A summary is that the much-maligned Corinthian colleges group, which 350,000 students took out an average of $10K in student loans to attend, is a sham college with worthless degrees. Apparently enough that they have broken the law and are in the process of being shut down. (Well, some of their branches. Apparently they sold some off and some others are still under investigation).
On the one hand, if someone was fraduently induced into getting a student loan for a college degree that would be worthless, I’m not so upset that loan is getting forgiven. Plus, I have long thought that cracking down on crappy for-profit colleges is long overdue, and this will be good for society overall as degrees become more worthwhile on average (on account of getting rid of the useless degrees).
On the other hand, I’m not so thrilled with the taxpayers picking up the tab for someone else’s bad decisions in picking a college without checking to see if that college was worthwhile first.
On the gripping hand, I would think that the feds could go after the colleges that have been shutdown to get the some of the money back. Dunno how much has already been spent though.
On the whole though, I think this is a good move overall - dump the fake colleges, and let the students that got defrauded have relief from those loans. What does the dope think?
I know a number of talented people with PhDs from excellent schools who have been unable to find work in their field, because academic underwent a radical shift while we were in graduate school. As students, we could not have predicted our unemployability. It’s not just students who made poor choices who have been saddled with unreasonable debt.
With a full-time job, I could have been out of debt by now. As it stands, working three part-time jobs, I’ll be out of debt in my mid-60s.
I don’t think we should totally erase their debt. We need to keep an incentive for people to not make bad decisions. I might be in favor of paying off some of the debt, however.
We do need to shut down these worthless “degree mill” colleges, but really there are a number of factors here. Mainly, it’s the societal expectation that everyone needs to have a degree, and working in (say) a skilled trade means you were too stupid and/or lazy to get a degree. That’s the pressure that pushes people into this sort of worthless college. Also, we should be honest about the fact that most colleges pad their curriculum with all manner of worthless classes, mostly to make work for more professors. I remember an ad from a local technical school that asked rhetorically, “How is Shakespear gonna help me break into IT?” It’s a question that we really need to think about. I mean, that Chinese History course I took to fill my liberal arts requirements was kinda interesting, but has it ever actually helped me? Not really.
College degrees are an investment like the stock market in my opinion. Do your research in the stock you are buying (the school and the degree) and you take your chances.
I don’t think the government should be bailing them out.
Heard a rumor that the VA tried to blacklist a bunch of these colleges from their college benefit program years ago, but that congress wouldn’t allow it - until the VA turned up with a list of comatose vets with college benefits claims and started legal action. Opposition to blacklisting dwindled after that.
I don’t know how to go about confirming or refuting the rumor, but it fits in with some other things that have been reported. Such as hiring a bunch of graduates for temporary outreach programs - in order to falsely boost up the employment rate they claim for graduates. I would very much approve of making some of these colleges responsible for the student loans that they recruited people into. Would also approve of fining them and shutting them down.
Forgiving the loans might be good policy. I’d have to see the numbers. I suspect that not forgiving some of them might be trying to get blood from a turnip. If the money’s not there, why spend money chasing it?
Student loans are not allowed to be used in bankruptcy court, but most of the loans made to students at those schools are never going to be paid off either.
So a compromise could be to make student loans from schools that are shut down allowable under bankruptcy law. That allows forgiveness, while still making the mark of “this borrower is not the sharpest tool in the shed and is easily swayed into poor decisions by sharp marketers and salesmen.”
You get forgiven, but your credit rating takes a hit. That hit is probably fairly legit, sadly.
We must allow student loans to be dismissed under bankruptcy. There is no reason not to. Also, the government shouldn’t loan money at all. Ever, for anything. It’s a bad idea. Or “guarantee” loans, or whatever it is they do.
I sorta agree, but I think only after five years. Otherwise, you could just get out of college, declare Cptr 7 and walk away, since you’d have no job, no income, no assets yet.
What I think we need more of is “jobs no one wants but we desperately need to fill” which give a Student loan forgiveness after so many years.
I believe that is the exact reason they are not dischargeable in bankruptcy. People were getting the degree, filing for bankruptcy, and walking away since they wouldn’t be buying a house in those 7 years anyway. So banks would stop making what’s essentially an unsecured loan unless they weren’t dischargeable.
I think there are already some programs like this, for example for teachers in underserved areas.
I think DigitalC meant getting it from the colleges that sold worthless degrees, but I agree the money is probably already spent.
Something just occurred to me, and it’s a point in favor of forgiving the loans. If the Feds shut down a school, then whatever value the degree did have is going to evaporate overnight. (“Your degree is from Corinthian College? That place that got shut down? Uhhh, I’ll have someone call you for an interview…”) In that sense, the Feds have basically “killed” your degree, so you could certainly argue that forgiving your federal student loans is the least they could do.
So? My cousin maxed out his credit cards on fancy guitars, rims and big screen TVs before declaring bankruptcy at age 22. This is an argument against bankruptcy in general, not bankruptcy for student loans specifically. What makes student loans different in this regard?
There are no such jobs. There are “jobs no one wants at the wages currently offered”, but the solution to that is for employers to pay them more, not taxpayer subsidies.