I know I'm late to the party, but this is something I have spent a long time thinking about. From what I see, the student loan program is designed to help students who have the right grades and SAT scores, but cannot afford the annual tuition fee as opposed to comparable students who were blessed with parents who planned for and saved to pay for the tuition fee. In my opinion, the best solution continues to be to let allow private companies issue the loans, but regulate it. The loans, for example, cannot be more than a certain % points over the long term interest rate.
This will allow the private companies to give out loans to deserving students for majors that actually will enable them to pay off the loan, and not give out loans to students seeking a major in, say social policy. Because, if they give out too many bad loans, they will end up going bankrupt.
Yes, that'll mean that social policy discipline will be overloaded with people of means, but that can be balanced a bit via offer of scholarship; also, really good scholars who took out loans may be able to take a grad level course in such subjects, and even Phd. So, folks of all backgrounds will still be represented in these areas, especially at the higher level.
I came from a middle class family in India, and my parents were pretty clear I should major in STEM programs. My kids, however, have an opportunity to pursue liberal arts, or anything they want - but I did not. That is life.
How will regulations scrutinize undergrad disciplines that don't make money? Will they say, "majoring in the history of Marxism leads graduates to have an unduly high debt to income ratio post-graduation, so we will no longer subsidize people who major in these fields."?
"But I think the best version of that would be that the law school itself would extend credit to the students it admits and the loans would be dischargeable in bankruptcy."
The loans should only be dischargeable if the degree can be repossessed and resold. If the borrower gets to keep the degree, and the education, for the rest of his/her life, then no.
This piece makes some good points, but the argument that there is no case for student loan debt forgiveness is dependent on a fantasy situation that is not reality. As Matt very dutifully points out, there is no federal path to higher ed reform right now, nor does it appear likely that there will be one in the future. The situation facing Joe Biden is "Forgive debt and kick the can down the road" or "Do nothing". "Cut a huge bipartisan deal with Senate Republicans that totally solves the problem" is not on the table.
I'm perfectly happy debating whether forgiving student loan debt is a good idea (I think it makes sense to do so for those who didn't complete their degree or have gone into public service) or the political optics of it (bad if you forgive all the debt, not so bad if you forgive it for teachers and social workers). But let's not reason as if anything productive on this issue is going to come out of Congress, because that's not the world we're living in.
This gets at a point raised in the article - did Congress actually give the President discretion to forgive federal student loans? Or is this whole idea that the President can by executive action "forgive" student loans just an ultra vires fantasy, no different in reality from the fact that a President Trump could, in his second term, "forgive" his campaign donors' federal tax obligations by ordering the IRS not to pursue collection of federal taxes due by people who donated to his political campaign? I don't know enough about the legal particulars of the federal student loan program to answer that, but it seems like it's a threshold question.
I think one of the simplest and easiest way to help some with the student loan debt issue is to lower the interest rates over time to where eventually they are nominal. As of now, the interest rates on my student loans are between 5-7%. I understand that lending money to a student is a risky venture and the I think the rates reflect that. However, I think those rates should diminish over time if you meet certain criteria (enrolled in auto-debt, never miss a payment, never ask for a deferment/forbearance) to where eventually they are withing the 1-2% range.
Also, Id like to share how my student loan debt has affected me and my life choices. I am in my mid thirties and graduated law school about 11 years ago. At the time, I was very immature and did not do well in school. As a result, I did not get a high paying job but had over 100k to pay off in loans. When trying to formulate a plan on how to pay off the loans, a wave of despair hit me and I felt like this mountain of debt would be too high for me to traverse. At that point, I was faced with a choice: austerity for 10+ years or enter the Income Based Repayment program and have a bit of wiggle room in my finances. What I mean by "wiggle room" is being able to live outside of my parent's house. Besides a vehicle I bought (with help from selling a 2008 Buick van I inherited) to replace my 97 4Runner, I did not really spend money on much. However, I was faced with another choice of either matching my employers 401k contribution or paying off debt. I choice to match the contribution b/c the return rate was higher than my loan interest rate. FF 8 years and I decided to move to CO to pursue a relationship. That relationship ended but I did meet my now wife (married in Nov). The hardest convo I had with her before getting married happened early in our relationship. I was very self conscious about my debt burden and felt in some way it made me a bad person and not worthy to be with anyone. Fortunately, she was understanding, said she loved me, and that we would tackle my debt together. It was a huge relief but there will always be the guilt in the back of my mind knowing that she is having to sacrifice due to my poor academic performance over 3 years of my early 20s. Looking back, I think the black/white advice is to sacrifice and pay the debt before you move on with your life, but (and this is what I tell my wife, maybe to justify my reasoning to myself) if I took the austerity measures, I never would have met her.
