US student loans grotesquely high

[Swammerdami]

I wonder about the $250,000 limit on household income. That's a LOT more than I ever made: Do those folks really need the ten grand as much as someone making $50,000? (I do realize that rent is higher in midtown Manhattan than rent in Blair's Pig Holler, West Virginny but I rented in Silicon Valley in the late 20th century and still never felt pressed for cash.)

And is that limit set up to be a steep "cliff"? Are people who made $252,000 in 2021 having conversations with their accountant about refiling to move some 2020 deductions to 2021?

 

[Jason Harvestdancer]

It would have been such a better idea to simply make student loan debt dischargeable through bankruptcy. The borrowers get a negative mark on their credit record for making a bad decision, the lenders get a loss for making a bad decision, and future bad decisions are discouraged all around. Instead we have a transference of debt to the government and neither the borrowers nor the lenders suffer any consequences for their decisions.

Not suffering consequences is progressive dogma though.

So while everyone is concentrating on whether or not people are ghouls to the borrowers, the fact is under this arrangement you are either choosing to be a ghoul to borrowers or choosing to be a ghoul to non-borrowers. The question isn't if you are going to be a ghoul, it is who you are going to be a ghoul towards.

 

[bilby]

So while everyone is concentrating on whether or not people are ghouls to the borrowers, the fact is under this arrangement you are either choosing to be a ghoul to borrowers or choosing to be a ghoul to non-borrowers. The question isn't if you are going to be a ghoul, it is who you are going to be a ghoul towards.

I was planning to report this as a derail, and ask the moderators to split it to it's own thread. But then I realised that would just be moving the ghoul posts.

 

[Politesse]

I wonder about the $250,000 limit on household income. That's a LOT more than I ever made: Do those folks really need the ten grand as much as someone making $50,000? (I do realize that rent is higher in midtown Manhattan than rent in Blair's Pig Holler, West Virginny but I rented in Silicon Valley in the late 20th century and still never felt pressed for cash.)

And is that limit set up to be a steep "cliff"? Are people who made $252,000 in 2021 having conversations with their accountant about refiling to move some 2020 deductions to 2021?

Political concession, I would assume. It would have been political suicide to include the poor but not the middle class.

 

[Politesse]

It would have been such a better idea to simply make student loan debt dischargeable through bankruptcy. The borrowers get a negative mark on their credit record for making a bad decision, the lenders get a loss for making a bad decision, and future bad decisions are discouraged all around. Instead we have a transference of debt to the government and neither the borrowers nor the lenders suffer any consequences for their decisions.

Not suffering consequences is progressive dogma though.

So while everyone is concentrating on whether or not people are ghouls to the borrowers, the fact is under this arrangement you are either choosing to be a ghoul to borrowers or choosing to be a ghoul to non-borrowers. The question isn't if you are going to be a ghoul, it is who you are going to be a ghoul towards.

People sure pick and choose when to be ghouls about where their tax dollars go, and when to just ignore it.

This being a democracy, it makes sense to me to act in accordance with what most Americans want, not what insurance companies who've been straight up grifting the American public for decades want.

And the numbers are pretty consistent on that, loan debt forgiveness has long been the most popular single option for addressing the debt burden. I don't personally think this is doing much more than kicking the can down the road, but I also get why Biden/Harris felt compelled to put this package together, and I'm certainly not mad about it. A substantial portion of the debt being discharged is "interest" that should never have been charged, because making higher ed a nigh-unregulated profit device for unscrupulous lenders was a stupid idea to begin with. We all benefit from putting money back in the hands of consumers rather than the coffers of "producers" whose main product is invented debt.

 

[Swammerdami]

So while everyone is concentrating on whether or not people are ghouls to the borrowers, the fact is under this arrangement you are either choosing to be a ghoul to borrowers or choosing to be a ghoul to non-borrowers. The question isn't if you are going to be a ghoul, it is who you are going to be a ghoul towards.

I was planning to report this as a derail, and ask the moderators to split it to it's own thread. But then I realised that would just be moving the ghoul posts.

So you were one of those Brits sent to Down-Under Land for punnishment?

 

[Toni]

It would have been such a better idea to simply make student loan debt dischargeable through bankruptcy. The borrowers get a negative mark on their credit record for making a bad decision, the lenders get a loss for making a bad decision, and future bad decisions are discouraged all around. Instead we have a transference of debt to the government and neither the borrowers nor the lenders suffer any consequences for their decisions.

Not suffering consequences is progressive dogma though.

So while everyone is concentrating on whether or not people are ghouls to the borrowers, the fact is under this arrangement you are either choosing to be a ghoul to borrowers or choosing to be a ghoul to non-borrowers. The question isn't if you are going to be a ghoul, it is who you are going to be a ghoul towards.

