Student Loan Debt Forgiveness

[Zarathud]

Northwestern does have as its fight song that they’re paying a lot for college….

Part of the value proposition is that students can afford to pay.

[GreenGoo]

A reminder that the tuition is already being paid. Colleges are getting their money, and no one (I sure as hell hope not) is arguing they should get more.

[RunningMn9]

A reminder that the tuition is already being paid. Colleges are getting their money, and no one (I sure as hell hope not) is arguing they should get more.

I think everyone is arguing that they should get a lot less because what they are providing isn’t worth what they are charging.

[GreenGoo]

Perfect. Make it happen.

[LawBeefaroni]

Perfect. Make it happen.

Won't happen by giving out money to pay the schools whatever they want to charge. Also doesn't help to have the narrative that a degree is worth whatever debt it takes to get it.

Here's and idea. Make tuition x% of of the student's earnings for the next y years. Cap gains are included. If you don't graduate, you pay the standard tuition model. Credits for things like highly needed lower income jobs, etc.

I'll start with x=2 and y=30.

[Smoove_B]

I'm unfamiliar with the author, but his detailed look at student loans was....interesting:

The share of this debt burden is not evenly split. As the Times points out, millennials carry an unequal share. (Note that those under 30 appear to be giving up on college.)

...

His bottom line and mine: When government sells education as the answer to government-caused wealth inequality, and makes trillions in student loans available to the industry that supplies it, government is helping that industry fleece its customers.

The student loan program is a transfer of wealth to rich institutions from the working class. How surprising is that in these neoliberal times?

Maybe Drazzil has always been right?

[LawBeefaroni]

Funny how that works out, isn't it?

Argentina has free college and it still widens the gap between the wealthy and the poor.

[malchior]

That's correct. It is the government + industry essentially creating a policy path that is mostly about oligarchs stuffing money in their pockets first. It's not valueless but it's predatory. Industry demands college degrees for entry level positions instead of providing non-higher education training paths like say the Japanese or some European countries do.

On top, we've got the Chamber and every industry association out there either pushing on the Department of Education & the Accrediting Authorities to relax higher education standards, loosen credit so they can build dorms and infrastructure that isn't needed, provide predatory financing, or alternatively trying to abolish the DoE to stand up degree mills. I hadn't thought of it as a wealth transfer before but it isn't a crazy position to take. I'm not 100% sold. I still think this is more about the dysfunction enabling all sorts of policy craziness (aka opportunism) in the United States but I might chew on it and see how it tastes.

[GreenGoo]

Won't happen by giving out money to pay the schools whatever they want to charge. Also doesn't help to have the narrative that a degree is worth whatever debt it takes to get it.

Here's and idea. Make tuition x% of of the student's earnings for the next y years. Cap gains are included. If you don't graduate, you pay the standard tuition model. Credits for things like highly needed lower income jobs, etc.

I'll start with x=2 and y=30.

Fire at will. Literally anything is worth trying compared to the current system.

[noxiousdog]

I still think this is more about the dysfunction enabling all sorts of policy craziness (aka opportunism) in the United States but I might chew on it and see how it tastes.

And FOMO and entitlement.

I mean really. Why should I, or anyone else, pay for some entitled person to go to Northwestern? It's rich people who want to join a club and expecting us to pay for it when they take out a loan to afford the membership.

[GreenGoo]

10k.

[Isgrimnur]

[noxiousdog]

Please be my guest and explain to me why we should expect someone making 31k (median US salary income) to subsidize someone who chooses to go to a school that is 50k per year more than the average university (not just public, but all universities)?

For extra credit, explain why public school vouchers shouldn't be used at private schools and remain logically consistent.

[Zarathud]

Student debt is being shown to be a drag on the economy and life — they’re not buying homes, starting families or businesses, etc.

Frankly I think a moderate loan forgiveness per person will have a net economic benefit, and reward those who work and pay the highest taxes. It’s an economic investment for the general good. But the Republican strategy is to build resentment against young people who are more liberal anyway.

[Zarathud]

Please be my guest and explain to me why we should expect someone making 31k (median US salary) to subsidize someone who chooses to go to a school that is 50k per year more than the average university (not just public, but all universities)?

For extra credit, explain why public school vouchers shouldn't be used at private schools and remain logically consistent.

They’re not. The median is paying about $5,000 per year in taxes. The maximum relief is $10-20,000 TOTAL. You’re still paying a lot if you go to Northwestern or a very expensive university. The burden is going to fall on the higher income earners who likely benefitted themselves from university education — and accumulated capital which is already heavily subsidized by tax policy.

