I’m sympathetic to Freddie’s last prescription for the young, debt-ridden and jobless:
Personally, broad student loan forgiveness strikes me as a sound policy both ethically and from a stimulus standpoint. You wouldn’t have to make it complete, but could agree to waive some percentage or some fixed value off of anyone’s load debt. I understand the sense in which this seems to punish those who paid off their loans, and I also know that the deficit hawks would howl. But this is indeed a great burden on our young adults, and I don’t see a moral hazard problem per se when it comes to student loans.
I’m also sympathetic to mortgage cram-down in bankruptcy court, and other forms of partial mortgage forgiveness, since it’s hard to argue that there’s something morally awful about those kinds of giveaways when bank profits have recovered due to a massive taxpayer bailout.
That all said, it’s tough for the person who paid off his mortgage and didn’t max out a HELOC to remodel his home to accept that his neighbor who did so will be getting his pergranteel for free. Similarly, a student who’s working a crap job and barely making payments on his student loans isn’t going to appreciate his unemployed friend’s forgiven loan.
But it’s not hard for everyone to appreciate universal Medicare. If you look at We are the 99%, there are a lot of uninsured people there, and a bunch more for whom insurance is a huge burden. If we’re going to pitch cures for what ails the 99%, let’s just get the healthcare monkey off our backs. It’s a simple, fair contribution to everyone’s lives, and we’re already partway there.
boss bitch
Wouldn’t both of these people qualify for student loan forgiveness?
4tehlulz
Aren’t loans forgiven outside of BK considered taxable income?
I’m not sure who I’d rather deal with: Sallie Mae (or the DoEd) or the IRS.
Libtard
Wow. Why does Obama get ZERO credit for Obamacare? We have a universal health care law, ready to take effect in just a couple more years, and the people who would benefit most, are the most determined to let it fail. Now we’ve got lefty bloggers pretending like it doesn’t even exist!
It’s dang discouraging. People on the right don’t eat their own like this.
Zifnab
@4tehlulz: Well, two things. First, if you’ve got $40k in income that gets written off, you’re going to have to pay down a mere fraction of that – in the neighborhood of 15% to 25% – in taxes. I’ll take a 75%+ loan write-off any day.
Secondly, the interest the IRS charges you for an unpaid balance (in the 2-4% range) is far more forgiving than that which a student loan would charge (my girlfriend has grad+ loans in the 7-8% range).
Finally, if the government wants to classify this particular debt write-down as something other than bad debt, it is certainly free to do so. So I don’t really see this as any kind of problem.
Shlemizel
While I am enthusiastic about the idea of student loan cram down (I have two kids in college on a deal where, if they graduate, we pay off their loans) I don’t think it solves the actual problem. They need jobs & jobs that pay a salary capable of having enough money for paying off the loans. Wages have been flat since 1980 while costs have sky rocketed.
This would be a huge relief to a lot of Americans but we really need to solve the actual underlying problem, high unemployment and stagnate wage growth. This won’t address the real issue.
beltane
My son is a high school junior so I am still reeling with sticker shock over today’s college tuition costs. Tuition, room and board at the very mediocre public university he wants to attend is over $28,000 a year. When I attended a public university in the late 80s early 90’s I paid $650 a semester, most of which I was able to pay with the income from my $8 an hour bookstore job.
Funny how the jobs still pay $8 an hour but the tuition has gone up more than twenty-fold.
capt
There is never an actual “moral” hazard by helping people in need. Now, there are some people who might try to game a support system but that has been true since the primordial ooze and an issue we will always have to address.
Frankly the only thing remotely moral about the big bank bailouts is the fact that a full collapse of the economy would hurt all of us 99’ers. The fact that the banks used the money for bonuses is just part of them gaming the system.
The people who write the bills that become law could have had a line in the TARP that simply said no bonuses for anybody if you have to take free money from the people – no bonuses until after the money has been repaid with interest.
(I know – I dream a bunch)
Zach
Universal, nationalized healthcare is a no-brainer from most economic conservative’s standpoints once they’re unwedded from some connection to the healthcare industry. There’s little opportunity for growth in health insurance or healthcare (especially with an inevitable focus on cost reduction in the near future). Nationalizing healthcare would almost instantly solve a majority of the long-term budget shortfall if we simply copied any other country’s healthcare system. It would instantly eliminate pension liabilities that are sinking companies who either didn’t foresee healthcare inflation or figured they could get out of paying for it one way or another in the future.
