Poll: Biden executive order for student loan forgiveness

[baconschteam]

I am torn. I have always been for it, but I think it would really go an extra step to tearing this country apart. Giving handouts to all the college elites? I can see how unfair it would seem to every struggling person who made the decision to not sign up for that debt. I think something more universal would be more beneficial and less divisive, such as medical debt forgiveness and/or universal health care.

This comes from the perspective of somebody who payed of my $70k of student debt in the last 2.5 years FYI. Still have $7k left at 3% interest, so sitting on that.

[LovinPSDs]

instead of bailing everyone out, why not cap/cut the interest rates and fix the actual problem.  A bail out doesn't fix a damn thing if 4 years from now we (the country) is in the exact same situation...

Not to play the "not fair to me card" but I worked 20-40 hrs a week in a steel mill (very difficult job) while I was in school to pay for a lot of it.  That being said, I was in school 15 years ago before prices really took off. 

[ChpBstrd]

Realistically, the Biden administration has exactly 2 years to accomplish whatever it will accomplish. I'm betting their priorities will be beefing up the ACA, voting security / a new Voting Rights Act, some fresh subsidies for clean energy, replacing a Supreme Court justice, and of course beating Covid-19. If they accomplish any two of these agenda items, it'll be a breakthrough 2 years.

I don't see them taking on student loan forgiveness. As this thread proves, it's too divisive and rubs too many people as a handout to privileged humanities majors with a future in culinary customer service. More importantly, there probably isn't enough time.

[Sid Hoffman]

I don't see them taking on student loan forgiveness. As this thread proves, it's too divisive and rubs too many people as a handout to privileged humanities majors with a future in culinary customer service. More importantly, there probably isn't enough time.

Your statement about the next two years could be especially true if you're right that student loan forgiveness never happens. Millions upon millions of young people voted for Biden specifically for student loan forgiveness. If he doesn't even deliver on the $10,000, much less the original $50,000 that was touted during the election times (though never specifically promised) I think a lot of voters will feel slighted. Of course, that's politics. They talk up whatever you care about when they need your vote, then ignore you once they've won the election.

For me, environmental policy and reducing oil dependency as quickly as possible should be top priority. Since so much of ACA shoring up is done via executive order, that's easy enough to fix. Basically anything Trump signed as EO, you just have an EO ready to go on inauguration day and be done with it. The EPA also has a lot of leeway for changing policies on their own without requiring fresh new laws to be passed. Also plenty of Republicans can get behind quite a number of environmental policies when it is framed as "This helps American businesses like all those corn farmers in the heartland of America, as well as big businesses like Tesla that make American jobs."

This shouldn't be divisive. Honestly, even student loan policy shouldn't be divisive. Look at how the stimulus checks went out. They looked at your last tax return and if you made too much money, your stimulus was reduced, possibly to $0. They could do the same for student loans. Like you're only eligible if you're 10+ years from your last class, and only eligible if your last five years of tax returns add up to less than a specified dollar amount. From the stats I've looked at, many people pay off their college within 10 years, so they'll get nothing and many others are high income earners and they too should get nothing. The ones we need to help the most are the ones that even after 10 years aren't making any money beyond what they could have without college. Get that money to the people who need it most and it's not divisive, it's just smart budgeting.

[Paul der Krake]

I don't see them taking on student loan forgiveness. As this thread proves, it's too divisive and rubs too many people as a handout to privileged humanities majors with a future in culinary customer service. More importantly, there probably isn't enough time.

Your statement about the next two years could be especially true if you're right that student loan forgiveness never happens. Millions upon millions of young people voted for Biden specifically for student loan forgiveness. If he doesn't even deliver on the $10,000, much less the original $50,000 that was touted during the election times (though never specifically promised) I think a lot of voters will feel slighted. Of course, that's politics. They talk up whatever you care about when they need your vote, then ignore you once they've won the election.

As far as I can tell, Joe Biden has ever promised a blanket $10,000, let alone $50,000 forgiveness. People on the fringe of the democratic party started making those calls after the election was won, hoping to build momentum, which is something politicians do.

https://joebiden.com/beyondhs/

If "millions upon millions" voted for him on that basis alone, they have a serious reading comprehension problem.

In other news, people gonna hear what people wanna hear.

[Taran Wanderer]

I’m against forgiveness. There has to be personal responsibility.  I would be for alternatives like automatic current federal bond rate refinancing, allowing the option of discharging student loans in bankruptcy (with appropriate guardrails), or targeted forgiveness for victims of fraud by for-profit schools.  But blanket forgiveness seems like the wrong way to go. It effectively punishes those who paid their loans off on their own.

[StarBright]

Has anyone posted this article on any of the student loan threads? 

https://taibbi.substack.com/p/student-loan-horror-stories-borrowed
fbclid=IwAR2Lnnyy1vpgYjXHvgDEu1hmAV0W_9SkY9zMU5ZCXDGVbtxdxi3YvUtipcQ

I think Matt Taibi is great at writing about complex financial problems.

One of the things I've read somewhere is that people who take out lower amounts of initial loans are among the most likely to make late payments and start to incur fees and penalties, thus starting the downward spiral of ever growing loan payments. So the 10k forgiveness may do more to serve as a stop gap to help a new crop of pandemic endangered borrowers while the new administration tackles other problems first.

