As far as I know there have been loan reduction policies in effect for a long time that just happened without fanfare. Two things that upset many of us are:

1. Many have sacrificed for long periods of time to pay of their loans and feel rightly or wrongly that we're bailing others who haven't been willing to make similar sacrifices.

2. With his periodic public pronouncements of debt relief, the President is rubbing this in the face of people who don't agree with some or all of the policy. I'm beginning to believe he feels he's a reincarnation of FDR, rather than a normalizing president.

As others (jt) point out, these are band aids on a large wound; and we're unwilling to address the larger problem.

ignored because they are politically unpalatable to the non profit education lobby. The best is the Gainful Employment concept. This measures the debt burden upon graduation of a student with an assumed reasonable amortization table against the actual earnings of students who borrowed money By School By Degree program. The data is all there as it has been collected for years as this was first implemented for For Profit school 8+ years ago by Obama.

When a program at a school "failed" the gainful employment rule, the school had one obligation and two choices:

Obligation: Rebate tuition back to students who borrowed too much Title IV money and de facto "overpaid" for their degree, because all data suggests they cannot successfully repay their US Government Student Loan

Choices: (1) Adjust tuition of the specific program downward so that future students do not "overpay" and thus "over borrow" Title IV to fund pursuing that program at that school; or (2) Teach out the program (i.e. shut it down) as no more Title IV funds would be available for prospective students of the program at that school. But they would remain available to students of programs that do "pass" the Gainful Employment test - meaning the typical student who borrows and graduates has a reasonable chance to pay down her or her debt.

Now when Trump came aboard, it went away because it was never implemented across all schools. The language was limited such that the testing was more or less limited to For Profit schools and non-profits (private or state schools) were exempted. Rather than fight to implement across all schools, Trump Education Dept simply stopped it completely. We are back to only limiting or stopping to provide Title IV funds to schools when (1) a very large percentage of students in an annual cohort (so class of 2018) stop paying on student loans 5 years later - so way after the fact, and nothing specific to a program and low career prospect programs get "helped" by high prospect programs; or (2) the school does not provide adequate proof of the schools financial health or compliance on various rules (audits to even reveal this are very lax).

Biden wants to reinstitute Gainful Employment right now for For Profit colleges and declare victory on "solving the problem". Needless to say, as was the case 10 years ago, the non-profits are cheering this as they want less competition for students and gladly attribute the whole debt problem to For Profit schools. But most of the dog For Profits are gone as they were weeded out successfully by Obama and most of the school failures from 2014-2020 were For Profits (and much of that debt has already been written off post school bankruptcy). There are not nearly as many For Profits around to blame. And even with them dramatically shrunk (University of Phoenix still exists but enrollment down over 80% from peak) the survivors have honed their focus on highly vocational programs (like UTI and Auto Mechanics or Chamberlain and Nursing or so many others focused on Pharmacy Techs or Medical Billing - where grads can pay off loans and programs will pass Gainful Employment if re-instituted).

Bottom Line: We should re-institute Gainful Employment testing for For Profits and Non Profits. Of course, this is loathed, especially by academia which fears financially encouraging students not to major in humanities subjects. Thankfully, this is already happening in the market place as students learn more, but many still pursue school degrees for which they have little prospect of paying down their debt. What is really needed is some combination of (1) Students who need to borrow to pursue such university programs get grants not loans - because on average they can't afford loans (2) Lower the tuition for programs whose career prospects are objectively worse - why should someone pay the same for a music degree or fine arts degree as an engineer or accountant pays? The market place certainly values the professor's earning prospects outside of school differently. Schools don't want to do this, but Gainful Employment would force the tuition reduction lest the program be eliminated due to ineligibility for Title IV loans (3) Fewer schools offering these lower vocation prospect programs. This again could result from Gainful Employment implementation across all schools or happen as it sort of is now as private and state schools everywhere cut programs with low enrollment which, in many cases, involve programs like fine arts and music or German, etc. How many state schools in Ohio need to offer a full slate? We need to encourage or have policies that promote consolidation of low vocation prospect programs into fewer schools where each program can have the best teachers, best state funding, the best grant solicitation (because they need it) and yes fewer overall jobs for some of the professors.


The other good option, employed by Brazil, is make the school share in bad debt as incurred. The money gets clawed back out of future Title IV funding. The only problem here is that schools will not be proactive and will fail left and right after the fact.


The worst option is to enable what we have.

Make the payments fully tax deductible.

Perhaps only if you work in the field you graduated from, but in general as others point out the funds I put into my education are a business expense.