One big problem with student loans is that some (not all) are extremely predatory. People report making their student loan payment for over a decade and never seeing their balance decrease. This is an enormous problem with how some of the loans were written. Some report their loans being sold and suddenly learning that they owe MORE than they borrowed, with no explanation or relief.

Bankruptcy can still affect you for many years and make it impossible to qualify for a mortgage or even sometimes to rent an apartment or purchase a car, even a used one. The same people who needed to take out a lot of loans are much less likely to have family to help them out with a vehicle or a down payment or to cosign a loan. College grads (and perhaps tech/trade school grads) are still locked out of the housing market, unable to marry, etc. And they are less likely to have had financially savvy parents who could adequately advise them regarding student loans in the first place, making them even more vulnerable to predatory loan practices, or just unwise undertaking of student debt.

 

[Gospel]

It would have been such a better idea to simply make student loan debt dischargeable through bankruptcy. The borrowers get a negative mark on their credit record for making a bad decision, the lenders get a loss for making a bad decision, and future bad decisions are discouraged all around. Instead we have a transference of debt to the government and neither the borrowers nor the lenders suffer any consequences for their decisions.

This makes sense.

 

[Jason Harvestdancer]

Bankruptcy can still affect you for many years and make it impossible to qualify for a mortgage or even sometimes to rent an apartment or purchase a car, even a used one. The same people who needed to take out a lot of loans are much less likely to have family to help them out with a vehicle or a down payment or to cosign a loan. College grads (and perhaps tech/trade school grads) are still locked out of the housing market, unable to marry, etc. And they are less likely to have had financially savvy parents who could adequately advise them regarding student loans in the first place, making them even more vulnerable to predatory loan practices, or just unwise undertaking of student debt.

Bankruptcy doesn't ruin you, although it does hurt you. It is not impossible to qualify for a mortgage with one on your record. It has a negative impact on your credit report for 7 years, but the negative impact decreases yearly.

There are college grads who feel locked out of housing, marriage, etc, simply because of their large student loan debt - something this mere $10k won't actually make much of a difference in. When the debt is over $50k, that's actually worse for your financial situation, including your credit report, than a bankruptcy that wipes the slate clean.

Bankruptcy protection would be exceptionally useful in the case of predatory loans, as then the lenders "get what's coming to them" when they don't get their money back.

I wonder if there's been any sort of study to determine the relationship between major chosen and how onerous the debt has been. I suspect that there will be proportionally fewer engineers getting this relief and proportionally more oppression studies majors.

 

[ZiprHead]

It would have been such a better idea to simply make student loan debt dischargeable through bankruptcy. The borrowers get a negative mark on their credit record for making a bad decision, the lenders get a loss for making a bad decision, and future bad decisions are discouraged all around. Instead we have a transference of debt to the government and neither the borrowers nor the lenders suffer any consequences for their decisions.

That was my idea too.

 

[ZiprHead]

One big problem with student loans is that some (not all) are extremely predatory. People report making their student loan payment for over a decade and never seeing their balance decrease. This is an enormous problem with how some of the loans were written. Some report their loans being sold and suddenly learning that they owe MORE than they borrowed, with no explanation or relief.

I believe it was Bush II who opened up student loans to commercial lenders who then charged credit card style rates.

 

[Toni]

Bankruptcy can still affect you for many years and make it impossible to qualify for a mortgage or even sometimes to rent an apartment or purchase a car, even a used one. The same people who needed to take out a lot of loans are much less likely to have family to help them out with a vehicle or a down payment or to cosign a loan. College grads (and perhaps tech/trade school grads) are still locked out of the housing market, unable to marry, etc. And they are less likely to have had financially savvy parents who could adequately advise them regarding student loans in the first place, making them even more vulnerable to predatory loan practices, or just unwise undertaking of student debt.

Bankruptcy doesn't ruin you, although it does hurt you. It is not impossible to qualify for a mortgage with one on your record. It has a negative impact on your credit report for 7 years, but the negative impact decreases yearly.

There are college grads who feel locked out of housing, marriage, etc, simply because of their large student loan debt - something this mere $10k won't actually make much of a difference in. When the debt is over $50k, that's actually worse for your financial situation, including your credit report, than a bankruptcy that wipes the slate clean.

Bankruptcy protection would be exceptionally useful in the case of predatory loans, as then the lenders "get what's coming to them" when they don't get their money back.

I wonder if there's been any sort of study to determine the relationship between major chosen and how onerous the debt has been. I suspect that there will be proportionally fewer engineers getting this relief and proportionally more oppression studies majors.

Obviously people would be helped more by greater amount of student debt relief. I have see references to this limit of loans ($10-20K) being the most that can be done by Biden without legislation but don’t have time to find a good source.

