work those hours to stay out of debt. It is hard to have much sympathy for people asking for student loan forgiveness.

On the plus side I ended up graduating with $20 and no debt.

Don't fall prey to these tales to yourself.

I worked full time thru college for bad pay and still needed 30k in student loans to make it out with my degree. I went to a state school, nothing fancy.

I hardly ever had fun in college, it was awful. The working world is waaaaaaay better for me.

Not everyone who has loan debt just partied away on borrowed cash.

>The working world is waaaaaaay better for me.

Same for me, working seems so easy by comparison.

You're absolutely correct. The people in my life who are the most vocal about loan forgiveness treated their time at university like a party, but that is not a representative sample.

I agree. I also remember working Friday/Saturday nights in the lab (as that was the only time I got to work on my projects), while everybody went out clubbing.

And we're definitely in a spot right now where folks that can pay off their loan are holding off in case the US forgives all loans or something. A perverse incentive that is going to boost the number of student loans that are not paid off.

Not just that, but with interest rates at zero and inflation at 8.5% per year (and growing!) it is incredibly stupid to pay even a single penny of federal loan debt early, unless you have a really good need to polish your credit score.

Federal student loan debts are getting cheaper by the minute, why pay more now?

Paying the minimum amount on time often does better for your credit score than paying the whole thing off, anyway.

The credit score is a number based on you being able to reliably make payments.

People in the US are always punished for being financially responsible.

This attitude, as stated, is one of the fundamental evils, I think (the implication being "If I can't have it, nobody can", or, in this case, "If I didn't get it when it was relevant to me, nobody can"). In this case, the core grievance is valid ("I think there's a better way to address the problem"), but this expression of it makes the problem into the super common "us vs them" where "them" is defined by the terrible cultural obsession with the concept of "deserved" punishment and personal responsibility in an unqualified, absolutist manner ("He committed a crime, he deserves anything that happens", "He failed to pay a loan, he deserves anything that happens", "She had sex, she deserves anything that happens", etc).

The way you present the problem is inaccurate to me. It's not "I can't have it so nobody can" or "I couldn't have it back then, so nobody should have it now.".

It is: "At the time, these were the rules, I ran the numbers, was responsible and ended up limiting my opportunities. Others, who were not responsible, now not only have more opportunities thanks to their degree but will also end up not paying for it".

I'm sorry, but to me it feels extremely unfair that people who frivolously took loans will now end up being ahead of people who - at the same time - decided to be more financially responsible. You can't retroactively change the rules and expect people to take it quietly.

The problem is made even worse because in the case of student loans, there is nothing to repossess.

This has nothing to do with changing the rules now.

More people are punished for being born poor - lead paint, air pollution, and crumbling schools don’t exactly lend themselves to upward mobility.

Rewarding people who have worked for decades to climb out of that situation by lifting those who didn't do the same to the same financial position doesn't exactly encourage upward mobility, either.

People who have paid their student loan debt are in exactly the same situation they were after this forgiveness than they were before: that is, they have no student loan debt.

People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible. Very different.

> People who have paid their student loan debt are in exactly the same situation they were after this forgiveness than they were before: that is, they have no student loan debt.

You're missing the point, either deliberately or on accident.

(Prefacing this with: we should keep and honor the terms of the existing PSLF program that students relied on when taking on debt.) There's no particular reason people with current loan debt, but ineligible for PSLF, should get a wealth transfer from other taxpayers with similar income, net worth, and expenses -- but no current student loan debt.

> People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible.

In fact, a hypothetical student debt forgiveness event like GP was discussing would punish those who responsibly paid off their student debts relative to similar-earning classmates who did not.

> are in exactly the same situation

I don’t know you could possibly reach that conclusion.

I paid off my loan and lost 1000 hours of work.

You didn’t have to work 1000 hours to pay off your loan.

We’re not in exactly the same situation. I don’t know how else I can put this without ELI5’ing

Correct - both people in your scenario end up having no student loan debt.

