Great. Now apply it to all the other colleges who marketed themselves as money making for students and an "investment" only to saddle them with unforgivable student loan debt.
At scale, everyone looks out for #1, and kids have a tendency to be a little naive.
I'm no expert, but it sounds like the problem is that we keep giving gov-backed money to kids to spend at schools who are telling them that paying 120k to be a history major is an excellent idea.
These schools are not their friends, and if we want to fix this, it feels like we have several choices:
A. Dictate to kids which programs they can get easy loans for.
B. Punish schools that produce tons of screwed over indebted kids, and hope they begin to downsize programs and costs.
C. Cut out the easy loans altogether, let schools fail, and see what happens.
D. Keep forgiving debt, and watch as angry people who avoided college and the loans vote in radical politicians with axes to grind.
Maybe we could see schools move to some sort of income sharing program, but I'm somewhat confident we'd soon see schools getting kids to sign on deals that are wildly exploitative (like 20 years of 10% of income sharing with the school...).
I know it sucks, but this whole situation sucks - I'm leaning towards A.
The simple solution would be to make the debt hypothetically discharge-able again and to get the government bubble of money out of the picture of higher education. I suspect the market would mostly regulate itself at that point, but then you get into the whole "not equal opportunity" crap. I hate to say it, but it isn't equal now. You trade proportions of colors of students for everyone has a degree, no one has a job, and everyone is in debt.
A solution I never see anyone else argue for. I'd like to have the FTC look into college advertising over the years to see what claims they made. If people were under the impression that expensive degrees in fields with way more supply than demand were going to result in good saleries that would be fraud and I'd expect them to be refunded. Would probably bankrupt them but that's what you get when you make misleading claims for money.
One one hand I support this because if you went to a for-profit college which provided you with no career skills and then went out of business, you need help. On the other hand, there is a massive population of people who went to a university of renown (on "good advice"), exited with a liberal arts degree in cartography and +$100k in debt, and who would now stab someone to get a job at Starbucks because that is their only way to get healthcare. They need help too.
No, they needed help to see that was a dumb decision. That time has passed. The government can’t be bailing out everyone that makes poor decisions, even when they’re young.
The government actively participated in that decision by providing the loan. One person can't just write themselves a check out of nowhere, it takes two parties. So why shouldn't the government bail out someone who the government put underwater in the first place?
Moreover, the government is also financing the universities in various ways. The government is propping up the whole university system into which students become indebted.
Funny how the least powerful, least wealthy, least experienced, least knowledgeable people always get blamed: the kids. Never blame the ones who know better and yet continue to exploit the kids: the government, the university administrators, the banks. Not to mention the parents, teachers, and guidance counselors who tell kids they need to go to college, and the employers who demand college degrees for no apparent reason, other than classism.
Of course this is just par for the course. In the 2000s when the banks made too many bad mortgages, the banks got bailed out by the government. The mortgage holders did not. The banks are "too big to fail". The universities are too big to fail. So we make the little people fail instead. And the big people, the wealthy people, get to continue failing upward. Consequences are always for debtors, never for loaners.
Yeah this title doesn't really make sense, and seeing as ITT Tech is now defunct it looks as though taxpayers (funded with a new 1.9 billion dollar funding allocation) will be picking up the tab, and people who worked hard and paid off their loans early won't be seeing anything.
I feel like a much better option would have been to make loans private and defaultable (so that if you get a loan it's not government money, and if you plan to get a worthless major private banks can simply charge you more for your loan or even refuse to give loans for a certain degree). ITT Tech was known to be a bad school for a long time and this would have been preventable through a freer market
> funded with a new 1.9 billion dollar funding allocation
That's not how it works. The money was already disbursed from past taxpayers to ITT many years ago. No new money is getting disbursed now. (Not to mention that it would require an act of Congress to allocate more money.)
Cancelation of debt held by the federal government just means less incoming government revenue in the future. But that revenue was never guaranteed to come back anyway, because many student loan debtors can't afford to pay back their debt, and some die never paying it off. (One of the fastest growing groups of student loan debtors is senior citizens. Some are getting their Social Security garnished.)
do you know what % gets back. This data looks like really hard to find. (One article says around 40-50% [1]) So its a loss of 750-900 million in revenue to the govt?
