
U.S. Student Debt in ‘Serious Delinquency’ Tops $166B - spking
https://www.bloombergquint.com/business/u-s-student-debt-in-serious-delinquency-tops-166-billion
======
RGamma
From a European perspective I can only shake my head at this.

It doesn't seem like a good idea at all to indebt a significant part of the
young population (which I presume creates a lot of avoidable stress) while the
rich gain in wealth and power year after year. But I guess longer-term
thinking has been thrown overboard in economic decision/policy making anyway,
because that would make the numbers not grow fast enough.

Recently I'm under the impression that American society has been tearing
itself apart more than is healthy, damaging social cohesion to a great deal.
Good luck building an advanced society on distrust and inequality though...

~~~
monting
Don’t mean to sound defensive (I’m not American), and I mostly agree with you.

But, from a non-European perspective, Europe doesn’t seem to be doing well? It
seems the EU is slowly disintegrating, and the monetary union isn’t working.
Also the political landscape seems to be in turmoil as well.

~~~
holografix
Also non-American and non-European here. My impression is that the EU is
getting itself into a huge mess mainly due to abused good intentions taking in
immigrants and as a byproduct of the GFC and Middle East’s proxy American x
Russian war.

While the Americans seem to not be operating as a democracy for a while and
are instead a Corporocracy. It became fairly obvious after the GFC. The three
“super powers” in the world are not democracies.

~~~
TomK32
First of all, a lot of those arriving and asking for asylum are sent back
because they don't qualify.

Moving on, we Europeans are making a decent profit from selling weapons to the
Middle East and African countries. We might as well take on those refugees
driven out by the violence our weapons cause.

Europe's history, even the years since WWII, is full of migrations: Post-war
displacement affected more than 10 million people, refugees from East to West
Germany, Brits fleeing the rain for sunny France and Spain (they are a few
hundred thousands), Hungary 1956 dispersed 200,000 hungarians of which 70,000
crossed this little bridge
[https://en.wikipedia.org/wiki/Br%C3%BCcke_von_Andau](https://en.wikipedia.org/wiki/Br%C3%BCcke_von_Andau)
and the last decade saw a massive flow of young people from southern Europe to
the north which causes long-lasting problems for the southern countries. The
list goes and and will go on. Some EU countries have 10% or more of EU-
nationals in their population which in my eyes will become a hot topic in
terms of higher level elections as right now you are only allowed to
participate in local elections if you are not a native.

------
Mountain_Skies
Education is important. Access to education is important. But our current
system of giving out student loans with no regard to if the student will ever
have a realistic ability to repay borders on predatory.

If we can't do anything to solve that portion of the problem, we should at
least restrict the mandatory fees that are tacked on for non instructional
purposes. No student should have to pay for decades to prop up with school's
sports ambitions. For every Alabama that makes a profit off of sports, there
are dozens of Georgia States that impose ridiculous mandatory fees on students
to balance the budget of the athletics department.

Athletics are easy to pick on because they're the most visible but most
schools have a whole list of these non instructional fees that students must
pay, in most cases, go into debt to pay or be denied access to education.

After removing the mandatory fees, also limit how much of the tuition can be
used for non instructional purposes. Every institution has overhead that must
exist to keep things operational but there must be a limit to how much or
we're once again either denying access to education or condemning students to
an overwhelming debt burden.

Instruction of course isn't the only mission of most universities. Research is
important. Extension is important. There are many worthwhile activities
universities engage in that should continue but not at the expense of access
to instruction.

edit: spacing

~~~
Shivetya
People have been fine with Medicade/Medicare spelling out costs for services
and such they should be willing to accept the same in higher education to
obtain a Federally backed loan.

Schools will trip over themselves to offer degree programs to meet Federal
Assistance requirements. Each degree, each course credit leading to that
degree, should all be subject to review on a periodic basis to insure that the
needs of the country as a whole are being supported. Colleges which fall
outside the loan guarantees will obviously find methods to insure students can
attend, by steering endowment funds and sponsorships.

~~~
iguy
> each course credit ... should all be subject to review on a periodic basis
> ... needs of the country

This sounds horrifying. You want every change of a course to go via some
central bureaucracy for approval? This bureaucracy will be staffed by
ideologically neutral disinterested angels, regardless of which party is in
power?

I think there's a much more free-market solution here. Cap student loan
payments at 15% of taxable income, written off after 20 years. Then they can
never be a crushing burden, and lenders will become very picky about who (and
for what course, and where) they make loans to.

And 17-year-olds will be presented with highly relevant individualised
information about the likely outcomes of different options. And it'll also
create some jobs for the coming glut of machine-learning people, to make these
predictions...

