Biden to Announce $10,000 Student Loan Forgiveness Plan
wsj.com
wsj.com
Nothing against people who can only afford public college, but the quality is subpar -- and the fact that there are people who can only afford that is the problem. We really need education to be more accessible; making education expensive is, whether intentional or not, a way to keep poor people poor. Education too expensive? Welp, too bad, you've got to find a job that (a) doesn't require a degree and (b) doesn't require skills or knowledge taught in universities. It'll probably pay less, so oh well if you were hoping to make enough money to get out of your socioeconomic hole.
Inb4 "but you did it": I was lucky enough to have a few relatively rich cousins who would cosign loans for me, lucky enough to be given opportunities by university department heads that I wasn't owed, and even then I almost didn't get that degree. And still, despite all that, $60k+ in debt.
No one is asking for "handouts". People are asking for a society in which exposure to good ideas, and guidance on how to determine which ideas are good at all, isn't reserved for people with stuffed bank accounts or rich parents. And that's just common sense for anyone with any empathy or hope for the future of the species.
The greatest scam perpetrated on Americans is the idea that "college education" is necessary to succeed. This scam has been so successful that several generations of people are now required, by companies, to go into debt for a piece of paper in order to pass HR filters. Moreover, people ARE asking for handouts. College students have been begging for loan forgiveness for a decade. It is quite literally a handout. Admittedly I am quite upset because I sacrificed years of my life and potential income to do the responsible thing and pay off my loans. This is the ultimate slight at me, and everyone like me, because with this $10k-$20k there is no punishment. There is no reduced credit score to rubble for 10 years, there is no "you cant return to school for 10 years if you take this". It is quite literally, by definition, another example of helicopter money to people who made a choice and now don't even have to live with it. People who decided to never pay off their loans, the approximately 50% of students with debt less than $20k, are now going to be relieved of this debt with _zero punishment_ for being so foolish. There is no debt relief system in any country on this planet as crazy as this.
This is not the approach we need, and it doesn't solve the fundamental problem. I have done almost 12 years in the university system. There is not a single skill I have learned applicable to any job I've held in the last decade. It's simply credentialing on par with what a professional certification would've been 20 years ago. We aren't subsidizing journeymen, etc for their education. We shouldn't subsidize university students either. Further, you can argue this simply benefits the rich. Now the companies that underwrote toxic debt get a payday on money that may not have come otherwise. Arguably, this could be considered on-par with the great financial collapse and the bailouts of banks.
We should not punish the people who chose not to go to college in order to "help" the people who chose to go into absurd levels of debt for a credential. Fix the system that is convincing people that this is the only way. Make bankruptcy possible and punish the companies for underwriting bad debt. 300B dollars is a lot of money to look to stylish.
I guess it depends how you define "handout". Usually that term connotes something undeserved, which is where I disagree with you.
> Admittedly I am quite upset because I sacrificed years of my life and potential income to do the responsible thing and pay off my loans. This is the ultimate slight at me, and everyone like me, because with this $10k-$20k there is no punishment.
Imagine if a parent said "I grew up poor and starving, so I'd be quite upset if my children had enough food to eat." That's basically what you're doing: you were punished by a broken system, and now you are mad if other people aren't punished the way you are. That's just selfish and petty.
> It is quite literally, by definition, another example of helicopter money to people who made a choice and now don't even have to live with it.
You're describing this "choice" in a way that seems to imply all choices are equal. That anyone can choose to go to college or not and have the same outcomes in life, that there's no benefit in choosing one path over another, that there aren't other factors influencing such a decision or the availability of these decisions in the first place, etc. "Don't even have to live with it" -- do you realize that sounds like you're implying lifelong debt is a punishment for education? Something that must be "lived with" if you get said education?
> There is not a single skill I have learned applicable to any job I've held in the last decade.
Why is that your metric? More importantly, if that is your metric, why did you spend 3x the usual amount of time at university if you weren't getting anything out of it?
> We should not punish the people who chose not to go to college in order to "help" the people who chose to go into absurd levels of debt for a credential. Fix the system that is convincing people that this is the only way. 300B dollars is a lot of money to look to stylish.
You're not being punished. Your debt would be the same with or without this policy. The cost to the average taxpayer is less than the cost of tuition at a public college. So guess what? If this policy paves the way for future similar policies that apply to new loans, you too can get free college education and make that tax money work for you, if you can't bear to let it work only for others.
It's not about "looking stylish". It's about the importance of education and acting as a proof of concept that it's feasible to make said education accessible to everyone.
The vast majority of Americans have a small window, typically age 18-25, to finish secondary and post-secondary education before the specter of adulthood causes you to lose almost all your time to do it.
If it was the case that I could simply quit my job tomorrow, get a totally free ride through school, and return to work 3-4 years later that'd be different. For myself, and most likely a majority of Americans, we paid our dues by sacrificing useful years of our life in school, then more of our lives paying off our debt (in the case of military debt payment contracts sometimes the price WAS your life), for what? Absolutely nothing. No tax break, no thank you letter from the schools and students, no anything. Just more taxes.
This is punishment. It's an unfair tax levied on responsible Americans.