Additionally, my understanding is that the current administration was not enforcing/denying fraud protections to students who took out loans based on false info from for-profit schools.  There are rules in place that say if a for-profit school falsely represents itself to get you to take out loans, then your loans can be forgiven. A federal judge ruled against DeVos because her Department of Ed basically shoved the claims in a drawer and and ignored them for 4 years.

I can see how forgiveness feels like a good solution to undoing damage.

In any case - I think there is a lot of really complex stuff going on with school loans, and undoing/fixing this byzantine process may take enough time that even more people are harmed.

Loan forgiveness and starting over may just end up being more efficient.

[joe189man]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea
 

[SwordGuy]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea

Properly fund the state universities (and remove administrative bloat) so tuition and fees become very affordable.   
Continue grants for the very poor to attend.
Beef up money for faculty needed to teach during the evening and weekends for those already in the job market.
Beef up labor protections so employers can't screw over employees and schedule them for work during class time.

Then everyone in America will have a reasonable chance to better themselves.   We'll collectively be pulling our nation up by the boot straps to make us all a better skilled, better educated citizenry.

With an added benefit that there will be fewer ignorant yokels to fall for the big lies put forward by the alt-right.

[joe189man]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea

Properly fund the state universities (and remove administrative bloat) so tuition and fees become very affordable.   
Continue grants for the very poor to attend.
Beef up money for faculty needed to teach during the evening and weekends for those already in the job market.
Beef up labor protections so employers can't screw over employees and schedule them for work during class time.

Then everyone in America will have a reasonable chance to better themselves.   We'll collectively be pulling our nation up by the boot straps to make us all a better skilled, better educated citizenry.

With an added benefit that there will be fewer ignorant yokels to fall for the big lies put forward by the alt-right.

i support just about everything here

[JGS1980]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea

Wealth Transfer? Hahahahahaha. Over the last 40 years, there has been a very consistent wealth transfer in only one direction ---> to the RICH. I see nothing wrong with throwing a bone to folks just starting out in their careers, now will I be resentful if they get a hand up even though I paid off all my loans.

BUT, I also believe in everything Swordguy says. The system should not overburden 18-22 year olds with so much debt to begin with. Student Loan forgiveness should not pass without a systemic overhaul.

[HPstache]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea

Wealth Transfer? Hahahahahaha. Over the last 40 years, there has been a very consistent wealth transfer in only one direction ---> to the RICH. I see nothing wrong with throwing a bone to folks just starting out in their careers, now will I be resentful if they get a hand up even though I paid off all my loans.

BUT, I also believe in everything Swordguy says. The system should not overburden 18-22 year olds with so much debt to begin with. Student Loan forgiveness should not pass without a systemic overhaul.

I think that's the point though... it's a wealth transfer to the rich because the richer population (generally speaking) are the ones going to college and many of them are racking up loans.

[joe189man]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea

Wealth Transfer? Hahahahahaha. Over the last 40 years, there has been a very consistent wealth transfer in only one direction ---> to the RICH. I see nothing wrong with throwing a bone to folks just starting out in their careers, now will I be resentful if they get a hand up even though I paid off all my loans.

BUT, I also believe in everything Swordguy says. The system should not overburden 18-22 year olds with so much debt to begin with. Student Loan forgiveness should not pass without a systemic overhaul.

I think that's the point though... it's a wealth transfer to the rich because the richer population (generally speaking) are the ones going to college and many of them are racking up loans.

yes, student loan forgiveness is a wealth transfer to the ~30% of kids that go to college, college graduates earn hundreds of thousands of dollars (on average) more than high school graduates

https://www.ssa.gov/policy/docs/research-summaries/education-earnings.html#:~:text=Men%20with%20bachelor's%20degrees%20earn,earnings%20than%20high%20school%20graduates.

still agree that the whole system should be reworked, but giving a handout to college educated people who already have a leg up financially is, in my opinion, not the right message to send to the ~60+% of folks struggling that didnt go to college

[crimp]

Is there a reason the government shouldn’t automatically put anyone who qualifies for IBR on the plan? The DOEd has your loan balance and the IRS has your income...

[therethere]

Is there a reason the government shouldn’t automatically put anyone who qualifies for IBR on the plan? The DOEd has your loan balance and the IRS has your income...

Probably because IBR may never pay off the loan balance. That's like buying a car, and then making the car payment so it doesn't pay off the loan. Why would a lender do that?

[charis]

Is there a reason the government shouldn’t automatically put anyone who qualifies for IBR on the plan? The DOEd has your loan balance and the IRS has your income...

Probably because IBR may never pay off the loan balance. That's like buying a car, and then making the car payment so it doesn't pay off the loan. Why would a lender do that?

IBR ends in taxed forgiveness (after something like 20-25 years I believe). 

There are already many federal loan forgiveness programs. They are just difficult to navigate and tend to set up borrowers for failure.

[JGS1980]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea

Wealth Transfer? Hahahahahaha. Over the last 40 years, there has been a very consistent wealth transfer in only one direction ---> to the RICH. I see nothing wrong with throwing a bone to folks just starting out in their careers, now will I be resentful if they get a hand up even though I paid off all my loans.

BUT, I also believe in everything Swordguy says. The system should not overburden 18-22 year olds with so much debt to begin with. Student Loan forgiveness should not pass without a systemic overhaul.

