How Should Democrats Handle Student Loan Payments
Photo: Student Loan Forgiveness application and reminder note by Marco Verch under Creative Commons 2.0
Despite the ongoing threat posed by the COVID-19 pandemic, the United States government has moved steadily away from the many programs it introduced in 2020 to combat the pandemic’s impact. It has ended extended unemployment benefits and stopped payments to businesses as part of the Paycheck Protection Program. One of the last remaining benefits is the suspension of federal student loan payments. Joe Biden has been planning on how to bring those payments back. He has also not abandoned his promise of forgiving the first $10,000 in student loan debt for borrowers. Along with the emerging Omicron variant, the question of resuming these payments has become a contentious one, especially among Democrats with an eye towards the next two federal elections.
Supporters of resumption can generally be classified as good government liberals. They want the government to follow the law, collect their bills, and use legislation or specific executive orders to solve the student debt crisis instead of ostensibly temporary pauses. In this case, the idea is that the student loan suspension was implemented because the COVID-19 pandemic brought economic activity to a standstill, leading to millions of layoffs and crises in housing, food, and many areas deemed more essential than student loans. Following the wide availability of vaccines and boosters, the rationale for suspending payments is no longer valid and the payments must begin again. Resumption supporters, also considered the center of the Democratic Party, see Biden as particularly amenable to their cause and are heartened by his discussions of restarting resumption.
But a resurgent group on the left has pushed for a more long-lasting postponement, if not the outright forgiveness of student loan debt. This group points to rising COVID-19 cases, the inherent unfairness of student loan debt, and the threat posed by the Republican Party in support of this goal. A recent poll showed that 70% of voters support extending the suspension. Some of these supporters see student loan debt as immoral and believe it should be undermined by any means necessary. Others believe that extending the student loan postponement is a more palatable version of partisan gerrymandering or midnight judicial appointments: all are tools Republicans have used in their will to power in the 21st century and Democrats have rejected as unseemly.
What would the ill effects of another student loan postponement be? The federal government would certainly have to deal with slightly decreased revenue. Payments have dropped by billions of dollars over the past 18 months and will continue to decline. There may be uncertainty caused in the financial markets if Wall Street believes the government is defaulting on an obligation. Democrats will also open themselves up to Republicans who would argue that loan forgiveness is another spending program that may contribute to inflation and an increase in the deficit. There would be an outcry from the political media and from a number of supporters of good government practices.
The problem for Republicans and supporters of good government is that there is no certainty these attacks would be relevant in a 2022 or 2024 campaign. Americans have shown little interest in punishing politicianswho increase the national debt. Any interest in the lobbying and political classes vanishes once Republicans hold any sort of power. It is also a bit of a stretch to argue that postponing loan payments is any sort of contributor to our current inflationary woes. Furthermore, paying loans to the federal government would actually increase the government’s revenue, a position that many swing voters and Republicans seem ambivalent on at best.
There also may be tactical benefits to continuing loan postponement. Biden could schedule payments to restart sometime in 2025. He could force Republicans to commit to either restarting payments or retaining the suspension. Student loan repayment may also be a plank Biden could run on without the help of Congress. Many Democratic priorities over the past several decades have required hold of both houses of Congress in order to be enacted. Student loan postponement is something Biden could do by himself without the help of Congress.
Democrats seem committed to solving the nation’s problems and running on their record. They have mostly abstained from the will-to-power techniques that have benefited Republicans from Donald Trump down to the state level in recent years. But the tide may soon be turning. If Democrats decide to start playing hardball, student loan postponement may be the first policy that they turn to. It remains to be seen whether they have the gumption for it.
I’m still a fan of “discharge loans in bankruptcy”.
The problem seems to be that universities are selling a product that is not worth what the recipients are paying for it and giving *ZERO* recourse for the whole “I got ripped off!” thing.
The problem isn’t merely the loan, it’s that we’re giving loans to people to buy things that aren’t worth the price of the loan. Allowing the loan to be discharged in bankruptcy might change the whole toxic dynamic.Report
Schools eligible to be part of the programs might want to consider eliminating the vast numbers of non teacher positions (like in administration, diversity, etc.) that seem to have cropped up over the last few decades. They don’t add value to the education of the customers. And I totally agree with your point of discharging in bankruptcy.Report
“I’m still a fan of “discharge loans in bankruptcy”.”
Not likely to happen. It is the lynchpin to the whole scheme. If student loans were dischargeable, then banks would actually have to start doing some underwriting, which would expose students to higher interest rates and, even worse, differing interest rates depending on their financial health and credit history. There would be more defaults, which would increase the costs accruing to the government, which guarantees this thing, and which would imperil the whole student loan asset-backed security market.
Basically, the government does not want to directly pay for higher education, so it supports this student loan scheme that gives the banks a near-guaranteed 6% for doing nothing. They don’t even have to keep the risk on their books. They package them and sell them on.
Also, with less credit being extended to students, schools would have to charge less tuition, which would be much less budget for all those Assistant Vice Provosts for Equity Student Affairs.
