Who gains most from canceling student debt?(bloomberg.com) |
Who gains most from canceling student debt?(bloomberg.com) |
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The one message that did stand out to me and we kind of have it already was this: "That system should be reformed going forward, with a shift toward income-based repayment." While we do have that, I think having a standard percentage having to be paid as opposed to case-by-case scenarios of individuals dealing with it themselves.
The funniest thing to me is how the average student handles debt. From my knowledge working at a bank and seeing non-working students, they couldn't budget a single checking account. A lot of them have this misinterpretation of finances as though "that is money I can use freely whenever." Not only do none of these kids know personal finance, they don't even know basic accounting principles. Most traditional students are either A: affluent and risk averse meaning they don't incur debt; B: affluent but also take out loans because "why not"; or C: low income and treat debt as a means to get free money. I have rarely ever if at all met a student who has a budget, does double entry accounting for their finances, and properly manages debt.
I just feel like the government in this scenario, both sides, would never just pay off the debt of all student loans. It's just not profitable and the economy's student loan bubble hasn't burst yet, which will be the only way they would do something. Honestly the only way for banks to truly take a total loss is if the person with the loan dies before it's paid seeing as you can't dissolve it by declaring bankruptcy.
However we shouldn't be looking entirely at students for this. Colleges are the most liable here. No other institution in the United States can act with such free autonomy while siphoning tax payers income. Also they can just jack up prices that in the private sector would be considered price gouging. The cost of doing business in education has certainly not increased. Another thing colleges do is they routinely play pretend and lie to you that the "job placement rate" for a program has anything to do with the field they're in or that it was the degree that got them the job. It really takes a keen and jaded individual to see through these just blatant lies! College institutions are extraordinarily predatory.
The truth is, for state schools, the government largely funded our parents education. Now most of that money has been taken away and replaced with un-dischargable loans. I see it as a grift of the old generations on the young. If you look at it that way, the government should definitely discharge a large fraction of the cost
Basically zero risk for colleges.
I'm utterly convinced it's all the aftermath of our extremely large boomer generation that began voting against education funding as soon as they graduated. For decades state schools were mostly funded by the government as they are in most other countries. Dependence on loans is new and pretty unique to the US. I really see it as the old stealing from the young in this case.
I have trouble explaining this to my parents enough though it's clearly true. They don't like the reality that their votes to "cut taxes" for 30 years has doomed their own children to a decade of debt and not being able to afford a house.
http://www.newstrategist.com/wp-content/uploads/2017/01/BB8....
When you give the masses an easy way to go to school and colleges (which are basically educational guilds nowadays) started upping the costs immensely. Colleges knew the writing was on the wall now that students didn't just need to save money and work using solely their own capital. They could get it by the government. The only one who truly bore the risk was the government backed borrowers.
The cost crises led to our crazy loan system.
All speculative, but individual pieces of evidence I've found point to this being likely
If you capped how much banks could loan on guarantee, you’d see prices for schools drop pretty sharp. Mark Cuban has talked about this a bunch over the years.
I'm not a history buff but this is how I interpret us reaching out current situation. Undischargeable loans is debt slavery and should be abolished. The very purpose of bankruptcy is to prevent situations like this.
The realistic outcomes are either government bailing itself out on discharged loans (after all, the school has already been paid). Or, probably a better decision, increasing state school funding to the dollars per student that existed in decades prior. Option 2 would be extremely difficult politically until mellenials overtake baby boomers as the dominant voting bloc in a decade or two
Also, in a way of looking at it, the loans are essentially pre-emptive taxation. So theoretically the people who we're going to fund these things are taxed directly instead of everybody, even those who don't go to college and get the benefit from it.
Easy money leads to bloat.
100-200k a year is not a sane cost for most degrees.
Shifting who pays it hides the problem and makes it worse.