I think that's the point though... it's a wealth transfer to the rich because the richer population (generally speaking) are the ones going to college and many of them are racking up loans.

yes, student loan forgiveness is a wealth transfer to the ~30% of kids that go to college, college graduates earn hundreds of thousands of dollars (on average) more than high school graduates

https://www.ssa.gov/policy/docs/research-summaries/education-earnings.html#:~:text=Men%20with%20bachelor's%20degrees%20earn,earnings%20than%20high%20school%20graduates.

still agree that the whole system should be reworked, but giving a handout to college educated people who already have a leg up financially is, in my opinion, not the right message to send to the ~60+% of folks struggling that didnt go to college

So means test it for folks whose families aren't rich. Help the people who need helping.

[regenaeb]

I would like to see some forgiveness and revamping these types of loans. If your loans are less than 10K, total forgiveness. If you loans are less than 25K, then 10K forgiveness. If 50K or more, forgiveness of 25K. After than we need to reign in the interest on these kinds of loans. I am not talking about federal loans I am talking about both federal and private. If you are attending a community college your loan interest would be  capped at 1.5% whether federal or private. If you are attending a 4 year state university your loan interest would be capped at 2% for federal and 2.5% for private. If you are attending a private university your loan interest would be say 4% for federal and 5% for private. This would help to focus students and families to really do some hard thinking about where they want to attend school and how much they can afford. I would also like to see some incentive programs for paying back the loans early. Say if you pay off your loans at an accelerated pace you end up having up to $10k forgiven, depending on the starting amount. This would help students to focus on working extra hard, a second job, living at home for a couple of years or with roomates, hard core budgeting and the reward is you pay less. I think the easiest time for a person to work extra is when they are young, just out of college before they start a family and buy a house.

I worked 2 jobs when I graduated. I had a regular desk job at an office 9-5 and then I would pick up bartending/wait staff shifts 1 weeknight and then on the weekends. I had a series of part time jobs over the years in addition to my regular job. This was all before I had kids. See I got into some credit card trouble when I was in college because I had no one teaching me how credit cards worked and they were giving them out like candy on campus every week. Once I got out in the real world and realized I had student loan payments, car insurance payments, rent, food and then credit card payments on top, the only solution was a second job. It took me about 4 years but I was able to get my credit cards done, and then car insurance dropped after I turned 25, and paid off my high interest student loans. I then consolidated the rest of my student loans into 1 loan at 1.75%. I still had student loan debt, still do today, will finally have it paid off this summer, but it was much more manageable. My payments are very low at $232/month and most of the payment is going to principal. So I focused on saving up an emergency fund and investing in my retirement accounts instead of accelerated pay off of my loans. Now that I am at a point in my life where I am maxing all mine and my husbands retirement accounts and our ER fund is up to 6 months, I am working on paying off the loans to get them gone. Again this much easier to do when most of you payments are going to principal and not interest. I was lucky when I consolidated it was 2004 and interest rates were super cheap. I don't see any reason why student loans cannot be a cheap interest rate, I mean if you can finance a $250,000 house at 2.25% then you should be able to do the same with student loans. Especially if they cannot be charged off or included in bankruptcy. I get they are unsecured loans, but are they really?  I mean you can't get rid of these things unless you pay them off or die. They are garnishing social security checks of some people that owe student loans. I would say that is pretty secure.

I am also for allowing forgiveness for taking jobs in underserved fields. We already do this for teachers taking jobs in certain locations as well as doctors, but I would like to see this expanded. How about the people that go to night training school to become a nurse assistant and work in nursing homes. That is not a high paying field and it is so needed. Why not give them forgiveness for each year they work at a state/county nursing home? Also lawyers, wouldn't it be great if we could get some young lawyers working in rural communities as prosecutors/defense attorneys. Bring in some younger thinkers and get them more involved in the justice system for underserved areas/communities. Same for doctors, if you work in a community health clinic or in a rural area hospital so much of your loans are forgiven. I do believe some states do this, but all states need to do this. Any facility located in any state that uses federal medicaid monies should qualify for this.

There are lots of ways we can make this system work better for all tax paying citizens, not just through complete one time loan forgiveness.

[crimp]

I would like to see some forgiveness and revamping these types of loans. If your loans are less than 10K, total forgiveness. If you loans are less than 25K, then 10K forgiveness. If 50K or more, forgiveness of 25K. After than we need to reign in the interest on these kinds of loans. I am not talking about federal loans I am talking about both federal and private. If you are attending a community college your loan interest would be  capped at 1.5% whether federal or private. If you are attending a 4 year state university your loan interest would be capped at 2% for federal and 2.5% for private. If you are attending a private university your loan interest would be say 4% for federal and 5% for private. This would help to focus students and families to really do some hard thinking about where they want to attend school and how much they can afford. I would also like to see some incentive programs for paying back the loans early. Say if you pay off your loans at an accelerated pace you end up having up to $10k forgiven, depending on the starting amount. This would help students to focus on working extra hard, a second job, living at home for a couple of years or with roomates, hard core budgeting and the reward is you pay less. I think the easiest time for a person to work extra is when they are young, just out of college before they start a family and buy a house.

Wouldn't offering forgiveness for quick repayment of very low interest private loans essentially amount to mandating that the private loan companies give money to rich people? I could invest the amount of money I would otherwise have spent on college, then pay off my loans immediately upon graduation to get this quick bonus while having earned more from my investments and the bonus than the increase in the loan balance. I'm not a huge fan of mandating private companies behave in an unprofitable manner, I'd rather just see the government offer low rates to people that actually need the leg up, particularly if they're attending public schools.