In many ways, we have built a giant self-perpetuating machine whose primary purpose is to support the professional managerial class by leaching value from the more productive sectors of the economy (among which the working class figure prominently).Report
There’s truth to that but I think it’s only part of the story. The tougher political reality is that if these loans weren’t federally backed there’d be lots of people able to eke their way into some institution or another on merit but who then would not be able to afford to go. I’m sure we can all predict the class and racial lines along which that would play out. Without getting into whether people in those positions are well-served by the system (hint: probably not), by eliminating the backing you’re also effectively pulling up the ladder for a lot of those working class peoples’ children. Now maybe the ladder is a bit of an illusion to begin with, or at least not nearly as neat and simple as the popular imagination suggests. But it’s a hell of a thing politically to just blow it up.Report
The 4-year college completion rate (within 6 years of starting) is somewhere around 60%. That could be a sign that too many people are going to college (at least at the wrong point in their lives). We probably need to take a step back and at least ask these questions. Certainly, individuals ought to be asking themselves these questions prior to jumping on the treadmill.Report
We encourage people to go to college in order to fight inequality. Not all are ready, not all have the fiscal resources.
The racial divide in student debt is seriously stark and nasty. Numbers aren’t in front of me but basically a decade after college the whites have paid a good chunk of their debt paid down and the blacks have had theirs increase.
I should look up the numbers and post them, sorry.Report
This gets at what I mean in my comment below. To some people it is about fighting inequality. To other people it is more of an educational or social capstone. To still others it is a jobs-program or a research and development hub. All of these are positive ends but that don’t always work well when you blob them all together. It also creates a lot of situations where people are talking passed each other on policy.Report
In order for me to fight inequality, you need to take out very large loans that you probably can’t pay off. That’s a risk I’m willing to take and besides, I have no personal skin in the game.
We tend to think the “motivation is good”, but considering how nasty the result is I’m not so sure.Report
The question of when someone goes to school doesn’t get enough attention, IMHO. It seems like Universities really want kids straight out of HS, and limit the number of non-traditional students, which makes me wonder why. Because at the end of the day, they both pay the same tuition rate.Report
Speaking only for myself…
As an undergrad who went to college right out of high school, I was largely still in “I’m a kid at school” mode. I took what I was given and didn’t really make waves.
I took two years off of school and then began grad school and had a VERY different mindset, feeling like now I was an adult on equal footing with any teacher or administrator. I was much more willing to self-advocate and pushback.
I was also on the hook for grad school in a way I wasn’t for undergrad (I was fortunate enough that my grandmother left money specifically earmarked for undergrad tuition) so I made sure I got my money’s worth. Some of this was my own behavior — I never skipped class because that was basically throwing money in the trash — and some of this was what I expected from the school, namely to meet my needs as a consumer.
Not sure if that is a normal differentiation but if it is, I can see why schools would prefer folks who carry themselves like I did as an undergrad rather than as a grad.Report
From my own time as a non-traditional graduate student… At the end of the quarter I got a phone call from one of the professors. “I wanted to speak to you before grades were posted. You’re clearly the brightest student in the class, but you’re getting a B. Because you didn’t check off all the boxes in the syllabus.” And my (smiling) answer was, “I don’t need an A. I’m not starting a career based on this degree. I didn’t check off the things that were obvious busy work, or that were aimed at teaching the basics of stuff I’ve done professionally for 20 years. But I did get two wonderful open research questions out of the class, so I’m happy.”Report
Since I started after I left the Navy, I was not allowed to enter as a Freshman, and had to take classes at the local CC first, then transfer in.
One the plus side, the admission requirements for a transfer student were more relaxed than for someone coming straight out of HS. On the negative side, the number of transfer students was limited, and there were more hoops to jump through.
I was definitely much more able to advocate for myself.
Financially, it’s better to wait until you are no longer considered under your parents taxes. I was able to get a lot more in grants and subsidized loans as an independent adult than the younger kids who were still considered part of their parents household.Report
Welcome to the 40% Sir!Report
When I think about it, that 40% failure rate probably means less than we think.
I’ve gone back to school several times and taken classes that are useful and/or out of personal interest. My wife and father have both done that too.
I remember being “encouraged” by the college “to graduate”. I already had multiple degrees so I ignored them.
It’s a strong option. Ignore the spam those degrees are larded up with and just take what you want/need.Report
These days, colleges admit you as either degree seeking, or special/guest/non-matriculated. So you’d have to break out those numbers.Report
True, but it’s a little concerning that our “60%” number isn’t worded to exclude the non-traditional students.
We might be looking at someone wanting to spin people up over a non-issue, or just over “something I want to have happen so I’ll pull in as much as possible”.
It’s like when we talk about “gun violence” and then rope in suicide or school violence and then rope in late-after-hours-in-the-parking-lot.Report
OK, that number is defined as “The overall 6-year graduation rate for first-time, full-time undergraduate students who began seeking a bachelor’s degree at 4-year degree-granting institutions in fall 2012 was 62 percent. That is, by 2018 some 62 percent of students had completed a bachelor’s degree at the same institution where they started in 2012.”
So I’m in the 40% because I transferred. Anyone who started in a community school because it’s cheaper and then transferred is also in that 40%.
Six-year graduation rates for first-time, full-time undergraduate students who began seeking a bachelor’s degree at 4-year degree-granting institutions in fall 2012 varied according to institutional selectivity. …at 4-year institutions with an open admissions policy, 34 percent of students completed a bachelor’s degree within 6 years. At 4-year institutions with acceptance rates of less than 25 percent, the 6-year graduation rate was 90 percent.
https://nces.ed.gov/fastfacts/display.asp?id=40Report
I honestly don’t know what it means. I suspect that it means multiple things. But in the context of my comment, it means that we should clarify those things before we just keep trying to push more kids down that pipeline.