I think you can make a solid argument for nationalized drug development (not nationalizing the industry, but funding non-profit research of drugs in addition to more basic & clinical research) as well.
There are very few industries like this (electricity transmission maybe?) where there’s little the private market can do as far as innovation goes. There’s not even a slippery slope. At some point, I could see cooperation between liberals and Norquist-types on this. It’ll kill the low-tax folks on the right to dump support from insurers, hospitals, etc, but nationalizing healthcare’s the only route that’s politically feasible and doesn’t require huge increases in Federal revenue.
jon
Forgiving student loans would benefit me, but I’d rather have the government make partial payments for those who can’t find good jobs in their field. I can pay mine, so the focus should be on those who can’t pay theirs. Academic welfare (student loans) can then focus on debt and the government can use the information to approve or disapprove loans based on needs and gluts in the job market. Too many lawyers? Tough luck getting into law school. Not enough engineers? Here’s some money. Want to pay $30K annually for a creative writing degree? Then use cash.
The ability or inability of students to get loans could then move universities to change their pricing. Not a perfect plan, nor would it work quickly to change things, but it’s better than the nothing that’s being done now.
Gilles de Rais
And yet that very argument is being made. Repeatedly.
Waingro
I’d be happy with a more humane repayment program. No debt should be completely forgiven to avoid moral hazard issues. Something like paying between 5-10% of your take-home pay for 10-15 years. Could be a sliding scale based on your income and how much debt you have. If you’re working, you pay something, if you’re unemployed you pay nothing, but you don’t get fucked with late fees and interest, etc. I’m pretty sure this is similar to the Australian system, though I could be wrong.
Dennis Doubleday
I think complete forgiving of student loans is probably a bridge too far. The benefits are too unevenly distributed (compare one kid who went to the Ivy League and racked up huge debt but has excellent career prospects to another who went to a state school to avoid significant loan debt.)
That said, as a parent of two children with significant student loan debt, I think it is awful the way the system has been rigged in favor of private student loan lenders. These lenders are getting 6 or 7 percent interest on loans that are risk free because of the government guarantees. They are useless middlemen taking their cut. I believe the Obama administration has already changed this to some extent for new loans. But having the government pay off these loans and substitute loans at the current 1% or so that the market pays for risk-free investments these days would be a strong stimulus, good politics, and just policy.
jon
@Zach: The GOP is the party of low wages. No other issue is as important. Not anti-communism, not racial issues, not abortion, not women’s rights in general, and not even gun control. The thing the GOP fears more than anything in the world is the workers being able to go off and start businesses of their own. And the reason most people can’t do that is because of the price of health insurance. The GOP wants workers afraid to leave their jobs, unable to leave their paltry insurance plans, and unwilling to risk their economic health by leaving big corporations and big corporate control. Immigrants, affirmative action, maternity leave, and pensions are a sideshow to avoid the fact that our raises for the past forty years have gone to pay for health insurance and for the CEO’s platinum parachutes.
Dustin
The fact that I would need to provide health insurance to my employees is THE reason I can’t afford to quit my job and start my brewery. The fact that every employer needs to either provide insurance at the cost of competitiveness or be a greedy asshole with no regard for their workers in this country is the problem. Single payer would go a long way to fixing the country. Everything else is a bandaid.
adamchaz
That feeling of not appreciating that an unemployed friend gets help out on their student loans is called jealousy.
However forgiveness of debt federal guaranteed debt is one easy way the government can increase demand in an economy that is de-leveraging. If I’m not spending money on my student loan payments or my mortgage payments I can by more goods and service. A program that forgives federal guaranteed debt would be a bailout for Main St.