I am also for allowing forgiveness for taking jobs in underserved fields. We already do this for teachers taking jobs in certain locations as well as doctors, but I would like to see this expanded. How about the people that go to night training school to become a nurse assistant and work in nursing homes. That is not a high paying field and it is so needed. Why not give them forgiveness for each year they work at a state/county nursing home? Also lawyers, wouldn't it be great if we could get some young lawyers working in rural communities as prosecutors/defense attorneys. Bring in some younger thinkers and get them more involved in the justice system for underserved areas/communities. Same for doctors, if you work in a community health clinic or in a rural area hospital so much of your loans are forgiven. I do believe some states do this, but all states need to do this. Any facility located in any state that uses federal medicaid monies should qualify for this.

There are lots of ways we can make this system work better for all tax paying citizens, not just through complete one time loan forgiveness.

I agree with a lot of this. It is already true that you can get PSLF for federal direct loans if you work for government or a nonprofit organization (e.g. a legal clinic) after 10 years, but I think your suggestion that the payback happens year over year instead of only at the end of the process would be a dramatic improvement.

[Roland of Gilead]

What if loans were forgiven during employment based on a timed rate?

Say you get $10 of loans forgiven for every hour worked at whatever job.

So if you have $40,000 of loans and can't find a job in Egyptology or whatever degree you picked, if you take up a job at Starbucks for $15/hr, you get an additional $10 per hour put toward your student loan debt.

So $400 a week toward your debt no matter what job you work, $20,000 a year but the money never is in your hands, it just pays off your debt.

[American GenX]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea

Definitely.... one of the worst.  I certainly hope it never happens.  No one paid off my student loans for me.  I worked to pay them off myself, just as I did all of my other loans.   Let's get these young people started out taking responsibility for themselves instead of depending on other taxpayers to bail them out.

[therethere]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea

Definitely.... one of the worst.  I certainly hope it never happens.  No one paid off my student loans for me.  I worked to pay them off myself, just as I did all of my other loans.   Let's get these young people started out taking responsibility for themselves instead of depending on other taxpayers to bail them out.

Curious when you went to college?

[Wolfpack Mustachian]

The biggest reason I voted no is that no one has satisfactorily, to me, answered the question:

Why is forgiving student debt the priority compared to other potential uses for the money in question?

The impetus is on the people promoting the policy change to explain why should $1.6 trillion dollars be spent in this way? I've not had a satisfactory answer, and the amount is certainly not trivial, so I say no.

[Fishindude]

The biggest reason I voted no is that no one has satisfactorily, to me, answered the question:

Why is forgiving student debt the priority compared to other potential uses for the money in question?

The impetus is on the people promoting the policy change to explain why should $1.6 trillion dollars be spent in this way? I've not had a satisfactory answer, and the amount is certainly not trivial, so I say no.

To buy votes.

[Paul der Krake]

What if loans were forgiven during employment based on a timed rate?

Say you get $10 of loans forgiven for every hour worked at whatever job.

So if you have $40,000 of loans and can't find a job in Egyptology or whatever degree you picked, if you take up a job at Starbucks for $15/hr, you get an additional $10 per hour put toward your student loan debt.

So $400 a week toward your debt no matter what job you work, $20,000 a year but the money never is in your hands, it just pays off your debt.

I have studied baristas in their natural habitat extensively and can confirm that they love nothing more than being paid $10/hour less than credentialed baristas.

[RunningintoFI]

Background on my opinion - 1st generation college graduate who took out $30k+ in student loans and worked two jobs to keep up with food and rent.  I was lucky to get a decent paying job after graduation and spent the next four years pushing every penny I could into paying off student loans.  No vacations, no extravagant purchases, not going out to eat for four years.  Paying off that last student loan was one of the most relieving feelings I have had in my life.   

Saying all that, I can sympathize with both sides.  I know how awful it is to have almost no life because you are paying for student loans for years.  I don't want to extend that misery onto other people.

But I also feel extremely jealous that others would get to skip that period of sacrifice that I went through.  I would absolutely love to have that time and money back now.  To be closer to FIRE.  To have had money to afford going on dates.  So part of me abhors the idea of sacrificing that much just for others to get a clean slate.  Call that unrefined thinking but I'm human so I don't have to be refined. 

I voted no.  I am more financially successful because of how I paid my student loans and the skills I learned to do that.  The money that went to student loans became my Roth IRA and emergency fund.  I avoided the hedonic treadmill as a result. 

Granted, you could say I was wired this way because of the laser like focus I had on my student loans but I think we do people a disservice if we give them the impression that loans don't have real costs. Do we need to fix the system? Yes. Do I think divorcing costs from college does that? No.   

[Roland of Gilead]

I mean the big problem is they can't give the education back.

If I buy a $400,000 house and end up not being able to pay for it, usually I have to give it back for my loan to be forgiven.

How do you take back a business degree if the person wants their $50,000 to be cleared from their debt?

Or do we just start forgiving any type of loan which causes a hardship?

[JGS1980]

Or do we just start forgiving any type of loan which causes a hardship?

