Student loan forgiveness....

[adrianp89]

My point still stands. Any degree that adds value can be paid for by its income without issue.

You can easily argue a high school degree adds value. Also community colleges are not always free or cheap.

 

[CaptRedbeard]

Do some research on cuba and you will see. Did you know a Dr in cuba is paid less than 100 dollars per month. Cuba has free education.

Don’t you think it’s a little disingenuous to compare the American economy to the Cuban economy?

 

[Beachbummer]

So, whether "society as a whole starts paying for college now", is a separate discussion from "should we eat all college loans incurred so far".

State schools are already subsidized, look at the international tuition cost to find out the full on-the-books cost of tuition to the stare.

If the discussion is, Should we consider increase to 100% or close to it, the subsidy for state schools, some would agree. It will cause some disruptions, perhaps your space was available because someone else had decided it made no economic sense to take it, while now with free school, it makes sense for them to stay, and their grades were awesome, so that same seat is not available, and you can't get to the now more desirable free spot, and you are stuck in more expensive private school or not in college at all due to greater competition for the "free" spots that are more desirable. These things don't always work out exactly as you (or I) think they would. But I have seen a system that provided free college in public schools, but admissions are highly competitive, and there is a private option for those that want it. It's not a bad thing. I saw such a system while it lasted in Venezuela until 1999. (before Socialist/Theft-ocracy took over the country and crapped everywhere)

Here is a Wiki page to the elite school of the country:

https://en.wikipedia.org/wiki/Sim%C3%B3n_Bol%C3%ADvar_University_(Venezuela)

Free for all that are accepted. Must score 95%+ on SAT equivalent for consideration.

This one is less demanding in admissions, but still considered a very good education, and also free like all the other public schools. My dad attended, and he might not have been able to if school was not free.

https://en.wikipedia.org/wiki/Central_University_of_Venezuela

I prefer it to be affordable but not entirely free. I suggest that if we can get the subsidy and cost back to 1990s level of 1 month of minimum wage per semester, that was pretty accessible, and worst case if you stayed home and attended school Even if you got a loan for all state tuition, 4 years, that's only 8 months of Minimum wage owed... You could do a good chunk of the first 2 years in Community college (I did) and saved a ton too. That tuition was pretty much free for in-state. That's pretty close to free for the bargain you are getting. I prefer a portion of contribution is because it allows the state school to serve more students with the same money from the state.

In the US there has been a tradition of the states subsidizing University tuition,I'm unsure of the trend before the 1990s, but in effect it may have been similar, that the student contributed only a small portion of the total cost, and it added up to a symbolic portion of the total cost.

 

[jlcj7]

saw this in the news today:

Leadership at one of the biggest student-loan companies expects Biden to cancel $10,000 in debt per borrower in the next few weeks

Leadership at Nelnet's annual meeting said "the probability's pretty high" that student-loan forgiveness will happen, the Lincoln Journal Star said.

www.businessinsider.com

“President Joe Biden is inching toward a decision on student-loan relief, and multiple reports have suggested the relief will be close to his $10,000 forgiveness campaign pledge, and potentially targeted to those making under $125,000 a year.

 

[Beachbummer]

Well, he's doing what he said he would, so there's some honor there. With the additional inflation created everyone with a fixed rate loan is seeing the present value of their loans dwindle. The cost of this additional money on the street will be even higher inflation. Just my 2 cents.

 

[djetok]

Don’t you think it’s a little disingenuous to compare the American economy to the Cuban economy?

No, because the difference is the dr in cuba, received cuban medical training for free. Free devalues things. Here a Dr is laughable so far in debt that they probably seem like they make 50 per month until the loans they have are paid back.

 

[BigN8]

I dropped out of college and never finished. Found a career and stuck with it and grew within that industry and I make good money. My wife did not graduate college. She is now a manager at TIAA CREF and within 6 years was making North of 100k. Prior to her finding the TIAA gig we sent her to one of those for profit schools called Sanford Brown. We got talked into a program where she would be trained as a medical assistant then a sonogram technician or ultrasound technician. We were lied to. I pulled money from my 401k to pay for part of it and we took out $36k in student loans. She graduated at the top of her class and could not get a job anywhere. They wanted people with 4 year degrees. She flailed for a while and then landed the TIAA gig and gave up on the healthcare route. I slowly and painfully paid off all those loans for an education she never used.