Having said all that, I am not for forgiving any debt. I made the choice to take out the money and knowing what I needed to do to be in a position to pay it off. But, I prioritized other things in my life at the time, that I still dont understand why and here I am. With my increase in pay over the last decade and now with my wife's income, we will be able to pay off my debt in the next two years but that money could have been used in a much more wealth building way, if I made different choices 10+ years ago.
Anyway, I wanted to provide a "day in the life" anecdote that puts a life story behind the debt. I dont regret going to law school, I regret how I spent my time there. I dont regret not taking austerity measures to pay off my debt but I will deal with the guilt of having my wife help me with my burden, when she has made all the right choices.
I was watching a YouTube video of Dave Ramsey (who, for all his flaws, has good budgeting advice for people deeply in debt) where a guy called in who had finished medical school a year ago but had failed his board exams several times, so he had the debt of a medical school grad (he said over 150k) but none of the expected income. Dave tried to give him some advice on what to do but didn't really have any answers, and everyone in the comments section was encouraging him to just leave the country. Seems like situations like that, however niche, would be a good use for student loan forgiveness because otherwise that guy's life is completely ruined through very little fault of his own.
I get that MDs/JDs aren't the most sympathetic class, but it is genuinely an insane system that to enter a high-prestige profession requires taking out a six-figure lottery ticket on yourself. It seems bad that we've structured it that prudent people steer away from what are stable and lucrative jobs for the people that get them.
So even accepting that it's his fault, which I'm not knowledgeable enough to do, why should I tried to learn something come with a financial death penalty? If you could clear the debt in bankruptcy it would be one thing but it really is weird that the penalty for being academically ambitious is far more severe than maxing out your credit cards to buy useless crap.
Oh, I don't disagree, and depending on the circumstances, the med school probably bears some of the blame too, for giving him a degree without ensuring he has the requisite skills to practice (although failing out at the end wouldn't have been any better).
My understanding is that one can actually discharge student loans in bankruptcy in cases of extreme hardship, which he might meet. At the very least, an income-based repayment plan would keep it from crushing him, and should be discharged after 20 years.
Yeah I don't know the person so it is hard to say, but it seemed like he had studied a lot and I'm not really going to fault someone for not being naturally smart enough to pass a test. Apparently those exams have a 96% pass rate, so that's 4% of a group of incredibly hard-working people that end up in that awful position.
I went to law school in 2012, the worst possible time to do so. I never got a job in law so I have 200k in debt that I know I'll never pay off. I understand I'll never get my loans forgiven, but I really wish some of the energy around the debate would go to streamlining the multiple, extremely confusing income-based repayment plans that currently exist. Is there anything preventing Biden/DOE from instituting a more simple "pay X% of your income" rule?
I'm generally not a big "personal responsibility" guy because life is hard but at some point people need to live with some of their choices, don't they? I'm all for shutting down scams and deceptive practices and garbage programs that don't do what they say they're going to do. I'd be fine with exploring any options for cutting the price of school going forward. But if you decided to go to school and you decided to take loans, you should probably be accountable to paying the loans back.
I live in Maryland.
Towson University - $15k/year if you live off campus
Loyola University - $53k/year if you live off campus, but few people do that, so $67k
If you're from Maryland and want to be a sociology major, education major, art history major, etc. and you're going to Loyola University (and you aren't from a wealthy family)... you've made a terrible choice. It's bizarre to me to think that the government should step in and fix it.
If we wanted to conjure in a lab an issue that would reunite libertarians, earnest social conservatives, and opportunistic rightwing populists, opposition to student debt relief (aka a bailout to the coddled, leftist higher education establishment) would be it.
My dad had promised his two kids that he'd pay for undergrad. My older sister ended up getting into her reach school, which at the time that I was looking at college, was literally the most expensive school in the country (I assume its around the same, but it has been a little more than 10 years so it might have dropped a little in those rankings). My dad kept his promise to her, but he came to me and said he wasn't sure that he could do the same for me if I went to a school that had that level of tuition. So I intentionally didn't apply to some selective schools that my counselors thought I could get in. I ended up having a little bit of student debt since I took an extra semester to graduate but less than 5k.
I looked around at grad schools when I graduated. I applied to a couple and got into most of them, but my professors said if they weren't willing to pay me to go, they didn't want me to go there. I could have disregarded their advice and taken out loans, but I made the prudent choice.
Ironically, I ended up paying off my student loans while working for a Federal Student Loan Servicer. I do have some sympathy for people who were misled by their university's financial aid. (There are a string of Bible Colleges in Tennessee and Arkansas that I'm convinced just lied to their students that they wouldn't need to pay back their loans at all) But forgiving someone's Harvard Law debt infuriate me.
A very compelling argument that will find no favour with the college educated white Dems that are quickly becoming the largest constituency for the party. There are no more New Deal Democrats. Now this is the program:
Forgive our student loans.
