Some of this wouldn’t be necessary if the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act hadn’t passed through. And Biden was one of its biggest Democratic supporters. It made it impossible to discharge student loan debt through bankruptcy.
And Elizabeth Warren, the person I voted for in the primary, for all the good that it did me, warned us about this.
I voted for Biden because I don’t want to live under Trump for four more years, and I’ll vote for him again in 2024 over Biden or DeSantis because I don’t want to live under fascism. But in this particular case, Let’s Go Brandon.
My position is that we shouldn’t be raising the bridge, but lowering the river. Make college affordable (like it was when many of us went) and no one will end up hip-deep in debt.
Which is why you support removing bankruptcy provisions for people whose businesses go under, right?
In the black-and-white world you’re advocating, everybody is equally responsible for paying all their own debts under all circumstances, and there are never any situations where some form of debt accommodation and forgiveness can make things better for everybody.
I don’t think student loan debt cancellation is a good idea unless it was part of a pre-existing contract or program. It’s not a tax break. It’s more of a situational windfall where the situation was choosing to borrow money for school and still owing. Folks who didn’t borrow money for school but instead took other career paths, went to cheaper schools, or worked more during school and are at the same income level aren’t going to benefit from this executive action.
So, I’m not sure what the net result will be other than the creation of a new moral hazard moving forward.
Yeah, it’s not like plumbers and carpenters ever need doctors or lawyers. If a carpenter needs his appendix out, he’ll just save taxpayers some money and do it himself with a Sawz-All.
This is a start, and probably necessary, but we need long-term action to fix the problem permanently, not a bunch of band-aids. Unfortunately, when anyone proposes any permanent solution, the same people who are saying now that short-term solutions like this don’t work, will complain that the permanent solutions are too draconian.
Went to a state school on scholarship and accrued debt as a graduate student. Paid it off years ago. Wholeheartedly support this policy change.
Unless you went to college 10 years ago or less, comparing debt loads from previous decades is fairly pointless. The cost of higher education - along with housing, books, and supplies - has skyrocketed, and even at the state schools, the subsidy paid by the taxpayer has declined in real dollars and in purchasing power. My Pell Grant would have covered the cost of my tuition and then some in 1990 - even the max award wouldn’t do that now.
Student debt is preventing folks from purchasing homes and other middle-class processes that lead to the growth of the economy and social mobility. Why would we not want to facilitate this?
Not every member in society is a member of every subset of society so I am not sure how relevant that anecdote is. Humans respond to incentives, just because every human doesn’t respond in an homogenous way to a particular incentive doesn’t mean that that incentive has no effect.
Can we see some data, about whose debts are being cancelled? How many of them are in debt because they made bad decisions to enroll in overpriced schools?
Because it won’t address the root cause of the student loan problem is why. Part of the problem is the positive feedback cycle between collateral free loans and overall cost of college.
A lot of my current co-workers were constantly told growing up that they had to go to college if they wanted a decent life. College. No alternatives - nothing like trade school or apprenticeships or maybe just working for awhile before going to college. Nope, they party line was straight from high school to college.
A bunch of them finished college just in time for the Great Recession and could not get jobs in their degree area. The jobs just weren’t there. Hell, there weren’t enough jobs even for those of us who had both degrees and work experience.
So… they didn’t get those nice jobs they were promised if they just worked hard and got good grades. After a few years of struggling with McJobs and retail they were told that because they didn’t immediately get jobs with their degrees they were now out of date and wouldn’t be hired.
So, understandably, there is some resentment among the shelf-stockers, cashiers, and other peons in the retail world who have college degrees and debt but never got a foot on the corporate ladder due to being born/going to school at the wrong time. And with their load of debt they don’t even have the option to try re-training in something different.
But hey, keep throwing people under the bus. Keep them destitute with debt that will never go away due to interest and fines and fees.
It’s not the doctors and lawyers crushed under debt (though there probably are some) it’s the people with bachelor’s degrees from what I see. At least where I work.
Again:
Yes, I know it ultimately comes out of my taxes. I’m totally fine with that. I’d rather the tax money be used for loan forgiveness than yet another big-corporate tax break.
