An Idea for Student Debt Relief

Stringfellow Hawk said:
Since all student loan debt did not go just for education, I think they should just pay it. There should not be rewards for irresponsible or bad behavior.
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I'm highly sympathetic to some borrowers. They started taking on these loans when they were quite young -- just kids, in some cases. Often they came from families without much financial sophistication or understanding of the professional job market, so they may never have had any good advice before finding themselves in that tough situation. It strikes me as unfair that our society, that has all sorts of ways for people to shed debt if they make bad gambles, makes student debt almost impossible to shed. If some inept silver-spoon businessman can drive multiple businesses into the ground and get involved in six different bankruptcies, it's just so weird that some poor dumb kid who gets in too deep has no way out. So, I think our system should have mercy for those who made some bad decisions, at some point, or just had some bad luck. But I don't want debt forgiveness to be a kind of windfall for someone en route to being rich, or something that people can game. I think my idea controls for that, since people will only opt into forgiveness if they really are drowning, rather than just temporarily stretched.
 
cawacko said:
Public service like what?
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Military service, public health clinics, public legal aid, community service projects...the possibilities are endless.
And all of it would nudge us to eventually becoming a civilized country, finally.

There's no need for private careers before the age of thirty-five or after the age of fifty-five.
The Calvinist Work Ethic is a malignant psychosis.
 
NiftyNiblick said:
Military service, public health clinics, public legal aid, community service projects...the possibilities are endless.
And all of it would nudge us to eventually becoming a civilized country, finally.

There's no need for private careers before the age of thirty-five or after the age of fifty-five.
The Calvinist Work Ethic is a malignant psychosis.
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Wow. Ok. Are there are countries that either follow, or come close to following, what you propose in the second paragraph?
 
Mina said:
if lenders worry about debts being wiped out again, they'll charge much higher rates to account for that risk, making education even less affordable.
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Interesting idea. I think(?) the loans will be wiped out for the students only, not for the lenders. They will still get their money.
 
cawacko said:
Wow. Ok. Are there are countries that either follow, or come close to following, what you propose in the second paragraph?
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That's hard to say. Whenever I was abroad (with one obvious exception called Vietnam), I was partying, not observing the local culture.

If there's no place like I've described, there obviously needs to be.
 
Mina said:
Unlike most liberals, I don't like the idea of generalized elimination of student debt.

Partly that's because I dislike the idea of a net transfer of wealth to people like young doctors and lawyers who will end up making a killing in their lifetimes.

Partly it's that I don't like the injustice of it in a situation where you compare someone who spent years making sacrifices to pay down what she owes, and a peer who lived the high life while making only minimum payments and taking every deferment opportunity, and now they're both put in the same situation.

But mostly it's because I worry about the unintended consequences -- for example, if lenders worry about debts being wiped out again, they'll charge much higher rates to account for that risk, making education even less affordable. Similarly, if people implicitly factor in the chance of having debt wiped out, they'll be willing to take on more of it, which puts upward pressure on college costs.

So, here's my pet idea, in lieu of that:

The government agrees to pay off however much student debt you'd like them to pay off, but in exchange you get a PERMANENT increase in all your tax rates of 0.1 point (income, estate, and capital gains), for each $1,000 of debt the government assumes.

So, say you graduate with $50,000 in student debt at 10yrs/5% terms, but you can only find work paying $30,000 per year. And so that $6,364 per year in loan payments is just killing you. You can wipe it all out, and in exchange your tax rates go up 5 points. Based on a $12,550 standard deduction, you would have been on the hook for $1,895 in taxes, but after the increase you'd be on the hook for $2,270. So, year one, you're relieved of $6,364 in payments, in exchange for $375 in extra taxes. Great deal. And even across a lifetime of earning, you are likely to come out ahead with that deal, unless you wind up making a lot more money down the road. So, you'd probably be smart to take the deal.

Now say that, instead, you're a freshly minted lawyer with a job offer from a big firm to earn $200,000. Well, now, if you take that same offer to wipe out $50k in debt for a permanent 5 point hike in tax rates, then year one you get the same $6,364 off your loan liability, but it's in exchange for a year one increase in taxes of $14,169. So, right out of the gate, it's a garbage deal, and you won't take it. You'll just pay what you owe.

Where it gets a bit tougher is in the middle. Like same deal, but your job pays $60k/year. Taking the deal helps you out in the early years: $6,365/year of debt payment relief in exchange for $3,498 more in taxes. But ten years down the road, that loan would be going away, anyway, whereas that tax increase persists. So, if you're really hurting right now, maybe it's worth paying more in the long haul in exchange for relief when you really need it. But if you're honest with yourself, you may admit the current pain isn't really that bad, so just bite bullet, tighten your belt, and pay what you owe.

You can tweak this idea by adjusting what dollar amounts equate with what tax change. Like if it's 0.1 point of hike for every $2,000, instead of every $1,000, it's friendlier to debtors..... it still wouldn't be attractive the lawyer in the second example, but will look like a better deal for the guy making $60k in the third.

The advantage of this system is that it gives people an incentive to be honest with the government, and themselves, about future earning prospects. If you're genuinely desperate, you'll jump at this, but if you know you're just temporarily strapped and will soon have plenty of money, you won't offload that debt onto the taxpayer when you know it'll mean higher taxes on a lifetime of high earnings. And it preserve the incentive to keep school costs low, since you pay at least some of it in some form, regardless.
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Nonsense, the tax code can be changed at any time, current rulers don't have the ability to decide for future rulers.
 
Althea said:
Better to discourage kids from taking a 4 year vacation from the real world via worthless degrees.

I'm for funding trade programs instead of college, and expanding existing programs for worthwhile degrees that allow you to work off your loans via community service.
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My idea could also be paired with student-loan reform, where subsidized/government loans are only available on certain conditions. For example, you need to qualify for them either with elite grades or by choosing a highly in-demand major.
 
Mina said:
My idea could also be paired with student-loan reform, where subsidized/government loans are only available on certain conditions. For example, you need to qualify for them either with elite grades or by choosing a highly in-demand major.
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More BS...grades are now outright fraud, plus schools are now indoctrination centers, not places of education.
 
Hawkeye10 said:
More BS...grades are now outright fraud, plus schools are now indoctrination centers, not places of education.
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Yes, more BS.

Indoctrination accusation is a lie. It doesn't happen much on a regular or intentional basis.

When is the last time you spent significant time and energy with a public educator or at a public school?

So fucking stupid
 
Whythink said:
Yes, more BS.

Indoctrination accusation is a lie. It doesn't happen much on a regular or intentional basis.

When is the last time you spent significant time and energy with a public educator or at a public school?

So fucking stupid
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I am Free Man....I reject the argument that only the "experts" get to speak. Just look at how profoundly they have lied to us and betrayed us.
 
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