More federal grants to create well paid make-work NGO jobs for professionals (“do tanks” not “think tanks”).
Give us more immigrant maids and nannies (and amnesties so that we're not breaking the law)
Tax the rich to pay for day care so our immigrant nanny can dump her kids in daycare while personally taking care of our little prince and princess at home so Dad can work at the law firm and Mom at the NGO (or Vice versa)
Mass transit to make it easier for our badly paid immigrant nanny to commute to our home (we take Uber or Lyft ourselves)
Densify urban areas so we can afford a downtown apartment.
SALT tax exemption forever so red states will subsidize our expensive blue city lifestyle
Cut spending for public police while our condo association hires private security
Dumb down the public schools, to make those kids less competitive with ours, who go to private schools
Get rid of the SAT so smart Asian kids won’t compete with our dumb white legacy kids when applying for college
Ration Covid medicine by race, so working class whites we despise will die first
Raise energy prices for the working class and industry, while giving us a tax subsidy for our pricey Tesla or Prius
Encourage Twitter, Google and social media to ban any viewpoints we disagree with
Gee, I wonder why the Democrats aren't doing too well in the polls these days...
The idea that dense public transit cities are extravagant uses of government money while freeway sprawl is just natural and righteous and cheap, cannot die fast enough. It is ass backwards. You’re damn right, I’m sick of subsiding sprawl America’s insane lifestyle.
The point is less that it is an extravagant use of gov't money (it isn't), but that many of the people who use it would rather live in those nice suburban areas with a bit of space. Just look at the places that became super spreading venues for Covid.
I'm not sure the data bear that out (am at work now so can't look for sources). I was in a very un-dense area in the Midwest starting a few months after the pandemic started - temporary move from NYC - and caseloads were horrible. A lot of refusals to comply with any COVID-related measures, including vaccines.
In NYC, I live in Manhattan and work in a public building there. I was the last one to start remote work (came into the office until I wasn't allowed to anymore). Haven't been sick a day during the whole thing.
Well, the issue is that those preferences are not really being satisfied. Additionally, there are public health considerations to consider in light of Covid. In the COVID-19 pandemic, the much-maligned dispersed urban pattern proved to be an asset. Los Angeles and its surrounding suburbs have had a considerable number of cases, but overall this highly diverse, globally engaged region managed to keep rates of infection well below that of dense, transit-dependent New York City. That's an aside. But to your broader point, the underlying consideration is one of equity and fairness. As Matty points out, student debt relief is a regressive form of debt relief. I'd rather move toward socialising the costs of healthcare by moving toward a singlepayer or All-payer type of system. You'd capture far more beneficiaries that way and it would be far less regressive.
It’s pretty clearly not the case that sprawl is justified by public health. Even if we grant that low density places fared marginally better under COVID (dubious), the automobile is a far more prolific killer, both directly and via pollution.
I'm an equal opportunity cynic. Same exercise for the small business owners who dominate the GOP—the big guys in small towns:
Import cheap immigrants as workers in your low wage small business (not so much as nannies and maids)
Crush labor unions
Minimize regulations in general
Support regulations that protect certain small businesses (ban on direct sale of contact lenses and glasses, instead of through opticians, etc)
Maximize SBA loans and grants
Gut IRS capacity for enforcing tax laws (thereby focusing the IRS attention on middle class employees who generally fill out clean, easy to understand returns and get arbitrarily audited)
Favor offshoring and Chinese imports if they are cheap inputs in your small business (rebar in construction etc)
Stepped-up exemptions for multi million (not billion) dollar inheritances for their kids
Write-offs for boats, weekend houses, fancy cars as business expenses
Meanwhile, the two topics without any constituency in either party:
US manufacturing
The private sector working class (the unionized public sector is a cash cow and voting bank for the Democrats, so they are left alone).
"Mass transit to make it easier for our badly paid immigrant nanny to commute to our home (we take Uber or Lyft ourselves)"
I suggest you take a gander at the going rate for nannies in major metro areas, and also the Federal rules about overtime. It's going to take A LOT of immigration for them to be badly paid if everything is above board.
My six figure student debt was consolidated at less than 3 percent years and years ago. I doubt I could have borrowed that amount of money at that low an interest rate any other way.
If the government is making the loans now, why not just cap interest rates at subsidized rates?
I wholeheartedly agree that one-time forgiveness without broader reform would be, for lack of a better term, unexciting. The best case for it is basically the humanitarian benefits of forgiveness for the genuine hardship cases, and I presume there are more targeted ways to gain those. The stimulus would be ineffective, and probably unnecessary if you assume we're at full employment.