There's a solution! Simply allow student loans to be discharged in bankruptcy. This was the rule of law before the GOP changed it in 2006 on a money grab for the banks.  I also think schools need skin in the game. They should have to pay the government (who guarantees most loans) 25-50% in claw back payments if they keep on accepting students who can't do the work in majors/masters programs/phd programs that won't get those kids a decent job.

[ender]

Or do we just start forgiving any type of loan which causes a hardship?

There's a solution! Simply allow student loans to be discharged in bankruptcy. This was the rule of law before the GOP changed it in 2006 on a money grab for the banks.  I also think schools need skin in the game. They should have to pay the government (who guarantees most loans) 25-50% in claw back payments if they keep on accepting students who can't do the work in majors/masters programs/phd programs that won't get those kids a decent job.

+1 this would solve the issue imo.

Right now, universities and associated banks have nearly no risk. This means no real market pressure to collectively keep down costs since... from their perspective free money!

I mean the big problem is they can't give the education back.

If I buy a $400,000 house and end up not being able to pay for it, usually I have to give it back for my loan to be forgiven.

How do you take back a business degree if the person wants their $50,000 to be cleared from their debt?

Or do we just start forgiving any type of loan which causes a hardship?

Credit cards are pretty similar to this in many cases.

[ender]

I think in a lot of ways we really are focused on the wrong problem when we talk about college exclusively.

Why not focus some/all of this proposed money on dramatically increasing the quality of high school systems and making them more "job prep" and less "college prep" so that people graduating high school are more educated in general?

[Roland of Gilead]

Or do we just start forgiving any type of loan which causes a hardship?

There's a solution! Simply allow student loans to be discharged in bankruptcy. This was the rule of law before the GOP changed it in 2006 on a money grab for the banks.  I also think schools need skin in the game. They should have to pay the government (who guarantees most loans) 25-50% in claw back payments if they keep on accepting students who can't do the work in majors/masters programs/phd programs that won't get those kids a decent job.

In a bankruptcy though you generally have to give up most of your assets (you can keep some very basic things).  How do you give up your education?  Do you sign something that says you will never use the business degree in work?

Before the law was changed, it was a lot more common to rack up a big student loan debt and then discharge it early in your career through bankruptcy while you had few other assets.   

[crimp]

Before the law was changed, it was a lot more common to rack up a big student loan debt and then discharge it early in your career through bankruptcy while you had few other assets.

Would you please link your source on this? I'd be really interested to read it. I know the law restricting student loan debt bankruptcy was passed in 1978, but I haven't been able to find good sources on abuse that led to that law being enacted.

[Fishindude]

I think in a lot of ways we really are focused on the wrong problem when we talk about college exclusively.

Why not focus some/all of this proposed money on dramatically increasing the quality of high school systems and making them more "job prep" and less "college prep" so that people graduating high school are more educated in general?

Excellent point !

[ChpBstrd]

Or do we just start forgiving any type of loan which causes a hardship?

There's a solution! Simply allow student loans to be discharged in bankruptcy. This was the rule of law before the GOP changed it in 2006 on a money grab for the banks.  I also think schools need skin in the game. They should have to pay the government (who guarantees most loans) 25-50% in claw back payments if they keep on accepting students who can't do the work in majors/masters programs/phd programs that won't get those kids a decent job.

In a bankruptcy though you generally have to give up most of your assets (you can keep some very basic things).  How do you give up your education?  Do you sign something that says you will never use the business degree in work?

Before the law was changed, it was a lot more common to rack up a big student loan debt and then discharge it early in your career through bankruptcy while you had few other assets.

Dischargeable non-collateralized debt would have a high default rate. Either interest rates would have to go up or taxpayers would have to be on the hook for defaults.

IMO, we wouldn't be having this conversation if we addressed the real underlying problem, which is the high cost of higher ed. The more debt subsidies we introduce, the more pricing power we hand to colleges and universities. Increased loan availability has decoupled college costs from real-world earnings, and allowed tuition expenses to escalate far beyond a reasonable payback period. So the colleges replace their stadium with a bigger one, expand the administrative bureaucracy, bump up executive salaries, and raise tuition and fees to cover it because they can. Anything we do to make loans more affordable or more accessible will just drive more demand to universities, which can then raise the cost and still fill all their slots. 

[maisymouser]

Agree with @Paul der Krake that the privilege talk is mostly unhelpful here. I acknowledge having a ton of privilege in my life. I agree that education is more expensive than it should be, that this cost has been burdening our young people too much over the past few decades, and that a return to our 1960s-ish policy of subsidizing most of the cost of a public university education would probably pay dividends to our economy going forward.

Where I get hung up on student loan forgiveness, as I alluded to above, is this:

Suppose Alice and Bob both got the same overpriced degree from the same overpriced state school three years ago. Suppose their financial position at graduation is identical: $30k of student loan debt, no assets to speak of. They both get entry-level positions at the same company, making the same salary. They both live frugal lives, putting half their salary away toward building their net worth.

Alice decides she would sleep much better at night having that student loan debt gone, so she puts that extra half of her salary toward her debt and pays it off this year. Bob looks at the interest rates and, similar to the "don't pay off your mortgage club" on this forum, decides he might do better investing. Over that same three-year period Bob pays the minimum on his student loans and puts the rest of his extra half of his salary into his 401(k) instead. The stock market has been doing great the past few years, so Bob's net worth is actually higher than Alice's by now.

