Then you are not the target for student loan forgiveness. It is meant for those who took a loan on the premise that they would be able to get a job that allowed them to pay back the loan. This is not the case for a large portion of college graduates. Here on HN this is not going to be common due to the demand in our job market. But talk to someone who borrowed a bunch of money to major in something with a less demanding job market and you'll hear a different story.
While this situation sucks, how is it any different than buying a house with a loan, having the house lose half its value, and then having the mortgage be written-off by the bank? Many adults went through this in 2008-2009 but short of filing for bankruptcy, I don't think billions of dollars of loans were forgiven because people couldn't pay them. They had to give up their houses, which would be the equivalent here of giving up your education.
Basically, if loans don't need to be paid back, what's the point of a loan at all?
If you were mislead by the bank about the value (or future value) of the house, then perhaps that loan should be (at least partially) forgiven as well.
It is also the responsibility of the party giving a loan to ensure that the borrower will have the ability to reasonably repay the loan in the future.
> If you were mislead by the bank about the value (or future value) of the house, then perhaps that loan should be (at least partially) forgiven as well.
During the housing crisis, banks enabled home buyers by providing low interest rates, insanely low income requirements, and small down payments. As a free person with their own free will, it should be your responsibility to decide if an investment is worthwhile, not a no-name bank which most definitely does not have your best interests at heart.
> It is also the responsibility of the party giving a loan to ensure that the borrower will have the ability to reasonably repay the loan in the future.
While it's obviously their goal to ensure that the borrower will be able to repay the loan (why else would they have people jump through so many hoops to get one?), it's by no means their responsibility. The only responsible party here (i.e., the party you can count on) is yourself. Your bank isn't going to find you a job, or put together your resume for you, just so you can repay your loan.
I want to live in your world of perfectly rational and infinitely wise superhumans. Sadly we live in the real world, and people are under-educated about debt, mislead by marketers, preyed upon by salespeople, and left holding the baggage. Adding and enforcing regulations about how debt can be issued, and helping people who have been victimized, seems like a practical resolution to the problem, rather than the one based on wishful thinking that you propose.
I think we're both describing the real world. People can simultaneously be held responsible for their debts and be under-educated about debt, mislead by marketers, etc. The question is who pays when a borrower makes a mistake—the lender or the borrower.
If you label all borrowers who can't pay back their loans as "victims", wouldn't that make the practice of lending itself immoral? In your opinion, why not just outlaw lending completely and be done with it? That way no one can be taken advantage of.
> The only responsible party here (i.e., the party you can count on) is yourself.
Agreed, but to that point, I'd imagine that the primary consumers of student loans are people in their late-teens who are on-the-whole less financially responsible than homeowners. And for a lot of those people, they're under a lot of social pressure to go to college despite the fact that it's a gamble that might not pay off.
Completely agree. This is a problem of education, upbringing, and society. If we really wanted to solve this problem, we'd address the root issue, and adolescents would understand that college isn't required or expected to be a functioning and productive member of society.
But that is unfair to those of us who do understand debt. This is the problem with socialism right here--you can't cripple the people who are responsible, who do the right things. You kill the country that way.
While that's completely true, my point stands. If loans don't need to be repaid, what's the point? Why just give up the ruse and make college free for everyone? I'm not proposing this at all, I'm just saying this is a slippery slope and the difference between the two is minimal.
It's not fair and responsible (from a government point of view) to burden teens with decision that might lead to a debt for the big part of their life imho.
I would bet it's a small minority of students who actually did seriously consult their parents and whose parents did wisely caution against it (even refusing to sign a parent PLUS loan, a factor not talked about much) but who found a private lender themselves anyway and after graduating can't pay it back. You could protect this minority from itself by raising the age of adulthood, but if we actually agree it's a minority, this won't solve the problem.
My point is it's not good enough to blame stupid non-adult teens when you could blame their adult parents just as easily, and trying to solve the problem at either of those levels (less stupid teens through 'education', or less stupid adults with longer reaching power, or forbidding teens in general from making bad choices) won't work.
The sad truth is that some kids don't have parents. The fact that they need to take out a loan at all suggests that their parents (if they have any) may not be very experienced at making much money themselves.
Loan forgiveness should not be restricted to teens. I know many adults that could be similarly mislead.
And absolutely it is a minority, which is why student loan forgiveness is workable. Trust me, the banks will still make money, just not as much.
Ok, so where are the teachers at? Surely they're in even better positions to advise than the average parent. https://news.ycombinator.com/item?id=13070885 report suggests otherwise.
Some loan forgiveness is workable and I think inevitable but it does nothing to stop the problem, it just relieves some people at the expense of others (generalizing to the whole economy) who can take the hit. In that it's kind of a herring. When you find yourself in a hole, you should stop digging as the first thing you do. Loan forgiveness lifts some people out of the hole but incentivizes digging faster.
Stop making excuses for adults to engage in infantile behavior. I was perfectly capable of making life decisions at age 18 - 19. And I am not a special genius.
Unfortunately, it's not the target. The target is, as has been stated multiple times, people who are incredibly, irretrievably indebted with no hope of paying the money back, because the colleges with the relevant programs cost far more than someone who obtained the resulting job (or wasn't able to find one) can ever afford to pay back.
