Please, please, please take note before commenting: These are being forgiven under the Public Service Loan Forgiveness program, created in 2007 (fifteen years ago), which eliminates your remaining debt after you've made ten years of payments while working in the public sector (government or non-profit). This has nothing to do with current debates around loan forgiveness.
That's where the 40,000 in the headline comes from. But the article also says this:
> Several thousand borrowers with older loans will also receive forgiveness through income-driven repayment (IDR) forgiveness, plus another 3.6 million borrowers will receive at least three years of additional credit toward IDR forgiveness, the Education Department said in a statement.
Does this mean full-time public service workers with pre-PSLF loans, or are the feds debating broadening the scope of loan forgiveness to include persons in other careers as well?
Seeing tons of comments about what people THINK an article says or about their opinion on something related is causing me to use this site less and less.
Completely agree that some of the comments are off the wall. But in all fairness the Ruerters article doesn't highlight the public sector part enough. To learn more you'd have to do your own research to find that PSLF has stringent requirements.
IMO this is more an example of how bad journalism can have damaging effect on even a well versed audience.
In this case I also think the article was really thin on details. Some people get $10,000 written off, others get some other limit to how much they will pay and so on. No clear details I could see about what the limits are and who will be targeted. There probably are details somewhere but this was not really answering my questions.
He still has time to do loan forgiveness "helicopter money" style. But even if all we got was an expansion of targeted relief programs I think it totally counts as fulfilling his talking point. The issue with student debt is that for some people there's no way out, but generally speaking college-educated people are more well-off and forgiving all debt would be a regressive stimulus that targets the wealthier side of the population. Targeted relief is a great way around that.
No. The previous guy installed people in the DOE that made it virtually impossible to forgive the loans even after they jumped through all the hoops to qualify under the law.
All Biden's administration is doing here is ungumming people who were eligible years ago. This is cleanup from the prior administration
Alternative could also be “government obfuscates prices for education and certain types of labor by offering nebulous benefit, the cost of which can be subject to much manipulation for purposes of presenting it as a low cost benefit”.
It would be straight forward to simply pay for higher education expenses directly, with much less bureaucracy and more transparent pricing, allowing for better allocation of society’s resources. But, as always, that would reduce the avenues for corruption, and so the politically viable option is the circuitous option.
This is a good point. The Public Service Loan Forgiveness (PSLF) Program is like the GI Bill, but they pay off your college debt after service instead of paying your college after service.
Its an interesting piece of legislation to see, and strongly implies former senator Joe Bidens initial student debt legislation was beginning to have seriously negative repercussions at the federal level for employee retention and hiring not even 5 years into its inception.
Back in 2005 Biden supported and stumped for a bill that stripped students of bankruptcy protections and led the country into a 1.7 trillion dollar student debt crisis. Watching President Joe Biden offer token debt forgiveness in 2022 is a little bit infuriating to watch as he could easily have spent the last seventeen years working to reform his mistake. If i had to weigh in on the sudden rise of student debt forgiveness under the current administration id say its political. inflation, gas prices, housing shortages, and supply chain issues have made it all the more practical to take action now and shore up the old midterm voter appeal.
There are a lot of different versions of these income-based repayment programs, dating back to the early 00s at least. They are all structured similarly but have differing eligibility cutoffs and rules. Typically they involved making payments on your loans for 20-25 years at some maximum % of your income before the remaining balance is forgiven. PSLF has a shorter forgiveness window (10 years) but you need to make 120 payments while working some job that is socially useful but not-market-optimal like public service or working for a nonprofit.
FWIW, IBR systems they are a common policy suggestion from both conservatives and liberals (with differing priorities / rules).
It wasn't just the Trump administration; it was clear there were significant problems with the way the program was administered well before the first loans were supposed to start qualifying in 2017. Among other things, the Bush and Obama administrations that created and administrated the program provided no guidance and no oversight to the companies overseeing the loans, so the companies made it effectively impossible to qualify.
Come work for the permanent undemocratic bureaucracy, and you'll even your student loans forgiven.
But if you decide to go down the path of becoming a kulak, the student loans will be with you even if you go bankrupt.
I'm curious where the sudden bump to 40k comes from. According to Wikipedia [1]:
> The Department of Education reported that 2,215 borrowers had the remainder of their respective student loans forgiven under the program as of April 30, 2020.
[1]: https://en.m.wikipedia.org/wiki/Public_Servic
FAANG has plenty of private XKeyscore wrong-think APIs that the bureaucracy utilizes under the auspices of "fraud prevention" to filter out "bad thinkers" from various activities. Welcome to fascism, folks.
It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.
Exactly. Plug the hole first (or concurrently), and then worry about bailing water. Additionally, as others have mentioned, it needs to be done in such a way that we aren't punishing those who have been responsible and made sacrifices to pay off their loans.
I'm not opposed to student loan forgiveness, but I don't think it's nearly as popular as many progressives would like to believe as a standalone proposal. Come up with some qualifications and limitations for reimbursing past loan payments, as well as a systemic fix for the future, and I'd be all for it.
All that being said, is it still wise to forgive student loans at this particular time? Originally, the pitch was that it would help act as a stimulus during the pandemic downturn. Now that we're dealing with the opposite situation, I don't see the rush. Maybe a bill could be passed that had a delayed or gradual effect.
Could it be possible that this is being done more as a way to garner votes for the midterms? Someone else commented that this affects like only a tiny fraction of people w/ student loan, but it does make for a good headline, judging by the number of comments here.
I am starting to think this is a sign of a big weakness in the American system. These half baked actions are evident in health care, security, and all other categories. I think it has to do with the fact that there are so many parties acting in bad faith that it is hard to get comprehensive legislation that addresses the problem as a whole vs just piecemeal bits and pieces because that is all that can be pushed through. I don't know what the solution to this is other than a complete reset of the system (which itself would require the existing system to produce and pass)
>> It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.
A wise man once told me "The first thing you should do when you find yourself in a hole is stop digging". This is my standard response to the student loan crisis and many others.
I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it. That's how it is supposed to work. We don't typically reward people for digging themselves into a hole by bailing them out. Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.
We do, actually, at least in the US. It's called bankruptcy. We generally recognize that sometimes despite best intentions, debts become unpayable and in these cases, the debts get restructured and creditors are frequently wiped out (which is fair, since both borrower and lender take risks).
