Is Student Debt a Crime Against America's Future?

[RVonse]

I find myself in agreement with both of the Democrat and Republican position on this issue. On the one hand, I believe the Republicans are correct that current student debt can not be forgiven. Because to do (as it is currently setup) creates a HUGE moral hazard for the people who were (and are) responsible with their finance. Furthermore its not fair to punish trade workers (or others who did not go to college) by making them pay in taxes for doctors and/or others (making much higher wages) who decided to go to college. The Republicans and conservatives are also right that colleges can and do raise tuition much higher than inflation because they can, since anyone can get a loan causing non elastic demand.

That being said, Thom Hartman makes a very good counter point which is hard not to agree with. That in the 1960's California had free tuition and many other states paid 80%. That during those years America actually benefited by 7 to 1 ratio payback for the money spent on tuition versus taxes received from the workers productivity using their education. But I would say those workers were able to find that kind of high value employment back in those 1960's days....I'm not sure they could do that today. There have been too many higher value jobs moved out the US by this point and I find it hard to believe a 7 to 1 payback could be realized today.

What I am also wondering (and do not know, never lived in California) is what the rules were back in the 1960's for the people who went to college yet were really not college material. Did the schools let them keep going for free as long as they wanted even though their grades were not passing? How did they draw the line between the students who really were college material with the students who thought they were college material but really weren't?

What do you think is best way forward?

 

[laughing dog]

The notion of "fairness" displayed in the OP is rather idiosyncratic because one can apply that rubric to just about any policy. For example, is it fair for people without cars to pay taxes that support roads? Is it fair for people who are lactose intolerant to support dairy farmers or vegetarians to support cattle farmers?

Moreover, at this time in the US, there is a real lack of trades people: plumbers, electricians, carpenters, etc.... are in very short supply. Wages in the trades are rising. The recent infrastructure bill is also increasing demand in certain manufacturing sectors, and the slow but inexorable move towards renewable energy is creating more and better paying work for labor.

By and large, most student debt is not owed by doctors and lawyers, but by those with undergraduate degrees (or unfinished degrees). Eliminating student debt would not bankrupt the country nor require anyone with a moderate or low income to subsidize a goddamn thing because of the progressiveness of the federal income tax. The Republican argument over moral hazard is risible since the GOP does not give a hoot about moral hazard when it comes to their esteemed consituencies.

A simpler, more elegant solution to the student debt issue is for Congress to repeal the law that makes exempts student debt from bankruptcy proceedings. It was enacted in response to reports of medical doctors and lawyers declaring bankruptcy even though they were high earners. It would is possible to create alternatives to student debt relief that are targeted to professions or people. For example, in Mn, if a graduated law student works as a public defender for 10 years, their law debt is forgiven. One would think that reasonable and rational people could come up with similar policies to help those with student debt issues.

However, that would require politicians and their dupes to stop their posturing. And more importantly, for the US to forge a real consensus on the public value of a educated public. Forgive the cynic in me, but I am not holding my breath while I wait.

Also, forgive my long-winded response. To directly respond to the OP question, student debt is not a crime against US's future. However, the lack of compassion and rationality in the opposition to some sort of relief is a crime.

 

[RVonse]

The notion of "fairness" displayed in the OP is rather idiosyncratic because one can apply that rubric to just about any policy. For example, is it fair for people without cars to pay taxes that support roads? Is it fair for people who are lactose intolerant to support dairy farmers or vegetarians to support cattle farmers?

Moreover, at this time in the US, there is a real lack of trades people: plumbers, electricians, carpenters, etc.... are in very short supply. Wages in the trades are rising. The recent infrastructure bill is also increasing demand in certain manufacturing sectors, and the slow but inexorable move towards renewable energy is creating more and better paying work for labor.

By and large, most student debt is not owed by doctors and lawyers, but by those with undergraduate degrees (or unfinished degrees). Eliminating student debt would not bankrupt the country nor require anyone with a moderate or low income to subsidize a goddamn thing because of the progressiveness of the federal income tax. The Republican argument over moral hazard is risible since the GOP does not give a hoot about moral hazard when it comes to their esteemed consituencies.