What I'm missing is how one-time forgiveness would come at the expense of non-debtors. As I understand it, the idea is that forgiven debtors would use the stimulus to outcompete non-debtors in the job market...but this seems to be in contradiction with the idea that additional stimulus isn't needed because we're at full employment.
Is the idea that forgiveness would further inflation, and the price raises on non-debtors would outweigh the benefits of forgiveness? I suppose this could be addressed via higher interest rates, but these would also have obvious detrimental effects on non-debtors. The problem I'm having with this idea is it seems higher rates are coming anyway.
I'm probably missing something, but would appreciate an explanation from either Matt or someone else as to how forgiveness actively hurts non-debtors.
To the extent these kinds of supply issues exist, I would think addressing them directly (e.g. in the case of housing, easing land-use restrictions etc.) would be far more effective than forgoing stimulus. Just about every stimulus measure has winners and losers, so I don't see this as a convincing argument against stimulus broadly.
This argument also presupposes that right now there is active competition between debtors and non-debtors for housing. That might not be wrong but I'd like to see some evidence for it.
If you admit that every stimulus has winners and losers, then by design it must be the case that debtors are winners while losers are at least some fraction of non-debtors? To what degree, I can only speculate though. But even if I knew that it only would cost me a few dollars personally, I still wouldn't be particularly thrilled about the idea.
My brother went to welding school with low costs and doesn’t like the idea to pay off peoples student loan debts. I paid my off a few years ago…I don’t like it either. Lots off people are not going to like it.
Loans based on the financial merit (ability to pay back based on earning potential of degree) makes sense.
The government should initiate a rating system for degrees. A similar lines of thinking to putting calories on food. They could identify key economic data about the degree on is about to go into debt to obtain and force universities to provide the information with the advertising for the degree. If we do it for a Pepsi why not for a $100k degree. These decisions are key to financial health. Clearly young people need protection from predatory universities (i.e. all of them).
Right, Matt discusses how the Obama admin tried to do this (in the 2 paragraphs beginning "The Obama administration tried to curtail some of the worst abuses...")
I basically agree with this post, but I think the question of "why does college cost so much?" is significantly underdiscussed relative to the narrower question of whether we should forgive existing student loan debt. I'd love to see a separate post on that: if we're funding these schools to the tune of trillions of dollars of public money, it seems fair to ask where that money is going, and the few answers I've heard (administration? lazy rivers?) have been largely unsatisfying. Nobody really seems to argue that college education is multiple times more impactful than it was when my parents could pay tuition by flipping burgers over the summer.
Ironically MY's full employment discussion and the reason your parents cold flip a burger and pay tuition are connected. There used to be a lot more jobs that didn't require college degrees, so if your parents went to college, there was a really big benefit. The wage premium is still there even with high tuition, but for some jobs, not as much. Why? When labor markets are loose and competition is not robust for entry-level workers (as it has been for about 20 years), employers can demand more expensive signaling on their job applications. So, "do you have a college degree?" on a job your parents could have gotten with a HS diploma comes about because 4 years and a lot of money is a good signal that you will stick to something. A signal that the employer didn't have to pay for to figure out. If I'm right about this, then if we stay near full employment over the next few years expect more businesses hiring people without college degrees and more colleges either lowering or holding tuition steady and if FE continues, expect many of the majors that currently exist to be no more beneficial than a HS diploma and, thus, go away. MY is right more competition in the labor market will have benefits for higher ed as well.
I agree with a lot of what you're saying here, but I don't think full employment entirely solves the problem. For one, circumstances could change and then if FE goes away, you're back where you started. Second, I'm skeptical that FE would be enough to completely close the wage premium between a HS diploma and a college degree for exactly the signaling reason that you cite---FE would likely boost white-collar wages, too.
I think your point that employers bear none of the cost of the signaling is really important in all of this. I don't know how you solve that, but I think it's the central driver of all of this and should be discussed more.
all good points that we won't know until 20 years after so you may very well be correct (and I'll be retired)...I think we agree on the central driver...
On the one hand, college tuition costs a lot. On the other hand, we hear a lot about adjuncts getting paid $2,000 for an entire course at colleges with pretty expensive tuition. Asking the government to forgive debt for an expensive degree where a significant number of courses were taught by underpaid adjuncts with no job security without any reform seems like a bad idea.
I know I'm late to the party, but this is something I have spent a long time thinking about. From what I see, the student loan program is designed to help students who have the right grades and SAT scores, but cannot afford the annual tuition fee as opposed to comparable students who were blessed with parents who planned for and saved to pay for the tuition fee. In my opinion, the best solution continues to be to let allow private companies issue the loans, but regulate it. The loans, for example, cannot be more than a certain % points over the long term interest rate.
This will allow the private companies to give out loans to deserving students for majors that actually will enable them to pay off the loan, and not give out loans to students seeking a major in, say social policy. Because, if they give out too many bad loans, they will end up going bankrupt.
