Maybe Forgiveness After All

Hei Lun Chan

Hei Lun Chan

Hei Lun is a retail manager living in Massachusetts. His interests include eating, running, video games and board games. He's a sports fan who doesn't watch sports. He's mostly a libertarian even though Facebook ad preferences thinks he's a "very liberal". His Twitter handle is @heilun_chan

Related Post Roulette

94 Responses

  1. Avatar Chip Daniels says:

    We could certainly teach young people about responsibility by withdrawing the government backing for student loan.
    Let student loans be like any other unsecured credit, and only be offered to creditworthy applicants, at rates commensurate to risk.

    But…of course…no one wants to do this. Not the students, not the colleges, not the banks or parents or even the taxpayers.

    If we think of student loans as a consumer item like credit card debt, it should logically follow that education itself is a consumer item like a sweater or Playstation.

    But again, no one involved in this wants to think of it that way. Not the students, parents, colleges, or taxpayers.

    College students are being caught in the crossfire of two conflicting desires on the part of the American people.
    On one hand, we as citizens have decided that higher education is an important good that should be subsidized and encouraged with various incentives and inducements.
    The idea is that education will produce job skills which will make the original investment a good idea and pay dividends to everyone involved.

    Except,this model is breaking down. The jobs which would make a 100K, or 200K investment a rational decision are not being produced in our economy.

    I don’t have a magic solution to offer, but I think among all the actors in this drama, the students are maybe the least culpable or able to change things.Report

    • Avatar Saul Degraw says:

      “I don’t have a magic solution to offer, but I think among all the actors in this drama, the students are maybe the least culpable or able to change things.”

      But the other great American tradition is to put all the blame on those least culpable or able to change things because burdens are almost always shifted lower in the United States.

      I think what we are also seeing is that the meritocracy works until it fails. There are still a lot of jobs that can justify 100K to 200K worth of debt but they usually require advanced educations (doctors) or going to a few HYPS level schools because HYPS people are the only ones that get those jobs.Report

    • Avatar Ozzzy! says:

      “Except,this model is breaking down. The jobs which would make a 100K, or 200K investment a rational decision are not being produced in our economy.”

      Very few jobs have ever been produced that justify that type of investment. I’d say there are more now than ever.

      The fact that college/grad school cost that much is a very different concern – that lots of people at colleges across the country are paying second or third std deviation levels of tuition and living expenses for 75k jobs.Report

  2. Avatar Jaybird says:

    If someone borrows however many tens of thousands of dollars to get a degree in something that doesn’t seem likely to result in a job that is capable of generating tens and tens of thousands of dollars to pay this back, that seems like something that could have been avoided.

    Saying that it’s the fault of the teenagers seems, in practice, to have been a recipe for more and more and more and more and more and more and more of the same.

    If we don’t want more of the same, maybe we should look at the grownups and check to see whether they have behaviors that might be worth deincentivizing.Report

  3. Avatar DensityDuck says:

    The problem is that even if you’d asked for advice then you’d have heard “you should definitely take out whatever loan is required to go to the Best College Possible, and that means the most expensive college possible, because of the College Earning Premium, which means that you’ll totally make enough money to pay back that loan!”

    Which has been kind of the theme for the last twenty years, which is Boomers and those of Gen X who are Boomer-wannabes trying to do the things that worked for them without recognizing why they worked or what it means to keep doing them.

    That said, student loan forgiveness proposals always seem to end up being re-skins of bankruptcy proceedings so maybe we just need to say that student loans should be dismissable via bankruptcy and go with the existing framework.

    People keep pointing at Trump’s history of declaring bankruptcy like he’s some kind of cheating rodent, but maybe the lesson ought to be “there exists a way that you can say I Owe More Than I Can Ever Pay Back and make other people have to accept that, and it’s something that any idiot can do, and it’s not actually a moral failure to do it”.Report

    • Avatar Jaybird says:

      Trumwill made this point a million years ago and it’s a good one:

      We compare High School Diploma to University when we should be comparing it to Community College.

      There are huge differences between Community College and Directional State and State University and SLAC and Ivy League and just lumping all five of those into a mush and calling them “college” is one hell of a magic trick.Report

      • Avatar DensityDuck says:

        counterpoint: we should be doing that, because people who have Insurmountable College Debt weren’t sent to college to learn things, they were sent there to get A College Degree because all the rich people in charge of things have college degrees, and for that purpose it does make sense to lump all five of those into a mush and call them “college”–and to go to the expensive one.

        The first level of secret knowledge is that nobody really knows why college degrees are associated with earning more so they just try to buy the most expensive magic beans they can find in the hope that price is associated with the quality of the magic.