A simpler, more elegant solution to the student debt issue is for Congress to repeal the law that makes exempts student debt from bankruptcy proceedings. It was enacted in response to reports of medical doctors and lawyers declaring bankruptcy even though they were high earners. It would is possible to create alternatives to student debt relief that are targeted to professions or people. For example, in Mn, if a graduated law student works as a public defender for 10 years, their law debt is forgiven. One would think that reasonable and rational people could come up with similar policies to help those with student debt issues.

However, that would require politicians and their dupes to stop their posturing. And more importantly, for the US to forge a real consensus on the public value of a educated public. Forgive the cynic in me, but I am not holding my breath while I wait.

Also, forgive my long-winded response. To directly respond to the OP question, student debt is not a crime against US's future. However, the lack of compassion and rationality in the opposition to some sort of relief is a crime.

The main part I don't like about forgiving the debt is because it leaves such a fog in the future what debt means. I don't think it is ever a good idea to encourage in any way people incurring debt for the sake of it.

What would you say to making college free for everyone. But when it comes to tax time, let those people who got the free school from the government pay their taxes at a higher rate than then the uneducated labor? There would not need to be any changes to the bankruptcy laws because the IRS has the power to collect.

 

[Ford]

That being said, Thom Hartman makes a very good counter point which is hard not to agree with. That in the 1960's California had free tuition and many other states paid 80%. That during those years America actually benefited by 7 to 1 ratio payback for the money spent on tuition versus taxes received from the workers productivity using their education. But I would say those workers were able to find that kind of high value employment back in those 1960's days....I'm not sure they could do that today. There have been too many higher value jobs moved out the US by this point and I find it hard to believe a 7 to 1 payback could be realized today.

A lot of jobs have been "moved out" of the US such as in manufacturing, while there are a lot of jobs available to people with higher education. The company I work for has a long list of very well-paying jobs available for educated folks, mostly in engineering, software development, cyber-security, product development, design, etc. etc. etc. I'm in commercial operations, and we have jobs that need to be filled in management, fleet operations, incident response, and other roles. It would be easier to fill a lot of these positions if our education system didn't have so many financial barriers to entry. The company pays very well, but when you add in absurd student debt and the high cost of living in our home city (San Francisco), even a six figure income is "just barely getting by."

I can't speak to California in the 1960s, but when I attended college in the mid 1980s, a middle class, one income family that had been putting away a little money every year could send their kids to a 4 year university and have them graduate without a dime of debt.

As with many things in the US, what should be a public service - education - has been hijacked and turned into a source of profit for private companies and financial institutions. We spent trillions to bail out financial institutions in the wake of the Great Recession, so it's not like we can't afford to forgive a little (or a lot of) student loan debt. Do that, and then work towards making higher education affordable for everyone.

 

[laughing dog]

The notion of "fairness" displayed in the OP is rather idiosyncratic because one can apply that rubric to just about any policy. For example, is it fair for people without cars to pay taxes that support roads? Is it fair for people who are lactose intolerant to support dairy farmers or vegetarians to support cattle farmers?

Moreover, at this time in the US, there is a real lack of trades people: plumbers, electricians, carpenters, etc.... are in very short supply. Wages in the trades are rising. The recent infrastructure bill is also increasing demand in certain manufacturing sectors, and the slow but inexorable move towards renewable energy is creating more and better paying work for labor.

By and large, most student debt is not owed by doctors and lawyers, but by those with undergraduate degrees (or unfinished degrees). Eliminating student debt would not bankrupt the country nor require anyone with a moderate or low income to subsidize a goddamn thing because of the progressiveness of the federal income tax. The Republican argument over moral hazard is risible since the GOP does not give a hoot about moral hazard when it comes to their esteemed consituencies.

A simpler, more elegant solution to the student debt issue is for Congress to repeal the law that makes exempts student debt from bankruptcy proceedings. It was enacted in response to reports of medical doctors and lawyers declaring bankruptcy even though they were high earners. It would is possible to create alternatives to student debt relief that are targeted to professions or people. For example, in Mn, if a graduated law student works as a public defender for 10 years, their law debt is forgiven. One would think that reasonable and rational people could come up with similar policies to help those with student debt issues.