But Person A, who paid their $30k loan in full, now has $30k less to spend on a home, a car, savings, etc. Person B, who did not pay their $30k, now has effectively $30k more in buying power either immediately or spread across what would otherwise have been their repayment timeline.

Person A's responsibility for their obligation has set them back $30k, while Person B's lack of responsibility for making payments has put them ahead $30k. Maybe we shouldn't call it a direct punishment, but they're certainly coming out of the scenario worse off than their counterpart.

Well, that is a fair point. I think the US Government should give me 1 billion dollars. This actually is a Pareto-optimal action too, since I will then have 1 billion dollars and the rest of you will be no worse off. In fact, you will be exactly the same amount off as before.

How about the govt just obey the terms of the agreement they made? This program has been on the books since 2007. Anyone who didn’t use it made their own decision.

Me me me! What about me!?

It is a case of "me me me" indeed. This is why people support canceling existing loans instead of changing the college tuition/loan system. They don't want to fix things for future generations, they want to fix their own problem with their own student loan and move on.

My master plan is to eventually have 13 graduate level Master's degrees under my belt. Why you may ask? If one is enrolled as a full time "student", the student loan monthly payments are paused. Since, at least for me, I can handle being a full time Master student and also my full time remote-only job, this isn't an issue.

The reason I am doing this is because there is $1.6 trillion in student loan debt; the government is definitely not seeing most of that money. Someone will have to come in and save us all. And well, I am willing to bet 13 master's degrees on this.

Currently at 3. ;)

> the student loan monthly payments are paused

And the interest is capitalized at the end. That's what the banks are counting on.

He who dies with the most debt wins.

I assume you’re joking, but just in case: in-school deferment only automatically applies to federal loans. For private loans, you have to apply and they can reject you or put a cap on the deferment duration. For federal loans, your eligibility depends on income and has an aggregate maximum of $138,500 including your undergraduate federal loans.

Source: https://studentaid.gov/understand-aid/types/loans/subsidized...

Any of your masters programs cover the tragedy of the commons?

> At least 40,000 borrowers will receive immediate debt cancellation under the Public Service Loan Forgiveness (PSLF) Program.

How is this news?

It's news in that they're actually unblocking programs which actually had been long legislatively approved paths for forgiveness and were already supposed to have been operating to this end for years.

It's not news in that these are not new categories of, nor expansions of previous commitments to student loan forgiveness.

When you look at the overall stats of student loans, a increasing number of them (a majority!) look like they will be never paid off over their lifetime, and we are still in a situation where if an individual has a small loan problem it's the responsibility of an individual. But if an entire class or multiple-generations (or a big enough individual loan), has problems, then it's a problem for the bank - in this case the US gov't and an even bigger problem of our overall society and providing an sustainable economically competitive skilled labor pool.

It used to be that for PSLF you had to make 120 sequential "on-time" payments and if your loan provider claimed (correctly or incorrectly) that one of them was late then the clock would reset, making it next to impossible for anyone to claim the benefit. A 10-year clock that can be reset at any time by the bank isn't good.

I believe they fixed it (possibly temporarily) so that the clock no longer resets.

This is a partial fix. The full fix would be to have PLSF pay out incrementally, say 10% after each 12 payments.

The real solution is to stop figleafing the problem and have the government handle all aspects of the loans directly without the involvement of any banks.

The government already has a large department of the Treasury that handles this kind of thing.

is it really next to impossible to pay on time? i assume you can dispute if they claim late incorrectly

I think this is the actual news. Although it doesn't state what the selection process is.

I think historically, the number of loans actually forgiven by the PSLF program has been very very low, even for people that qualify.

I know folks who have worked towards PSLF and ended up getting screwed because they weren't on the right repayment plan. Absolutely devastating to find out you've spent ten years working on something only to have it fall apart because you checked the wrong box once. And apparently this is a very, very easy mistake to make.

Particularly a while ago it was nearly impossible to utilize the program because it was a bureaucratic and underfunded mess. So the number who qualified was effectively zero.

Now it's marginally less terrible and actually forgiving some people's loans.