Bankruptcy can and does delay one’s ability to obtain a mortgage and perhaps even rent. Not forever but again, you are delaying peoples ability to purchase a home, etc.: build wealth.

I imagine that people who went into higher paying careers( regardless of major) have an easier paying off any kind of debt compared with, say, teachers, social workers and public defenders.

Just to remind people that one does not need to be an engineer to be a valuable employee or employer, I’m gifting this link:

https://www.nytimes.com/2017/08/21/books/review/you-can-do-anything-george-anders-liberal-arts-education.html?unlocked_article_code=L9WikcfD3FcfOQGSd5Si2adjrEaGewVd9pD6JM6oarStUcB5N2KJcBqlbDQ-Scab2uamTC0M2pxoOb0hvQ3lv-E4IPMXI19GiyA21M_clxpJXxux_I0Fw5ckqUDh-mExEt0VABgyoNfjX83T6vvlJs2wIuWA_mBzOFoWiCl86L24XAbUojuMyxLdRO3aXitZU1wslv-5YVkQFR2hV6H2GN-BEQx1rtXEySjic_XKtPh1NqeRtfxv9mJDy9ILOwtI-FlUuXK84YHqxeKra9qMzZnNTfz_uehgQBQv29itk8XIuPlBn6tjA-k-8ZFA4SY0viw5CZQQflpTiP4_NwX7Gq2qr0XI95ArEttmJStW6CVkVVvAct-1May0-FREc84ylNcsr5ZGYQ&smid=share-url

 

[Loren Pechtel]

It would have been such a better idea to simply make student loan debt dischargeable through bankruptcy. The borrowers get a negative mark on their credit record for making a bad decision, the lenders get a loss for making a bad decision, and future bad decisions are discouraged all around. Instead we have a transference of debt to the government and neither the borrowers nor the lenders suffer any consequences for their decisions.

Not suffering consequences is progressive dogma though.

So while everyone is concentrating on whether or not people are ghouls to the borrowers, the fact is under this arrangement you are either choosing to be a ghoul to borrowers or choosing to be a ghoul to non-borrowers. The question isn't if you are going to be a ghoul, it is who you are going to be a ghoul towards.

Two words: Strategic bankruptcy.

If student loans were dischargeable they would cease to exist because most people would complete their education and then declare bankruptcy. People who take student loans almost certainly exit college with negative net worth.

 

[Loren Pechtel]

One big problem with student loans is that some (not all) are extremely predatory. People report making their student loan payment for over a decade and never seeing their balance decrease. This is an enormous problem with how some of the loans were written. Some report their loans being sold and suddenly learning that they owe MORE than they borrowed, with no explanation or relief.

I just ran into an explanation on this--some lenders have minimum required payments that are less than the interest that accrues. I don't see that as predatory so long as it's clearly disclosed.

In fact, I have suggested a system that would cause this to happen--cap student loan required payments at some percentage of income above the poverty line.

 

[Ford]

One big problem with student loans is that some (not all) are extremely predatory. People report making their student loan payment for over a decade and never seeing their balance decrease. This is an enormous problem with how some of the loans were written. Some report their loans being sold and suddenly learning that they owe MORE than they borrowed, with no explanation or relief.

I believe it was Bush II who opened up student loans to commercial lenders who then charged credit card style rates.

This is a root of a lot of our problems in this country. Things which should be low cost to ensure most consumers would benefit are turned into profit centers for business interests to soak the people for profit instead. Take insulin. The inventors sold the patent for a dollar because they wanted it available to anyone. Drug companies (hand in hand with private insurance) took the "let's help people" ball, turned it into a "let's help our CEO get a bonus" ball and ran with it. Now insulin (in the US) is prohibitively expensive. Just like predatory student loans. Hell, predatory loans in general. There are old school mob loan sharks who wouldn't dream of charging what some car dealers do. I worked for one of those online dealerships for a minute. They were charging up to 28% interest on some long term loans. For the Bible thumping folks, that's called "usury."

I forget which passage says that's a sin, but I'm pretty sure it's in there.

 

[bilby]

It would have been such a better idea to simply make student loan debt dischargeable through bankruptcy. The borrowers get a negative mark on their credit record for making a bad decision, the lenders get a loss for making a bad decision, and future bad decisions are discouraged all around. Instead we have a transference of debt to the government and neither the borrowers nor the lenders suffer any consequences for their decisions.

Not suffering consequences is progressive dogma though.

So while everyone is concentrating on whether or not people are ghouls to the borrowers, the fact is under this arrangement you are either choosing to be a ghoul to borrowers or choosing to be a ghoul to non-borrowers. The question isn't if you are going to be a ghoul, it is who you are going to be a ghoul towards.

Two words: Strategic bankruptcy.