By singling out current student loan holders we're saying that Bob is more deserving of government help than Alice, even though he's done better overall. We're saying that people who graduated 10 years ago and have struggled mightily to pay off their student loans on schedule (but finally did it this year!) are less deserving of government help than people who graduated last year in the same exact position. I don't buy it. I agree there are a lot of people who had to dig themselves into a big financial hole getting themselves educated enough to participate in the economy, and I disagree that current student loan balance is a very good proxy for how badly someone has been affected by this issue.

Here! Me! You are talking about me! I would be personally livid if a student loan forgiveness discharge took place. Not only is it not fair to people like me but it's not fair to those who couldn't afford to consider college in the first place. It would alienate a HUGE swaths of the population.

I don't know what the solution to the profound amounts of student debt that people are apparently drowning in, but this ain't it.

[Ecky]

Forgiving student loans is a wealth transfer to those already in a position to do well for themselves because of the degree they obtained.

No one forced anyone to go to college and/or to take out student loans to pay for it.

its a terrible idea

Definitely.... one of the worst.  I certainly hope it never happens.  No one paid off my student loans for me.  I worked to pay them off myself, just as I did all of my other loans.   Let's get these young people started out taking responsibility for themselves instead of depending on other taxpayers to bail them out.

I'm down to only $100,000 of loans left to pay off. I might be able to afford to keep my head above water if I had one kid, by the time I'm 35. Being able to refinance some of the public loans I had down from ~15% interest helped early on. I'll take any easement I can get.

[therethere]

Here! Me! You are talking about me! I would be personally livid if a student loan forgiveness discharge took place. Not only is it not fair to people like me but it's not fair to those who couldn't afford to consider college in the first place. It would alienate a HUGE swaths of the population.

I'm not sure I really understand. My parents paid for zero of my college or living expenses. Hence why I have student loans, and a large amount of them. Can you please explain what section of people "couldn't afford to consider college"? People who couldn't get their parents to cosign on loans? Not trying to be a jerk, but legit understand. Loans have been given out so freely, that I feel like anyone could get them. I mean, that is one of the primary issues of this whole student loan problem. Loans were given out like candy and therefore tuition could increase out of control as a result.

[simonsez]

I'm down to only $100,000 of loans left to pay off. I might be able to afford to keep my head above water if I had one kid, by the time I'm 35. Being able to refinance some of the public loans I had down from ~15% interest helped early on. I'll take any easement I can get.

Wow! In the last couple decades I thought the federal student loan rates only went up to 7.9% (grad plus which usually went down to 7.65 after auto-debit) or 6.8% for undergrad.

Highest I could find historically for federal student loans was 14% SLS loans (predecessor to federal PLUS) made between 10/1/1981-10/30/1982.  I would hope that all of those student loans from the 80s are paid off.
https://www.savingforcollege.com/article/historical-federal-student-interest-rates-and-fees

@Ecky what kind of student loans did you have?

[maisymouser]

Here! Me! You are talking about me! I would be personally livid if a student loan forgiveness discharge took place. Not only is it not fair to people like me but it's not fair to those who couldn't (reasonably) afford to consider college in the first place. It would alienate a HUGE swaths of the population.

I'm not sure I really understand. My parents paid for zero of my college or living expenses. Hence why I have student loans, and a large amount of them. Can you please explain what section of people "couldn't afford to consider college"? People who couldn't get their parents to cosign on loans? Not trying to be a jerk, but legit understand. Loans have been given out so freely, that I feel like anyone could get them. I mean, that is one of the primary issues of this whole student loan problem. Loans were given out like candy and therefore tuition could increase out of control as a result.

There, I fixed it.

Edit (to sound less snarky): There are lots of people who cannot afford college because they were not born to families who can or who have family members willing to cosign on a loan. There are lots of people who did not have the resources to succeed academically (as a result of their community not being able to afford that) and never even got to think about college. There are also people who are responsible about understanding the huge cost of going to college and therefore choose other career pathways, because they reasonably assume they cannot afford to pay off student loans for half their life.

Basically I think this student loan forgiveness is alienating to all except the chunk of the (privileged) population that voluntarily signed on to student loan debt. Not good policy.

[sailinlight]

Here! Me! You are talking about me! I would be personally livid if a student loan forgiveness discharge took place. Not only is it not fair to people like me but it's not fair to those who couldn't (reasonably) afford to consider college in the first place. It would alienate a HUGE swaths of the population.

I'm not sure I really understand. My parents paid for zero of my college or living expenses. Hence why I have student loans, and a large amount of them. Can you please explain what section of people "couldn't afford to consider college"? People who couldn't get their parents to cosign on loans? Not trying to be a jerk, but legit understand. Loans have been given out so freely, that I feel like anyone could get them. I mean, that is one of the primary issues of this whole student loan problem. Loans were given out like candy and therefore tuition could increase out of control as a result.

There, I fixed it.

Edit (to sound less snarky): There are lots of people who cannot afford college because they were not born to families who can or who have family members willing to cosign on a loan. There are lots of people who did not have the resources to succeed academically (as a result of their community not being able to afford that) and never even got to think about college. There are also people who are responsible about understanding the huge cost of going to college and therefore choose other career pathways, because they reasonably assume they cannot afford to pay off student loans for half their life.

Basically I think this student loan forgiveness is alienating to all except the chunk of the (privileged) population that voluntarily signed on to student loan debt. Not good policy.

