Student Loan Forgiveness

[davewill]

If you believe that education is a right where you should receive education free of charge, then the most logical solution is that those professors must provide education without pay — making them your serfs.


Sent from my iPhone using DegreeForum.net

If you don't believe it, then you must (logically?) believe that some people do not deserve a reasonable opportunity to get ahead... making them your serfs.

The current loan system is unsustainable, we have to come up with some other way to give students a chance without letting unscrupulous companies and school administrations take us for a ride. To me, the best bet is a public funding plan that allows us to control pricing... something closer to the community college experience.

[Seagull]

If you believe that education is a right where you should receive education free of charge, then the most logical solution is that those professors must provide education without pay — making them your serfs.


Sent from my iPhone using DegreeForum.net

If you don't believe it, then you must (logically?) believe that some people do not deserve a reasonable opportunity to get ahead... making them your serfs.

The current loan system is unsustainable, we have to come up with some other way to give students a chance without letting unscrupulous companies and school administrations take us for a ride. To me, the best bet is a public funding plan that allows us to control pricing... something closer to the community college experience

Well said.

[Flelm]

Over the past 20 years, education costs are up 50%, while wages have increased 10%. (adjusted for inflation)


https://www.npr.org/2020/12/16/941292021...ca-adds-up

[dfrecore]

Over the past 20 years, education costs are up 50%, while wages have increased 10%. (adjusted for inflation)


https://www.npr.org/2020/12/16/941292021...ca-adds-up

Loan forgiveness does not address the problem with this, and instead exacerbates it.  There is NO incentive for schools to rein in costs when the government backs loans, and then forgives them.  Schools will continue to spend like lunatics as long as the government continues to do idiotic things like this.

The only way to get this under control is for the government to stop backing loans, and then banks can decide if they want to loan to people who choose degrees with no job market.  If you only need 10,000 lawyers a year, banks will look at how many people want to go to law school and then decide if that's a good deal or not (it won't be).  If you only need 500 gender studies majors a year because there are no jobs outside of academia for them, then banks won't back those loans at all, and then schools will stop offering them because there won't be enough students to take it...and so on.  Accounting majors will always be able to get loans - as will engineers, and English majors, and whatever else is useful.  Oversaturated majors will dry up.

Then, we need some sort of cap or ratio on how many administrators there can be at a college.  I'd probably look at some private schools and shoot for that.  Private schools are usually run more like a business, and don't have near as much overhead as public, because public schools is just another name for "taxpayer funded" schools.  It's not their money, so they don't have to be careful with it.  The amount of overhead there is at colleges now is absolutely ridiculous.  The costs are out of control.

[innen_oda]

If you only need 10,000 lawyers a year, banks will look at how many people want to go to law school and then decide if that's a good deal or not (it won't be).  If you only need 500 gender studies majors a year because there are no jobs outside of academia for them, then banks won't back those loans at all . ..

That's quite an optimistic and benevolent view of banks. If banks were truly so wary to loan money to people who couldn't pay it back, there'd be a lot of financial crises that would not have happened.

Someone who can pay their loan back in 10 years is FAR less valuable to a bank than someone who can barely pay it back in 30 years, and along the way incurs all sorts of late fees, interest, and financial penalties. A college graduate with a loan is someone with a long lifespan ahead of them, which is plenty of time for a bank to draw money from them.

The poor and the young are generally great targets for banks. The poor and the desperate are great for truly malicious loan terms, while the young are good for reasonably-awful loans, because they tend to have just enough assets (and hope) to make bankruptcy unpalatable, but insufficient earning power to escape the loan before the bank has maximised their profit.

[dfrecore]

If you only need 10,000 lawyers a year, banks will look at how many people want to go to law school and then decide if that's a good deal or not (it won't be).  If you only need 500 gender studies majors a year because there are no jobs outside of academia for them, then banks won't back those loans at all . ..

That's quite an optimistic and benevolent view of banks. If banks were truly so wary to loan money to people who couldn't pay it back, there'd be a lot of financial crises that would not have happened.

Someone who can pay their loan back in 10 years is FAR less valuable to a bank than someone who can barely pay it back in 30 years, and along the way incurs all sorts of late fees, interest, and financial penalties. A college graduate with a loan is someone with a long lifespan ahead of them, which is plenty of time for a bank to draw money from them.

The poor and the young are generally great targets for banks. The poor and the desperate are great for truly malicious loan terms, while the young are good for reasonably-awful loans, because they tend to have just enough assets (and hope) to make bankruptcy unpalatable, but insufficient earning power to escape the loan before the bank has maximised their profit.