Yes, I suppose one would need to identify vanity degrees that are meaningless, but even there it seems a lesser issue then giving money to a multi billion dollar hedge fund with an educational mission like ND.

I think that a deduction on interest is fair, perhaps with some income phase outs.

However, my entire medical school bill was a necessary business expense, both principal and interest. It's not any less relevant to me being a doctor than a company car is for a salesman or the myriad of write offs that businesses include, other than the temporal fact that the tuition expense is incurred in a different year, and by category is not a write off expense.

summer of 1980, when applying for my first loan, of my dad saying "after you graduate and are making money you will be glad to have this interest to write off." Nope. Eliminated while I was in school. Still, my $35K debt (10K undergrad, 25K law school) pales in comparison to today's world.

I feel like I am always on the losing side of these policies. My wife and I lived below our means to stash cash in 529 plans. Paid ~$700K out of pocket to get our 5 through college; 20 years of tuition in 12 years (2006-2018). Those that went to ND had some loans but happily 2 of the 3 have theirs paid off. Other two (UVA and SMC) had no loans based on their college choices. I played it safe and by the rules - others get bailed out. Oh well. I am grateful for the 529 saving plan incentive, however.

@jt - my middle child (it's always the middle child) may need your services as she is a doctor in debt, currently in a fellowship at Michigan. e-mail linked.

The interest deduction income phase out is comically low in my opinion.

Your daughter should look into PSLF and SAVE (or whatever they call the income based repayment plans now).

I do find it interesting how you look at it though. You call $12k a bail out. I'm interested to know how much capital gains tax was saved in the 529 plans. I'd guess it was significantly more than $60k (5 kids x $12,000). I'll admit I'm making the possibly wrong assumption that the full $700k was paid out of the 529. Also, depending on where you live, it's possible those 529 deductions saved you a decent amount of money in state income tax.

accounts.

That would be relatively impressive savings over a relatively short period of time, considering they weren't even around until 1996, and by 2000 there were only 30 states that had them. It really took the tax act of 2001 to get them off the ground and into the mainstream.

that said, anything is possible.

I was just trying to point out it was a significant benefit received from a government policy decision, and I would assume Moose84 (similar to CATripleDomer below) would object if someone characterized it as a bail out.

In thinking about it a little more, $60k would require between $300k and $400k in gains which is unlikely so Moose84's net benefit of the 529 was likely less than $12k per kid, again depending on state tax impact.

I want to point out that it's an honorable thing that Moose84 did to sacrifice and save for his kids' tuition. He used the government programs available to him to as much benefit as possible which I encourage everyone to do. Just asking everyone to acknowledge the benefit and not describe benefits received by others using negative terms.

The tuition did not all come from 529. I had a unique situation 2010-2012 that allowed me to pay a year or two of kid 3's and 4's ND tuition out of cash flow while their 529s recovered and grew after the 2008 market meltdown.

Perhaps I was to strong in my wording saying "bail out." It just seems that policies change right at the wrong time for me. I am grateful I avoided parent loans or encumbering my house with new debt to accomplish the feat.

I said it before, I will say it again -- I am so glad to be out of that rat race!

@jt - I will e-mail you.

my concern is that this program, whether you call it a bailout or not, really doesn't solve the underlying issue(s).

It just reeks of politics as usual in this day and age.

I wish they would solve the real problem or even make an attempt. I won't hold my breath. In the meantime, I'm not going to begrudge a government benefit that might actually go to a middle class recipient for a change after experiencing the actual bailouts over the last 15 years.

...A lot to be amused by. I understand the angst, and I agree that people need to take responsibility for their financial actions that might have unexpected reactions. Overall, I'm not a fan of this move by Biden.

Unfortunately, this leads me to think of all the far more gargantuan tax giveaways/sweeteners/what-have-you that benefit people who are fat and happy (and when I say "people," I include corporate entities that, per SCOTUS, are to be treated like persons at least sometimes).

For example, I can't tell you how many tax returns I've seen for appraisal clients who own small to middling-sized apartment buildings, where there is a healthy net profit until accelerated depreciation wipes that out, and you get to tell Uncle Same that you owe no tax on that rental profit because per the tax code (a/k/a "Through the Looking Glass"), you lost money.

The other amusing part was a commercial attorney here telling us that degrees that don't make you money due to their value in the marketplace are garbage. I have two garbage degrees, I guess. (Although I did actually make some money doing music transcriptions and more recently consulting on a few music plagiarism cases.)

any type of subsidy or benefit funded by my tax dollars to send me a handwritten letter of thanks. Not sure I'm going to get it, though.

