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U.S. forgives 40k student loans

reuters.com

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Re: U.S. forgives 40k student loans

#361

Post by brewdad »

ben940830298432 wrote: post #348
twblalock wrote: post #321

Earlier quoted context omitted.

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.

The private market would just require people to be more responsible about taking out loans. If people that take out loans for basket weaving often don't pay them back nobody would give out a loan for basket weaving. If someone is on their 5th major or college without completing any credit they won't get any more loans without having some backing.

Do we really want a world where the bankers get to decide what a person studies? Bankers have never gotten anything wrong before.

Re: U.S. forgives 40k student loans

#362

Post by JumpCrisscross »

nostromo wrote: post #135
honksillet wrote: post #46

Earlier quoted context omitted.

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…

> 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.

Re: U.S. forgives 40k student loans

#363

Post by sudosysgen »

torbTurret wrote: post #334

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.

Because only one of the two is dischargible through bankruptcy.

Re: U.S. forgives 40k student loans

#364

Post by __ryan__ »

gzer0 wrote: post #37

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 governme…

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...

Re: U.S. forgives 40k student loans

#365

Post by Zpalmtree »

AtlasBarfed wrote: post #22
theandrewbailey wrote: post #2

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.

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 pit…

We can dislike both of those things, you know

Re: U.S. forgives 40k student loans

#366

Post by stjohnswarts »

loourr wrote: post #12

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.

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

Re: U.S. forgives 40k student loans

#367

Post by everforward »

LadyCailin wrote: post #336
timssopomo wrote: post #312

Earlier quoted context omitted.

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…

It should be on the university and college, if you must have private higher education, and not just make it free. State that the institution and/or potential employers must give out a loan that will cover the entire cost of education, which can be paid back with x% of income for 120 months of full time employment. If the student cannot find a job, or is not desirable for a given industry with the degree, and has to t…

I think it would need to be more nuanced than that if we want to escape second order effects.

The first is that if the college bears risks for financed students, the first seats will always go to people who can afford to not use financing. It'd be like the legacy system, but out in the open and encouraged by regulation.

The second is that it will likely make it harder to climb the social ladder. I'm too sleep-deprived today to find sources, but I would imagine that students that can afford to not work while in school tend to do better. Likewise, I would bet that wealthier students tend to do better by nature of connections. If your dad/mom is an engineer, and you want to be an engineer, you've already got connections.

It also pushes people towards the military, if the GI Bill is the only way for normal people from poor families to afford college. It's a little dark that wealthy families can pay their children's way, but poor families have to risk them dying to do the same thing.

I like the basis of the idea, I just think it needs a bit more nuance to prevent wealth inequality getting worse than it already is.

Re: U.S. forgives 40k student loans

#368

Post by gr33nq »

31098347 wrote: post #323
gr33nq wrote: post #260

Earlier quoted context omitted.

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 b…

>Maybe we shouldn't call it a direct punishment, but they're certainly coming out of the scenario worse off than their counterpart. It's hard for me not to sound flippant when I say this, but -- this is life. As far as I'm concerned, anyone who has the means to pay off their student loans themselves practically won the lottery and they should be thankful they're not totally fucked like those who need the forgiveness.…

>As far as I'm concerned, anyone who has the means to pay off their student loans themselves practically won the lottery and they should be thankful they're not totally fucked like those who need the forgiveness.

Let me share my personal experience with you so I can try to shed some light on our varying interpretations of what "won the lottery" means. I went to college full-time, four days a week, and was a commuter. I was responsible for my entire car payment, my parking pass, my books/material, and for taking out a loan for tuition. I took it upon myself to get a part-time job while continuing to study and go to class for four and a half years. I then got a full-time job upon graduating and lived very frugally for two years with a huge chunk of my paychecks going towards paying off my car and student loans. The thought of paying interest killed me, and I did everything in my power to put every penny I could afford towards paying down my debt. I didn't go on vacations, didn't spend money frivolously on a new iPhone every year, didn't buy anything that wasn't necessary until my obligations were fulfilled.

Now let's revisit Person B (and to be clear, I personally know a Person B who's a close friend of mine who fits this description). They did not consistently work in college, but partied, went to festivals, took vacations, had a much easier schedule not having to factor in a job. They then graduate just like me. They have a few hundred dollars more every month that can go towards more vacations than I had the option to take, a more expensive car that I could not afford to buy, and more discretionary spending power than I had during that time. They work a job now, but have yet to begin repaying their loans yet (I understand the pandemic was a once-in-a-lifetime situation, but even so, there's a grace period after graduating where you aren't forced to pay). And even when payments resume, they will likely pay the bare minimum each month because they now have the prospect of having that debt potentially forgiven in its entirety.

How do you tell me with a straight face that I won the lottery, and that Person B is actually the one who is "fucked" (as you so eloquently put it) and needs the forgiveness?

Re: U.S. forgives 40k student loans

#369

Post by frumper »

fortran77 wrote: post #125
mrep wrote: post #92

Earlier quoted context omitted.

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.

Re: U.S. forgives 40k student loans

#370

Post by bombcar »

mrep wrote: post #358
bombcar wrote: post #351

Earlier quoted context omitted.

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.

To be fair, it's not like you don't have housing/food/utility costs if you choose to not go to college.

Apparently the average community college costs about $10k to graduate from, less if you're on a 2 year degree.

Cue "that's not real college" crowd, of course.

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