Satanicpanic
Who cares if someone else doesn’t like it? I’m tired of people whining “Oh, that guy gets ___ but I don’t.” Get over it. The only reason why I even care about what the rich are getting in this society is because they’re using their wealth to fuck the rest of us. Some broke person getting a free ride to college? So what
jibeaux
So I once read this story about the private lenders and a particularly naive young woman. She went to some heartstoppingly expensive school, I believe it was Columbia, and ended up getting a lot of these private loans and graduated massively, massively in debt with the best job she could get as a photographer’s assistant. She got her degree in religion with a minor in women’s studies. While I feel for her that she has these ridiculous loans, I cannot understand how someone can be smart enough to graduate from Columbia without apparently understanding that your B.A. in religion is not going to land you a job paying anywhere near enough to let you take out a six-figure loan. Why was she allowed to borrow that much from the lender? Why didn’t Columbia counsel her about borrowing that much? Why didn’t her parents, friends, anybody counsel her? And once you have a six figure loan from your undergraduate education that you can’t repay, anything you might do to get yourself out of that hole — dental school, pharmacy school, medical school — are going to be closed to you because you have to borrow more money to do that. I don’t know what the answer is to that, but I do know I don’t want my tax dollars forgiving that loan if for no other reason than if you’re dumb enough to loan a nineteen year old religion and women’s studies major that amount of money, then you need to eat it when she inevitably defaults.
Dustin
ignoring peoples jealousy is part of the reason we have the problems we do in this country. “I payed mine, fuck you” isn’t a sentiment you can ignore; where do you think the tea party came from?
Cassidy
Simply making colleges and universities change their ponzi scheme so that loans aren’t automatically factored in to their profit margin would be a good place to go.
Zifnab
@jon:
The problem with this idea is that its very backward-looking. We’re suffering a problem of too many lawyers today because we had a crunch in a number of other professions – journalists, teachers, business majors – and “lawyer” was the only career that made sense if you planned on saddling yourself with an extra $80k in debt to retrain yourself.
Tell everyone “Just become engineers” and in five years you’ll have a glut of engineers with no job prospects. Then we can all thumb our noses at the stupid would-be engineers of tomorrow like we’re thumbing our noses at the would-be lawyers of today.
That’s ass backwards. If you’ve got a glut of lawyers (or journalists and school teachers) you should be trying to maximize their usage, not funnel them into another major. That requires a government willing to directly hire unemployed workers. And our country – with its 34k public sector job shrink last quarter – clearly isn’t interested in doing that.
If you really, really, really want a solution to all the debt and the financial pain – just hire a bunch of students to do what they are trained to do. Hire creative writing students to creatively write. Load up the DoJ with new lawyers. There’s lots of work to be done. Pay people to do it. Then everyone wins.
Cassidy
@Dustin: Bigoted, old, white people utilizing every gov’t service they could and money from the KocH brothers. They aren’t special.
superking
Here’s my one time simple solution to the mortgage crisis: Fannie and Freddie, who own something like 55% of all loans in the US, reduce the principal on every single one of their loans to 80% loan-to-value. Then, those loans can be recast using their existing principal balances and terms. Every single loan, whether in default, imminent default, or current. There is no moral hazard problem because everyone wins, and no one can control if their loan is owned by the GSEs.
At 80% LTV, people can start selling their homes and getting a little money to move. It would prevent foreclosures for both people who want to stay and people who want to move. With cheaper houses, the housing market gets moving again.
The problem with the housing bubble is that loans lock values in for 30 years. We need to deflate values in order to get things moving again.
Now, I know this is a fantasy, and you know this is a fantasy. But why is it a fantasy? It’s not because of the Republicans in Congress. It’s because the Federal Housing Finance Agency–an executive agency whose director was appointed by President Obama–won’t let it happen. If you recall, Fannie and Freddie are owned by taxpayers at this point. The federal government owns something like 80% of all their stock, because we had to bail them out when the bubble collapsed. The FHFA oversees Fannie and Freddie. It’s their regulator.
The FHFA has imposed a rule that PROHIBITS FANNIE AND FREDDIE FROM LOWERING THE PRINCIPAL BALANCE ON ANY OF THEIR MORTGAGES.
This is a solveable problem, people, but we don’t have an administration that wants to take action on it. We need an organized campaign to get the administration to force the FHFA to change their rules. Maybe my fantasy solution wouldn’t come about, but if Fannie and Freddie start allowing servicers to write down loans, some people will be better off.
beltane
@Cassidy: Yep. That’s where the real problem lies and simple loan forgiveness doesn’t address the question of why the growth in the cost of higher education has so dramatically outpaced the overall inflation rate over the past couple of decades. Same situation with healthcare costs. Why are we allowing ourselves to be ripped-off in this way?