Yes, that'll mean that social policy discipline will be overloaded with people of means, but that can be balanced a bit via offer of scholarship; also, really good scholars who took out loans may be able to take a grad level course in such subjects, and even Phd. So, folks of all backgrounds will still be represented in these areas, especially at the higher level.
I came from a middle class family in India, and my parents were pretty clear I should major in STEM programs. My kids, however, have an opportunity to pursue liberal arts, or anything they want - but I did not. That is life.
How will regulations scrutinize undergrad disciplines that don't make money? Will they say, "majoring in the history of Marxism leads graduates to have an unduly high debt to income ratio post-graduation, so we will no longer subsidize people who major in these fields."?
"But I think the best version of that would be that the law school itself would extend credit to the students it admits and the loans would be dischargeable in bankruptcy."
The loans should only be dischargeable if the degree can be repossessed and resold. If the borrower gets to keep the degree, and the education, for the rest of his/her life, then no.
This piece makes some good points, but the argument that there is no case for student loan debt forgiveness is dependent on a fantasy situation that is not reality. As Matt very dutifully points out, there is no federal path to higher ed reform right now, nor does it appear likely that there will be one in the future. The situation facing Joe Biden is "Forgive debt and kick the can down the road" or "Do nothing". "Cut a huge bipartisan deal with Senate Republicans that totally solves the problem" is not on the table.
I'm perfectly happy debating whether forgiving student loan debt is a good idea (I think it makes sense to do so for those who didn't complete their degree or have gone into public service) or the political optics of it (bad if you forgive all the debt, not so bad if you forgive it for teachers and social workers). But let's not reason as if anything productive on this issue is going to come out of Congress, because that's not the world we're living in.
This gets at a point raised in the article - did Congress actually give the President discretion to forgive federal student loans? Or is this whole idea that the President can by executive action "forgive" student loans just an ultra vires fantasy, no different in reality from the fact that a President Trump could, in his second term, "forgive" his campaign donors' federal tax obligations by ordering the IRS not to pursue collection of federal taxes due by people who donated to his political campaign? I don't know enough about the legal particulars of the federal student loan program to answer that, but it seems like it's a threshold question.
I think one of the simplest and easiest way to help some with the student loan debt issue is to lower the interest rates over time to where eventually they are nominal. As of now, the interest rates on my student loans are between 5-7%. I understand that lending money to a student is a risky venture and the I think the rates reflect that. However, I think those rates should diminish over time if you meet certain criteria (enrolled in auto-debt, never miss a payment, never ask for a deferment/forbearance) to where eventually they are withing the 1-2% range.
Also, Id like to share how my student loan debt has affected me and my life choices. I am in my mid thirties and graduated law school about 11 years ago. At the time, I was very immature and did not do well in school. As a result, I did not get a high paying job but had over 100k to pay off in loans. When trying to formulate a plan on how to pay off the loans, a wave of despair hit me and I felt like this mountain of debt would be too high for me to traverse. At that point, I was faced with a choice: austerity for 10+ years or enter the Income Based Repayment program and have a bit of wiggle room in my finances. What I mean by "wiggle room" is being able to live outside of my parent's house. Besides a vehicle I bought (with help from selling a 2008 Buick van I inherited) to replace my 97 4Runner, I did not really spend money on much. However, I was faced with another choice of either matching my employers 401k contribution or paying off debt. I choice to match the contribution b/c the return rate was higher than my loan interest rate. FF 8 years and I decided to move to CO to pursue a relationship. That relationship ended but I did meet my now wife (married in Nov). The hardest convo I had with her before getting married happened early in our relationship. I was very self conscious about my debt burden and felt in some way it made me a bad person and not worthy to be with anyone. Fortunately, she was understanding, said she loved me, and that we would tackle my debt together. It was a huge relief but there will always be the guilt in the back of my mind knowing that she is having to sacrifice due to my poor academic performance over 3 years of my early 20s. Looking back, I think the black/white advice is to sacrifice and pay the debt before you move on with your life, but (and this is what I tell my wife, maybe to justify my reasoning to myself) if I took the austerity measures, I never would have met her.
Having said all that, I am not for forgiving any debt. I made the choice to take out the money and knowing what I needed to do to be in a position to pay it off. But, I prioritized other things in my life at the time, that I still dont understand why and here I am. With my increase in pay over the last decade and now with my wife's income, we will be able to pay off my debt in the next two years but that money could have been used in a much more wealth building way, if I made different choices 10+ years ago.
Anyway, I wanted to provide a "day in the life" anecdote that puts a life story behind the debt. I dont regret going to law school, I regret how I spent my time there. I dont regret not taking austerity measures to pay off my debt but I will deal with the guilt of having my wife help me with my burden, when she has made all the right choices.