However, that would require politicians and their dupes to stop their posturing. And more importantly, for the US to forge a real consensus on the public value of a educated public. Forgive the cynic in me, but I am not holding my breath while I wait.

Also, forgive my long-winded response. To directly respond to the OP question, student debt is not a crime against US's future. However, the lack of compassion and rationality in the opposition to some sort of relief is a crime.

The main part I don't like about forgiving the debt is because it leaves such a fog in the future what debt means. I don't think it is ever a good idea to encourage in any way people incurring debt for the sake of it.

What would you say to making college free for everyone. But when it comes to tax time, let those people who got the free school from the government pay their taxes at a higher rate than then the uneducated labor? There would not need to be any changes to the bankruptcy laws because the IRS has the power to collect.

Income tax rates should be based on income levels not necessarily educational levels, so I don’t like that part of your plan. As to making college free for everyone, I think that presents lots of issues that I don’t think the US as a whole is ready to grapple with in a rational manner.

 

[Politesse]

Furthermore its not fair to punish trade workers (or others who did not go to college) by making them pay in taxes for doctors and/or others (making much higher wages) who decided to go to college.

If the same opportunity is also offered to them, how is this different from any other kind of government grant? Should we end all government grants, scholarships, subsidies, bonds and so forth on the grounds that only some people take advantage of them? If there's a common benefit from a government expenditure, as there very clearly is in the case of a college degree, then it is to me a valid use of a national budget. I don't grow corn; does that mean I'm being "punished" for not growing corn every time an Iowa farmer gets a check from the USDA that my tax dollars technically funded? We're giving farmers 28.5 billion dollars this year, almost exactly the same amount that was pledged to the debt relief plan, with less return as most subsidized crops aren't anything like as profitable as a college degree. If they were, we wouldn't need to subsidize them. But the expenditure is actually fine with me, because it is keeping the otherwise failing economy of the American breadbasket afloat and ensuring we continue to have a domestic food supply if we come to need it. Education is a likewise sensible investment that benefits all concerned, as it makes it more likely that the jobs you mention will stay in the US, and that they'll be able to fill them with the local workforce rather than needing to hire overseas, to say nothing of intangible beneftis like having a literate voting population, or the survival of art and culture for another generation.

I do agree that college should be free, however, just as it is in most other wealthy nations. Debt forgiveness was a stunt, not a solution.

 

[Toni]

That being said, Thom Hartman makes a very good counter point which is hard not to agree with. That in the 1960's California had free tuition and many other states paid 80%. That during those years America actually benefited by 7 to 1 ratio payback for the money spent on tuition versus taxes received from the workers productivity using their education. But I would say those workers were able to find that kind of high value employment back in those 1960's days....I'm not sure they could do that today. There have been too many higher value jobs moved out the US by this point and I find it hard to believe a 7 to 1 payback could be realized today.

A lot of jobs have been "moved out" of the US such as in manufacturing, while there are a lot of jobs available to people with higher education. The company I work for has a long list of very well-paying jobs available for educated folks, mostly in engineering, software development, cyber-security, product development, design, etc. etc. etc. I'm in commercial operations, and we have jobs that need to be filled in management, fleet operations, incident response, and other roles. It would be easier to fill a lot of these positions if our education system didn't have so many financial barriers to entry. The company pays very well, but when you add in absurd student debt and the high cost of living in our home city (San Francisco), even a six figure income is "just barely getting by."

I can't speak to California in the 1960s, but when I attended college in the mid 1980s, a middle class, one income family that had been putting away a little money every year could send their kids to a 4 year university and have them graduate without a dime of debt.

As with many things in the US, what should be a public service - education - has been hijacked and turned into a source of profit for private companies and financial institutions. We spent trillions to bail out financial institutions in the wake of the Great Recession, so it's not like we can't afford to forgive a little (or a lot of) student loan debt. Do that, and then work towards making higher education affordable for everyone.

My kids attended college mostly in the early 2000’s. I worked a variety of jobs in order to help pay for their college expenses ( in addition to their father’s salary), some of which were their responsibility so, by at least the early 2000’s, one income was not sufficient.

When my siblings and I attended university in the ‘70’s, our expenses were primarily covered by scholarships. Virtually all remaining expenses were covered by summer jobs. Hubby paid for college through summer jobs, modest scholarship and modest student loans, the repayment of which was $15.35/month.