Evinfuilt
It’s too bad we can’t get a simple stimulus like loan forgiveness and single payer. See that makes people think they can get something from the government. Now a tax holiday for bringing in money from off-shore, the repubs can get behind. Who cares if that “punishes” those that don’t abuse the system, not actually get money into the system. It does keep their benefactors happy.
Republicans for hypocracy.
RSA
@capt:
I agree that moral hazard probably isn’t the best way of thinking about this thing. The moral hazard of forgiving student loans across the board is that students will rack up bigger loans, knowing that they won’t have to pay for them. I don’t think that this is a plausible outcome–as long as regulators can keep an eye on for-profit colleges trying to make a buck off the situation (which is a problem already).
What we’re really talking about is something other commenters have observed: People who think, “I worked hard for what I have, and no one else should have benefits that I didn’t.” This is pretty common, from anti-immigration people who say that it’s unfair for people to jump the line (a really weak argument–supermarkets solve this problem by just opening up new lines) to parents who are strict with their kids because the parents had a tough childhood.
Dustin
@19: There was more to it than that and you damn well know it. Ignore the source funding, where did the underlying emotion come from? It may be misdirected, but economic strife in the lower/middle classes that’s existed for decades isn’t exactly a small factor. They were conned into attacking the wrong targets but their anger is the same as ours and it is VERY real. The readers on this site may, as a rule, know who to blame for our country’s problems but that doesn’t change the root cause. Call it jealousy, a demand to honor the social contract, whatever. The anger is always the same and if you think you can ignore that you’re wrong.
Dustin
Damn moderation que. Post your list of “banned words” or get a new filter, because the one you’ve got sucks.
Brian S
@jon: Sooooo..fuck the humanities then? Because under that system, that’s what will happen. Hell, it’s already happening in tons of public schools.
Nutella
@beltane:
That’s one part of the problem that the government can’t address directly. What government can and should address directly is that this price rise is supported by loan regulations that make the taxpayer the guarantor of the loans and the loans unforgivable even in bankruptcy so the lenders get hefty interest rates for completely risk-free loans.
That’s bad law that needs to be changed rather than adding on more bad law to regulate college prices.
Rafer Janders
@Dustin:
The fact that I would need to provide health insurance to my employees is THE reason I can’t afford to quit my job and start my brewery.
Well, same here, only not a brewery. Got an idea for a business, it would eventually employ dozens to hundreds of people if it worked, but no way could I cover health care for myself and the four-five people I’d need to get it off the ground for the first few years. So it’s never going to happen.
Sad for me, but sadder still for the people who’ll never get those jobs.
WereBear
Moral hazard only applies to the 99% who just want to stop getting ripped off.
Banksters wrecking the economy and getting well on the 99%’s dime?
Well, supply your own word. I don’t want to get moderated.
Nutella
@Rafer Janders:
The romantic idea that the US as the home of independent small businesses and rugged individualists is completely wrong. Most countries have more independent and small businesses than we do and lack of health insurance is the biggest reason for that.
The economic system is quite deliberately stacked against small business. Health insurance is vastly more expensive per person for smaller companies. Small companies don’t get bailouts and tax preferences that big companies get since they don’t have lobbyists.
The US system is extremely hostile to individual enterprise by design.
NA
A central problem is the way states no longer cover anything close to basic operational costs. They haven’t for some time. Students are suffering because state schools have been in large part privatized, dependent on student tuition and fees, grants, and corporate support. Childcare and transportation divisions for students, for example, are often expected to be “self-supporting” within the university context.
jron
College costs are to the point today that it’s not actually clear that it’s worth going, and I think the guaranteed loans are a big reason for it.
There is simply no reason for colleges to compete on tuition costs. Of course they don’t appear to be putting their newfound cash into professors or scholarships, rather into investments, ground & buildings (not labs as much as fitness centers), and CEO-competitive pay for the very top.
Just my almost-uninformed opinion of course. Still, as an architect I am often struck by how expensively-detailed college campus buildings and landscaping are today compared with work elsewhere (doesn’t mean I don’t love them), and how their newer facilities for student life tend to surpass anything remotely available for the public in their surrounding cities.