Now I have 2 daughters that are 22 and 23. I told them I would cover their college if they wanted to go, but they had to maintain above a 3.0 and they had to do the first 2 years at a local community college. We took out no student loans for them. One is now about to graduate from TWU and the other did her first 2 years through Covid and decided college is not for her and is dropping out after getting her associates degree. What I witnessed during their senior year of high school is pathetic. In middle and upper middle class neighborhoods the college thing is more of an entitlement and a status symbol. I watched my kids friends and other kids at their school who really had no interest in college or weren't really smart enough to continue on to college work themselves into some big D-1 school really for the sole purpose to brag about it on social media and wear the damn tee shirt around the high school campus. Many of these families are not savers, they wanna be like the Jones' next door and they can't afford to send their kid to the big D-1 school, so they made their kid take out student loans. Let me tell you, it was humbling for my kids to wear their NCTC community college tee shirt to "college tee shirt day" their senior year. While all their friends who really couldn't afford to go to Texas A&M were strutting around high school with their tee shirts. I kept telling my kids, it's not about where you start, it's about where you finish.

After living through it, and hearing stories 4 years later from my kids friends and other parents, many of these kids went to big D-1 schools, just because it was the next step. Or they went to the big D-1 school because that's where their parents went. For the most part it was a status symbol, and they wanted that 4 year big college experience. They never once considered staying around the house, living at home and knocking out the first 2 years at 1/4th the cost.

I saw it. I heard the stories. I watched these people make stupid financial decisions just because the thought they or their kids were entitled to it. And, I for one get sick to my stomach knowing my tax dollars could potentially pay for these dumbasses when we sacrificed and did the right thing for our income level. Not to mention paying off $36k in student loan debt for a useless certification.

 

[Taylorman]

Such a wide variety of opinions in this thread. I had no intention of commenting but after reading through I thought I’d point out that addressing outstanding loans is only treating a symptom of the problem. It does not solve the problem itself. While opinions will vary on the root cause, IMO, it’s that colleges aren’t held accountable for the value they supposedly provide. For example, a history, English, social services, or teaching does not provide the same out of the box income potential as a finance or engineer degree. Despite that, colleges charge the same rates and build a 4-year curriculum at those rates for all those degrees. I would also argue that the first two year of college are bloat years that amount to no more value than a 5th and 6th year of high school for the most part. Remove all the bloat and maybe there’d be left with a semester or two at most of predatory classes for any given major.

The so called “value” of a college degree today is really just a checkbox and status symbol. Fewer and fewer people are using their degrees in their chosen line of work these days is just proof of how colleges fail to provide the value they promise. Until the system is changed to hold colleges accountable for the outcomes and value they provide we’ll remain in this cycle of bad debt and poor outcomes.

As for the outstanding loans, I’m not in favor of throwing money at problems and expecting positive results. However, I do think the existing structure that allows for minimal repayment that just covers interest and see the overall balance continue to grow is a real problem. I’d much prefer to see a mandate put in place that forces lenders to apply a majority percentage of any agreed upon payment (and they can’t just jack up current payments) to the principle. Something along the lines of a minimum 2/3 principal and 1/3 interest as an example but would prefer a sliding scale where lower income earners have a higher percentage mandated toward principal. This type of an arrangement provides a path out of debt, promotes accountability by not just wiping the debt clean, and would help change lending behaviors. Something along this line plus addressing college fees to align better with the earning potential would start the shifting the dynamic in a favorable direction, IMO.

 

[BlkGS]

Let's look at it from a different perspective..

We are now saying that kids at 17/18 aren't capable of making big choices about their life and understanding the implications and costs of those choices. Because of this, we want to continue schooling with university. But that ignores the root cause, that the education system failed them already. The education system failed to prepare them for life at 18, and failed to give them the tools to understand their budgets. The real issue then isn't student loan debt, it's high schools not preparing kids to make intelligent decisions.

 

[2kwik4u]

@Taylorman Well articulated and structured response. Thanks for taking the time. I agree that paydown shouldn't be the only portion of the solution, some additional reform needs to come with the cash for it to make sense.

