Just a nice, uncontroversial subject for a Friday morning. Also, 7 other things worth knowing today.
I voted yesterday :) I voted more / all....
My thing is how can 10,000 be fair when some people have way way wayyyy more out in loans??? It should be a % of the loan
Surprised by the Twitter responses to this. Do you have the demographics of those who responded? I know debt is a problem but important to make good decisions and then hold yourself responsible and accountable for those decisions. Your own story is a good example.
There are three things that need to be separated out here.
First, the predatory for-profit "institutions" that were created solely to collect money from the federally-backed student loans programs. They deserve the maximum punishment - prevent them from filing bankruptcy and take every cent they, and all their officers, and all their stockholders have to pay the students back. This won't happen, because money buys politicians.
Second, the rest of the "legitimate" post-secondary institutions, who discovered that they could raise tuition and fees without too much complaining, because the money was guaranteed to come from the loans program. They should be required to reduce all costs to the 1965 level (when the program started) and then justify every additional cost to the Dept of Education.
Third, the students themselves, who thought they would make a ton of money and didn't think about how they were going to pay back these massive loans. And especially the ones who assumed all along that they would never pay them back - either by bankruptcy or by the govt stepping in and saving their asses.
My mother paid my undergrad tuition while I had a job to pay for books, fees, and beer (OK, and pot, too). I paid for my own Master's degree by taking five years to earn it, working full time. I doubt either of those would be possible today.
My biggest concern is where the money will come from to pay these loans off? Is Biden simply ordering that they no longer exist and cannot be collected? Will that really help the people who borrowed other money to live on while paying these? What about all the people who converted student loans to ordinary debt? Will this help them?
There's no denying that this whole thing is a mess, but a more thoughtful solution, taking all issues into consideration, would be a lot better. Of course, that's not how govt or politics works.
I am 50 years old and I’m currently saddled with a ton of student loan debt. I wasn’t able to go back to school until about seven years ago and we were not in any position for me to be able to afford college. The other side of that is that we were in no position for me to not have a degree in order to make more money overall. I am going to be hopefully close to retiring by the time I get it paid off if I’m lucky. Our daughter on the other hand is absolutely drowning in loans. She’s getting student loans to cover her tuition but it’s never enough so she had to take a private loan out in addition to her student loans (nota fancy college, just a state university) That is not abnormal for college kids these days. They’re graduating from college with a bachelors degree & if they’ve had no college fund growing up, they now can have six digits in student loan debt. Our economy is never going to be able to continue to move forward if we have people who can’t move out of their parents homes or pay their bills because all of their money is going to student loan debt. I’m not saying wiping away debt is going to answer it but there has got to be a better solution than what is currently taking place
The government has all the information it needs to erase student some of the loan debt. First start with the Fafsa forms that all financial aid students filled out when they took out loans. Then look at the persons income/assets by reviewing their income tax. I don’t personally know what the income/asset cap should be relative to the persons debt but I’m sure there are smart people to figure that out. The Fafsa applicants and recipients should go first because if they were awarded any kind of real financial aid (not just loans) and still needed some loans to attend they probably would qualify. It’s just a thought.
IMO, canceling any amount of student debt is wrong for 4 reasons: 1) it's unfair to those who didn't take on that debt. The government's money is our money, after all, and taxpayers shouldn't have to bear the burden of our neighbor's poor financial decisions. Why not offer to forgive medical debt instead? That's a situation that (in most cases) no one willingly takes on. 2) Paying those loans on the borrower's behalf means that these predatory lenders suffer zero consequences. They still get their money. So there's no incentive for them to change. There has to be some kind of punishment for them and reforms put in place, regardless of loan forgiveness. 3) It also ignores the fact that higher education is ridiculously overpriced. I'm not suggesting price controls necessarily, but we need some measure of making it more affordable, so students don't get themselves into this position in the first place. 4) People need to learn to be accountable for their actions and decisions. So many of these younger generations have been coddled, helicopter-parented and insulated from any/all hardship, and it's creating a society of people who can't cope with adversity. If we keep bailing them out, it'll only get worse.
I am blessed to have attended college without racking up any debt whatsoever. Of course, I attended a local community college, had some bursaries to do so, and my parents covered the lion's share of it. My continuing education has cost me much more than my college education, though this has been spread out over time, with the debt cleared in a reasonable time frame. I am in full agreement with your proposals, Bill. They really make sense to me.
I hope David Muir and ABC News follow CNN's lead. "Breaking news as we come on the air tonight...", every night, is just a tad hyperbolic.