And to the Charlie Cook quote, what's the data on the type of people receiving benefit on this round of forgiveness. He seems to assume--without evidence--that everyone getting loans forgiven is a Ivory tower academic elite. But what if the people getting the forgiveness are working class people too? Are there no waitresses trying to pay off their college loans?

Much more taxes than most on this board will ever pay.

I am seeing large transfer payments to the lower end of the income distribution. I'm not seeing it on the higher-end. Perhaps you are referring to other aspects of the tax code, like GSTTs and whatnot.

• Click here for link at https://taxfoundation.org/research/all/federal/who-pays-taxe

of the tax code which can be exploited by folks with high income rather than transfers.

GRATS, CRATs, CRUTs, Carried interest, special depreciation rules, "loans are not realization of income", unlimited charitable deductions, foundations as covers for personal spending, etc., "capital gains tax subsidy" etc. are all artifacts of the tax code that favor the ultra wealthy.

I think the mistake that many folks make when they analyze the "wealthy" end of things is that by and large they will eventually pay. And certainly they do pay the majority of the tax revenue. Is there a risk some of these ultra wealthy people renounce citizenship and head to New Zealand? Sure but not everyone likes to sleep with sheep.

So eventually this capital will be taxed or at least distributed back into the economy via donation and consumption. Maybe not by their next generation, but certainly by the four that money will be back in the system. And those subsidies resulted in a tangible return on investment.

We enjoy tremendous advantages in our technology and productivity from our investment in human capital and research and development and the above "loopholes" create incentives to take risks and explore those. Bezos, Musk, Buffet, Gates, etc. have led vast teams to create technologies that make all of our lives better and the economy more efficient. I don't understand mouth breathing liberals who get upset about the fact that a mortal who will end up dead just like them having vastly more money than they do. Guess what - those people made all of our lives better. Billions of people. I'm happy they did that as they should be as well.

Are we getting a return on investment on welfare, section 8, etc? What is the goal of those subsidy? We have so many damned carve outs and preferences I don't see how it is possible to optimize a 100,000 variable equation. In general I am a meathead and think that simplifying the tax code would at least allow us to test these programs for efficacy.

As is, we only talk about whether we are adding to a deficit / surplus etc. This is not my expertise at all and now I regret responding. My bad.

such as the carried interedt loophole or even lower tax rates for capital gains. The facts is both those decisions could be described in the same manner but I doubt be would look at them in that manner.

It is simply part of the code now.

I also think that so few people understand the issue that it is ignored. Or, PE/HF money is strong. Either one works.

Is that R's were uniformly against getting rid of it as was Sinema. If the dems had one more vote that likely would have been a pay for in the IRA.

It has survived more than one tax policy fight, so it certainly has staying power.

There is also the possibility that Sinema chose to be the face of the opposition, to give other people in her party coverage. This is pure speculation on my part, but it is not that difficult to imagine such a scenario playing out.

unique brand of maverick where she has adopted policies not supported by large portions of either party but uniquely supported by the libertarian tech types and she has also taken a ton of money from from firms who benefit from the rule.

She envisioned herself as a centrist who would rise to the Presidency and understood she would need deep pockets to do that. I dont think she had any other objective in mind.

Dem aggressive advocacy prior to those elections and total control of both houses and POTUS because Senate Leadership in both cases did not want it to pass or even get brought to a vote or slipped in. And whenever included, it was a sham.

Chuck Schumer as Whip, Minority Leader and Majority Leader will never let it happen. I strongly advocate getting rid of it and my fellow conservatives sadly do not and are up front about it. But they also don't say it should be gone and then do everything possible to hide the fact that they will not let it pass.

You still owe $5k on your loan and it's forgiven, guess what, you're getting a 1099 for $5k.

If you're a waitress and you've been paying off college loans for more than 10 years, well.......

They ended up as taxable income. Of course, no one made that determination until 6 months after the fact...

during the housing crisis if the borrower sold for less than what was owed.

If you sold your house for 400k, for example, and you owed 500k, you would get a 1099 for 100k.

Sometimes we exclude the forgiven amount from AGI, because….voters.

And, taxable income is a bit of a stretch. It was money to pay employees so it should be a 1:1 offset by an expense deduction so the net tax effect is $0.

