Student Loan Forgiveness

The idea of student loan forgiveness as economic stimulus has been going around lately. Doesn't seem likely to happen, which is a shame. Giving several million people an extra couple-to-several hundred dollars a month extra to spend seems like it would probably have a noticeable stimulative effect. If we're going to see another round of quantitative easing, I think this would be a good focus for it.

I wouldn't mind having my loans forgiven. I'm in for probably $50 grand so far. However, given that the starting salary for a person with my credentials is comfortable, I'd be also be happy if there were some sort of means-testing parameter built into a student debt loan forgiveness plan, even if it meant I would have to pay back all of my loans (assuming I'm able to land the expected salary following graduation).

I think that at the very least, the way college is paid for needs to change, student loans especially. First off, interest rates should be tied to something current. There's absolutely no risk-based reason that I get an 8% rate on my student loans - they're guaranteed by the government. There is no risk aside from interest rate risk, and right now that risk seems pretty small. I get the same rate on one of my credit cards.

What are your thoughts? Would it work? Would you benefit? Have you already paid your loans off? Did your parents pay for your school? I have found this issue draws a pretty stark line between the "I think it's a great idea" folks and the "I paid mine off/my parents paid for my college and so we shouldn't forgive anyone's loans because that wouldn't be fair" folks.

 

I am a big supporter of this idea. I have around $125K in grad school debt, and am currently out of a job. But even if I had work, and even if I were ever going to make enough that it would be easy and not unduly burdensome to pay back that level of debt (which is unlikely ever to be the case), I would still be a big supporter of this idea.

I really believe that education should be free through undergrad, and grad school should be as close to free as possible. But if we can't manage that, it seems ludicrous to me that not only do we make education ever harder to pay for at the higher levels (not to mention being abysmally underfunded and mismanaged in public schools at the primary and secondary levels), we don't even have interest-free government loans, or at least nearly interest-free loans to cover everyone's needs.

And in any case, with the economy in the crapper as much as it is right now, we'd get a lot more money circulating by forgiving student loans than by a lot of the other "tax rebate" or similar stimulus type bullshit that's being proposed.

 

Of course you kids love this idea. You're up to your balls in debt.

I'm kinda biased since I graduated from college with more money than I started with and I realize that "nobody does that."

...

So, yeah, I think it's total bullshit to suggest loan forgiveness when I sold my soul to get a college education. And that's just my emotional response.

The business side of the brain likes the idea as long as it isn't another one of those free ride adult daycare things that encourages C-average students.

Not everybody can graduate Summa Cum Laude, I get it, but if such a program is to be pushed forward it should be for people that want to be there.

It isn't just about the ability to pay back (means-based), it should go along with the same kinda voodoo they use to decide financial aid / scholarships.

...

All of this free education stuff seems like something they'd do in Europe or Canada. What's next, government-sponsored healthcare?

*insert awkwardly loud cackle*

 

I think more should be done to get college to cost a lot less. My education would be more than double what I paid just a few years ago today.

 

One of the things that the US needs to get its head around is that it is falling behind in the education race. A lower cost would be a start to getting more people better educated. I don't know that there should be a complete forgiveness of all loans but I can see why it would be a good stimulus to do so.

 

I concur, Charlatan. In quantity, sure, but I also see the quality part as more important.

The current job market is flooded by a ton of college grads that have no idea how to do anything useful.

It seems to me that the cost paid by the student thing has little to do with the quality of the education.

Whether I paid $100k or $0 is irrelevant if the standards of excellence are totally in the crapper.

I mean, I'm a moron and I graduated at the top of my class. What does that say?

Our standards are in the toilet and our colleges are degree factories.

 

I realize I'm not the most educated in financial matters, but the practical side of my brain doesn't understand. Where would it come from? Quantitative easing seems like a backwards way to run a government, and the stimulus plans don't seem to be helping. How would student loan forgiveness work? The money is owed to someone, presumably a financial organization. Is all that money supposed to be paid off by the government? That's a lot of cash for the government to be sending out when everybody on both sides seem to be pushing hard to reduce government debt. And as far as free college goes, that just seems unworkable. I mean, you already pointed out that public education as it exists today is screwed up beyond belief. So if we throw college into that mess, who's going to pay for teachers and books and campus upkeep and so on? Interest free loans, by the government, leads to what in the event of default? Either more government debt, or the government seizing your stuff and garnishing your wages is what it seems to me. No one wants that either. Like I said, I'm no financial genius, so if someone could explain to me how this could be done without just putting the government in more debt than it is, I would appreciate the insight.