And to move up another level of abstraction, until we clear up the pipeline issue, the financing issue will be difficult, if not impossible, to solve (at least not in a way that will make everyone happy).Report
The Census gives us data on educational attainment by age, including non-completers. In the 25-34 bracket, about 41% have at least a bachelor’s degree; an additional 11% have an associate’s degree. So that’s 52% with some post-secondary degree. 16% have some college but no degree. It seems to be very rare to attend college for four or more years without a degree; only 0.9% fall into this category. I’m not sure how part-time time attendance is recorded, though.
It really is the new high school.
https://www.census.gov/data/tables/2020/demo/educational-attainment/cps-detailed-tables.htmlReport
If the scheme is bad, it seems like removing the linchpin would be one of the good ways to deal with it.Report
Like I said above though, to do that you’re going to have to be ready to tell a lot of marginal people in a lot of marginal places that higher ed is no longer a path for them. They will likely respond with a lot of pesky questions like ‘well what is then?’ There needs to be a good answer, and it obviously can’t be ‘teach your kid to code.’Report
What is the path for marginal people in marginal places now?
“Get a mortgage’s worth of debt but no house?” or, more conservatively, “get a down payment’s worth of debt but no house?”
Because if you get a degree that gives you a ton of debt but not a ton of leverage with employers, you’re stuck talking about the importance of knowing how to drink two beers if you have a funnel.Report
I agree with you that it isn’t serving them well. What I think is missing from the analysis is the political importance of the appearance of a ladder, even if in a lot of cases it’s a fiction. Especially when it’s a fiction our entire K-12 system is based around.
Turn off the funds and a lot of stories we tell about economic outcomes won’t be nearly as tenable. Especially if we haven’t also reformed education at the lower levels.Report
Degrees give great earning power. Get degree= make more money. Most people get degrees that help them. If someone doesn’t get a degree then they are boned, but you know what helps that. More support services, not less. The people that don’t get a degree and cant afford to finish are the ones most likely to get hurt by making it harder to go to college.Report
I think that’s the wrong emphasis. The challenge is to get more alternative paths to a successful life that don’t involve college. The way education works in our country that’s a bottom up thing not a top down thing.Report
I agree there should be more paths to a good life. But aren’t the two big choices after HS either a trade school or college if someone wants the benefit of more education. Not everyone will want more school but with advancing tech there will be fewer jobs that don’t require post HS ed. Sure it would be good if more jobs were good with OJT but there are limits to that and some negs to it.
College is going to be one of the paths to a good life. It’s not going away nor should it. Of course the military is one after HS path but tons of education including college is often part of that.
Making college and trade schools easier for more people to attend is what we need. How to pay is a big issue, but i would just make a lot of free at the public level.Report
“We need to make it easier for people to crab bucket” will not end up with more people in the top half of the bucket and never will.Report
I’m guessing that we will always have half the pop in the top half of the bucket and half in the bottom half. Not a math person but thats my guess. The answer is obviously raise the entire bucket. Like put in a tall post or something. Might have lost the metaphor there a bit.
A better educated pop is better for lifting the bucket up higher.Report
I agree that a better educated pop is better for lifting the bucket up higher.
But.
We’re seeing movements to get rid of “gifted” classes, movements to get rid of math requirements, and get rid of ‘D’ and ‘F’ grades.
Granted, this is in high school and not college, but if we’re having to get rid of all of that stuff to make sure that more people can get into college, we are not going to end up with a better educated population but merely a better credentialed one at best.
At worst, we’ll have “some college” with a house’s down payment as debt.Report
Each one of those movements has a bunch of stuff going on that doesn’t mean the kids aren’t educated well. They are also not happening in that many places so the overall effect on the kid pop at this time is negligible. If they work and people adopt them widely then we have to see what they actually did. But they aren’t going to change the ed level of kids on there own. Some might help.Report
I think the cost is intertwined with the options. The reason university can be cheap or free to the student in other countries is because one of the things their larger educational systems do is let in only those very likely to succeed. They aren’t giving ok students free access to ok schools to issue credentials of unclear value or ROI. The people on the margins most at issue here aren’t even in the discussion there because they’ve been tracked to something else since grade school.Report
You’d think that loan forgiveness wouldn’t be a thing.
The people that don’t get a degree and cant afford to finish are the ones most likely to get hurt by making it harder to go to college.
I’m not sure that “Some College + Non-Dischargable Debt Equal To The Down Payment For A House” is a better place than “High School Diploma”.
Like, to the point where I’d have to see numbers showing which is better because it’s not, at all, obvious.Report
I’m not saying this to be obnoxious: I read this comment as sarcastic at first. I’d say most of it is exactly backwards. There are plenty of degrees given out that don’t end up helping the recipient, at least in the field of study. Also, there are a lot of opportunities for skilled workers. A bright person who works under a skilled plumber for two years may have more stable and lucrative employment than the four-year college graduate.
But more importantly, the idea of “get degree = make more money”, while it can be true, is entirely dependent on the current rules of the game. If we wanted it to no longer be true, it’d take few steps to undo it. I think a national high school exam and reform of hiring laws would probably do the trick.Report
I said this last year, I’ll say it again:
A point Trumwill made once that seared itself into my brain is that we compare the student who goes to the U of M with the one with a high school diploma and we shouldn’t.