Student loans can't be discharged through bankruptcy unless the borrower is permanently disabled. It's entirely possible to end up in default on a loan for a degree you never obtained, paying a loan your entire life, without ever decreasing the principal. Unsurprisingly, this rubs people the wrong way.
So first off, remember that the people taking out the loans are typically between 17 and 20. I don't know about you, but when I was 18 I was a fucking idiot. I mean I still am, but more so back then. I would be surprised if you weren't (and you probably aren't even the median case!). Also consider that a lot can happen in 4 years, especially at that age. Your interests typically rapidly change, you learn more about who you are, and you may underestimate your future earnings (especially given that schools tell you that you'll earn so much because of your degree and their connections). But there's some other issues.
- Interest rates have gone up
- Cost of schools have risen
- The government holds most student debt
- It is still usually a good deal to get an education, but the deal is rapidly becoming less of one (the value of the deal is even changing for people in the middle of education or even graduated)
- The clauses on the debt are getting stronger, being almost impossible to cancel the debt and leading to people never being able to pay off their loans.
- The loans are predatory and becoming more so (when I took mine out a decade ago I had the option to pick "fixed rate" or "variable" but that wasn't actually fixed _interest_ rate)
- Schools are promising scholarships and then not giving them (my school would constantly schedule me for meeting with the financial aid office, a requirement, the week after the deadline and wouldn't schedule me before)
- We're better understanding the major impact on our economy when a generation that is in their prime earnings age is still not consuming and instead paying off debt.
- An educated population results in a happy and effective civilization (especially if one of your main exports is technology)
I think there's a lot of good reasons that people are pissed off. Our generations specifically was told "go to college and you'll get a good job and have a stress free life." But we quickly found that going to college doesn't lead to a good job and we can't get the same things our parents did. Jobs are harder to get, they don't pay as much, and housing is insanely priced. So basically people are pissed about a lot of stuff and a whole messed up system, and most young people are either: in college, avoided it because cost, or recently graduated. Considering that, it is unsurprising that it is a major focus.
Also I should add, some bailouts work. Pretty much what people are saying here is "this has gotten out of hand. You need to bail us out so we can effectively participate in society."
> I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it.
Saddling _teenagers_ with such debt is problematic in many ways. For many of my peers they were not ready/cut out for college but still had the debt + schooling jammed down their throats because "it's what you're suppose to do."
Then, there's the cost to quality situation... I got nailed with this one - accredited private college with little oversight with a _horrible_ program for my area of study. We're talking two professors for the entire subject, and most of the courses they had advertised in their catalog hadn't been offered in over _seven_ years. Lots of people's time at school was just jumping through hoops for an "education" with very little value to their eventual career.
Cost has gone through the roof - administrative costs for colleges have skyrocketed. I've worked in marketing for schools - they're businesses before they're educational facilities. They're profit seeking through tuition, grants, donations, etc. Don't even get me started on sports...
> We don't typically reward people for digging themselves into a hole by bailing them out.
They were put through an incredibly profit-seeking system that operates in it's own self interest to get as much tuition as possible. Just like the healthcare industry, we've let administrative costs and middlemen drive the price of an education up while whittling the quality of it down.
100% they were not the only ones digging the hole that they find themselves in. Additionally, I have a hard time nailing 17-18 year olds to the cross for poor decisions in regards to their "digging" activities.
> Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.
And, just saying - yes this happens!! We consistently cut breaks to the interests of capital (large corporations, the rich w/taxes). Regardless of how any of us feel about it, this will continue to happen. So if our corporate benefactors are getting help, why can't a citizen with/seeking an education get some help too?
It's just something that can be presented in a very divisive way for each party to easily capture sizable market shares of the electorate. It became a "valuable" problematic to put forward when the group of people who struggle to pay off their loan became big enough to make it worth it politically.
The way this works is that you just have to define something to be a "necessity" in the public consciousness, because there's a prevailing intuition that it's illegitimate to be asked to pay for anything that fits that description. Medical bills are a necessity, so it's illegitimate to be asked to pay them. You have to go to college to get a good job, so it's illegitimate to be asked to pay for an education. You need a place to live, so high rents are also illegitimate. And so on.
And also reimburse the people who sacrificed to pay theirs off or avoid them in the first place. I’d donate my reimbursement if they did, but of course they won’t.
Demanding "even-stevens" all the time doesn't help the situation at all. The people that were able to pay off their loan debt were people who chose a degree that would be able to make significant money, were talented enough to land a great job in a field without a lot, or had the circumstances that let them finish a degree where others were unable to.
Do some people make bad decisions about degree choice? - Yes
Do some people drop out of school because it's too hard or because of other circumstances (unexpected baby, financial hardship, etc) - Yes
Do those people who either have made bad decisions, had less fortunate circumstances than others, or a combination of both deserve to live under a mountain of debt for the rest of their life? - No
One other thing people don't consider is that Most 18 year olds don't have a good grasp on money or what they want to do in general and in my hometown (poor county in WV) there was a TON of pressure to go to college if you didn't know what you want to do. Kids don't know better to not get into debt for a degree because everyone tells them not to worry about it. There is a serious problem with financial education in the US.
You can help out people who made a bad decision or had bad luck without being so uptight about how everything has to be complete "fair". The world isn't fair from the time we're born till the time we die.
> And also reimburse the people who sacrificed to pay theirs off or avoid them in the first place.
Most of the loans in this specific program were forgiven in exchange for at least 10 years of specific public sector jobs. Those jobs usually come with a reduced compensation in exchange for the loan forgiveness.
I have a few friends who went this route as lawyers because they prefer helping out in the public sector instead of doing corporate lawyering stuff or the other options.
They definitely did not come out financially ahead by going this route, even with the massive loan forgiveness.
Well what about us that didn't have loans and cash-flowed it? I have saved enough cash for my kids education by not buying new cars, no vacations, etc.. Seems I am punished for being frugal. I should blown it all and let the tax payer foot the bill.
I see this as basically just making amends for the failures of the PSLF program. This is for the folks who made years of payments expecting to get loan forgiveness after 10 years as promised, only to then be told none of the payments counted because they didn’t read the fine print or simply because of the loan servicer’s incompetence.