        The next level of secret knowledge is that people totally know why college degrees are associated with earning more but they don’t want to admit that you can’t straight-up buy connections or whiteness so they send their kids to these places hoping they’ll accidentally develop the former or learn the signals that substitute for the latter in employers’ minds and parents have an idea that expensive colleges are better for those things than cheaper ones, which is true.

        This doesn’t make sense for STEM degrees but that’s because if your kid was capable of graduating with a STEM degree and getting that kind of job you’d know it before you decided what college you were going to send them to.Report

        • Avatar Jaybird says:

          Insofar as College* is a signal, it’s a signal that says “I am capable of reading books, writing papers, showing up on time, self-study, finishing projects, and Not Dropping Out.”

          That’s a useful signal to send!

          But the signal you send with, oh, a degree in Philosophy (with a minor in Religious Studies) is significantly different than the one sent by a Double E.Report

          • Avatar DensityDuck says:

            Last part of my post: “This doesn’t make sense for STEM degrees but that’s because if your kid was capable of graduating with a STEM degree and getting that kind of job you’d know it before you decided what college you were going to send them to.”

            You’re certainly correct that degree-as-a-signal can be achieved at a very low cost but degree-as-a-signal-at-a-low-cost is not enough to get you a Big Important Rich Person Job, and it’s increasingly not enough to get you much of any job.Report

          • Avatar Michael Cain says:

            One interesting question to consider is whether four years in the military, finishing with an E-4 rank/rating (specialist or corporal in the Army) should send the same signal. Granted, the Not Dropping Out part is enforced, not voluntary. And the employer is taking some risks that the employee might be recalled.

            Myself, I have often wondered if the college requirement is more a matter of companies preferring to hire 22-year-olds for some types of entry positions than 18-year-olds. 22-year-old me would have been a much better full-time hire than 18-year-old me, even without the specialized training from college.Report

            • Avatar Oscar Gordon says:

              My experience is that it does. And while you can’t ‘dropout’ of the military, you can coast, and those that coast are obvious to anyone who understands enlisted service.Report

  4. Avatar Marchmaine says:

    This is one of those topics that strikes me as so bizarre… we can’t forgive the loans until we address the cost of higher-ed. Unless, forgiving the loans is secretly a plan to crater the cost of higher-ed. Then we should be talking about how cratering the cost of higher-ed via loan forgiveness will impact higher-ed and whether the loan forgiveness write-down on private lending institutions that will make all Higher-Ed financing toxic is, in the end, a good way to get higher-ed costs aligned with the value. The answer might be yes, but that’s the only question worth pursuing…Report

    • Avatar Chip Daniels says:

      We should certainly ask why the investment in education needs to be so large, but we could also ask why the return is so low.

      I stress this because I see this as the original implicit bargain in the post WWII Era;
      Namely, that the taxpayers would incentivize education, and reap the harvest of job skills and economic flourishing.
      The college graduate who was given education by the shopkeeper, would graduate and purchase the goods the shopkeeper offered.

      But increasingly that harvest seems to be getting leaner and less able to justify the investment.

      A shopkeeper might look at the massive investment then see the graduate’s earnings spent, not on his goods but on repayment to the banks, and wonder what exactly he is getting from this bargain.Report

      • Avatar Oscar Gordon says:

        Like I said downthread, I don’t understand why we should be subsidizing all levels of educational investment? Why isn’t there a max amount that a person can borrow for education?

        My son is a resident of WA, I have no problem with the government saying, “We will permit him to take out a maximum amount equal to 10 full time, in-state, semesters at the University of WA. That is the limit that will be subsidized and be non-dischargeable.” You want to go to HYPS, you will need to cough up the rest as savings, or a consumer loan, or something.Report

        • Avatar Chip Daniels says:

          I agree, but in continuing my theme, maybe we should work backward starting from what the median income can afford to pay.

          For example, if the median income of a recent graduate is 40K, then we create an assumed maximum debt service out of that, then work back into what total tuition level that would purchase.

          But…I think the results of that analysis would be devastating.Report

          • Avatar Oscar Gordon says:

            Perhaps so, but that doesn’t mean it shouldn’t be done.Report

          • Avatar Jaybird says:

            I think the results of that analysis would be devastating.

            To whom?Report

          • Avatar Ozzy! says:

            The min wage of $15 in San Fran at 40 hrs a week at 50 wks a year is 40k. If you want to argue that college graduates are making min wage, ok, but would you at least throw in the concession that most college grads with $100k to $200k of debt aren’t working min wage because they aren’t qualified for other, higher paying jobs?Report

            • Avatar Chip Daniels says:

              The average wage for Millennials nationwide is in the 30K to 50K range;


              Even for those with STEM degrees, the figure is around 65K

              So even if we took those numbers and worked backward, the resulting “affordable” tuition would probably be lower than the status quo.