~~~
TheOtherHobbes
The predictable outcome will be a glut of professionals with high-prospect
degrees which will actually drive wages down in those fields, while useful-
but-low-prospect careers - nursing, the arts, teaching - will continue to be
underfunded and underpaid.

There's already more than enough "ideologically neutral disinterested"
distortion of social value created by so-called free markets everywhere else
in the economy. If free markets were going to solve university education
they'd have done it by now - just as they've been promising to for decades
now.

~~~
asdfasgasdgasdg
> If free markets were going to solve university education they'd have done it
> by now - just as they've been promising to for decades now.

The market in university education is not free, though. There are significant
distortions induced by the various loan and scholarship policies enforced at
both the federal and state level.

Has "the free market" been promising to solve university education? Is such a
thing even an entity capable of making a promise? As far as I can tell, it's
totally uninterested in doing so. Most reputable educational institutions are
not for profit. The for profit ones seem almost entirely taken with the
problem of bilking students and taxpayers by providing shoddy goods at
outrageous prices and exploiting the student loan regime and ignorant
customers. The university education system and the free market are, as far as
I can tell, basically uninvolved with one another.

FWIW, I don't think the free market would solve university education either,
for entirely foreseeable reasons. In a completely free market, universities
and lenders would bet on the affluent, and the poor would be left out in the
cold to an even greater extent than they currently are. But on the other hand,
it's hard to blame the free market for the current state of affairs.

------
anilshanbhag
There is so much waste in universities: bloated admin/it staff , libraries
filled with journals/magazines that no one reads, tenure system that doesn't
allow you to downsize departments that have no students. Tuition can be
reduced, however there is no incentive to do it since students can easily get
loans.

~~~
erentz
Right. It’s become a government backed bubble. Somehow we need to pop it
softly. I’m sympathetic to all the current student debt holders and providing
relief to them but if we do that without putting and end to these guaranteed
loans we’re just perpetuating (and making worse) the problem.

Doing something like making community college and trade school level degrees
free and leaving everything else to private loans sorta makes sense. (Arguably
80% of university graduates really didn’t need their degree for their job.)

~~~
Coding_Cat
There is a rather simple way of stopping the ever growing tuition bubble, one
that is employed in the Netherland, but I feel like it won't be popular in the
US: Cap the tuition a college is allowed to charge and restrict them from
charging additional fees.

~~~
ashelmire
Actually, the simplest way to put downward pressure on tuition in the US is to
allow the loans to be dischargeable in bankruptcy.

~~~
TrinaryWorksToo
Won't people then plan to go bankrupt? Although perhaps that will allow a
better equilibrium.

~~~
hn_throwaway_99
No, being bankrupt is definitely not an enjoyable state to be in, even is your
debts are discharged, though.

What is _does_ mean, however, is that no sane entity will then continue giving
out loans for someone to go $75k in debt to go to cooking school.

~~~
hobo_mark
You mean _culinary science_ !

------
rubyn00bie
Let it burn down. No one should pay back their student loan debt. Seriously,
just stop. This is a scheme in which they've fucked over a large portion of
the population with the skyrocketing prices of education. Further, this
education is the regularly accepted means of increasing your production.
Society says you have to do this, and then continuously increases the price,
without reason.

The gist of this is; some shithead, many years ago decided to increase his
bottom lines by fucking with future generations and our ability to output...
when they started this whole fucking problem, and you know what? Let it burn
to the ground.

You know who's not gonna lose a bunch of money? The people in student debt, we
already fucking have.

~~~
SlowRobotAhead
>No one should pay back their student loan debt. Seriously, just stop.

Sorry. But you took a debt, you pay it back. Integrity isn’t outdated.