Specifically, the previous Dept of Ed administration torpedoed the program. When the first class of PSLF candidates hit the 10 yr mark in 2017, 99% were rejected [0].

[0]: https://www.politico.com/story/2019/05/23/public-service-loa...

Given it was actively blocked during the previous administration? The PSLF Program actually working as intended is news.

I hope every single person who is vocal about cancelling student debt, but doesn’t talk about fixing the underlying problems, recognizes that they’re just another generation of unremarkable hypocrites.

It’s a real problem deserving a real solution. Well beyond people just sticking their hands out, saying “gimme!”

why not both?

Absolutely both. But not just the one.

You might wonder whether it's actually regressive for people who have college degrees (or who at least attempted to get one) -- overwhelmingly not the neediest people in our society, even if I do sympathize with how terrible our student loan system is -- to be targeted for help from the government!

Why is the government so afraid of allowing new student loans being issued to go into bankruptcy? Wouldn't this solve most issues going forward?

Separate note: instead of loan forgiveness programs, just pay for people's school up front if they go into these public sector jobs. Then if they quit before the end of their contract, they're on the hook for whatever. Same as the military academies system. Free college, 5 years of service, and you're done. I'm guessing they don't because they can weasel their way out of paying the forgiveness later through technicalities / miring the candidates with red tape, and the program is actually in bad faith.

Because unsecured loans are awful: https://news.ycombinator.com/item?id=31099683

There's a couple reasons why not to do this, primarily flexibility. The program is expressly designed to allow people to move between positions, as long as they remain in a state, federal, local, tribal or 501c3 job. Those jobs also aren't guaranteed, nor is the government obligated to find you a posting.

The program wasn't started in bad faith, spent some time there under the Trump administration where it was effectively non-functional, and is now functioning again.

They should require banks to forgive loans, rather than forgiving Federally-backed loans.

If you require banks to forgive loans (or if you allow loans to be dischargeable in bankruptcy), you create an incentive for the banks to loan money only for college education that results in useful careers. The Federal government is immune to market forces, so forgiving Federal loans just means you encourage the type of college degrees that are not useful.

Not convinced - a sensible bank will look at the likelihood of a person to get a good job after their education, and might conclude that while choosing Engineering over Art History is a factor, there are far stronger factors like

- parents wealth and social position - wealth of parents of peer group at the university - skin colour, gender - propensity for drug alcohol abuse in the family - heart and other medical conditions that might result in early death

We choose welfare insurance at the state level to avoid / correct these undesirable features of our current society, not to continues them into the next generation

Then the government should handle the loans directly and not involve the banks at all.

All other debt can be discharged in bankruptcy, so the banks have free reign to be racist on mortgages and credit cards, but somehow student loans is the problem?

Also see who asked for student loans to be non-dischargeable hmmm.

You're missing the point of the PSLF. It's intended to provide incentives for highly qualified people to choose public service rather than go into lucrative careers. These are considered "useful" careers, but they don't pay well. For instance, I currently work as an individual contributor platform developer for the US Air Force and I make more than the 4-star chief of the entire Air Force, yet presumably he has more of an impact on the country at large than I do. I believe the president is the only federal employee with a higher salary than me. The purpose of programs like this is to make sure we still have people willing to work for the government at all, given everything else they need to give up to do it.

Personally, I think we should just raise government salaries to be competitive. I'm personally getting sick of being paid 60% of my worth to the private market by my job doing science at the university.

> Some 43.4 million borrowers are carrying about $1.6 trillion in outstanding student loans from the Federal Loan Portfolio, an average of more than $37,000 each, according to the Education Data Initiative.

And yet the content of a college education can be had for free on YouTube. Colleges don't sell education, they sell a credential.

Public policy has been lagging behind technological reality for decades on this one.

I wonder what the pause in student loans has done to contribute toward inflation? I would be paying 200 dollars a month right now, but no way I'm paying 0% interest loans that may get partially forgiven one day.

The title can be read in an extremely misleading way. The US has forgiven forty thousand individuals loans. Not 40k per individual.

It’s how I first read it. Since there are millions of US citizens with student loans that’s far less than 1% and doesn’t seem… news worthy.