Edited to add: public universities are being abandoned by their states for the same reasons of easy loans–governments know they can pass the costs on to the students. They can pay it now even if they can never pay the loans off later. State colleges now cost what private universities cost back in my day. And private universities are simply ridiculous.
RSA
@Nutella:
Thanks for the link; I’d never seen that, and it surprised me, though it shouldn’t have.
Nutella
Let us not forget the most egregious moral hazard: The banksters who perpetrated massive fraud against mortgage holders are not, and never will be, in jail.
jl
Don’t have time to read all the comments, so apologies if I repeat something.
Freddie seems to confuse unfairness with moral hazard, and I do not think his unfairness argument is correct.
Moral hazard refers to the effect of the policy on the incentives of the recipient of the loan forgiveness. So, the moral hazard argument should be that student loan forgiveness would affect these ex-students’ incentives to make investment decisions in the future, or affect future college students’ incentives to get a job after graduation rather than move into their parents’ basements and beg for their own loan forgiveness program. How plausible is that scenario, assuming that good jobs were available? I do not think it is very plausible.
The unfairness argument would apply if previous generations of students also faced a very bleak job market and did not get loan forgiveness and this generation did. But that is not the case. If you want to make that argument, then you should at least compare the prospects of the graduates following the 2000 recession and weak recovery with this recession and weaker recovery. But this recession was much bigger, and the recovery weaker. So, I think the parallel is weak.
The linked Wolfers’ argument is a mess also. Similar implausible moral hazard argument. I do not follow his logic on the most bang for the buck argument. A student who cannot find a job, and suffering a crushing student debt loan, that cannot be discharged in bankruptcy is surely operating under severe spending constraints. Also these people would normally be starting families, if they had jobs, so they would spend.
Wolfers’ distribution argument is flawed because he assumes that college graduates will not be poor in the future. Need an argument for that, unless Wolfers is a real business cycle type who believes the recent graduate are taking a voluntary vacation. What is the likely lifetime income and wealth trajectory of these ex students?
Wolfers also seems to assume that these students are all liberal arts or business students who are upper middle class and above. But many of them are poor and working class students who got ripped off in a private trade school, or working class kids who got technical education at a public state college or community college (which is quite expensive in many parts of the country).
Cassidy
I don’t if I agree or disagree with this. I will say that anecdotally, at least the profit college is providing the product. We’re trying to get my wife through nursing school. The profit schools can do it in about a year, certification and all. The price breakdown is pretty cut and dry: Pell Grant, maxed loans, this is how much you owe after that. Now, why can a profit college deliver on the goods, yet a 2 year level CC can’t? But they’re still factoring in the same costs. That’s bullshit. If you go the “cheaper” route, you’re still getting the loans, still maxing the Pell Grant, maybe not paying anything on top, but it takes twice as long.
WereBear
Oh, I know. I scraped by for ten years in a small home business; the Amiga computer, which helped pioneer modern movie special effects and video editing… yet was attacked by Microsoft’s cartel mentality and had to give up after the third bankruptcy.
Innovation and good ideas don’t make as much money as monopolies who don’t give customers any choice but to get gouged.
PeakVT
@beltane: That $28K isn’t in Vermont, is it?
Commenting at Balloon Juice since 1937
I had a fifteen year mortgage and student loan that I paid off. I doesn’t bother me at all if someone else’s is forgiven. I would prefer whatever it takes for the economy to improve so that people could be secure and happy.
jl
@Cassidy: Because public schools are getting their budgets severely cut on short notice. That is why you cannot get through in the scheduled time. Just like private schools will cut back, or disappear when the next credit crunch comes, and they cannot attract investment funds.
B W Smith
@superking: I agree with your idea and think that would stimulate the real estate market. I also think such a move may force private entities to follow suit. Just one nitpick, are you sure the head of the FHFA is an Obama appointee? I thought I had read that the agency had an acting head that was a Republican. I think Obama has either not named a nominee or the nominee has not been approved. I’m not sure it would make a huge difference because of the membership on the board.