The biggest difference between our university education expenses and our kids’? How much the state supported higher education. Also the cost of student loans.

 

[RVonse]

Income tax rates should be based on income levels not necessarily educational levels,

But the IRS already does this so it really would not be new at all. For example, income from capital gains are taxed much lower than labor rates. In exactly the same manner, the IRS could further differentiate labor tax rates if they wanted to. The colleges would simply notify the IRS their student enrollments so that those taxpayers would be targeted appropriately for the higher rates.

It would be a win for the student because he/she would get free education in order to secure a high paying job. A win for the government because more population would become educated and productive. And a win for the lower labor class because they would not have to pay for any of it.

 

[Toni]

What I think about student loan forgiveness is that the majority of student loans should be forgiven outright. States need to step up and to start covering the same percentage of university expenses as they did in the 60’s and 70’s.

Student loans, when necessary, should be federal or state loans at extremely low interest rates, payable over 30 years and dischargeable through bankruptcy or under certain life conditions, usually health related where the ability to work is severely compromised. Student loans could be discharged through public service jobs ( teaching or practicing medicine in underserved areas, working as a public defender, etc.) but it should be pro-rated so that partial discharge was possible after 5 years. Note: Under Trump, there was an effort to abolish loan repayment in exchange for public service jobs( as mentioned earlier). I do not trust that a similar effort would not be mounted should Republicans regain power—and perhaps pass.

Lowering the cost of going to medical school, law school, graduate school could also serve to lower the costs of done services to the public. I’m thinking specifically of medical school costs and the costs of psychological /psychiatric care, which is desperately needed, as is social work.

I also think that the cost of going to trade schools needs to be much more heavily subsidized.

I know that the popular proposal is to make community college free for all, and allowing all community college coursework to be substituted at four year colleges and universities. I think that is as good an idea as the actual ability of community colleges to deliver the same content and rigor as four year colleges: mileage varies greatly. I have nothing but awe and respect for some community colleges and professors but I went back to school as an adult abd was sometimes in class with students who did their first two years at community college where they excelled but who were struggling tremendously to do coursework at the university level. I know that in some areas of study, an entry level course at a community college covers less than half the material that is covered in an entry level class at the 4 year university I attended, leaving community college students far behind their peers who attended university for their first two years. Not always, of course. But enough that I am extremely wary of that proposal.

But yes: community college should be free or close to it.

 

[Toni]

Income tax rates should be based on income levels not necessarily educational levels,

But the IRS already does this so it really would not be new at all. For example, income from capital gains are taxed much lower than labor rates. In exactly the same manner, the IRS could further differentiate labor tax rates if they wanted to. The colleges would simply notify the IRS their student enrollments so that those taxpayers would be targeted appropriately for the higher rates.

It would be a win for the student because he/she would get free education in order to secure a high paying job. A win for the government because more population would become educated and productive. And a win for the lower labor class because they would not have to pay for any of it.

But not all jobs requiring a college education are high paying. Yet we need well qualified teachers and social workers, the two careers that leap to mind.

The other reason that making the cost of a college education affordable—which means free for a lot of people—is that fewer students are going to graduate school—meaning fewer of them will be qualified to be college professors, should they desire to pursue a life in academia, where remuneration varies wildly.

So who will teach our future doctors, lawyers, architects, engineers, nurses, teachers, etc?

 

[laughing dog]

Income tax rates should be based on income levels not necessarily educational levels,

But the IRS already does this so it really would not be new at all. For example, income from capital gains are taxed much lower than labor rates. In exactly the same manner, the IRS could further differentiate labor tax rates if they wanted to. The colleges would simply notify the IRS their student enrollments so that those taxpayers would be targeted appropriately for the higher rates.

It would be a win for the student because he/she would get free education in order to secure a high paying job. A win for the government because more population would become educated and productive. And a win for the lower labor class because they would not have to pay for any of it.

There is a reason capital gains are taxed at a lower rate - it is to avoid indexing the gains to inflation. It is a 2nd best solution to the issue of capital gains taxation.


Whether or not a college educated person earns the same or more than a non-college educated worker depends on a number of factors. I know college educated people who earn less than plumbers or electricians.