Whatever broader relief the government is offering could be news but the details are extremely scant so far.

I could imagine there's a lot of people who:

1. Are paying/had paid their mortgage properly. Usually implies being down to earth and choosing a home you can actually afford.

2. Paid their student loans.

3. File and pay their taxes properly.

4. Have never went unemployed, or better yet, they're self-employed.

5. Never played stock market bets, as they're more conservative and prefer to save money in a predictable way through the years/decades (yes, decades).

6. Didn't get bailed out for COVID as they were not eligible because of 4, or they didn't need it because of 5 and their own savings bailed them out.

They should feel really pissed off right now, with just cause.

This is about a 15 year old program and nothing to do with current political sentiment. Those same people always had the choice of complying with this program as well.

It was a tangential comment and I never mentioned politics, at all. 15 year old program or not, what do citizens who meet all those things I mentioned get in return?

Please don't tell me it is "the satisfaction of knowing that their hard work and taxes benefit others who are less fortunate than them".

I don't view it as getting something in return. They made a choice. The people complying with this other program made a choice. Both choices result in less debt they have to worry about. This leads me to think we're having a different conversation than the one you want to have.

If your post describes me can you explain to me in a way I would understand why I should feel really pissed off right now?

>They should feel really pissed off right now, with just cause.

I watched my entire generation party, travel, and generally screw around on free debt for 4 years while I was working my ass off to build a career and barely surviving.

Yeah, I'm pissed.

I fit almost all of those (except dabbling in TSLA calls a few years ago) but I don't feel pissed off, just mildly amused by the whole thing.

Essentially this is Aesop's fable:

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

Yup, only at the end the Animal Council decides that the ant has enough food for itself and should give its surplus to the grasshopper.

The winter goes by, spring comes and the grasshopper starts dancing again ...

And next year, the ant decides to also spend her time dancing around and partying, and when winter comes everybody is f-ed.

I paid off my student loans each month until I was 34. I did it, and it made me stronger. Making other citizens pay for your loans is selfish, and it will come back to bite the people who accept this largess.

things sucked for you and so you are determined to make it suck for others

I know every European seems to ask this of every American but what is the resistance to a welfare state? if you look at a government as investing in its citizens like a VC fund, then providing education and medical care is sensible, and some will turn out fine and others will be Bezos and then you can get your investment back via tax.

I am honestly trying to avoid the flame war here - but I do it know how else to frame the question?

The biggest misconception is that America could have a European welfare state if we just taxed the rich. The reality is the rich in America only pay slightly lower taxes than their European counterparts.

In Germany top income tax rate is 50%. In the US, it's 37% if you live in Texas and 56% if you live in California. In Germany long-term capital gains is 25%. In the US, it's 24%. In the US the corporate tax rate is 21%. In Germany it's actually lower at 16%.

The primary difference between Germany and the US is not taxes on the wealthy. It's that the German middle class pays significantly more than the American middle class. A couple with two children, each earning $65k/year will pay 28% of their income in taxes. Then on top of that they'll pay 19% in VAT tax on nearly every purchase. Effectively for every Euro earned, they're left with post-tax purchasing power of 59 cents.

In contrast, the same family in America will only pay 11% of their income in taxes. Depending on state sales tax comes in at 7%, and unlike VAT at most applies to maybe half their budget. For every $1 of income, this American household is left with 85 cents of post-tax purchasing power.

And that's the main difference right there. European welfare states are powered by taxes on the middle and upper-middle that are simply unacceptable to the average American voter. Imagine a politician running on a policy of tripling middle class taxes. It doesn't matter how much single-payer healthcare, free university education, and expanded public transit they promised. Americans would simply never vote for that.

what is the resistance to a welfare state

America is a welfare state. If you truly can't afford to go to college, the government will pay for you to go. Look up FAFSA.

If you can't afford medical care, the government will provide it for you. Look up Medicaid.

People pay into Social Security for Retirement, Social Security Disability if you get disabled, Medicare is universal healthcare for anyone 65 or older. Affordable Care Act subsidizes healthcare for anyone else that can't afford it.