@BigN8 You've certainly seen many sides of the issue. I can appreciate your insight at that level. I still don't see it as a "slap in the face" as I was told earlier in the thread if you sacrificed and paid cash, and others took out loans. It's a problem that needs to be resolved, and the repayment is part of the solution. We paid my wifes $36k in student loans (which is a 4yr degree from a reputable state school), and we have my loans outstanding. I'm not going to be a little bit upset that others get the "free money" and we already paid hers off. If the premise of "you make your decisions, you have to live with them" applies to one side (how I got deep in debt with school), then it certainly applies to the other side (you've already paid yours off in full, including non-value-add certs).

@djetok I tend to agree that free devalues things. I can see it every time I sit down at a poker table that doesn't have a buy-in associated with it. No skin in the game makes people do dumb shit because "it's free, doesn't really matter". However, I think some other things will still retain significant value if free, or perhaps subsidized. In this particular case, the education that can be used to generate income (and associated value add to the community in terms of taxes, and local spending) will retain value. We can ensure the people that attend are there on purpose with simple things like GPA limits, attendance limits and things of that nature. It'll weed out the partiers from the willing to be educated in short order. THEN, you let people pay for the status symbols if they want them. Want that Texas A&M shirt that BigN8 talked about, that's fine, it's a private institution go pay for it. Much like healthcare the move to a single payer system, or similar level of reform on where the money comes from helps quell this problem from becoming something we have to address AGAIN in 20 years.

 

[Taylorman]

Let's look at it from a different perspective..

We are now saying that kids at 17/18 aren't capable of making big choices about their life and understanding the implications and costs of those choices. Because of this, we want to continue schooling with university. But that ignores the root cause, that the education system failed them already. The education system failed to prepare them for life at 18, and failed to give them the tools to understand their budgets. The real issue then isn't student loan debt, it's high schools not preparing kids to make intelligent decisions.

Sounds like a case of misplaced expectations thinking a high school should be responsible for teaching kids to understand budgets and make smart decisions. IMO, that’s the parents responsibility.

Edit: @BlkGS Based on your earlier post I think you’re a prime example of a parent teaching kids how to make smart decisions. I hope I’m able to have a similar impact on my boys.

 

[Beachbummer]

Your 2/3rds to Principal idea sounds good on paper, but at 5% interest (which is LOW for unsecured loan) You are limited to a repayment in 10 years at the most, which will increase your payment amount for the same loan amount vs a longer term loan. If you wanted to extend the payment for a longer period, you are borrowing for so long your payment is mostly interest at the beginning because the term is so long, you can't really have a longer term and pay 2/3rds of the payment on principal. The principal repayment % is a function of loan length and interest rate alone.

You suggestion will only reduce the term of the loans increasing the payment amount (I don't think it's a bad idea at all, until someone can't afford the payment, but if you can't pay in 10 years, can you really afford it?)

But, we are then dictating rules to "protect" borrowers from themselves. Is that a good idea? I struggle with the justification of prohibiting adults from agreeing to financial arrangements they find acceptable to all parties, but we already forbid certain loan types.

Interesting idea if you can accept you are prohibiting loans over a certain term and interest rate combination.

 

[2kwik4u]

Let's look at it from a different perspective..

We are now saying that kids at 17/18 aren't capable of making big choices about their life and understanding the implications and costs of those choices. Because of this, we want to continue schooling with university. But that ignores the root cause, that the education system failed them already. The education system failed to prepare them for life at 18, and failed to give them the tools to understand their budgets. The real issue then isn't student loan debt, it's high schools not preparing kids to make intelligent decisions.

I'm 100% on board with this. I think the removal of core subjects and the concentration on higher level math is a disservice to the community at large. We're not equipping these kids to be productive members of society, we're prepping them to pass tests, write entrance exam responses, and otherwise NOT concentrate on the basic skills required to move forward. I had 6 math classes and 2 years of that was calculus before I left high school. I would have been FAR FAR better served by a class in basic budgeting, economics at large, and how debt works. How to vote, how to register a car, how to pay taxes. SOOOO many things I had to learn on the fly that could have at least been exposed to in a 1 year "How to be an adult" course would have covered.

This, however, doesn't solve the problem at hand that still needs to be addressed. It very well might prevent it from happening again, though.

 

[2kwik4u]

Sounds like a case of misplaced expectations thinking a high school should be responsible for teaching kids to understand budgets and make smart decisions. IMO, that’s the parents responsibility.

This assumes the parents have the capacity, willingness, and quite honestly, the presence of mind to teach these things. We're a pretty privileged bunch to expect that home situation to apply across the board. We can adjust the curriculum to help cover some of these shortcomings, and help stop the problem up front......or at least help them make better informed decisions about how any particular decision is going to play out.