I don't know the % total. But I did find that student loan payments were $70 billion per year (in 2019, before the suspension of payments). Which is only 4% of the outstanding debt. And of course new debt keeps getting issued every year.
Most student loans are repaid. That fact is indeed difficult to discover online. (I'd paste a link, but it'd take awhile to track down, again. You learn more about how much intentional and unintentional bias there is by pouring through published
reports yourself, anyhow.) The average student loan debt burden atgraduation is also much lower compared to commonly cited statistics--e.g. $~30k circa 2021 according to https://educationdata.org/average-student-loan-debt-by-year, but I'm not sure if those figures include graduate loans. For 4-year undergraduate programs at public universities the average is lower still--~$26k (see https://www.aplu.org/our-work/5-archived-projects/college-co....). And note that these are averages; medians are significantly lower (on the order of $5-10k, IIRC) but almost as bothersome to find as the percentage of student who pay off their loans.
Published statistics are highly misleading because once a loan balance is repaid in full its no longer included in statistics. IOW, statistics only include outstanding balances, and over time that group increasingly skews toward the small subset that are never able to reach a $0 balance. That subset naturally also skews toward much higher outstanding balances, both because they skew toward much higher balances at graduation, but also because their inability to bring it down to $0 strongly correlates with inability to bring down the balance atall, and thus face balances inflated by compounding interest.
Similarly, students who never had to borrow (wealthier parents, or poor enough to receive free rides through grants and scholarships) are excluded from balance numbers--42% for 4-year public universities according to https://www.aplu.org/our-work/5-archived-projects/college-co... (via link above).
Another major bias factor is that many statistics (perhaps most?) aggregate data for both undergraduate and graduate students, the latter usually including business, law, and medicine. (Occasionally you'll see reports disaggregating medical and sometimes law students.) Graduate students tend to have much larger balances. Many of them also tend to have much more earning power, but those who pay off their balances disappear from the data (see above). Graduate program data is irrelevant to the question on most people's minds--is college (i.e. undergraduate) worth it?
> Graduate program data is irrelevant to the question on most people's minds--is college (i.e. undergraduate) worth it?
As a former graduate student in the humanities, and a longtime holder of student loan debt, I don't consider graduate program data irrelevant. In fact it's extremely relevant to me.
Graduate students owe half of all student loan debt, despite being only 25% of all student loan debtors. It's a massive problem, but graduate students are largely ignored.
Graduate students are exploited by universities for cheap labor. They need grad students for teaching and research purposes. But the PhD completion rate is low, and then good luck getting a tenure track job, much less tenure.
Some people want to make college all about money and earnings potential, but it's not. It's about education, scholarship, research, the advance and accumulation of knowledge. If college were nothing but a money-making scheme for students, then it would make no sense to even have public universities. In that case they all ought to be private, for profit schools like... um, ITT. ;-)
Do you want to abolish the humanities? Abolish everything that doesn't result in high earnings? Alternatively, do you want to make them only accessible to rich kids who don't have to borrow?
The elephant in the room of student loan debt is that people who go to college are literally better educated. In other words, less ignorant. College is not a cure-all for ignorance, but it's a lot better than nothing. And it's difficult to have a functioning democracy if we put education behind a paywall. Arguably, we don't have a functioning democracy...
A massive problem compared to what? That's the problem I have with most published statistics in this area: they're aggregated and reported in a manner that attempts to answer that question from the outset. They start from the presumption that it is a massive problem, and then aggregate and report data in a way that exaggerates effects.
I personally would be happy to vote for policies that increase public funding of public universities with the aim to reduce or eliminate the need for loans when attending such schools. But beyond that, it seems difficult to address these problems without greater specificity regarding the problems and potential solutions. Based on most popular reporting, Federal-subsidized loan programs seem massively exploitative on their face, but if the vast majority of people are able to pay them back, and given the percentage of Americans with postsecondary degrees (50% ages 25-64 as of 2020 according to https://nces.ed.gov/programs/coe/indicator/cac/intl-ed-attai..., behind only Canada, Luxembourg, Korea, and Israel among OECD countries), then it's not nearly as obvious that they're a net negative overall (notwithstanding the seemingly intuitively obvious inflation potential), and perhaps more targeted policies are appropriate.