I agree that the idea and industry behind “13th grade” is dumb. Obviously not
every kid should be encouraged to take on debt to go to college. But “stop
paying your debts” is a bad message imo.

~~~
arbitrary_name
Let's take the morality out of it. It's been injected in there for the benefit
of the lenders.

They charge an interest rate to cover their risk. Right now, with the fact
that debt holders cannot default, they are getting an unfair deal. Defaulting
on the debt and refusing to pay effectively triggers the risk that they were
charging interest on.

Like strikers refusing to work until better working conditions are provided,
so too are debtors withholding payment doing something noble.

~~~
will4274
Just because loans cannot be discharged in bankruptcy doesn't mean they are
risk free. Some people die before repaying their debts, some people leave the
country or otherwise become impossible to track down. In these cases, the bank
eats the cost of the loan and has to make it up on other loans. risk is
limited not eliminated.

------
wtvanhest
If you add up the total cost of all education institutions in the US, multiply
by 4 years, then build a payment structure based on that number, there is
simply not enough income left over in the corhort of new grads (first 10 years
out of school) to pay the debt service.

The problem has nothing to do with liberal art majors, or irresponsible
borrowing.

The problem is entirely driven by an excessive cost structure of both public
and private institutions.

People like the founder of Lambda School understand the problem and will be
the solution.

~~~
temp1928384
Lambda School isn't exactly cheap. 17% of 2 years salary (edit) is capped at
$30k. I paid less than that in tuition for 4 years of in-state tuition at a
top 10 public school.

~~~
tfolbrecht
Read there ISA, there is a cap, it's at 30k. You only pay if you make a salary
greater than 50k a year. It's also six months full time, intensive, and
targeted. They feel it's their duty to help you find a job, and have found a
job (>50k) for 100% of their first cohort. Find me a college with similar
numbers.

[ISA FAQ]([https://lambdaschool.com/faq/](https://lambdaschool.com/faq/))

~~~
temp1928384
I believe Lambda School is effective, though something about being alone at
home in front of my computer for 12-15 hours/day for 6 months straight, even
with remote office hours and chatting with other students, makes me think I'd
feel extremely lonely.

~~~
tfolbrecht
It's an 8 hour day with a lunch break. 11am-8pm ET, If you want people, you
can always go to the local coffeeshop, library etc.

I agree colleges killer feature for a young person is networking, friendship,
and dating. You just have to find alternative places to get it.

~~~
randomacct3847
8 hours of lectures? Then more time on computer for homework/project work?

~~~
tfolbrecht
It's an hour of reading/ a small code exercise, two hours of lecture, lunch, a
small project and a brief meeting in a smaller group.

It's equivalent to a 40 hour work week.

------
kaycebasques
Auto loans are looking interesting, too.

* $1.27T of outstanding debt.

* Subprime share of that fell to 22% but because so many loans are being created, total number of subprime borrowers (SBPs) is now at all-time highs.

* 8% of SBPs are seriously delinquent. Cycle low was 6% in 2012. Peaked at 10% in 2010.

* Increasing share of prime loans is offsetting the deteriorating SBP picture.

* “Although rising overall delinquency rates remain below 2010 peak levels, there were over 7 million Americans with auto loans that were 90 or more days delinquent at the end of 2018. That is more than a million more troubled borrowers than there had been at the end of 2010 when the overall delinquency rates were at their worst since auto loans are now more prevalent. The substantial and growing number of distressed borrowers suggests that not all Americans have benefitted from the strong labor market and warrants continued monitoring and analysis of this sector.”

[https://libertystreeteconomics.newyorkfed.org/2019/02/just-r...](https://libertystreeteconomics.newyorkfed.org/2019/02/just-
released-auto-loans-in-high-gear.html)

------
smallgovt
As someone who graduated from a top tier school, I'm constantly befuddled by
society's expectation/belief that college degrees are useful.

I learned absolutely nothing during my 4 years of undergrad that is
practically useful to my current vocation, and I can say the same is true for
90% of my peers.

For some areas of study, college IS worth the cost. For example, hard
sciences. But, for the vast majority, it's not (think: business and
administration, art, history, economics, etc.)

I would guess that in 90% of cases, graduates would be more valuable to
companies and potential employers if they spend those 4 years and $300K
(tuition + lost wages) learning/practicing their specific trade/industry.