Very well put, I don't think this is a right/left issue at all. It's basically like saying the federal government will pay off your auto loan if it's for a Chevy or Ford only, or that if you had credit card debt in 2018, the federal government will give you a refund of that amount on your 2021 taxes, just completely arbitrary.

[charis]

There are many government programs that are just as arbitrary, and many non privileged students who need student loans. The line must be drawn somewhere. Be jealous if you paid your own way, if you must. Then get over yourself and move on.

[Morning Glory]

Need more options:
"make them dischargeable in bankruptcy"
"just eliminate the interest"
"maybe after we tackle x, y, and z"

I'm not against debt forgiveness but I think other things are a higher priority, such as universal healthcare, early childhood education, and parental leave. I think we need to work on bringing tuition down for current and future students too.

My choice would be to make the loans dischargeable in bankruptcy. Then there would be a way out for those who are truly suffering, but those who are able to pay would still pay. I would also be fine with pausing the interest for a longer time.

[Cranky]

I don’t see how I am worse off is someone else’s debt is forgiven - and I put 3 kids through college without loans.

My dd has grad school debt and says that if it’s forgiven she’s going to med school. ;-)

[JGS1980]

Or do we just start forgiving any type of loan which causes a hardship?

There's a solution! Simply allow student loans to be discharged in bankruptcy. This was the rule of law before the GOP changed it in 2006 on a money grab for the banks.  I also think schools need skin in the game. They should have to pay the government (who guarantees most loans) 25-50% in claw back payments if they keep on accepting students who can't do the work in majors/masters programs/phd programs that won't get those kids a decent job.

In a bankruptcy though you generally have to give up most of your assets (you can keep some very basic things).  How do you give up your education?  Do you sign something that says you will never use the business degree in work?

Before the law was changed, it was a lot more common to rack up a big student loan debt and then discharge it early in your career through bankruptcy while you had few other assets.

Dischargeable non-collateralized debt would have a high default rate. Either interest rates would have to go up or taxpayers would have to be on the hook for defaults.

High default rate? There's already a high default rate. Just make it so you can't discharge your student debt EARLY in your career. Maybe a 10 year moratorium. For most folks, your student debt at 10 years is VERY different than the debt at graduation. If you can't dig out in 10 years, then you probably need the help. In regards to "taxpayers being on the hook", my solution is to have the colleges pay 50% back as a penalty as above.

[maisymouser]

There are many government programs that are just as arbitrary, and many non privileged students who need student loans. The line must be drawn somewhere. Be jealous if you paid your own way, if you must. Then get over yourself and move on.

Well, that IS where I draw a line. It's not about jealousy. I don't think I would be seriously negatively impacted by such a forgiveness program, but as someone else has said, I really do think that kind of money could be put to better use for more Americans in a more equitable way. If we are handing out money like candy we should be prioritizing on universal health care, early childhood education, and parental leave (as posted by @Morning Glory).

I am a proponent for equitable policy in ANY domain, not just college loan forgiveness. If you have examples of other arbitrary handouts, I would be interested to see if any of them are ones I would support- I doubt it though.

[StarBright]

There are many government programs that are just as arbitrary, and many non privileged students who need student loans. The line must be drawn somewhere. Be jealous if you paid your own way, if you must. Then get over yourself and move on.

Amen to the bolded! Goverment programs are often about incentivizing behavior. Student loans encouraged students to go on to higher ed. Now millenials and zoomers aren't participating in the economy, loan forgiveness is a way to make it easier to participate.

Honestly, the more I dig into student loan forgiveness the more I think it makes sense from all sorts of angles. They should just rip the bandaid off and do it.

[therethere]

There are many government programs that are just as arbitrary, and many non privileged students who need student loans. The line must be drawn somewhere. Be jealous if you paid your own way, if you must. Then get over yourself and move on.

Amen to the bolded! Goverment programs are often about incentivizing behavior. Student loans encouraged students to go on to higher ed. Now millenials and zoomers aren't participating in the economy, loan forgiveness is a way to make it easier to participate.

Honestly, the more I dig into student loan forgiveness the more I think it makes sense from all sorts of angles. They should just rip the bandaid off and do it.

Yes, I used to be appalled by student loan forgiveness. But I've changed my tune over the years. I've realized it was mainly out of jealousy for severely sacrificing to pay my own loans. Govt programs aren't always perfectly targeted and it's just not reasonable to expect them to be.

Others say that some kids chose not to go to college because of the high costs. But there's also people like me, who chose to go to college and the cost started out reasonable (15k/year). But unexpected annual tuition increases of ~5k+ a year added significantly to the overall cost (tuition increases added at least 30k to my 4-year total not including interest). I met my DH in college, so in total we ended up with 60k more loans than we thought we would have going into it. Dropping out of college after you are a year or two in just isn't reasonable,   since you'll be stuck with loans and no degree. At my college they purposefully made credits non-transferable. So you couldn't even transfer once tuition kept rising.

My point is, this is a very complicated issue. And people are cancelling the idea of it over very, very specific circumstances that might get forgiveness. But there are so many specifics to cover, it would be impossible to make a "perfect" program that only helps out those who need. Govt regulations and handouts are not inherently fair.

[JGS1980]

There are many government programs that are just as arbitrary, and many non privileged students who need student loans. The line must be drawn somewhere. Be jealous if you paid your own way, if you must. Then get over yourself and move on.