Pointing out that reporting is misleading doesn't put someone on one side of a debate or another. Moreover, figuring out alternatives is far more difficult than identifying problems. If someone is actually earnest about adopting constructive remedies, I would think an accurate understanding of the nature of the problem(s) would be highly valued. If you're primarily concerned about issues regarding PhD programs, hooking your wagon to general solutions principally targeting undergraduate financing could backfire.
I find your position a little strange. For example, you say "students who never had to borrow (wealthier parents, or poor enough to receive free rides through grants and scholarships) are excluded from balance numbers", speaking as if that's a "bias" in the statistics that makes them "misleading", rather than being the fundamental problem itself: the unfairness of some students having to borrow huge amounts of money to get an education, while others don't have to borrow anything, despite going to the same schools!
Student loans getting repaid doesn't automatically mean that student loans aren't a problem. They're effectively a highly regressive tax imposed on kids based on the income of their parents. Or if not precisely a tax, then an entry fee to certain import parts of society, job markets, politics, etc. But the entry fee is waived if you belong to the right family.
> wealthier parents, or poor enough to receive free rides through grants and scholarships
Some of my nieces and nephews are going to college this year. They all seem to have gotten free rides for tuition( they have to pay for room and board). They are all solidly middle class. I don't think what you are saying here is correct.
It's simple: rich kids don't have to borrow for college, but millions of other kids do.
Who exactly has to borrow and how much? Well, that's complicated and depends on many different factors. I'm not sure what your anecdote is supposed to disprove? Obviously people have to borrow for college, given $1.7 trillion in student loan debt.
Me: Who exactly has to borrow and how much? Well, that's complicated and depends on many different factors.
You: You are making it out as if its only either poor or rich get a free ride.
Me: No.
You can willfully misinterpret me, despite my own clarifications, but this goes against the HN guidelines. It should be needless to say, but kids don't have to borrow for college if their parents pay for it, right? So it's very dependent on a kid's family. This seems indisputable. I'm not trying to say anything surprising here, just the obvious.
I'm done replying to you now. This conversation is not interesting and is going nowhere fast.
Eh, does the accounting really matter? It's not like the federal budget is anywhere near balanced anyway. What really matters is when and how much the federal government is paying out to schools, and when and how much the debtors are paying back to the federal government. The actual cash flow.
This all seems pretty insane: on pages 9 and 10 of "An explanation of the budgetary changes under credit reform", it looks like one hand of the government, which is on budget, borrows from another hand hand of the government, which is off budget? ¯\_(ツ)_/¯ My mind is going, I can feel it.
Anyway, since Congress changed the accounting method from cash to accrual in 1990, they can just change it back if they happen to not like the current deficit numbers. ;-)
Great, now make all student debt dischargeable in bankruptcy. Too many people end up deeply in debt with degrees that don't do what was promised. Especially the trade schools! ITT Tech, Silver State Helicopter, Culinary Schools, and all sorts of garbage private schools are taking advantage of people who were told to get an education at all costs.
Right now we already "socialize the downside" for all sorts of debt. I don't honestly know why student debt is any different.
No matter how many times you toss this word salad, it falls to the taxpayer. I paid my student loans off in full and on time. At the time I owed a loan amount equal to about 25% of my annual salary. If one borrows the money, they are obligated to pay it back. If they believe they were defrauded by the institution, that’s between them and the institution, not between them and the government. Maybe the government should just “forgive” my mortgage as well. My car payment? My monthly utility bill? The expectation that government will remediate one’s bad decisions is the road to serfdom.
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[ 3.8 ms ] story [ 101 ms ] threadI'm no expert, but it sounds like the problem is that we keep giving gov-backed money to kids to spend at schools who are telling them that paying 120k to be a history major is an excellent idea.
These schools are not their friends, and if we want to fix this, it feels like we have several choices:
A. Dictate to kids which programs they can get easy loans for.
B. Punish schools that produce tons of screwed over indebted kids, and hope they begin to downsize programs and costs.
C. Cut out the easy loans altogether, let schools fail, and see what happens.
D. Keep forgiving debt, and watch as angry people who avoided college and the loans vote in radical politicians with axes to grind.
Maybe we could see schools move to some sort of income sharing program, but I'm somewhat confident we'd soon see schools getting kids to sign on deals that are wildly exploitative (like 20 years of 10% of income sharing with the school...).
