That's why I don't get the big push for canceling student loans. It feels like rewarding people for irresponsible behavior, and ultimately punishing those who acted responsibly.
Further, I expect it would drive tuitions even higher. Who cares what it costs if you don't have to pay...
Same here. However, I don't think other people should have to suffer through what I suffered just because I had to go through it myself. I want society to improve and for others to receive the benefits of those improvements, even if I myself will never get to enjoy them.
It's like getting upset at the development of a cheap cure for cancer, because it would seem like a slap in the face to all of the people who suffered and beat cancer themselves, were bankrupted by it or died because of it. I never smoked cigarettes, for example, am religious about sunscreen, and I take care of my body and health to avoid threats like cancer, and I've lost loved ones to the disease. Just because I "did everything right" and still suffered through the loss of loved ones to cancer, doesn't mean that I'd be upset if there were suddenly a cheap cure for it, and I wouldn't be upset if it benefited everyone who smoked a pack of cigarettes a day for the last 3 decades, either.
No, it's like taking my taxes and giving them to someone else instead of services which benefit many people.
The right way to do this is giving everyone the same amount of cash and increasing marginal income tax rates.
It would be politically stupid to reward a small amount of people who have low voter participation rates and instead earn the ire of many who have high voter participation rates.
Simply stopping government funded higher education loans would be a better move that actually addressed the root problem with higher education costs.
If the goal is to help poor people, then help all poor people. Not just a subsection of the poor that happened to borrow money for overpriced signaling mechanisms.
And in your system, this counterbalances the natural advantage that children born to wealthy parents have how?
Canceling student debt on the other hand would be a massive handout for the rich as the majority of student debt is held by rich and upper middle class Americans. Students from from the poorest quartile of households have just 5% of the student debt [1].
1. https://educationdata.org/student-loan-debt-by-income-level
Or scrapping all income/property taxes, and just having marginal sales taxes (the more you spend, the more tax you pay), but then that would require tracking every single transaction.
My earnings and earnings potential will likely forever be below someone who graduated from ivy league. My network is also much smaller and less affluent.
Now telling me I have to pay the tuition of folks that went to said schools, via taxes, is a giant slap in the face.
That said, a quick Google says that 12% of student debt per year is taken by students at elite schools, despite it representing a tiny portion of borrowers. Link below.
https://www.brookings.edu/opinions/biden-is-right-a-lot-of-s...
I did manage to find the article though. Thanks for sharing. Based on my own experience attending a private university, I had thought students at ivy league schools mostly used private loans. Unfortunately, the article doesn't break out which debt is government-backed and which isn't. This much debt in general is problematic for young professionals, but my understanding is that "cancel student loans" is about the government-backed debt. I'll have to see if I can find a breakdown somewhere.
Any "free" money going forward would presumably come with some strings that at least attempt to keep things reasonable. But it just feels wrong to pay off someone's irresponsible private school loan from a few years ago.
Socially, you could make an argument that they should be more careful. But to the borrower, any denial could be interpreted as taking away an opportunity, and could really backfire if not done very transparently and rigorously following an acceptable process. What if the process unintentionally has a disproportionate impact on one race, for instance?
For something seen as a ticket to the middle class, it's politically better to leave the decision up to the individual.
Maybe my ignorance is showing, but putting a cap on loan amounts for undergrad would probably protect the student quite a bit.
I understand the idea that these loans are predatory might be controversial, but this idea comes from the fact that going to expensive universities and paying for it with loans is pushed by high schools, parents, universities, and society alike as the sure-fire path to success. To an 18-year-old with no way to really comprehend the amount of money they're spending on education or what life looks like after university, they likely will take much of this at face value.
I was so stunned I couldn’t come up with the words to say. Maybe the real issue is teaching kids the value of money.
There were decades of people before internet searches were available who decided to prioritize a lack of debt over going to the absolute best school they could. The most expensive school any of my classmates went to was Tulane, and the kids who went there almost all went on GI bills. Now, across the river, where the people were more affluent... those folks definitely spent more money on their college educations. Can't say I've seen their investments reflected on their Linkedin profiles, though.
This changed in 2005, under GWB, and was not the worst thing he did (screwing up Afghanistan, invading Iraq, PATRIOT, TSA, ...) but was still a bad thing he did.
Those who can earn enough money eventually pay it off, but they're not worried about debt collectors if they're not earning any money.
People who don't ever earn enough simply don't pay it off and it's not a problem.
To prevent abuse from the universities raising costs too much, if they want to participate they have to adhere to set rates for degrees. There are a couple of universities that don't participate in the system but they're no-ones first choice
Taking away someone's diploma because they defaulted on their loan would just be destroying value. It's the equivalent of a bank foreclosing on your house and then burning it to the ground.
https://www.natlawreview.com/article/rmbs-to-slabs-history-r...