So, when are we as a society going to realize that 90% of us are wasting 20%
of our most productive years on useless learning? This really seems like a
travesty to me.

~~~
cortesoft
I think the disconnect is that a university degree is NOT vocational training,
and it never has been.

What happened is that for a long time, only a certain class of people got to
go to a university, and that class of people were the same ones that got the
best jobs. In fact, many companies used a university degree as a filtering
mechanism to select that class of person.

Other classes saw this, and assumed that if they also got this degree, it
would open up that other class. It worked for a bit, but soon there were
simply too many people getting the degrees for it to work anymore as a way to
select a limited group. It is no longer the gateway into a higher class
lifestyle.

At the same time, though, I think it is a bit dismissive to call the education
useless. I learned a ton studying philosophy at a university, even if it
doesn't directly apply that often to my work. It helped me understand the
world, its history, and how we think. I am very glad I did it.

However, it was not training me for a job. Not everything we do is for job
training.

~~~
smallgovt
I totally agree that college is a useful path to building critical thinking
skills and becoming a well-rounded individual, but I don't think that's why
most people enroll.

Instead, I think if you surveyed people, the most prevalent reason for
enrolling in college is the belief that it's a wise investment in their
financial future. My belief is that this is just not true for 90% of potential
graduates. And, wasting 4 years and $300K is a huge mistake when taken in the
context of this college debt crisis.

I don't know what the short-term solution is, but I think the long-term
solution is for companies to stop requiring college degrees and move towards
evaluating the skills that actually correlate with job output. As a business
owner, I've certainly done this, and I hope we can move in this direction
quickly as a society.

------
brohoolio
There's going to be a bunch of comments about waste in universities, how
people are irresponsible, trade schools, government alone guarantees that make
it a crisis, no ability to discharge debt, etc.

The two big things that typically don't get brought up in these discussions is
that government funding for college is way down and medical costs. All these
state schools, which are pretty much the backbone of higher education in
america are chronically underfunded. The last 40 years in america we have been
borrowing against our future and higher education funding is just one aspect.

The second aspect is that higher education is fairly labor intensive, a large
part of the labor cost is health care. When a pharmaceutical company acquires
the rights to a rare drug and jacks up the cost 1000% that cost ultimately is
passed on to students.

------
8bitsrule
College students in the previous century had a remedy. It was removed in 2005.

Forbes: "In 2005, Congress passed, and President George W. Bush signed, the
Bankruptcy Abuse Prevention and Consumer Protection Act, which exempted
federal and private students loans from discharge."

[https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_an...](https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and_Consumer_Protection_Act)

IIRC correctly, the number and size of student loans grew greatly after this
Act. College students who received advice which encouraged them to take on
huge debt loads - on speculation - were essentially thrown into the water to
see if they could learn to swim.

------
exabrial
No creditor would give a loan to someone who doesn't have a chance of paying
it back. There are kids going to school for music therapy that are taking
$100K in debt. It's time to end government subsidized loans, at least in the
current form. The private market does a great job of evaluating risk, the only
thing that needs to be done is ensure there is ample competition so it self-
regulates.

~~~
maxkwallace
In principle I agree, but in practice, it seems like private lenders are
empirically doing a bad job evaluating risk. Rates for private loans are so
high they can only be explained by a high default rate, even among "low-risk"
demographics. These rates are very high even for students that we'd view as a
low credit risk (e.g. studying CS and not music therapy). I think this shows
the private market is doing a poor job evaluating risk.

That said, it's probably still a good thing long-term to end government
subsidized loans. But that doesn't mean the private market is healthy. I'm not
an expert on this area, and I don't know why there aren't "smart" lenders that
do a better job arbitraging this. It could be possible that it's inherently
difficult to predict whether someone will default or not.

As other people have pointed out, the real problem is the incentive structure
for colleges and the increase in administrative staff (and thus tuition) who
are enriching themselves at the expense of everyone else.

~~~
dorchadas
> In principle I agree, but in practice, it seems like private lenders are
> empirically doing a bad job evaluating risk. Rates for private loans are so
> high they can only be explained by a high default rate, even among "low-
> risk" demographics. These rates are very high even for students that we'd
> view as a low credit risk (e.g. studying CS and not music therapy). I think
> this shows the private market is doing a poor job evaluating risk.

