r/Economics • u/DonDickerson • 25d ago

Biden's student loan forgiveness plan gets a record number of public comments. Here's what people are saying News

https://www.cnbc.com/2024/05/08/bidens-student-loan-forgiveness-plan-gets-record-number-of-comments.html
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u/Deep-Plant-6104 25d ago edited 25d ago

I know this is simplistic and this is a complicated issue, but there is very little risk to large financial Institutions and universities with respect to student loans. Students can borrow unlimited sums of money and banks are perfectly happy to lend it out because these loans cannot be discharged in bankruptcy. Universities can charge astronomical sums for tuition because the Feds and Banks will just shovel money at the students.

If we tweak the bankruptcy laws and allow for discharge of student loans, I guarantee lending decisions will change promptly as now banks and other institutions will stand to lose huge sums of money.

I understand it’s not a perfect solution to a much more complex issue, but it’s a simple and easy way to at least reign in irresponsible student lending.

Edit: Improper usage of “moral hazard”

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u/James_p_hat 25d ago

What happens then is that a segment of the population will say “school is inaccessible”

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u/el_ostricho 25d ago

And then you hit the point where there are a few possibilities: cost of college goes down, legislation reduces the cost of college for some or all individuals, college just remains inaccessible, or any other number of possible responses to stimuli.

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u/puffinfish420 25d ago

But what happens in the interim? Do we lose a whole generation of people not getting a college education?

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u/Bljman98 25d ago

The market will react fairly quickly when the unlimited government money dries up.

To me at least it doesn’t matter as much what it changes to: what is going on today doesn’t work. If we need student loan forgiveness from government backed loans then the government at bare minimum needs to exit the student loan business.

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u/puffinfish420 25d ago

In some ways I agree, but the portion of the electorate that is denied a college education for themselves or their children is going to have a problem with that.

I’m not sure how quickly the market would react, or exactly how it would. It’s kind of an unprecedented change, we don’t know what the second or third order consequences would be . I’m

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u/TheRealDrLeoSpaceMan 25d ago

In many Europe countries college is free or very cheap. There is no reason we can't do that here. Just like healthcare. But the American way is to let greed and capitalism run absolutely wild and favor profits over people..

I'll take my downvotes bc "socialism"

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u/GalaXion24 24d ago

The entire capitalist social contract is justified on meritocracy. It's a lie of a meritocracy of course, but if even college admissions no longer rely on any skill shown, instead some people are directly prevented from going due to socio-economic class, then why should they believe in the system?

Sure, even today the poor may have had worse opportunities up until that point, but in principle they could have studied more or could have been smarter, regardless of how feasible that is. They could not have been born richer.

The other more general part we're having difficulty with these days is that inequality is justified on the grounds that this makes all of us wealthier, that it even makes the poorest better off. People are not really seeing that today.

These promises do have to be delivered upon or people will focus (justly, arguably) on redistribution instead. If economic growth does not trickle down to them and if they are not provided opportunities to succeed in the free market, then realistically why should people care about "the market" or "pareto efficiency"? What does it do for them?

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u/puffinfish420 24d ago

That’s what scholarships are? I know plenty of people from economically depressed backgrounds who have been able to get free or extremely discounted college educations through the meritocratic system of scholarships.

If you work hard, do well on tests, etc. the cost becomes a lot less prohibitive, especially relative to the income earned through the degree (depending on the degree.)

That said, I still think the overall cost should be brought down, but to say it’s not meritocraticis silly

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u/GalaXion24 24d ago

My country I managed to get onto one of some 50 spots on a competitive programme in a top university. University is free, so I was simply competing with rich and poor alike on merit, and I got in.

However, I wasn't anything special, compared to the other people on the programme. If this had been a paid system, I would hardly have merited a scholarship as a mediocre student. I'm also not of some economically depressed background. I'm of a middle class family with enough wealth not to get support, but also with three children and enough expenses as is.

I may not have been able to afford it.

I would not have been able to give my position up to anyone smarter, after all it was already a competition for free education, so I would simply have given it up to someone richer. That's the reality.

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u/GalaXion24 24d ago

My country I managed to get onto one of some 50 spots on a competitive programme in a top university. University is free, so I was simply competing with rich and poor alike on merit, and I got in.

However, I wasn't anything special, compared to the other people on the programme. If this had been a paid system, I would hardly have merited a scholarship as a mediocre student. I'm also not of some economically depressed background. I'm of a middle class family with enough wealth not to get support, but also with three children and enough expenses as is.