CarolDuhart
I wonder if the best solution in the long run for colleges would be to link college funds to public service. Fund the colleges the same way we fund the Pentagon/Military Industrial Complex. For the student: you can go completely free, but you will have to spend a certain amount of time in public service in exchange. Maybe a CCC type service, or the military, or VISTA, or the Peace Corps. Older students who have jobs and children can work at service sector jobs or have a percentage of their wages extra taken out of their wages. Upon retirement the same offer can be made to these students to work at public service as well to pay off the debt.
beltane
@PeakVT: Plymouth State in NH. In-state there is $25,000. I told my kid that he’ll spend the rest of his life regretting taking on that debt should he decide to do it. The college fund we have for him would have covered a good percentage of the costs attending college at the time he was born but I now think he’d be better off using that money to travel overseas for a few months as it would only cover a single semester plus textbooks.
Being a non-rich person in this country is like having mosquitoes feast on your blood while vultures peck away at your entrails.
Kola Noscopy
What? I thought Mr. Obama did that already with ACA. What are you folks complaining about?
Obama’s “got this.”
Kola Noscopy
@Libtard:
Perhaps because it’s a ten percent measure at best, Obama cut its nuts off before he started negotiating, it hasn’t taken effect yet, and the future Republican congress could destroy it with a wave of its hand.
Maybe that’s why…
Nutella
@Commenting at Balloon Juice since 1937:
It doesn’t bother me if younger people’s loans are forgiven as long as the forgiveness doesn’t prop up the twisted system we have now. Forgiving the college loans needs to be paid for by the lenders, not the taxpayers. The lenders have removed all risk and this would hand some of the risk back to them where it belongs.
Cassidy
@jl: Then public schools need to come up with something better. The current model isn’t working. They’re more concerned about raking in the money.
Cassidy
@Nutella: I’d prefer to ensure every lamp post in the country has a banker/ broker/ lender swinging from it and a walkway of heads on pikes outside every major business school in the country. Too much?
PeakVT
@beltane: I just looked at Johnson State and it looks like going there would cost $17K for T+R&B, which is better, but is still a lot. Unless he can get a scholarship somewhere the best thing to do may be to go to CCV and then transfer to a 4-year school.
jpe
Loan forgiveness would cost the government an enormous chunk of money; one has to wonder if that money couldn’t be better deployed, like on health care.
Nutella
@Cassidy:
No.
jpe
@Nutella: Why on earth would they do that?
jl
@Cassidy: That is rather broad indictment of public colleges. You have a specific state or public schools in mind?
In CA, the administration of UC, and to a lesser extent, Cal State and community colleges, has certainly been interested in raking in the money for the top brass. On the other hand, everyone below the top brass works for less than they could in private colleges, and public ones in other states.
The very idea of CA community colleges is to serve a population that has no money, so there is not much cash to rake in.
Cassidy
@jl: Point taken. Florida.
Emma
@Kola Noscopy: You always show up to piss in the cornflakes, don’t you? Do you spend your time waiting to see where you can more-or-less logically insert an anti-Obama reference? Boring life you’ve got there, unless they’re paying you to do it. And revealingly ignorant to boot.
AA+ Bonds
“How Do I Society? Help :(”
I’m sorry, but the balance between these people’s liberties and rights and the welfare of society at large is the job of the United States government, and government everywhere.
There is no unconstitutional deprivation of life, liberty, and property in forgiving taxpayer-subsidized student loans – and, let’s be honest for once, they’re ALL taxpayer-subsidized.
chopper
@Brian S:
humanities are great. they are. but people have to realize that a bachelor’s in many of them just aint gonna add up to shit.
if you want to go into humanities, you need to accept the fact that you’re going to have to go to grad school. a bachelor’s in psychology means you get a great job as a bank teller.
chopper
@WereBear:
oh, the amiga. the greatest computer ever made.
AA+ Bonds
@jpe:
Hahahahaha!
Yeah, it could also be better deployed on cash payments directly to 18-year-olds (Thomas Paine’s idea), and worse deployed on expensive pork like a new fighter jet, and guess which of these are actually possible. Loan forgiveness? Also something that might pass Congress.
It’s pretty poor propaganda if you don’t even vigorously endorse “health care” in the post, killer.
Here’s a counterargument to the argument you didn’t even provide: why the fuck do you think professional services are so expensive per hour in this country?
AA+ Bonds
Crippling your young people with nondischargeable debt, debt that forces them to act conservatively with their resources as though they are already homeowners before they secure income – that’s a job-killer and an innovation-killer.
If policy is going to prime and maintain an economic engine (and I believe since Keynes that remains the only way anyone actually does things) it needs to shift this debt burden now.