I was watching a YouTube video of Dave Ramsey (who, for all his flaws, has good budgeting advice for people deeply in debt) where a guy called in who had finished medical school a year ago but had failed his board exams several times, so he had the debt of a medical school grad (he said over 150k) but none of the expected income. Dave tried to give him some advice on what to do but didn't really have any answers, and everyone in the comments section was encouraging him to just leave the country. Seems like situations like that, however niche, would be a good use for student loan forgiveness because otherwise that guy's life is completely ruined through very little fault of his own.
I get that MDs/JDs aren't the most sympathetic class, but it is genuinely an insane system that to enter a high-prestige profession requires taking out a six-figure lottery ticket on yourself. It seems bad that we've structured it that prudent people steer away from what are stable and lucrative jobs for the people that get them.
I'm not entirely unsympathetic, but it seems it's still mostly his fault?
So even accepting that it's his fault, which I'm not knowledgeable enough to do, why should I tried to learn something come with a financial death penalty? If you could clear the debt in bankruptcy it would be one thing but it really is weird that the penalty for being academically ambitious is far more severe than maxing out your credit cards to buy useless crap.
Oh, I don't disagree, and depending on the circumstances, the med school probably bears some of the blame too, for giving him a degree without ensuring he has the requisite skills to practice (although failing out at the end wouldn't have been any better).
My understanding is that one can actually discharge student loans in bankruptcy in cases of extreme hardship, which he might meet. At the very least, an income-based repayment plan would keep it from crushing him, and should be discharged after 20 years.
https://studentaid.gov/manage-loans/forgiveness-cancellation/bankruptcy
Yeah I don't know the person so it is hard to say, but it seemed like he had studied a lot and I'm not really going to fault someone for not being naturally smart enough to pass a test. Apparently those exams have a 96% pass rate, so that's 4% of a group of incredibly hard-working people that end up in that awful position.
I went to law school in 2012, the worst possible time to do so. I never got a job in law so I have 200k in debt that I know I'll never pay off. I understand I'll never get my loans forgiven, but I really wish some of the energy around the debate would go to streamlining the multiple, extremely confusing income-based repayment plans that currently exist. Is there anything preventing Biden/DOE from instituting a more simple "pay X% of your income" rule?
I like that Matt made the mother in his example genderfluid
I'm generally not a big "personal responsibility" guy because life is hard but at some point people need to live with some of their choices, don't they? I'm all for shutting down scams and deceptive practices and garbage programs that don't do what they say they're going to do. I'd be fine with exploring any options for cutting the price of school going forward. But if you decided to go to school and you decided to take loans, you should probably be accountable to paying the loans back.
I live in Maryland.
Towson University - $15k/year if you live off campus
Loyola University - $53k/year if you live off campus, but few people do that, so $67k
If you're from Maryland and want to be a sociology major, education major, art history major, etc. and you're going to Loyola University (and you aren't from a wealthy family)... you've made a terrible choice. It's bizarre to me to think that the government should step in and fix it.
If we wanted to conjure in a lab an issue that would reunite libertarians, earnest social conservatives, and opportunistic rightwing populists, opposition to student debt relief (aka a bailout to the coddled, leftist higher education establishment) would be it.
My dad had promised his two kids that he'd pay for undergrad. My older sister ended up getting into her reach school, which at the time that I was looking at college, was literally the most expensive school in the country (I assume its around the same, but it has been a little more than 10 years so it might have dropped a little in those rankings). My dad kept his promise to her, but he came to me and said he wasn't sure that he could do the same for me if I went to a school that had that level of tuition. So I intentionally didn't apply to some selective schools that my counselors thought I could get in. I ended up having a little bit of student debt since I took an extra semester to graduate but less than 5k.
I looked around at grad schools when I graduated. I applied to a couple and got into most of them, but my professors said if they weren't willing to pay me to go, they didn't want me to go there. I could have disregarded their advice and taken out loans, but I made the prudent choice.
Ironically, I ended up paying off my student loans while working for a Federal Student Loan Servicer. I do have some sympathy for people who were misled by their university's financial aid. (There are a string of Bible Colleges in Tennessee and Arkansas that I'm convinced just lied to their students that they wouldn't need to pay back their loans at all) But forgiving someone's Harvard Law debt infuriate me.
A very compelling argument that will find no favour with the college educated white Dems that are quickly becoming the largest constituency for the party. There are no more New Deal Democrats. Now this is the program:
Forgive our student loans.
More federal grants to create well paid make-work NGO jobs for professionals (“do tanks” not “think tanks”).