              But the “answer” to tuition inaffordability depends on what expectations and priorities we as a society want to make.

              Do we want college graduates to walk out of school without debt, and thus begin immediately to use their purchasing power to fuel the consumer economy?

              Or is it acceptable that they walk out and spend the first decade of adult life diverting a large portion of their income to the banking sector?

              A person with a degree earns double than someone without; Is this an acceptable state of affairs, or do we want to take action to boost the salaries of the non-college educated?

              These are all just decisions about priorities which translate into policy.

              As others here noted, talking about college debt is really just pulling the first string of a really large sweater.Report

              • Avatar Ozzy! says:

                Ok, Does the average ‘millennial’ have a 4 year college degree with 100k plus of debt? Doenthread people were talking $30k. $30k of debt to earn that much more than min wage eaves year is probably worth it?

                I’m not disagreeing with your follow on points, except where they are new points and not what was in your first comments.Report

              • Avatar Chip Daniels says:

                Good point, and to be sure there are some who graduate and find it easy to repay their loans.
                But the warning signs are growing levels of student debt, not less, and greater levels of delinquency.


                And this is in a “good” economy!

                So I come back to the underlying societal bargain, that college is an investment in a public good and that this will pay dividends to one and all.

                Does that still hold true?Report

              • Avatar Oscar Gordon says:

                As I’ve said before, how many of these stories of excessive student debt involve people with STEM or Business degrees?

                Not all degrees have equal value, but they are all priced as if they do.Report

              • Avatar Chip Daniels says:

                Here’s yet another link:
                (I can’t vouch for its accuracy but seems to track what I’ve seen elsewhere)

                STEM graduates default less than business majors who default less than arts majors.

                But the key takeaway seems to be college selectivity:
                “We find that students attending nonselective colleges have higher default rates no matter what they study.”

                Which actually makes intuitive sense.
                The students who attend for-profit colleges are those most likely to be struggling to begin with, and then have to incur higher loan balances and then graduate without the social network to take advantage of their education, leading to higher default rates.

                So for these students the implied bargain of education doesn’t hold true. They are required to invest more, yet get less of a payoff.Report

              • Avatar Oscar Gordon says:

                That’s interesting, because the anecdotes I hear are all about students who attend expensive SLACs, or Ivy’s, or the like, and not the low name recognition schools that your link suggests are responsible for the bulk of the debt.

                If we look back to the WWII ‘deal’, the state system is supposed to be the system that helps out the lower end student. So if there is a massive demand, and the state systems are busy spending money on construction that is not allowing them to expand to meet that demand, then perhaps we should be looking at those governing bodies and asking them why they aren’t doing that?Report

              • Avatar Chip Daniels says:

                That’s an excellent point.

                State colleges are literally under the command of the taxpayers and have no requirement to be profitable.
                There really isn’t any reason the taxpayers can’t demand a larger but simpler system.Report

            • Avatar Chip Daniels says:

              My comment is in moderation.Report

            • Avatar Sam says:

              40 hours a week * 50 weeks per year is 2000 hours.
              2000 hours at $15.00/hour is $30k.

              Just sayin’Report

          • Avatar Dark Matter says:

            …if the median income of a recent graduate is 40K, then we create an assumed maximum debt service out of that, then work back into what total tuition level that would purchase.

            Outside of the media’s careful cherry picking, the “borrow big numbers…” crowd typically pair that with “…so I can become a doctor”. It’s a risky option but if it’s part of a plan it’s fine.

            The median “unpayable” debt is 4 or 5 digits and was made to someone who failed to get a degree or who found their degree didn’t help.

            Even the media’s careful cherry picked examples often have “I ignored my debt for years because I didn’t want to face it and it grew”… or worse, “I had no clue what the papers I was signing even meant because I was *that* fiscally ignorant”.

            Weirdly I want my kids to be able to take out $200k in student loans if they want. I think there are better ways to do that, I expect them to understand the risks, rewards, and alternatives, but it’s an option that should be there.Report

      • Avatar Marchmaine says:

        Yes, but where does that diverge or add to what I just noted?

        I see, so a stimulus package for shopkeepers and an incentive for finance/education to continue increasing costs to their benefit (’cause they do benefit) because future us will feel the pain of future shopkeepers and spend future wealth on those shopkeepers?

        That’s a plan, but its a pretty terrible plan that rewards perverse behavior in Education long after we’ve all recognized that the original implicit bargain of the post WW2 Era had taken an unexpected turn.