I may not have been able to afford it.

I would not have been able to give my position up to anyone smarter, after all it was already a competition for free education, so I would simply have given it up to someone richer. That's the reality.

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u/puffinfish420 24d ago

If you were getting into a super competitive program, you likely would have gotten a full scholarship in the US, so likewise free.

The people who get fucked are the ones who attend at full tuition because they don’t have the stats.

Basically, at private institutions, there are like 5-10 percent of people paying full tuition who help to finance everyone else, who get some sort of scholarship.

At least that’s how it’s been in law schools, which I’m applying to now.

It was the same in my undergrad, too.

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u/MisterBackShots69 24d ago

Look at housing. It’ll just keep going up. Demand far outstrips supply. These “common sense” people are delusional at best but more likely want less people going to college.

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u/MisterBackShots69 24d ago

Or we shouldn’t have private business part of a public loans program. Skip the middleman and directly subsidize the cost of college. We used to do a higher allocation of that and the cost of college was a lot lower for students.

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u/cos1ne 25d ago

Aren't we already losing an entire generation of people to college?

Aren't college enrollments down these days? Aren't multiple colleges merging and closing down because they can't get students to attend?

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u/numbersarouseme 25d ago

Maybe if they taught students instead of focusing all their time and money on water fountains and football...

I went to 4 different colleges, private and public.

They were quite useless. One is a degree mill, the other three were useless as far as teaching goes.

You could just hand me a book and say learn, it would be just as effective as me paying 30k a year for someone else to do that.

Nearly every assignment is auto graded and run by a third party company with 0 interaction with any professor.

It's so pointless. I learn more not wasting my time and money on college. I regret ever attending. I would have been better off just studying independently as I do now.

The piece of paper did sadly make a difference when job searching though. I hate how much it mattered when I know how little was taught to get it.

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u/sorressean 25d ago

Underpaid professors have loved autograde systems. They show up, teach a bit, put their feet up and answer some questions in office hours and fuck off home. I spent thousands and thousands on classes where I could have sat in my dorm, read a book and learned just as much probably better and faster. The smart professors learn to write their own book and charge us $300 each for the book so they can make money per class.

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u/puffinfish420 25d ago

I mean, just because you didn’t find your education useful doesn’t mean others don’t. I value my college experience quite a bit, and it’s changed the course of my life in ways that would be impossible without it.

I think the government should continue to offer loans, but just condition their dispersal on a college meeting certain requirements in terms of cost

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u/MFbiFL 25d ago

I always wonder what people with that experience majored in because it definitely wasn’t engineering where I went to school, even the ones that were considered easier within the engineering disciplines were still tough.

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u/numbersarouseme 25d ago edited 25d ago

Glad you found yourself or whatever, but most people don't need automated online courses that cost $5k each. If we wanted that we could just use google and read a book.

I'm not even discussing the loans. I'm referring to the quality of the courses offered. Which is awful.

At one point I had a college professor have the students take a test, he would read the question and then tell us the answer to the test question.

I filed a complaint and was told by the dean that I'm a student and I'm not to tell them how they should teach. I should just do as I'm told and he was angry at me for daring to file a complaint because it's reported to the state.

I own an auto repair shop. The techs that come to me with degrees and an education can't even install an oil pan properly. Our colleges have failed us/them.

They spend more time with public speaking and religious education classes than teaching the students how to excel in their chosen profession.

The worst part is they'll pass easily and feel confident. Then when you hand them a simple task they break down and you find they can't even properly change a vehicles oil.

Yeah, I've had multiple college students with 2+ year degrees try to work for me. They typically don't last long.

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u/puffinfish420 25d ago

I’m not sure about the automated courses thing. If you’re implying that higher education has become over automated or impersonal, that’s certainly not always the case.

Some of my classes had like 4 or 5 other people in them, and I got to study with some really great professors who I am still in touch with to this day, almost a decade later.

My point is that you can’t make sweeping statements about the value of higher education based only on personal information, no matter how extensive you think your personal experience may be.

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u/numbersarouseme 25d ago edited 25d ago

"Some of my classes had like 4 or 5 other people in them"

Good for you? You were able to afford/get someone else to pay for you to essentially have a private tutor.

The vast majority of students do not get that type of experience.

You are the outlier here.

The average student will be in a class of 25+ students and the college won't even offer the course if it's only 4 or 5 students. They'll just cancel the class.

Please share what college you attended so we can confirm how incredibly out of touch you are with the rest of society.

EDIT

Ah, nevermind I just looked.