Give us more immigrant maids and nannies (and amnesties so that we're not breaking the law)
Tax the rich to pay for day care so our immigrant nanny can dump her kids in daycare while personally taking care of our little prince and princess at home so Dad can work at the law firm and Mom at the NGO (or Vice versa)
Mass transit to make it easier for our badly paid immigrant nanny to commute to our home (we take Uber or Lyft ourselves)
Densify urban areas so we can afford a downtown apartment.
SALT tax exemption forever so red states will subsidize our expensive blue city lifestyle
Cut spending for public police while our condo association hires private security
Dumb down the public schools, to make those kids less competitive with ours, who go to private schools
Get rid of the SAT so smart Asian kids won’t compete with our dumb white legacy kids when applying for college
Ration Covid medicine by race, so working class whites we despise will die first
Raise energy prices for the working class and industry, while giving us a tax subsidy for our pricey Tesla or Prius
Encourage Twitter, Google and social media to ban any viewpoints we disagree with
Gee, I wonder why the Democrats aren't doing too well in the polls these days...
The idea that dense public transit cities are extravagant uses of government money while freeway sprawl is just natural and righteous and cheap, cannot die fast enough. It is ass backwards. You’re damn right, I’m sick of subsiding sprawl America’s insane lifestyle.
The point is less that it is an extravagant use of gov't money (it isn't), but that many of the people who use it would rather live in those nice suburban areas with a bit of space. Just look at the places that became super spreading venues for Covid.
I'm not sure the data bear that out (am at work now so can't look for sources). I was in a very un-dense area in the Midwest starting a few months after the pandemic started - temporary move from NYC - and caseloads were horrible. A lot of refusals to comply with any COVID-related measures, including vaccines.
In NYC, I live in Manhattan and work in a public building there. I was the last one to start remote work (came into the office until I wasn't allowed to anymore). Haven't been sick a day during the whole thing.
“Would rather have” - yeah, we are using public funds to satisfy preferences. Why is it right to satisfy their preferences and wrong to satisfy ours?
Well, the issue is that those preferences are not really being satisfied. Additionally, there are public health considerations to consider in light of Covid. In the COVID-19 pandemic, the much-maligned dispersed urban pattern proved to be an asset. Los Angeles and its surrounding suburbs have had a considerable number of cases, but overall this highly diverse, globally engaged region managed to keep rates of infection well below that of dense, transit-dependent New York City. That's an aside. But to your broader point, the underlying consideration is one of equity and fairness. As Matty points out, student debt relief is a regressive form of debt relief. I'd rather move toward socialising the costs of healthcare by moving toward a singlepayer or All-payer type of system. You'd capture far more beneficiaries that way and it would be far less regressive.
It’s pretty clearly not the case that sprawl is justified by public health. Even if we grant that low density places fared marginally better under COVID (dubious), the automobile is a far more prolific killer, both directly and via pollution.
This is a delightfully cynical take on where the mainstream D party is at. I think it's more accurate than not.
I'm an equal opportunity cynic. Same exercise for the small business owners who dominate the GOP—the big guys in small towns:
Import cheap immigrants as workers in your low wage small business (not so much as nannies and maids)
Crush labor unions
Minimize regulations in general
Support regulations that protect certain small businesses (ban on direct sale of contact lenses and glasses, instead of through opticians, etc)
Maximize SBA loans and grants
Gut IRS capacity for enforcing tax laws (thereby focusing the IRS attention on middle class employees who generally fill out clean, easy to understand returns and get arbitrarily audited)
Favor offshoring and Chinese imports if they are cheap inputs in your small business (rebar in construction etc)
Stepped-up exemptions for multi million (not billion) dollar inheritances for their kids
Write-offs for boats, weekend houses, fancy cars as business expenses
Meanwhile, the two topics without any constituency in either party:
US manufacturing
The private sector working class (the unionized public sector is a cash cow and voting bank for the Democrats, so they are left alone).
"Mass transit to make it easier for our badly paid immigrant nanny to commute to our home (we take Uber or Lyft ourselves)"
I suggest you take a gander at the going rate for nannies in major metro areas, and also the Federal rules about overtime. It's going to take A LOT of immigration for them to be badly paid if everything is above board.
"if everything is above board" is a key proviso
My six figure student debt was consolidated at less than 3 percent years and years ago. I doubt I could have borrowed that amount of money at that low an interest rate any other way.
If the government is making the loans now, why not just cap interest rates at subsidized rates?
I wholeheartedly agree that one-time forgiveness without broader reform would be, for lack of a better term, unexciting. The best case for it is basically the humanitarian benefits of forgiveness for the genuine hardship cases, and I presume there are more targeted ways to gain those. The stimulus would be ineffective, and probably unnecessary if you assume we're at full employment.
What I'm missing is how one-time forgiveness would come at the expense of non-debtors. As I understand it, the idea is that forgiven debtors would use the stimulus to outcompete non-debtors in the job market...but this seems to be in contradiction with the idea that additional stimulus isn't needed because we're at full employment.
