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What Warren and Bernie Sanders Supporters Are Worried About: Student Loan Repayment
Via Bored Panda:
Comments are worth reading as well. Here is one, regarding why a person can get $200K of student loans, but not even $20K in business loans:
Published in GeneralKevin Burgess
because the business loan could be forgiven, and written off as a loss. Student Loans cannot. Even though they actually come from the U.S. government, they’re handled by third parties, who count on it as a never ending income stream for the economic life of the student. Even in death it’s not cancelled.
True, and they would be right to a degree. But their argument that “Hey, we were only wildly irresponsible in shoveling out loans because we thought we would able to hound these people to the grave,” may not go over well.
But, in all seriousness, there would be various tweaks you could make to ease the blow. You could, for example, give student lenders, or certain student lenders, priority status, so they can be paid a larger share than ordinary creditors.
Plus, the people taking advantage of this will be the ones they would have had the hardest time collecting from anyway. The protections already built into the bankruptcy code will ensure that wealthy doctors and other people able to pay them back aren’t ducking out of it.
Mostly I think it goes to more layers of university management.
Tenured profs can be jerks, but let’s be careful about bashing profs in general.
Until you land the tenure-track job it’s a desperate attempt to get one interview for every thirty job applications you send out. You have a full-time unstable job teaching and a half-time job applying for a stable job. Add another half-time job scrambling for publications if you’re like most of the newbies. If you’re lucky like me, you get a stable job for the minor inconvenience of moving to Pakistan or Hong Kong.
Once you get the tenure-track job you may have to manage onerous publication requirements plus onerous grant application responsibilities plus students numbering . . . sometimes around 30, sometimes more like 230. And some meetings.
(Not that any of that is necessarily an antonym to “effete.”)
We can treat the problem at the root by offering less loan money. And less grant money.
That’s why I’ve always hated, loathed and despised the existing loan forgiveness programs that eliminate your debt after x years if you go to work for the government but not if you go to work for the private sector. It should be the opposite.
“Public Service” my butt.
Thank you for sharing your perspective-it is important that we hear it. I know that you and your wife will pay your debts because that’s what responsible people do. But that doesn’t mean that the situation that got you into those debts was fair or right. You were sold a bill of goods, that is for sure. But too much of the conversation is about forgiving debt and not enough about attacking the reason for that debt-the inflationary prices of colleges and universities and the poor quality of secondary education. Generally when companies charge more than the market will bear, they go out of business. But there is no market here, just a monopoly. I’m hoping that the painful lessons of your generation and the Gen Xers will help break the stranglehold of the “everyone should go to college” mindset that helped create this mess.
Good.
Them prices keep going up because the government keeps subsidizing them. Cut back on federal student loans.
We should totally make a law saying that people applying for loans have to have the terms written down in a contract that they sign in order to get that loan. Maybe the loan issuer should have to keep a copy of that loan just to make sure that the information was available to the applicant.
Hence my suggestions:
1. Turn this on the biggest fatcat universities, sitting on billions a piece in endowments. Demand they make good those lured in but not getting the salaries to pay back inflated fees and tuition in the first 5 to 10 years.
2. Demand transparency and real reduction in admin cost, passed on in real reduced fees/tuition.
While it sucks to see young people buried in such massive debt, that they don’t even have an asset they can liquidate to help pay…….I tell myself that the ones with the larger $100K+ debt are probably snobby kids that went to private schools they had no business going to.
Otherwise, $40K in debt is doable to pay off. It sucks….but theres no inate social good that comes from sending every kid to college…..so its all on them….and hopefully their parents.
I would be open to laws that put more responsibility on lenders though.
But it’s a small price to pay for supporting the infrastructure that provides the second echelons of the ruling class, no?
A lot could be done by making the universities co-signers for the loans.
In Republic, Socrates two laws that would help with bad moneylending practices. The best law would prevent young people from spending borrowed money on whatever they want. An almost-as-good law would require that lenders lend at their own risk.
One way to start is by pointing out that student loan forgiveness would amount to another big bank bailout.
And can anyone guess which lines have the most Federal and state regulations riding on them?
My guess is “XYZ” studies . . .
Administrators, mostly.
I completely agree that the blame lands at the feet of the federal government and colleges and universities that have grown at the expense of bad policy. I also agree with many of the solutions offered above. I personally think the Federal government should be out of the loan business altogether. I say this without any malice towards my fellow conservatives, all the above is ignoring current political reality.
If we could snap our fingers and implement the changes we want it will only help those students entering higher education now. An excellent start. However, there are nearly two generations of students who have the costs of bad policies on their balance sheets. Those two generations are currently seeking redress for what they were charged, and they will very shortly have a heavy hand in electoral politics. We ignore it at our peril, and we quote conservative doctrine and economics at them to little benefit.
