Cancel student loan debt?

With the renewed conversation starting with Biden's incoming administration, what do you all feel about the push for 50k in student loan forgiveness being proposed by the progressive side of the party? To be clear this is being advertised as being possible by executive order, not any act of the legislative branch.

I'll start off by saying I hate both aspects of this. Such a large fiscal action by Presidential decree seems like a very bad idea. It does not seem to be a good use of political capital at all. I could be ignorant but I can't think of anything that matches that amount attempted in the past by a President.

Beyond the mechanism, I just think it is terrible policy. Helping those most capable and financially able to incur the costs does not even seem like a progressive idea to me. None of the purported benefits seem to amount to much beyond increased costs of those that weren't financially prudent. The attempt to attach this to racial inequality are especially weak, not to get into the incredibly stupid trolley meme making the rounds.

Of all the progressive policies being put forward, this might be the one I am most adamantly against. To be clear I would not personally be affected, as I only went to community college for a few semesters and incurred no debt, but the very idea is just beyond my understanding. The broad brush approach is the worst idea, and the framing of it as most benefiting minorities is disingenuous at best.

So.. thoughts?

It's something that Biden could actually do.

Let's face facts, unless we pull an inside straight in Georgia, Biden is going to have a Republican Senate that will hobble COVID-19 prevention, tank the economy, and demand a return to the coal age, just because their guy is not in the White House. If Biden can get something even remotely useful done without the GOP, he should do it. He should not waste time chasing the mirage of bipartisanship.

Random said:

It's something that Biden could actually do.

Let's face facts, unless we pull an inside straight in Georgia, Biden is going to have a Republican Senate that will hobble COVID-19 prevention, tank the economy, and demand a return to the coal age, just because their guy is not in the White House. If Biden can get something even remotely useful done without the GOP, he should do it. He should not waste time chasing the mirage of bipartisanship.

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Point taken, but with mid terms coming in two years, do you feel this is an action that would help or hurt in the house and senate? Is the purpose to help the most people or help the most vulnerable? I am not even sure where I stand without more thought put to it, but a more limited a targeted approach would be more understandable if the underlying problem was actually addressed. Otherwise the current backlog of debt is cleared and next year's will start building up as soon as the semester hits. Helping people by signing is nice and all but fixing the underlying problem seems like the more pressing issue, no?

it's essentially eliminating a large monthly bill for a lot of people, and i'd assume that this is the first bill that goes unpaid when people struggling economically

i'm not sure what percentage of people that have high income and unpaid student loans vs. student loans they are unable to pay, but I think it may be jumping to conclusions to say that people with a large amount of student loan debt are the most able to pay it off. i would assume that people that are most financially able to pay their student loan debts have already done so, some people are on decades long payment plans, and others have completely given up on paying them at all.

but i don't have the data on any of that

dirtywick said:

it's essentially eliminating a large monthly bill for a lot of people, and i'd assume that this is the first bill that goes unpaid when people struggling economically

i'm not sure what percentage of people that have high income and unpaid student loans vs. student loans they are unable to pay, but I think it may be jumping to conclusions to say that people with a large amount of student loan debt are the most able to pay it off. i would assume that people that are most financially able to pay their student loan debts have already done so, some people are on decades long payment plans, and others have completely given up on paying them at all.

but i don't have the data on any of that

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I will add a post to amend to this but off the top of my head statistics around 40% of the overall debt is from people with post graduate degrees. Only 20% is from lower income earners. I would almost consider forgiveness for borrowers without a degree vs any other segment because the benefits over a lifetime of having a degree vs none is substantial in regards to lifetime earnings. Unless someone beats me to it I'll try to quantify my argument a bit better.

I have mixed feelings about this. Just because you incurred student debt doesn't mean you are capable of paying it off in a timely matter or at all. Student debt isn't just incurred at high end universities, it's often the result of for profit schools that promise jobs that aren't real. Also, the cost of education has skyrocketed and saddling young people with such a debt burden is troubling.

Seeing lots of different descriptions of the proposal.

