Student Loan forgiveness idea

Generally on private loans they are priced with the risk of bankruptcy as a factor. Most Student loans are federally backed so they have artificially low rates So either the fed govt would have to fund the bankruptcy loss, or else student loan rates priced higher.

 

I wouldn’t consider my 6.55% student loans to be artificially low.

 

Yeah my wife was as high as 7.5% Part of the problem in my opinion is that there is a perception these loans are "affordable. "

 

Bankruptcy is a clear solution. However at graduation 99% would be eligible for bankruptcy just based on earnings/expenses from the previous years? It would need a lot of rules.

 

Bankruptcy would not be a good idea to solve the crisis. The most debt is caused by private ivy league schools and medical degrees that have 6 figure debts once graduating.

My sister is a vet and has $300k+ debt but makes $130k+ a year. She would have loved to declare bankruptcy out of college and absolve the debt right there.

 

I’ve got a better idea. How about only giving student loans to students earning legitimate degrees like medicine, engineering, and teaching, and then those students do the grownup thing by paying their debts just like everyone else. If you want a dead end degree in gender studies, anthropology, or liberal arts then get a job waiting tables and pay your own way.

 

Yeah I can buy a house (a real asset) for a lower interest rate with more risk to the bank. But a degree has a higher rate and has been for 10+ years. It's crony BS that Congress created. It's also wrong to place these loans on 18-23 year olds that have no idea what they are doing.

 

Those are logical assumptions but are not reflected in this market. This is a classic case of privatized profit and socialized loss

 

If I were czar, I would require numbers to be posted attached to each school that indicated how many of their students are carrying debt at various time frames since they have graduated. The schools need to do a better job of helping the students navigate this. The students should be made more aware of the problems that are out there. Hey Johnny, before you sign here, I need for you to review this document that shows the current status of all those who still have outstanding debt that have done the same thing that you are about to do.

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,WESGATORS

 

Hell literally just froze over.

 

We should also reform the tax code to allow students loan payments to offset 100% against income. There’s no good reason to allow a business to offset its costs and not individual taxpayers.

 

If you were Czar, and you had absolute power, you'd make people do more reading of fine print? Definitely not making you Czar.

 

Who said anything about fine print? Ha. No, my point is more exposure attached to the school. Schools aren't going to want to be associated with loan debt for graduates, it will be in their best interest to address the problem.

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,WESGATORS

 

Was it done? I missed the link.

 

It is non collateralized personal debt.

 

Who decides what is a legitimate degree and what is not? I have a traditional liberal arts degree (history), have no student debt, and make around average the double salary for the county I live in. Why shouldn't I have been able to get student loans, but others can?

A better idea would be to identify the institutions that have the largest default rate and deny them loans. And it was something for years that the Obama admin was doing, and making a difference. Obama forced all schools to do things like list gainful employment numbers, which are what percent of school graduates were gainfully employed in a field related to the degree. During the Obama years, for-profit schools were also forced to stop deceptive recruiting processes and sales incentives that allowed schools to give enrollment agents big bonuses for enrolling any and every warm body, regardless of ability to go to school, let alone graduate.

And it was helping too. First time default rates for student loans for all institutions dropped 4%, and for for-profit schools, just over 6%. But in came Trump and DeVos, and much of the gains that happened under Obama were reversed.

There are still problem schools that are causing a significant portion of the problem. Which suggests schools that graduate plenty of students with liberal arts degrees are doing just fine when it comes to their graduates paying back student loans. Much better to look at schools that are causing the problem, then degrees.

 

Forgive Student Debt

Facing growing discontent over the rising student loan repayments in the middle of a Pandemic, many prominent Democrats – and some Republicans – are calling on Washington to cancel much of the $1.7 trillion that Americans owe. They say it would help level the playing field, stimulate the economy, unbridle graduates to pursue what they want, and offer a life-line amidst the largest health crisis the world has seen in decades. But others argue that it would balloon the federal deficit, waste taxpayer money, and benefit wealthy borrowers who don’t need their student loans cancelled. In this especially timely debate, we ask: Should America forgive student debt?
​

For the motion

Right now, Americans owe an estimated $1.7 in student debt. The cost of education has risen dramatically over the past few decades, and many argue that this debt is preventing them from starting a family and buying a home, causing some to warn of a looming financial crisis.​

Against the motion

The United States economy is strong, and most student borrowers pay their loans on time. Despite well-publicized personal anecdotes about burdensome college debt, concerns about a widespread financial crisis are exaggerated​

You can listen to the debate or read the transcript.

My vote - your debt you pay it.

 

Just privatize them. Banks might give someone with perfect grades and great test scores a reasonable loan for an engineering degree or medicine, but definitely won't give a 2.8 GPA kid a loan for a degree in political science.

Problem solved.

 

There should be no middle ground. No one is ever forced to take out a loan but if you borrow money, you pay it back.