Why should student loan debt be cancelled?

[LogicalApex]

Originally Posted by RickFLM4

Well unfortunately, I seem incapable of demonstrating to you the flaw in your statements, or you are unwilling to listen, or both. The federal government does not profit from student loans and are not exploiting students as you claim.

I am fully in favor of reforms which would allow these debts to be discharged in bankruptcy like other debt (with the bankruptcy staying on one's credit report until the original maturity date of the loan), with corresponding increases in interest rates to cover the expected losses, and limits on borrowing determined on likely ability to pay based on statistical averages of earnings from selected areas of study, again to protect taxpayers from defaults. There are plenty of options to get an education without incurring six figures of debt, as discussed throughout this thread, there are need and merit based subsidies from government and private sources, and there are some program to reduce payments for people in certain jobs post-graduation. All of this information and all of these options are available to anyone willing to do the work to figure it out. The system is, in fact, designed to benefit society even if you or I or anyone else doesn't agree with the design or have different ideas on how to improve its flaws.

The vast majority of the U.S. population is not going to be in support of unlimited free higher education for as long as one wants, in any field of study the choose. Even if they were and something like that were implemented, taxes would necessarily increase (perhaps through a surcharge on the college educated to make it more palatable to the population at large?) and you'd still be paying for it. There is no "free" and it is in fact fair in the view of the vast majority of people for borrowers to repay their debts with interest and taxpayers to pay their taxes.

Good luck to you in life.

As I said earlier, the government intended the program as a profit center and the driver for it losing money is predominately due to the student loan relief given under President Trump.

But you can let the GAO tell you that instead since you're incapable of comprehending my posts...

https://www.gao.gov/products/gao-22-105365

...Education originally estimated these loans to generate $114 billion in income for the government...

The largest estimated cost increases—$102 billion in total—stemmed from emergency relief provided to most federal student loan borrowers under the CARES Act and related administrative actions in response to the COVID-19 pandemic. This relief included suspending (1) all payments due, (2) interest accrual, and (3) involuntary collections for loans in default. The suspensions, which are programmatic changes dating back to March 13, 2020, are currently set to expire on August 31, 2022.

CARES Act was signed by President Trump @ https://trumpwhitehouse.archives.gov...748-cares-act/

Also, news flash. If the borrower defaults on the loan the tax payer is still paying for the loan balance. Whether it be bankruptcy or not since the loans are fully underwritten and provided by the government.

But you're incapable of understanding facts so I'll say good luck with life to you as well.

[Lady Jane]

Student debts should not be cancelled. It's a valuable lesson in life that they will have to remember. Maybe the hard way.

I graduated from University with zero debts and money in the bank. Why? Because I studied instead of partying and earning grants and bursaries. And I also worked tending bar after classes, week-ends and Summer holidays while some of my classmates were drinking their loans and begging for money come March or April.

I don't know where they are today, if they even graduated. I have no sympathy for their poor choices in life.

Just my two cents on the matter.

[LogicalApex]

Originally Posted by dreamingat30fps

His explanation made sense, but my bad you said it's valid so I guess that's that.

Look. Let's just assume EVERYTHING you say is legit and it's double dipping and the schools are shady and preying on students etc.

How does me paying for your student loans (because it's not forgiveness... no such thing... it's redistribution of student loans to people who didn't take them out) solve all your claimed issues with the educational system?

Is it student loan forgiveness AND ban on future government backed student loans? Is it student loan forgiveness AND overhaul of the higher education system? Is it student loan forgiveness AND shutting down of these predatory practices by colleges?

No.

As I said many times, I'm actually not in favor of a totally free higher education system. I have no idea where you and others keep getting this from. The student should have some skin in the game and loans can provide that skin. The loans should be capped at how much debt a student is capable of assuming to prevent the debt from becoming crushing as it is today and to provide pressure on the government to do its function of holding schools accountable.

The students aren't the problem here the government allowing states and schools to extract as much as possible from students with questionable results is. The government also planning these systems with the goal of turning a profit is also a problem. The students end up victims in this which is a real tragedy.

There is no societal win for letting students graduate with debt loads too large and so heavy that it weighs down every other area of society.

[LogicalApex]

Originally Posted by Lady Jane

Student debts should not be cancelled. It's a valuable lesson in life that they will have to remember. Maybe the hard way.

I graduated from University with zero debts and money in the bank. Why? Because I studied instead of partying and earning grants and bursaries. And I also worked tending bar after classes, week-ends and Summer holidays while some of my classmates were drinking their loans and begging for money come March or April.

I don't know where they are today, if they even graduated. I have no sympathy for their poor choices in life.

Just my two cents on the matter.