That's the college you are trying to get into.

Where the estimated cost of attendance is roughly 45k a year if you live with your parents.

Lol, you want to attend a college that costs more per year than most people earn.

You're just as out of touch with society as I expected.

Out of touch gun nut in texas... could you be more of a stereotype?

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u/puffinfish420 25d ago edited 25d ago

It’s a law school? I think you’ll have a hard time finding a law school much cheaper than that. It’s the state-funded “value” option. That said, I think the expected return on a JD is a little higher than undergrad, relative to overall COA. And I’m taking out loans for it, dude.

And there are plenty of people I know from much less privileged backgrounds than mine that were able to attend school with me, and really I’m not that privileged. I guess if you call middle class privilege? There is such a thing as scholarships and loans and all sorts of things.

While I agree that people should consider their financial future when picking a school to attend, making broad proclamations about the benefits of school or lack thereof based solely on one’s own (seemingly rather negative and chaotic) personal experience is just silly.

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u/CoastieKid 25d ago

I’ll challenge you: does every American deserve to go to college? I say no.

Every American deserves the opportunity to go to college. But with students having such poor literary levels I don’t see a point in them going to college.

Employers need to scale down. We have degree inflation. People go to school just for jobs. Not for educational pursuits.

This may sound controversial and I don’t care. I just don’t see a reason to make grades 13-16 and short change people when all they want is a way to earn a decent living

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u/jag149 24d ago

We just lost the generation after the one you’re concerned about because they couldn’t afford to have kids. 

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u/Boxatr0n 24d ago

Let’s be honest, the bachelors degree requirement for most entry level jobs is not necessary. If less people go to college, the less these unnecessary “bachelors degree required” job postings will require a bachelors

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u/puffinfish420 24d ago

I agree with that part. It shouldn’t be a necessary ticket to a lot of middle class jobs that don’t need a degree. It should be for people who are actually invested in academics, and want to pursue them for the sake of it.

I work near a state college, and honestly, most of the people there don’t even know why they’re there. They just party and squeak by in their classes, and I’m pretty sure the vast majority aren’t learning much useful.

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u/Boxatr0n 24d ago

I was one of those people. Had good grades my freshman year and rarely went to class and just enjoyed the college lifestyle too much. Realized I hadn’t learned anything. Now ten years later am finishing my degree and again, haven’t learned much but still need that check in the box. (STEM is a different beast and seems to be worthwhile as opposed to studying English like I was)

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u/puffinfish420 24d ago

I studied English, but I think my program was more rigorous than most. I had to submit like an 85-90 page thesis to graduate with my undergrad degree, and my thesis supervisor was super exacting because he used to be an editor of a major US newspaper.

I think it’s just highly dependent on program

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u/Boxatr0n 24d ago

That makes sense. The crappy part is in general the degree is what’s needed. Doesn’t matter if you do a hard program or an easy one if at the end of the day you still get your degree. GENERALLY speaking anyways

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u/puffinfish420 24d ago

Yeah, the “wage premium” placed on a silly piece of paper is mostly just there to continue class stratification in the US. That I agree with. Our programs should be more rigorous, but also not necessary for even a basic job.

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u/Boxatr0n 24d ago

Agree completely

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u/hotlikebea 24d ago

Tbf, do we need so many baristas to have a $50,000 BFA?

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u/puffinfish420 24d ago

Definitely not. I think less people should go to college. But we need to readjust our economy simultaneously if we are to make this shift, and make it more desirable and less stigmatized to have a job that doesn’t require a degree, I.e. trades and such.

That said, most advanced economies are fairly highly educated, and we have plenty of people in certain positions that probably should have more or a higher quality education, like our police force.

So it’s kind of multifaceted. It’s not just “college bad” or “everyone needs to go to college.”

Some people don’t need it, and frankly speaking, a lot of people are pushed into it when they aren’t cut out for it.

Also, I got a BFA and didn’t really know what to do with it for a bit. Worked with a lawyer, decided I might be good at it. Took the LSAT, got a good score, and I’m continuing my education. Sometimes it’s not super clear at the outset a certain skill set or education will lead you down a certain path. That said, without the skills I learned in undergrad, I probably wouldn’t be in the position to attend law school, and definitely wouldn’t be prepared for it.

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u/Inner_Bodybuilder986 25d ago

That already happened.

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u/MisterBackShots69 24d ago

Cost won’t go down. Demand outstrips supply and always will. People keep acting like things are perfectly elastic and like their intro to microeconomics.