In reply to: 153k loans disappear with the stroke of a pen... posted by El Kabong
A massive fan. At least for federal direct loans. Especially when the repayment timeline and forgiveness terms are tied to the size of the loan.
I’m honestly not sure why someone other than Ebenezer Scrooge would be opposed to this. Borrowers will spend this money by putting it back into the economy.
simplified and improved in a few ways. I'll start by saying I only have very tangential exposure to these programs through friends of my wife, so it's probable that I don't know or understand all the implementation details. My understanding though is that while you're in repayment, your balance may actually increase (negative amortization), which can have major ramifications if someone is looking to switch jobs, get married and file taxes jointly, etc. before the loan is forgiven. IMO, while on an IBR plan, the principal balance of the loan should decrease according to the normal amortization schedule. That way, if someone has a life event where they no longer qualify for IBR, then they would just transition off IBR with their loan in the same place it would have been had they never done IBR in the first place. Student loans shouldn't be a reason for someone to not get married or not take a higher paying job.
If your payment does not cover all the interest, the excess is forgiven so your loan set least does not grow.
free shit. Buying votes. Not fixing the underlying problem.
They have to clean up the existing mess, and they need to figure out how not to make more mess in the future. The fact that this addresses the first problem without addressing the second doesn't necessarily make it a bad policy. I think we're starting to see the market address the second problem to some extent, but the student loan regime still needs a major overhaul.
Oh, because that won't buy votes.
market is why the problem exists.
The top schools get more and more applications every year for approximately the same number of spots. As near as i can tell in the 40 years since I applied to ND they have added approximatelt 300 spots to the class while attracting 25,000 more applications. The same is true across the board. Around the time I applied to ND UCLA had nearly a 90% acceptance rate. Last year they accepted 12,737 applicants out of 145,910.
The competition to get into those schools drives up the price which drives up the entire market making it more expensive for everyone at every level of school. And I understand not everyone should or needs to go to college but likelwise the trades are not right for everyone either. Not to mention if 25% of college students dropped out and went into the trades the increase in numbers would likely drive down the wages in those industries.
it seems like you disagree with him and not me necessarily.
My post is in reaction to his; I make no claim as to whether the market is addressing either.
respond. Apologies for reading it out of context.
I do have my doubts about colleges correcting it based on my current experience but I may also be too much into the process right now to see clearly
The government borrows to pay off the loan, so that people can consume stuff.
If this is your position, then you need to justify why a college graduate should receive a subsidy, on top of the subsidies that they have already received (student loan tax deductions, in-state tuition for some).
Only 30% of society graduates from college, and those that do earn roughly $600k - $1.0M more in earnings during their lifetime. Why should 70% of society pay to forgive loans, when the people that took out the loans have an asset that generates a higher level of income vs. a High School diploma?
with the U.S.'s graduated tax rates, the top 20% of earners, who are probably disproportionately college graduates themselves, pay almost 90% of all taxes. I don't like either this particular policy or the student loan regime overall, but I also think it's somewhat inaccurate to characterize it as construction workers subsidizing bankers. Bankers subsidizing teachers is probably closer to the truth.
This number is also distorted because we embraced the EITC over transfer payments, because the EITC encourages work to obtain the credit.
I think college education is a good unto itself that benefits the broader society.
Don’t get me wrong — if I were King, the way I would accomplish it would be through free education. I have qualms about the current structure, where the federal government loans money to students to pay for private /public education. I have doubts that it’s a good approach.
But given the structure we find ourselves in, my justification for income-based debt restructuring and forgiveness is that it makes it easier for college grads of limited means to live their lives.
I think non-college grads should get assistance from the government as well. I think many of them already do.
in 10 years got a garbage degree funded by the US government. They should have gone to trade school and gotten some noble job like a plumber, HVAC tech, med tech, anything other than a useless degree that can't pay off a $12k loan. The irony is that the plumber can pay off that $12k loan.
Signed, father of a kid who dropped out of a college to pursue a trade vocation. It was absolutely the right decision for him, and he's paying off his meager student loans because he's taking responsibility for his choices and learning the value of making a promise. He keeps his promises.
One of the most successful ND grads on Wall Streer was a PLS major.
College is not a trade school. Art majors are people too.
If not, then there are two PLS majors doing really well on Wall Street....
has a BBA. I think in accounting but perhaps finance.
Although there is one other guy that had made a shitload of real money in hedge fund management and then was an early cryptoncurrency believer and may be the wealthiest ND alum. Not PLS.
issued by upper echelon schools, and those issued by lower tier institutions.
Students at upper echelon schools are smart as hell to begin with. Regardless of their degree, they can find their way in the world, and likely thrive.
But the best a student can do is to get into a Cal State school, for instance, they're far better off pursuing a 'trade' degree (i.e., accounting, hotel management, teaching, etc.) then a liberal arts degree, at least in instances where they have to borrow the money to attend. Students attending on their parents dime are a different story.