 

Yeah while you're at it, why don't we make houses free too, so all the young grads can have one. And nice cars.
There's nothing "free" about making stuff "free". Someone has to pay for it. Should the professors work for free?
How about the food service people in the dining hall?
Should I work more hours than I do now so I can pay into the pool that pays off your college loans?
We would be better off making money management and basic finance a required course at both the high school and undergrad levels so young folks can get over the idea that things are free, as well as the idea that they deserve things like a college education simply because they exist to consume the product.

Rant over.

Would I strongly favor subsidizing low and no cost loans for college education? You bet.
Pay off the debt somebody has already accrued so they can spend on different "stuff" and supposedly stimulate the economy? No way.

 

Or healthcare. OOOOOOOOOO...

 

Bodkin van Horn, I forgive you and Levite.

 

The government can print money. It's bad to do too much, like drinking milk and video chatting.

Quantitative easing. It isn't always bad, despite what certain reactionary economic doctrines would have you believe.

I think you misunderstand the possible mechanisms of doing this and the implications of it. First, I think we should be thinking about cost benefit here in terms of possible benefits and costs to the overall economy. Good investments frequently leave you better off than you started. Here, I think investing in having a large number of people continue to be smugly self-satisfied in the results of their college financing success would likely be significantly less stimulative than forgiving the student loan debt of millions of people who've had less success.

Offering a basic finance course wouldn't likely have a stimulative effect (though I agree what it would likely be beneficial), which would be the point of forgiving loans, so I'm not sure why you think we'd be better off in that regard by offering supplemental finance education to people who aren't even in college yet. We need to stimulate the economy now. Not in a few years.

You sound skeptical of the possible stimulative effect. Why for? I'm not too learned in the ways of the economy, but it seems like the type of thing that should have a stimulative effect.

 

But smug self-satisfaction is the American way. Unless you're poor. Or black.

 

I'm not necessarily for loan forgiveness. I do question why college debt is treated any differently, by law, than any other debt ( in the US anyway). Less banks would be willing to give out loans, when they know that payback isn't guaranteed. Then we'd get less people willing to take those low payback type degrees. Colleges might even have to think more, before raising tuition so damn much, if they did not have such a ready pool of money, provided by these kids with no plans but lots of money in loans.

 

Having just signed my MPN for another $24,500 so I can afford to go to college to get a job so that I can pay back these loans, I'm for it in theory.
However, how exactly are the school supposed to stay open and pay for decent professors, if they're not getting this money back?
I'm looking into jobs where my employer (the government) may pay part of my loans back. I also signed for income-based repayment, so that I can't be bankrupted or come after for around $1900 a month, as a post-doc student making shit money until I get licensed. I think something should be looked at continuing in that manner. If people default, you're not getting anything. If you ask for a percentage of their income, you're at least getting something, but you're not killing them.
They're never going to get it all back. Never.
I definitely feel a little punished at times for choosing to better myself, by the $125,000 (plus interest on 60% of it) that this damn PhD is going to cost me.

 

Right, but where is the government going to get that money?
We're talking billions of dollars of student loan debt out there and people being able to completely walk away from it?
Our economy has already been donkey-punched, has a few teeth missing and
we can't even get decent health care plans, now we're going to try to find money for this?
I don't see it happening. And I think that students should be held responsible for some part of their loans.
Otherwise, we're going to have the markets flooded with a metric fuck-ton of people with
four and five useless degrees and career students not contributing to society because "It's Free!"
Even if that's not exactly the way it happens, I've met so many people that got useless degrees
that were paid for by someone and they're not even working in the field.
Take my Valedictorian Family Member who had a full-ride to any state school she wanted, and plenty out-of-state.
She chose 2 years at a intensely expensive private school (to the tune of $50k for those two years)
and then went to Gatorland for 2 more, for free.
To get a degree in Archaeology.
What does she do now? She's a leasing agent at an apartment complex.
Has she ever worked in her field? NO.
Will she? Probably not.
What was the fucking point, Ms. 4.49 High School GPA? Hellifiknow.
I had a friend who lived in Sweden until he died this year. School for him, in any state-run form,
was paid for by the government until you were 26 at the time he was being educated.
He had three bachelors and a masters degree because you were free to go as far as you could until you reached that age.
He was an over-educated school teacher. Which is fine, it made him a good teacher, but he also didn't have
to work while in school. So people were not contributing to the work force, etc, while still in school.
I'm possibly not making a good argument at the moment because my Headache From Hell is back, so I'll just stop
for the moment and try to pull my thoughts back together. Am I making sense at all?

 

The government doesn't pay off the loans, we do.

What happened to personal responsibility? Did somehow the rules change after you signed a legal and binding contract? Didn't you 'do the math' and consider the risk you were taking on and the downside to that? And if you didn't why am I now responsible? I would only support this if it were in exchange for a like value of service; teaching in an inner city school, Ameri Corp VISTA, military service or similar domestic service commitments.

I paid for both of my sons college education, if you get yours free shouldn't I get some sort of reimbursement?