        So Dr. House, I agree that its probably Sarcoidosis, but that’s not how we treat for Sarcoidosis.Report

        • Avatar Chip Daniels says:

          It was intended as a concurrence and bracketing of your saying that we should address the cost of the investment, with me saying we should address the returns.Report

          • Avatar Marchmaine says:

            I guess that’s where we got separated… I can see “returns” on the debt forgiveness… that’s just a good ole $1T stimulus; I’m not sure how we realign the returns of the next 50-yrs without significant changes to the cost/financing side… and this is important… first.Report

    • Avatar Saul Degraw says:

      As I understand it, the rising tuition of higher-ed came from two sources:

      1. Decreased state funding for their own public universities;

      2. In the 1980s, GWU and NYU were meh institutions and the Presidents of those institutions discovered that drastically increasing tuition made the schools more desirable and led to a better applicant pool. Other schools followed suit.Report

  5. Avatar Oscar Gordon says:

    I can stomach forgiveness, if the system radically changes to prevent the moral hazard.

    Maybe we do something like preventing a student from taking on student loans until they are 25 (unless they have a parent with good credit co-sign the loan).Report

    • Avatar Saul Degraw says:

      For what purpose? The most popular majors are already the so-called practical ones like business, IT, health professions, engineering, biology and biomedical sciences, etc.

      This is part of bearing the burden lower I feel like. We can’t bring ourselves to admit that things might require serious reforms/changes so we just blame the kids.Report

      • Avatar Jaybird says:

        To the extent that a University Experience provides an Edumacation, it’s a very, very good thing that should be provided to every single person capable of soaking it up.

        To the extent that a University Experience is a luxury good that doesn’t provide anything beyond Personal Growth And Enlightenment That Doesn’t Translate To A Social Good In Any Meaningful Sense, people should pay for it their own dang selves.

        While I understand that “Any Meaningful Sense” is a weasel-phrasing, I like to think that it can be quantified by such things as employment capable of paying off the accrued debts.Report

      • Avatar Oscar Gordon says:

        The purpose is that a 25 year old is going to be more responsible about the costs. Or their parents are going to be, if they co-sign the loan.

        But hey, I’m open to other ideas that help avoid mountains of student debt. Maybe we set a tuition ceiling for student aid that maxes out at whatever the flagship state school is at?

        Or dischargeable loans (which always seems to upset certain people, because it would make banks more careful about how much they are lending, and to who, and for what, like that’s a bad thing).Report

        • Avatar Saul Degraw says:

          Eh, I don’t think most American adults are financially responsible in general.Report

        • Avatar George Turner says:

          As always when this topic comes up, I suggest sending kids to someplace like Delhi University, which is probably akin to using a time machine to send them to a good US school back in the 1950’s or 60’s, before the costs skyrocketed.

          Our schools have focused on outdoing each other in amenities, bloated staffs, and fabulous real estate, but many foreign countries haven’t been part of that.Report

        • Avatar Dark Matter says:

          Or dischargeable loans (which always seems to upset certain people, because it would make banks more careful about how much they are lending, and to who, and for what, like that’s a bad thing).

          If we want to be really fancy we could have “dischargeable” costs fall partly on the University.Report

          • Avatar Murali says:

            See my comment lower down for why this would be a bad idea. The easiest way for universities to go about reducing their own liability is to stop accepting people who belong to groups most likely to default. This will not end well.

            The kind of statistical discrimination that this incentivises makes it a deal breaker. Some times, statistical discrimination is unavoidable, but we should not create situations which incentivise statistical discrimination for little obvious return. The relevant comparisons here are not forgiving that part of the debt and having the state bear the cost. Graduates who are stuck with college debt are still better off than people who never went to college in the first place. Even if they are not, something seems unjust about refusing a person who can succeed at college a position just because 99 other people in her demographic cohort are unable to handle college debt. What would make this more palatable is a diagnostic of future success that does not throw out so many false negatives.Report

            • Avatar Dark Matter says:

              The easiest way for universities to go about reducing their own liability is to stop accepting people who belong to groups most likely to default.

              This maybe more feature than bug.

              They won’t just “stop”, it will be a lot more complex than that. They’re still under a lot of pressure to admit historically underserved groups.

              At the moment all their incentives are to admit someone, even if they can’t pass and will leave with nothing but debt. The media likes to cherry pick sympathetic white people with unpayable student debt. But we should expect the math to be a lot more brutal on those “historically underserved” groups.

              I expect this parallels the housing crisis which was a lot harder on minorities.Report

  6. Avatar JoeSal says:

    We should probably teach kids the moral hazards of accepting the unearned, but it would be more efficient to teach it to universities first.Report

  7. Avatar PD Shaw says:

    As a parent of a child that just started college, a couple of things that I wasn’t aware of before that people here may not as well.