What Biden’s student loan forgiveness plan would mean for borrowers

The student loan crisis has been particularly painful to Black borrowers, with nearly 85% of Black college graduates carrying education debt, compared with 69% of White college graduates. And due to racial wealth and income inequities in the U.S., Black borrowers suffer higher default rates and are also stuck in debt much longer than their White peers.

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Biden’s student loan forgiveness plan, while it’s much narrower than the relief proposed by his opponents on the left in the Democratic primary, would still reset around 10 million borrowers’ balances to zero, according to calculations by higher education expert Mark Kantrowitz. In all, the policy would slash the country’s $1.7 trillion outstanding student loan tab by about a third.

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forgive $10,000 of the debt for all borrowers, and the rest for those who attended public colleges or historically Black colleges and universities and earn less than $125,000 a year.

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or this:

Biden: Student Loan Forgiveness “Figures In My Plan”

Biden referenced legislation from House Democrats to cancel $10,000 of student loans.

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This plan to cancel student loan debt is likely for federal student loans only.

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Biden also said that community college and two-year and four-year public colleges should be tuition-free for students making less than $125,000 of income per year.
This plan would apply only to college tuition, not graduate school.
During the presidential campaign, Biden said he would extend this student loan forgiveness to private Historically Black Colleges and University (HBCU) or a Minority-Serving Institutions (MSI).
Biden also said he wants to revamp the existing Public Service Loan Forgiveness program so that borrowers can receive student loan forgiveness earlier (such as in five years, rather than 10 years). He also said the program can be better managed.

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In addition to student loan forgiveness, Biden wants tuition-free college at community colleges and two-year public state colleges and universities.
Biden’s plan only covers tuition and related expenses, but not room and board.

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Limited to federal loans for tuition at state colleges/universities - not the (typically) much more expensive private colleges. That's not bad, I get the impression that some of the worst student debt and some of the most irresponsible borrowing relates to covering living expenses while in college. Free tuition at community and two-year colleges also seems good, those are already fairly low cost to begin with, its not going to break the bank to do that. Some articles say he is also proposing free tuition at four-year public colleges, but some say it is limited to two-year public colleges.

It is not clear what one needs to do to qualify for loan forgiveness - typically there are income and timeframe requirements for such programs. You typically can't get loans forgiven for some time after leaving college (five and ten-year spans are both mentioned in articles), there may also be income and even bankruptcy requirements. As it is, college loans have more recently been exempt from bankruptcy protection - file for bankruptcy and you're still on the hook for those student loans, they can still garnish wages to get them even if it pushes you below poverty line. The current system is very predatory and geared towards lenders.

Again, the proposal does not seem to cover living expenses, nobody's getting a free apartment while they make a pretense of going to college on the taxpayer's dime.

Limit it to In-State tuition, and add in some sort of board to look into and set standards for expenses at these state colleges and I would be very on-board with this. Tuition as it is now is vastly more expensive than it was when I went to college in the late 1990's, real estate and cost-of-living as a proportion of income has also gone up considerably. The college opportunities we had, that our parents had, those are financially out of range for the current middle class.

ETA: Also, it is not clear to me how much of the current debt load is owed to lenders under federal programs, or directly to the federal government, or just owed to lenders in general. The proposal only seems to address federal or federal-program loans, some of the most predatory loan practices out there would be unaffected

I can see the merits - education should be supported, house prices are high, debt weighs heavy, limiting freedom and risk taking. Obviously this is a kind of retro-active action to put right something that would be better if dealt with sooner and there's never a perfect solution doing that. I can see why this wouldn't be popular with those who managed to pay their loans off already.

That all said, spending must have its limits and we have an economy falling apart under the pandemic. It's hard to see this as any kind of priority right now.

crescent said:

Limited to federal loans for tuition at state colleges/universities - not the (typically) much more expensive private colleges. That's not bad, I get the impression that some of the worst student debt and some of the most irresponsible borrowing relates to covering living expenses while in college. Free tuition at community and two-year colleges also seems good, those are already fairly low cost to begin with, its not going to break the bank to do that. Some articles say he is also proposing free tuition at four-year public colleges, but some say it is limited to two-year public colleges.

