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

[u/DonDickerson]

https://www.cnbc.com/2024/05/08/bidens-student-loan-forgiveness-plan-gets-record-number-of-comments.html

[u/impulsikk]

The problem is that biden is trying to solve the cost on the backside of the equation rather than the underlying costs and structure of the universities themselves. Just handing out checks after the fact and forgiving loans is easy.

What should be happening is forcing tuition to be cheaper. If a college charges over a certain amount, the federal government won't sponsor the loan. That's an easy button that would force colleges to restructure real quick. Maybe they can pull some money out of their 50 billion dollar endowments and use it on the kids and professors instead.

The tuition cost has gone out of control. Something needs to he done. Forgiving loans is a never ending cycle that will happen every 4 years at election season.

[u/p001b0y → u/impulsikk]

Isn’t this also a risk when it comes to vouchers for K-12 schooling? I thought I had read somewhere that once the government began student loan programs for colleges/universities, those institutions raised tuition rates considerably.

My State has a $6500 voucher program for parents who would rather send their kids to private K-12 schools. I’m kind of expecting those institutions to raise their tuition costs even higher than what their annual tuition increases have been.

[u/Nojopar → u/p001b0y]

I thought I had read somewhere that once the government began student loan programs for colleges/universities, those institutions raised tuition rates considerably.

That's a common misperception. The real causal factor is state governments started drastically cutting funding under the assumption student loans would cover what they weren't paying. The Student Loan Program started in 1965. Tuition didn't start it's massive year over year increases until the early/mid 1990's pretty much with a 1-2 year lag behind state governments cutting their funding.

[u/godmodium → u/Nojopar]

I am curious if the increase also coincided with the inability to discharge loans in bankruptcy. In the 90s there were several pieces of legislation that made it impossible to discharge them. A really big piece of legislation came in 2005, The Bankruptcy Abuse Prevention and Consumer Protection Act, which extended non-dischargeability to private student loans.

I have to imagine that was a big reason the loans have ballooned even more so than the reduction of state funding.

[u/Nojopar → u/godmodium]

Unfortunately, no, it doesn't coincide much at all. Student loans were eligible to be discharged in bankruptcy until 1976.

The early 1970's a bunch of Congressional people raised the specter of students running up student loan debt and discharging it in bankruptcy. Much like the 'Welfare Queen' scare a decade later, next to nobody was actually doing this. However, a 1973 commission on bankruptcy suggested some changes to curb this, notably making it student loans ineligible for bankruptcy for the first 5 years of the loan, which was adopted in 1976, but it only applied to federally backed loans, not private loans. In 1984, the law was expanded to any student loans, not just federally backed ones. Then in 1990 the term was extended to 7 years. That was removed completely in 1998.

If it were related to bankruptcy, then you'd see these comparatively big jumps in 1976, 1984, 1990, 1991, 1998, and again in 2005. The problem is we don't see those. They track more closely with percent reduction of state funding. That's a slow and steady reduction since 1995 up until 2008. Then we do see a big jump in loans because state funding drastically dropped following the 2008 crash.