Or that they know the risk, but also know people have to borrow so see a
chance to profit more from it.

------
randomacct3847
I don’t regret going to a public college at all. College is more than just a
job factory. You make some of your strongest friendships, connections,
potentially future partner in school. You learn a lot about yourself.

Private edu costs are out of control, but if we can figure out how to cut
costs then I don’t think the institution of college/higher ed should go away.

You have the rest of your life to work...as a working adult I don’t
particularly wish I had skipped college and taken a 6-month online class
instead so I could start working earlier.

~~~
malvosenior
I think this is the strongest argument against student debt relief. I would
certainly _not_ pay for someone else to do this:

 _" You make some of your strongest friendships, connections, potentially
future partner in school. You learn a lot about yourself."_

~~~
randomacct3847
I agree that taking out $200k+ for an undergrad degree is crazy. But what I
paid at a public edu was completely reasonable and worth it in my opinion.

~~~
greedo
My daughter will be going to a small private school in a year; the total cost
of tuition is around $7K. She'll be living at home since the school is within
driving distance, and working summers to help pay for tuition and expenses.
$30K for a BA is fine. Paying outrageous amounts to party on a student loan is
what's nuts.

------
curtis
I wonder if the increase in serious delinquency is being disproportionately
driven by loans to for-profit institutions.

This article addresses the issue directly:

"Student debt a harsh math lesson for US graduates as wages lag" \-
[https://www.nola.com/education/index.ssf/2018/03/student_deb...](https://www.nola.com/education/index.ssf/2018/03/student_debt_a_harsh_math_less.html)

For instance:

> _Compared to their peers at other colleges, students attending for-profit
> institutions -- mostly those classified as inclusive, part-time or two-year
> -- are falling behind in their debt repayments. Twenty-two percent at for-
> profit schools were behind on their academic loan payments compared with six
> percent of students at public institutions, according to a survey by the
> Federal Reserve._

------
arminiusreturns
So, one of my side hobbies is saving the world, and my conclusion is that any
fiat frb system requires regular debt jubilees (Hammurabi did it first), and
part of why our system is so fucked is because people ignore this fact. Any
conversation about usurious debt without talking about jubilees is missing the
bigger picture.

------
i_am_proteus
The entire credit system for education ends up combining government spending
and market forces in the worst ways possible. The Federal Reserve Bank of NY
drew some conclusions a few years ago to this extent.[0]

The Federal government provides an enormous amount of free/"free" credit, the
schools get cash and the students take on the risk. Coupled with the role of
academic institutions as gatekeepers of a shot at a better future, and we get
the system we have. Hyperbolically, t only outcomes schools are incentivized
to care about are applications (lower acceptance rates raise prestige) and
attendance (money is transferred to the school only while the student is
attending).

[0]
[https://www.newyorkfed.org/medialibrary/media/research/staff...](https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr733.pdf)

------
ourmandave
This is why keep pushing my daughter towards a trade school.

(Once you become immune to eye-rolling life gets easier.)

There's a lot of companies with unfilled skilled blue collar jobs. And despite
self-driving trucks, semi drivers can make some serious money.

And HVAC projected job growth is 14% over the next 10 years. Thank you Global
Warming!

~~~
bad_good_guy
Should you really be actively _pushing_ your child in any direction? Would the
best course of action not just be to make sure that trade schools are a
completely viable choice, should she not be interested in an academic subject?

~~~
CogitoCogito
Basically everybody actively pushes their child in some direction. Assuming
you have some wisdom to offer, that's basically what parenting is about. If
the OP truly believes trade schools are a better choice, then I don't see why
he shouldn't push them.

Besides in the circles I grew in this attitude would have brought some balance
to things considering I was surrounded by people pushing deeply academic
subjects beyond all else.

------
orzig
Honest question: what are the best two or three studies showing where all the
extra money has gone over the last few decades?

If millions of people are losing, some set of people must be winning (by an
amount roughly inversely proportional to their size). I understand economics
is complex, feedback loops, etc., but with so much money flowing it must
accumulate somewhere. And I’m sure people have studied it on a deeper than
anecdotal level

~~~
Mountain_Skies
There are many winners, probably some we'll never know. Real estate developers
near universities are big winners. The living standard of the average student
are much higher than they were in the days of shared bedrooms and a single
large shared bathroom per floor. Apartments marketed to students are pretty
upscale these days. For some students, their college years will be the peak as
far as living standards go. There is a whole economic ecosystem that thrives
off of student dollars that were nowhere as plentiful before easy federal
student loans expanded.