And for the bonus points, elementary school vouchers have the effect of decreasing funds from local public school budgets. That’s inconsistent with the idea of localities paying for free minimum education. The educational market for such schools isn’t national (unlike universities), and the burden often falls on local areas having difficulty funding public schools. Universities intentionally have a broader student body for diversity and diversification reasons, supported by federal programs.

[malchior]

Please be my guest and explain to me why we should expect someone making 31k (median US salary) to subsidize someone who chooses to go to a school that is 50k per year more than the average university (not just public, but all universities)?

Why do blue states subsidize red states? Why does Medicaid and SNAP subsidize Walmart and McDonalds?

[GreenGoo]

And again, I ask the question "why do some countries have free or heavily subsidized post secondary education?".

There are advantages to a well educated population. Just as there are advantages to having decent roads and healthcare.

Why use taxes for anything that doesn't immediately benefit one individual while benefiting another individual?

[noxiousdog]

Please be my guest and explain to me why we should expect someone making 31k (median US salary) to subsidize someone who chooses to go to a school that is 50k per year more than the average university (not just public, but all universities)?

Why do blue states subsidize red states? Why does Medicaid and SNAP subsidize Walmart and McDonalds?

And you want to make that process worse? The poor subsidizing the rich?

Why do you want me to subsidize a rich person's school?

There's totally an argument for state school funding. Northwestern? I whole heartedly disagree and then can't fathom the logic for private universities, but not for private k-12.

[noxiousdog]

And again, I ask the question "why do some countries have free or heavily subsidized post secondary education?".

There are advantages to a well educated population. Just as there are advantages to having decent roads and healthcare.

Why use taxes for anything that doesn't immediately benefit one individual while benefiting another individual?

Strawman. I think everyone thinks there should be some subsidies for universities. The question is who should receive them and where they should be able to use it.

[noxiousdog]

And for the bonus points, elementary school vouchers have the effect of decreasing funds from local public school budgets. That’s inconsistent with the idea of localities paying for free minimum education. The educational market for such schools isn’t national (unlike universities), and the burden often falls on local areas having difficulty funding public schools. Universities intentionally have a broader student body for diversity and diversification reasons, supported by federal programs.

I understand that logic, but disagree. It moves money that can be used at public universities and community colleges to private institutions.

[GreenGoo]

Strawman. I think everyone thinks there should be some subsidies for universities. The question is who should receive them and where they should be able to use it.

No more so than you're <- your single example as a counter argument to subsidies in general.

And if you weren't speaking in generalities, why bother commenting on a single example as if it has any meaning in the overall discussion?

I don't want people scamming the welfare system either. I don't argue against welfare by referring to a single family known for abusing the system.

We can all think of examples where giving public money might not be appropriate. So what.

[noxiousdog]

Strawman. I think everyone thinks there should be some subsidies for universities. The question is who should receive them and where they should be able to use it.

No more so than you're single example as a counter argument to subsidies in general.

And if you weren't speaking in generalities, why bother commenting on a single example as if it has any meaning in the overall discussion?

I don't want people scamming the welfare system either. I don't argue against welfare by referring to a single family known for abusing the system.

We can all think of examples where giving public money might not be appropriate. So what.

I'm talking about all private universities and specifically those whose participation costs are significantly higher than a median college education. The list is pretty long. Baylor, Northwestern, Stanford, Duke, all the Ivy League institutions just off the top of my head.

[malchior]

Please be my guest and explain to me why we should expect someone making 31k (median US salary) to subsidize someone who chooses to go to a school that is 50k per year more than the average university (not just public, but all universities)?

Why do blue states subsidize red states? Why does Medicaid and SNAP subsidize Walmart and McDonalds?

And you want to make that process worse? The poor subsidizing the rich?

Why do you want me to subsidize a rich person's school?

There's totally an argument for state school funding. Northwestern? I whole heartedly disagree and then can't fathom the logic for private universities, but not for private k-12.

I was intentionally making an obtuse observation here. It seemed to me that there is a focus on a specific type of negative outcome of the policy as an argument against the whole of a policy. My questions were chosen because neither of the two outcomes referenced above are the specific intent of policy. They are instead the outcome of a fairly complex policy environment. I agree we might want to prevent a rich person who can afford it from getting a benefit but like I said above I'm not convinced about this idea it is some wealth transfer.

Edit: GreenGoo's comment above is what I was going for. We can pick out edge cases all day but that's not a good way to evaluate policy generally speaking.