If someone earns more, they should pay more in taxes, regardless of source of income. If they earn less, they should pay less, regardless of the source of income. Tax rates, if they vary, should be tied to the amount of income, not the source.

 

[RVonse]

But not all jobs requiring a college education are high paying. Yet we need well qualified teachers and social workers, the two careers that leap to mind.

The other reason that making the cost of a college education affordable—which means free for a lot of people—is that fewer students are going to graduate school—meaning fewer of them will be qualified to be college professors, should they desire to pursue a life in academia, where remuneration varies wildly.

So who will teach our future doctors, lawyers, architects, engineers, nurses, teachers, etc?

.

The market should determine the jobs worth doing and worth spending money for a high cost education. Because if a college degree does not produce enough value for that professional to pay it off, it certainly would not have enough value for a lower uneducated labor worker to help pay it off for them. Those jobs that aren't worth the price of their degree shouldn't be done or sought after in the first place nor should anyone be paying for someone else's education. I did not even expect my parents to pay for my education.

 

[RVonse]

Whether or not a college educated person earns the same or more than a non-college educated worker depends on a number of factors. I know college educated people who earn less than plumbers or electricians.

If someone earns more, they should pay more in taxes, regardless of source of income. If they earn less, they should pay less, regardless of the source of income. Tax rates, if they vary, should be tied to the amount of income, not the source.

I agree with the progressive income tax but I also agree with how FICA tax is handled. Generally speaking, people who will not collect social security later in life (railroad and/or government work) are not required to pay into FICA tax. In this same spirit, non-college educated workers should not have to bear any of the tax burden (or otherwise) for college degrees only benefiting those higher value workers. Its just not fair to those people. Because in the final analysis, everything that is free is paid by people who work.

 

[Toni]

But not all jobs requiring a college education are high paying. Yet we need well qualified teachers and social workers, the two careers that leap to mind.

The other reason that making the cost of a college education affordable—which means free for a lot of people—is that fewer students are going to graduate school—meaning fewer of them will be qualified to be college professors, should they desire to pursue a life in academia, where remuneration varies wildly.

So who will teach our future doctors, lawyers, architects, engineers, nurses, teachers, etc?

.

The market should determine the jobs worth doing and worth spending money for a high cost education. Because if a college degree does not produce enough value for that professional to pay it off, it certainly would not have enough value for a lower uneducated labor worker to help pay it off for them. Those jobs that aren't worth the price of their degree shouldn't be done or sought after in the first place nor should anyone be paying for someone else's education. I did not even expect my parents to pay for my education.

So who should teach children?

Who should work with individuals and families who need extra help because of poverty, disability, old age, mental illness, etc.? Who should do the job of social workers?

 

[Toni]

Whether or not a college educated person earns the same or more than a non-college educated worker depends on a number of factors. I know college educated people who earn less than plumbers or electricians.

If someone earns more, they should pay more in taxes, regardless of source of income. If they earn less, they should pay less, regardless of the source of income. Tax rates, if they vary, should be tied to the amount of income, not the source.

I agree with the progressive income tax but I also agree with how FICA tax is handled. Generally speaking, people who will not collect social security later in life (railroad and/or government work) are not required to pay into FICA tax. In this same spirit, non-college educated workers should not have to bear any of the tax burden (or otherwise) for college degrees only benefiting those higher value workers. Its just not fair to those people. Because in the final analysis, everything that is free is paid by people who work.

Really? Railroad workers and truck drivers don’t need doctors and nurses? Don’t need dentists? Don’t need engineers who design the vehicles they drive? Don’t need architects to design safe housing? Don’t need pharmacists? Don’t need teachers to teach their children?

Your world view is about as long as the length of your arm and I’m guessing you’re not very tall.

 

[bilby]

Yeah, this idea that a college degree only (or mainly) benefits its holder is completely absurd.

Indeed, many college degrees don't particularly benefit their holders financially; It's more lucrative to do an apprenticeship as a plumber or electrician than to get a bachelor's degree in most fields.

Having an educated population is hugely valuable to any country, and not being completely surrounded by idiots is a feature well worth paying for.