I could go on and on and on. There is no black and white - we are just another shade of gray out there.

We see ourselves as a nation of immigrants. Where you came from, perhaps you had a social contract passed down through generations of the history of your people/ tribe/ ethnic group. But you gave that up when you came here.

Americans see themselves as the descendents of their own unique "first generation" ancestor who broke ties with his people of origin and came here to stand on his own two feet. We don't see ourselves as responsible for YOUR first generation ancestor's home country problems or failure to make it here. We may in our newly formed ethnic enclaves take care of each other, but that's opt in. Patriotism to us is about preserving that independence- not a shared lineage. I am generalizing here obviously, but you were asking a kind of zeitgeist question. Hope I help something click for you.

> what is the resistance to a welfare state?

I don't believe it's sustainable. I don't believe it's sustainable here, and I don't believe it's sustainable there either (in fact, as far as I can tell, we've starting to see the cracks in the European welfare state for a while now). We have some welfare state-like programs here - social security, for example, is supposed to provide guaranteed retirement income to the elderly. Both of my grandfathers lived on it for decades before they passed. My father collects it now, but it's not enough to survive, even at his meager standard of living, so he works as a security guard at 72 (and yes, I've offered to let him come live with me but he's too proud to accept). I don't believe that there will be anything left over when I try to collect it in 20 years. If it was actually free, there wouldn't be any reason to be upset, but my social security payments are far higher than what I contribute to my actual 401(k) retirement plan that I do expect to be able to live off of when I'm ready to retire. The welfare state takes everything and eventually provides nothing.

Personally, I’m concerned about our government’s track record of mismanagement and infighting that is detached from the needs of the people. Without that implicit trust, giving them more power is a general concern. Speaking geopolitically, the US military is the most powerful force in history including present day and our economy is the largest globally, which makes us coveted by those who seek to wield power for their own benefit, more so than your average Europe country. If the US were to fall to tyranny, that’d put everyone else at risk. Again, less of that risk with your average European country.

If I lived somewhere like Sweden where there is heavy taxation with equally heavy social benefits, I’d probably be fine with the arrangement and wouldn’t fight it. Sounds nice.

I’m not trying to equate welfare with tyranny, of course. The use of bread and circuses has been associated with the downfall of empires to sway public opinion with a short term good at a long term cost. If you start disrupting our major economic systems like that, we’re more likely to dissolve and those with power would use that weakening to their advantage.

As many liberal policy wonks (not a pejorative) will point out: the American people love their welfare benefits! A common claim is that "A majority of Americans support $POLICY! It polls so well!", wherein $POLICY is broadly a sub-component of "welfare state". I sometimes hear it said with an undertone of exasperation: Why can't policies that are so self-evidently popular get enacted into law?

The challenge isn't getting people to say "Yes" when you ask them "Hey do you want all of this great stuff?" That already happens, per the above popularity of individual benefits.

The challenge is getting people to say "Yes" when you ask them "Hey do you want to pay for the government to give you all of this great stuff?" Those two details: higher taxes and government administration, are what erode support for these policies.

The median US citizen believes that "government run" is a synonym for any of dozen negative adjectives: wasteful, won't work, abused by the rich, bureaucratic, untrustworthy, and so on. Are those true or false in any given instance? Would a private sector alternative would avoid those negatives? The specifics do not matter when people are acting on deeply-entrenched, life-long perceptions.

As for why that perception came to be? That would be a historical thesis of its own, and might be tangential to your question.

Why does every European who wants to be successful move to the US? Why is almost every innovative and successful company from the US?

Providing free stuff to layabouts isn't a recipe for success. These "investments" will never pay off. The way to incentivize economic success is via competition.

Unfortunately the US is already far down the path of handouts and participation trophies, and has nurtured an utterly entitled generation who think everything should be handed to them.

The problem is that many US universities are private. So when the government puts money into loans and grants for students, the universities just raise tuition, rather than expanding to accept more students. In the end it's just a transfer from the public to university administrators. To really expand access to education we'd have to have many more public universities.

