I also agree that a blanket forgiveness program would be profoundly unfair. There are a lot of people out there that made an economic decision to invest in an expensive high value educational degree, such as a law degree, an MD or an MBA.
And in many cases this was a sound decision and the degree will provide the return on investment that they anticipated. And I don’t see any reason why we should enrich these people, many who come from privileged backgrounds.
And frankly, if someone was dumb enough to pay a quarter million bucks for a useless degree at a for profit college they selected because it has luxury apartment dorms and swimming pool - I don’t want to help them either.
I am in favor of free or low cost state and city college, i think NYC made a great move by making CUNY ( City University of New York) free to most students.
And I could support a program like HARP, maybe making provisions to refinance the worst loans at low or no interest. But blanket forgiveness? No way.
I think the idea is pretty awful myself. Not for the moral hazard reasons, though I think those have merit as well. Very simply, the problem I see with increasing student loan debt is that tuition has risen in response to increased supply of money. Student loans became more plentiful, and universities responded by increasing tuition, the cycle continues and we’re looking at inflation in the college education space.
I see it similar to the housing bubble in the run up to 2008. People getting hordes of money they previously wouldn’t have been able to, drives up the price until at some point the bottom falls out of the unsustainable rise. Being against NINJA loans isn’t equivalent to being opposed to people owning their own home. Being opposed to student loans being used for purposes that would never yield a sufficient return to repay them is not equivalent to being opposed to higher education.
The way it is being done now I think is unsustainable. Forgiving loans having the government pick up the tab is like putting out a fire with gasoline.
Indeed. They could then triple the tuition. Why would the students care? The feds are paying.
So then we will have the feds start introducing measures to control tuition costs and mandating that certain programs be cut to keep those costs down.
Then the upper tier schools starting with the Ivy League will buck that system and say that they won’t accept the federal vouchers.
Eventually we will get to the “new normal” whereby the college paid for by the feds is not viewed as desirable by employers and only those who went to the schools which did not accept the federal money as being truly cert worthy. Students from middle class homes will want to attend those schools and take on debt.
So, we will end up right back where we started, except with an uber-massive government entitlement which if proposed to be eliminated will be met with cries of “Republicans want to end education for poor people.”
I don’t recall if PJ O’Rourke originated the line, or just quoted it, but it ran “if you think health care costs a lot now, wait til you see what it costs when it’s free”. Same thing with college tuition.
The idea behind this plan AFAICT is
[ul][li]There are a significant number of people who want to go to college, and could succeed in college, but are prevented from doing so because they can’t afford or don’t want to incur the debt, and[/li][li]if those folks do go to college, their earnings over their lifetime and therefore the amount of taxes they pay will be raised enough that it will offset the cost of their tuition.[/ul]Right now, people take the risk that incurring debt and getting a college degree in something marketable will pay off. Their earnings will go up by enough to make the bet worthwhile. [/li]
If the government is paying, then it doesn’t matter if your earnings go up (to you) or not. Someone else is paying anyway - if your passion is Art History or Theater of Film Studies or something, and it doesn’t pay off, oh well. Four years wasted, but you just go out and get the same job you could have anyway.
A friend of mine got his Ph.D. in Neopunic Orthography. He is a nice enough guy, and pretty smart overall. But he was working as a manager, and the ability to discuss the niceties of funerary inscriptions did not crop up very much.
Hmm. I’m not sure of that. Students loans as we’ve currently let them be designed are non-market based and downright predatory. Even with that we’re beginning to see four-year schools - private ones - fail and shut down because there’s not enough bang-for-buck.
But I don’t disagree with you on ‘making more money available makes prices rise’. We see the same thing in health care. Take away insurance and a the health care industry would face significant pressure to adapt or die. That could spur a lot of innovation while being astonishingly chaotic during the transition.
But it’s more complicated that it looks on the surface. There’s a real correlation between the level of education in a population - not just in practical subjects - and the overall productivity-per-worker as well as an increased skepticism in the population of institutional behaviors. I, personally, think increased productivity and a greater number of people doubting our large organizations is a good thing. Others may disagree.
A quick though on an idea to deal with these? Start off two a few things.
Provide education with full rides to the top 10-20% of students at every high school. I believe GWB put this in place during his time as governor or Texas.
Limit the amount that can be borrowed - even from private sources - for college. This applies downward pressure on rising college costs.
Make students loans bankruptable. Give the lenders some skin in the game. Make them have to assume risk to make the loans. As it is it’s another example of ‘privatized profit/socialized risk’ that we see so often in the financial industry.
Those all sound reasonable to me, with some checks and balances in place. I’d vote for such a plan. I also agree with you that a general well educated populace is an overall benefit to society in and of itself. I also think that it makes good economic sense, regardless. The trouble is balancing everything, as well as fairness and access. The first bullet you provide especially would be something to balance with those checks in place to make sure it’s not just the elite (i.e. smartest or those who get the best grades at least, which aren’t always the same thing) get the benefits.
Agreed. As an example, some time ago, my grandmother showed me the tuition bill from my father’s college education. He went to a local state run university. In 1968, tuition was $154.00 per semester. If you plug that into an inflation calculator, it comes to $1,124.92 in 2019 dollars.
That would be well within the means of most families to save for. It would be well within the means of any student to work their way through school. Good students, the ones most likely to succeed in their career path, could still get scholarships to pay for that. But we had the federal loan program which inflated these numbers far beyond a person’s ability to self pay.