RSA
@Cassidy:
Best of luck, Cassidy. I think that for-profit colleges do work for some students (though it’s independent of the “for-profit” part). My comment was based on two things: Something like 90% of the revenue of for-profit colleges comes from federal sources, including student loans, and the default rate on those loans is close to twice what it is for non-profit colleges. A lot of the students who enroll in for-profit colleges don’t know what they’re letting themselves in for, and it’s partly due to bad practices on the colleges’ part.
AA+ Bonds
@jpe:
How much do no-effort libertarian posts like these pay?
@Cassidy:
What “goods” is a private school delivering that a CC isn’t? If you mean a more highly staffed student finance department, that’s not remarkable at all.
Cassidy
@AA+ Bonds: A degree and certification in half the time a CC can do it. And there is more to it than that. Are you familiar with nursing programs? In general, what happens is that a RN curriculum is tied to the CNA or MA program. So a nursing student spends the first semester or two getting a certification something they don’t want or need. Theoretically, they could work part time as a CNA or MA while going through school after that and that’s how schools sell it, but the real point is to add on a few more semesters to squeeze out the money. A “RN” should only take about 2 years, at most to get, although much less is completely viable. That’s one year of Pre-req’s and one year of Nursing School. Private colleges are doing that.
Zifnab
@CarolDuhart: Obama had a plan back when he was running for President that amounted to 100 hours of community service in exchange for a $4000 college scholarship. This would have been an amazing deal for prospective college students and you’d have seen people lining up around the block to take advantage of it.
But money is expensive, so fuck that.
jpe
@ AA+: There’s nothing libertarian about it. I think hundreds of billions of dollars would be better spent on child poverty and health care than on repaying student debt. Of course, that assumes a world in which any of those is politcally feasible.
superking
@B W Smith:
The Acting Director is Edward DeMarco. Here’s his bio: http://www.fhfa.gov/Default.aspx?Page=67
jl
@Cassidy: They must do things differently in FL. Two year RN nursing programs are common at CA community colleges, and most RNs educated in this state are coming out of those two year programs now. I know several who went that route. A person wants something fancier, they go to a four year state university. Then to a UC campus if they want a PhD.
From what I am told by nurses, a lot for profit CA college RN degree programs are considered sketchy.
JITC
@Dustin:
Single payer would go a long way to fixing the country. Everything else is a bandaid.
Here here!
Brachiator
@mistermix
There is already huge, massive mortgage forgiveness for people who have lost their homes due to foreclosure. There could be more for loan modifications, but the financial industry and the Republicans drag their feet on this.
However, the larger problem is that too many people were given loans under false pretenses. They simply don’t have sufficient income to keep their homes. And income stagnation is keeping new buyers out of the market.
I could see some student loan forgiveness in exchange for some kind of state or national service. And much more than 100 hours. Blanket forgiveness, no.
Cacti
@RSA:
For-profit culinary schools might be the worst offender in that regard.
Pay about $50k for an AA in culinary arts, get a job as a line cook for $9 an hour that you could have gotten w/out a culinary degree.
jl
A macroeconomic point that slipped my mind is that one of reasons for the financial panic, and resulting recession, and weak recovery is that there is too much face value paper debt chasing too little money, and too few productive resources in the economy.
So, somebody’s debt has to be reduced.
One of the reasons for the weak recovery is that too many people are trying to make due with the debt overhand they have to deal with (that is mostly people), or are spending more resources trying to capture what revenue flows there are to make their paper debt good, or trying to pretend to be solvent (that would be the financial industry, mostly).
People can nit pick around about what is ‘fair’ or avoids ‘moral hazard’ or whatnot. But those concerns do not deal with the fundamental problem.
So, what to do? Maybe a little inflation (but no, that is out too, since the financial industry thinks that would make them pay an ‘unfair’ share of the burden).
So, at some point, weak arguments about violation of some arbitrary, data free and speculation heavy, unfairness standard have to give way to the common good. IMHO.
Ruckus
@Nutella:
The US system is extremely hostile to individual enterprise by design.