And anyway, the problem with education isn't that it's not available to enough people. Smart, motivated kids can get a university education even if they're poor. We have enough academics and highly-educated workers for our economic needs. The problem is that it's become a class marker. Many, many people don't want more degrees out there, because it would make their own degree less valuable. Others are desperate to get a degree at any cost, not because it improves their career prospects, but because it confers high status. So taking on huge debt for a useless degree is fine, and in fact good, because it's conspicuous consumption. Of course, debt sucks, so once they have the degree, loan forgiveness is very much in their interest, but not publicly-funded university.

On the larger question, I think it's a cultural thing. America was settled by people leaving stifling societies to go it alone: Europe at first, then the American establishment on the east coast. The frontier is gone, but that value system persists, and self-reliance and independence are hugely important to many people in the US. There's a pretty good argument to be made that American democracy arose because the wilderness was right there and if they didn't get a say in government, people would just move beyond its reach. That culture is has served us well, but we've run out of frontier, and we're starting to feel the social pressures that Europe has had for millennia. There's no escape from the state, so the way to get ahead is to work the system, get a larger share of the pie rather than growing it, and so on. The pushback to that is to demand more fairness from the system, ie, a welfare state.

We don't want others not like us to get benefits, especially if it's paid out of a common tax pool. Even if it's not, if we're not eligible for the same benefits. The US population has had decades (almost centuries) of us vs them politics within the country.

I don’t have an inherent problem with universal higher education or state-sponsored welfare, but the US federal government manages to bungle things. In the case of the federal student loan program, tuition costs have tripled since the early 90s and students who otherwise wouldn’t have gone to school are in many cases saddled with debts on which they can’t default. For many Americans, this doesn’t make for a compelling case for more government.

I am fully on board with this idea. The government provides education for people who want it. They better themselves, they better the economy and taxes. A side benefit is that educated people also better the human race as a whole.

>if you look at a government as investing in its citizens like a VC fund, then providing education and medical care is sensible

Be careful what you wish for. if the US was a VC fund, they'll have to not invest in every company they come across and perform due diligence, which probably means excluding disadvantaged people with poor academic records.

We're actually quite fond of corporate welfare but loathe individual welfare. States will try to out compete each other to offer subsidies and tax relief for a giant-corp's new facility but shun much less expensive assistance for poor families. Golden shovels win re-elections! [0]

[0]https://goldenopenings.com/Gold-Chrome-Shovels_c_46.html

I work hard and always have. I wont be happy if it leads to zero advantage over those who dont.

people don't like spending all their money on taxes and being poor like the europeans

This framing is on its head because America already has a very generous welfare state and hands out money much more liberally than many European states. Including in education which is why there's such an inflation in education cost. The US even has a more progressive taxation system than most European countries.

In Europe education is largely public and thus its subject to budgetary concerns. It's why Germans go to vocational training and have half as many people in tertiary education, there's no degree or cost inflation.

People in the US who aim for European policies need to understand that it consists not of liberal fiscal policy but of robust public services provided by and largely paid for by the middle and working class.

One question for the economists, how can U.S fight inflation if all I see on the news is the government printing money? As Brazilian I got used to that, the government create popular projects in order to increase the public opinions but it only generates more poverty’s. Obs: I’m Brazilian and I really don’t know nothing about USA economy and politics but seems the same that happened here.

So tired of government meddling in people's affairs.

So if you work for government you are eligible, in private business not!

That money is going to come out of someone else pocket. In this case it’s going to be more inflation and more taxes.

Where I live (Canada) the system is so complicated that 95% of people don’t even understand how it work. We have to run simulations of typical cases to trace graphs and make a decision.

I don't see allowing bankruptcy as a problem. Companies are in the business of lending to students, that doesn't dry out overnight. There are periods of more risk on, and risk off so there would also be cycles. A car analogy: cars can be repossessed but minus covid area a used car tends to be a bad investment (not an investment at all) - a money looser and even on repossession ends up at a loss. Yet banks still lend out to cars. What happens when banks don't lend? Dealer incentives and financing. Colleges are not going to simply put their hands up and say, well students can't afford us anymore. Colleges, which are in the business of selling degrees, will evolve and find a way to lend money. Their main target market depends on getting these loans.