Excluding it from taxable income resulted in a gift from the government to the recipient equal to the PPP loan received * the recipient's tax rate.

which is, by definition, taxable income. Cash moved from an asset and liability on the balance sheet to an income statement transaction. All of this happened after the fact and was not known at the time of loan origination or forgiveness.

At least as it relates to the IRS. State Departments of Revenue may have ruled differently.

For the vast majority, the recipient was able to claim the deduction for payroll expenses and did not have to claim the forgiveness as income. This resulted in a net benefit to the recipient.

EDIT: The average PPP loan forgiveness was $72,100. At a 25% tax rate, that is a benefit to the recipient of $18,025. In aggregate, $757B out of $790B in PPP loans have been forgiven. That's roughly $190B in benefit to business owners over and above the PPP loans themselves.

hit my revenue. We did not wrongly claim forgiveness.

There wasn’t a good place to put it so most people/companies included it in revenue, but it would have been backed out of taxable income on the tax return. If it wasn’t then you should look into filing an amended tax return.

As it relates to forgiven loans, it would be equivalent to the borrower being able to claim an interest deduction for the forgiven amount. Such a ridiculous treatment and any business owner that took PPP should take a long, hard look in the mirror before bitching about loan forgiveness. As I’ve noted plenty of times before, my issue is not with PPP, it is with being able to “double dip” on the expense.

PPP was just an easier way to fund UE benefits. The alternative was mass layoffs and breadlines.

In contrast, no one forced anyone to attend college. People entered into these loans under their own free will and knowingly took out the loans in pursuit of an asset that they can monetize for the rest of their life.

As we have discussed before, the PPP comparison is completely off base here.

Like El K, I’m just waiting on my letter of thanks. At the very least, just an acknowledgment that a massive benefit was received and maybe the self awareness to not whine because the government has the audacity to confer a massive benefit on someone else this time.

There is no defense that expenses paid for by a gift from the government should have also been deductible while not having to recognize the gift as income. It was an egregious theft from the American people straight into the pockets of American business owners

Speaking of bread lines, I’d love to see stats on how many PPP-recipient businesses actually shut down during the pandemic and how many saw full year revenues down year over year. We basically just spent three years shotgunning billions, if not trillions, into American businesses in various ways. As Colonel Jessup might say “I’d rather they just said thank you and went on their way, but I don’t give a damn what they think of student loan forgiveness.”

The issue is the timing of what happened. As it turns out, when COVID hit, my leadership team and I decided to take zero salary and get a PPP loan so that we could retain the 5 people we hired at the end of 2019. Our revenues stayed flat in 2020, then we get a "gift" of taxable income (yes it is taxable because it is income), and I ended up paying taxes on no salary just because we saved 5 jobs. The problem with the scenario is that none of this was made clear until well into 2021, when we already had the burden of 5 extra people and the taxable "gift" from the government.

Or you didn’t meet the qualifications for forgiveness per the IRS.

I’d love to understand the mindset it takes to have the government pay your payroll and select other expenses for two months in a year where revenue was flat and have the audacity to complain about $12k in student loan forgiveness. It was a gift and I’m not sure how you view it any other way.

Here’s the math. Let’s concede that you included the loan amount ($x) in your taxable income. You received $x in taxable income and paid $x in payroll and other approved expenses. $x - $x = $0 so no tax effect.

Now, for nearly all of the other businesses that received PPP loans that were later forgiven.

PPP loan amount: $x
Loan forgiveness taxable income: $0
Expenses: $x
Net income: - $x
$x times their tax rate is the direct to owner benefit of being able to deduct expenses paid for by the government. It was a windfall which dwarfs the student loan forgiveness numbers at both the individual level and in the aggregate.

Does it hit equity? Normally, it would be income, but you’re saying that’s not the case. What’s the alternative?

Some people booked it to a PPP Forgiveness account in the Owner’s Equity section of the balance sheet.

Debit Ppp liability
Credit ppp forgiveness equity


Others booked it to an extraordinary income account which was then subsequently excluded from taxable income. Still others just booked it to a regular revenue account and subsequently excluded it from taxable income on their tax returns.

It’s not unusual to have book vs tax differences. GAAP depreciation vs Tax depreciation is generally always different.

However, that difference is probably what’s at play here.

At the end of the day, PPP was designed to be forgiven. The program was bipartisan and probably flawed due to us pushing it out quickly during a pandemic.

In contrast, student loans were originated under the assumption that they would be paid back. Biden tried to push for forgiveness and lost in court. Biden is forgiving loans anyways, like a true modern day Andrew Jackson.