> You're describing this "choice" in a way that seems to imply all choices are equal. That anyone can choose to go to college or not and have the same outcomes in life, that there's no benefit in choosing one path over another, that there aren't other factors influencing such a decision or the availability of these decisions in the first place, etc. "Don't even have to live with it" -- do you realize that sounds like you're implying lifelong debt is a punishment for education? Something that must be "lived with" if you get said education?
This is precisely why we should not pay students for making poor choices. The underwriters should be responsible for two things given students generally are not creditworthy:
1. What is the net present value of the degree
2. Will the student be able to pay the degree off under the assumption of (1).
3. [Optional] What is the correct course of action in the event of default.
Loans should only be given to degrees that have a positive NPV. Since the government guaranteed loans through making sure bankruptcy discharge could not happen this calculation was thrown out and money was given to everyone. Ostensibly this was to encourage people to get degrees other than STEM, but it turns out very few degrees outside STEM have an NPV on the right side of 0. As an aside this is probably a good thing. STEM has become a jobs program, and university education shouldn't necessarily be tied to profit. However, when loaning people money only the jobs programs will get it - naturally.
This solution Biden has proposed fixes nothing. We gave the corporate student loan banks the biggest bailout we've seen since the great financial collapse. We should be up in arms about this. Students should be protesting. The debt was not removed, we simply gave tax payer dollars to the least deserving, and by extension encouraged them to continue to loan to negative NPV degrees because the government will always save them.
Lifelong "punishment" for a personal choice is not a punishment. You chose your degree. If it wasn't profitable, you can probably blame yourself or your counselor or the smooth talking college recruiter. You got duped. It was still your choice. Paying off my loans was not my choice. The alternative was much worse. If was told in 15 years a president would rob the tax payer to pay off my debt I would've just let it sit and ignore the collections calls. But the alternative was a lifetime of debt servitude and so I scrounged, worked overtime, ate nearly nothing, barely slept, and finally paid off my debt shoving every penny I earned into it. I understood it was my responsibility and the debt wasn't anyone's fault but my own.
This policy doesn't solve the whole problem, but it is a step in the right direction. Consider it a proof of concept: if this policy can show the feasibility of forgiving existing student loan debt that's piled up over many decades, then it should pave the way for future policies which can better subsidize new loans -- a far lower cost.
Obviously, the root of the problem lies with privatization of education and capitalism, but those are things so ingrained in our society that we basically can't expect to ever fix them. Working our way towards better subsidies is the next best goal.
2) The quality of education at public schools is very often lower than that at more expensive schools. I have at least two data points of my own experience to back that up, along with the public perceptions. Acting like getting a better education is a "bad choice" because privatized universities overcharge students is not only an oversimplification, but one that punishes people for trying to better themselves, and for trying to be better contributors to the society we all share.
3) From what I've read, it is legal, via the HEROES act of 2003.
Furthermore, what kind of message does this send? This is NOT how the REAL WORLD works. It only further does a disservice to millennials who already have a outrageous sense of entitlement, lack of work ethic, and as a whole wonder why they are in debt, don't own homes, and break even month to month.
A decade from now the government will be printing money to pay off car loans for low income borrowers who got themselves underwater buying a $50k BMW. And similar bailouts will be done on the backs of the working class, at least until the financial system collapses.
We probably shouldn't have bailed out the banks in the GFC or more recently forgiven PPP loans to business who didn't need it or previously spent recklessly on buybacks.
We also shouldn't have working class people, or people who responsibly paid off their loans, subsidize others who made unfavorable economic choices.
Socialism for both individuals and businesses comes with extreme moral hazard. Real capitalism means business go under - you get the wins and the losses. Similarly, part of what made America great is the individualism that you are responsible for your own outcome. Clearly we have structural issues, but this was a real thing - this sends a terrible message. Why be responsible if the government will bail you out? Why take accountability for your decisions when our leaders are telling you that other people are at fault for your bad choices?
This also directly leads to the extremism in politics. Liberals go to the Bernie camp because they see how big business gets unfairly subsidized. Conservatives go to the Trump camp because they see socialist policies stomping down and belittling the non-college educated working class, and to add insult to injury, they are now directly paying for it.
Since my subsidized loans had interest well below inflation, I decided to pay the absolute minimum possible payment on them for last 9 years. In that time, they have lost 37% of their real value just through inflation alone.
I always felt bad for my friends who insisted on paying off their loans as soon as possible. And now, mine are about to disappear completely for free!
I constantly hear that this is a good thing and I shouldn't be upset that I spent years of my life living on beans and rice to pay off my debts. I was fortunate that I was able to work my way into my position now where I am quite comfortable. We shouldn't reward people for poor choices. That includes both students taking $XXX,XXX dollars for a worthless degree, and the lenders who funded them because the government made it so the debt is LITERALLY risk-free.
A better solution would be to allow students to declare bankruptcy. Instead of forcing the lenders to make better choices on who they fund (which should honestly only be degrees with an NPV > 0), they punish the middle class again with yet another regressive tax.
The better approach is to cap the total cost of an education to what a graduate will earn in their first year in the workforce. $200k Gender Studies degrees will vanish in an instant.