Actual DOE press release here: https://www.ed.gov/news/press-releases/department-education-...

Underlying problem just keeps getting worse though:

USC cost of attendance for 2022/23: $85,648[0]

[0]https://admission.usc.edu/learn/cost-financial-aid/

Heh that's 1/3rd the cost of a median LA home in just four years.

Loan forgiveness is a big FU to those that chose not to go to college to save money.

Whether it be healthcare, housing, or education, the government always responds to rising costs by subsidizing demand rather than helping increase supply or fix incentive structures. Really frustrating but almost inevitable because subsidizing demand is the one "solution" that sounds good to almost everyone involved. The suppliers make more money, some consumers benefit short-term, few understand that this just drives prices up further. Anyone have ideas on ways this cycle could end?

(I realize this article isn't what it seems, but I'm still taking the opportunity to discuss this issue)

When you say "cancelled", do you mean "told the creditors to eat shit" or "we paid the creditors off"? Because everyone thinks #1 is happening, when usually it's #2.

Isn't the government the creditor?

People know very well that #1 is happening, but they usually justify it with "but the military spends $XXX billion a year" or some other whataboutism.

And the student loan debt cycle continues. I'm all for canceling student debt if it is attached to a longterm plan to reduce the cost of higher education so that the next generation is not strapped with the same problem. My cynical side thinks the higher education lobby is deeply entrenched with the Federal Government and loves the never ending conveyer belt of young adults with large bankrolls provided by government backed debt.

It's an insane system that has enabled universities to drastically increase tuition and fees, outpacing inflation for more than half a century.

I have an unpopular opinion that forgiving loans hurts those that did not go to college because of ability or cost. This font read to me like a blanket forgiveness is object to though.

I understand the support from those who’ve already paid off their loans but this does not apply to those who did not go. Also I suspect it depresses wages as people will not need to demand higher wages and this seems to be used to funnel them into government jobs.

what happened to the free market economy? the incentive structure is fucked. As a person who worked my ass off this decade, it is unfair :(

Free market needs to be allowed to fail, so bring back student loan bankruptcies and watch the problem mostly fix itself.

Anyway, you could get loans paid off if you worked public sector, but you usually come out ahead working private sector in the same field.

this program has been available for 15 years, you could’ve used it

it died in '08.

One technical question I've never understood about this debate: when the government "forgives" loans like this, what are they actually doing? Is the government paying the creditors off on the debtors' behalf (like a bailout)? Or are they simply declaring a refusal to prosecute the debtors?

The government is the creditor. They just forgive the loan. Probably just 0 out a number in a database somewhere.

I wont support any loan forgiveness. I worked my but off to work fulltime and pay tuition at the sate university. It took 6 years of hard work for a 4 year degree. I graduated with no debt. That my hard work might make me no better off than those who took the easy route, infuriates me.

This NPR article goes more in depth about this: https://www.npr.org/2022/04/19/1093310151/student-loans-inco...

Put myself through college with some very shiny work and living conditions only to be met with medical debt from a congenital issue later.

Can never wrap my head around why America would forgive student debt and not medical debt, especially when the former is always a choice.

generally ... American policy is designed by the wealthy of the wealthy and for the wealthy. So unless a problem is effecting the wealthy is has a low chance of getting fixed.

Because only one of the two is dischargible through bankruptcy.

This is fine but I would really like to see an effort to get the rising costs under control. Otherwise colleges will just suck up more money the same way health care is happy to accept subsidies while raising costs.

Canceling student loans will never happen. It’s crazy how so many people have hung their hopes on this event occurring. To the point where they will likely die or become very poor if it doesn’t happen.

They're not forgiving student loans so much as forgiving themselves for not administering them correctly, and then taking steps to rectify the years-long errors.

There should be no student loan forgiveness. But bankruptcy should get you out of them.

