Hacker News Reader

Comment by 0zemp2c | Hacker News Reader

loan forgiveness is tantamount to asking me to participate in buying out someone else's loan

a loan used to buy a degree

a degree which isn't generating enough income to pay off the loan

if you buy out other underperforming assets like foreclosed homes, there is a discount...where is the discount on these underperforming degrees?

why do I want your underperforming asset? I already have a degree, but thanks!

View on HN

Why should I pay for the fire department when my house has never caught on fire? Why don't we instead have the fire department directly bill the property owners after they put out a fire?

If people willingly burned down their houses, that analogy might begin to apply.

That analogy doesn’t make a lot of sense unless you have some people choosing to live ankle deep in gasoline. If that were the case then, yes, they should foot the bill to put out their perpetual fires.

They aren't "perpetual fires". They are a one time decision that we convinced people to make after we have spent their whole lives telling them it was the only way to become successful. We have repeated for decades that going to college will earn someone an extra million dollars in lifetime income. We then asked most people to make this decision before society has deemed they are mature enough to vote in elections, smoke cigarettes, or rent a car.

Yes, my analogy ended up being a stupid system that doesn't make sense. That was my intent. Asking 17-year-olds to make decisions about taking on 6 figures of debt is also a stupid system that doesn't make sense.

Frankly I think the problem of student debt is so large and so burdensome on the younger population that I don't really care if they're considered "underperforming assets" or whatever. The more money this generation spends on debt the less they have to buy houses and have children, and I personally will benefit from them being able to buy my house when I'm old and want to downsize and them having children so that there will be income into social security when I'm retired. All in all I would consider it an investment into my future retirement by ensuring the younger generation can support me.

Hey man. Some of us are GenX who took significant opportunity costs to pay down our student loan debt. Don't make us compete for our first house with jubileed Millennials and GenZers. We can't afford to do that and save for retirement as is (though at this point I can't afford to do either. Glad I have a pension).

At the same time, your education costs were much lower - through no fault of your own. Why should younger borrowers be penalized for market forces they did not contribute to?

I finished my AS and BS as a non-trad at the ages of 29 and 35. I'm currently in my mid 40s. Debt from my AS was paid by my parents, but the $31k in student loan debt and $20k in credit card debt for my BS was paid by me[1]. Most of that in the past 5 years, meaning that I lost out on the stock market gains by prioritizing the debt pay off. To add insult to injury, my final payment was Feb of 2020, just in time to miss out on the forgiveness (I accelerated payments with the proceeds of a second job).

[1] - When you're hourly, and maintaining a household, it costs money to take time off from work to go to school.

As a fellow Gen X, this is such an empathy-free opinion in my reading. There are so many times I say to myself "Wow, I'm so lucky that I graduated college in the 90s when school was expensive but nothing like the insanity it is today, and that I was able to afford housing before housing prices became completely disconnected from wages." And I did have to pay off student loans for years.

To be clear, I'm not really in favor of debt forgiveness, but not because I believe it's "unfair", but because I think it actually makes the root cause problem (the astronomical cost of college) even worse. I think modifying bankruptcy laws to make more student debt dischargable is a much better solution.

Basically I strongly believe that pretty much every generation up to the millennials got a much better deal when it comes to education and housing costs, even if they do get 10 or 20k debt forgiveness. Dude, you were one of the lucky ones (and you've got a pension to boot!!!).

Read my comment below before judging me. Many millennials graduated before I did.

Various of these Millennials and GenZers are in superior financial situations to me thanks to debt forgiveness.

Meanwhile later GenZers are looking at the roll back of credential requirements. Which allows them more options for decent paying jobs without college debt.

Though, yeah, I'm really lucky compared to the early Xers and late Boomers who are sitting on 6 figure debt repayments as they stare retirement in the face.

My pension only came in to play in my late 30s. I don't plan on staying in this job for many reasons, but if I did I would be working into my late 70s to fund it at full compensation. Edit sometime later to add: They also take 9.5% off the top of my paycheck to fund it.

