Student Debt and Responses

[Wargamer08]

So, looking for discussion here about the state of student dept and what people think is a reasonable response to the issues therein.

My initial response from a different thread and a little off the cuff.
@Abhorsen I’m a fan of just forgiving all student loans by making the banks eat it then inform the banks that they can have it happen again if they keep giving loans to people for stupid shit with no future way to pay.

Now note, I don’t owe a dime in student loans. This would likely harm me in some small way. However the way it’s run now can not continue. Yes this does mean that some moron shitters that took 60k for an art degree get saved. That’s unfortunate, but all that bad debt and loaning tactics are worse.

 

[Abhorsen]

@Abhorsen I’m a fan of just forgiving all student loans by making the banks eat it then inform the banks that they can have it happen again if they keep giving loans to people for stupid shit with no future way to pay.

Here's the problem: First, the banks made those loans in good faith, and with pretty reasonable expectations that enough would be willing to pay, as college graduates are almost always employed if they want to be, and eventually average earning over 100k/year. That sounds like a reasonable investment to me.

The second problem is why should the loans be forgiven? Adults agreed to these loans. They made a promise. Why shouldn't they be obligated to keep it?

The problem with student loans is that it allows Colleges to make too much money that they waste on useless degrees. Instead, I think colleges should be funded by a percentage of future earnings for a period of time post-graduation. It makes sense to me as it aligns the goals nicely. Colleges want to see kids graduate now and get good jobs quick, not have them take years for useless degrees.

 

[ShieldWife]

It’s a difficult problem. The college loan system is predatory. Kids straight out of high school sign away their futures on the promise that they will be nothing if they don’t get that insanely expensive sociology degree. The more people who get these degrees, the more expensive they get and the less valuable they get. The cost of college has been sky rocketing for decades.

On the other hand, forgiving debt will just make the problem worse. It will encourage colleges and universities to rise their tuition fees even more, it will encourage even more people to get degrees that they don’t need. Forgiving debt without reforming the entire higher education system would be like trying to build a new house on top of one that is still burning down. Plus, why should poor blue collar people who didn’t get to go to college at all have to pay off the loans of college students? Those degrees actually do have some value even if it’s just as a sign of having paid their dues and jumped through the right hoops.

So my suggestion is to heavily reform the college loan system and not only that, but to try to move away from 4 year degrees for everybody. More people should go into trades, should apprentice at jobs, or otherwise find work in other ways. Only when we can make these much needed reforms can we even discuss the debts students already have.

 

[LindyAF]

First, the banks made those loans in good faith, and with pretty reasonable expectations that enough would be willing to pay, as college graduates are almost always employed if they want to be, and eventually average earning over 100k/year. That sounds like a reasonable investment to me.

The second problem is why should the loans be forgiven? Adults agreed to these loans. They made a promise. Why shouldn't they be obligated to keep it?

IIRC ,most student loans are not private, private banks stopped giving out student loans ages ago, at least for the most part. The vast majority of student debt is public, I'm pretty sure.

I think also there's a bit of a double standard here because student loans are not currently just as binding as every other kind of loan. They are actually more binding, because they are not alleviated as easily by bankruptcy. So the youngest possible adults, who are generally being told by most authority figures in their lives, not to mention the media, that they need to go to college are currently being held more responsible than other adults facing less pressure.

I think everyone here agrees that the student loan system needs to be reformed, particularly to reduce the incentive for the college to offer useless majors that only serve as a class distinction. That's going to be opposed by the people who profit from the current system, and the forces that it feeds into (more broadly, basically the whole Left). The most effective way to get something like that through, then is to attach it to a carrot. What we put forward cannot be all medicine, no sugar- that will get us nowhere.

Or another way to look at it is, given the current student debt crisis, I think student loan forgiveness is inevitable. If it's done by the Right, we can use that leverage to ensure that it doesn't happen again, while taking the opportunity to strike at the heart of the progressive power structure. If it's done by the left, they can maintain the current system or make it even worse, while creating people who are reliably left-wing because they are dependent on a left-wing bailout structure.

 

[Captain X]

One of the most bullshit things about student loans is that they no longer have the bankruptcy protections other forms of debt have, so that needs to turn around. Another thing is that the government needs to stop essentially writing blank checks in the form of these loans. Universities are using these loans as an excuse to just keep raising their prices in order to keep milking the government for more and more money, and in the end all it does is feed into administrative bloat, and frankly has been bankrolling the creation of the current crisis we face from the regressive left.

