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And hey, while we're at it...let's cancel all the car loans and forgive 50% of people mortgage debt?
Just like the banks with their irresponsible behavior shouldn't have been bailed out...neither do irresponsible private citizens.
Not even close. It won't solve the problem. It simply transfers it to those that did/do repay.
I don't think you understand what it means to write off debt. Writing off the debt doesn't transfer it to anybody. It takes it out of the system.
It has nothing to do with ethics. When debt exceeds ability to pay, it has to be taken off the books. And the same thing will happen with student loans. I suspect that eventually the laws regarding student loans will be changed, so that people can take it off their records they way they do other debts.
I don't think the idea is as stupid as it sounds. I don't really have a dog in this fight, so to speak, but the economic effects of so many people carrying around such high debt burdens is pushing back at us economically.
There are many options - not just debt cancellation. For example, a debt "abeyance" could temporarily freeze payment obligations until the economy recovers. A partial subsidization could wipe out some debt above a high cutoff (something like $80,000 to $100,000). An extended grace period for repayment could stretch the debt out deeper into a person's higher-earning years (e.g., hold off on repayment obligations for 7 to 10 years, then introduce them, so that students have an incentive to save and build retirement nest-eggs instead of having everything go to loan payments).
As the student debt market is currently configured, though, it will probably just collapse.
I don't think the idea is as stupid as it sounds. I don't really have a dog in this fight, so to speak, but the economic effects of so many people carrying around such high debt burdens is pushing back at us economically.
That's correct. When people are spending most of their income to pay off debt, they have less and less left over to buy other things, like cars and appliances and clothes. In other words, as debt accumulates due to the miracle of compound interest, it sucks more and more money out of the economy.
Student loan debt has the same effect as any other. It doesn't matter how the debt originated. The end result is the same. Historically, when debt exceeds the ability to pay, it is written of the books. What else can you do? You can't squeeze money out of a rock.
What makes student loan debt different are the rules governing it. Right now, it is very difficult to get rid of the loan. It will follow you around, accumulate and grow until you are 90 years old and then they'll take it out of social security payments. You're can't run and you can't hide. The only time a student loan is successfully written off is if you die.
What's more, those loans are backed by the government. Sallie Mae can lend money as irresponsibly as it pleases, which is what they do, and if you default, the government makes sure Sallie Mae gets paid.
I hope the laws change. I don't see how all these students graduating with $100K in loans are going to pay them off if they can't get jobs.
I don't think they will pay them off. There are an increasing number of people in their 40's and even 50's who still have significant student loan debt, which just doesn't strike me as helpful to the American economy.
I don't think they will pay them off. There are an increasing number of people in their 40's and even 50's who still have significant student loan debt, which just doesn't strike me as helpful to the American economy.
Yes, I see it too. I have several friends who tell me they will never pay off their student loans in their lifetime.
I know a lot of people who are dealing with a lot of debt in general. Very few people understand what it means to live below their means. A high percentage are teetering on the edge of a financial precipice. One small thing changes, and the whole deck of cards falls down. What happens when people lose their homes? Where do they go to live? And when their cars are repossessed? And suddenly, there isn't enough loose change around to buy a box of macaroni and cheese? They have no money because they never saved. The banks owned everything, and then one day the banks came and took everything back.
So I'm very concerned about the future of our country. You only have to look around to realize that we are headed for very bad times. It's like watching a slow train wreck in action.
I don't think any debts should ever be written off. If you make a promise to pay something, you should pay for it...or die trying. Being young or tricked isn't an excuse. Read the fine print.
I do feel sympathy for students these days. Tuition is so expensive, even at a public university. It's ridiculous. And finishing requires some hard work and sacrifices, especially for working students or students with families. They should be able to focus on their studies without worrying about how they're going to pay for school...they have enough on their plate. I would love to see more efforts from the government to make college more affordable so more people won't ever have to take out loans to begin with.
I heard on the news recently that more and more colleges are setting up shop in a single building and foregoing a huge campus with dorms and tracks and football fields. All the students just commute to school every day. I think that's a great trend...the tuition at those schools is much lower than it is in traditional colleges.
Oh, and I did get a decent tax credit this year for the tuition I paid in 2008. That was appreciated.
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