If democrats wanted that, they would write a bill to do so. Not everything has to be bundled up in a multi trillion dollar bill that involves a ton of other unrelated things. The reason they haven't done that is because they don't really want to.
There were a couple other things with a few more dollars allocated in Build Back Better, if I recall, perhaps worthy of more criticism than community college for everyone. Anyway, I wonder how much of the student loan debt is from community college, both as total dollar figure and per borrower. Something tells me that in-state tuition for community college isn’t where all the underwater borrowers went to school.
free community college is already a thing, it's called 'Pell Grants'
republicans don't want to talk about it because it's free money that works, and democrats don't want to talk about it because there's no reason to expand it
Side rant (though somewhat similar to colpabar's reply):
The Democrats tried to govern like they had a large majority, when they had 5 (I think) seats in the House, and a 50/50 Senate. Of course it failed! If you need every single vote, you can only go as far as the least-willing member will let you go.
The Democrats never should have tried to govern that way. They should have been coalition building, trying to find some common ground where they could do some things. Instead, they acted like they could dictate their agenda to Congress. Both Biden and Pelosi should have known better; they have decades of experience in Congress.
Why did they do this? You could argue that they did it because they knew that no Republican would ever cooperate on anything. But if that was the reason, they still should have gone for what they could get through the members they had, not going for the moon.
Or you could suspect that they wanted to blame the Republicans (and maybe the more conservative Democrats) for their lack of progress, as a tactic to win the next election. Well, from all the indications so far, that's not working out for them.
Yes. Additionally, it's crazy that we're singling out this specific type of debt for forgiveness. What exactly is the criteria that makes this debt different from others?
Is it because it's taken on when you're young and unable to understand the risks? If that's the case, I gambled away a LOT of money when I was 22 on casino credit, and I made the mistake of paying off my markers - I should have waited for the "you made a poor decision when you were young" forgiveness train to arrive.
The same could be said for those parasitic $500 "Student Credit Card" offers we all received when we were young, or the kids who decide to finance that brand new Mustang they can't afford at loan shark rates due to no credit history. Why not forgive it all, if the standard is "they were young and didn't know any better"?
And why stop at youth? It's pretty ageist to assume only the young are financially illiterate. There are plenty of older people who make poorly informed financial decisions. Bail them out too? When all the 5/1 ARMs written at 1.6% a year ago for homebuyers barely on the bubble of serviceability reset, we should definitely forgive them for their idiocy as well.
Yes! And if they stopped issuing these loans, tuitions will drop quickly. Im against loan forgiveness, but if they’re going to do it that also need to stop backing these loans.
This program is for people working in the public sector. It's not known at the time of issuing the loan whether the student will quality for loan forgiveness.
This sounds like an attitude og “If you believe your driving to fast, open the door and jump out the car. Pushing the brake won’t bring you to a stop immediately”
This loan forgiveness is for a very specific subset of lenders who have been making payments for 10 years but not yet paid of the loans. Eliminating loans all together would not have put them or society in a better position, it would just mean that next semester there would be hardly any new students accepted at any higher education and the entire education sector in the US would be bracing for impact and trying to figure out how on earth they are going to continue while their normal revenue disappears overnight.
The really crazy thing would be to end the student loan system without providing an alternative. If you do that, only kids with rich parents get to go to college.
The current system is far from perfect but it enables kids to attend college regardless of their parents' wealth. Any replacement system needs to enable that too.
The private market would just require people to be more responsible about taking out loans. If people that take out loans for basket weaving often don't pay them back nobody would give out a loan for basket weaving. If someone is on their 5th major or college without completing any credit they won't get any more loans without having some backing.
But there is a important point here too - these loans are issued with too low of an interest rate BECAUSE they are guaranteed by the government.
Drop that guarantee and the interest rate is going to float to more of a credit card level, which will make them prohibitive for funding tuition, which will put an extreme downward pressure on tuition rates.
Getting the DoE into the student loan market was intentional and is seen as the first step to reworking the entire system. Navient et al are keen to keep the gravy train rolling.
If we're going to be forgiving loans, we shouldn't be giving them out in the first place. Otherwise, we're going to be in the same spot in one generation's time.
Just stop guaranteeing them, let students default on them. All these guaranteed loans that can't be discharged allows academic institutions to ratchet up the price. Let them calculate risk and price them accordingly.
The guarantee is the only reason the loans are made. Otherwise, you're lending a lot of money to someone with no income and no assets, and no one will want to make that loan.
+1. Defaults exist for a reason - they force the lender to think about whether someone can pay off a debt or not, and we got here by giving everyone a loan, whether they could pay it off or not.
This create market driven dynamics in which degrees basically are tailor made for industry. This approach disincentivizes pure research for scientific purposes.
Universities are tax exempt, and highly profitable. Many have endowments over $1 billion [1]. Yet, the average cost in state is $10,000 per year, and almost $30,000 if out of state. For comparison, the tuition at Oxford College, one of the most prestigious institutions in the world, is $12,000 per year.
Student loans may be considered even predatory [2], adding to the injury.
There should be a better mechanism to allow people to go to college in the US, without subjecting them to half a lifetime of debt.
Are you complaining about the massive amount of not-really-loans given to small and not small during COVID?
Right? You're vociferously complaining about that frequent game played by corporations with outsized lobbying abilities to get loans that aren't really ever expected to be paid? How much was that in the grand scheme of printing money by the fed, a billion?
Or are you angry about little poor people getting a pittance of money in the grand scheme of things?
It is so strange how much people shrug off corporate handouts, but get up in arms when poor folks get a pittance from the government.
Edit: my tone was a bit harsh, probably because I get this knee jerk reaction.
It's probably because corporations are like gods. You can't kill them. They are omnipresent. With data hoovering, they are some form of omniscient. They are tireless, sleepless, don't require air, water, or food. The modern way to kill a corporation is probably so serpentine that it puts the best D&D plot to kill a god to shame. They don't technically have a physical body. They have servants, followers, a clergy, and power. They can cast "summon army of retainer lawyers" and send you to hell.
Who are we to question if the god of money hands the god of cars magic printed-but-never-actually-printed numbers that aren't based in something?
I think most people who'd like to get rid of the loans would also like to provide additional help to make college less elitist. Easy loans are just the local optimum we need to get out of.