Stifle it. I know about 10.000x more about commercial law than you do about financial statements or running a business. All of that I managed to learn based on the foundation of my two business degrees, both of which you deem as worthless. I
I don’t denigrate your law degree or whatever the hell your undergrad degree was. I don’t care what it was. My undergraduate accounting degree is every bit is valuable to me as whatever the fuck your undergraduate degree was to you.
only to take issue when someone also arbitrarily assigns value to yours?
What am I missing here?
Seems to me that value is defined in many ways, financial and not. And if financial return is the only metric by which to judge, why didn’t you just re-route your kid to a degree that would have provided a great financial return? It’s already been shown that college degreed individuals will make much more money over their working career as a whole.
Or, and work with me here, is everyone’s pathway and contributions unique? Even art majors. Should we be subsidizing and paying those off? That’s up for discussion. But “garbage” degrees? Come on.
Is a garbage degree. The student will never earn enough in additional income to justify spending that amount on tuition. Same goes for a photography grad degree from NYU.
That’s what I think of when someone says “garbage degree.”
Then the asset you bought wasn’t worth it. The degree is garbage to the extent the holder couldn’t monetize it. Across denigrates all business degrees on this forum continually. All of them. I don’t denigrate any one particular degree.
My son is already earning more in his field than he would’ve earned in the field he was pursuing. He was not cut out for college. After 4+ years at it, it was quite clear he needed to do something else for my wallet , but more importantly, for his own mental health. He will be just fine in the field he’s in. Not all kids need to go to college and not all college degrees are valuable.
As I’m sure you know, the undeniable fact that the average college degree holder’s earning potential margin over those who don’t hold a college degree isn’t driven by the contribution of, well degrees I won’t name. Plumbers, med techs, HVAC techs out earn lots of college degree holders. Such is the interaction of supply and demand.
discussion. I place a lot of value on a solid liberal arts degree and the curriculum requirements to obtain it. Critical thinking, communication skills, and learning to be a part of a community are invaluable skills.
This has been devalued by subsidized loans and administrative greed, imo.
It is why people pay up to attend prestigious schools. They are buying the name brand associated with the school, access to the alumni network, and the opportunity to build their own network.
Spending $150k to graduate from Harvard is completely different than spending $150k to graduate from Full Sail University. If ROI is ignored, then the two degrees are equal in value?
Many people are not wired like you are.
People who are smart and motivated tend to do well in high school. Many people truly choose a school for reasons other than vocational prospects.
Motivations such as quality of program, desire to learn, desire to grow as a person, to deepen faith and understanding, or just to go to a party school like ND.
If you are touring ND, Northwestern, Duke, and Gtown, then a positive ROI is a given for most students. The only unknown is fit, which is why people visit a school and attend based on vibes.
Why do people attend college? For knowledge, or because it is a gateway to a financially secure future?
The conflation of trade schools (eg business school, most computer science, most kayak schools, etc) and universities has caused a lot of confusion.
that it's always been the main factor
...The subject matter in the subthread is whether a college degree has value if the holder is someone who borrowed less than $12,000 and in 10 years hasn't paid it off. What is anyone's basis of credibility on this issue, I wonder, other than anecdotal personal experience and their subjective interpretation of the matter?
My anecdotal personal experience: At ND I majored in music; at the University of Chicago I got a master's in musicology. Along the way I got a real estate license, then became a commercial r.e. appraiser; and most of my work is in litigation circumstances. At Chicago I borrowed about $18,000 and paid it off in about 12 years.
I've been asked more than once in depositions what I think my music education has contributed to my current career. This is my answer: At both ND and Chicago, I learned how to identify a problem, gather information, assess it, and write something clear and concise that was intended to persuade the reader that my solution was reasonable; and to do rigorously and diligently. If one applies oneself in college, you can learn this lesson well, regardless of the major.
able to pay off their loans. I do not agree with analyzing a college degree from a purely, or even primarily, ROI perspective. Cost should play a role but I believe there is inherent value in collegiate education.
Plenty of trade schools receive federal funding (which I happen to think is a good thing too).
And participants in SAVE also keep their promises. Default disqualifies a borrower from participation.
when you say "there is inherent value in a collegiate education." Your statement would be more accurate if you removed the word "collegiate."
There is inherent value in gaining knowledge and educating yourself by whatever means possible. Reading books, speaking to experts in the field, learning via apprenticeship, watching informational videos, deep-diving materials on the internet, and the list goes on.....
At one point, college may have served that purpose as well, but these days it's primary role is to produce a piece of paper (the degree) that theoretically makes you attractive to a future employer.