You continue to bring up favorable treatment under the tax code as evidence of hypocrisy. That’s wrong, since the tax code changes are voted on by congress legally. And the code has been used to influence behavior for decades. So people respond to changes in the code, because that’s entire point of the code: to nudge people to save (401ks), or save for college (529), or buy a home (mortgage interest deduction), or have kids (child tax credit), or develop job skills (EITC), and on and on and on.

If your argument is that the code plays favorites, then the alternative is a flat-tax with zero deductions, credits, or exemptions. You game for that? I am.

I’m not a Democrat or Republican, and I don’t care what decisions Washington makes. Some will work in my favor, some won’t. Life moves on. We all make the best decisions with the facts we have when making the decisions.

Fact: PPP Loan forgiveness was tax exempt income at the Federal level and in the majority of states
Fact: PPP recipients were allowed to “double dip” by claiming an expense deduction for expenses paid with PPP proceeds.
Fact: This double dip resulted in a direct owner benefit of the PPP loan amount times the recipient’s tax rate.

My problem is not the hypocrisy of the code. It’s the hypocrisy of the beneficiaries of the code. I’d just like one PPP recipient to acknowledge that they had two months of payroll and other expenses paid for by the government and the cherry on top was they were able to still deduct those expenses from income and it was fucking great. I’d like one person who was able to shield capital gains in a 529 plan to admit it was an awesome benefit that is equivalent to loan forgiveness. What is the difference between $12k not paid to the government in capital gains tax and $12k not paid to the government in loan principal? Hint: nothing.

Instead we get responses about shutdowns and breadlines and misstatements about the PPP being taxable income and terms like bailout and deadbeat. There is no doubt that many businesses suffered from the pandemic and from government policies. There is also no doubt that many businesses didn’t miss one beat in 2020 and received two months of free payroll and rent and inexplicable deductions for government-paid expenses. This incites no outrage because it was a bipartisan gift rather than an executive order? Just doesn’t make sense to me.

As I’ve said many times, I encourage everyone to get what they can from the government and to pay as little as possible in tax. I encourage CaTripleDomer to file an amended return if he did in fact include the PPP loan in his taxable income. I support business owners buying 6,000 pound SUVs for “business” use and writing off 100% of the cost in year one. I have no problem with any of this. All I ask is that the recipient acknowledge the benefit that taxes not paid to the government is the same damn thing.

Edit to add: it should be pointed out that over the last 20 years, 529 plans and other savers have benefited tremendously from government bailouts. I guess I have a hard time reconciling one form of government bailout as acceptable and another form as unacceptable.

From Notice 2020-32:

This notice provides guidance regarding the deductibility for Federal income tax
purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or
business when the taxpayer receives a loan (covered loan) pursuant to the Paycheck
Protection Program under section 7(a)(36) of the Small Business Act (15 U.S.C.
636(a)(36)). Specifically, this notice clarifies that no deduction is allowed under the
Internal Revenue Code (Code) for an expense that is otherwise deductible if the
payment of the expense results in forgiveness of a covered loan pursuant to section
1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public
Law 116-136, 134 Stat. 281, 286-93 (March 27, 2020) and the income associated with
the forgiveness is excluded from gross income for purposes of the Code pursuant to
section 1106(i) of the CARES Act.

https://www.irs.gov/pub/irs-drop/n-20-32.pdf

Unless I am reading this incorrectly, it appears that double-dipping is not allowed.

• Click here for link at https://www.lanepowell.com/Our-Insights/202925/No-Double-Dip

I think it was September of 2020 but may be off on month or even year. IRS updated to comply.

The original IRS ruling makes basic logical sense. But you know Congress (bipartisan) can’t pass up an opportunity to gift business owners money via non-headline-friendly rules.

“Student loan forgiveness” is easy to understand and drive outrage.

“Congress allows business owners to deduct PPP expenses” doesn’t quite drive the same base brain outrage. As soon as I said the word deduction most posters eyes glazed over.

It is funny how the IRS went with the correct approach, only to be nuked by Congress.

FWIW, I agree that double-dipping here is wrong. Props to Mnuchin for taking the proper stance.

Last week, the IRS said it would deny those deductions, citing a tax code section that prevents companies from taking deductions tied to tax-exempt income. Allowing the deductions, the agency argued, would offer a double benefit.

Treasury Secretary Steven Mnuchin has defended the decision.

“If the money that’s coming is not taxable, you can’t double dip,” he said on Fox Business on Monday. “This is basically tax 101.”