You're also in Canada where there are caps on student loan debt. At least there were when I studied in Canada for a year.

But when a state subsidized school costs ~$20K/year in tuition (not counting books, etc.) it is a lot harder to pay for that "tending bar".

https://bursar.temple.edu/sites/burs...tion_Rates.pdf

I know as I worked hard, including summer jobs and jobs WHILE attending school. I still graduated with a decent student debt load. I never partied. Nor do I drink at all.

I was the first of my family to graduate college though and my parents were too poor to contribute anything at all to my education. I earn very well now so I'm paying my loans back, but I'm also not dismissive of the real challenges others face and the strain the whole thing places on our society.

[Lady Jane]

Originally Posted by LogicalApex

There is no societal win for letting students graduate with debt loads too large and so heavy that it weighs down every other area of society.

Although I partially agree with you above statement, students should stop getting into debt for useless degrees and wait at home for employers to come knocking at their doors. It doesn't work that way.

Even if opportunity knocks, you still have to get off your arse and answer it.

[RickFLM4]

Originally Posted by LogicalApex

As I said earlier, the government intended the program as a profit center and the driver for it losing money is predominately due to the student loan relief given under President Trump.

But you can let the GAO tell you that instead since you're incapable of comprehending my posts...

https://www.gao.gov/products/gao-22-105365





CARES Act was signed by President Trump @ https://trumpwhitehouse.archives.gov...748-cares-act/

Also, news flash. If the borrower defaults on the loan the tax payer is still paying for the loan balance. Whether it be bankruptcy or not since the loans are fully underwritten and provided by the government.

But you're incapable of understanding facts so I'll say good luck with life to you as well.

The $114B (which by the way is a 5 year figure, not an annual figure, and tiny in relation to the total debt outstanding) and related report was flawed, as later reported by the GAO, perhaps in the broken link you posted. Even if you remove the effect of CARES Act, there is still a shortfall due to income-driven repayment plans already in effect.

If the debt could be discharged in bankruptcy per my earlier post, and interest rates were increased to reflect the risk of defaults, the taxpayer would not be paying for the defaults. Other borrowers would be paying for those defaults because the incremental interest would cover it. Sorry I didn't make that clear enough for you.

[LogicalApex]

Originally Posted by Lady Jane

Although I partially agree with you above statement, students should stop getting into debt for useless degrees and wait at home for employers to come knocking at their doors. It doesn't work that way.

Even if opportunity knocks, you still have to get off your arse and answer it.

The problem I have with this is placing the burden upon the students. Why would we do this here when we don’t do this in any other part of society?

You don’t get to go to a bank and say “I need $1M to buy a 2025 BMW i5” and the bank says sure. The bank will look at the cost of the vehicle and cap your loan there. They will look at your current pay and debt experience to gauge your risk and interest rate.

How can a student who has yet to work their professional career capable of accurately gauging their future earnings? They can’t. You want students taking some risks to better themselves, but you don’t want them so crushed that they lose any interest in trying.

The government on the other hand already has this data. They know students earnings after graduation. Debt loads and repayment ability. They can accurately gauge the “risk” of a given school and its degree programs.

Give students accurate details before they borrow about their degree and their school.

Cap debt limits for schools that are graduating students who aren’t earning well enough to afford their loans. Etc.

As I keep saying, the students are not the problem. They are victims in the current system. They are sold a promising future they have no real experience to gauge its risk. Yet many want to blame them alone. Boggles my mind.

[Watching The World Burn]

I think what bothers me the most lately is that some posters, particularly LogicalApex keep using this term "government making a profit". It irks me, because I cannot see an instance where a government makes a profit from any activity they do.

Profit would typically be defined as the excess of earnings over expenses, AND earnings is typically defined as compensation for the use of either labour / time or capital you own.

The government has neither in and of itself. It is a parasite in the truest sense of the word, since it relies on its host (being the people) to sustain itself. It does not produce. It does not earn. It cannot make a profit.

In spite of my feelings above, I still see a need for a government, as I think it is reasonably well suited to deliver certain services on a standardized basis, albeit it not as efficiently as I would like. Ideally I would like to see the government get smaller, but that is a pipe dream - what organization would voluntarily reduce itself / its power?

But governments do not profit and they do not produce. At best they redistribute and provide a modicum of standardized services.

[Car-Addicted]

Originally Posted by LogicalApex

As I said earlier, the government intended the program as a profit center and the driver for it losing money is predominately due to the student loan relief given under President Trump.

Trump derangement syndrome on display: Facts

Secretary of Education Betsy DeVos to continue deferring federal student loan payments through the end of the year with no interest accrued during that time. This is a three-month extension of the student loan relief policies under the CARES Act, which are set to expire on September 30.