If it only becomes for the rich, that's a problem. If it only is for those who can earn merit scholarships (plus a smattering of rich flunkies to pay the bills), is that necessarily a problem?
They were cancelled because it turns out the schools were scams. So it was a situation where the students got into a lot of debt, and got nothing(like an education or a worthwhile diploma) in return.
I don’t know the Us system at all but it sounds like what they are doing are rewarding public service workers (eg teachers?) or charity workers which likely don’t get paid well by cancelling their debt after a set time period of otherwise good behaviour.
Which sounds equitable to me, although I’ll never understand why high school is free but university isnt.
I agree in theory. If the U.S. were a company dedicated to profit for its shareholders, then it certainly shouldn't give out bad loans.
However, since the U.S. is a country dedicated to the benefit of its citizens then it's absolutely okay to provide loans as a form of social welfare, and accept a higher than normal rate of default. After all, providing these loans instead of the market was the entire point of the exercise.
I'm a UK guy in my 50's. I went to uni (the US term for college) in '83. At the time I was in the minority of the population. I was given a grant of £3000pa and was able to make ends meet. I might have lived in, shall we say, the most salubrious of environments, but I emerged without debt.
Same thing when I did my masters and PhD a few years after that.
I basically caught the tail end of uni, when it was for the minority of folk. I shake my head at the monster that higher education has become. I'm hardly in the loop anymore, but I've noticed that the UK want to nickel-and-dime the students with tuition fees, graduation fees, and whatever fee that they seem to concoct on an ongoing basis. The US seems even worse, with books costing 100's of bucks.
Shocking. Truly shocking. The whole thing is a shameful scam, and no-one is calling it out for what it is. The truth is, one rarely /needs/ a university education. It's really just a piece of paper to get you into an office job - if you're lucky.
The problem is, now that everyone's got a degree, they're not particularly valuable in their own right. It's a foot in the door to a club that keeps upping its membership fees.
Dare I say it, but it was better when a uni education was the preserve of the elite few. Now, I appreciate it that this is going to rankle a lot of sensibilities about "fairness". If fewer people had a uni education, then it wouldn't be considered quite so important, as employers would have to take what they could get rather than insisting on a degree. Plus it would also put an end to a large swathe of the population starting their young adult life with a small mortgage.
In my eyes, what we're seeing today is morally unconscionable. Lambs to the slaughter.
I find myself in a very funny situation where I have a very high paying and great job, that I got without any education. Now that I want to emigrate to Japan, I need a degree, so I am going to study in Finland as real estate is cheap and I can get a degree for free there before moving. I literally just need that piece of paper.
I don’t think Saul Goodman went to Finland for his degree. But seriously, it’s dumb. People with years of demonstrated expertise and progressive responsibility denied opportunity to apply for jobs because they simply don’t meet the MQ of the piece of paper. If you go back for it in the US you’ll be confronted with extraordinary cost, silly pledges for DEI, and all the rest.
Of course, the current UK student loan system has several features that make it far more favourable to students than the USA:
-Tuition fees are capped at £9250 per year (approx $12,100), even for prestigious universities. A typical degree in the UK lasts for three years.
-An additional loan is available for living costs. The amount available varies based on household income.
-Loan repayment is linked to earnings. You only need to repay while you're earning £27,295 or more per year. If you're unemployed or on a wage below that, you don't have to pay anything back, so the debt is much less likely to cause financial hardship.
-Repayments are typically automatically deducted from wages (for workers who are salaried and only have one employer), so there is little admin involved in payment (the repayment rate is 9% of the salary above the £27,295 threshold).
-Loans are written off 30 years after graduation. It is predicted that most people won't actually pay off the loan, so it's seen by many as a sort of "graduate tax".
Some downsides:
-The interest rate is very high (especially given the current inflation rate), and interest starts building up while a student is studying.
-Even if the repayment terms are favourable and should be seen as a "graduate tax", rather than a loan, it's still the case that people will have a debt for 30 years of their career.
-A lot of the loans look set to be written off (as people won't earn enough to pay them off). This cost is met by the taxpayer.
> Dare I say it, but it was better when a uni education was the preserve of the elite few.
I agree, but there is fundamentally no reason this level of education need be restricted to the elite few today even if we ran the clock backwards on everything related to university. We live in the information age now. I can have access, for free, to all the educational material of any university in the world. I can't have access to their equipment[0], and I can't have access to their professors[1], but the only real problem with that today is that I don't get a piece of paper at the end that says I got a piece of paper from a university.
[0] Could be solved with some kind of rental program I guess, at least for equipment that isn't ridiculously rare and valuable.
[1] How much access do the students have these days? From what I hear, TAs do a lot of the actual interacting with students part.
Is this a by-product of reduced government funding? I know my state school received less funding from our state over time and that's where I thought tuition and fees had to make up the shortfall [1]. In turn universities increased frivolous spending on housing, sports and facilities that serve little education purpose but are intended to attract more tuition paying students.
Unfortunately no politician will have the guts to do this.
This is why people are skeptical of the federal government getting involved in just about anything.
They passed this program to help students afford school, and it’s done the opposite. It was also passed as a revenue neutral program of loans that would be repaid, now they’re increasingly being forgiven or put into forbearance.
Now to fix it, someone will have to feel significant pain, most likely both the educators and low-income students.
This is a bad plan. Why would any 21 year old ever pay? Just ignore this debt until it is discharged. So you have to wait 7 years to buy a house? That sounds like no big deal.
What we should do is have the fed define a maximum allowable charge for the school loan that can be protected by the government. Pick some number, like $10K a year all in. Any other school loans can be discharged as they aren't protected or schools could try to force the parents to co-sign. But either way, the government stops propping up runaway tuition inflation.
We have to also look at why some of the cost is through the roof. When I was in school, housing was block buildings with bunk beds and a bathroom for the whole floor. Cafeteria was 2 choices and drinks. Now, everyone has a private bedroom and living room to hang out in and their own apartment bathroom. Cafeteria is like a commercial buffet with all you can eat Nutella. That money has to come from somewhere. People want it to feel like a 4 year cruise ship. That is one reason that the costs are out of control.
This is also one factor in our healthcare. Everyone wants lower prices but they also want an Urgent Care on every corner so they can go when it is convenient to them. Someone has to pay for that building and staff to sit there all day waiting for customers to show up. Everyone seems to want it both ways and never stop to consider their complicity.