We should compare the U of M to M State. We should compare M State with Compass Directional State. We should compare Compass Directional State with High School Diploma.
By comparing no college to U of M, we’re eliding a *LOT*.Report
Some of U of M’s have much better football teams then other U of M’s.
Mid rank public school grad here. They work well and are the best choice for most people. Most people in college go to NW SE State Tech U type schools.Report
I’m very much not being sarcastic. Do some degrees not help people? Of course. That is a ind person problem. Sometimes people make bad choices or find a career isn’t what they thought it would be. Many college students dont know what they want. But same thing for people who join the military and can’t wait to get out or people in trades who find they hate swinging a hammer.
My preference is for trade school and college to be free in public institutions. That is not out of our reach at all.
Trades are great. I’ve known a lot of people in them. There is also a reason why many people don’t want them. Plumbers are great but stand ankle deep in sh*t at 330am in below zero cold is not great. The trades need people but they also break bodies and can often be hard hard work that doesn’t always pay well. Lets not romanticize trades.
Finally i think it’s great people can get an education to make their dreams come true. But the world also kills dreams because that is the world. But i want people to be able to reach for them. I’ll give them a good word of encouragement and hope for them. I hope they get that good life even if they choose to be an anthropologist.Report
What does “reform of hiring laws” mean?Report
“Laws” might be the wrong word. Generally speaking, you’re taking on some risk of being sued if you hire someone without some quantifiable criteria such as academic credentials.Report
Which is an aligned but separate issue. Far more industry segments now require some sort of credential to begin work in the field, and that credentialing has to be sustained. And that in turn means all sorts of tuition based training has to be accomplished to earn a living. Even the trades are beginning to require paper proving competency instead of apprenticeships.Report
It should. It worked for daughter #1. I’m pushing it on #3 and #4 (thus far not successfully).
6 months ago, My local group had 8 open software spots. They hired me and three others.
How many open spots does that leave open? I asked and the answer is “eight”.
“Eight” is “this is our bandwidth for hiring people” and not “this is how many we need”.
We have about a million open SW jobs in the US. I think “a million” is like “eight”. The number of unemployed SW people is 2.6% (that’s about how long I’ve been unemployed longer than that over my professional career).Report
I think that’s all well and good where the infrastructure is there to support it. You’re never going to get there just by telling people to buck the system or unilaterally disarm.Report
The scheme is beyond bad. It is practically evil. But evil is what happens when people refuse to make tradeoffs.
The three things that keep getting more expensive: education, healthcare and housing. On the one hand, there are real improvements that explain part of the cost increase, but not the whole increase. They’re getting way more expensive in real terms.
They’re all the same in that there is a credentialing racket at the heart of the issue and a bunch of financing schemes to try to disguise the true price and shield people from making rational decisions. Somewhere there is a clip of AOC arguing for student loan forgiveness using the case of a woman who got into her “dream school” but got no grants, only loans.
That is a heck of a dream. Maybe it’s time we woke up.
Either we face up to the reality or we continue the slide. Really, we’ll probably do both. That is the official responses will continue to be inadequate, so people will find the best solutions that they can. I am OK with this, but those of you who have concerns about equity are not going to like the outcome.Report
Education isn’t actually getting more expensive, at least not for students from lower- and middle-class families. Mean debt per 4-year graduate is up 4% over the past 15 years after adjusting for inflation. The rising sticker price has largely been offset by increased need-based aid.
The main cost of attending a university is not tuition, but the opportunity cost from being out of the labor market for four years. Average net tuition might be $5-10k per year, but a college student might easily have made $30,000+ per year working full-time.Report
Interestingly some litigation has chipped away at the ‘non-dischargeable’ piece so that isn’t quite as true as it used to be. It still isn’t the normal release valve it should be of course.Report
Student loan debt is about 50/50 between undergrad and grad.
I can’t find exact numbers on this, but a good percentage of people who have some undergrad debt don’t graduate. I’d bet they took out fewer loans, but may have a harder time repaying them. As for graduate school, again, I can’t find decent numbers, but I’d wager a big chunk is carried by MD’s.
Those four situations seem so different to me that I think we should talk about them as different problems. The person with two years of college and no degree, the one with a bachelor’s degree and now in a non-professional job, the one who knowingly got a master’s degree in a low-wage field, and the 28-year-old hospital resident who’s eating ramen for 6 years then buying a Mercedes.Report
Agreed.
“College loans” covers an upper middle class kid in medical school, as well as a very poor medical technician student at ITT Tech, who doesnt graduate.Report
That’s the challenge with the topic. The discourse on forgiveness focuses on the morality play about the rich kid with a degree in under water basket weaving. That doesn’t mean we don’t need a lot of reform in a lot of places. But regarding forgiveness specifically the discourse should be about the person who has paid back $30k on $10k they took out at some low tier state school they flunked out of, with no end in sight to the payments.Report
a good rule of thumb is if someone is talking to you about college loan debt and doesn’t split out graduate and undergraduate debt, they’re selling you something. Or they split it selectively.
some of us inside the machine are both concerned on the daily and easily amused on this front when the normies talk about debt this or admin bloat that or lazy rivers, etc.
