student loan forgiveness

You abolish 92% of the student loan debt, and you can bet the remaining 8% will find a way to sell it off to the government.

 

In extend to my post a page or two back, regarding the price of education, just chiming in with how it is done here in Denmark where the education is free (tax paid). I am not saying this is the best way to run the show, just how we do it.

So the education is free, in that the university cannot charge money for it and depending on the subject of the degree they are awarded a sum of money for each year the student completes (60 ECTS points).
When I was studying 5 - 10 years ago, I believe the rates where in these ballparks:

For hard / natural sciences like maths, chemistry, phycics, computerscience, medicine, pharma etc the university got around 20000 $ (150000 DKK) per year completed by the student.
For pretty usefull stuff with job security, like studying to be a nurse, teacher etc they got around 15000 $
And for studying 'not so usefull stuff for society', such as studying danish, english, arts etc they got around 10000 $ per year.

Keep in mind that the average salary in Denmark is quite a bit higher than in the US, so people working at college / universities are probably paid more.
Part of the idea here is also that there is much larger cost associated with teaching stuff like physics, due to the experiments etc that you have to conduct as part of the education.
These rates then also have to cover some or all of the research done by the university. The universities can also get money from grants or through business partners, e.g. technical universities usually team up with high-tech companies to fund part of the research with the companies getting some research purely done for them through those projects.

I don't know if you consider these rates high or low, but concluding that my 5 year bachelor and master degree then cost around 100000 $ for the tax pays (which is also myself). On top of that I got paid 1000$ a month for almost 6 years (I did pay tax of those 1000$ since it was an income ), so that is around 70000$ which covered all my living expenses and ensured I did not have a student loan after I got my degree. I did work a part time job of 12 hours a week the first 2 years I studied, for extra beer and guitar money.

 

So I was thinking about student loans and mortgages and how they relate more.

If you buy a house and can't pay the mortgage, the bank can take your house away from you when you foreclose or file bankruptcy. The collateral for the loan is your house. The mortgage isn't forgiven and you don't get to live in the house for free if you can't repay the mortgage.

For student loans, it seems there is a similar solution. Give people the right to "foreclose" and lose their degree. Ya, it's worthless for the lender, and ya, it is overall a waste of resources, but it gives the person a way to say the debt wasn't worth the degree and walk away with knowledge but no piece of paper.

Question here is, who pays for that? It would be similar to the housing bailout. Taxpayers would have to make a decision to revoke a bunch of degrees to help those in debt.

 

WHaaaaaa???

 

In what world is that “result” of removing debt, AND the degree actually better than JUST removing the debt?

Aside from jealousy.

This “solution” is still about the emotional response of someone without a degree FEELING jilted. And wanting to “get back” at those that might directly benefit from a policy change.

“Gotta give back that degree” bro the entire country would just default and lie about it. Literally all of them would. You think companies aren’t going to hire them when literally everyone does it? You proposing wasting tax dollars to “track” that too?

It’s just debt forgiveness with extra steps. To appease other’s feelings with zero economic benefit.

 

Basically this.

 

- I take your points, but I'm still trying to figure out why any student loan debt should be forgiven at all. I don't think Covid or any other reason is a good reason. I could understand suspending payments for a few years or something but not total forgiveness. People made a contract and knew what they were getting in to. They were not frauded or coerced etc..

 

You assume everyone would forfeit their degree.

This really is no different than unenrolled people who sat in on courses to learn without paying tuition. They didn't get credits or degrees in return. And some of them still do the assignments and ask for them to be graded.

 

18 year old children straight out of high school took out the loans that they were told by the schools administrations and banks that they would need to get an education. And they agreed to whatever the terms and rates were, because that had worked for their parents and grandparents.

A degree had historically included some modest loans so that’s what they did. Not realizing the shift that was about to occur in the US, where wages were going to stagnate for 20 years.

Those people graduated with 20, 30, 40k of debt to attend state schools only to be met with companies absolutely milking the global financial crisis by offering the same wages they had in the 90’s.

The disproportionate cost of education is inherently linked to the fact that wages have stagnated during that time frame.

If nearly impossible to get out from under that debt if one cannot “just live at home with mom and dad for a few years rent and food free” to pay down that debt.

In a country where the median rent is constantly rising at over a thousand a month for a one bedroom before bills, with jobs that pay the same as they did 20 years ago, because 50% of the population is convinced that a rising minimum wage CAUSES price inflation.

A huge amount of untapped economic activity is buried behind the grinding monthly loan payments.

The government does not own companies. They cannot be forced to bring back pensions, and cost of living raises. At most the government can regulate a minimum/living wage.