If the deductions are allowed, businesses could use them to offset other income. If companies are losing money, they could use the deductions to offset past years’ income and get refunds.

For example, consider a company that gets a $100,000 loan and whose owner has a 22% tax rate. If the business pays $100,000 worth of deductible expenses and has the loan forgiven, that would provide a $22,000 tax benefit on top of the loan forgiveness.

Members of Congress say this benefit is exactly what they intended.

“As was expressed to Treasury during the development of the PPP, we did not intend to deny the deductibility of ordinary and necessary business expenses, nor did these small businesses expect to lose deductions for their business expenses when they applied for a PPP loan,” wrote Sen. Chuck Grassley (R., Iowa), Sen. Ron Wyden (D., Ore.) and Rep. Richard Neal (D., Mass.) in a letter to Mr. Mnuchin. All are leaders of the congressional tax-writing committees.

Their letter also argued that the IRS misinterpreted the existing tax code section that denies deductions related to tax-exempt income.

Messrs. Grassley and Wyden are also backing a bill from Sen. John Cornyn (R., Texas) that would expressly allow the deductions, according to Mr. Cornyn’s office. Rep. Lizzie Fletcher (D., Texas) is introducing a similar bill in the House.

• Click here for link at https://neal.house.gov/news/documentsingle.aspx?DocumentID=6

The double dip is just a preposterously insane policy. As I said a few posts ago, it would be equivalent to letting student loan borrowers take an income tax deduction on the forgiven loan amounts. No one would ever even suggest that because of how stupid it would sound.

I do find it curious that so many PPP recipients here that are pretty vocal on student loan forgiveness don't seem to have any rebuttal or acknowledgement to my posts on the double dip or the fact that $12k saved in capital gains tax in a 529 vehicle is not any different than $12k in loan forgiveness. The only difference is the timing of the benefit. Sure, one was approved by Congress and the other was an executive order, but from a financial standpoint, they are equivalent.

Also, I suppose we'll just ignore the massive government bailouts and zero interest rate policies from post-9/11 to 2009 Financial Crisis to Trump tax cuts to 2020 COVID relief that were essentially a transfer of wealth to America's investor class. It just blows my mind that some people here can be so oblivious to their misplaced selective outrage.

Except it was specifically exempted through 2025 when ARPA was passed.

And I'm not sure how to continue that thought at the end. I prefer not to make value judgements without knowing the details. If you're a waitress making student loan payments on a 12k loan after 10 years you don't deserve consideration because you're an irresponsible deadbeat? Quite a few assumptions packed in there.

Isn’t particularly strange or interesting. Isnt that what we want from our leaders? The Supreme Court very much did not say Biden could not make adjustments to student loans. It said one action on loan relief wasn’t allowed under an existing law. So Biden is taking another path, under another law, to accomplish something similar. He’s obeying the Supreme Court.

Also the SAVE modifications were subject to notice-and-comment rule making that’s been in the works for years, well before the ruling in Biden v. Nebraska.

going to 4 year colleges are not the only borrowers, and borrowers who complete their 4-year degrees are actually a relatively small minority of defaulters. I don't think you can assume that the experience of your children, at their presumably affluent high school, is indicative of most borrowers.

Before you get your money, you have to say that you've seen the presentations about student loans, understand what you were shown, and agree to the contract.

That applies to grads from Payton Prep all the way down to Bumblefuck Tech.

I get what you're trying to say, but this can be applied to a lot of things from seabelts to smoking to weight management.

about 99% of the adults int he world have no clue about banking and loans. The simply want to know two things am I approved and what is the payment?

This lesson really hit home for me when one particular customer went into default. He owned a very succesful bank consulting business. His specialty was advising community banks on their Asset Liability makeup and working with their Aseet Liability Committees. He worked with banks all over the country and was a prominent speaker at convestions and with regulators. He developed a product that would have been fantastic for community banks to maintain large deposits at a lower cost of funds but was shot down by what I will generously call the corrupt ratings agencies.

We had a loan with him. The new product got him over extended and we were trying to work out a resolution. We had a number of loans that were cross collateralized. That person who Banks relied on in managing their asset liability risk had never heard the term cross collateralization and had no idea what it meant.

Whether you agree or disagree with what Biden did the idea those presentations would mke everyone understand what they were doing is very naive. Particularly when you factor in not every parent has your education and experience.

they shouldn't bear the consequences of their decisions? Why is it that those who understand and the skills to make money are penalized for their skills and knowledge by having to fund those that don't?

These loans are nearly permanent.