    1. For the first year undergraduate, the federal government will loan up to $5,500. People should look around at college costs to understand that doesn’t go very far at all. There are also private student loans, alluded to indirectly in the OP, but generally student loans, government or private, pay 24% of the cost of college.

    2. To qualify to take out federal student loans, one has to take part in on-line educational counseling. I’ve looked at it and it covers stuff like budgeting, estimating future income and expenses, and understanding how interest compounds and the advantages of pre-payment. It also appears to address some misconceptions, such as you still owe money if you don’t get the job you want.

    3. Parents I believe take out as much in loans as students, so the question is who is being bailed out? I assume that private student loans require the parents to co-sign. Parents without assets presumably cannot take out those loans. Again, who is being bailed out?

    4. The maximum the federal government will loan for a four-year undergraduate degree is $27,000, with a current interest rate of 4.53%, works out to $280 per month for 10 years. Does an undergraduate degree increase expected income by $280 per month or not?Report

    • Avatar Ozzy! says:

      That’s subsidized. Direct plus are at a higher rate (still low) and cover additional amounts. Parents guarantee those, I think, for undergrad.Report

      • Avatar PD Shaw says:

        I’ve seen various amounts, but the average total student loan debt upon graduating with a 4-year degree is approximately $28,500, the median being approximately $16,700. So I assume the most common experience is student loan debt is incurred solely through federal loans without taking direct plus loans because they can take out $27,000 for four years or no more than $31,000 for more than four years.

        Debt is higher at for-profit schools and private schools. I would start by cutting aid to private and for-profit schools and distributing it only to public schools under federal criteria.Report

        • Avatar Jaybird says:

          I also suspect that the hardest hit by debt are the ones who have loan debt when they drop out and don’t go back.

          So there’s no “upon graduating”.Report

          • Avatar PD Shaw says:

            Definitely, I think that’s one large part of it, and the other is probably post-graduate degrees, people taking on $200,000 in student loans towards careers that don’t pan out. If that’s the case, we might want to do something different for those two groups cause they’re different.Report

    • Avatar Brandon Berg says:

      Does an undergraduate degree increase expected income by $280 per month or not?

      It’s tricky to tease out causality, but according to BLS statistics, the median college graduate makes about $450 more per week than the median high school graduate.

      That’s for full-time workers over age 25. People with bachelor’s degrees are more likely to be employed full time, so this understates the college earnings premium.

      Again, this is not all causal; people who graduate from college tend to be smarter and more conscientious than those who do not, so they would likely earn more on average even if they didn’t go to college.

      But even if only half of the difference is causal, the college wage premium easily pays off the median student loan debt in just a few years.Report

      • Avatar PD Shaw says:

        Yeah,but the issue with the median student situation is that it still works out differently for different circumstances, but I do think putting a finger on the precise points of duress makes better policy than just increasing the subsidy. As you say, college graduates tend to have more going for them than those who do not.Report

  8. Avatar Silver Wolf says:

    Three things. If we view an educated populace as a public good (as I do), then “subsidizing” that education is an investment.

    Second, I think that the onus should be on those making loans to vulnerable teens to outline the actual long term costs of the loan. There should be requirements to inform student loan enrollees of the actual financial situation.

    Third, none of this will matter to many students who, like me, will do almost anything to escape their economic tier. A huge problem is the rising cost of education making it untenable to anyone who isn’t at least somewhat well off or wiling to take out a massive loan. Governments need to ask themselves how much they value an educated populace. Unfortunately, many have and they have spoken.Report

    • Avatar DensityDuck says:

      “educated populace as a public good” is not achieved by college, it’s achieved by high school.

      “[N]one of this will matter to many students who, like me, will do almost anything to escape their economic tier.”
      What you’re saying here is that you don’t want an education, you want a well-paying job. If you could get that without going to college then you wouldn’t have a reason to go.Report

  9. Avatar Saul Degraw says:

    I can’t reply to people by pressing on the reply button. This is in response to Jaybird’s edumaction question. I am not sure how many universities actually have things like lazy rivers. A lot of them are probably nicer accommodations wise than when I went to school in the late 1990s and early aughts.

    I went to law school at a mid-ranked university. The undergrad wing gets a lot of money from foreign students that want the prestige of a U.S. degree but don’t necessarily have the grades to get into an elite university*. As an alumni, I get access to the gym. The gym is good but it is fairly Spartan as gyms go. They have an Olympic sized swimming pool and classes (that get cancelled frequently) but no rock wall, no lazy river.