However the government can get rid of debt freeing up a ton of spending power.

You want to benefit from debt forgiveness? Find something worthwhile to sell all these people who now have hundreds of dollars a month to spend, and move the money from their pocket and into yours.

Restaurants (eating out more) and the trades would be some of the first sectors to benefit as well as these people rush to purchase/fix up homes and finally stop renting. Most millenials are 30+ and want nice floors, new decks, and a yard.

Industries that are overwhelmingly small businesses.

Debt itself is not bad. But educational debt in the US was a bait and switch once degrees stopped leading to “at least a good office job with benefits”.

I myself received a promotion in the last few years and started exactly where the guy promoted in ‘04 did, but that person had 2004 cost of living not what housing and childcare and food costs now. Ended up leaving for a better offer because I can. Huge swaths of the population are hard working fair people and simply don’t have that option so they work for 15+ years ago salaries on debts that would have been manageable if wages had jumped the nearly $20k they should have since the mid 90’s.

Economics is boring, and long, and interlinked. It’s not a snappy Republican/democrat TV sound byte.

Someone making $50mm a year doesn’t notice and extra $2k it gets banked.

Someone making $38k now making $41k will spend every last dollar with local businesses.

It’s not about “being nice” it’s about what makes economic sense. Bad debt helps no one.

That why the federal reserve bought all the bad loans off the banks in 2008.

Banks made tons of shit loans they KNEW sucked. And the entire country was fine with them being bailed out because it would lead to more economic growth in the long run. And ALL the banks were bad actors.

Most students took out loans to improve their lot in life, not something shitty like banks did. And relieving THEIR debt burden would also lead to economic growth for them and their communities where they spend money.

More beer & wings, less debt.

 

Well I use those words because they apply aptly to our current system. Crippling debt is bad, I'd argue if you advised a young adult to pursue their education regardless of the pitfalls of said debt, I'd say that is extremely irresponsible.

For example, you advising me that I should have gone to Brown for the reasons you listed (Depriving their student body of myself and vice versa) doesn't appeal to me enough to maximize my federal grants, scholarships, loans, THEN apply for private loans to complete the cost of my education. I find it extremely hard to believe that if you and I knew each other when I was 17/18 and deciding which institution, that I should have chosen the most expensive and out of reach option.

I also think you're mistaking my choosing to make STEM Degrees cost free, for assuming all else is worthless in comparison. You're also not realizing that STEM is one of the most Ill-represented sectors of education and the workforce in the first place, it would incentivize people who want to get educated in those fields to pursue it regardless of their finances.

Here's where you're wrong, you're reading my replies and drawing a completely made up conclusion then tagging me with it. I don't think you're attacking me, I think you're making broad generalizations about MY views that are untrue.

I don't give a shit if anyone else gets forgiven or not, it doesn't affect me. If they get forgiven, good on them and I wish them well. If they aren't forgiven then that just means they have to repay something they committed to.

You are way too invested in pointing out the supposed jealousy and selfishness of those who had to pay for their education with nothing to back it.

Also stop characterizing young adults as children, what a stupid tactic to absolve people of their commitments. You're grown enough to consider moving out, and achieve higher education, but you're too young to understand the terms of an agreement that ties you to life changing debt?

Here's where our opinions might cross though,

1) College Education has inflated and is far past overpriced, I'm all for reduced cost or even free options with eligibility requirements.
2) I'm all for selective federal loan forgiveness, because yes, not everyone deserves a get out of jail free card.

 

So you can admit that the inflated debt is jail. But not that all people should benefit from debt reduction.

Economically speaking - why?

You are getting upset when I repeatedly point out in my many long-winded posts that this opinion can be simplified down to those who share you opinion saying “Well it’s just not fair that’s why!”

But economically it makes more sense to have the government retire those loans and let the people go on with their lives while we also work on making college affordable going forward.

I posted a long response using the fed bailout in ‘08 as an example.

Only in the US will citizens defend the use of tax dollars spent to bail out corporations one week that will lay off employees the next week anyways, but fight tooth and nail if that taxpayer money instead goes to help actual people.

 

Someone a few pages back asked for an explanation of America, and this is pretty much it.

 

You seem to be taking a personal slant on this. I didn't say you should have gone to Brown. We'll never know which option would have been best for you. But I think that anyone who gets in to Brown should be able to go to Brown without thinking about eating instant noodles for 20 years. In the current climate, there is a very classist lean that takes poor hardworking achievers and then sifts them into schools that are much worse than their qualifications, and that's a real shame. It's a shame for them, as it deprives them of a better learning environment. It's a shame for the faculty, that have to deal with less bright spoiled kids in their places. It's a shame for all the other students there that want similarly smart kids around to challenge them.