 

[BlkGS]

No, because the difference is the dr in cuba, received cuban medical training for free. Free devalues things. Here a Dr is laughable so far in debt that they probably seem like they make 50 per month until the loans they have are paid back.

Untrue. They have high loans for sure, but they're also making a TON of money. If you're taking home 10k a month, paying 2k or 3k a month in student loans isn't as bad as paying 400 when you take home 3000 a month.

 

[Southernerd]

Sounds like a case of misplaced expectations thinking a high school should be responsible for teaching kids to understand budgets and make smart decisions. IMO, that’s the parents responsibility.

The problem is it isn't simply a financial decision. The choice for many of these kids is between a career flipping burgers and becoming a doctor. Most decent jobs require a degree meaning that going to college is essential to having opportunities at a better life. If you want to take a position that its ok to price kids out of opportunities like this, you're going to live in a country where only the children of wealth folks get the job because they are the only ones who get the degree. We don't need to take the eye off the big picture, where these loan companies and many schools worked together to create massive increases in tuition that weren't reality based, while at the same time, politicians who took money from loan companies cut budgets from higher education which further increased tuition which created more opportunities for loan servicers to earn interest. The whole system is broken and the only people who are facing any consequences are the students who had little choice but accept the deal they were given.

 

[djetok]

@djetok I tend to agree that free devalues things. I can see it every time I sit down at a poker table that doesn't have a buy-in associated with it. No skin in the game makes people do dumb shit because "it's free, doesn't really matter". However, I think some other things will still retain significant value if free, or perhaps subsidized. In this particular case, the education that can be used to generate income (and associated value add to the community in terms of taxes, and local spending) will retain value. We can ensure the people that attend are there on purpose with simple things like GPA limits, attendance limits and things of that nature. It'll weed out the partiers from the willing to be educated in short order. THEN, you let people pay for the status symbols if they want them. Want that Texas A&M shirt that BigN8 talked about, that's fine, it's a private institution go pay for it. Much like healthcare the move to a single payer system, or similar level of reform on where the money comes from helps quell this problem from becoming something we have to address AGAIN in 20 years.

Thats nice to think about, in reality it will not happen. Do you expect the same care from someone that is free or your paying for something? You don't because, you say oh well it was free and worth a shot.

With free education its the same. What professors will work for a free college , rather than a aTm that would be a private institution. The prof is going where the money and benefits are 9 times out of 10.

 

[djetok]

Untrue. They have high loans for sure, but they're also making a TON of money. If you're taking home 10k a month, paying 2k or 3k a month in student loans isn't as bad as paying 400 when you take home 3000 a month.

It was a joke man . My daughter is a Dr. , she has loans that we are paying now. I will tell you though as a resident, she does not have a lot of extra money, of course she has no time either.

 

[Southernerd]

This assumes the parents have the capacity, willingness, and quite honestly, the presence of mind to teach these things. We're a pretty privileged bunch to expect that home situation to apply across the board. We can adjust the curriculum to help cover some of these shortcomings, and help stop the problem up front......or at least help them make better informed decisions about how any particular decision is going to play out.

Neither of my parents graduated highschool. I grew up in a run down trailer and ate government cheese. My highschool offered zero assistance. They had a "college track" that somehow only included the children of well-off parents regardless of academics and the remainder of us were there to supply employees to local factories. I wasn't allowed to take college prep classes, I signed up and they removed me. I didn't have a choice but to go to college and figure it out on my own. Now I'm a productive member of society, I'm paying nearly $60k a year in income taxes which I'm sure the politicians appreciate. Or I could have stayed put and dreamed of a disability check as a retirement plan.

 

[Taylorman]

This assumes the parents have the capacity, willingness, and quite honestly, the presence of mind to teach these things. We're a pretty privileged bunch to expect that home situation to apply across the board. We can adjust the curriculum to help cover some of these shortcomings, and help stop the problem up front......or at least help them make better informed decisions about how any particular decision is going to play out.

Fair points. Not all parents are willing or qualified to teach such things. However, I’m not sure that burden should default to the schools. Some can be taught there but I think it’s far too big of a gap to put it all on the school system. I’m reminded of the saying “it takes a village to raise a child”. Speaking only for myself, I could do more to help bridge this gap for those less fortunate than myself than I am doing now.