And sadly, many degrees these days are indeed garbage because they cannot fulfill that fundamental goal. The knowledge that you gain from a college education is not worthless, but it can certainly be gained many other places at a fraction of the cost.
He said he went to college and grad school mainly because back in the 70s that was the only way he could get access to the equipment he needed to make movies. His advice to current kids with today's technology is that if you want to make movies, you don't need to go to college. Instead, just start making movies and build a portfolio of work. The same thought process can now extended to education more generally.
jaded and cynical view of higher education. I don’t really know what to say other than I find your view to be sad and impoverished.
Let’s take your plumber. A good one is well-paid, well in excess of college graduates who toil in lots of low-paying jobs. Now, further assume this plumber likes his job and it supports his lifestyle and his dependents. He doesn’t own a college degree and he has no student debt.
I believe your argument is that your plumber is somehow impoverished if he doesn’t own a college degree?
I suppose I shake my head like a disappointed father at that, too.
No, I don’t think anyone without a college degree is impoverished. I was describing that other poster’s view of college ed, not people.
Well, except for the deadbeats that didn’t pay for it. You’re damn right it’s owned.
I am envisioning you shaking your head at me like a disappointed father, but also note a complete lack of substance in your reply.
You go on seeing the world as you wish it were - hopefully it works out for you.
But I dream of a better world. And I support policies I think will bring that better world about.
Are all people college graduates or just more than today? Should everyone go to college? If not, who should and shouldn’t, and on what basis should we judge that decision? And once we decide that, who should pay for that degree and in what percentage share? Or should college be free to all?
Someone land a job in ANY field. Doesn’t even have to be in the art field. There is no reason to go to college unless it leads to gainful employment. That’s why trade schools and apprentice programs exist. My son should not have gone to college. He is now a trade vocation, apprentice program and he and his family are very happy that he is doing that instead of toileting unsuccessfully to get a degree that would be useless to him..
The number of people with a bachelor's degree increased from 30.4% in 2011 to 37.9% in 2021, per the Pew study linked below. College graduates also are less likely to be unemployed vs High School graduates.
There are a couple of issues here, that I can see:
1) Not everyone needs to attend college. Pushing the "You must go to college" narrative is why kids end up in crappy colleges that have a negative ROI. Per the Pew study, only 46.4% of students that attend private for-profit colleges graduate in six years. At private non-for-profit school that number is 78.3% and 69% at public schools.
Graduating from UVA probably leads to a stable life. Graduating from a degree factory wastes four-to-six years of your life, probably puts you six figures in debt, and probably has a negative ROI. These kids would probably be better off attending a trade school or joining the military in a non-combat role to learn something tangible.
2) If kids graduate from High School without tangible life skills, then we need to rework what we teach in High School. We should not force kids into college to obtain enough knowledge to benefit society.
3) Most college degrees are not necessary to work in an office. A degree has become a screening tool, use to replace actually interviewing candidates, and certainly used to avoid training new hires. The good news is that this barrier to entry is slowly fading away (https://www.wsj.com/articles/help-wanted-no-degree-necessary-georgia-florida-skills-based-hiring-1e294181).
On the subject of assistance, I'm failing to understand why we need to help borrowers repay loans when they obtained an asset that generates hundreds of thousands of dollars in additional income over their working life (and the gap between college and non-college earnings has only widened over time). An asset was obtained, and now we are asking society to eat the cost. That is the definition of privatizing the gains and socializing the losses.
In contrast, people that lack assets should receive assistance from the government. My preference is to couple assistance with the opportunity to learn a skill, so that the recipient can move up into a higher paying role and off of assistance. For this reason, I favor the EITC over direct cash payments.
Like most of our problems, we are attempting to cure the symptom, not the disease. I guess that is how the game works.
It is to teach people how to think, to relate, to decide, to do things for others.
What are people doing in High School these days? Apparently no one is learning how to think, or how to navigate life.
If kids are this banged up, then I might switch my position and embrace BI’s call for two years of conscription. Because none of this makes any sense to me.
How much networking value do you think a degree from the University of Houston or Indiana State really provides? And to give some perspective, there are over 2800 four year universities in the US, meaning UH is certainly in the top 5-10% of all universities and Indiana State is probably in the top 25%. Maybe 2-3% of universities provide any sort of meaningful network value.
If you live in Seattle, probably not that much.
On a national level, only a handful of schools will qualify here. On a regional level, the network effect is much greater.
We also must distinguish between networking with alumni and networking with friends that you made along the way.
I think that there is value here. Like everything else, it varies between the different universities.
...college is not the only way to teach people those things, and for a lot of people isn't a particularly good way to teach people those things. So why are we pushing them into college?
That Trump's strongest demographic is white dullards who didn't go to college.
...a reaction to the facts that:
A. So much of society shares your low opinion of those who don't go to college
B. We've abandoned any pretense of improving the lot of the working class and have instead suggested that the solution to the problems of the working class is for the working class to make themselves not working class.