Millennial here, paid off my student loan debt with my own, hard-earned cash. My parents were already bankrupted by medical debt before I graduated high school, so no help there.

I still want my less lucky peers and the zoomers made whole after they were sold a bill of goods. Chaining the better part of a generation to an anchor isn't a winning move for any civilization.

I want the people who were shafted by predatory colleges made whole. I also want the parents of dead or disabled students let off the hook for repaying those loans. I also want disabled students forgiven. I don't want the people with 6 figure incomes, or current household wealth in the mid 5 figures, given a freebie at the relative expense of others in less fortunate situations.

> Chaining the better part of a generation to an anchor

Most Millennials never took on student debt. Or if they did, already paid it off.

Means testing is super effective at increasing a welfare program's cost while reducing its societal impact.

I read these Borgesian lists of acceptable kinds of hardship (which can be and are routinely bike-shedded ad nauseam) as calls for pointlessly increasing government bureaucracy and expenditure. Far cheaper to simply offer blanket forgiveness at some appropriate level.

It's done all of the time prior to now for student loans.

And for income, at least, the IRS should be able to easily do this.

Blanket forgiveness of loans comes with a societal cost for those who are in precarious situations but do not have loans to forgive. By increasing the money available to be spent for non-basic purposes there is almost guaranteed to be a demand-driven inflationary effect.

This inflation would hurt those on the margin the worst. The parent comment that I originally replied to wants this forgiveness, in part, so that Millennials and GenZers will bid up the value of their house in order to help fund their retirement. This is the housing situation we've been in for the last couple of decades. In general it's been to the benefit of current homeowners, but not so much for the rest of us.

>I don't want the people with 6 figure incomes, or current household wealth in the mid 5 figures, given a freebie at the relative expense of others in less fortunate situations.

This is the nuance that we must bring to the discussion. I am pro student debt forgiveness, but in a way that isn’t a massive handout to people like me. I paid off the majority of my student loans with the signing bonus of my second FAANG job. No way would I have any business getting my debt forgiven.

The Biden plan has cutoffs of $125k for singles, and $250k for married couples. As income thresholds these are just too high. Even in urban California. A 20-something couple from an upper-middle-class background with $200k in salary could get $20k forgiven. That's ridiculous. And inflationary, especially on things such as house prices.

https://www.whitehouse.gov/briefing-room/statements-releases...

> The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples). No high-income individual or high-income household – in the top 5% of incomes – will benefit from this action.

Yeah. These numbers should be reduced by 50% at least, meaning maximum 60k for individuals and 125k for couples. That would be generous enough to not miss some HCOL middle class folks. And it shouldn’t apply to graduate school debt at all.

I also question the need for full forgiveness, and wonder what the inflationary impact would be on something like “everyone’s student loans from the federal government are now 0%. Your minimum payment is 5% of your AGI and your tax returns will be used to pay down the balance until it’s paid off. future loans will be capped at prime rate +.% fixed at time of borrowing”. Leave private loans untouched, but dischargeable at bankruptcy. This would pressure on student loan private lenders to lend based on certain conditions (I.e, grades and academic progress) with a minimum amount lent by the federal government. It would result in a lot of withholding changes, but I think that’s a good thing.

I don't like the idea of a flat tax. Or giving 0% rates to the wealthy (which would encourage the abuse of student loans by people who do not need the loans to attend school).

That’s a good point. Perhaps the interest rate could remain the same for people making over $60k and reduced for those making less, with none of the “capping at x% AGI” for those above $60k either. This would make it more dynamic for, I.e, a person who takes time off because of illness, caring for a family member, or having a child.

More complicated and potentially more room for fraud.

Overall, I think we ought to do something for people struggling. But I agree that nothing should be done for the wealthy.