I’m a conservative. Most of us here on this site will look at their situation and say, “Well, that sucks but that’s just how it is.” And, honestly, that’s true. It appeals to us because we’re conservatives. As much of a fan I am of Ben Shapiro and the truth that is, “facts don’t care about your feelings,” I think we need to be honest about the results this approach gets in terms of electoral politics. I know people on this thread have very different views of the current president. Whatever those feelings, his election was in part due to how we treated the concerns of a group of citizens. We ignored them at best, and at worst we told them some version of, “life’s not fair, get over it,” in less than gracious terms. The political reality we need to address now, not in the future, is that millennial voters have serious concerns and problems. While I am in complete agreement that the government should not simply forgive their debts, if we want to convince them that’s not the answer, we’re going to need some kind of conservative approach to their concerns. However, if we want to drive them into the open and waiting arms of the socialists that are now going mainstream, we can keep shrugging and telling them to get over it. That political reality is going to start to affect all of us that value freedom soon because many in that generation seem to be willing to give up many, if not most, of their other freedoms for what they perceive as financial freedom, even if it means destroying the most powerful capitalist economy in the world. It does not matter what phone they hold in their hand, what laptop they tweet from, or how much cheap stuff they can buy for their dollar compared to yesteryear. They don’t see a way out of the financial burdens they personally have, and it does us no electoral favors to ignore it.
This may be simplistic, but I would suggest a federal mandate lowering the interest rate on loans to something equal to the current interest rate on a basic savings account – currently around 0.5%. That would reduce payments but not discharge the debt entirely. I know it is paid like a mortgage – interest first, but that could change as well to a straight interest plus principal, like a car loan. The private lenders that are involved in student loans (I believe it was Obama who reduced the lenders and therefore reduced competition for loans) could be given a choice – reduce interest or have loans forgiven.
I also agree with having them discharged by bankruptcy, disability or death. We co-signed our daughter’s student loans for the U of Illinois (we live in Minnesota). She worked while going to school and reduced her room and board costs each of the four years by finding cheaper housing. She started paying on a $180,000 debt six months after graduation, and seven years later she has reduced that (by consolidating and paying faithfully) to $94,000. She is currently paying an interest rate of 4.5%. Immediately after her graduation we took out a $200,000 life insurance policy on her to cover the debt if she passes away.
We thought we were doing the right thing – telling her to follow her passion and and dreams. Unfortunately that passion led to a Fine Arts degree in photography, and crushing debt. I work in a high school. I tell any student who will listen that they should start in a community college. Then, when they have their general requirements met, and now are age 20 instead of 18, they can make a better decision of what they want and need. But there is still the huge push that 4 year college right out of high school is the only path to financial success. That is the big lie.
My guess is the people with these debt problems are already predisposed to vote for Democrats (just read the comments in the link). Moreover, if the Democrats kowtow to this group with unreasonable bailouts or new taxes, they will trigger a reaction from other voters. Thats a reality of politics. Catering to one group, can often tick off another group that sees their money being given away.
How hard do you think it would be for a conservative politician to create a stump speech citing outrageous costs the colleges are charging or ridiculous majors that students are racking up debt for? So, let the Democrats run into this minefield. Its way easier for conservatives to debate this than even healthcare.
When our children were looking at potential colleges in the early 2000’s I thought the colleges were borderline dishonest about loans. The colleges constantly referred to “financial aid” and lumping loans, grants, and discounts together as a “generous financial aid package.” The colleges avoided the word “loan,” and almost never pointed out that the majority of the “generous financial aid package” the college was offering was a loan that would need to be repaid.
I would like to see more information about this.
$180K from a state school? Yikes! Anyway, thanks for sharing this. Your advice sounds good. Looking over the current tuition at the college I went to…..I’d be seeking out a community college alternative today too.
Do we make any progress on people’s personal feelings if we push a requirement that the colleges themselves (rather than the taxpayers) be responsible for the loan repayments? Does it matter for the personal feelings of insurmountable financial burdens who relieves them of that financial burden? I would think that it matters not to the individual borrower whether the loan is paid off by the taxpayer, by the bank, or the college. Can that thinking get through this current idea that the government is the solution to all problems?
It might depend on your definition of “matters.” It would be a good subject for some polling research.
It seems like this might be the one thing that would really help and be palatable to a lot of people. When reading through the twitter stream on the article referred to by this post, that was the crushing feature that distressed many: they were paying but their loans didn’t go down because it was interest only. I’m not sure that an 18 yr old would understand this when signing a loan and like someone pointed out, unlike a mortgage, they have no asset backing them. And after death, come on! Again no asset. Yes restructuring loans wouldn’t be fair to those who have already paid them off but as we conservatives say, life isn’t fair.
Not surprising. Art at the level of the DMV.
The lenders would demand a bailout for their losses.
If I recall correctly, the revealed Trump tax return showed that he paid $23 million for the year shown. I’ll never earn $23 million, much less pay that in taxes in my whole life.
And that could be paid by the colleges and institutions from their endowments. Voila!