Amen to the bolded! Goverment programs are often about incentivizing behavior. Student loans encouraged students to go on to higher ed. Now millenials and zoomers aren't participating in the economy, loan forgiveness is a way to make it easier to participate.

Honestly, the more I dig into student loan forgiveness the more I think it makes sense from all sorts of angles. They should just rip the bandaid off and do it.

Yes, I used to be appalled by student loan forgiveness. But I've changed my tune over the years. I've realized it was mainly out of jealousy for severely sacrificing to pay my own loans. Govt programs aren't always perfectly targeted and it's just not reasonable to expect them to be.

Others say that some kids chose not to go to college because of the high costs. But there's also people like me, who chose to go to college and the cost started out reasonable (15k/year). But unexpected annual tuition increases of ~5k+ a year added significantly to the overall cost (tuition increases added at least 30k to my 4-year total not including interest). I met my DH in college, so in total we ended up with 60k more loans than we thought we would have going into it. Dropping out of college after you are a year or two in just isn't reasonable,   since you'll be stuck with loans and no degree. At my college they purposefully made credits non-transferable. So you couldn't even transfer once tuition kept rising.

My point is, this is a very complicated issue. And people are cancelling the idea of it over very, very specific circumstances that might get forgiveness. But there are so many specifics to cover, it would be impossible to make a "perfect" program that only helps out those who need. Govt regulations and handouts are not inherently fair.

Hear Hear! Just because the system is rigged does not mean you can't DERIG it just a bit.

[stoaX]

I would much rather see something more universal like a UBI or one time stimulus check than something that benefits only a select group of people. It seems unfair that people who paid off their loans early, never took out loans, or never went to college would get nothing.

Two point for this:

No. 1 - I think you are not factoring in how much of people's student loan debt loads are origination fees and interest. So you get 10k in loans for semester one, you get a check for 9600 to pay towards your tuition, fees, books, room and board or whatever, and the following day you owe 10001.37 because interest compounds daily, assuming a 5% rate.

Let me repeat that! Interest compounds daily. So - you can calculate what that borrower owes for that first semester when they graduate. somewhere between 12-13k I think just eyeballing. then there are the other loans.

Student loans are no longer just a way to help students get an education - it is an industry raking in billions in profit with many private and semi private companies in play in addition to the government. I think this is wrong.

No. 2 - the escalating costs of the education has been spiralling out of control. It's costs are inflated, in large part by whoever the student loan industry is enriching. Because they can. and then make more money off students. Education costs have increased by 145% since the 70's.

According to this site, https://www.nitrocollege.com/research/average-student-loan-debt, even after accounting for inflation education costs have more than doubled over that time period.


And one thing I don't want to hear is just go out and get scholarships or grants. There is no free lunch, and I'm tired of smug people talking about free rides. You know who pays for that? Other students who in fact end up paying even more than just for their own educations. Or tax payers. Or a combo.

Point 1:  Interest is per diem, like it is on everything, and you exaggerate how it compounds.  While you are in school most fed loans don't even accrue interest.  There is a second type of student loan that accrues interest while you are in school but you only take that out if you absolutely have to.  I never did and I took out $60k in student loans over 3 years.

Point 2:  Agreed on escalating costs.  That should be the priority to address imo.

Yeah, point 2 is important to improving the situation going forward.  Tuition has dramatically outpaced inflation.

What happens to new students starting university in the coming years?  Should they plan on getting their loans forgiven?  Or will they have to pay them off?

[anni]

College students do not have to go to private schools, wear Canada Goose parkas, carry iPhone 11s, eat sushi for lunch and have Starbucks three times a day. You don't need to take out ridiculous loans if you work in the summer, live frugally and attend a state school and/or community college or a trade school. A loan forgiveness program would simply mean that the smarter more mustachian students are paying for both their own modest loans as well as (through taxes) the extravagant college degrees and lifestyles of others.

I just want to chime in here... I worked at least 2 jobs at a time (and often more) throughout college, 12-30 hours per week, and summer service industry jobs, all for $7.25-$10/hr, and I worked as an RA for room and board for two years, AND I finished my degree a year early. I went to a public state school - the best one in my state, but not the most expensive. I ate beans and rice and bought the bar soap off the bottom shelf. I didn't go out to bars or restaurants, ever. No spring break trips. Definitely no Canada Goose (I remember when I starting seeing those, wtf?) My mom got me a new coat at Costco once, that was nice. I still finished undergrad $50K in the hole. My various jobs barely covered the costs of my books and $200 "access codes" so I could do my homework each semester.

I hear this "just work and go to a state school!" sound bite all the time and it really rankles me. I don't know anyone from my school who pulled it off without a scholarship, and I ran with the other working class kids. Maybe other states have cheaper schools? One would have to have a truly exceptional work ethic (and good luck) to get out with both good grades and little debt with no outside help. 40 hours a week (at minimum wage) for 50 weeks would not even cover tuition and fees. (all of my university jobs paid the federal minimum wage, though I think they increased it to a "living wage" last year).

Anyway, I think a student loan forgiveness bill is a shitty bandaid for a shitty issue. I would love for my last $15K of debt to be wiped out, especially given how my university recently started giving full rides to students from my financial background (ouch). But I think finding a way to permanently lower the cost of university would be the best solution for everyone.

A college degree is not at all a ticket to a middle class life anymore. It shouldn't be priced like it is.