I know that the bankruptcy laws were misused by doctors who declared bankruptcy right after medical school to discharge their debts, but there should be a way to allow loans to be discharged without showing allowing that sort of abuse.

are issued.

These are unsecured loans, issued to people with zero collateral. The way that we make the loans work is to force repayment, and charge high rates of interest to cover non-performing loans.

If we insert default via BK into the mix, then we need to change the origination process. Or, people will need to post collateral to obtain a loan. Something would need to change to prevent people from taking out loans, then filing for BK. Sure, the judge can deny their petition, but what happens when borrowers find a sympathetic judge that pushes through discharge? Is this the best course of action?

efforts to repay the unsecured loan over a period of time, particularly if that loan facilitates some broader value to society (which we might define in a variety of ways), the remainder is discharged.

EDIT: And I'll add this here to not go into another post subthread. I see your other points about "too many people in college". How do we fix that problem? Yeah, the world needs ditch diggers too. But who is going to decide who gets to go to college and who gets to be shuffled off into some other job? Fixing that system is bigger than the way colleges and universities are run, how much they cost, or the way counseling in high school happens.

Sure, we could adapt some European or Asian model where access to University-level curricula is rigidly guided by performance on exams or in school. However doing something like that now would lead to wildly inequitable outcomes. We'd need to tear things down and start at kindergarten to find some way to provide equal footing for potential access to those opportunities. And don't get me wrong. I'd be all for that. I just don't think there's any appetite for it.

Rather than continue to throw taxpayer money at artificially inflated education cost. We ought to get the government the fuck out of this business and let the market drive down cost and improve quality as it has done and just about every goddamn thing else. Educational resources are ubiquitous. We don’t need the power of a government purchaser to incentivize spending or investment. This is a massive global industry.

Do you realize it is impossible to read the entire US tax code before it inevitably changes again? Do you think that continuing to make it more complex is sustainable?

If we want people to be able to afford education afford, housing, afford anything we need to get the fucking government out of the situation, not more into it.

Rather than continue to throw taxpayer money at artificially inflated education cost. We ought to get the government the fuck out of this business and let the market drive down cost and improve quality as it has done and just about every goddamn thing else. Educational resources are ubiquitous. We don’t need the power of a government purchaser to incentivize spending or investment. This is a massive global industry.

Do you realize it is impossible to read the entire US tax code before it inevitably changes again? Do you think that continuing to make it more complex is sustainable?

If we want people to be able to afford education afford, housing, afford anything we need to get the fucking government out of the situation, not more into it.

I've argued that we have a supply-demand imbalance in higher ed. We have too few good schools, which makes the prestigious ones even more prestigious. We cannot easily fix this, because schools are brands. It is extremely difficult to open a new school, and create a brand that can compete with the established players.

I don't know the answer to this problem, I just know that this is a problem. Kids are being sold a fake narrative, and it is destroying them economically.

My residency in my house provides a broader value to society in that I prevent squatters or criminals from taking possession of it, maintaining the safety and property values of all who live near me.

When can I expect my notice that the rest of my mortgage will be discharged?

Is there really an equivalence between the societal benefits of an educated populace and private property ownership? Seems like very different things. Unless of course it was some government-administered "lease to own" situation, or you were a settler who benefitted from the Homestead Act.

Stopping everyone's training after apprenticeship should be sufficient.

is very slippery. Many here think plumbing and electrician do not provide a broader value to society and believe philosophy and music do. Well, society tell us its view (and its conclusion is the opposite).

It is not that society thinks ballerinas and composers should not be compensated well, it just thinks very few should (and they make most of the money - and can become fabulously wealthy). Many plumbers and electricians make a reasonable living, but very few people in the arts do. This is just reality.

We do a disservice to good governance when we indulge in the low income prospect vocational interests of a significant number of students in the name of some societal benefit by providing debt for those degrees when THEY CANNOT SUSTAIN ANY DEBT WHATSOEVER. They need 100% grants - perhaps from some major foundation - not low interest loans that will be wiped out in 10 years while we kid ourselves on the repayment prospects and hope 1 or 2 of them hits the lottery by becoming a great singer, actor or prima ballerina.

Yes, it is unfair that rich kids will get a better chance to take a flyer on a career in ballet or music or fine arts. It is also unfair that wealthy people can afford concierge medicine and experimental treatments. The place address this - if you feel it needs addressing - is NOT in the Title IV direct student loan program. Again, those who lack means but wish to study these lower prospect vocational paths need grants not wink and nod debt.