[Isgrimnur]

31k (median US salary)

For teenagers

[noxiousdog]

31k (median US salary)

For teenagers

Apologies. I wrote "salary" but meant income.

[RunningMn9]

And again, I ask the question "why do some countries have free or heavily subsidized post secondary education?".

I'm not sure how many people here (if any) would argue against that. Those countries don't provide such a feature through student loan relief, do they? Do they do anything to control the costs of such benefits?

I agree with the value of affordable post-secondary education. I don't believe that student loan debt relief achieves that. I don't believe post-secondary vouchers achieves that. I think that the govt partially footing the bill will just continue to fuel escalating costs.

We are conflating two things here:
1) Fixing the absurd cost of college education in the US.
2) Helping those that are already victims of that absurd cost.

There haven't been many useful suggestions for 1 so far (although I think we all kind of want that). For 2, there seems to be some issue over what is reasonable (I would think that most would agree that capping the relief at $10K doesn't really help the folks that incurred $100+K debt at exorbitantly priced private universities).

ND and I aren't really inclined to help a certain kind of borrower. But I don't think anyone here is arguing to help those people, beyond the $10K that would apply to all borrowers. Am I wrong in this summary?

[Carpet_pissr]

It’s an interesting point. What happens when medical providers find out/assume patients have insurance? Or simply base their billing around that assumption?

Of the three possibilities (rates are higher, the same, or lower) I feel confident that ‘are lower’ is never the case.

If a $10K forgiveness bill were somehow passed and it sticks, I could totally see schools either immediately or slowly increasing tuition by a similar amount.

It potentially fucks future students (or does nothing for them if my tuition increase theory is correct), but the ones the bill affects would be ecstatic bc they’re already through.

[RunningMn9]

Health insurance isn’t just some entity forking over a portion of the bill though. The insurer uses their increased leverage to negotiate much lower rates. My daughter just went to the ER, and the bill arrived at about $6500. The insurance company was like “no thanks, we will give you $1000” and that was that.

Although I suppose that $1000 could be inflated.

If the govt said we are going to provide $10k to every student, and you can’t balance bill the student - that’s all you’re getting - that would certainly not escalate the cost. It may bankrupt universities though.

[Carpet_pissr]

Anecdotal: on a recent trip to the dentist, when I went to pay at the end, I noticed the price for my cleaning (and a few other outstanding bills from other fam members), were much higher than I had normally been paying.

When I asked the office manager/biller/assistant about it (whom I’ve also known for several years, our kids played soccer together), she said, “oh that’s not right, here let me adjust. We changed systems recently and that’s the ‘insurance’ rate. I forgot you don’t have (full coverage) insurance.”

The corrected invoices were about 20% less than the first ‘insurance’ batch she handed me.

[LawBeefaroni]

Self-pay discounts are common practice.

[Carpet_pissr]

Self-pay discounts are common practice.

Which probably represents a more “fair” market price for the service. Lots of caveats there, and the quotes heavily emphasized.

[RunningMn9]

Self-pay discounts are common practice.

Which probably represents a more “fair” market price for the service. Lots of caveats there, and the quotes heavily emphasized.

I assumed it was an example that even the insurance amount is inflated.

[GreenGoo]

We are conflating two things here:
1) Fixing the absurd cost of college education in the US.
2) Helping those that are already victims of that absurd cost.

There haven't been many useful suggestions for 1 so far (although I think we all kind of want that).

I don't think anyone is conflating anything. The thread is titled loan debt forgiveness and is about loan debt forgiveness.

What's your suggestion for #1?

[dbt1949]

Does Canada have similar problems?

[GreenGoo]

No one is paying 100k+ for a 4 year degree, if that's what you're asking. Actually, ignore that, especially if housing and food is counted. I suspect we have a few more financial assistance options, but it has changed so many times I'm unsure where it is at the moment. My son is living at home and is doing commerce, so expenses are significantly less. Plus, he received an entrance scholarship (pays about 1/2 tuition), so that obviously helps. I have an education fund for my 3 kids (not enough for a full ride), so he is getting a portion of that. Finally, I kick in some money from household savings.

As of his 2nd year, he has no loans. That will change by 3rd or 4th year. I only planned to help for first 2 years of each of my kids' post secondary. They are responsible for the rest. Sorta. I won't let them starve or drop out due to money, so...yeah. Don't tell them that

Tuition for a STEM degree is around $13k-15k a year, which is about 10x what it was when I was in school, and only 2x of that is from inflation.

[Defiant]

We are conflating two things here:
1) Fixing the absurd cost of college education in the US.
2) Helping those that are already victims of that absurd cost.