I’m 47 and on track to pay off my student loan next year. I would be mostly ok with some form of forgiveness but only if it came with the end of government backed or subsidized student loans in all their forms. That’s how things got out of control, there’s no risk to lenders and so the schools can raises prices indefinitely.

I think the original error was making them non-dischargeable in bankruptcy. People still take out private student loans to go to college. I think colleges would have raised rates even without government subsidization. 18 year olds are in an ideal situation to be sold the benefits of taking on large amounts of debt for their future.

Student debt is so large and burdensome because the government has been handing out unconditional money to colleges. Student loan forgiveness increases people's willingness to pay for college, which means even more unconditional money for colleges. It's like putting out a fire by smothering it with gasoline.

This is different from say EV subsidies (which I also think lived passed their usefulness) because car makers are incentivized to serve more customers to make more profit. Colleges don't gain anything from increasing their enrollment and would rather raise their tuition to hire administrators and build shiny buildings that boost their rankings.

I have been saying this forever, this is basic economics, you get more of what you subsidize. here govt should have subsidized creating more high quality colleges instead of federally-backed-non-dischargable loan. IMNSHO the non-dischargability is really the key here. if you can get rid of it in bankruptcy then they will be forced to evaluate which programs are not good ROI and possibly charge more interest for them. this way govt saddles students with the consequences of bad-policy on their part.

Yes loan forgiveness is not ideal but its a makeshift solution to a really bad situation government has created by federally backing student loans and making them non-dischargable in bankruptcy. IMO the ideal solution is to remove the non-dischargebility condition and let the market take its course but that needs congress to act & pass law, loan forgiveness does not!

IMO the subtle reason why republicans hate it is because loan forgiveness effectively signals (to borrowers) that no need to pay this loan, just wait around for a Dem president to show up defer/cancel etc it. which is a step towards discharging the loan in 'special circumstances'.

The basic economics politicians dont seem to get about education cost is that if you dont increase supply and just increase demand pool by making loan cheaper/federally backed all you will get is price inflation & thats been happening at rate way outpacing inflation.

Education is investment in community, not a profit generating vehicle.

I will gladly invest in my communities knowledge base any day of the week. Tax me. Please. Pay the teachers what they're worth and make the NIMBYs and FYGMs cry.

bailing out student loans is about paying banks, not schools or teachers...they already got paid (and socializing the loan debt just subtracts from capital available to raise public school teacher salaries)

This is not about your local elementary/middle/high schools, this is about higher education and their costs for both private/public universities. These costs have been increasing YoY at a much higher rate than inflation and for what?

More administrators? More useless degrees?

The entire premise of student loans is everyone is eligible for them, regardless of their potential future financial ability to pay them off. They're also not ever allowed to default on these loans.

These loans should be dictated by the free market for a multitude of reasons. One, it prevents the sociology student from incurring a 200k student debt that they'll not be able to repay because loan issuers will in fact realize that these students will never repay these bills. Two, if students cannot afford these outrageous loans, they'll have to cut back on their overpriced degree fees.

>These loans should be dictated by the free market for a multitude of reasons

It is a crime and tragedy that education needs loans at all. Students are not for your personal profit.

> loan forgiveness is tantamount to asking me to participate in buying out someone else's loan

So do government loan guarantees in the first place, though.

That is not how money works. Your income is other people going into debt. Your salary rise means more money in the system. Loan forgiveness means more income to you.

Woah, we should just forgive all loans then.

> Loan forgiveness means more income to you.

But is it more in real or nominal terms?

In real terms.

800 billion dollars in PPP loan forgiveness seems more palatable to you, maybe?

"Whataboutism" is not a proper argument.

I'm not engaging in whataboutism. I'm engaging in an analogical argument. I'm making certain assumptions about this guys political leanings, but that's strawmanning at worst, and he's free to refute it if he isnt rate limited.

it IS a proper argument if you are using other cases to establish context and precedent about our priorities as a society.

Reply on news.ycombinator.com