The schools should also have some skin in the game. If a former student defaults on their loan then the school should have to eat part of the cost, and schools (or particular majors) with high default rates shouldn't be eligible for loans at all. This would fix the problem of irresponsible schools encouraging students to take on huge loans that leave them stuck in debt for decades.
There's a reason the federal government is as involved as it is. When I started college, lots of students dropped out because they didn't have the money. My first semester, maybe five students I interacted with dropped out within a few weeks. "Going back home to work. The loan didn't come through." That was back in the old days, when tuition was cheap, before states decided to end support for university education.
The better policy would have two parts:
- A maximum (like 7%) of your after-tax income can go to student loan repayment.
- Colleges have to partially repay loans they took for tuition if after five years the student isn't on track to pay the loan off. This would align the incentives of the college with those of the student. It would bring a fast end to students that borrow to pay $75,000 a year for worthless programs.
This is the answer. Lenders would then have to do proper qualification on borrowers, would be more limited in their lending, and this would put downward pressure on tuition.
This way, American universities have large amounts of funds available to provide the best education, best facilities, hire the best professors and that's why America simply has the best universities worldwide and it is paid by their students?
It also mostly only paid by students who can afford it. Students from weaker social backgrounds only have to pay a small fraction of the normal tuition fees.
As well, 77% of people with student loans have less than $40,000 in debt and 57% have below $20,000 in debt. $20,000 can be paid off within 2 years with a normal graduate job if one wants to pay them off early.
I ended up working 60 hour weeks to not take out student loans. People talk about having a good time at college but all I remember is getting up at 4am to go to my first job, doing class all day and working my second job until 10pm. No spring breaks and no summers or holidays because I could work those hours to stay out of debt. It is hard to have much sympathy for people asking for student loan forgiveness.
On the plus side I ended up graduating with $20 and no debt.
I worked full time thru college for bad pay and still needed 30k in student loans to make it out with my degree. I went to a state school, nothing fancy.
I hardly ever had fun in college, it was awful. The working world is waaaaaaay better for me.
Not everyone who has loan debt just partied away on borrowed cash.
I agree. I also remember working Friday/Saturday nights in the lab (as that was the only time I got to work on my projects), while everybody went out clubbing.
And we're definitely in a spot right now where folks that can pay off their loan are holding off in case the US forgives all loans or something. A perverse incentive that is going to boost the number of student loans that are not paid off.
Not just that, but with interest rates at zero and inflation at 8.5% per year (and growing!) it is incredibly stupid to pay even a single penny of federal loan debt early, unless you have a really good need to polish your credit score.
Federal student loan debts are getting cheaper by the minute, why pay more now?
This attitude, as stated, is one of the fundamental evils, I think (the implication being "If I can't have it, nobody can", or, in this case, "If I didn't get it when it was relevant to me, nobody can"). In this case, the core grievance is valid ("I think there's a better way to address the problem"), but this expression of it makes the problem into the super common "us vs them" where "them" is defined by the terrible cultural obsession with the concept of "deserved" punishment and personal responsibility in an unqualified, absolutist manner ("He committed a crime, he deserves anything that happens", "He failed to pay a loan, he deserves anything that happens", "She had sex, she deserves anything that happens", etc).
People who have paid their student loan debt are in exactly the same situation they were after this forgiveness than they were before: that is, they have no student loan debt.
People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible. Very different.
How about the govt just obey the terms of the agreement they made? This program has been on the books since 2007. Anyone who didn’t use it made their own decision.
It is a case of "me me me" indeed. This is why people support canceling existing loans instead of changing the college tuition/loan system. They don't want to fix things for future generations, they want to fix their own problem with their own student loan and move on.
My master plan is to eventually have 13 graduate level Master's degrees under my belt. Why you may ask? If one is enrolled as a full time "student", the student loan monthly payments are paused. Since, at least for me, I can handle being a full time Master student and also my full time remote-only job, this isn't an issue.
The reason I am doing this is because there is $1.6 trillion in student loan debt; the government is definitely not seeing most of that money. Someone will have to come in and save us all. And well, I am willing to bet 13 master's degrees on this.
I assume you’re joking, but just in case: in-school deferment only automatically applies to federal loans. For private loans, you have to apply and they can reject you or put a cap on the deferment duration. For federal loans, your eligibility depends on income and has an aggregate maximum of $138,500 including your undergraduate federal loans.
It's news in that they're actually unblocking programs which actually had been long legislatively approved paths for forgiveness and were already supposed to have been operating to this end for years.
It's not news in that these are not new categories of, nor expansions of previous commitments to student loan forgiveness.
When you look at the overall stats of student loans, a increasing number of them (a majority!) look like they will be never paid off over their lifetime, and we are still in a situation where if an individual has a small loan problem it's the responsibility of an individual. But if an entire class or multiple-generations (or a big enough individual loan), has problems, then it's a problem for the bank - in this case the US gov't and an even bigger problem of our overall society and providing an sustainable economically competitive skilled labor pool.
It used to be that for PSLF you had to make 120 sequential "on-time" payments and if your loan provider claimed (correctly or incorrectly) that one of them was late then the clock would reset, making it next to impossible for anyone to claim the benefit. A 10-year clock that can be reset at any time by the bank isn't good.
I believe they fixed it (possibly temporarily) so that the clock no longer resets.
This is a partial fix. The full fix would be to have PLSF pay out incrementally, say 10% after each 12 payments.
The real solution is to stop figleafing the problem and have the government handle all aspects of the loans directly without the involvement of any banks.
The government already has a large department of the Treasury that handles this kind of thing.
> Several thousand borrowers with older loans will also receive forgiveness through income-driven repayment (IDR) forgiveness, plus another 3.6 million borrowers will receive at least three years of additional credit toward IDR forgiveness, the Education Department said in a statement.
I think this is the actual news. Although it doesn't state what the selection process is.
I know folks who have worked towards PSLF and ended up getting screwed because they weren't on the right repayment plan. Absolutely devastating to find out you've spent ten years working on something only to have it fall apart because you checked the wrong box once. And apparently this is a very, very easy mistake to make.