As a small (very, very small) business owner I agree wholeheartedly with this. There are very few issues from any government entity discouraging very small business, the blockades come from big business, from wholesalers, from the very industries that the small business supports. Banks, suppliers, landlords, they all want the one big company who pays fees, buys more inventory, pays inflated rents, rather than more, smaller customers, since we all still use paper for every accounting and customer interaction that happens (/snark) having more customer interactions is bad for the big companies.
I am the 99%
superking
@Brachiator:
This is sarcasm, right?
Emerald
@Kola Noscopy: It’ll get me covered under the expansion of Medicaid. Now, Medicaid (in my case, MediCal) isn’t much to speak of, but it’s a sight better than what I’ve had for the last ten years, which is nothing.
If you’re over 50 and you lose your health coverage for any reason, you don’t get it back until Medicare. In two years that changes. To me, that’s a lot.
As to the student loans, I think there ought to be usury laws. I borrowed a total of $40K over five years, ending in 1994. I’ve been paying a tad under $400 per month since then. I’ve got the debt down to just below $30K now, never missing a payment (yeah, compound interest is a bitch).
But I’ve paid back right around $80K (a tad over or under). That’s a 100% profit to the banks who never took any risk to give me those loans in the first place, and take no risk now. Plus, if I default, they’ll garnish my Social Security (which, because I was born in the magic year 1950, I can’t get until I’m nearly 67 because of Reagan’s deal). I also can’t get rid of the student loans by declaring bankruptcy. Dunno what they’ll do if I die before Obamacare kicks in.
Dick Durbin said: “The banks own the place.”
Yup.
So I’m entirely sure we won’t get any usury laws. But I do think that those of us who have paid back double what they borrowed, if anybody’s loans should be forgiven, it’s us.
Selfish, amirite? I am the 99%
Samara Morgan
college mortgage paper is just the new sub-prime mortgage paper.
and freddie is part of the problem, because he’s out there pimping the value of a four-year lib arts degree.
Arclite
Also, too: while we’re talking about student loan forgiveness, let’s not forget many of those students were sold a bill of goods by for-profit colleges like Phoenix while receiving useless degrees. Let’s investigate and prosecute those fuckers that have committed fraud and forgive those loads first.
CarolDuhart
@chopper: This is where my service for debt would help tremendously. Not everybody can do degrees where they push money or do technical stuff. There are a lot of liberal arts that enrich our democracy and add meaning. So how do we make it work and save the humanities? Perhaps some service while in college may be the ticket. Aspiring humanities people could use their national service to tutor kids, provide an ear to people who need one, work as government clerks and aides. It would certainly lighten up things to have some creatives work alongside government officials for a while.
Expand the government again. We the People hire each other. Tax the financial derivatives people-they don’t make anything or hire anybody anyway.
Kola Noscopy
@Emma:
My bitter but curiously satisfying piss is a necessary antidote to the saccharine-sweet Otard effluvia you and your fellow travelers endlessly drizzle over the flakes.
Stop effluviating and I’ll stop pissing.
Libtard
@Kola Noscopy:
How is Obamacare a “ten percent measure at best”? Whatta joke.
Why not blame Nancy Pelosi for bank bailouts and the alleged failings of “Obamacare”? No, cuz lefties like her, cuz … ??? I mean, I like the lady too, I think she did good work – same damn work that Obama did, actually.
jon
@Brian S: No, I don’t mean “Fuck the humanities”. What I mean is “Fuck the humanities degrees costing as much to get as an engineering degree.”
I have a number of degrees, including humanities, creative writing, and studio art. And a masters in library science/information resources. The pricing structure for big colleges is out of whack in some cases, and that’s what I’m saying. I’m not saying any of my degrees are worthless. But I’d be lying my ass off if I said I thought they all were worth the same.
Katie
Forgiving student loans is a huge slap in the face to all the people that actually paid off/are paying off their loans. I have no sympathy for people that whine about their student loans, unless it’s about the outrageous interest rate that some of them have. I could see forgiving the interest, but certainly not the principle. I graduated completely debt free a few years ago, by working full time and taking 4 classes a semester. Yes, it took me 6 years instead of 4, but getting out without owing anything was well worth it.
I now work at a state university and the money many of the students seem to have to fling around is simply amazing. It’s kind of funny to look at parking lots–the beaters are in the employee parking lots, the nice cars belong to the students. Most students I talk with don’t really think of their loans as something that will need to be paid back, collectively they seem to have their heads in the sand.