Of course, while it's easy to blame the universities for charging ridiculous amounts to attend them (it's impossible to pay for school with a regular part-time job, let alone a summer job the way people used to be able to), a lot of the blame lies with businesses for being lazy in their hiring practices. The entire reason there is such a push for four-year degrees is because businesses started being lazy by shortening their list of candidates by just excluding everyone who didn't have a four-year degree. So where before there was a big push to get kids to finish high school so they could have a shot at getting a decent job, there started to be a push to get a four-year degree in literally anything (my university even offered a "General Studies" degree). So that shit needs to be turned around, too. Unfortunately, I have no idea how.

And then, of course, there's the loans themselves. Since these are looked upon as basically the avenue to guarantee anyone who want's access to higher education can get it (so akin to a civil right), it is ridiculously easy for a young adult to get them where they would be turned down for basically any other type of loan, so they can rack up tens of thousands in debt, and if they don't land a decent job to pay it off, they can't even fall back on bankruptcy. Oh, and the DoE has SWAT teams they'll send after the people who default on their loans, because of course they do.

 

[Buba]

I remember reading - decades ago? - that the "US student loan crisis" began when the Feds did something about student loans.
I do not remember details - maybe grants matching loans dollar for dollar? Subsidising loans in some way? This was to make college more affordable. The (predictable) effect was colleges hiking up tutition prices.
@Captain X and @LindyAF - thanks for confirming my suspicions that the fault ultimately lies with Good Intentions at Federal level.
Hence the starting point should be no more easy to get Fed backed loans. Of course, there will be an outcry from vested interests (colleges now hooked to higher fees which I suspect pay for such weighty academic pursuits as Gender Studies or LGTB Literature) and well intentioned idiots blabbering about no-haves being denied higher education.
Naturally, scholarships for good grades and/or ROTC scholarships are beyond the poor darlings, I presume ...
How to abolish this system of de facto social benefits and subsidies to shitty colleges - I have no idea

 

[Abhorsen]

I think also there's a bit of a double standard here because student loans are not currently just as binding as every other kind of loan. They are actually more binding, because they are not alleviated as easily by bankruptcy. So the youngest possible adults, who are generally being told by most authority figures in their lives, not to mention the media, that they need to go to college are currently being held more responsible than other adults facing less pressure.

There's a reason they are more binding: you can't lose a college degree in bankruptcy. Otherwise every student with a brain would go bankrupt the second they left college, as they are both massively in debt and currently have no possessions outside of maybe a car (and IIRC, cars (one of them) are one of the exceptions to a bankruptcy).

IIRC ,most student loans are not private, private banks stopped giving out student loans ages ago, at least for the most part. The vast majority of student debt is public, I'm pretty sure.

If it's public, that's worse, as then we just giving away money to the (soon to be) richest class of people.

I think everyone here agrees that the student loan system needs to be reformed, particularly to reduce the incentive for the college to offer useless majors that only serve as a class distinction. That's going to be opposed by the people who profit from the current system, and the forces that it feeds into (more broadly, basically the whole Left). The most effective way to get something like that through, then is to attach it to a carrot. What we put forward cannot be all medicine, no sugar- that will get us nowhere.

Or another way to look at it is, given the current student debt crisis, I think student loan forgiveness is inevitable. If it's done by the Right, we can use that leverage to ensure that it doesn't happen again, while taking the opportunity to strike at the heart of the progressive power structure. If it's done by the left, they can maintain the current system or make it even worse, while creating people who are reliably left-wing because they are dependent on a left-wing bailout structure.

This is fair, but it would have to come attached to an actual reform, instead of the usual bullshit.

 

[Terthna]

There's a reason they are more binding: you can't lose a college degree in bankruptcy. Otherwise every student with a brain would go bankrupt the second they left college, as they are both massively in debt and currently have no possessions outside of maybe a car (and IIRC, cars (one of them) are one of the exceptions to a bankruptcy).

You can, however, find yourself with a worthless degree. Either because it's in something like Gender Studies, or because it's become outdated; something that happens quickly with degrees involving computer systems.

 

[Abhorsen]

You can, however, find yourself with a worthless degree. Either because it's in something like Gender Studies, or because it's become outdated; something that happens quickly with degrees involving computer systems.

