(no subject)

[gunslnger.livejournal.com]

Since the topic of forgiving student loans has been mentioned here a couple times recently, I figured we should get an expert opinion on the issue.

Forgive Student Loans? Worst Idea Ever.

So, can you think of a reasonable rebuttal to one of the 5 reasons not to do it?

ETA: In my opinion, forgiving student loans is a pretty bad idea, for at least the reasons given. If you want to hand out free money, give it to the people who need it first, determined by actual need; don't use an unconnected metric of "went to college" to determine where it should go.

Comments

[prisoner--24601.livejournal.com]

You know, I'm sort of boggled by all of the fixation on the banks. They at least paid back their bailout money.

Unlike the 14B that the government lost bailing out Chrysler and General Motors. And yet no one makes lulzy macros with auto workers on them or is protesting in front of their corporate headquarters...

[gunslnger.livejournal.com]

So, you didn't read it. Ok.

[abomvubuso.livejournal.com]

Please could you add some short opinion of yours?

[curseangel.livejournal.com]

The assumptions in that article are kind of seriously gross. (I'm sorry, but a lot -- if not most -- of the college grads I know are living "hand-to-mouth", and a lot of them have crappy credit and zero spending money. The assumption that college grads are living high on the hog and can easily afford their exorbitant loan repayments is gross. But okay, let's see about this.

1. It's not a contest; we don't have to only help college grads or only help high school drop-outs. Here's the thing, though. College graduates are gradually falling farther and farther into debt, forcing them to cross off their lists jobs that traditionally pay lower salaries but which are both a) needed in society and b) require a college degree. And I'm not talking about, like, professors here. I'm talking school teachers, social workers, FBI agents, really important jobs that just.. don't make a lot of money. People with high debt-loads can't afford to take these jobs! It's to our benefit to make it easier for people to choose professions that are needed in society, isn't it? (I know I, for one, crossed "social worker" off my list of potential careers because regardless of how much I would love to take that job, because I love to help people, the paycheck just wouldn't cut it, especially with the $50k+ I owe in student loans!)

2. Bullshit. College grads are poor, too -- very poor in a lot of cases, especially in this economy. And forgiving their loans means they can afford a lot of things they previously couldn't. Sure, giving a very poor, less-educated person a one-time gift of $1000 would generate spending -- maybe they'd buy a TV, or a new cellphone. (It's infinitely more likely that it would go to their credit card debt or their mortgage/rent payment!) Relieve someone of their debt, though, and save them hundreds every month? That has a huge impact, especially if they're less well-off or poor, which many college grads are. Not only does it stimulate spending on entertainment things like TVs and non-essentials like that, but with that few extra hundred or however much, they can spend more on food, and other things -- keeping businesses other than WalMart and Panasonic in business.

3. Again, why is it all or nothing? I don't recall the idea of debt forgiveness being a zero sum game where forgiving loans means you absolutely cannot create better loan policies for the future. I think it would be a great idea to forgive the loans of those currently suffering under less-fair and less-incentivized student loans and then follow that up with restrictions on loan companies, subsidies for students, and so on and so forth. When education is free or low-cost and widely available, everyone benefits.

4. No, this point is actually just too ludicrous and stupid to really even say anything about. It's the "slippery slope" fallacy tied up in some new wrapping paper. Bullshit.

5. A lot -- a whole lot -- of college grads, especially recent college grads, are part of the 15+% in poverty. And again -- why is it all or nothing? Why is it "make life better for one group or the other"? Why can't we do both? Why can't we forgive student loan debt, lower the cost to go to college and offer greater opportunities for future potential students, and expand aid to the poor? Fuck, we could probably pay for all of it if we shaved like two percent off the military budget. Buy a few less $1.whatever billion planes and we can help a whole lot of people live better lives.

This whole article basically presents student loan forgiveness as an issue of college grads versus the poor, when in fact many, many college grads are the poor. It's just.. all wrong-headed and nasty.

[lilenth.livejournal.com]

^This.

[badlydrawnjeff.livejournal.com]

This whole article basically presents student loan forgiveness as an issue of college grads versus the poor, when in fact many, many college grads are the poor. It's just.. all wrong-headed and nasty.

Here's the problem - for all the grief many conservatives get for (in many cases, wrong-headedly) saying that the poor are poor because of their own doing? Those people who got into debt in the tens of thousands for degrees that weren't worth it? They did it to themselves. They chose poorly, and now the rest of us have to foot the bill for them? Really?

I have well over $40k in student loan debts. That's of my own doing. It isn't your problem to solve, or anyone else's but my own.

[gunslnger.livejournal.com]

That's at least a better idea, yes.

[underlankers.livejournal.com]

Yes, I can. People gave subsidies to corporations with three times as much debt as they have assets without the debt-asset thing changing any at all. Give it to the people who actually contribute something, too. As I hardly see why the CEO of say, GE, should get such money and these guys should not.

