Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
In Defense of the Responsible
Over on Twitter today, my friend Phil Klein of the Washington Examiner is getting piled on for this piece:
New post: "Elizabeth Warren's plan to cancel student loan debt would be a slap in the face to all those who struggled to pay off their loans" https://t.co/4g6No2MRVm
— Philip Klein (@philipaklein) April 22, 2019
College is really expensive. Too expensive. Especially when you consider the product you’re getting for the cost. Studies show students are spending less time than you can possibly imagine studying and learning, despite the fact that college is treated as a full-time job. There’s a reason why I was able to pull off working 40-50 hours per week to pay for (some) of college while I was also in school full-time.
That being said…
There seems to exist a misunderstanding about student loans vs. other kinds of loans. For some reason, they are thought of in very different ways. Car loans, credit card loans, home mortgage loans… There is an expectation that they need to be paid back by those who put their names on the dotted line. But for student loans, there are continual demands for these loans to be magically done away with, despite a promise made by the student that the loans would be repaid, often with interest.
But Republicans and conservatives need to do better on the cost of college and student loans than “you borrowed it, you pay it back.”
Over at National Review, Kevin Williamson has an interesting idea:
Here is a three-part plan for something practical the federal government could do to relieve college-loan debt. Step 1: The federal government should stop making college loans itself and cease guaranteeing any such loans. Step 2: It should prohibit educational lending by federally regulated financial institutions or, if that seems too heavy-handed, require the application of ordinary credit standards in any private educational lending, treating the student himself as the main credit risk in all cases, including those of secured or unsecured loans taken out by parents or other third parties for that student’s educational expenses. And 3: It should make student-loan debt dischargeable in ordinary bankruptcy procedures.
Why is college tuition so expensive? Because it can be. College has turned into a four-year party with state-of-the-art dorms, gyms, and facilities. Their administrative staffs have ballooned as well. And there have been no limits placed on the largess. They raise tuition to pay for the excess, and parents and the government (in the form of grants and loans) keep on shelling out the cash.
While college has become a prerequisite for a middle-class life, it has also become thought of as an absolute right. While college should be affordable, there are many ways to obtain a four-year degree, and they don’t necessarily involve spending four years away from home at a degree-granting resort. Community college and state schools provide a lower-cost option, especially for students looking to live at home and save money their first year or two of school. There’s also the option of only going to a school that offers a reasonable financial aid offer, and that requires hard work in high school to pull off. (This was a great story today in the LA Times about one such student).
Perhaps because I spent my first year of college at a low-cost and honestly bad school, perhaps because I chose to go to a state school that wasn’t anywhere near my dream school list, perhaps because I worked two jobs at 20 hours a week at each job while in school full-time, perhaps because I never missed a student loan payment in ten years after graduation, perhaps because I had friends with more money and similar test scores and grades get full-rides at better schools because of the color of their skin while I, an actual orphan, did not…. I’d pretty much be ready to riot in the streets if those who took out loans they couldn’t pay for because they thought they deserved to go wherever they wanted and study whatever they wanted to get bailed out.
I made responsible decisions, and if their loans are discharged, I will be penalized for them. I went to less rigorous, less prestigious schools and spent my time working as a waitress and cashier instead of networking or interning because I wanted to minimize my debt as much as possible. My opposition to the idea of discharging student debt (first floated by Elizabeth Warren) isn’t necessarily about fundamental anger about the unfairness with regards to money, but also the different decisions those of us who cared about walking away as debt-free as possible made.
Published in Education
It’s overpriced and a bad value. It’s outrageous.
Government Is How We Steal From Each Other™
You mean like they are the only loans that you can’t be rid of through bankruptcy?
The government should get out of college student loan guarantees forever.
We got a private college student loan for our oldest daughter. Yes, the interest rate was more expensive, but we didn’t have to fill out the FSFSA government forms which basically lays out all of your financial life even more than the IRS wants.
For the record, we don’t do anything illegal, but we hate the idea government agencies share information which might result in the IRS sending us a notice, “Hey, we think you owe us more money because . . .”
Going to private loans with no government backed guarantee would result in more kids getting money for STEM, and less for “XYZ Studies” degrees. However, there will be some loans for English and History majors, but not enough such that we flood the country with graduates whose senior projects were something like, “Shakespeare and Queer Theory”.
Unemployable except at university . . .
Aaaaannnndddd…
They have a near guaranteed demand for their limited supply?
You can’t just remove the means to fund college by short-circuiting college loans. Those degrees are still the primary means businesses cull their applicants.
You need to empower businesses to seek quality employees via other means, as well. As long as the degree is the only viable interface between prospective employer and employee, then the cost of that degree is going to stay high.
You need to create competition for the degree. From what I understand, the government forced businesses to drop internal evaluations of applicants. If that is so, removal of that stipulation could create enough competition for the degree to lower costs without permanently placing high-risk loan applicants at the mercy of banks for their long term ability to hold down a job.
Exactly. It makes me crazy.
There is nothing wrong with liberal arts or liberal arts degrees at a fair price. The whole thing needs to be sold À la carte. Of course the stupid classes have zero value.
It’s so bad.
And I wouldn’t. In fact, I will defend these kids their frustrations. Even though I went to a private college straight out of high school. Even though I got a thoroughly sensible degree for 60-80k. Even though I busted my butt paying off that stupid loan within 5 years of graduation (and I had a baby! And I tithed! And I saved for retirement!)
LOL Vox = central planing morons from hell
Literally funded by seizing wealthy people’s assets. What could go wrong?