Instead of realizing the error and getting out of the boondoggle, the government wants yet another program with even more unintended consequences.
I went to a state school in 1994. By the same calculator, tuition should have been $655.83/semester. It was $950, nearly 1.5 times the rate of inflation.
Today it is $3,816/semester, almost four times the rate of inflation since 1968, and nearly double the rate of inflation since 1994.
It seems like a great idea, but then there are problems as well. Let’s say that my kid is in the top 35% at his school and will have to pay for his college. What is to stop me from moving to a poorer and underperforming district so that he is now in the top 20%? The “per school” argument smacks of affirmative action (and a debate for another thread). Why should I have to move somewhere within the state for this benefit; should really be the top 10 to 20 percent in the state. If we are investing money, then those worthy shouldn’t be an accident of geography.
But then we get what I talked about. The elite schools will go above the caps and we will have the rich/poor dynamic again. Some super smart kid from a middle class family simply cannot go to Harvard even if his grades and test scores merit it.
I agree with the old system of bankrupting student loans; i.e. you must wait 5 years. Without that wait, a 22 year old graduating from college could file for Ch 7 bankruptcy as he or she likely has no assets which need protection. Live within your means and with cash for the next few years and then start your thirties with clean credit and no debt. Too much potential for abuse.
This is the problem in a nutshell. Student loans are good on an individual level and wasteful on a societal level. Young people who are in debt for college should be upset, but they should be upset at the actual problem, the mandatory nature of college, and the subsidies the government is paying to the greedy college administrators.
A hypothetical, there is a pageant where all of the eligible maidens in a country compete for a chance to marry one of 10 aristocrat bachelors. Those who succeed will live the cushy life of a duchess and those who fail will have to live normal lives like the rest of us. Since the pageant is about beauty, someone has the idea to get plastic surgery before the pageant and then they win one of the spots. Soon everyone who competes in the contest is having lots of plastic surgery and because plastic surgeons are scarce the price is bid up 10 and 20 times what it was when only a couple of people were using plastic surgery. Many women are burdening themselves with huge amounts of debt for the plastic surgery and the vast majority are not winning the pageant anyway. So the government starts handing out loans and subsidies for plastic surgeries. The plastic surgeons see this and raise their prices accordingly.
A dishonest senator decries the situation and says that the solution is for the government to provide free plastic surgery for everyone who wants it. Others say we should do away with the pageant and stop wasting so much money on plastic surgery. Those people are called haters of beauty and asked why they don’t want poor girls to grow up and marry aristocrats.
What does happen in those countries? Do more people end up with degrees? No the US has a slightly higher percentage of people with college degrees than Finland which was you cite.
Is the quality of education better? No, the US has 15 of the top 20 universities in the world and Finland has 1 in the top 100.
Is the economy better? No, America has a higher GDP per capita, higher economic growth, and half the unemployment rate.
If there’s anyone in this country who’s going to be in a position to pay off loans, it’s college grads. I like handouts but college professionals are the last demographic that I’d give them to if we’ve still got money left over after zeroing out every other kind of debt on the planet.
I absolutely won’t begrudge anyone who actually manages to get any kind of handout in this nation. I paid off my loans the hard way but then again college wasn’t nearly as expensive. The most outraged at this will likely be the boomers who went to school back when a stockboy could earn 6 figures and moonpies costed a nickel.
The negative consequences are obvious. That’s why socialism is so dangerous. It’s a sugar coated poison pill and the politicians who push it are knowingly promoting counterproductive ideas for political power.
All I know is I have dibs on the warthog at the zoo if so-called “progressives” come to power.
I like #1 and #3. I think some subsidy for some group is good, I don’t know about full rides though. #2 I’d say no. If someone wants to make the choice to borrow, they should be able to. However, if the gov backed student loans stopped, or were reduced, then it would have the same downward pressure without being as authoritarian.
I think the problem with some of the posters here is they dont know many of the new graduates and see how they are tackling this problem.
Yeah, now someone will link to some statistic but from what I see kids go into college now with their eyes pretty wide open (mostly). They and their parents do their homework. We put money into a kids 501 college savings plan. Their are scholarships galore.
Now someone will spout out how expensive a year of college is. But thats full price. Students often pay much less with financial aid packages. Students shop around for colleges with the best value.
Also why not just attend a local community college and live at home for 2 years and save big?
What I would like to see are economic incentives for the billionaires out there to open there wallets and provide more scholarships. For example in South Dakota a man started a Build Dakota scholarship with $50 million with the goal of developing South Dakotas workforce.
One thing to keep in mind about public colleges/universities when comparing tuition then and now is that tuition =/= total cost of education. Most states poured vast sums of tax dollars into those schools, basically subsidizing education. In a series of retrenchments, beginning in the 80s and really gathering steam over the past decade or so, states are cutting back the amount of the subsidies, so in addition to tuition rising with inflation and in response to student loan availability, tuition is rising because students are expected to pay a greater share of the cost of educating them.
See, for example, this study from the Center on Budget and Policy Priorities: over the decade from 2008 to 2017, forty-four out of forty-nine states cut inflation-adjusted spending per student in the state’s publicly-funded higher-education institutions, by an average of 16 percent. In 1988, tuition covered about one-quarter of the cost of instruction at a state school; by 2016, it accounted for nearly half.