Particularly a while ago it was nearly impossible to utilize the program because it was a bureaucratic and underfunded mess. So the number who qualified was effectively zero.
Now it's marginally less terrible and actually forgiving some people's loans.
Readit News
> Several thousand borrowers with older loans will also receive forgiveness through income-driven repayment (IDR) forgiveness, plus another 3.6 million borrowers will receive at least three years of additional credit toward IDR forgiveness, the Education Department said in a statement.
IMO this is more an example of how bad journalism can have damaging effect on even a well versed audience.
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All Biden's administration is doing here is ungumming people who were eligible years ago. This is cleanup from the prior administration
It would be straight forward to simply pay for higher education expenses directly, with much less bureaucracy and more transparent pricing, allowing for better allocation of society’s resources. But, as always, that would reduce the avenues for corruption, and so the politically viable option is the circuitous option.
Back in 2005 Biden supported and stumped for a bill that stripped students of bankruptcy protections and led the country into a 1.7 trillion dollar student debt crisis. Watching President Joe Biden offer token debt forgiveness in 2022 is a little bit infuriating to watch as he could easily have spent the last seventeen years working to reform his mistake. If i had to weigh in on the sudden rise of student debt forgiveness under the current administration id say its political. inflation, gas prices, housing shortages, and supply chain issues have made it all the more practical to take action now and shore up the old midterm voter appeal.
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Well, FWIW, I'd never heard of that program before now, but I'm not super happy about it, either.
FWIW, IBR systems they are a common policy suggestion from both conservatives and liberals (with differing priorities / rules).
Did you know this happened before this article? No. Does your caring change the fact that it's news? No.
"What's the point of the article?" To inform. That this needs to be questioned is upsetting.
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The article refers to these as "historical failures" but I think that being very generous.
Come work for the permanent undemocratic bureaucracy, and you'll even your student loans forgiven. But if you decide to go down the path of becoming a kulak, the student loans will be with you even if you go bankrupt.
I'm curious where the sudden bump to 40k comes from. According to Wikipedia [1]:
> The Department of Education reported that 2,215 borrowers had the remainder of their respective student loans forgiven under the program as of April 30, 2020. [1]: https://en.m.wikipedia.org/wiki/Public_Servic
I'm not opposed to student loan forgiveness, but I don't think it's nearly as popular as many progressives would like to believe as a standalone proposal. Come up with some qualifications and limitations for reimbursing past loan payments, as well as a systemic fix for the future, and I'd be all for it.
All that being said, is it still wise to forgive student loans at this particular time? Originally, the pitch was that it would help act as a stimulus during the pandemic downturn. Now that we're dealing with the opposite situation, I don't see the rush. Maybe a bill could be passed that had a delayed or gradual effect.
A wise man once told me "The first thing you should do when you find yourself in a hole is stop digging". This is my standard response to the student loan crisis and many others.
Student loans can't be discharged through bankruptcy unless the borrower is permanently disabled. It's entirely possible to end up in default on a loan for a degree you never obtained, paying a loan your entire life, without ever decreasing the principal. Unsurprisingly, this rubs people the wrong way.
- Interest rates have gone up
- Cost of schools have risen
- The government holds most student debt
- It is still usually a good deal to get an education, but the deal is rapidly becoming less of one (the value of the deal is even changing for people in the middle of education or even graduated)
- The clauses on the debt are getting stronger, being almost impossible to cancel the debt and leading to people never being able to pay off their loans.
- The loans are predatory and becoming more so (when I took mine out a decade ago I had the option to pick "fixed rate" or "variable" but that wasn't actually fixed _interest_ rate)
- Schools are promising scholarships and then not giving them (my school would constantly schedule me for meeting with the financial aid office, a requirement, the week after the deadline and wouldn't schedule me before)
- We're better understanding the major impact on our economy when a generation that is in their prime earnings age is still not consuming and instead paying off debt.
- An educated population results in a happy and effective civilization (especially if one of your main exports is technology)
I think there's a lot of good reasons that people are pissed off. Our generations specifically was told "go to college and you'll get a good job and have a stress free life." But we quickly found that going to college doesn't lead to a good job and we can't get the same things our parents did. Jobs are harder to get, they don't pay as much, and housing is insanely priced. So basically people are pissed about a lot of stuff and a whole messed up system, and most young people are either: in college, avoided it because cost, or recently graduated. Considering that, it is unsurprising that it is a major focus.
Also I should add, some bailouts work. Pretty much what people are saying here is "this has gotten out of hand. You need to bail us out so we can effectively participate in society."
> I'm curious to know how these loans became such a political issue. It's unusual to take out a loan and then complain about having to repay it.
Saddling _teenagers_ with such debt is problematic in many ways. For many of my peers they were not ready/cut out for college but still had the debt + schooling jammed down their throats because "it's what you're suppose to do."
Then, there's the cost to quality situation... I got nailed with this one - accredited private college with little oversight with a _horrible_ program for my area of study. We're talking two professors for the entire subject, and most of the courses they had advertised in their catalog hadn't been offered in over _seven_ years. Lots of people's time at school was just jumping through hoops for an "education" with very little value to their eventual career.
Cost has gone through the roof - administrative costs for colleges have skyrocketed. I've worked in marketing for schools - they're businesses before they're educational facilities. They're profit seeking through tuition, grants, donations, etc. Don't even get me started on sports...
> We don't typically reward people for digging themselves into a hole by bailing them out.
They were put through an incredibly profit-seeking system that operates in it's own self interest to get as much tuition as possible. Just like the healthcare industry, we've let administrative costs and middlemen drive the price of an education up while whittling the quality of it down.
100% they were not the only ones digging the hole that they find themselves in. Additionally, I have a hard time nailing 17-18 year olds to the cross for poor decisions in regards to their "digging" activities.
> Unless they're large corporations. We bail them out in certain cases. But I don't think that's a popular idea either.
And, just saying - yes this happens!! We consistently cut breaks to the interests of capital (large corporations, the rich w/taxes). Regardless of how any of us feel about it, this will continue to happen. So if our corporate benefactors are getting help, why can't a citizen with/seeking an education get some help too?