My take is reverse the cuts in state funding of public colleges, which is where much of the increase in cost has come from (either by having states pay what they used to, or have the federal government step in).

With regard to private colleges, try to steer kids away from it if their families can't afford it or they don't get scholarships to make them affordable. I don't know if it would be effective, but I don't have much sympathy with kids choosing to go to a crazy expensive private school they can't afford when there are much more affordable public schools that give a good education.

[RunningMn9]

My take is reverse the cuts in state funding of public colleges, which is where much of the increase in cost has come from (either by having states pay what they used to, or have the federal government step in).

With regard to private colleges, try to steer kids away from it if their families can't afford it or they don't get scholarships to make them affordable. I don't know if it would be effective, but I don't have much sympathy with kids choosing to go to a crazy expensive private school they can't afford when there are much more affordable public schools that give a good education.

I think that unless you choke off the money going to the schools, there is no incentive for the schools to not maintain or increase cost. Having states (or the feds) contribute more directly to public education seems like addressing a symptom still. And maybe that's the best that we can do? I don't know.

To use the example that's been discussed above, the cost of a four year degree from Rutgers Engineering (living on campus) and bumping the current numbers by their average annual jump of 4%, gets you to a total cost $138732. At a state school, using in-state tuition rates.

If the question is "How do we fix that?" we have some questions:
1) Is that number actually "broken"? If that's what it costs Rutgers to furnish the education, then it doesn't really matter how outlandish it is, right?
2) If that number is actually "broken", WHY is it broken? What led them to determine those cost figures?
3) Was Rutgers struggling in 1992 when they were only charging $1665 per semester for tuition? Inflation accounts for about 1/3 of the cost increase from 1992 until today (only with respect to tuition).
4) In addition to the 443% increase in tuition costs, Rutgers now also charges mandatory fees that are in excess of the tuition in 1992 ($1719 per semester in fees vs. $1665 per semester in tuition in 1992).
5) I wasn't able to find specific data for Rutgers Room/Board in 1992, but I did find some data that the average room and board for a university was $2000 per semester. Rutgers currently charges $7231 per semester for room and board. Inflation accounts for about 44% of that increase.

So the total cost of a year at Rutgers has risen from about $5329 to $32670. Inflation would account for a jump of $5329 to about $11470. So to answer the first two questions above - what caused the jump of an additional $21200 per year, and is it "reasonable"?

[Smoove_B]

So the total cost of a year at Rutgers has risen from about $5329 to $32670. Inflation would account for a jump of $5329 to about $11470. So to answer the first two questions above - what caused the jump of an additional $21200 per year, and is it "reasonable"?

The biggest missing piece (mentioned above) is the amount of money states were historically paying to colleges to help with costs. It's been a long time since I sat in on meetings covering this topic, but the amount our state was provided to RU when you and I were there working hard (well, you were) was proportionately higher that what it turned into during the 00s and 10s. At one point I had access to that info; I no longer do but here is a broad-brush for all higher education. I want to say for us (our cohort) the state was paying something like 50% of the tuition costs. In other words, all attendees were getting a 50% scholarship - based on the rate that was being communicated as part of actual cost to provide a 3-credit course.

It doesn't explain all the increases but there was definitely a trend over the last ~25 years to have states move away from directly subsidizing the colleges to (1) providing more loans directly to students and (2) encourage colleges to reset the prices to reflect their lack of government subsidies.

So what's the issue now? It's largely agreed that middle-management in higher ed is out of control. So as a way to increase revenues, colleges stopped hiring tenure track instructors and engaged (broadly) in the adjunctification of higher ed. The corporate / private sector equivalent of not employing F/T staff but instead only hiring temp workers (with no benefits) that you pay to work 10 months out of the year.

So in short, part of the problem with student loans (imho) is that attending university went from something society valued as a greater good to a quasi-corporate entity that exists to make money on the backs of their customers (students) and employees.

[Zarathud]

Cost has become highly tiered. When I graduated Loyola University Chicago, the new Jesuit President (an economist) discussed increasing base tuition and scholarships to increase perceived value, and capture more dollars from wealthy coastal parents who could subsidize tuition scholarships to locals. He argued if the sticker price went up, but your ACTUAL costs stayed the same then they could attract more highly qualified students.

[Carpet_pissr]

Self-pay discounts are common practice.

Which probably represents a more “fair” market price for the service. Lots of caveats there, and the quotes heavily emphasized.

I assumed it was an example that even the insurance amount is inflated.

Yes, this.