Also:
Too many people in my generation really do not understand that the rules of the game have changed. College costs so much that even upper middle class kids need financial aid, and that means loans. It’s a take-or-leave-it proposition, they have to borrow the money or they don’t go to college, and they have zero ability to negotiate terms. Much, much more debt than was ever possible in my day.
How is a tax break not ALSO a “situational windfall”? If you happen to be in the favored tax bracket(s) that primarily benefit from the tax break, then you’re lucky. It’s not like you did anything to deserve it.
Sure, and as a childless non-homeowner I don’t benefit from tax credits that homeowners and parents at my same income level get to benefit from. So what?
Fiscal policies are not implemented as a way for sadistic Nanny Government to selectively hurt some people’s feelings by letting the other kids have something you can’t have. Fiscal policies exist to further specific economic objectives: in this case, to relieve some of the economic cramping associated with a lot of younger workers having a lot of student debt.
How is this program creating a “moral hazard”? It’s not a matter of irresponsibly insulating borrowers from risk, because with student loans, the risk is not the point.
Moral hazard occurs when you want the prospect of risk to discourage people from taking risky actions, and somebody steps in and removes that disincentive. Like, say, you have to pay stupid huge amounts of rescue insurance to go free-climbing on a dangerous rockface in a remote national park, and some chancers decide to skip the insurance and try it anyway, and they fall and are injured and nonetheless get rescued without having to pay. Consequence: lots more irresponsible chancers deciding to take the same risk without insurance. We want to deter people from that kind of behavior.
But we as a society don’t want students to be deterred from college attendance by the prospect of not being able to afford a $10K or $20K debt repayment. It would be extremely foolish of us to squeeze the debt pincers so tight that the prospect of future financial precarity sticking graduates with amounts of debt less than the average cost of a car is disincentivizing students from higher education.
Right, but why is it the students that get punished for the actions of the schools and the banks?
Kids are told that they need to go to college unless they want to work flipping burgers the rest of their lives. College is not considered an option, it’s a requirement.
The student who took on debt in order to have a chance to be competitive in the workplace isn’t the one that is at fault here for skyrocketing tuition, but they are the only ones who are being held accountable.
I completed my higher education debt-free, thanks to the responsible decision to attend a university where a parent of mine was on the faculty, and I greatly resent that my hard-earned tax dollars are being frivolously put into the pockets as those who wouldn’t consider such simple and affordable options as mine.
Yes, this is a huge part of the problem. We have a mechanism for allowing people to get out of unduly burdensome debt. But then forbid its use on one of the largest forms of unsecured debt.
Now that I know banks aren’t getting a windfall from this forgiveness (thanks, @RitterSport, @Broomstick ), I’m fully in support of it.
(Full disclosure: my primary and secondary educations were paid for by taxpayers, my undergrad education by a non-profit merit-based scholarship, and my graduate education by scientific grants. I’ve never taken out a student loan and don’t begrudge others benefitting from public largesse.)
I often hear all the blame laid at the feet of the student, but don’t the banks bear some responsibility for the situation? They’re approving of loans with little regard for the ability of the student to pay it off after graduation. By gauranteeing the loan, we’re shielding the banks from their bad decisions. Why?
Because the guarantee didn’t shield banks from their bad decisions - it meant the banks would lend the money to people they wouldn’t have otherwise. Whether that was a good policy or not , it wasn’t a matter of the banks being protected from the consequences of approving loans the banks decided to make - it was more like the bank requiring a co-signer.
The Pell Grant bit has me confused. Are you eligible for the $20k if you received a Pell Grant at any point in your education? Or do you have to have received the Pell Grant for the same semester you took out your loan? Since only undergraduates are eligible for Pell Grants, that would exclude a lot of graduate debt from eligibility for the $20k.
At my state’s flagship school, the University of Kansas, 42% of undergraduates have federal student loans, averaging about $6600/year (about 65% receive federal grants). Average tuition and fees is now around $11K/year; add $10-14K or so for the room & board on campus, plus books and supplies and ordinary living expenses, and a four-year degree is going to set you back around $100K or better. Now, what does basic arithmetic tell you about how affordable that degree is for a student paying out-of-pocket, in flyover country?