Allow loans to be wiped out in bankruptcy check. Get out of the business of federal student loans check. However thirdy you need to make all the greedy colleges actually pay for the moral hazard that they engaged in for decades. The colleges have to take on the liabilty and loss from bankruptcy not the goverment. The feature behind that is many colleges would go bankrupt themselves. Again that is the whole point. yes some good colleges would get taken out and state tax payer would bear a large liabilty. However I think the certifaction mafia needs to be punished because it was sure not an education they provided for indentured servitued.
Ding. Ding Ding.
Exactly. I don’t want a general bailout or forgiveness, just the same Constitutional protections for being unable to pay that I have for all other debts.
I made two big mistakes in my 20s: I borrowed $65K for a house and $140K for law school. When we couldn’t make our house payments, we had the options of short sale, foreclosure, and bankruptcy. Nine years later, it’s as if it never happened. Meanwhile, I’ve gained $100K in interest on those student loans that I couldn’t pay then and can barely pay now, with only the hope that somehow between now and when I’m eligible for income-based forgiveness (2034) I will have either paid it off or saved up the necessary six figure tax payment.
It seems when things are supposedly “free” – cough, they are cheapened. The latest example is the free ride by the wealthy and celebrities to get their kids in the doors of elitist schools, not of their own work and merit, but by falsifying and money. Erasing college debt, or any debt, is unfair to those who have paid back responsibly. Addressing the exorbitant costs of college is another issue and should be addressed separately.
Another analogy to this is all the immigrants who have come to America legally, they paid the cost, learned the process and abided by it. It makes it all the more precious. Except for people that can show persecution, forcing your way in or using others to get here, ignoring a country’s laws is not the right way, any more than forcing your way or using others to get into college. That includes tax payers paying your tab if you default.
Should bankruptcy ever be allowed?
TY for the links! I am so torn on this issue so I am trying to read all I can. Among the fears I have is that it will end up costing taxpayers too much, run up the deficit & debt and only benefit the colleges that have escalated the cost of college. I have too many retired professor friends who stopped teaching because of the dumbing down of standards on students entering these colleges.
I want to see student debt forgiveness in bankruptcy. For one thing, doing so acknowledges that the lender also assumed some risk.
That the lender bears some responsibility for making the loan in the first place was understood in my grandparents’ day. This is especially true when the lender is a financial institution with access to current finance information and economic predictions for the future. The lender has a much greater ability than the borrower to judge the merits of a loan.
Ep. 1389 How to Defeat the Government/University Complex, Which Is Turning Frustrated Kids into Socialists http://disq.us/t/3dywtrz
They specifically address the job signaling scam.
We are in this mess for three reasons: the job signaling scam, the accreditation scam, and government finance.
Viva La Socialism!
As I mentioned on Henry’s thread, this is all related to the fact that companies can no longer use IQ tests to vet applicants.
If companies could do that again, they’d stop equating “college degree” with “smart” and the bottom would fall out of the higher-ed market.
Yes, there’d be a huge reckoning that we’d probably all be on the hook for, but the “necessity” of a college degree for entry-level jobs would disappear.
I learn more on Ricochet than I did in college. TY!
People need to ask what the point of higher education is, now. I’d rather have all of my books picked out by Dennis Prager, Mark Levin, and Mises.org. Then study something for productivity. The current system is a bad value. Horrible. Overpriced, and all but useless. Outrageous.
More creative discussion.
https://twitter.com/JustEric/status/1120654986906619904
That has been my idea. Place a permanent hold on the transcript, so it can never be used for licenses or to transfer credits.
After all, the whole reason that student loans started being made ineligible for bankruptcy was the specter of doctors and lawyers dumping the debt and then going on to get rich. Heck, private student loans were still eligible for bankruptcy in 2006, so it’s not like we’re going to go back to some dark age when only the rich could get a college education if we permit bankruptcy again.
Nobody has thought anything through on education. Now it’s the Zombi Of Human Capital Destruction.
As long as people believe their children need a college degree to succeed in life parents will take out loans, students will accept debt as a necessary evil and colleges will escalate fees. We cannot afford to invest in every good idea. Fixing the unintended consequences have financial limits too.
Honestly, I think this can be wiped out. The value (return on investment) will go up. They already have a demographic problem. We just need some conservative and libertarian sugar daddies to raise hell.
https://twitter.com/OccupyWisdom/status/1120670379591307269
The flaw in Warren’s thinking is obvious. Does she really think the rich are going to leave their assets lying around year after year to be pilfered by the government? One’s year’s worth of theft, max.
If you find rats in your grain, the first thing you do is move your grain to somewhere safe. Then you go after the rats . . .
I’m not qualified to discuss it, but the mess this creates is mind boggling, and not just legally. The only wealth taxes that aren’t a [redirected] are property taxes. Pretty interesting.
If you need to go beyond taxing flows of incomes and user fees, you screwed up decades ago.
Let’s go all in: College Loan Reparations! $50,000 to everyone who ever attended college, or whose ancestors attended college.
It’s allowed when there is hardship and no other way – companies and individuals do it all the time and it has a purpose – there are different types, but it ruins your credit for years. It’s like starting completely over since your credit score is everything unless you can pay cash for everything. When the housing bust happened and all these people who took on multiple mortgages or properties they couldn’t afford and had to turn them in, they fell into this awful category of having to rebuild their credit and rent. It’s a last resort and shouldn’t be used as a blanket solution for all college debt to win political points.
So is it or is it not “unfair to those who have paid back responsibly”?
Bankruptcy is an erasure of debt. (Well, more like an acknowledgement that a promise that can’t be kept won’t be.) What is it about student loans that prevents bankruptcy from being a legitimate option for those who can never repay?