(FWIW i fully support means tested fed loan forgiveness, with pretty light railings on the means side of things)Report
Hey I started law school pre-2008 financial crisis when everyone said it was literally the most mercenary thing I could possibly do. I then came out at the bottom of the crater, in debt, with no one hiring to a bunch of smug ‘told ya so’s.’ The scam is real and I’ll be damned before I say it isn’t.
But yes, that situation and those like it, while frustrating, is not representative of the issue as a whole. Bailing me out, especially at this point would not only be bad politics but totally immoral.Report
if it makes you feel better, a friend got their LLM from an ok but not great ranked school after the financial crisis.
but this is one of those areas where the online chatter is very, very heavily informed by our own experiences. i was first gen and had zero guides (pre-internet), but shopped based on fin aid package, not wanting to play football for a scholarship, and degree offered…and so graduated with zero debt. i pulled a similar trick with grad school.
but buyer’s remorse is absolutely real, and there’s a sense of promise denied that is very prevalent among people my age and younger. so it’s important that i don’t let my own experience/luck/prudence/bde/etc color how the rest of the world views things.
the subject is further distorted by the generally slac/ivy + j-school umc grads who write and/or cheerlead about the topic, which i don’t think helps in the slightest. that’s where my observation about how debt is sliced and talked about comes from, because it’s essentially decontextualized nonsense numbers most of the time in the service of advocacy. or villainizing based upon ideological lines (“snowflakes”, grievance studies, etc), which just fails to recognize the reality of emotions along these lines in favor of moral judgements.
and despite moral judgements being the true sexual orientation of social media, it’s not actually helpful for crafting policy, though that ship probably sailed a long while back. (moral language is immensely helpful in selling policy, but those are separate pursuits)Report
One of the problems I’ve seen at the companies I’ve worked at has been the unpacking of bundled service models. Someone packaged a bunch of services and products together early on. It seemed to work in that people readily bought it and the company escaped the Earth’s gravitational pull. However now you’re a more a more mature company, doing ok, but no one can figure out which of the stuff in the bundle is actually profitable, the tax situation is a mess, and you’ve got a lot of interconnectes processes and infrastructure sitting around doing things to support the bundle but no one remembers why.
Education the issue and education the policy have gotten a lot like that. We’ve got K-12 systems still structured basically like they were in the Gilded Age. Higher ed is dominated by institutions set up long ago either to polish the already wealthy or teach people to grow tobacco, plus a smattering of private entities running the gambit from decent trade program to outright scam. We expect this to act as a factory of well-rounded future leaders, straight-up jobs program, pathway of class advancement, and producer of world class research. All at a price the tax payer is comfortable with. At some point we’re going to have to start untangling them, both in how we talk about it and how we handle it in terms of public policy.Report
I agree. Good analysis Pinky.Report
It seems to me we can split the baby in a way. Publicly fund the first two years of post HS education at any public school (this is basically what a GI Bill covers). If trade school is two years? Awesome, you got a skill and a job and you’ll probably pay back the cost in taxes in a handful of years. As for University, most people who are going to fail out of a BA/BS program will do it in the first two years. They’ll not have a credential, but they also won’t have a ton of debt.
Then have a time limit. Burned up your two years being stupid or picking a bad credential (or you just want to change career paths), you can try again in 10 years. Offer a waiver if your chosen career is evaporating faster than anticipated.Report
It’s not a bad idea though it doesn’t address existing debt. I suppose you could just forgive a flat amount analogous to 2 years tuition and call it a day.Report
The College Board’s Trends in Student Aid report is a good source of student loan statistics. That’s the 2021 report, but the 2016 report is also worth checking out for statistics on default rate by loan amount. Somewhat counterintuitively, default rate is negatively correlated with loan balance.
The highest default rate (24%) was among borrowers who borrowed less than $5,000, while the lowest (7%) was among borrowers who borrowed more than $40,000. This was for borrowers entering repayment in the 2010-11 school year, so overall default rates were considerably elevated due to the state of the economy at the time.
Also, 45% graduate with no debt, and of the remaining 55%, the average debt is under $30,000. This means that about 3/4 of bachelor’s recipients graduate with less than $30,000 in debt, which costs about $4,000 per year to pay off over a decade. For reference, the college wage premium is about $30,000 per year; IIRC it’s $20,000 per year in the 25-34 age bracket.
There is no national student loan debt crisis. There are individuals struggling with student loan debt, just like there are individuals struggling with credit card debt, auto debt, or mortgage debt. But these are the exception and not the rule.Report
Most student loan debt is relatively modes and in the low five figures. That’s a lot of money but not crushingly high debt. The reason why it is a big political issue is that that the people with the biggest student loan debt are well-positioned to make a big deal out of it and are a reliable Democratic constituency. This means that Democratic politicians need to pay at least some attention to them.Report
The devil is in the details and those details often get lost by spin.
1. Most student debt held by people is in relatively low amounts and is often held by people who went to vocational-type for-profit predators and were exploited. Many did not graduate. Some did but then received a harsh lesson in learning that ITT and DeVry are nit well regarded in the job market.
2. A lot of the stories for student debt revolve around people who have six figure crushing debt from graduate school or professional school. Sometimes this is from medical school or getting an MBA. Other times it is from getting a degree in the arts or humanities or even STEM that did not pan out as promised in the job market.