So right now we are prioritizing SLAB investors' profits over giving consumers more spending power. If college graduates suddenly could spend their loan payment money on other goods and services, it would be great for the economy. Loan repayments have been frozen for years now and nothing bad economically has happened.
But instead we're just protecting the rent seeking of the wealthy, which isn't really worthwhile economic activity.
Personally I think SLABs are extremely unethical, but even if you disagree with that, SLABs are unsustainable and look a lot like the subprime mortgage bubble.
I agree that there needs to be something to drive the cost of education down, but I don't know if a tuition price ceiling is the way to go. I think a good start would be punishing schools that spend elaborately on buildings, athletics and excess/overpaid administrators while also paying their grad students doing a lot of the teaching work starvation wages (or if you're UCLA, don't even pay them at all!) and neglect spending directly on education and tuition. I think an endowment cap is a great idea in this area, to force schools to lower tuition by having to spend a certain part of their endowment, rather than letting them hoard money.
Some other things that are extremely good ideas is letting the interest rate be renegotiable/refinancible. For example, why did I have to continue paying 6.5% on my loan when rates everywhere else were near zero? And also letting people discharge loans in bankruptcy like pretty much every other debt.
The bubble will burst any day now, since enrollments have been declining for years at this point. Until then, the only people benefiting are student loan servicers, useless and overpaid administrators, plutocratic athletics departments, and investment bankers, NOT students or people doing the actual educating.
Something like dischargeable in bankruptcy after 15 years could work though.
This would cause them to be somewhat cost conscious in certain areas; explosion of administrators, and use of capital contributions for excessive facilities.
How many decades should we punish people for?
I feel like student loans should be treated more like FHA loans, who generally do more to make sure the loan is worth it.
If loan givers had a vested interest in the success of the grantee, they'd do far more due diligence than they do today. They'd not give someone 100k for an English degree, for example.
That said, some of the diligence is expected from the borrower as well, IMO.
Demand a refund not a handout
The real crime here is charging 100k for an English degree. People should be allowed to pursue whatever interests they want, no question. Why would someone spend 100k on an English degree they can’t possibly hope to have bear financial fruit? The scene from good will hunting comes to mind…
I was pretty deflated. I ended up applying for a research assistant position and fortunately got it, so I went back to grad school. Along the way I opted to start a company since I at least had guaranteed health insurance as a student. I graduated and ran the company for 4.5 years. The job market recovered some during that time.
Software engineering salaries now are monumentally different than what they 18 years ago. For a long time I questioned whether I had made the correct career choice. Of course, nowadays we can't get enough engineers and new grads are being offered salaries that I still have trouble believing (and that took me years to work up to). I don't have a problem with that, either. It's just the last time I saw something like that, the industry collapsed.
I feel reasonably comfortable with job security now. But, that's a semi-recent thing. I worked my ass off trying to stand out in case another dot com situation was forthcoming. And for maybe the first decade of my career I operated under the assumption my salary could be cut in half if the other shoe dropped.
Anyway, my point I suppose is that society sometimes changes rather quickly and it can be hard to predict what's going to work. As the first person in my family to attend college, I had to navigate uncertain waters. But, when the price of entry to most jobs is having a degree, you go and get a degree and hope you can work the rest out later. Of course, nowadays we understand that the US doesn't put any value in the humanities so getting a degree in it is probably a bad deal. It just wasn't always that way and the current trend hopefully won't last either.
-- It's far easier to get an engineering job without a degree now, at least in the US. Even if you could get one in 2004, you almost certainly were going to get paid less and be relegated to back office scripting.
When students can no longer afford infinite loans, the price of these degrees will magically drop like a rock.
It would give the people a way out today - a few years of bad credit sure, but worth it if you are really underwater with them.
Keep in mind that most (nearly all) of the people you're talking about were minors less than a year prior to getting these loans pushed on them by people with a lot of experience convincing very young people to take loans. It's disingenuous to act like they aren't easily preyed on due to their inexperience.
The trouble is, if you take away the student loans the cost of tuition will drop but a lot fewer people will be able to go.
1. https://educationdata.org/average-cost-of-college-by-year
What I'm trying to say ultimately is in my opinion most High School graduates are to naive to actually realize how bad of deal they may be getting themselves into and the US government is actively encouraging that reckless behavior by allowing these federal loans to be issued.
But that's as far as I'm willing to go on the issue. If it were up to me, I'd have the feds regulate university expenditures the same way that they regulate insurance companies. You get X% of tuition and fees to go towards construction, overhead, and administration. Everything else is for educator salaries.