Why cancel student debt?? It has already gone 2 years with no payments!! I would much rather see $10k go to a Burger King employee whose chances of lifetime income and investment is much lower. WHY give the perks to someone who AGREED to pay it back? Why not give everyone a $10k car? Or every home owner $10k? This is SOCIALISM plain and simple for those of us who WORKED our way thru college and make smart choices. Where does it stop? It is just madness. (I worked full time 40-60 hours a week in college and still contributed to my ROTH IRA
And I had my loans paid off within 2 years And I am no where close to the smartest guy in any room - I just made the hard choices.) I would agree that paying down someone's medical debt make even better sense.
This is just pandering to voters.
I might be wrong, but I seem to remember that the 'original ' government backed student loan program was a rather good idea. Very low interest (.5%?) to the student with the government picking up the difference. Whatever happened to that?
What about the college being held somewhat accountable/ responsible for student success?
People took out these loans and they should pay them back. But, I think student loans should have interest rate terms similar to mortgages. Recalculate the loan with mortgage interest rates, deduct what they have already paid, and pay the balance like a mortgage. If they have already overpaid using this new amortization, the lender should refund them the overage. It is ridiculous that people sign up for these loans to obtain an education without realizing how they are being suckered in by these lenders. Young people especially are naive and don’t realize what they are signing up for. My daughter signed up for student loans and I had no idea until over a decade later when she complained about how hard it is to pay off. These lenders prey on students. Maybe the student should need to have a co-signer. Credit is too easy.
I took 10 years to earn my BS, working and paying for most of it as I went. I got my tuition for a MS by working as a Teachers Assistant for the university. I earned a second MS with the help of the GI Bill for serving in the Army Reserves. It is harder now to do it the way I did with tuition being a lot higher. I am helping my grandkids with college expenses, but I tell them to pay for it as you go as much as possible.
I worked while being a student. I worked summers and holidays off. I transferred universities to one that gave me academic money for high grades even though it was not my dream school. I worked multiple odd jobs at once to pay them once I graduated. Never owned a new car or had a car payment. Used public transit for years until I could afford a used car. Never had the newest phone. Cooked at home everyday and nearly every weekend. Lived in crappy rentals well within my means. Didn't take trips. I think some people need the loan relief no doubt, but it does have an unsavory taste a bit that people in general, live outside their means and are complaining about debt. For the record I'm 30. I don't have money figured out; I am still learning everyday. And I am grateful I had the opportunity to study as I am sure there are many people in the world who want to have an education and do not have access or a financial means to do so. On another note, my suggestion would be to offer cheaper education for medical professionals. We are in post pandemic world and on the cusp of a major nursing shortage with aging babyboomers. We need more qualified health professionals fast.
I chose the “without regret” option when I started my $50 per year annual subscription to Understandably.com. Thank you for living up to the promise of that option.
As to the discharge of debt question, there is the ease of the narrow discussion that obfuscates the question of what the debt funds (in this case, higher education) and how those being funded (the institutions) view those who accept the loans and transmit the funds to the institution. How much responsibility for the debt problem is bound up in how the institution used debt to maintain the institution. Structural power such as this is hard to recognize and reform. The higher education institutions and the government (part of the same education power structure) share responsibility for the student loan debt problem. Reform and equity (two culture war words that have lost their true meaning and intent) call for a systemic change in how we understand the need for higher education and such education in is made accessible and fairly administered. So yes, student debt, a societal millstone that when released brings forth new possibilities, should be reduced to force the discussion that leads to those possibilities. The Virginia Theological Seminary (VTS) where I earned my Doctor of Ministry, is a fine example of how those possibilities move from hopes and dreams to reality. It took me 20 years to pay off the loans from my Master of Divinity seminary, I would have been well served and the Episcopal church that I serve (now in retirement) would have had a less anxious leader (20 years included becoming debt free while raising a family). Open this link to see how VTS understands the true purpose of this institution: https://vts.edu/financial-aid/.
My thought on canceling student debt is: what about the jobs? There are people who work in the financial industry focusing on student loans. What happens to them? What about the ripple effect on the economy? Will workers lose their jobs because there are, effectively, no more student loans to collect?
Check out the "Borrowed Future" documentary and podcast from Ramsey Solutions. It's insane how this student loan crisis is beyond imaginable. I was fortunate enough to work my tail off and pay my loans off (1 Bachelor's, 2 Master's degrees later) and become debt free after many years of not so great financial decisions. Student loan forgiveness is wishful thinking. In the same sense, when you sign your name to purchase a car, you assume responsibility for it. My decisions do not warrant someone else bail me out for circumstances I can control. I am debt free because of advice from Ramsey Solutions. Debt is a no for me going forward. I am enjoying my freedom. On the journey to become a Baby Steps Millionaire!!!!!