I know it sucks, but this whole situation sucks - I'm leaning towards A.
Open to more discussion on this.
1. Easy, govt backed loans allow the schools to raise prices without reducing demand
2. Most of this extra revenue is not spent on academics, but rather admin staff, new student housing / amenities, and loss centers like sports
3. Students choosing paths that cannot pay back the debt they take
I think all parties have blame to share, though the schools maybe the most through their exploitive practices
I'm hopeful that new learning paths will emerge so that people can find meaningful, sustaining work without the traditional 4 year degree
Some people brag that the President has already canceled more than $30 billion in student loan debt, but $4 billion was from just one school.
Total US student loan debt is over $1.7 trillion.
Moreover, the government is also financing the universities in various ways. The government is propping up the whole university system into which students become indebted.
Funny how the least powerful, least wealthy, least experienced, least knowledgeable people always get blamed: the kids. Never blame the ones who know better and yet continue to exploit the kids: the government, the university administrators, the banks. Not to mention the parents, teachers, and guidance counselors who tell kids they need to go to college, and the employers who demand college degrees for no apparent reason, other than classism.
Of course this is just par for the course. In the 2000s when the banks made too many bad mortgages, the banks got bailed out by the government. The mortgage holders did not. The banks are "too big to fail". The universities are too big to fail. So we make the little people fail instead. And the big people, the wealthy people, get to continue failing upward. Consequences are always for debtors, never for loaners.
I feel like a much better option would have been to make loans private and defaultable (so that if you get a loan it's not government money, and if you plan to get a worthless major private banks can simply charge you more for your loan or even refuse to give loans for a certain degree). ITT Tech was known to be a bad school for a long time and this would have been preventable through a freer market
That's not how it works. The money was already disbursed from past taxpayers to ITT many years ago. No new money is getting disbursed now. (Not to mention that it would require an act of Congress to allocate more money.)
Cancelation of debt held by the federal government just means less incoming government revenue in the future. But that revenue was never guaranteed to come back anyway, because many student loan debtors can't afford to pay back their debt, and some die never paying it off. (One of the fastest growing groups of student loan debtors is senior citizens. Some are getting their Social Security garnished.)
do you know what % gets back. This data looks like really hard to find. (One article says around 40-50% [1]) So its a loss of 750-900 million in revenue to the govt?
1. https://www.credible.com/blog/statistics/average-time-to-rep...
https://slate.com/business/2021/03/student-loan-total-annual...
Published statistics are highly misleading because once a loan balance is repaid in full its no longer included in statistics. IOW, statistics only include outstanding balances, and over time that group increasingly skews toward the small subset that are never able to reach a $0 balance. That subset naturally also skews toward much higher outstanding balances, both because they skew toward much higher balances at graduation, but also because their inability to bring it down to $0 strongly correlates with inability to bring down the balance at all, and thus face balances inflated by compounding interest.
Similarly, students who never had to borrow (wealthier parents, or poor enough to receive free rides through grants and scholarships) are excluded from balance numbers--42% for 4-year public universities according to https://www.aplu.org/our-work/5-archived-projects/college-co... (via link above).
Another major bias factor is that many statistics (perhaps most?) aggregate data for both undergraduate and graduate students, the latter usually including business, law, and medicine. (Occasionally you'll see reports disaggregating medical and sometimes law students.) Graduate students tend to have much larger balances. Many of them also tend to have much more earning power, but those who pay off their balances disappear from the data (see above). Graduate program data is irrelevant to the question on most people's minds--is college (i.e. undergraduate) worth it?
As a former graduate student in the humanities, and a longtime holder of student loan debt, I don't consider graduate program data irrelevant. In fact it's extremely relevant to me.
Graduate students owe half of all student loan debt, despite being only 25% of all student loan debtors. It's a massive problem, but graduate students are largely ignored.
Graduate students are exploited by universities for cheap labor. They need grad students for teaching and research purposes. But the PhD completion rate is low, and then good luck getting a tenure track job, much less tenure.