3. A lot of media tends to focus on group #2 rather than group #1 because journalists on the student-debt beat are more likely to know people in student group #2 rather than group #1.
4. #2 and #3 let anti-student debt people spin it all as just being a sop to the middle classes and above and ignore all the people who were exploited and sold fraudulent bills of goods by private industry, for-profit exploiters.
I’m a liberal and maintain that is good and healthy for society to have a mass educated class in all fields including, and maybe especially, the arts and humanities. Education is about more than earning skills which lead to a job/money. It is about being able to learn to analyze, be introspective, be a contemplative citizen, ask what is the purpose of life and what is the best way to lead a good life?* Are there times when it is more moral/ethical to say no to promotion/money in the name of the greater good or not feeling morally/ethically uneasy? A well-educated and contemplative citizenry is also good for the survival of a robust, active, and partcipatory democracy. It leads to the vibrant society.**
We like to piss on art majors for not studying something practical but those arts majors go on to produce the music, TV, movies, video games, books, etc. that keep many people entertained and provide joy and fun in life.
*I realize that there is going to be a good chunk of the population who answer these questions with “on a large pile of money surrounded by lots of hotties” and no education will change them but that does not mean educational policy needs to be tooled to the most utilitarian, venal, lowest common denominator.
**Of course, lots people can see education as a threat if it produces introspective and questioning citizens.Report
I’m a liberal and maintain that is good and healthy for society to have a mass educated class in all fields including, and maybe especially, the arts and humanities.
I agree that it would be great if we had an educational system that was capable of doing this sort of thing.
As it is, we seem to have a critical mass of students graduating and saying “my degree was not worth what I paid and am continuing to pay for it”.
You need to tell them that they have something beyond measure. Not the people who are saying “well, maybe they should be able to discharge this debt in bankruptcy”.Report
The mass educated class nut is a tough one to crack. There doesn’t seem to be much of a formula for what makes people drawn to academic, artistic, and intellectual pursuits. Lots of people are good at school without really loving the arts, humanities, or science that much. We can definitely fine more people into these things than we did in the past and educate them but that leads to another problem. You get lots of frustrated people who are angry that they can’t pursue archeology or a career in the arts in any form and earn a living. Not just artists but people who just want to be on a museum staff somewhere get kicked in the shins with how hard it can be. So you run into the elite over-production problem.Report
These majors are not impractical because of what they do. They are impractical because of the number of people who have them relative to the number of jobs which exist.Report
A few years back, a picture went viral of a sign in a football locker room at one of those colleges.
It said something to the effect of how there are a couple orders of magnitude of difference between the number of college players and the number of NFL players and went on to point out the difference between what a third string linebacker makes versus one of the players you’ve actually heard of. It finished with telling the students to study.
Anyway, they need a sign like that for art majors.Report
This ain’t the sign I remember but it covers the same numbers.Report
Math brings clarity and reflects reality.Report
Yeah, a Dorm/Fraternity* mate of mine was an OLB on the ND practice squad (got to play on senior day, like Rudy) … He wasn’t the brightest guy (super likable and charming) and knew that his scholarship to ND was the greatest thing he could possibly have for his future.
He’s a very successful VP at a major tech company and his LinkedIn bio is still all about the lessons he learned as a member of the 1988 National Championship squad under Lou Holtz…
Impossible to know whether ’88/Holtz is correlation or causation; but it doesn’t matter, he knew from the very beginning that his ‘plan’ was to parlay the ND degree PLUS his time as an ND football player into a door opener for his future. The National Championship ring? That was pure bonus.
*ND does not have frats, but the dorm you get as a freshman is the dorm you keep… so becomes a sort of default frat where you know everyone… which makes for interesting cross-over adventures where the author may or may not have prevented some football players from getting suspended/kicked-out by being the nerdy designated driver. Which starts to sound like a Bryan O’Nolan Mike Pence story…Report
My 3rd daughter is scary good at Art. Easily the best student in every class she’s been in, everything she does is worth attention. Her middle school stuff was better than the bulk of the HS stuff I saw.
I spent years explaining the realities on what a career in Art looks like (not the same thing as discouraging it), and she’s decided to pursue that as a hobby and earn money in a different field.Report
Video game design employs a tremendous number of artists:
https://www.artstation.com/?sort_by=community
“Learn to code” also means “Learn how to make digital art to creatively design websites”.Report
The first question is, what do you want to do with the degree? If you want to study art for its sake, that’s great. It’ll bring down the average earnings per graduate though. If you want to work in an art-related field, the degree might be necessary. But if you want to be an artist, a degree might not get you closer to that goal. A lot depends on the art. In classical music, a graduate from a high-reputation school can make a good living; a graduate from an average school can earn money but probably not be a full-time classical musician; a non-graduate won’t stand a chance beyond playing with a local theater company. A general music teacher might need a teaching degree; a general musician doesn’t need to graduate high school. To be a jazz musician, you simply have to unlearn basic grooming habits.Report
My younger brother became an architect because he wanted to use his art gift in a practical way. It’s been very aesthetically and financially rewarding.Report
#2 and #3 let anti-student debt people spin it all as just being a sop to the middle classes and above and ignore all the people who were exploited and sold fraudulent bills of goods by private industry, for-profit exploiters.