Pay into the principal
“The suspension of interest on federal student loans makes those payments even more impactful,”

Focus on building an emergency fund
If you have no cash stashed away, keep your student loans on hold during this postponement period and focus on saving.

Prioritize paying down credit card debt
If you have both credit card and student loan debt, you should take advantage of this extended student loan deferment period to focus on paying off your credit card balances.

For student loan borrowers who are struggling
The proposed extension of deferring student loan payments is only for federal loans, but if you’re worried about private student loans, contact your loan servicer to ask for a forbearance period or other options for financial relief.

You're right pure Evil!
https://www.cnbc.com/select/trump-me...student-loans/

[LogicalApex]

Originally Posted by RickFLM4

The $114B (which by the way is a 5 year figure, not an annual figure, and tiny in relation to the total debt outstanding) and related report was flawed, as later reported by the GAO, perhaps in the broken link you posted. Even if you remove the effect of CARES Act, there is still a shortfall due to income-driven repayment plans already in effect.

If the debt could be discharged in bankruptcy per my earlier post, and interest rates were increased to reflect the risk of defaults, the taxpayer would not be paying for the defaults. Other borrowers would be paying for those defaults because the incremental interest would cover it. Sorry I didn't make that clear enough for you.

Debt outstanding isn’t a profit or loss figure. $114B in profit is $114B in profit.

But your “solution” is that future students should pay for the defaults of students who came before them? And that’s somehow more beneficial to society?

Do you pay a higher mortgage rate due to foreclosures in your area? Or a higher car loan rate based on how often your neighbors defaulted on their car loans? That makes even less sense than the mess we have in place currently.

[Lady Jane]

Originally Posted by LogicalApex

The problem I have with this is placing the burden upon the students.

I respectfully disagree with that. Choices are made but consequences are blindly ignored.

[LogicalApex]

Originally Posted by Watching The World Burn

I think what bothers me the most lately is that some posters, particularly LogicalApex keep using this term "government making a profit". It irks me, because I cannot see an instance where a government makes a profit from any activity they do.

Profit would typically be defined as the excess of earnings over expenses, AND earnings is typically defined as compensation for the use of either labour / time or capital you own.

The government has neither in and of itself. It is a parasite in the truest sense of the word, since it relies on its host (being the people) to sustain itself. It does not produce. It does not earn. It cannot make a profit.

In spite of my feelings above, I still see a need for a government, as I think it is reasonably well suited to deliver certain services on a standardized basis, albeit it not as efficiently as I would like. Ideally I would like to see the government get smaller, but that is a pipe dream - what organization would voluntarily reduce itself / its power?

But governments do not profit and they do not produce. At best they redistribute and provide a modicum of standardized services.

We can call it a tax.

Students are taxed twice.

1. In loan interest taxes.
2. In higher income taxes for their increased wages.

That further highlights the absurdity of the current system.

[RickFLM4]

Originally Posted by LogicalApex

Do you pay a higher mortgage rate due to foreclosures in your area? Or a higher car loan rate based on how often your neighbors defaulted on their car loans? That makes even less sense than the mess we have in place currently.

Mortgages and auto loans do in fact factor in not only your expected ability to repay but also anticipated losses from other borrowers across the loan portfolio who default. And by the way, the prices you pay for insurance are affected by losses from people other than you and prices you pay at a store factor in theft, spoilage and other forms of losses not directly related to you. This can’t seriously be news to you? So yeah, I’d be ok with other borrowers bearing the cost of borrowers who don’t repay just like any other loan.

[noemon]

It should be said that the continental European higher education model is free only for the natives.

They make money solely from the foreigners studying in European universities who are charged fees to subsidise the locals.

I cannot imagine how or why any patriot would reject such a model especially when the US spends money like trinkets for far lesser reasons without any issue.

[RickFLM4]

Originally Posted by noemon

It should be said that the continental European higher education model is free only for the natives.

They make money solely from the foreigners studying in European universities who are charged fees to subsidise the locals.

I cannot imagine how or why any patriot would reject such a model especially when the US spends money like trinkets for far lesser reasons without any issue.

What are tax rates in Europe?

[kscarrol]

Perhaps I'm wrong on this but while university is free in Europe, there are fairly rigorous standards/testing requirements which limit the number of students to effectively the "cream of the crop"?

[Watching The World Burn]

Originally Posted by LogicalApex

We can call it a tax.

Students are taxed twice.

1. In loan interest taxes.
2. In higher income taxes for their increased wages.

That further highlights the absurdity of the current system.

Admittedly many things can be called most anything by anyone, though it does not stand to reason that said thing has therefore been correctly identified and named by that person.

#1 is not a tax.
#2 is a tax.