Some of what's being spouted in this thread about degrees being no more than an asset to be bought is gibberish, but so is the idea that college is a good fit for everyone. You don't really believe that, do you?
a college degree? Interestingly, those with a 4-year degree value that education at the same level (or even lower) than those without a 4-year degree. In other words, it seems more likely that those without a 4-year degree place more value on it than those who do have one.
Yeah, shitty elitists exist. But I suspect they are equal opportunity shitheads.
ROI is a good metric. And I don’t think the gains are privatized. Everyone benefits from a college-educated populace!
I’m also a fan of the EITC. And I 100% agree with your last paragraph. We’re all just whistling Dixie around the real issues.
Let's say that you took out a loan to build a factory. Construction takes four years, and at the end of four years the factory will generate $X in income. You would certainly consider this an asset, right?
A college degree is no different, it is just human capital as opposed to physical capital.
If society pays off the loans used to obtain this human capital, and you get to keep your degree, how can you view this as anything other than privatizing the gains and socializing the losses?
You seem to place a lot of value on society graduating from college. Again, High School should be enough formal education for most of society. Do you have any data to support this assertion? I'm seeing the opposite, which is highlighted in the WSJ article below:
Roughly half of college graduates end up in jobs where their degrees aren’t needed, and that underemployment has lasting implications for workers’ earnings and career paths.
That is the key finding of a new study tracking the career paths of more than 10 million people who entered the job market over the past decade. It suggests that the number of graduates in jobs that don’t make use of their skills or credentials—52%—is greater than previously thought, and underscores the lasting importance of that first job after graduation.
Of the graduates in non-college-level jobs a year after leaving college, the vast majority remained underemployed a decade later, according to researchers at labor analytics firm Burning Glass Institute and nonprofit Strada Education Foundation, which analyzed the résumés of workers who graduated between 2012 and 2021.
More than any other factor analyzed—including race, gender and choice of university—what a person studies determines their odds of getting on a college-level career track. Internships are also critical.
The findings add fuel to the debate over the value of a college education as its cost has soared—and whether universities are producing the kind of knowledge workers that employers say they need.
“You’re told your entire life, ‘Go to college, get a bachelor’s degree and your life is gonna be gravy after that,’” said Alexander Wolfe, 29 years old, a 2018 graduate from Northern Kentucky University who currently works security at a corporate facility in the Cincinnati area. “In reality, it hasn’t really helped me that much.”
I would assume most would say that they got quite a bit more out of attending Notre Dame than the resultant income differential. Seems like multiple things can all be true here.
1. There is a potential benefit to going to college beyond the economic ROI.
2. That said, there does need to be a certain level of economic ROI given the costs involved, and for many students that economic ROI is not achieved.
3. College is not the only place that the economic and non-economic benefits often associated with higher education can be obtained, and for many students it is not the right place for those benefits to be obtained.
4. Thus, instead of encouraging everyone to go to college, we should do more to promote the availability of both these economic and non-economic benefits in contexts outside of traditional four-year colleges.
If you got a degree in baloney, it's a harder sell to suggest forgiveness than something more marketable.
I don't particularly like this because we now basically suggest a degree in Philosophy isn't worth as much as a degree in Accounting, despite the former possibly being a lead-in to a law degree (and ultimately both may lead to many of the same careers).
I realize this comes with more "buts" than a Sir Mix-a-Lot video, but I think we at least need to determine how much responsibility lies with the borrower, how much lies with the lending institution, and how much lies with the college.
The closest analogue seems to be the subprime mortgage era. Is it the fault of the borrower for taking a risky mortgage they probably can't swing, or the institution for giving them the money?
But they seem better addressed to the broader question of whether, how, and why the federal government should be in the business of making direct loans for secondary education.
Given the situation we’re in, some form of income-based deferral and forgiveness seems like a great idea. I think that a borrower who borrowed 12,000 for college, spent ten years in a structured repayment scheme, and spent those years living off of 2x the poverty line or less, should have those loans forgiven. At that income rate having their monthly payment go to the federal government as opposed to plowing it back into the economy is an easy call for me, personally.
Certainly at some point you get into a moral hazard but I don’t see SAVE or REPAYE as having come close to whatever that line might be.
At the end of the day, a few billion probably isn't material to the budget. However, a few billion here and a few billion there tends to add up to a material number over time. It also highlights a lack of focus on controlling expenses, which definitely adds up over time.
As I highlighted in my post a week or so ago about the deficit, we have a massive spending gap that we cannot close. We cannot afford to piss away a few billion here or there anymore. That game is over, especially with interest rates where they are. (Debt service is going to crack a trillion dollars a year, up from around $300B. That is a net hit to the deficit, because there is zero uptick on the revenue side to offset it.)