Some people want to make college all about money and earnings potential, but it's not. It's about education, scholarship, research, the advance and accumulation of knowledge. If college were nothing but a money-making scheme for students, then it would make no sense to even have public universities. In that case they all ought to be private, for profit schools like... um, ITT. ;-)
Do you want to abolish the humanities? Abolish everything that doesn't result in high earnings? Alternatively, do you want to make them only accessible to rich kids who don't have to borrow?
The elephant in the room of student loan debt is that people who go to college are literally better educated. In other words, less ignorant. College is not a cure-all for ignorance, but it's a lot better than nothing. And it's difficult to have a functioning democracy if we put education behind a paywall. Arguably, we don't have a functioning democracy...
A massive problem compared to what? That's the problem I have with most published statistics in this area: they're aggregated and reported in a manner that attempts to answer that question from the outset. They start from the presumption that it is a massive problem, and then aggregate and report data in a way that exaggerates effects.
I personally would be happy to vote for policies that increase public funding of public universities with the aim to reduce or eliminate the need for loans when attending such schools. But beyond that, it seems difficult to address these problems without greater specificity regarding the problems and potential solutions. Based on most popular reporting, Federal-subsidized loan programs seem massively exploitative on their face, but if the vast majority of people are able to pay them back, and given the percentage of Americans with postsecondary degrees (50% ages 25-64 as of 2020 according to https://nces.ed.gov/programs/coe/indicator/cac/intl-ed-attai..., behind only Canada, Luxembourg, Korea, and Israel among OECD countries), then it's not nearly as obvious that they're a net negative overall (notwithstanding the seemingly intuitively obvious inflation potential), and perhaps more targeted policies are appropriate.
Pointing out that reporting is misleading doesn't put someone on one side of a debate or another. Moreover, figuring out alternatives is far more difficult than identifying problems. If someone is actually earnest about adopting constructive remedies, I would think an accurate understanding of the nature of the problem(s) would be highly valued. If you're primarily concerned about issues regarding PhD programs, hooking your wagon to general solutions principally targeting undergraduate financing could backfire.
Student loans getting repaid doesn't automatically mean that student loans aren't a problem. They're effectively a highly regressive tax imposed on kids based on the income of their parents. Or if not precisely a tax, then an entry fee to certain import parts of society, job markets, politics, etc. But the entry fee is waived if you belong to the right family.
Some of my nieces and nephews are going to college this year. They all seem to have gotten free rides for tuition( they have to pay for room and board). They are all solidly middle class. I don't think what you are saying here is correct.
> They're effectively a highly regressive tax imposed on kids based on the income of their parents.
> entry fee is waived if you belong to the right family.
So i thought you agreed with that statement.
Who exactly has to borrow and how much? Well, that's complicated and depends on many different factors. I'm not sure what your anecdote is supposed to disprove? Obviously people have to borrow for college, given $1.7 trillion in student loan debt.
> They're effectively a highly regressive tax imposed on kids based on the income of their parents.
why is it just 'income of their parents' in your statement if there are 'many different factors'.
You: You are making it out as if its only either poor or rich get a free ride.
Me: No.
You can willfully misinterpret me, despite my own clarifications, but this goes against the HN guidelines. It should be needless to say, but kids don't have to borrow for college if their parents pay for it, right? So it's very dependent on a kid's family. This seems indisputable. I'm not trying to say anything surprising here, just the obvious.
I'm done replying to you now. This conversation is not interesting and is going nowhere fast.
This all seems pretty insane: on pages 9 and 10 of "An explanation of the budgetary changes under credit reform", it looks like one hand of the government, which is on budget, borrows from another hand hand of the government, which is off budget? ¯\_(ツ)_/¯ My mind is going, I can feel it.
https://www.cbo.gov/sites/default/files/102nd-congress-1991-...
Anyway, since Congress changed the accounting method from cash to accrual in 1990, they can just change it back if they happen to not like the current deficit numbers. ;-)
It. What is "it"? Pay what, exactly?
https://thehill.com/blogs/congress-blog/economy-budget/28362...
Right now we already "socialize the downside" for all sorts of debt. I don't honestly know why student debt is any different.
By canceling this debt, no school (or student) will have learned the lesson, and indeed schools can take advantage of students even more now!
Sorry man.
Also, corporations aren't incentivized to learn either.
If its wrong to discharge debt in bankruptcies let’s make that the law, for students and business alike. Let’s see how that works out.
There are no costs to the individual entities here however.