Actions have consequences. Bitter pill sometimes, but sometimes that helps develop character. Perhaps said individuals will get so busy trying to earn money to pay back their loans that they won't have time to contemplate if they are a boy or a girl.

[noemon]

Originally Posted by kscarrol

Perhaps I'm wrong on this but while university is free in Europe, there are fairly rigorous standards/testing requirements which limit the number of students to effectively the "cream of the crop"?

Correct.

Rest of them willing to pursue the particularly chosen subject but failing to get a place at the top unis, either go to more 'provincial' universities in the country or abroad.

Here again EU students do not pay where it's free for the locals as that is precisely what being an EU citizen is, that you enjoy the rights of the locals in every EU country you are in with your native passport and without any other bureaucratic procedure including the right to vote in any local election you are residing but not on any national election or referendum that you exercise only in your native country.

[LogicalApex]

Originally Posted by Watching The World Burn

Admittedly many things can be called most anything by anyone, though it does not stand to reason that said thing has therefore been correctly identified and named by that person.

#1 is not a tax.
#2 is a tax.

Actions have consequences. Bitter pill sometimes, but sometimes that helps develop character. Perhaps said individuals will get so busy trying to earn money to pay back their loans that they won't have time to contemplate if they are a boy or a girl.

lol you are comical. After a whole diatribe about profits. Now “many things can be called most anything by anyone”.

Just for the amusement at this point.

What is #1?

[2000cs]

Originally Posted by Watching The World Burn

Admittedly many things can be called most anything by anyone, though it does not stand to reason that said thing has therefore been correctly identified and named by that person.

#1 is not a tax.
#2 is a tax.

Actions have consequences. Bitter pill sometimes, but sometimes that helps develop character. Perhaps said individuals will get so busy trying to earn money to pay back their loans that they won't have time to contemplate if they are a boy or a girl.

And, student loan payments are, for most taxpayers, tax deductible.

[LogicalApex]

Originally Posted by RickFLM4

Mortgages and auto loans do in fact factor in not only your expected ability to repay but also anticipated losses from other borrowers across the loan portfolio who default. And by the way, the prices you pay for insurance are affected by losses from people other than you and prices you pay at a store factor in theft, spoilage and other forms of losses not directly related to you. This can’t seriously be news to you? So yeah, I’d be ok with other borrowers bearing the cost of borrowers who don’t repay just like any other loan.

Higher default rates eat into profit margins. Higher shrinkage and spoilage rates eat into profit margins. Insurance is intentionally about pooled risk so obviously the pool is shared.

Charge high prices because your store is losing a lot to theft. You’ll lose out to the cheaper competitor who has gotten it under control. Charge higher interest rates due to high default rates and you’ll similarly lose out to competition.

But go on. You’ll tell me there is no such thing as competition and companies are not subject to market forces when setting prices.

Then you’ll next tell me they are and you believe in capitalism.

You people speak with both sides of your mouth like your brains are full of holes or something.

[sygazelle]

Originally Posted by Lady Jane

Student debts should not be cancelled. It's a valuable lesson in life that they will have to remember. Maybe the hard way.

I graduated from University with zero debts and money in the bank. Why? Because I studied instead of partying and earning grants and bursaries. And I also worked tending bar after classes, week-ends and Summer holidays while some of my classmates were drinking their loans and begging for money come March or April.

I don't know where they are today, if they even graduated. I have no sympathy for their poor choices in life.

Just my two cents on the matter.

Like you, I graduated debt free. It took me 10 years to get through college because I worked the whole time. For my Masters, my employers had tuition reimbursement so that helped a lot, but it took me 10 years instead of 6 (4 undergrad and 2 grad school) because I worked full time.

I feel a bit for these students who pile up student loan debt because they are climbing such a huge financial hill after they graduate. But it didn't stop them from partying, going for $7 Starbucks, and eating out all the time. Actions have consequences. If their debt is forgiven, what life lesson message does that send?

At the macro level, the education system is broken and needs to be revamped. When I worked in the Netherlands, my colleagues explained the student were put on a university track or a vocational track in something like 7th grade. So, if you weren't deemed university material, you learned a trade instead. This notion that you should go to a university because of social pressure or parent pressure when you don't want to go or you are not cut out for it is a huge waste of time and social expense. Getting loans to get degrees that that have little or no hope of getting a student a job where they can pay back the loan just adds to the social issue.

I'm glad I got a great education and was able to do it without debt. I made a great living and in my case, my education helped me in my career. I feel for those who loaded up on debt and chose degree paths that didn't yield jobs with incomes to pay off the debts. But, these adults signed contracts. Letting them off the hook completely sets a ridiculous precedent.