Well, the housing bubble of the early 2000's was due to the GOVERNMENT forcing banks to make loans to bad risks, rather than banks doing that themselves.  They were penalized for NOT giving out loans to people they'd decided couldn't afford them.  If the government would have stayed out of it, we probably would not have had such a terrible crash in the mid-2000's.

Yes, banks are not altruistic.  But they do know how to measure risk.  They want their loans paid back, and giving loans to people who they don't think can pay them off is not a good long-term plan.  One way to see how they work: those with better credit get better rates.  If they only wanted people who wouldn't pay them back for a long time, they'd give better rates to those with bad credit, and worse rates to those with good credit.

So, I don't really buy your premise.

[LongRoad]

A better idea is just to give Pell Grants to everyone as pretty much all kids start out life broke regardless of what your parents make.  Lower the cost of doing this by taking away the free interest on loans while in school and set all interest to a flat 4%.

Something similar to how they handle it in Australia might be nice. Everyone is entitled to an interest-free government loan for their studies, which is not paid back until you reach a certain income level, and then is repaid based on your income (so someone earning $100 000 right out of uni starts repaying a large proportion of their studies immediately, whereas someone earning $45 000 three years after graduating, doesn't pay anything for those first three years, and then only a small percentage of their salary).
It stops universities offering nearly as many useless degrees (because if no one in a specific school is ever able to repay their loan, the government starts asking questions), and allows everyone the opportunity to attend uni if they wish while still putting some sort of cost and limits on study.

Of course, the government there is gutting the system bit by bit, because educated people tend to inconvenient to governments. Perhaps the US could take over for Australia in offering fair and equitable education access.

I don't know, maybe it's all the blood rushing to their brains 'cause they're upside down, but the folks in Oz come up with some pretty neat ideas.

---

Over the past 20 years, education costs are up 50%, while wages have increased 10%. (adjusted for inflation)


https://www.npr.org/2020/12/16/941292021...ca-adds-up

Loan forgiveness does not address the problem with this, and instead exacerbates it.  There is NO incentive for schools to rein in costs when the government backs loans, and then forgives them.  Schools will continue to spend like lunatics as long as the government continues to do idiotic things like this.

The only way to get this under control is for the government to stop backing loans, and then banks can decide if they want to loan to people who choose degrees with no job market.  If you only need 10,000 lawyers a year, banks will look at how many people want to go to law school and then decide if that's a good deal or not (it won't be).  If you only need 500 gender studies majors a year because there are no jobs outside of academia for them, then banks won't back those loans at all, and then schools will stop offering them because there won't be enough students to take it...and so on.  Accounting majors will always be able to get loans - as will engineers, and English majors, and whatever else is useful.  Oversaturated majors will dry up.

Then, we need some sort of cap or ratio on how many administrators there can be at a college.  I'd probably look at some private schools and shoot for that.  Private schools are usually run more like a business, and don't have near as much overhead as public, because public schools is just another name for "taxpayer funded" schools.  It's not their money, so they don't have to be careful with it.  The amount of overhead there is at colleges now is absolutely ridiculous.  The costs are out of control.

How many times did Donald J. Trump declare bankruptcy before he became president? Sometimes, all of finance seems to me to be like a big Ponzi scheme. Banks, etc. do questionable things in pursuit of profits, and they just try not to be the last investor holding useless paper.

---

If you only need 10,000 lawyers a year, banks will look at how many people want to go to law school and then decide if that's a good deal or not (it won't be).  If you only need 500 gender studies majors a year because there are no jobs outside of academia for them, then banks won't back those loans at all . ..

That's quite an optimistic and benevolent view of banks. If banks were truly so wary to loan money to people who couldn't pay it back, there'd be a lot of financial crises that would not have happened.

Someone who can pay their loan back in 10 years is FAR less valuable to a bank than someone who can barely pay it back in 30 years, and along the way incurs all sorts of late fees, interest, and financial penalties. A college graduate with a loan is someone with a long lifespan ahead of them, which is plenty of time for a bank to draw money from them.

The poor and the young are generally great targets for banks. The poor and the desperate are great for truly malicious loan terms, while the young are good for reasonably-awful loans, because they tend to have just enough assets (and hope) to make bankruptcy unpalatable, but insufficient earning power to escape the loan before the bank has maximised their profit.

Well, the housing bubble of the early 2000's was due to the GOVERNMENT forcing banks to make loans to bad risks, rather than banks doing that themselves.  They were penalized for NOT giving out loans to people they'd decided couldn't afford them.  If the government would have stayed out of it, we probably would not have had such a terrible crash in the mid-2000's.

