I completely agree with all of what you’ve said here. However, none of it affects my previous point that a society’s benefit from an individual’s higher education is not limited to the amount of interest money that the government receives from the individual repaying their student loans.
Important to keep in mind: state university tuitions (what students pay) have been rising in large part because the tax subsidies to keep in-state tuitions low have been declining, so students are paying a larger share of the costs to keep the place running.
While the cost of education is an important issue, I think it’s incidental to student loan forgiveness. An educated population is a net good for society. Do we want individuals to bear that cost or society?
Society should for the most part. Maybe for all part? I’m not sure.
In the US, it’s never been an either/or question – it’s always likely to be some on both sides. This forgiveness just tips the balance slightly more to society paying.
I’m a little confused by this post. Granted your first sentence, the rest of your post looks more relevant to cost of education than to student loan forgiveness (which is what I thought this thread was about).
While there may be other good arguments for student loan forgiveness, it seems to me that, if you’re specifically aiming for a more educated population, you’d get more bang for your buck by giving it to current or future students than giving it to those who have already been educated.
I am not convinced that graduating more people with degrees in Psychology or Communication Arts or Gender Studies is a positive externality. It could easily be the opposite - graduating disillusioned people destined to be under-empoyed and a poor match for the worker needs of society.
It’s also not clear that pushing more people into college is a net benefit if it means watered down coursework, a glut of marginal science as all those new scientists fight to get published, and a whole lot of disaffected people who thought they were headed for a great career only to discover that the best they can do is an adjunct position at a mediocre university paying $35,000//yr, or that their degree in critical theory only qualified them for a job at Starbucks.
When college grads in many fields make less money than plumbers and carpenters, society might be telling you something about the relative value of those jobs and where we should be focusing our educational efforts.
Some degrees are definitely a net positive externality. Others are not. We should not treat them the same.
It sounds like you may be confusing “a degree in _____” with “training for a job in _____.”
At least under the American system, earning a degree with a major in a particular subject involves learning more than that one particular subject.
And I would imagine that knowing a lot of psychology or being skilled in communication would be advantages in many jobs (as well as other, non-job-specific parts of being a useful citizen and member of society).
ETA: This is assuming we’re talking about undergraduate (Bachelor’s) degrees. For graduate degrees, your point is more valid.
This is pretty much what my son, a Jr in college, is saying about all this. That those lending the money should pause to consider the major/career glidepath/potential earning ability of the student taking out a loan. His point is perhaps someone going into $100K debt for a degree in a field that is not in high demand should be considered by the lender, and not just blanket letting everyone have any amount of a loan they want.
One problem with student loans is that they subsidize the college experience as well as the education. It’s fine to say that it’s good to get a college degree, but it’s not necessary to do it at a school which has country club amenities like manicured campus, spacious dorms, top-notch food, outdoor water parks, etc. One way that might address that is to make loans proportionally forgivable/dischargeable depending on the rack tuition price. So a loan applied to a school which charges $10k a year would not be dischargeable, but a loan applied to a school charging $60k would be. This way the student and the lender would be making a more obvious choice about whether they are funding the education or the experience.
Eh, my undergrad degree wasn’t directly job-related. Until I specialized with graduate degrees, no employer cared what my major was, nor did grad programs (including the Ivy League). They cared that I completed a degree.
@Crafter_Man I’m still waiting for you to provide your reasoning as to why a person should NOT be able to discharge student loan debt via bankruptcy.
One reason is that it keeps the interest rates lower for school loans. The more confident the lender is that they’ll get paid back, the lower the rates they will charge. If loans become dischargeable, then the bank has to inflate the rates to account for the losses on those loans. Personally, I think that could overall be a good thing. If the lender would be more critical about their loans and whether the student would be able to pay them back, then it’s less likely for there to be a student debt crisis where people have crushing amounts of debt and are in low-paying jobs where they don’t have any hope of paying them off.
That would be an argued FOR allowing bankruptcy discharge, frankly - it would remove the incentive to offer endless loans to those with poor chances of paying them back.
I’m asking @Crafter_Man his reasoning for NOT allowing bankruptcy discharge of student loan debts. Which he has not answered. Granted, it’s been only a day at most, but I’d really like to know his reasons.
It’s very likely useful to society to have an occasional place where students from various economic backgrounds can mix together on an equal basis.
Whether college ought to be that place is a different discussion; but as it stands, that’s becoming more and more the place we’ve got.
Why should that argument only apply to school loans, and not to all types of loans; including those to businesses?
I wanna take back the “Let’s Go Brandon” I said earlier in the thread. This is the real game-changer.
One obvious difference with student loans is that they are given out without respect to ability to pay them back, and they are given out with repayment terms that don’t start for years. They are also unsecured loans. And you are setting up a situation where students could declare bankruptcy immediately after graduation, before they have any assets to discharge in bankruptcy court. Their credit rating is generally crap at that point anyway, so it would be a huge advantage to be able to just write off all your loans as soon as you graduate.
All of this would make those loans much more risky than they are now. Interest rates might go up a lot more than ‘a bit’. They might look more like credit card debt or high risk auto loan interest rates.
Aside from debts that are never paid off, there are many student loans that take decades to pay off. A high rate student loan carried for decades would be devastating to graduates. You could easily set up a feedback loop where the rates go up, causing more people to default and declare bankruptcy, which causes rates to go up even more…
I have a better idea: make colleges have skin in the game. To keep interest rates down, make college co-sign for 50% of the loan. If the student defaults, they go bankrupt and the college pays half. That might get rid of some of the moral hazards that are driving colleges to raise tuition while hiring increasing numbers of administrators and adding more garbage degrees to capture as much student loan money as they can.
Colleges should have a vested interest in graduating productive people, especially if those people are borrowing money to get their education. If you still want to take advanced basket weaving, go for it. But the school might not co-sign your loan. That itself would be a signal about the relative value of the degree.
This sounds great but I’m curious how it will work. Say a graduate with $60,000 in debt can’t find work in their field and only makes $30,000/year. 5% of their income is $1500/year. If that’s where their payments are capped, it amounts to 2.5% interest, so if their rates are any higher than that they won’t even be servicing the loan, let alone paying it down. How does Biden’s plan ensure their balance doesn’t grow?
There are no such taxes.
…
Why isn’t the justification for this (which is essentially a middle class tax cut) just the same as when corporations or rich people get tax breaks:
It frees up capital for reinvestment.
What? Only corporations are “job creators”?
Most people with student loans have them on automatic debit; it’s just money that drains from their account. If, instead, somebody gets an extra $200-$400 a month sitting in their bank account, maybe they decide to hire a landscaper or pool service, or go out to eat more often, or sign the kids up for music lessons, etc, etc.
It’s money that will return to people’s bank accounts. They are people who are not likely to hoard their newfound wealth, since it’s modest and they aren’t rich. So, they’ll spend it, and it will stimulate the economy.
(Oh? As for me? I had about $30,000 in student loans from completing law school. I paid them off when I accessed my savings during the Covid shutdown. To those who just got a “windfall”, I say “Hi five! Feels good, doesn’t it?!”)
Yep, in Illinois in-state tuition, room, and board is currently over $35k/year at the flagship state university. Over $140k, assuming you graduate in 4 years. That’s bonkers.