Again, the proposal does not seem to cover living expenses, nobody's getting a free apartment while they make a pretense of going to college on the taxpayer's dime.

Limit it to In-State tuition, and add in some sort of board to look into and set standards for expenses at these state colleges and I would be very on-board with this. Tuition as it is now is vastly more expensive than it was when I went to college in the late 1990's, real estate and cost-of-living as a proportion of income has also gone up considerably. The college opportunities we had, that our parents had, those are financially out of range for the current middle class.

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Thanks for that. This very much seems influx for but I really hate the angles being pushed at times. For example the percentages of black vs white students never gives an overall number to really compare. A higher % of a minority that might also have a lower percentage of overall students very well could be a very small number comparatively. This is conveniently left out, as well as their overall debt.

While the rate might be higher, their overall % reflected I suspect is much smaller than advertised. For example if they represent only 5% of the overall student debt population while being a larger percentage by demographics due to lower population % and lower debt level per student. That way white upper middle class doctors that owe 200k can get on board and justify it as helping the poor while they represent the overwhelming cost.

Limiting to community and in state tuitions would definitely help my perception, but would still be a hard sell.

Egg said:

I can see the merits - education should be supported, house prices are high, debt weighs heavy, limiting freedom and risk taking. Obviously this is a kind of retro-active action to put right something that would be better if dealt with sooner and there's never a perfect solution doing that. I can see why this wouldn't be popular with those who managed to pay their loans off already.

That all said, spending must have its limits and we have an economy falling apart under the pandemic. It's hard to see this as any kind of priority right now.

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It seems more like a "we can do this so we should" vs's an actual need. Beyond the college grads that paid their loans, it actively hurts non college educated and trade workers that already have it rough. It seems to reward the worst actors and penalize the best, which seems like bad policy and incredibly bad in regards to future voting.

Random said:

It's something that Biden could actually do.

Let's face facts, unless we pull an inside straight in Georgia, Biden is going to have a Republican Senate that will hobble COVID-19 prevention, tank the economy, and demand a return to the coal age, just because their guy is not in the White House. If Biden can get something even remotely useful done without the GOP, he should do it. He should not waste time chasing the mirage of bipartisanship.

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I am pretty sure Biden would need at least some of the GOP on side.

Cancelled student loans seems like it would involve financial aspects that would put it outside the ability of him to just issue an executive order. So it means they would need legislation, which means dealing with Moscow Mitch in the Senate.



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rdwight said:

Thanks for that. This very much seems influx for but I really hate the angles being pushed at times. For example the percentages of black vs white students never gives an overall number to really compare. A higher % of a minority that might also have a lower percentage of overall students very well could be a very small number comparatively. This is conveniently left out, as well as their overall debt.

While the rate might be higher, their overall % reflected I suspect is much smaller than advertised. For example if they represent only 5% of the overall student debt population while being a larger percentage by demographics due to lower population % and lower debt level per student. That way white upper middle class doctors that owe 200k can get on board and justify it as helping the poor while they represent the overwhelming cost.

Limiting to community and in state tuitions would definitely help my perception, but would still be a hard sell.

It seems more like a "we can do this so we should" vs's an actual need. Beyond the college grads that paid their loans,
it actively hurts non college educated and trade workers that already have it rough It seems to reward the worst actors and penalize the best, which seems like bad policy and incredibly bad in regards to future voting.

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How exactly does it do that? This isn't a zero sum game. I don't see how helping college students hurts anyone.

Biden should set a "matching" debt cancellation in that the US will cancel, say, $25,000, and the college will cancel another $25,000. (or use better numbers)
If they don't agree, the student will be allowed to declare bankruptcy on the total amount.

The problem is mostly that colleges can charge whatever, because they get their money one way or another.
Student loans should be financed out of the college endowment - that way, they have a vested interest in making sure the students get marketable skills.

acbytesla said:

How exactly does it do that? This isn't a zero sum game. I don't see how helping college students hurts anyone.