Being that student loans in the US are _no longer forgivable_ via bankruptcy or any other means, these student loans are essentially a permanent debt the student will never be free of otherwise, and bear more than a passing resemblance to a class of indentured servitude. Such things are not what any reasonable person had in mind for America.
Taking out a loan you don't realistically have the capacity to pay back is irresponsible. This scheme is nothing but privatized success and socializing failure.
If you want to fix the problem, stop subsidizing the loans and allow these colleges to die, shrink or reduce costs.
I won't copy my entire comment, but right here I lay out the math on why student loan forgiveness goes largely to those getting very expensive terminal professional degrees. Do you consider those going into medical school to be irresponsible people?
If you were misled by a loan provider, that's fraud and you should report it. The much more likely scenario is that you assumed a $150k degree guaranteed you a job, which is obviously not the case.
How is taking money for a degree irresponsible? The only party irresponsible is the lender. I hope the taxpayer loses 60 gajillion dollars on student loans since they are simply exploiting young people.
A decision to start your adult life with borrowing large amount of money and spending it on studying an esoteric subject would be considered extremely irresponsible in most societies ( assuming the person does not have any assets or marketable skills to fall back on).
If you enjoy art history, I have no problem whatsoever if you want to learn about it. But if you borrow $50k that you can't pay back to pay for your hobbies, that's irresponsible.
The problem is a university and/or loan provider who is only interested in your money (and doesn't fear their loans being forgiven) has an incentive to mislead kids into thinking that this is not irresponsible.
Not everyone is as well informed as you were at 18.
The article touches on this, but income based repayment benefits students who graduate with medical, law or other professional degrees the most. Entering into the workforce at a relatively low rate, then having some loans forgiven before their pay goes up a great deal.
I had no opportunity to attend college, I had to support myself at 18. Is it right that I subsidize people more privileged than I? If and when they start making money can I expect a discount on their services?
> Is it right that I subsidize people more privileged than I?
Probably not, but considering that the forgiveness program the government is talking about mainly targets people with debt who can't pay it back - like people who are seriously disabled and can't get a job - you would likely be subsidizing people less privileged than you, which is a good thing.
> If and when they start making money can I expect a discount on their services?
No, but they're not making money now and they won't be in the future and that is why the government is considering discharging their loan debt.
>mainly targets people with debt who can't pay it back - like people who are seriously disabled and can't get a job - you would likely be subsidizing people less privileged than you, which is a good thing.
So if I become disabled, will you be paying my mortgage?
I'm not sure if I'd be paying your mortgage per se, but I'd be paying for whatever benefits you receive through the Social Security Adminstration's Disability Benefits program. But even if I was, why would that be controversial? Why should the government not provide aid to people who are virtually derelict?
Yes and yes. The fact that they are offering the service at all means you don't have to go somewhere else (possibly far away) to get an equivalent service, so that is a form of discount.
The exception is for fields that are zero-sum games, such that an abundance of lawyers, for example, makes it cheaper to defend yourself from a lawsuit but also more likely to be sued.
>
Yes and yes. The fact that they are offering the service at all means you don't have to go somewhere else (possibly far away) to get an equivalent service, so that is a form of discount.
No thanks, if I'm paying for your education I expect a better discount than "my office is a little bit closer"
It should not be controversial that with a greater supply of a service, price will tend to go down (or quality will go up) because there will be more competition.
>It should not be controversial that with a greater supply of a service, price will tend to go down (or quality will go up) because there will be more competition.
Firstly, if the services are in demand why is paying off the loan an issue?
Secondly, they already have the degree paying off loans does not increase the number of graduates.
Then you have a stroke of luck in more ways than one. You didn't hit on hard financial times afterwards: you spouse didn't wind up disabled and neither did you. You didn't have one of the many natural disaster dooms that plagues others and so on. You found a decent enough paying job after graduation instead of getting only being able to use it to be a department manager at a retail joint.
'Tis rather likely. These sorts of things are difficult for most folks to weather if they don't have high enough income to keep up on stuff or help from other folks with better means.
>Bullshit.. I paid off student debt like a responsible adult
I've got a similar unpopular opinion about the housing bust. Prices were sky-high, so I chose save (and couldn't afford to buy a home). Then, a bunch people who got in over their heads and couldn't make their mortgage payments were, in some situations, bailed out.
Yes, I get that some people were deceived by zealous mortgage brokers or had personal crises that caused them repayment issues. But I'm sure that's about as common as the people who took what they could get as far as a mortgage, lied on their applications, or were flipping houses.
Irresponsible fiscal behaviour is incentivized, and more prudent measures are punished.
About 8 years post-graduated I have roughly $19k in student debt remaining. At my current payments, I won't pay it off in the next 12 years, but it's cheaper for me to pay it off quickly.
Even ignoring the often sizeable income tax bill, people whose debts are forgiven likely paid more back to the government than you did, on both a percentage and absolute scale.
Edit: And to the income tax point, if you've got tens of thousands in debt and have an already high income (not totally outside the realm of possibility since you're likely ~42 years old) that could easily be a 5-figure bill.
That's a completely nonsensical way to do accounting. $1 today != $1 with risk of non-payment 5 years from now.
The correct way to compare is to do time discounting at market interest rates (i.e. what interest rates would be if the feds did not act as backers for student loans).
You probably also chose the correct student loan like a responsible adult. Considering you were not an adult back then, that's an achievement (or just luck).
But you can hardly expect all people who just got out of high-school to have good financial sense.