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Let's say that Mr. Biden whips out his magical Presidential Pen and in one fell swoop wipes out all student loans. Ignore the legalities of this, just say that it happens. OK, now what? There will, of course, be one group of people who will be ecstatic, they being the people whose loans are wiped clean.
But at the same time, you've just engendered a tidal wave of resentment from people who worked hard to pay off their loans, or scrimped and saved so they wouldn't be burdened by loans, or forewent college entirely because they decided that they couldn't afford it. These people will feel that they've been played for suckers. Biden will lose their support unless he doles out some freebies for them as well. "You get a car, you get a car, everyone gets a car!" Where does it end?
But there's also another group of people to consider, namely those who are poised to take out loans for their own education. What will they think? "Hey, I won't have to pay these back, so I can 'borrow' as much as I want and live it up!" There would be a huge surge in borrowing from people who, quite reasonably, will have no expectation of having to pay off their loans. Do their loans get forgiven as well? If not, how are they going to feel when they're made to pay them back? "Why did those other people get their loans forgiven but not me?" More resentment.
The great majority of people who benefit from loan forgiveness are those who were irresponsible and took on too much debt, often for non-marketable degrees. As another poster so beautifully put it, I as a responsible person shouldn't have to pay for the stupid choices of others.
Is college expensive because of administration cost, big fancy campus, etc? With the advancements in technology and communication this should have lowered the cost of education.
Do all jobs need to require a college degree? this is the elephant in the room. Why not give companies incentive to train entry level work=force.
Can a business certificate be sufficient in the workforce? A certificate for Business management, Finance, Accounting , Marketing, etc - that just deals with the concepts of those fields. 2 year certificate - Core: Business Math, Business Communication, Business Office365, Business Basic Finance/Accounting = 1 semester. Afterwards, you will just focus on your degree field.
I got a ton of student loan debt. Lower interest to some nominal amount or get rid of it would be fine with me. It’s one thing to charge the high costs but to also allow Congress to set interest at 8%+ profiting off young adults is a problem. I know for years I’ve paid a lot of my income into my loans only for the principal to grow.
Some of the interest rate being oddly high for non-dischargeable debt is to cover for those that don't or can't pay.
This would include the people that died from something like a car accident or ended up in jail or are just dead broke and work cash jobs etc. Even though they can never get away from the debt they're not going to pay on it.
For example, if you pay back 50k at 4% interest over 10 years that's 506/mo.
Now if 10% of people default, they need you to repay 55,555 which makes the payment closer to 562/mo.
But instead the default rate gets baked into a higher interest rate.
50k at 6.25% over 10 years is 562/mo.
Now certainly it's going to be more complicated IRL but just using this rough example the interest rate is >2% higher just due to defaults.
Biden promised student loan forgiveness when he campaigned for president. Up till now he has only forgiven a very small part for a few students.
Politicians say all sorts of things and make many different promises to various groups to get people to vote for them.
A lot of people have heartburn with any student loan forgiveness. Especially pissed off are people that saved for tuition and have no student debt & people that never went to college having to shoulder the financial burden for others.
Also part of getting an education is paying for books, supplies, housing and food. Some colleges have dorms and students pay rent to the college. A lot of student debt money went to pay these incidental items that are not direct education related.
Would people be more inclined to debt forgiveness or not charging interest on the tuition portion of the debt? Borrowers would still be on the hook for any money borrowed over and above the cost of tuition. It doesn't seem fair to forgive living expenses for students for 4 or more years.
An example would be someone owing $25K in student loans. $16K of that is tuition, the balance for other expenses. The borrower would owe the entire principal and interest on the $9,000 that was spent on living expenses. A portion of the $16K tuition money would be forgiven or else eliminate the interest portion of that money.
I suspect the reason that there hasn't been any movement of student loan forgiveness is due to its' overall unacceptability to those who don't have any student debt. Trying to find a solution that satisfies both sides often results in inaction on the issue.
Or does anyone have other ideas that they think might appeal to both groups?
Sorry, when you say the words “debt forgiveness”, do you comprehend what it actually means? Does the debt just vanish? Where does the money come from to “forgive”?
I laugh at the thought of a hardworking person, took on a second, maybe third job, paid their way through college, graduated debt free or paid off any student debt within a few years, now they’re coming home from work to see this sort of garbage being debated. Where’s their “forgiveness”? Then, they get their paycheck and see the federal tax withholding and realize they’re not quite done paying student loans… even though they paid their own.
I got a ton of student loan debt. Lower interest to some nominal amount or get rid of it would be fine with me. It’s one thing to charge the high costs but to also allow Congress to set interest at 8%+ profiting off young adults is a problem. I know for years I’ve paid a lot of my income into my loans only for the principal to grow.