    I don’t deny that there are schools with lazy rivers and amusement park level recreational facilities but I wonder if it is blown out of proportion. There are also lots of colleges closing because of declining enrollment and a lack of funds. CUNY is perpetually underfunded.Report

    • Avatar Michael Cain says:

      Off topic technical inquiry: Are all the reply buttons dead for you, or only select buttons? If you are signed in (I think you have that level of privilege), does the problem persist if you sign out?Report

      • Avatar Jaybird says:

        (I have similar problems in IE, I don’t have any problems in Firefox or Edge.)Report

        • Avatar Michael Cain says:

          If you can send me e-mail identifying a specific comment (ie, author/time) for a specific article, that would be great.Report

          • Avatar Jaybird says:

            It’s more that, in IE only, when I click on “REPLY”, the box doesn’t show up underneath the comment.

            So then I use Edge.

            (And it happened with your comment right there. So then I used Edge and posted this one.)Report

            • Avatar Michael Cain says:

              Thank you, I can reproduce the problem in my Windows VM. Appears to be specific to IE. Smells like… one of the WordPress JavaScript modules not being loaded properly.

              Oh, goodie. I haven’t hammered my head against a WordPress JavaScript problem for months.Report

              • Avatar Brandon Berg says:

                IE has been deprecated and is in end-of-life maintenance mode. IIRC Microsoft’s official position is that the only reason anyone should use it is as a testing tool to verify that your web site still works for those benighted souls who still use it as a web browser.Report

              • Avatar Dark Matter says:

                IE’s purpose is to serve as a brief look up and loading tool for Chrome.Report

              • Avatar Brandon Berg says:

                Even for that, you’re supposed to use Edge nowadays.Report

    • Avatar Jaybird says:

      While “lazy rivers” provide a great example of excess that would make people say “college costs *HOW MUCH*?” when they read about them, I’m not necessarily talking about that sort of thing. My criticism is much broader than that.

      Here, I’ll say the whole thing again:

      To the extent that a University Experience is a luxury good that doesn’t provide anything beyond Personal Growth And Enlightenment That Doesn’t Translate To A Social Good In Any Meaningful Sense, people should pay for it their own dang selves.

      If you go here, you can read a fun article and daydream about going back to school like Rodney Dangerfield.

      But the problem ain’t (necessarily) climbing walls. It’s The University Experience, when it doesn’t translate to earning power in the future, is, in itself, a luxury good.

      If it translates to earning power, it is no longer a luxury good.

      (I’d think that this is fairly uncontroversial.)

      My argument is that buying luxury goods on credit is bad.Report

    • Avatar Brandon Berg says:

      The gym is good but it is fairly Spartan as gyms go.

      As all good gyms should be. “But” may be the wrong conjunction to use there.Report

  10. Avatar Saul Degraw says:

    Problem, seems to have corrected itself.Report

  11. Avatar Saul Degraw says:

    Responding to Jaybird’s list, looking at that list you have some:

    1. A few elite universities (Vanderbilt, Penn and Chicago) that are very selective and known for academic rigor (Chicago’s motto is “where fun comes to die.”);

    2. A lot of flagship level public universities that are or are close to public IVY status. Some of which are also major athletic powerhouses;

    3. A handful of private and public second or third tier universities using athletic facilities to attract students that can pay full freight tuition probably: SF State, Northeastern, Pepperdine)

    A lot of these schools especially those in 1 and 2 have excellent endowments as well.Report

  12. Avatar Murali says:

    Putting colleges on the hook for settling part (for instance 25%) of student loans seems to be a quick way for colleges to start turning down students who have lesser prospects of repaying their loans. Inevitably, these are going to be under-represented minorities who tend to have fewer opportunities.

    What the government in Singapore is doing is increasing the subsidies it provides to students by expanding its bursary scheme. This seems like a more efficient way for the state to subsidize university education.Report

  13. Avatar Dark Matter says:

    I have two “children” in college (and others that aren’t but let’s ignore them).

    One naturally understands money and is money focused/mindful, the other doesn’t.

    I started talking about money in front of them when they were in middle school. I’ve also pointed out foolish fiscal moves by various people, including college loans, over the years. I didn’t/don’t give them an allowance because I wanted them unable to pay for stuff unless they “saved” for it from their holiday/birthday gift money. I’ve pushed for them to have horrible minimum wage jobs to understand why they don’t want to do that.

    Both of them have now had higher level jobs (i.e. internships) and an awareness of money and what it means. Both of them got darn close to full ride scholarships by shopping around, filling out paperwork, and applying. Both of them followed the money when it went to going to college, although with the first we had to push Really hard. She would have bought into the “college is an experience, follow your heart” line of bullshit without parental influence and gone with loans.

    Our school systems should teach kids not only how to get into college, but also what it means to choose between a more expensive school and a cheaper one, the career options from different majors, and how loans will affect you after you graduate.