The financial markets no doubt have some pretty big winners though the way all
of that works is a bit convoluted and difficult to pin down individual
winners. If there is no tsunami of default, the government itself (and
hopefully taxpayers by extension) likely will come out a winner.

The money flowing through campuses flow out in many ways beyond student
spending. New construction, salaries for professors and administrators,
textbook companies, journal middlemen, and many others are all thriving off of
the diversion of so much money into these institutions. In general it's good
for the economy around the schools but a million little drags on the economy
wherever the students live after graduation as their potential spending
dollars are diverted to loan payments instead of the local economy.

------
dqpb
Loans should be based on the earning potential of the degree.

------
kevindong
The trend in American high schools is to push everyone to go to a college;
regardless of what each student's interests are, how useful a college
education would be in attaining the jobs that the major is applicable towards,
the student's academic aptitude, etc.

My high school was thankfully somewhat resistant to this trend in that there
was a very large vocational program that was somewhat popular amongst my
graduating class.

I don't mean to offend people when I say this, but there are certain majors
that very, VERY few people (if any) should actually pick as a matter of
practicality (likelihood of getting a livable-wage job related to the major
vs. getting saddled with debt for a degree that you won't use during your
lifetime).

------
iamgopal
Law regarding repayment and non payment of student loan should be seriously
relaxed. Increase risk factor will reduce the amount of float in the market,
and supply and demand ultimately force institution to better manage and reduce
the cost and price.

------
ww520
The system lacks check and balance to rein in the runaway college cost.
Graduated students with crushing debt should start suing the schools to get
back some of the money. The schools clearly jack up the overall tuition to
push up the debt.

------
wpdev_63
The problem is that for _many_ of jobs that 'require' a degree is they're not
necessary at _ALL_! A good high school education is good enough for the vast
majority of the jobs outside of STEM. Now we have diploma inflation because it
makes them 'more productive'.

In an ideal world you world put them in a short boot camp to make sure they up
to snuff for the job but atlas you have the gatekeeping going on with
universities. I personally can't wait for the education bubble to pop.

------
DeonPenny
If we run this number up hopefully they bail everyone out.

~~~
intopieces
As someone who just paid his student loans off after 7 years out of college, I
hope this turns out to be the case. I am fortunate. A confluence of factors
outside the control of many borrowers keeps them saddled with debt for the
foreseeable future. They deserve relief.

------
reasonablemann
No coincidence that industries with misaligned incentives create massive debt
bubbles. Education, health care, real estate.

------
sys_64738
Student debt is unsecured debt hedging against future earnings of the debtor.
If you look at it through purely financial return then the degree earnings
potential absolutely has to be means tested to reduce risk of default. The
only way to make this happen is to have the federal government get out of the
student loan business.

------
lukeschlather
The graph of percentage of people in serious delinquency over the past 20
years doesn't seem to support the doom and gloom throughout the article. In
fact it looks like there might even be a bit of a percentage-wise decline,
even though the absolute total is increasing linearly.

------
alexnewman
Only things in our economy with no skin in the game get more expensive

medical and student loans cannot be bankrupted houses are mostly gov't
supported and when they crash the gov't bails them out.

If you don't want high prices, tell the gov't to stop inflating the prices.

------
craftinator
I would be interested to see this data scaled with the average price of
attending college. That cost has 'surged' in recent years as well, most
because colleges are so much better at teaching now!

------
brightball
Stuff like this is one of the reasons I like the idea of a basic
income...because you could easily just divert the BI to pay for long term
services in a situation like this.

Can’t pay student loans, your BI gets automatically directed to paying it off
with no interest until the balance is clear.

Need to pay for school in the first place? Direct the monthly BI to the
university to cover tuition/housing/meal plan (or a significant portion of
it).

Commit a violent crime that will put you in jail, let your BI go to the prison
to cover your stay.

Have a baby? The baby gets a basic income that can pay for daycare, baby
supplies.