As it stands, not even bankruptcy gets rid of student loans. This is true in the UK too.

I'm not tuned in to American politics so can someone more knowledgeable fill me in...

How many more loans are likely to be forgiven?

When will people be told to start repaying?

This is mainly a policy called Public Service Loan Forgiveness which says that IF you make 120 payments on schedule and on time (ten years) AND you work during that time for a qualified 'public service' job (think government, teacher, non-profit) THEN after 10 years the government will pay the remainder of your loan.

There's some other stuff but the majority of it is that, a policy that's been in place for many, many years, but has been a bureaucratic hell to correctly navigate (you need to check each year, perhaps each month, that your payment has been recorded correctly, and reported correctly, etc).

This is not general loan forgiveness by a long shot.

Just to have some perspective, that's 40k out of ~40 million, or about 0.1%.

The cynic in me is already speculating on why/how that 0.1% was chosen ...

By working for the government. People must be rewarded for taking jobs that pay more on average, have better benefits on average, and are much harder to be separated from on average.

Fuel for inflation

Extremely misleading title. i assumed 40k was the dollar amount cap for each loan. not the number of loans forgiven.

I wish they'd just make the interest on existing federal loans 0 and be done with it.

Sounds ideal in principle (principal?), but low interest/risk on student loans is what allowed tuition to inflate well beyond general inflation in the last several decades.

I think the solution is to allow student loan debt to be discharged under normal bankruptcy proceedings, on one hand, and to return to c. 1980 costs for a university education, on the other.

The latter requires cuts of administrative salaries across the board in the American higher education system. For example:

> "The university’s highest paid chancellor is UC San Francisco Chancellor Samuel Hawgood, whose salary increased from $795,675 to $819,545. At the bottom of the pay scale are the chancellors of UC Santa Cruz, UC Riverside and UC Merced, whose salaries increased from $394,655 to $406,495."

https://www.dailycal.org/2017/09/18/uc-gives-pay-raises-8-10...

In contrast, the governor of California makes $220K or so in salary. In 1980 UC tuition was $300 for the academic school year, plus a student services fee of $419. That sums to about $2500 a year inflation-adjusted today. Today's UC tuition is about $12,500 per year. On top of that, a minimal $20,000 per year for rent + food is tacked on. So if this is all paid by loans, ~120K debt is created for a four-year education - unless you have quite wealthy parents of course, then you get out free as a bird.

In reality what's going on here is the conversion of the American 20th century education system - which put America on the leading edge of technological development for over half a century - to the British Empire education system, in which a small aristocratic class attends exclusive colleges to get networked into the posh system of aristocratic class privilege. Everyone else just becomes a victim of the parasitic investment capitalist sector which collects interest on the debt for the next 20 years (oh yes that includes feeding into 401K boomer retirement plans, so there's that lovely angle too).

Do the recipients have to pay tax on the amount forgiven?

I am a liberal, but I must say the President Biden is the most chicken-sh@t president in my adult lifetime when it comes to breaking virtually all campaign promises. I voted for him and regret it.

a lot of borrowers, a lot of debt, that's for sure

middle class people are fucked

Can Biden forgive my mortgage while he's at it? Why should I be in debt for 30 years, it's very inconvenient. Not everyone has the money to get a fancy university education, even with loans and other financial assistance, so we should be cancelling debt across the board. We should nationalize the banks and print money until all the debt is gone. Or it's racist.

He probably won’t forgive your mortgage but he (and virtually every politician of either party) will give you plenty of free money through the continuation of all the regressive policies that favor property owners to prop up the economy via the “property values always go up!” con game.

So, I am not sure that you need to feel too aggrieved. Cheers!

This is the result of the Public Service Loan Forgiveness program started in 2007.

We did print money, multiple times over the last two recessions.

Guess who got the money?

Why are you angry at a small number of poor students?

Why didn't they think of that?

This is literally an attack on blue collar workers. What do they get from this?

Yup we live in a clown world now.

What’s next, forgiving all the student loans?

Does no one think of the consequences of these kinds of actions?

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