[stewstewstewdio.livejournal.com]

Yes, I can. People gave subsidies to corporations with three times as much debt

And meanwhile the IRS is giving amnesty to corporations (http://www.bankrate.com/financing/taxes/foreign-tax-amnesty-ends-aug-31/) that are using offshore tax dodging techniques to shelter their income.

[eracerhead.livejournal.com]

I can't disagree. Relieving debt is not stimulative and is really a bailout of the financial institutions who will get guaranteed payment. Humans are such easy marks, every one of them is a sucker.

[onefatmusicnerd.livejournal.com]

I find myself in the uncomfortable position of agreeing with you, on the understanding that you are actually supporting solutions in step one and two.

Other than that, student loans make people in there most creative years risk averse and thus kill innovation. Much larger grants for future students is probably a much better idea.

[onefatmusicnerd.livejournal.com]

Much much much, fuck it is early...

[surferelf.livejournal.com]

I might have to start reading the Freakanomics blog again. I stopped because it got too formulaic. "I bet you think process Y would result in common sense result X. Wrong! The result is actually the opposite of X! Ha ha! You're a dope."

[soliloquy76.livejournal.com]

I didn't read the article, but I know the arguments. I'm not at all for student loan amnesty. I could possibly get behind some kind of government-sponsored deferrment plan, loan buyout with zero interest, and/or extended repayment schedule. More bailouts are not the answer, though.

I think it would be a good start.

[squidb0i.livejournal.com]

A trillion dollar stimulus that goes directly to consumers (who make up 70% of the economy - instant demand) and doesn't require cash on hand.

Re: I think it would be a good start.

[gunslnger.livejournal.com]

doesn't require cash on hand.

You do know that it's banks that hold the notes and not the gov't, right?

[paedraggaidin.livejournal.com]

Although I joke a lot about a general cancellation of student debt, I don't think it's actually a good or workable idea, primarily because, unlike grants, loans aren't free money and students knew full well when they signed that promissory note that they would one day have to pay the money back. I don't have sympathy for people who naively rack up tens of thousands of dollars in debt and then, once they graduate and have to start paying them back, start whining about how mean and unfair it is. I liken them to the dumb kids who leave their parents' home to go off to college, get a high-interest credit card thinking it's akin to free money, run up a huge balance on fast food, electronics, and liquor, and then start crying when the debt collectors begin calling. There are too many students who look at student loans not as financial aid for a valuable education, but as free party money for four years. Anyone who claims this isn't true hasn't spent the past six years with college and graduate students.

As one of my professors says, "too bad, so sad!"

Now, as a student who will have approximately $100,000 in student loan debt by the time I graduate from law school next May and intends to pay every red cent back, I do have sympathy for people who knew what they were getting into, diligently made payments, and then got into financial trouble because of unemployment, medical debt, or other legitimate reasons. There should be some sort of relief available for these people. Heck, it happened to me, too, when I flunked out of community college due to health reasons. If it hadn't been for hardship forbearance, I don't know what might have happened.

So, I think that student loan debt should be dischargeable in bankruptcy as with any other unsecured debt. i also think there should be more easily-accessible safeguards put in place to help struggling former students continue to pay off their loans in difficult times.

[johnny9fingers.livejournal.com]

Sensible.

And perhaps some sort of deferment/reduction if the person with the student loan takes up socially important but low-paying work like teaching or social work of some description.

[gunslnger.livejournal.com]

That is crazy interest. The loans I took out the last two years are at 7% interest. So, maybe if they mandated a refinancing of old loans to the current low rates, that would be a manageable deal, for example.

[fizzyland.livejournal.com]

How about this one? College expenses and their attendant debt have been rising considerably, while wages stay stagnant.

But wait, people have TV's so I guess there's no problem with people graduating into a shitty job market with the debt of a home owner sans home.

[gunslnger.livejournal.com]

College expenses and their attendant debt have been rising considerably

And gov't action has nothing to do with that, right?

[malakh-abaddon.livejournal.com]

Distribution: While it is true, I think that most college graduates make more money over their lifetime, as of this time there is a short supply of decent paying jobs in many areas, which require, like in my case, that I relocate to an area where there are better prospects for work. In this case, if there was a debt forgiveness program in place, those who drop out of high school, could use that program to educate themselves and get a GED, or some other form of vocational training or education, which while not on par with a degree from a university, is helpful.

Macroeconomics: It was asked how much of $50,000 would be spent in the next month or year. Should that student take the money that would have been spent for college loans and applied it to a house, or a new car, at least half of that money would be returned to the economy. That is not taking into account the funds that will be used for essentials and utilities. More money available is more money useable. Even if it takes 3 years to spend that money will be in the economy, it will be invested, it will be used.