Regarding you specifically, at first you said you really wanted to go to Brown because it had this great curriculum, but didn't because of money. Then you said you only applied on a lark to appease your mom. Then you implied it maybe wasn't worth it to go to Brown in retrospect because you know people who went to prestigious schools and you outearn them. So let's not make this about your case, because that's just confusing things. I just think that if you earned a spot and wanted to go, we should create a world in which you would be able to go without fear of massive debt, and that the alternative has negative implications for you and the rest of society.

 

The only solution is to just go ahead and forgive all debts of all types, but I'll need to know in advance so I can buy a few things first.

 

I agree with the statement and the silliness of it.

Since I am probably one of the people this is targeted at... Let me repeat. I am completely in favor of education reform, but focusing on the K-12 situation. Make everyone better and not just the minority of adults that got themselves into debt will be better for everyone.

In addition, I think mortgage debt, credit card debt, car loans, insurance, etc. are impacting more of our economy than student debt. So fix problems with taxpayer money that effect everyone before you start giving preferential treatment to a minority that went to college. They aren't better than underprivileged communities that didn't even have an option to consider college. And they definitely should have more options or their degree was a waste of resources.

In other words, college debt is a problem for people with privilege that chose it.

I could be wrong, and I'd be interested if their has been any economic studies on the implications of things like loan forgiveness.

 

People shouldn't get things that cost others money for free. It isn't about jealousy. It is about fairness and not creating artificial privilege. If we were arguing about people like Donald Trump's debt being forgiven, people would be saying he has to pay it and supporting the lawsuits against him. I just see a double standard because people want free education. What prevents people in the future from taking large student loans and expecting to never pay it back? Fix the problem forward, not backwards.

 

It seems to me that both you and @Jonathan20022 agree, but do not realize it.

Perhaps the issue is the continuous conflating — in this thread and in other forums — of two independent problems: forgiving loans vs free education (they are not the same issue, however related).

 

Not all debt is equal, equating student loan debt to stuff like credit card debt, mortgages, or failed businesses is missing the forest for the trees.

 

Crying “fairness” is for the 27th time: jealousy plain and simple. I’m not saying that you’re at home crying, this isn’t a tv show. I’m saying that at it’s core, under all the layers of mental gymnastics, it’s just sour grapes.

The arguments against loan forgiveness are not based on what would benefit spending growth.


Nearly (1/6) of the US has student loan debt.

All the debt you listed is PRIVATE debt.

Student loans are 92% public debt utilized for an education. Not a truck they couldn’t afford that can be sold off and downgraded to a cheaper car. Boom problem solved.

You keep crying about “fairness”. But the federal reserve used everyone’s tax dollars to bail out banks that willfully made bad loans. They faced no lasting consequences. This was acceptable, but bailing out an entire generation who did not get the “deal” that was promised? Degree = Good job did not materialize for a significant part of the population.

Meanwhile you keep saying “THEY shouldn’t get something for free”. Not every single thing has to be “us versus them”. Can we not be willing to help people who will spend the money right back with us?

There is $1.2 trillion of auto debt in the US.

There is 1.5 trillion in student loan debt. (1/6 of the us population).

It’s not about “preferential” it’s about it being public debt that can be forgiven. Versus owing Chase because you bought a pricy car. The car can be sold tomorrow. Debt gone.

Mortgages aren’t bad debt to begin with. So that is a straw man argument. Want a lower rate? Refinance. Or sell the house. And get something cheaper.

Your “argument” makes zero economic sense, because it compares public debt that is a lifelong burden due to inflated costs, interest rates, lack of bankruptcy and stagnant wage growth.

Every “alternative” is just a way to muddy the discussion by including private debt for physical objects in a discussion about public debt for an education.

The choice to go to college shouldn’t be a “privilege” to begin with. The random broke country kid from the Midwest should have every shot to go to school if they have the grades for it.

Then the discussion about “improving k-12 but fuck those with debt already” implies that only one problem can be tackled at a time. Why can’t the wealthiest country in the world tackle both?

Oh because it’s the same country that doesn’t consider the costs of insurance premiums, copays, and insurance payout caps as a “tax” on their income.

Mental accounting sure is a bitch.

 

You are right. They aren't equivalent.

How many families cannot send their kids to school because they cannot afford it due to their own financial situation? College debt is a problem of privilege. People stressing about their minimum wage jobs (plural) and if they can afford to eat regularly... They aren't sitting here wishing that college graduates got their debt paid off.