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Well money for loan forgiveness and/or free tuition doesn't come out of thin air... Tax payers do end up paying at least something for it. And with plenty of competing priorities (covid relief, health care, infrastructure), education may take a back seat to more immediate concerns.

That doesn't necessarily make free tuition/debt forgiveness a bad idea, and there are certainly some benefits to society. But I don't think it is a bad thing to look at costs and benefits of various options.

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Segnosaur said:

Well money for loan forgiveness and/or free tuition doesn't come out of thin air... Tax payers do end up paying at least something for it.

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How do you figure? A forgiven loan is written off; it's not as if the federal government would be paying out the outstanding balance of the forgiven loans, since the creditor is itself.

Segnosaur said:

I am pretty sure Biden would need at least some of the GOP on side.

Cancelled student loans seems like it would involve financial aspects that would put it outside the ability of him to just issue an executive order. So it means they would need legislation, which means dealing with Moscow Mitch in the Senate.

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To "officialize" it, perhaps. However, I suspect that Biden could purely by executive order simply halt collection activity, credit reporting, and social security garnishment for relevant classes of loans. The loans would still "exist", but the debt would be effectively canceled for all practical purposes.

This has the down-side of being potentially reversible by a future president unless the legislation can be passed, of course.

Segnosaur said:

Well money for loan forgiveness and/or free tuition doesn't come out of thin air... Tax payers do end up paying at least something for it. And with plenty of competing priorities (covid relief, health care, infrastructure), education may take a back seat to more immediate concerns.

That doesn't necessarily make free tuition/debt forgiveness a bad idea, and there are certainly some benefits to society. But I don't think it is a bad thing to look at costs and benefits of various options.

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Yes in fact it does. There is a huge difference between macroeconomics and microeconomics. You think we had that Trillion dollars we used for COVID relief or for the debt incurred during WW2? So, we incur debt? The economy grows and we pay it off in 20 years with inflated dollars.

This is not a simple issue. I'm not saying we should or shouldn't do it. I'm just saying it simply isn't true that helping students pay off debt necessarily hurts others.

Checkmite said:

Well money for loan forgiveness and/or free tuition doesn't come out of thin air... Tax payers do end up paying at least something for it.

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How do you figure? A forgiven loan is written off; it's not as if the federal government would be paying out the outstanding balance of the forgiven loans, since the creditor is itself.

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Depends on the situation....

- from what I understand, some loans are made by the government itself... So forgiving the loan means less money available for the government as a whole for various programs

- as for things like bank loans, either the government will have to compensate banks to cover the missing loan repayments, or banks will lose money (making them less likely to make student loans in the future)

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dirtywick said:

it's essentially eliminating a large monthly bill for a lot of people, and i'd assume that this is the first bill that goes unpaid when people struggling economically

i'm not sure what percentage of people that have high income and unpaid student loans vs. student loans they are unable to pay, but I think it may be jumping to conclusions to say that people with a large amount of student loan debt are the most able to pay it off. i would assume that people that are most financially able to pay their student loan debts have already done so, some people are on decades long payment plans, and others have completely given up on paying them at all.

but i don't have the data on any of that

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I think it is more likely that students from wealthier families are less likely to have student debt.

The Great Zaganza said:

Biden should set a "matching" debt cancellation in that the US will cancel, say, $25,000, and the college will cancel another $25,000. (or use better numbers)
If they don't agree, the student will be allowed to declare bankruptcy on the total amount.

The problem is mostly that colleges can charge whatever, because they get their money one way or another.
Student loans should be financed out of the college endowment - that way, they have a vested interest in making sure the students get marketable skills.

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The college doesn't hold the debt. They got paid tuition at the time, cash on the barrel head, that students received from loans.

SuburbanTurkey said:

The college doesn't hold the debt. They got paid tuition at the time, cash on the barrel head, that students received from loans.

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That's my point
Colleges should get disqualified from having access to student loan funds above a limit if they charge too much for too little.