    I’m sure how well a job we’ve done is locally determined, but unfortunately it’s also dependant on the child and their relationship with their parents. If the parents are spendthrifts, that’s their example on how life is supposed to work. I’ve seen some of my children’s friends go down this path at a young age. Daughter #2’s former best friend fits this mold, and she simply doesn’t want to hear otherwise and considers it deeply insulting to have her behavior pointed out to her. That’s why “former best friend”.

    …making colleges pay for giving out useless degrees…

    One of my friends from High School got a degree in “Afro-American studies”. She turned that into a law degree from Harvard and that into a law firm which she owns. “Useless degrees” depends on the person. The real problem is not having long term plans.

    So here is my general outline for a loan forgiveness grand bargain:

    You tell me what the rules are. I’ll tell you what my actions are.

    I suggest rather than invent new complex rules to deal with people who weren’t thinking of complexity, and trying to seperate them from ones who are simply gaming the system, use the machinery we’ve already invented to deal with this type of fiscal mess for the rest of society.

    Make student loans dischargeable in bankruptcy. Let bankruptcy judges deal with every individual situation individually, it’s what they’re trained to do.Report

  14. Avatar Brandon Berg says:

    The key thing to understand about student loans is that the default rate is negatively correlated with loan balance. Of borrowers entering repayment in 2010-11, two-thirds of those defaulting in the first three years had less than $10,000 in debt when they entered repayment, while only 4% started with a balance greater than $40,000. The default rate for those with less than $5,000 in debt was 24; for those with more than $40,000 it was 7%. And this was in 2010-2014, the worst recession in 80 years; default rates are falling as the economy recovers, despite increasing loan balances.

    With rare exceptions, people aren’t defaulting on their student loans because they borrowed too much money; they’re defaulting because they’re unemployed, or working part-time minimum-wage jobs, and can’t afford to service even very small debts.

    As I pointed out upthread, the median full-time worker with a bachelor’s degree only (advanced degree holders make more) makes about $460 more per week than the median full-time worker with a high-school degree. That’s $2000 per month. Even after taxes, the college wage premium is sufficient to pay off the typical student loan debt in a couple of years.

    There is no student loan crisis. If you’re unemployed, a $100/month student loan payment is not your problem—unemployment is. Yes, there are a relative handful of people who’ve made some…choices and accumulated six-figure debts for undergraduate degrees or worthless graduate degrees. These fit the narrative, so sleazy yellow-journalism outlets like the NYT cherry-pick them for their coverage, but they’re extreme outliers, only a few percent of all borrowers. Student loan debt may be a personal crisis for them, but it’s not a national crisis.Report

    • Avatar Brandon Berg says:

      Also, the narrative going around about how Millennials can’t buy homes because of student loan debt, and it’s ruining the economy, is nonsense.

      First of all, the economy doesn’t care that much whether you rent or own your home. That aside, Millennials can’t buy homes because they’re moving en masse to cities where housing is supply-constrained by a coalition of NIMBYs are xenophobic left-wing activists. Millennials are bidding against each other and older generations for the homes that do exist, so if they didn’t have student loans, all that would do is enable them to bid up the prices even higher. And clearly someone is buying the homes, or they wouldn’t be so expensive.Report

      • Avatar Brandon Berg says:

        NIMBYs are and xenophobic left-wing activists.Report

      • Avatar Chip Daniels says:

        How much of a mortgage payment is possible on a yearly salary of 40K, or household income of 80K?
        Where are the houses in this price range?
        Are they located near the jobs which pay that much?
        What is the maximum commuting distance from home to job?
        And in the end, is it worth it to buy, or rent?

        These are the calculations that millions of young households are making every day, and the data shows the trending answer as a revealed preference.Report

        • Avatar Dark Matter says:

          How much of a mortgage payment is possible on a yearly salary of 40K, or household income of 80K?

          Locally here you can get a family house with a fenced backyard on a 40k income where you don’t have much of a commute. The difference is the gov can’t or hasn’t squeezed supply here.

          If you’re only going to build houses for the top 15%, then the bottom 85% will be priced out.

          Raising the min wage to 50 an hour doesn’t create any new homes, it just increases their cost because the prices need to rise so the bottom 85% are still priced out.

          You have a supply issue. “Can’t afford homes” is the result, not the cause.Report

          • Avatar Chip Daniels says:

            The fact that the prices are within reach for the 40K salary is what the cool kids call a “pricing signal” reflecting the size of the pool of qualified buyers, and indirectly, the local job availability.

            We talked about this before. Even absent any regulations of any kind, the supply will be constrained by the simple arithmetic of cost of construction plus land value, figured against the demand measured by the pool of buyers who can fit that bracket.

