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Comment by declan_roberts | Hacker News Reader

I'm so frustrated at the morality around giving these kids unsustainable loans. The entire discourse is loan forgiveness, with zero effort into preventing this crisis continuing.

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I think that, to most 18 year olds, the concept of tens of thousands of dollars of debt is basically too abstract to reason about clearly. I agree that the fact kids can take on this amount of debt at that age–which cannot be discharged in bankruptcy, but is also guaranteed by the government such that the universities take zero risk in the transaction–is basically unconscionable.

The logical thing to do here would be as you correctly point out, have universities and private banks bear more of the risk vs the government.

Of course, the moment that happens, enrollment would crater and the whole student loan program would be revealed as a subsidy that benefits university administrators, provosts and deans to promote 21st century grand tours, for the middle class.

The reckoning is coming. The question is who pays. Kids arent paying anymore. Will it be Banks, university administrators, or low income americans? Will it be the low incoime class who finances the debt largesse of the middle class, via monetized debt and inflation?

I don't see a scenario where the people who benefit most from the corrupt system (schools) bear the cost.

Very likely the cost will go right to the taxpayers.

Seems to be a pretty condescending view of an 18 year old.

I've always wondered why we don't make student loans similar to other loans; IE, dischargeable in bankruptcy, and thus force lenders to evaluate credit risk when making them. That would mean less loans are issued and schools must cut costs and borrowers must pick more economically advantageous programs.

"We will pay for it, but it's a loan so not really" is a fallacy. If we decide that education is an all around good thing so we want to subsidize it, great, but let's just do that directly.

> thus force lenders to evaluate credit risk when making them

The lender is the federal government for almost all student loans now.

Which might seem like a bad thing but remember why we got into this mess - private loans are often predatory! Private lenders understand the nature of young adults and absolutely used that to their advantage.

Then people would complain that disadvantaged students are being denied high education, because such students inevitably are going to have worse academic prospects than well off students, and therefore can't get student loans.

Simple: look at the degree and future earnings, not the student.

So you expect private lenders to be on the hook for delinquencies and put them in charge of assessing credit risk, but then at the same time kneecap them by not allowing them to see any information about the lenders aside from what degree they're studying? Seems like a shitty regime where the smart middle class students (not rich students, because they don't need student loans) bears the burden of subsidizing all the bad students.

it would simply result in no one lending

The only people I've heard of having absurd payments are on private loans and/or have graduate degrees, like a dentist with a payment that looks eye popping until you realize he makes 2 million. DoE student loans have very lenient repayment options, including an income-based option with payments as low as $0.

I'm in favor of making higher education free or subsidized just on principle, but I've yet to meet a person in real life actually struggling as a result of federal student loans. Their terms seem more than fair overall.

https://studentaid.gov/manage-loans/repayment/plans/income-d...

And I don't know if it's the norm, but I had to take a written test proving I knew exactly what I was getting into - how long would a typical loan take to repay, what are the terms, who backs the loan, the fact it is a loan I have to repay..

It is also a possibility that people impacted are not part of your social circle/class.

A family member was suckered into big student loans for a PTA degree from a mid-tier collage masquerading as a university. The jobs she could get didn't pay enough to cover the loan.

Every degree program should come with a statement of how much one can earn on that degree and a loan repayment schedule. However, there needs to figure out to prevent school administrators from lying and distorting the process.

These huge loans for professional degrees are a problem as well, because they create the imperative for those careers to be super-high-earning.

They should be. I want people to be incentivized to become doctors and engineers and to pursue other difficult fields that are of immense value to society.

The opportunity for it to be lucrative is different than the imperative. Huge debts preclude or at least disincentivize people whose motivations may be more altruistic from taking lower-paying, higher impact roles.

It’s not arbitrarily expensive though. Training doctors is expensive. Regardless I don't know how to square the idea that altruistic people won’t become doctors because of debt with the reality of humans responding to incentives and we want to incentivize the best to become doctors, etc.

You really want doctors to be in it primarily for the money rather than for delivering effective care?

I want them to be competent. This means rigorous training and stringent examination. Competency means effectiveness and we need to incentivize our brightest to do this rather than write code for ads or trade equities and bonds, which require significantly less training effort.

I would think dentists earning 2 million a year are very rare.

Don’t worry we made sure they couldn’t be discharged through bankruptcy. So, we don’t have to worry about whether or not the system is sustainable. Free money for everybody, yay!

Free money for the school endowments**

The major part of the reason for that is the requirement for actually preventing it: Congress needs to act. Congress is divided[0], and only one party is likely to favor reducing the number of unsustainable student loans given out. (Or, to the extent that the other party might favor measures that would have that result, it would be secondary to other goals that would be antithetical to their opponents'—so either way, nothing is going to get passed.)

Fundamentally, there are really only two ways forward that reduce the number and magnitude of student loans: Either make higher education[1] dramatically more affordable, by restoring a lot of the federal support from it that's been removed over the past several decades, or make it dramatically less accessible, by various kinds of measures that either outright restrict who can go to college, or condition federal funds on other less-straightforward limitations.

Unfortunately, in addition to reducing the overall education level of our populace, the latter category would do little to reduce the burden on those who still want to go to college—indeed, there's reason to think it might make things worse, as the same facilities get fewer students and thus less tuition.

[0] Noting that I am phrasing this extremely obliquely to try to define the problem as clearly as I can without running afoul of site guidelines on political partisanship.

[1] This would, IMO, include most kinds of trade schools; I do think that providing incentives for many people to go into trades rather than colleges and universities is a sort of middle ground here, but it's far from a solution to the identified problem.

Yeah, I think loan forgiveness without doing anything to reduce tuition (and other attendance) costs or expand alternatives like trade schools is throwing fuel on the dumpster fire.

There’s a high likelihood the next president will change the system, one very drastically (if rumors are true).

Could you expand on this? As an outsider I’m unfamiliar with what might change and who might change it.

Harris will likely offer loan forgiveness. It’ll be generous.

Trump is unlikely to offer generous loan forgiveness. Has in passing mentioned plans to change the department of education (and the loan system), weakening colleges power and reducing the amount of money colleges receive from the government.

Neither candidate will mention this out loud, it’s not a news story either group wants.

Loan forgiveness only fixes one symptom of the cancer.

How will she offer it? Much of what Biden attempted to do through executive action was struck down by the Supreme Court.

If Harris won’t even say it out loud, then it’s unlikely she’d be able to get it passed through Congress.

Seems like wishful thinking.

Executive action is the only semi-viable way, I think

Which Biden already did and was slapped down by the Supreme Court. And so he’s trying smaller ways (still via executive action) to get as much forgiven as possible.

So again, I ask you, how would Harris do more?

What is Betsy DeVoss legacy from the dept education?

More ‘school choice’ for K-12 students

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