Universities teach students as a byproduct of their primary purpose. That some have, in recent decades, become businesses whose customers are students, and whose products are qualifications of dubious value to those customers, is obscuring this fact somewhat.

But it remains true that the main reason why universities are a national and global asset is that they do research. Universities are places where knowledge is made; That they also disseminate that knowledge is a secondary factor.

The rise of "universities" whose sole focus is the teaching of undergraduates is analogous to the rise of distribution companies like Amazon and Walmart, who will sell you all kinds of stuff, but who have outsourced its production and manufacturing to some distant land, and who make nothing themselves.

 

[laughing dog]

Whether or not a college educated person earns the same or more than a non-college educated worker depends on a number of factors. I know college educated people who earn less than plumbers or electricians.

If someone earns more, they should pay more in taxes, regardless of source of income. If they earn less, they should pay less, regardless of the source of income. Tax rates, if they vary, should be tied to the amount of income, not the source.

I agree with the progressive income tax but I also agree with how FICA tax is handled. Generally speaking, people who will not collect social security later in life (railroad and/or government work) are not required to pay into FICA tax. In this same spirit, non-college educated workers should not have to bear any of the tax burden (or otherwise) for college degrees only benefiting those higher value workers. Its just not fair to those people. Because in the final analysis, everything that is free is paid by people who work.

In the same spirit, it is not fair non- farmers have to pay taxes to support farmers, or childless people pay taxes to school children, etc….

Moreover, education benefits society in general, so taxpayers do benefit.

Finally, since money is fungible, how on earth would you be able to insure some group’s taxes do not end supporting this?

 

[ZiprHead]

Whether or not a college educated person earns the same or more than a non-college educated worker depends on a number of factors. I know college educated people who earn less than plumbers or electricians.

If someone earns more, they should pay more in taxes, regardless of source of income. If they earn less, they should pay less, regardless of the source of income. Tax rates, if they vary, should be tied to the amount of income, not the source.

I agree with the progressive income tax but I also agree with how FICA tax is handled. Generally speaking, people who will not collect social security later in life (railroad and/or government work) are not required to pay into FICA tax. In this same spirit, non-college educated workers should not have to bear any of the tax burden (or otherwise) for college degrees only benefiting those higher value workers. Its just not fair to those people. Because in the final analysis, everything that is free is paid by people who work.

Really? Railroad workers and truck drivers don’t need doctors and nurses? Don’t need dentists? Don’t need engineers who design the vehicles they drive? Don’t need architects to design safe housing? Don’t need pharmacists? Don’t need teachers to teach their children?

Your world view is about as long as the length of your arm and I’m guessing you’re not very tall.

Railroad workers have similar to a FICA tax. It's just administered by a seperate government agency.

 Railroad Retirement Board

 

[Loren Pechtel]

A lot of jobs have been "moved out" of the US such as in manufacturing, while there are a lot of jobs available to people with higher education. The company I work for has a long list of very well-paying jobs available for educated folks, mostly in engineering, software development, cyber-security, product development, design, etc. etc. etc. I'm in commercial operations, and we have jobs that need to be filled in management, fleet operations, incident response, and other roles. It would be easier to fill a lot of these positions if our education system didn't have so many financial barriers to entry. The company pays very well, but when you add in absurd student debt and the high cost of living in our home city (San Francisco), even a six figure income is "just barely getting by."

While it is popular to blame outsourcing, the biggest cause of job loss actually has been computers. Those jobs are increasingly being done by computer controlled machines rather than humans anywhere.

I can't speak to California in the 1960s, but when I attended college in the mid 1980s, a middle class, one income family that had been putting away a little money every year could send their kids to a 4 year university and have them graduate without a dime of debt.

That would require the state to actually fund education adequately. Much of the explosion of cost of education is actually a reduction in government money. Every year they make the students pay a slightly higher percent of the total cost.

 

[Politesse]

The rise of "universities" whose sole focus is the teaching of undergraduates is analogous to the rise of distribution companies like Amazon and Walmart, who will sell you all kinds of stuff, but who have outsourced its production and manufacturing to some distant land, and who make nothing themselves

Even non-research schools ultimately produce knowledge; the community college I work for conducts little research beyond the sociology of our little town, but we produce plenty of graduates, who then go on to research universities or labs out there in the world.