Yes, banks are not altruistic.  But they do know how to measure risk.  They want their loans paid back, and giving loans to people who they don't think can pay them off is not a good long-term plan.  One way to see how they work: those with better credit get better rates.  If they only wanted people who wouldn't pay them back for a long time, they'd give better rates to those with bad credit, and worse rates to those with good credit.

So, I don't really buy your premise.

According to research done at the Sloan School of Management at MIT, the crash wasn't based upon the Community Reinvestment Act of 1977. (That would be the law which would be the basis for your opinion that our government forced banks to make loans to risky borrowers.)  Mortgages increased in all income levels, and regardless of whether the borrowers were prime or subprime, and middle- and upper-income borrowers, regardless of credit scores, were defaulting. Here's the study, https://academic.oup.com/rfs/article/29/...#114359937. 

Big business, and that includes banks, are out for profit. As I wrote before, none of them want to be the one left holding the bad paper, but they don't mind profiting off of it.

[eriehiker]

I think that the answer is to allow individuals to discharge student loan debt during bankruptcy just like any other kind of debt. The real problem here is the student who takes out 50K or 100K in student loans and has pretty much zero hope of ever paying it back. Apparently, a limited number of people are able to walk away from student loan debt in bankruptcy if the judge finds repayment as an undue hardship. However, this is a complicated procedure.

If student loan debt were treated like credit card debt, the banks would be more careful in awarding student loans. The bank might actually say no to the $100K psychology degree. Or maybe the banks would call students who were building up debt to ask them what is going on like the credit card companies do if I make a big charge just off the plane during a vacation. The downsized amount of loan awards would take some of the bloat out of colleges that create crazy programs. There would be fewer students with less-competitive degrees, which would make the job market better for those with those degrees. Students with crazy debt would get the debt discharged during bankruptcy and eat ramen noodles for seven years and then start living again.

[Seagull]

Over the past 20 years, education costs are up 50%, while wages have increased 10%. (adjusted for inflation)


https://www.npr.org/2020/12/16/941292021...ca-adds-up

Loan forgiveness does not address the problem with this, and instead exacerbates it.  There is NO incentive for schools to rein in costs when the government backs loans, and then forgives them.  Schools will continue to spend like lunatics as long as the government continues to do idiotic things like this.

The only way to get this under control is for the government to stop backing loans, and then banks can decide if they want to loan to people who choose degrees with no job market.  If you only need 10,000 lawyers a year, banks will look at how many people want to go to law school and then decide if that's a good deal or not (it won't be).  If you only need 500 gender studies majors a year because there are no jobs outside of academia for them, then banks won't back those loans at all, and then schools will stop offering them because there won't be enough students to take it...and so on.  Accounting majors will always be able to get loans - as will engineers, and English majors, and whatever else is useful.  Oversaturated majors will dry up.

Then, we need some sort of cap or ratio on how many administrators there can be at a college.  I'd probably look at some private schools and shoot for that.  Private schools are usually run more like a business, and don't have near as much overhead as public, because public schools is just another name for "taxpayer funded" schools.  It's not their money, so they don't have to be careful with it.  The amount of overhead there is at colleges now is absolutely ridiculous.  The costs are out of control.

Each major is not just one fit for a specific job. There should be no limit on degrees, people do not work just in the US. There is an entire world out there. There could be a ton of lawyers in one area but one can move to another area where there is a need. 

They should just put a cap on how much colleges can charge per courses and textbooks. Making it more affordable and reducing the need for loans.

If the cost is for all the structures upkeep, well, then, remove the unnecessary stuff. And only focus on important things.

Loan forgiveness does remove the responsibility of repaying the debt but does not remove the effort and time put in to reach that goal.

If we really want to make college affordable, we need to stop accepting that is how it is and not accept that cost. If it is too expensive and can't pay out of pocket, don't attend that college. Having a frame of mind of no debt helps choosing only what we can afford. And if more people would do that, colleges and banks won't see any benefit in the way they run things now. 

Plus, people should avoid all loans that cannot be touched by bankruptcy. It doesn't make business sense to sign a loan that you cannot escape. Remember, the bank is backed by government, the bank always wins. So avoid that.

Maybe only then things will improve.

We are all too accustomed to a culture of debt and instant gratification. That allows colleges to take advantage of us students.

[Alpha]

Negotiated Rulemaking - If you scroll all the way to the bottom you'll see the section on Loan Forgiveness, among other things.
Negotiated Rulemaking for Higher Education 2020-21