Biden has done some limited debt forgiveness targeted to, IIRC, permanently disabled borrowers and borrowers who attended fraudulent schools, and I don’t think anybody objected to that. If you want to go nut-picking, you can probably find a couple people on Twitter who did. But the gimme-gimme-gimme left is calling for a blanket debt cancellation, the vast majority of which would benefit people who have manageable debt levels and got good value for their money. There’s simply no justification for this. Any debt cancellation needs to be targeted to people who legitimately can’t pay (e.g. via bankruptcy) or who were defrauded.Report
The architecture, real estate, and construction industries are what I know personally, and demonstrate some interesting facts.
Almost all architecture firms demand a four year degree even for the lowest position which requires absolutely no architectural knowledge.
Real estate firms like a degree, but less often, and you can find plenty of people who are working at higher levels who have degrees in unrelated fields or no degree at all.
Construction is completely indifferent to degrees. I now work for a construction company where the DEO is an ex football player, and the manager has a degree in political science/ philosophy.
Its like we have discussed before, how over-credentialization leads to the mad scramble for degrees which aren’t really necessary. I don’t have a simple solution but my suspicion is that overall softness of labor over the past few decades contributed and maybe a stronger position of labor will convince employers to hire people without degrees.Report
Don’t BS us, Chip. We all know you took that architecture gig to make ends meet, just for a few years before you blew the lid off the art scene with your sketches. But those philistines wouldn’t know greatness if it hit them in the head with a brick. Now here you are stuck in a career beneath you, cavorting with division 3 linebackers and simpletons with marketing degrees from junior college.Report
From a monetary perspective, this is a deflationary policy.
As such, I am all for it.Report
Everytime we have the Student Loan discussion here, we ignore the fact that you can’t even discuss the existing loans until you address the underlying problem of the payment and cost incentives that go into the existing College education.
We have to address that first… downstream, once that is addressed…we could look at what to do with people who are carrying loans from a “Legacy” bad University payment incentive program. Anything that starts with Loan forgiveness and doesn’t fix underlying problem is unserious and should be treated as such.
And, as noted above, if we can get past fixing the underlying College Cost problem; it will probably be only Undergrad loan adjustments… quite possibly the loans for Law/Medicine will remain as valuable as the gatekeeping allows.Report
Take it one level deeper.
Liberals can’t take the idea that “everyone is equal” is a massive oversimplification.
Hence, colleges were watered down… starting in around the 1970’s.
Note the date.
Do you have any idea how embarrassing it would be, to liberals, if only 10% of women could graduate college? (RBG and others like her came up when college was hard, and it shows.) That’s why college needed to be watered down, and mainly in the area of critical thinking.
Addressing liberal ideology being allowed to trump “facts on the ground” will fix many problems.Report
Um, I don’t think any of this is true or relevant.
Especially not to my point about the incentives we’ve built into the cost structure for any qualified institution of higher education.Report
Liberals don’t think this. Liberals DO think that everyone’s opportunities should be equal, and liberals think society (and thus government) need to work to make sure barriers to success are removed and/or mitigated. Like the lack of admission of women to most colleges and universities and programs until AFTER RBG finished law school.
There’s also no evidence that college has been watered down, especially in the area of critical thinking. Its a nice neo-conservative talking point but it lacks evidence.Report
Women’s studies? Worthless degrees in general? Last I checked there are more women than men going to college. We also have a lot of low economic impact majors being dominated by women.
I think we have evidence there are a good number of people going to college who shouldn’t, i.e. people whose economic prospects aren’t increased by going.
If we’re going to use student loan debt (or rather who is paying it off and who isn’t) as a stand in, then we have…
…12 years after entering college:
White men paid off 44 percent of their student-loan balance
White women paid off 28 percent
Black men saw their balances grow 11 percent
Black women saw their loan balances grow 13 percent[42]
https://en.wikipedia.org/wiki/Student_loans_in_the_United_States#Race_and_gender_differences_in_student_loan_debtReport
White women earn 79 cents on the dollar to white men, so of course they pay off less student debt. Black women earn 62 cents to the dollar; black men earn 87 cents to the dollar. That has nothing to do with the worth of their degrees.
And honestly if you want a curriculum that excels at teaching critical thinking and dissecting the human condition, women’s and gender studies are probably it. I can also tell you form inside science, many disciplines still have a the enormous problem un both undergraduate and graduate settings of actively discouraging women from high economic impact studies – the very real “mom tax.”Report
The bulk of that difference is having children. One of the claimed effects of student debt is preventing/postponing children.
https://www.vox.com/2018/2/19/17018380/gender-wage-gap-childcare-penalty
Further, for every 100 women who get degrees there are 74 men. If these college degrees really do enhance income, then how is it that men and women earn the same before women have children?
These numbers look a lot like about a quarter of women get degrees that don’t increase their economic value.
Wait, what is the reasoning here?
Lack of “worth of the degrees” would go a long way to explain your numbers.
On a side note your numbers don’t include education, but adjusted for education they’re still roughly the same so whatever.Report
The real question is how much value do these classes add.
If you have to talk about unprovable measurements like “critical thinking” (no one learns that from the news or high school?) and not “these degrees prepare you for jobs”, then that’s a problem.
My expectation is chemical engineers who find their classes too hard can change their majors to women’s studies, but the reverse never happens.