            Supply and demand aren’t a straight arrow of causation, but a circle affecting each other, and reflecting an array of other variables.Report

            • Avatar Dark Matter says:

              All very, very true… but while gov interference isn’t the only factor, it’s probably the most important one.

              If the land is extremely expensive, then developers would like to build skyscrapers so rather than build one house at a time they’re building hundreds. If that’s impossible because of zoning, then that has predictable results, one of them being that land becomes even more expensive.Report

    • Avatar Chip Daniels says:

      If you borrow a hundred dollars, its your problem.
      If you borrow a million dollars, its the bank’s problem.
      If you borrow a trillion dollars, its the nation’s problem.

      Your formulation is correct, but leaves unaddressed, why are so many college graduates still underemployed or unemployed, and what should we do about it?

      It would be facile to say “don’t take out college loans”, because as you point out, a degree, almost any degree, confers a wage premium.

      Yet the data shows rising levels of default even for graduates.Report

      • Avatar Brandon Berg says:

        A lot of them aren’t graduates. That’s why 2/3 of defaulters had debts under $10,000. They took out loans for a couple semesters and dropped out. And, quoting directly from above:

        “And this was in 2010-2014, the worst recession in 80 years; default rates are falling as the economy recovers, despite increasing loan balances.”

        They had a high unemployment rate because they were graduating (or not) into the worst economy in 80 years. That’s been over for a few years now. The current unemployment rate for college graduates is 2.2%.

        Yet the data shows rising levels of default even for graduates.

        The chart I linked is for three-year default rates. It started rising for graduates with the cohort graduating in 2004-2005. Most of those would have graduated in 2005. Three years after that was…2008. The three-year default rate for graduates rose until the 2011 cohort, and then started falling after that. It’s not rising. It’s falling, because wages are rising and unemployment is falling.

        Really, there is no student loan crisis, and there’s no economic crisis. Things really are going pretty well for people with the sense not to abuse opioids.Report

        • Avatar Chip Daniels says:

          Your argument is with other economic reporters and journals, like Bloomberg which tells us that delinquencies surged in the past few years:

          From the article:
          “Delinquencies continued to climb even as the unemployment rate fell below 4 percent, suggesting the strong U.S. job market hasn’t generated enough wage growth to help some people manage their outstanding obligations.

          Income levels for graduates “are not necessarily high enough for debt payments overall,” said Ira Jersey, Bloomberg Intelligence interest-rate strategist. “If you have a choice to pay your student loan or for food or housing, which do you choose?””Report

          • I’m not an economist, in fact I will quickly admit to it being one of my weaker areas of knowledge. But it seems peoples debt loads and the wage gaps, while overlapping, are not the same thing but could be used as the same on charts to massage the numbers. Point being debt has more personal choice involved in it’s accrual.Report

          • Avatar Chip Daniels says:

            And here’s another, connecting student loan debt to overall consumer debt:

            This part jumped out at me:
            “Separate data from the New York Fed showed that borrowers aged 30 to 39 years and those 50 and older drove the jump in flows to serious delinquencies, a measure economists use to gauge market stress and likelihood of defaults.”

            This seems weird- these don’t sound to me like foolish kids getting poetry degrees or borrowing money for Iphones. These sound like desperate mid-life adults trying to adjust to a fickle economy.Report

    • Avatar Dark Matter says:

      +1. Excellent Post.Report

  15. Avatar Brandon Berg says:

    Two things:

    1. I have a comment in moderation.

    2. If I reply to my own comment while it’s in moderation, and my second comment does not get flagged for moderation, it shows up in the Recent Comments sidebar, but not on the post (because its parent is in moderation). I checked this in incognito mode, so I’m pretty sure it shows up for everybody. Seems like a bug, though not really a big deal.Report

    • Avatar Jaybird says:

      Here’s how I can replicatably put my own comments in moderation:

      Write an awesome comment with a link and a typo
      Catch the typo only after hitting “post comment”
      Fix the typo using the handy-dandy do-it-within-five-minutes edit feature

      Whammo! My comment is in moderation.

      (Your comment is now out of moderation.)Report

      • Avatar Brandon Berg says:

        It is! Thanks!

        It makes sense that editing a comment with a link would kick it to moderation. This prevents people from writing legit comments and then editing in spam links.

        The smarter thing to do would be to compare the edited comment to the original version, and only kick it to moderation if any links were changed or added, but as a developer, I totally understand taking the lazy approach. I also realize that it’s probably just some plug-in you guys downloaded.Report

    • Avatar Michael Cain says:

      Re #2… Less bug and more no one thinks it’s worth coding a recent-comments widget more complicated than “show the <num> newest comments whose status is ‘approved'”. These plugins seem to get installed more on the basis of how easy it is to change <num> or the length of the excerpt or how much information is shown or the layout/formatting.Report