The problem I really see is that we've dug ourselves a big hole. The safety net created for the banks were done to ensure that everyone could get a loan. Banks were "worried" that people would default on their student loans and run away with the money, even though this hasn't happened or is really rare. There was an unfortunate side effect that this incentivized banks to give out riskier loans. Couple that with telling everyone to go to college, kids that don't know what they want to do, and schools that are also seeking a profit, and you get a pretty messed up system.
The unfortunate part about this, is that I believe that if you remove the protections on the loans, many students now WILL default, because they have too much debt and are incentivized to do so, if they are one of the larger loan carriers. I'd say "bite the bullet, and that's what banks get for giving out risky loans" but we know that's not going to play out that way, especially since the gov owns a fair portion.
Making tuition free is nice, but the generation that took out loans isn't helped AND this does not reduce the college price problem. The price was inflated and there is no reason for them to decrease it. Kind of a parallel to health care here. That's the cost. I like this idea, even if I have to pay back my large loans, but I think the fundamental price issue also needs to be solved.
Giving a portion of your earnings is a decent method, but you already bring up the problem with that. And this also doesn't solve the price problem, in fact it encourages the price to keep going up. (We can even tangent into how schools are over charging gov for research, but I'll leave that for another comment)
Whatever we do, somebody is going to lose. And that's the problem with bubbles. We need to, as a society and government, decide who is going to lose. Problem is I think the majority of people think the banks [gov] should lose, for giving out such risky loans. But I don't think many politicians would agree. I wonder what the economists say.
> I'd say "bite the bullet, and that's what banks get for giving out risky loans" but we know that's not going to play out that way, especially since the gov owns a fair portion.
> Making tuition free is nice...
I think it's funny that you have these two ideas so close together... The government owning most of the loans provides a very easy path to enabling free college retroactively: extinguish all the loans. The government doesn't have a profit incentive, so there's no reason that such a path should not be reasonable.
Because half of America doesn't want to do a buyback. Though I suspect, if done, it would end the same way as the 2009 bailout. People are upset, and then mostly forget about it. And in this case, would still be upset at banks and institutions instead of the people. But I think getting initial support would be difficult. Personally I'm fine with increased taxes for this. I think everyone should be educated. But again, we need to lower the cost of school and stop them from cheating companies and the gov on research money.
That punishes everyone who took out private loans or worked to put themselves through college. Not to mention it hurts those who worked to pay down their loans earlier.
There are a lot of ways of socializing the cost of education, doing it retroactively opens up a whole can of worms.
It's not "fair" but I think it's necessary. We are staring down the barrel of a loaded gun at this point.
I may be a little salty because I took the community-college-into-university approach to save on costs and made some sacrifices to send every extra penny I earned towards paying down debt.
But I also realize that the country is going to be much worse off if we continue to punish people for spending more than they could afford on university.
No. It doesn't punish those people who paid earlier because those people fare no differently in the world where we don't retroactively forgive loans and in the world where we do retroactively forgive loans. It doesn't benefit them either but unfortunately this is a society level problem, we need to move beyond individual level thinking to solve it.
I'd also like to point out that the later people went to school, the more they paid. On average, at least. The burden that debt brings is becoming more and more as time marches on and we don't fix this problem.
That's where a TARP-like buyback would come into play. Negotiate to buy private student loans and extinguish them also. I know there are charity-type groups that do this with mortgages, though I'm having trouble finding any links at this current moment.
But, honestly, I'm not a huge fan of logic lines that sound like, "We can't help everyone, so therefore we should help no one." We should absolutely strive to help everyone we can. And if there's still a population remaining afterwards which requires help, then we can talk about why they weren't helped before and figure out whether and how to reach them also.
Are you talking about things like Rolling Jubilee[1]? They focus on credit card debt. I heard about them YEARS ago, and they were trying to get on student loans back then and it looks like they still haven't been able to do it.
I definitely remember reading about them. They're a good example of the type. It looks like they are transitioning their focus to The Debt Collective, which looks like some sort of play on collective bargaining instead?
I'm working with an idea that you can go bankrupt on student loans, but in doing so you lose the degree - including all rights to a job that might use the degree.
There are a ton of things I haven't figure out (follow my post history for more detail on what I have)
While that is an interesting idea I see two major problems with that. 1) It doesn't really encourage colleges to decrease the price of college. 2) Degrees matter little when you compare to knowledge. You can clearly say on your application to a job that you graduated but your degree was revoked. What does the company care? You didn't lose the experience and education, only the paper.
The unfortunate part about this, is that I believe that if you remove the protections on the loans, many students now WILL default, because they have too much debt and are incentivized to do so, if they are one of the larger loan carriers. I'd say "bite the bullet, and that's what banks get for giving out risky loans" but we know that's not going to play out that way, especially since the gov owns a fair portion.
Making tuition free is nice, but the generation that took out loans isn't helped AND this does not reduce the college price problem. The price was inflated and there is no reason for them to decrease it. Kind of a parallel to health care here. That's the cost. I like this idea, even if I have to pay back my large loans, but I think the fundamental price issue also needs to be solved.
Giving a portion of your earnings is a decent method, but you already bring up the problem with that. And this also doesn't solve the price problem, in fact it encourages the price to keep going up. (We can even tangent into how schools are over charging gov for research, but I'll leave that for another comment)
Whatever we do, somebody is going to lose. And that's the problem with bubbles. We need to, as a society and government, decide who is going to lose. Problem is I think the majority of people think the banks [gov] should lose, for giving out such risky loans. But I don't think many politicians would agree. I wonder what the economists say.