If it’s such a predatory system, why don’t people debate the merits behind ceasing to loan students money?
Should we raise the minimum age requirement for mortgages and car loans too, since young people are so irresponsible? Perhaps also credit cards?
Sorry, when you say the words “debt forgiveness”, do you comprehend what it actually means? Does the debt just vanish? Where does the money come from to “forgive”?
I laugh at the thought of a hardworking person, took on a second, maybe third job, paid their way through college, graduated debt free or paid off any student debt within a few years, now they’re coming home from work to see this sort of garbage being debated. Where’s their “forgiveness”? Then, they get their paycheck and see the federal tax withholding and realize they’re not quite done paying student loans… even though they paid their own.
I'm in the same camp. My wife and I scarified some cool vacations, home equity (purchased 2 years later then we could have), and other things to pay back our loans in our 20s. It sucked but I signed the papers and accepted the money. It was my responsibility to pay them back. Luckily, I didn't go to a super expensive school, so my debt was manageable, but the fact remains.
Forgiving student loans sends the wrong message. Not only is it a slap in the face for people who paid off their loans, or didn't go to college, but it also tells future borrowers “Don’t worry about paying off your loan, just complain for a decade and a politician will come along and wipe it away." The system will not be able to sustain itself.
This is another example of the government causing a problem (Federalization of the student loan program), being shocked when school costs go up, and then irresponsibly trying to solve it by creating another problem to solve their own problem.
Why in God's name did we Federalize the student loan program? Can someone tell me? I'll accept it if it was because back in the day, they feared minorities wouldn't be given a fair shake. But today it's 2022... not 1969.
If we privatize student loans, there will be COMPETITION to offer student loans... better conditions, and in some cases some students who fall on hard times would be able to include it in bankruptcy. CORPORATIONS would be the one holding the debt, not the taxpayer.
With competition, you wouldn't have schools raising their costs because they know that they can... THEY would be in competition too.
I'm going to add to this, because the more I think about it, the more angry it makes me. I don't watch Fox News, but someone sent me this link, and it's very telling.
This is from 2020, and it's an interview with Elizabeth Warren. I encourage everyone to watch it... the entire video, including the commentary. Do it even if Fox News disgusts you and makes you angry. There are salient arguments in here:
I'm in that boat... I'm sacrificing so that I can pay for my daughter's education. I will completely pay for her college education so she can be debt free with a degree when she graduates. I save... I don't go on expensive vacations. I drive 10+ year old cars.
Why should I pay for someone else's college education who took out loans and aren't paying them back?
Why don't I get paid back for the money that I spent on my college education?
Why does someone who DOES NOT have a college degree now have to pay for the college education of someone who irresponsibly took out loans... and at the same time, talks DOWN to people who don't?
I'm reminded of a similar situation back in 2007. In 2007, the housing market crashed. I had purchased a home a few years before in 2003. The value went up, and then after 2007, our homes dropped down to what the value of the home was originally when we bought them. A person bought the home behind mine in 2007. It was a couple that had no business buying that house... they clearly did not have the money to do so (Florida lets you look at tax records and actual signed legal documents). The husband was a janitor and the wife was an elementary school teacher. The home was a $500k home in 2007. When I bought the home... I scrimped and saved... worked my ass off to pay down that mortgage.
During the housing crisis... they couldn't pay their mortgage (they just stopped paying), and this went on for like a year. Eventually, their bank FORGAVE $300k of their debt. $300k (through Government loan forgiveness)!!! They now had a mortgage on a home that was less than my mortgage, with a nicer home. The entire time I'd been paying my mortgage, no matter how bad things got... I still paid my bills.
The couple paid the mortgage for a couple of months, and again stopped paying. They squatted for another almost 2 years, and finally were evicted by the police.
I actually hope they do forgive student loans. It will be a forgiveness that directly benefits young white middle class. You'll see how popular that will be when people start realizing this. It will destroy Democrats in the mid-terms. They're trying to buy votes (that's all this is), but you'll see pretty quickly it'll work against them, just like every bad decision they've made since February of 2020.
If it’s such a predatory system, why don’t people debate the merits behind ceasing to loan students money?
Should we raise the minimum age requirement for mortgages and car loans too, since young people are so irresponsible? Perhaps also credit cards?
Talk about moving goalposts.
I said lower the interest rates. Make them pay it, but allow for it to actually happen. There’s been 0% interest for over two years now. Clearly it can be done.
I’m really torn that an 18 year old doesn’t have the maturity to realize the debt they are taking on.
The process needs to change be it either free or subsidized 2 year school or trade programs.
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