Do some people make bad decisions about degree choice? - Yes
Do some people drop out of school because it's too hard or because of other circumstances (unexpected baby, financial hardship, etc) - Yes
Do those people who either have made bad decisions, had less fortunate circumstances than others, or a combination of both deserve to live under a mountain of debt for the rest of their life? - No
One other thing people don't consider is that Most 18 year olds don't have a good grasp on money or what they want to do in general and in my hometown (poor county in WV) there was a TON of pressure to go to college if you didn't know what you want to do. Kids don't know better to not get into debt for a degree because everyone tells them not to worry about it. There is a serious problem with financial education in the US.
You can help out people who made a bad decision or had bad luck without being so uptight about how everything has to be complete "fair". The world isn't fair from the time we're born till the time we die.
Most of the loans in this specific program were forgiven in exchange for at least 10 years of specific public sector jobs. Those jobs usually come with a reduced compensation in exchange for the loan forgiveness.
I have a few friends who went this route as lawyers because they prefer helping out in the public sector instead of doing corporate lawyering stuff or the other options.
They definitely did not come out financially ahead by going this route, even with the massive loan forgiveness.
If next year all new college students get free tuition I'm not going to be upset that I had to pay.
I'm going to be happy that they don't have my burden.
We as a society need to push the next generation up, not complain that they don't have it as hard as we do.
*Free Tuition = Tuition paid for by our taxes.
republicans don't want to talk about it because it's free money that works, and democrats don't want to talk about it because there's no reason to expand it
The Democrats tried to govern like they had a large majority, when they had 5 (I think) seats in the House, and a 50/50 Senate. Of course it failed! If you need every single vote, you can only go as far as the least-willing member will let you go.
The Democrats never should have tried to govern that way. They should have been coalition building, trying to find some common ground where they could do some things. Instead, they acted like they could dictate their agenda to Congress. Both Biden and Pelosi should have known better; they have decades of experience in Congress.
Why did they do this? You could argue that they did it because they knew that no Republican would ever cooperate on anything. But if that was the reason, they still should have gone for what they could get through the members they had, not going for the moon.
Or you could suspect that they wanted to blame the Republicans (and maybe the more conservative Democrats) for their lack of progress, as a tactic to win the next election. Well, from all the indications so far, that's not working out for them.
So why did they take the approach they took?
Is it because it's taken on when you're young and unable to understand the risks? If that's the case, I gambled away a LOT of money when I was 22 on casino credit, and I made the mistake of paying off my markers - I should have waited for the "you made a poor decision when you were young" forgiveness train to arrive.
The same could be said for those parasitic $500 "Student Credit Card" offers we all received when we were young, or the kids who decide to finance that brand new Mustang they can't afford at loan shark rates due to no credit history. Why not forgive it all, if the standard is "they were young and didn't know any better"?
And why stop at youth? It's pretty ageist to assume only the young are financially illiterate. There are plenty of older people who make poorly informed financial decisions. Bail them out too? When all the 5/1 ARMs written at 1.6% a year ago for homebuyers barely on the bubble of serviceability reset, we should definitely forgive them for their idiocy as well.
This loan forgiveness is for a very specific subset of lenders who have been making payments for 10 years but not yet paid of the loans. Eliminating loans all together would not have put them or society in a better position, it would just mean that next semester there would be hardly any new students accepted at any higher education and the entire education sector in the US would be bracing for impact and trying to figure out how on earth they are going to continue while their normal revenue disappears overnight.
If anything would be crazy, that would be it.
The current system is far from perfect but it enables kids to attend college regardless of their parents' wealth. Any replacement system needs to enable that too.
To a politican about the only thing better than a vote buying scheme is perpetual vote buying scheme.
Minor nit: The gov't doesn't give the loans, they underwrite & insure the loans.
Drop that guarantee and the interest rate is going to float to more of a credit card level, which will make them prohibitive for funding tuition, which will put an extreme downward pressure on tuition rates.
Getting the DoE into the student loan market was intentional and is seen as the first step to reworking the entire system. Navient et al are keen to keep the gravy train rolling.
Universities are tax exempt, and highly profitable. Many have endowments over $1 billion [1]. Yet, the average cost in state is $10,000 per year, and almost $30,000 if out of state. For comparison, the tuition at Oxford College, one of the most prestigious institutions in the world, is $12,000 per year.
Student loans may be considered even predatory [2], adding to the injury.
There should be a better mechanism to allow people to go to college in the US, without subjecting them to half a lifetime of debt.
[1] https://en.m.wikipedia.org/wiki/List_of_colleges_and_univers...
[2] https://abcnews.go.com/US/wireStory/navient-settles-predator...
"Universities are actually hedge funds that happen to have a school attached to them".
Right? You're vociferously complaining about that frequent game played by corporations with outsized lobbying abilities to get loans that aren't really ever expected to be paid? How much was that in the grand scheme of printing money by the fed, a billion?
Or are you angry about little poor people getting a pittance of money in the grand scheme of things?
It is so strange how much people shrug off corporate handouts, but get up in arms when poor folks get a pittance from the government.
Edit: my tone was a bit harsh, probably because I get this knee jerk reaction.
It's probably because corporations are like gods. You can't kill them. They are omnipresent. With data hoovering, they are some form of omniscient. They are tireless, sleepless, don't require air, water, or food. The modern way to kill a corporation is probably so serpentine that it puts the best D&D plot to kill a god to shame. They don't technically have a physical body. They have servants, followers, a clergy, and power. They can cast "summon army of retainer lawyers" and send you to hell.
Who are we to question if the god of money hands the god of cars magic printed-but-never-actually-printed numbers that aren't based in something?
You have to work for a state, local, federal or tribal government, or a 501c3 (non-profit) for ten years in order to qualify.
However, since the U.S. is a country dedicated to the benefit of its citizens then it's absolutely okay to provide loans as a form of social welfare, and accept a higher than normal rate of default. After all, providing these loans instead of the market was the entire point of the exercise.
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Same thing when I did my masters and PhD a few years after that.
I basically caught the tail end of uni, when it was for the minority of folk. I shake my head at the monster that higher education has become. I'm hardly in the loop anymore, but I've noticed that the UK want to nickel-and-dime the students with tuition fees, graduation fees, and whatever fee that they seem to concoct on an ongoing basis. The US seems even worse, with books costing 100's of bucks.
Shocking. Truly shocking. The whole thing is a shameful scam, and no-one is calling it out for what it is. The truth is, one rarely /needs/ a university education. It's really just a piece of paper to get you into an office job - if you're lucky.