If student loans were dischargeable they would cease to exist because most people would complete their education and then declare bankruptcy. People who take student loans almost certainly exit college with negative net worth.

Sounds good to me. It would probably be even better not to bother with loans at all, and just use general revenue to pay for education from the get-go; But at least your strategic bankruptcy proposal is a massive improvement on the current system.

 

[Toni]

One big problem with student loans is that some (not all) are extremely predatory. People report making their student loan payment for over a decade and never seeing their balance decrease. This is an enormous problem with how some of the loans were written. Some report their loans being sold and suddenly learning that they owe MORE than they borrowed, with no explanation or relief.

I just ran into an explanation on this--some lenders have minimum required payments that are less than the interest that accrues. I don't see that as predatory so long as it's clearly disclosed.

In fact, I have suggested a system that would cause this to happen--cap student loan required payments at some percentage of income above the poverty line.

Sure but paying less than interest means the loan is never paid off—it’s a life long burden.

Again, the most vulnerable students are those whose family never went to college, who are likely to come from working class or poor families whose families have little or no ability to help them and who may have little or no experience with student loans.

A coworker at my last job told me her parents encouraged her to take out the maximum loans possible and to ‘enjoy herself.’

 

[bilby]

I just ran into an explanation on this--some lenders have minimum required payments that are less than the interest that accrues. I don't see that as predatory so long as it's clearly disclosed.

Your inability to see an opportunity for predatory behaviour isn't in any way a defence against its existence.

"Clearly disclosed" is legalistic bullcrap. If you give an eighteen year old a sheaf of papers and say "if you don't sign these, you get no money to pay for college", do you genuinely think many of them would bother to read the small print, or would fully comprehend its implications even if they did read it?

Do you carefully read and consider the entire EULA before clicking 'I Agree', every time you install any software package?

There shouldn't be any need for prospective students to be exposed to contractual entrapment by corporations. Just pay for their education, and the general increase in national productivity that results from not having a nation of imbeciles will easily cover the expense.

It won't be a net benefit to the nation in every single individual case, but that's really not important at all, as long as the overall effect is positive. Unpicking the problem cases and eliminating them in advance costs far more than just tolerating them (as we can see from the current broken efforts to do just that).

 

[Toni]

It would have been such a better idea to simply make student loan debt dischargeable through bankruptcy. The borrowers get a negative mark on their credit record for making a bad decision, the lenders get a loss for making a bad decision, and future bad decisions are discouraged all around. Instead we have a transference of debt to the government and neither the borrowers nor the lenders suffer any consequences for their decisions.

Not suffering consequences is progressive dogma though.

So while everyone is concentrating on whether or not people are ghouls to the borrowers, the fact is under this arrangement you are either choosing to be a ghoul to borrowers or choosing to be a ghoul to non-borrowers. The question isn't if you are going to be a ghoul, it is who you are going to be a ghoul towards.

Two words: Strategic bankruptcy.

If student loans were dischargeable they would cease to exist because most people would complete their education and then declare bankruptcy. People who take student loans almost certainly exit college with negative net worth.

Sounds good to me. It would probably be even better not to bother with loans at all, and just use general revenue to pay for education from the get-go; But at least your strategic bankruptcy proposal is a massive improvement on the current system.

It WAS better back in the days when states funded most of the cost of attending a state university.

If states stepped up and committed or re-committed to covering at least 65% of the cost of university as they did in the early 70’s that would help tremendously.

As student loans became more available, universities began to raise costs—and states backed away from supporting universities as conservatism rose.

 

[Politesse]

One big problem with student loans is that some (not all) are extremely predatory. People report making their student loan payment for over a decade and never seeing their balance decrease. This is an enormous problem with how some of the loans were written. Some report their loans being sold and suddenly learning that they owe MORE than they borrowed, with no explanation or relief.

I believe it was Bush II who opened up student loans to commercial lenders who then charged credit card style rates.

This is a root of a lot of our problems in this country. Things which should be low cost to ensure most consumers would benefit are turned into profit centers for business interests to soak the people for profit instead. Take insulin. The inventors sold the patent for a dollar because they wanted it available to anyone. Drug companies (hand in hand with private insurance) took the "let's help people" ball, turned it into a "let's help our CEO get a bonus" ball and ran with it. Now insulin (in the US) is prohibitively expensive. Just like predatory student loans. Hell, predatory loans in general. There are old school mob loan sharks who wouldn't dream of charging what some car dealers do. I worked for one of those online dealerships for a minute. They were charging up to 28% interest on some long term loans. For the Bible thumping folks, that's called "usury."

I forget which passage says that's a sin, but I'm pretty sure it's in there.

In numerous places. The most damning is probably Exodus 22:25, which specifically condemns taking advantage of the poor by loaning to them at interest, or as the book puts it, "do not be like a moneylender to him".