So? The issue isn't whether a degree is useful to you, it's that you having a degree is useless to your creditors, regardless of what the degree is, as they can't reposses it and sell it, unlike almost all forms of bankruptable debt.

 

[Terthna]

So? The issue isn't whether a degree is useful to you, it's that you having a degree is useless to your creditors, regardless of what the degree is, as they can't reposses it and sell it, unlike almost all forms of bankruptable debt.

Creditors loan money to students with the expectation that their degree will result in them getting a decently paying job; but if that degree is worthless, than the debt is also worthless, so what exactly do they stand to lose if bankruptcy is declared?

 

[Abhorsen]

Creditors loan money to students with the expectation that their degree will result in them getting a decently paying job; but if that degree is worthless, than the debt is also worthless, so what exactly do they stand to lose if bankruptcy is declared?

No, the debt isn't worthless. It's almost always repaid eventually.

 

[ShieldWife]

The heart of the issue here is that too many people go to college. The education itself is often worthless in and of itself, but it has value because in the competitive job market that we have, employers will hire people with degrees over those who don't. The high demand for higher education, along with loans which are artificially made less risky because they cannot be discharged with bankruptcy, has driven the cost of education sky high. At the same time, the high number of college graduates, the lowering academic standards to accommodate a everyone who wants degrees, and the ridiculous ideology which pervades higher education makes these increasingly expensive degrees less and less valuable.

Something has to radically change with current trends or things will get worse and worse until there is a collapse of some kind.

Ultimately, only a fraction of the people going to universities now should be going there. People should be getting jobs out of high school, getting job training, learning trades, starting businesses, or seeking some other lifestyle which does not involve a higher education. This will, of course, have an adverse effect on colleges and universities - as it should because higher education has become a parasitic destruction force in our society.

 

[Terthna]

No, the debt isn't worthless. It's almost always repaid eventually.

Is it? Because I don't think that holds true anymore; or at least, not as much as it once did.

 

[ShieldWife]

Well, the debt is usually repaid in part because it's hard to not repay it. You can't declare bankruptcy to get rid of it. They government can also take actions to collect this debt that it doesn't when debt is privately owed. Even if the degree is worthless, the degree holder will usually still have some income and will still be heavily pressured into repaying the debt.

 

[Abhorsen]

Is it? Because I don't think that holds true anymore; or at least, not as much as it once did.

Oh, it's repaid by hook or by crook, including wage garnishment, etc. If you get money, they get some of it. And if the student does default, the cosigner is now liable.

 

[DocSolarisReich]

Well, the debt is usually repaid in part because it's hard to not repay it. You can't declare bankruptcy to get rid of it. They government can also take actions to collect this debt that it doesn't when debt is privately owed. Even if the degree is worthless, the degree holder will usually still have some income and will still be heavily pressured into repaying the debt.

They can end up docking your pay to get theirs back, which is why the rigged game needs to be smashed.

 

[Terthna]

Oh, it's repaid by hook or by crook, including wage garnishment, etc. If you get money, they get some of it. And if the student does default, the cosigner is now liable.

Cosigner? I wasn't aware that was a thing when it came to student loans; mine never required one.

 

[Abhorsen]

They can end up docking your pay to get theirs back, which is why the rigged game needs to be smashed.

Someone sounds like a commie here. How is the game rigged? Both sides agreed to it, now one side is trying to cheat the other.

Cosigner? I wasn't aware that was a thing when it came to student loans; mine never required one.

Private ones usually have this. What I'm saying is that there are a variety of ways they can get you to pay, and there's enough that there are private businesses will do it.

 

[DocSolarisReich]

Someone sounds like a commie here. How is the game rigged? Both sides agreed to it, now one side is trying to cheat the other.

Usury is a sin. Hating the sin of golden chains of debt does not make one a 'commie'.

Usury FAQ, or, money on the Pill

“Are we not ashamed to pay usury? Not contented within the limits of our own means, we do by giving pledges and entering into contracts, fabricate the yoke of our slavery.” – Plutarch We exho…

zippycatholic.wordpress.com

 

[Abhorsen]

Usury is a sin. Hating the sin of golden chains of debt does not make one a 'commie'.

Well, then you must hate capitalism then, as it relies on usury to do finance. Now that's fine, but it also means I don't care about your opinion as to student debt if you don't believe in loans at all.