The problem is, now that everyone's got a degree, they're not particularly valuable in their own right. It's a foot in the door to a club that keeps upping its membership fees.
Dare I say it, but it was better when a uni education was the preserve of the elite few. Now, I appreciate it that this is going to rankle a lot of sensibilities about "fairness". If fewer people had a uni education, then it wouldn't be considered quite so important, as employers would have to take what they could get rather than insisting on a degree. Plus it would also put an end to a large swathe of the population starting their young adult life with a small mortgage.
In my eyes, what we're seeing today is morally unconscionable. Lambs to the slaughter.
-Tuition fees are capped at £9250 per year (approx $12,100), even for prestigious universities. A typical degree in the UK lasts for three years.
-An additional loan is available for living costs. The amount available varies based on household income.
-Loan repayment is linked to earnings. You only need to repay while you're earning £27,295 or more per year. If you're unemployed or on a wage below that, you don't have to pay anything back, so the debt is much less likely to cause financial hardship.
-Repayments are typically automatically deducted from wages (for workers who are salaried and only have one employer), so there is little admin involved in payment (the repayment rate is 9% of the salary above the £27,295 threshold).
-Loans are written off 30 years after graduation. It is predicted that most people won't actually pay off the loan, so it's seen by many as a sort of "graduate tax".
Some downsides:
-The interest rate is very high (especially given the current inflation rate), and interest starts building up while a student is studying.
-Even if the repayment terms are favourable and should be seen as a "graduate tax", rather than a loan, it's still the case that people will have a debt for 30 years of their career.
-A lot of the loans look set to be written off (as people won't earn enough to pay them off). This cost is met by the taxpayer.
I agree, but there is fundamentally no reason this level of education need be restricted to the elite few today even if we ran the clock backwards on everything related to university. We live in the information age now. I can have access, for free, to all the educational material of any university in the world. I can't have access to their equipment[0], and I can't have access to their professors[1], but the only real problem with that today is that I don't get a piece of paper at the end that says I got a piece of paper from a university.
[0] Could be solved with some kind of rental program I guess, at least for equipment that isn't ridiculously rare and valuable.
[1] How much access do the students have these days? From what I hear, TAs do a lot of the actual interacting with students part.
[1] https://wispolicyforum.org/research/uw-in-the-21st-century-l...
This is why people are skeptical of the federal government getting involved in just about anything.
They passed this program to help students afford school, and it’s done the opposite. It was also passed as a revenue neutral program of loans that would be repaid, now they’re increasingly being forgiven or put into forbearance.
Now to fix it, someone will have to feel significant pain, most likely both the educators and low-income students.
What we should do is have the fed define a maximum allowable charge for the school loan that can be protected by the government. Pick some number, like $10K a year all in. Any other school loans can be discharged as they aren't protected or schools could try to force the parents to co-sign. But either way, the government stops propping up runaway tuition inflation.
We have to also look at why some of the cost is through the roof. When I was in school, housing was block buildings with bunk beds and a bathroom for the whole floor. Cafeteria was 2 choices and drinks. Now, everyone has a private bedroom and living room to hang out in and their own apartment bathroom. Cafeteria is like a commercial buffet with all you can eat Nutella. That money has to come from somewhere. People want it to feel like a 4 year cruise ship. That is one reason that the costs are out of control.
This is also one factor in our healthcare. Everyone wants lower prices but they also want an Urgent Care on every corner so they can go when it is convenient to them. Someone has to pay for that building and staff to sit there all day waiting for customers to show up. Everyone seems to want it both ways and never stop to consider their complicity.
The better policy would have two parts:
- A maximum (like 7%) of your after-tax income can go to student loan repayment. - Colleges have to partially repay loans they took for tuition if after five years the student isn't on track to pay the loan off. This would align the incentives of the college with those of the student. It would bring a fast end to students that borrow to pay $75,000 a year for worthless programs.
It is also awful public policy to train people to get into debt right out of the gate - this just has all sorts of bad long term consequences.
The only solution is some form of price controls, presumably by nationalising some universities or competing against them at the federal level.
This way, American universities have large amounts of funds available to provide the best education, best facilities, hire the best professors and that's why America simply has the best universities worldwide and it is paid by their students?
It also mostly only paid by students who can afford it. Students from weaker social backgrounds only have to pay a small fraction of the normal tuition fees.
As well, 77% of people with student loans have less than $40,000 in debt and 57% have below $20,000 in debt. $20,000 can be paid off within 2 years with a normal graduate job if one wants to pay them off early.
Source from 2019: https://i2.wp.com/www.brookings.edu/wp-content/uploads/2019/...
On the plus side I ended up graduating with $20 and no debt.
I worked full time thru college for bad pay and still needed 30k in student loans to make it out with my degree. I went to a state school, nothing fancy.
I hardly ever had fun in college, it was awful. The working world is waaaaaaay better for me.
Not everyone who has loan debt just partied away on borrowed cash.
Federal student loan debts are getting cheaper by the minute, why pay more now?
People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible. Very different.
The reason I am doing this is because there is $1.6 trillion in student loan debt; the government is definitely not seeing most of that money. Someone will have to come in and save us all. And well, I am willing to bet 13 master's degrees on this.
Currently at 3. ;)
And the interest is capitalized at the end. That's what the banks are counting on.
Source: https://studentaid.gov/understand-aid/types/loans/subsidized...
How is this news?
It's not news in that these are not new categories of, nor expansions of previous commitments to student loan forgiveness.
When you look at the overall stats of student loans, a increasing number of them (a majority!) look like they will be never paid off over their lifetime, and we are still in a situation where if an individual has a small loan problem it's the responsibility of an individual. But if an entire class or multiple-generations (or a big enough individual loan), has problems, then it's a problem for the bank - in this case the US gov't and an even bigger problem of our overall society and providing an sustainable economically competitive skilled labor pool.
I believe they fixed it (possibly temporarily) so that the clock no longer resets.
This is a partial fix. The full fix would be to have PLSF pay out incrementally, say 10% after each 12 payments.
The government already has a large department of the Treasury that handles this kind of thing.
I think this is the actual news. Although it doesn't state what the selection process is.
Now it's marginally less terrible and actually forgiving some people's loans.