~~~
preommr
This makes 0 sense because that's not how UBI works. You can't just give free
money to everyone and expect things to magically fix themselves. Where are you
even getting all this money under modern constraints to just give to every
single person? But that's beside the point because even with UBI, you'd still
have to sacrifice QoL to pay back the loans for your education because of the
inefficiencies that exist in our current system. The end result would you be
slaving away at work with high taxes that go off to pay off your loans and
whatever percentage goes to UBI.

~~~
brightball
The core idea is that every citizen is getting a monthly stipend of some basic
amount. If that were to happen, it stands to reason that policy oriented side
effects would kick in over time to work alongside such a stipend.

First among those, actually securing student loans against the BI.

I’ve never seen BI as being anything that would be desirable to live on
though. Closer to survival level income in the area of $700 / month. You’d
partially pay for it by reducing all other types of government service payouts
(welfare, social security, disability, unemployment) by that amount. You’d
likely see homeless shelters, rehab clinics, etc open that were designed to
operate on a per person budget equaling the BI.

At the same time, you can potentially eliminate minimum wage discussions since
it would immediately supplement those workers.

I think it’s doable at a low level as long as you partially address the costs
with dents in the budgets of many of the other existing services.

------
skookumchuck
The solution is straightforward. End the government sponsored loan program.
This will cause tuitions to drop down to what the market can justify.

------
chiefalchemist
And earlier this week there was a report - from the NY Fed? - that the number
of 90+ day delinquent car loans is also up.

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alkibiades
i predict we’re going to have to bail these people out. once a critical mass
of americans do something idiotic, it becomes politically expedient to bail
them out and blame the companies for greed. this is a direct response of the
government providing unlimited loans to anyone

~~~
toomuchtodo
We will bail them out when enough voters vote for candidates who support
zeroing out this debt, and write it off as a policy mistake.

We’ve wasted trillions on unproductive military initiatives in the Middle
East, this would be relatively minor in comparison. The economic productivity
realized by these debtors able to be full economic participants instead of
having student loan drag for a lifetime outweighs the moral hazard.

~~~
goodells
I can see two distinct groups of people who would take issue with this, not
that they'll necessarily have their way:

\- people who were realistic about their finances and did not take on debt to
"drag for a lifetime" in the first place. Why should the "rich" and/or
reckless kids who lived in overpriced dorms with unnecessary amenities get
bailed out when "I was smart and didn't screw myself from the start"?

\- people who were able to afford a university education out the gate and were
not burdened by any or much debt in the first place (and their parents!). Why
should the "poor" and/or reckless kids who reached for something they couldn't
& shouldn't have been able to afford get bailed out when "I worked hard to
provide for myself / my family from the start"?

~~~
rosterface
As a member of the first group, I agree with you. I really don't like the idea
of subsidizing what I consider other people's bad decisions. I was able to
make financially reasonable decisions, which often involved sacrifice, and
chose to focus on a viable career. I don't want to spend my hard earned money
supporting people who didn't do that.

I did not come from money and came from a pretty awful environment so I know
this is a possible outcome for most people.

~~~
troutwine
Also a member of the first group and I disagree with the conclusion. I'd be
very happy to see all current student debt forgiven and subsidies to
university programs improved. Good on you, though, for getting through an
education without debt. That's a real accomplishment. There are for sure a
good number of people who get an education for a viable career and wind up
with loans that spiral out of control, especially in a country with spotty
healthcare or perhaps because they exited school during the Great Recession
and got stuck in intern-hell. Point being, there's a good number of folks with
student loan debt they can't easily manage who made all the right decisions
but got a bad break somewhere. Also, this doesn't even consider people who do
civically valuable work but having extremely low earning potential.

Are there some people who took out great quantities of loans with no concern
for their future? Absolutely. Should such people be hounded by this lack of
foresight at the age of 19 into their old age? I'd argue no. Even if you can't
find sympathy for the indebted, I'd also argue that very few societies in
history have managed to stay cohesive with a large, indebted underclass, let
alone prosperous and achieving their potential.

~~~
rosterface
Actually, I don't have a degree. That's sort of my point. It's very possible
to just enter the labor market and make money if you work hard and smart. I'm
a developer but I know plenty of people I grew up with who went on to be:
military people, plumbers, cops...