Is the idea that forgiveness would further inflation, and the price raises on non-debtors would outweigh the benefits of forgiveness? I suppose this could be addressed via higher interest rates, but these would also have obvious detrimental effects on non-debtors. The problem I'm having with this idea is it seems higher rates are coming anyway.
I'm probably missing something, but would appreciate an explanation from either Matt or someone else as to how forgiveness actively hurts non-debtors.
Well, for example, the forgiven debtors may then better compete with non-debtors on things like houses.
To the extent these kinds of supply issues exist, I would think addressing them directly (e.g. in the case of housing, easing land-use restrictions etc.) would be far more effective than forgoing stimulus. Just about every stimulus measure has winners and losers, so I don't see this as a convincing argument against stimulus broadly.
This argument also presupposes that right now there is active competition between debtors and non-debtors for housing. That might not be wrong but I'd like to see some evidence for it.
If you admit that every stimulus has winners and losers, then by design it must be the case that debtors are winners while losers are at least some fraction of non-debtors? To what degree, I can only speculate though. But even if I knew that it only would cost me a few dollars personally, I still wouldn't be particularly thrilled about the idea.
A few points…
My brother went to welding school with low costs and doesn’t like the idea to pay off peoples student loan debts. I paid my off a few years ago…I don’t like it either. Lots off people are not going to like it.
Loans based on the financial merit (ability to pay back based on earning potential of degree) makes sense.
The government should initiate a rating system for degrees. A similar lines of thinking to putting calories on food. They could identify key economic data about the degree on is about to go into debt to obtain and force universities to provide the information with the advertising for the degree. If we do it for a Pepsi why not for a $100k degree. These decisions are key to financial health. Clearly young people need protection from predatory universities (i.e. all of them).
Right, Matt discusses how the Obama admin tried to do this (in the 2 paragraphs beginning "The Obama administration tried to curtail some of the worst abuses...")
> The government should initiate a rating system for degrees.
It has one, sort of: https://collegescorecard.ed.gov/school/?166027-Harvard-University&fos_code=3801&fos_credential=3
I basically agree with this post, but I think the question of "why does college cost so much?" is significantly underdiscussed relative to the narrower question of whether we should forgive existing student loan debt. I'd love to see a separate post on that: if we're funding these schools to the tune of trillions of dollars of public money, it seems fair to ask where that money is going, and the few answers I've heard (administration? lazy rivers?) have been largely unsatisfying. Nobody really seems to argue that college education is multiple times more impactful than it was when my parents could pay tuition by flipping burgers over the summer.
Here's an attempt I saw to break it down for Harvard. The conclusion was actually rather unsatisfying, in that there was no easy answer apparently.
https://www.reddit.com/r/slatestarcodex/comments/gpdqu4/the_finances_of_harvard_university_2004_vs_201920/
Ironically MY's full employment discussion and the reason your parents cold flip a burger and pay tuition are connected. There used to be a lot more jobs that didn't require college degrees, so if your parents went to college, there was a really big benefit. The wage premium is still there even with high tuition, but for some jobs, not as much. Why? When labor markets are loose and competition is not robust for entry-level workers (as it has been for about 20 years), employers can demand more expensive signaling on their job applications. So, "do you have a college degree?" on a job your parents could have gotten with a HS diploma comes about because 4 years and a lot of money is a good signal that you will stick to something. A signal that the employer didn't have to pay for to figure out. If I'm right about this, then if we stay near full employment over the next few years expect more businesses hiring people without college degrees and more colleges either lowering or holding tuition steady and if FE continues, expect many of the majors that currently exist to be no more beneficial than a HS diploma and, thus, go away. MY is right more competition in the labor market will have benefits for higher ed as well.
I agree with a lot of what you're saying here, but I don't think full employment entirely solves the problem. For one, circumstances could change and then if FE goes away, you're back where you started. Second, I'm skeptical that FE would be enough to completely close the wage premium between a HS diploma and a college degree for exactly the signaling reason that you cite---FE would likely boost white-collar wages, too.
I think your point that employers bear none of the cost of the signaling is really important in all of this. I don't know how you solve that, but I think it's the central driver of all of this and should be discussed more.
all good points that we won't know until 20 years after so you may very well be correct (and I'll be retired)...I think we agree on the central driver...
On the one hand, college tuition costs a lot. On the other hand, we hear a lot about adjuncts getting paid $2,000 for an entire course at colleges with pretty expensive tuition. Asking the government to forgive debt for an expensive degree where a significant number of courses were taught by underpaid adjuncts with no job security without any reform seems like a bad idea.
Right, it doesn't seem like the increased costs are going into the classroom. And if they're not, where are they going and why are we paying for it?