Or put differently, I seriously doubt there’s much signal-of-worth there over a general degree. Nor do I know what jobs are waiting for people with those majors.
So let’s just gather some numbers to prove my gut… when I try to gather stats for “what is the expected income for this degree” I find most of the majors are easy to figure out, but women’s studies normally isn’t listed at all.
If you seriously dig you end up with: https://www.payscale.com/college-salary-report/majors-that-pay-you-back/bachelors?orderBy=midCareerMedianPay&ascending=false&search=women%27s%20studies
They’re rated #670 out of 827. Their early pay is $45k (that’s very close to the bottom) and their mid-career is $68k.
For perspective “Art Therapy” is #667, “Technical Theatre” is #681, “New Media” is #675, and they’re tied with “Modern Language Spanish” and “Applied Sociology”.
These classes are extremely popular. They don’t mention that majoring in them puts you up with the Theatre people.Report
For perspective: “English Literature” and even “Speech & Drama” are both $20k more at $87k.
If you like numbers that is an interesting website. I assume these are one year’s worth of data so there’s probably a sizable margin of error.
Further some of these majors probably suffer from small sample size. Search on “Accounting” and you’ll see 12 different majors that are all over the place.Report
Asian men earn $1.25 on the dollar, relative to white men. Why didn’t you mention them? Did it ruin your narrative?
https://www.bls.gov/charts/usual-weekly-earnings/usual-weekly-earnings-current-quarter-by-race-and-sex.htmReport
I expect we’ll find they’re clustered in the STEM classes. We need an extra “M” in there for “Medical” but whatever.
My reading from (link below) is the STEMMs are seriously clustered in the top majors.
Some majors add a lot of value to your long term pocketbook, some don’t.
Hmm… this implies mis-matching is a big deal. Switching from a hard STEM major in your college to someone a lot softer has serious long term effects. You might be a lot better off going STEM in a weaker college.
https://www.payscale.com/college-salary-report/majors-that-pay-you-back/bachelors?orderBy=midCareerMedianPay&ascending=falseReport
Sorry, I’m late to the conversation, but I have a question tangentially related to this discussion. When I started university in 1971, semester tuition was $300. Today it is around $5,000 at the same school (a well-respected big-time state university). Can someone explain to me what the heck happened there?Report
It’s a combination of multiple factors.
First, the growth in money supply has outpaced the growth of the real economy over the past 50 years, so prices and wages have risen across the board. However, not all prices have risen uniformly. The prices of services tend to rise more quickly than prices of manufactured goods, because it’s easier to increase productivity in manufacturing than in provision of services. It still takes exactly one teacher to teach a class, and as class sizes decrease, productivity actually decreases as well.
I’ve heard that the increase in university education prices in particular is partially driven by the increase in costly amenities and the growth in administrative employees, I don’t have a good sense of how important a factor that is, but it bears mentioning.
Finally, because of need-based financial aid, posted tuition prices are becoming less and less representative of what students actually pay. Most universities will heavily discount tuition for students from lower- and middle-income families, and charge students from wealthy families more to make up the difference. Despite increases in posted tuition prices, mean student loan debt per graduate is only 4% higher than it was in 2005.Report
Yes and no. If productivity is measured as cost to have a class, then there have been massive productivity increases.
Adjuncts teach the bulk of the large classes and are paid something like min-wage(*).
Min-wage “ish” because they’re salary. Big picture adjuncts would be better off in retail because they’d have more hours.Report
This reply is for both Brandon and Dark Matter: Thanks to both of you for some insights. I did look into it a bit further and saw a lot of financial aid possibilities. I don’t know what that means/meant for the folks who have crushing debt at this point. Obviously, I am an “old” (very damned “old”) and come from the era when a college degree seemed framed in gold, and had no trouble getting through (including three extra semesters because I was having such a good time and a double major; also had jobs the whole time) without any debt. I’ve always been extremely lucky. I just feel bad about the debt-horror stories getting so much press. The “improved/enhanced facilities” angle may go a long way towards some explanation as well. Thanks again for a lot to think about.Report
Unfortunately a lot of this comes down to parenting, specifically fiscal literacy.
Colleges love to sell “the dream” and “the experience”.
My eldest bought into that. We used a lot of social pressure to have her accept a close-to-free ride scholarship at the local 2nd tier College rather than the “1st tier but expensive and no scholarship” she really wanted.Report
The “crushing debt” angle is being vastly oversold by activists and the media. Only 10% of borrowers have more than $80,000 in outstanding debt, and the majority have less than $20,000. People on the high end mostly have professional degrees that are worth going into that kind of debt for.
Also, some people have high debt because they opted into income-driven repayment and didn’t earn enough for the required payment to cover interest. But with IDR, any remaining debt is forgiven after twenty years of paying the required payment (10% of income above the poverty line, I believe), so there’s a sense in which this isn’t real debt.
It’s hard to get good numbers on exactly how common the “I have six-figure debt from an MFA in puppetry” that you see in the news is. Non-professional master’s degrees are where you see a lot of the real horror stories, because the federal government doesn’t limit borrowing for them the way it does for undergrad, so universities treat them as cash cows.
But the thing about the entire Millennial generation being crushed by a mountain of student loan debt is just a lie.Report
Inflation was about 7x. Rest is massive armies of administrators and other overhead. Some of that is seen by the students, i.e. athletic buildings and better dorms.Report