> _there 's a good number of folks with student loan debt they can't easily
> manage who made all the right decisions but got a bad break somewhere._

I don't think it's ever the right decision to take out a massive amount of
debt. Even to study something you love. You can't fight against the real world
economics of that decision. I saw the option to get what I considered to be a
lifetime's worth of debt and looked for alternatives. Lots of people who come
from lower class backgrounds do the same.

I think it's going to be very hard to get those people on board with paying
off other people's student debt.

~~~
goodells
What makes the student debt such a crappy situation is the fact that we're
dealing with young people and families who may not necessarily have all the
information to do an educated cost/benefit analysis. Students are pressured
from very early on to plan to go to college. Teachers, guidance counselors,
administrators, and often parents all fall into the narrative of "yes, college
is a good decision and will pay for itself". It is completely taboo to tell a
student that there are other options because that can be construed as telling
the student they have less potential than others.

~~~
alkibiades
right but if someone like that came to you and asked for 200k in loans you’d
laugh in their face. But now instead the govt decided to back student loans
and these people got them like candy

------
NoblePublius
No student loan should be issued without the university being equally liable
to pay it back.

------
reader5000
But I thought the more a degree costs the more it magically increases lifetime
earnings?

~~~
hskaw
It does: if degrees cost more, fewer people can access them, so the market has
fewer people with that expertise, so they can make more money.

~~~
jackpirate
You missed the key step that the people who access these programs are already
wealthy, and wealth breads wealth like rabbits.

------
keeptrying
What are the ways this can cause a recession?

------
xwvvvvwx
Just fucking cancel all the debt already :)

------
kevmo
This is the real national emergency.

------
briandear
This will be highly unpopular but it seems to me like a solution is to start
doing some amount of payroll withholding for those with student loan debt
similar to the way social security/Medicare is handled. It doesn’t have to be
a huge amount, but enough to ensure repayment. Government forces us to “save
for retirement” via social security, yet being debt-free is a far greater
advantage in retirement than the retirement income supplement of social
security. If people had no debt, they’d be better positioned to cover their
own retirement. Paying off $100k student loan debt “now” is far more valuable
to a person than social security later. Essentially what I would propose is
this: your social security withholdings go towards student loans while you
have student loans, once the loans are repaid, social security contributions
resume. But, it’s a house of cards because those with excessive unpaid student
loans are most likely the ones financially irresponsible enough to require
social security for their retirement. There is also the other issue that your
social security payments you make today are paying current benefits rather
than your own benefits later. Social Security is a Ponzi scheme, so in
practice my idea wouldn’t work as it might collapse the social security
scheme; but adding federal student loan payments to payroll withholdings would
potentially solve the problem. Also stricter caps on student loans sounds like
good policy. There is no good reason anyone should have $100k+ in
undergraduate student loans. Taking out loans to get an expensive degree from
a school like NYU ought to not be allowed. Loans should be a means to assist
someone in getting education — not as a means for someone to get the most
expensive education possible. Practically bottomless student loans has
absolutely contributed to the extraordinary inflation in higher education:
college costs have risen faster than even healthcare costs, no small part of
which can be blamed upon the availability of loans.

~~~
jogjayr
I rather like the idea of making student debt dischargeable in bankruptcy (not
retroactively obviously). Why should borrowers alone face the consequences of
their bad decisions? Aren't lenders equally complicit?

I understand that educational loans are essentially unsecured loans. So fine,
let them be treated like personal loans and let lenders evaluate their risk
accordingly. It'll quickly put an end to letting an 18-year old go into $100k
in debt for a liberal arts degree.

~~~
Kephael
The government backs the loans and this ends up being a massive subsidy for
academia. If loans were priced accordingly, far fewer loans would be issued
and there would be fewer students in college, and fewer colleges and
universities.

~~~
jogjayr
Colleges and universities might start charging something more reasonable once
they see that their students can't take out such large loans. Why exactly does
it cost tens of thousands of dollars to deliver a liberal arts education
anyway?

Otherwise, community colleges prepare students to transfer into year 3 of a
4-year college, at a fraction of the cost. This is a viable option for
students who can't afford the full 4-year experience.