Below is a re-post of something I put back here in the PBR two weeks ago....

Below are the median debt levels of a selection of Master's programs. Note how there is almost an inverse relationship between the median amount of money borrowed and the likely financial prospects for said degree in the market place (not shown, but you can definitely envision it). So the most debt is going to those with the least favorable immediate job prospects. And a big reason is the guys at the bottom are probably working while they get their Master's and/or get tuition help from their place of work who actually values the extra education.

Visual and Performing Arts, General $63,830
Radio, Television, and Digital Communication $55,554
Social Sciences, General $54,554
Philosophy $54,260
Journalism $53,213
Clinical, Counseling, and Applied Psychology $51,888
Sociology $46,871
English Language and Literature, General $44,301
Political Science and Government $43,853
Arts, Entertainment, and Media Management $41,238
Information Sciences, General $40,579
Marketing $35,738
Computer Science $35,301
Education, General $29,434
Accounting $28,212
Mechanical Engineering $26,775
Civil Engineering $26,180

Note: Data from Education Initiative last updated August 2023

This sentiment seems to come up frequently whenever discussing this topic. That the people who might support subsidizing these types of "low economic value" endeavors must view them as better and/or more worthy. Except I've never seen anyone actually express that sentiment here. Though it does make for a convenient way to frame the discussion to make that one segment of people seem sufficiently out-of-touch. I'm pretty sure that the vast majority of people here--especially those than own a home or business--understand the value of skilled trades.

Perhaps we have a few loud posters creating the impression.

If everyone who goes to college ends up financially better off from going to college, not enough people are going.

There are a lot of kids who have an 80 or 90% chance of doing well. There are also careers that might look financially viable now but end up redundant because of advances in technology.

You don't want a system where going to college can ruin you if you guess wrong on your career. Then again you don't want to make it too forgiving and induce everyone to go.

This change seems pretty minor, and I doubt the details are going to cause a bunch of kids to defer the workforce and get basketweaving majors.

Sometimes it seems like the general perception is that "Millenials with art degrees" are the only people welching on their financial obligations at the expense of others. What if instead of going to college, they took out a loan to start some small business with a half-baked plan and then declared bankruptcy when it failed?

These people have been paying for 10+ years monthly, on time, and without fail. Is it truely fair to shackle someone with debt in perpetuity for a mistake they made likely before or just after they reached 18 years old. You all sound incredibly heartless.

Just tired of the attitude that it is okay to spend other people's money, especially on something that the federal government doesn't have a constitutional mandate to provide. I am also a big believer that people are accountable for their own decisions. Letting people off the hook for good behavior is not letting them feel the consequences of their decisions. It is making other people feel the consequences.

...and making me wish we had tarred and feathered a few of those many bad actors who were let off the hook; it would have been a good spectator sport.

-When we stop subsidizing mortgage rates to keep them low and allow people to buy houses they shouldn’t
-Give small businesses tax benefits to bail out failed entrepreneurs

I don’t see how this is fundamentally different. And I’m speaking as someone who fully paid off a six digit student loan with no bailout.

And you didn't ask my opinion on those topics.

No, we as a population shouldn't subsidize those things. How much of other people's money is enough? Where do we draw the line? Why is it even a consideration that responsible people should be forced to pay for those that are irresponsible?

have been done. I addressed the specific point those presenations are probably worthless for the vast majoirity of the people so I dont know if that is a good basis for the position.

is going to be as thorough and diligent, and not to mention honest, as your kids' high school was?

I seem to remember a loan forgiveness effort where people who had been victimized by predatory lenders associated with for-profit schools received financial sustenance.

Did I hallucinate that?

When I started medical school, tuition was $20k per year and loans were approx 2%.

Tuition increased by 20+% per year while I was in school, and congress passed a law after my first year that loans were fixed at 6.8%, I think it was.

Yes, I can pay and have been, in fact I've paid enough that I would have paid off the original "contract." So, if we're talking contracts, it's worth remembering that there were some sweetheart deals (for the loan guarantors) that changed things midstream.

I wonder how many of those getting forgiveness have paid more than the original loan? I would not be surprised if if was a sizeable number.

Speaking of some "contract" doesn't really apply. Do you feel that now that some lens are forgiven, these must continue to be forgiven because that is now the "contract" students are operating under?

Personally, I still would have started medical school under those conditions. Of course, anyone who already has was already in enough debt it was necessary to go through.

My point is simply that national policy on this stuff has not always favored the student, the student has been quite disfavored during my time.