Education Policy: Yes if it only applies to those who currently have college loans it will not increase the numbers of those with a college education. I agree that loans and subsidies should be widely available to all those who wish to go to college. As it stands, when I made my choice to enter into college, and of great concern to me now is, "How will I pay for this?" If everyone who attends college in lets say the next five years has access to this program, it removes one obstacle to them getting a college education.

Political Economy: This is a bunch of kids that are finding that the job market sucks, they cannot afford to repay their loans. They see the big three automakers, banks, oil companies, and other businesses getting bailed out, so why cant they? Either bail out everyone or bail out no one. So I guess that bettering ones self, is not socially constructive. Making sure that people are not driven into a lifetime of debt to better themselves is not socially constructive. Freeing up money, even if it is just a grand or two is not socially constructive.

Politics: Oops, looks like I fell into the gave money to me, rather than businesses, millionaires and billionaires. Oh wait, I am a soon to be college graduate who is living in poverty. I get money on both counts, yay, I would now be able to fix the ford I drive, or replace it. This is not a comparison of the next best alternative or even the worst alternative, it is a case of bailing out the next generation of people, who will become the leaders of this nation, offering a better chance to get out of poverty, or bailing out people who do not give a rats ass. Again I say, if people have more income, they can spend more, which brings everyone up, because if they spend more, more jobs are needed, bringing the wages up, lifting more people out of poverty.

[raichu100.livejournal.com]

1. College grads have high incomes? What? I mean, maybe if you're talking about older people who have been out for ten or twenty years, but newer grads (more likely to still have education debt)? Don't think so.

2. macroeconomics make my head hurt

3. yeah kinda agree idk

4. "This is a bunch of kids who don’t want to pay their loans back."
...no. If they're not paying their loans back, it's more often than not because they CAN'T, not because they don't WANT to.

5. As others have said, college grads and the bottom 15% are sometimes one and the same.

[gunslnger.livejournal.com]

1. Yes, we are talking about their potential incomes.
4. It's referring to the ones advocating this bailout.
5. So we should use the appropriate metric and not one that just sounds good.

[oportet.livejournal.com]

Yes, it is a terrible idea - but if they're going to do it, they need to hurry up. I'll start doing the minimum payment if this idea picks up steam.

[gunslnger.livejournal.com]

That's a different problem. And I did say "if" first too.

[rick-day.livejournal.com]

Forgiving the debt will not keep the cycle from repeating in 6 years or less.

Today? Pfft You signed a loan, you pay it off, or suffer the consequences.

Going forward solutions? I like One Percenter Mark Cuban's idea: limit student loans to a cap of $2,500 per year. Anything else has to be paid by scholarship or cash. Pretty soon, the market will take a well needed correction, and tuition will drop in cost.

My 2 cents

[kylinrouge.livejournal.com]

I would support forgiving student loans more if it was followed immediately by universal university.

Either way, money in people's pockets. If you want to limit it so it isn't everyone then determine it by EFC (Expected Family Contribution, FAFSA stat) and forgive more from people who grew up in adverse conditions than others.

Point Five

[harry-beast.livejournal.com]

Why give money to college grads rather than the 15% of the population in poverty?
It is also worth noting where this money will come from: out of the pockets of working people, many of whom are struggling to get by as it is. There is something problematic about taking money away from working stiffs so that children of privilege can spend four years becoming unemployable.

Re: Point Five

[evildamsel.livejournal.com]

If people with student debt were children of privilege, they wouldn't have student debt. They would have gone to an ivy on a full ride paid for by a trust fund.

[ghoststrider.livejournal.com]

I actually disagree entirely.

First off, while they shouldn't have taken the loans, the banks shouldn't have loaned them the money either. The only reason they did so is that the government has made it impossible to discharge the loans in bankruptcy, which is a really stupid idea. This will have a long term effect of effectively making an entire generation debt slaves who can never get out of their debt and cannot contribute anything to the economy because they'll still be paying off their ludicrous loans.

Second, it will actually drive the cost of education down. When no one can get a $150,000 loan to major in, say, women's studies, women's studies degrees will stop costing that much.

My solution is what Glenn Reynolds proposed: let students discharge student loans in bankruptcy five years after graduation (maybe 7-8 for med school and law school graduates) and force universities to eat 10-15% of the loan (personally, I would put that number at 25%, but that's just me.) That would put institutions of higher education on notice that they cannot charge absolutely ridiculous, bullshit prices for their utterly worthless tripe and expect to get away with it scot-free. Also, naturally, get the government out of the student lending business.

And no, this isn't really anti-free market. This is against fraud and market distortions caused by a stupid alteration of the bankruptcy law and free money (for universities and lenders, that is.)

[gunslnger.livejournal.com]

Yes, doing things to reform the student loan business would be a good idea. Giving a straight handout to all students who have a student loan is not.