Compromise Proposal on Student Loans

Moderate Right said:

This reminds me of using your fingers to plug leaks in a dam. What we need to do is quit signing blank checks by giving loans to those who have no reasonable expectation of ever paying them back. From now on you only get a student loan if there is a reasonable expectation that it will get paid back. We're giving way too many loans to people who just want to get out of their parent's house and partake in sex, drugs, and rock 'n roll and then wind up working at McDonalds. For those who do get loans, if you default on a government backed loan then you are required to do some form of governmental service in order to repay, such as enlist in one of the military services. If you don't do that then you go to jail.

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The odds of the Federal government - last seen arguing that colleges need to stop worrying about things like test scores instead of students' "adversity score" - is likely to accurately judge 18 year olds' reliability is roughly nil.

If you want this result (and, I'm in sympathy and agreement), point #2 is for you.

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Moderate Right said:

This reminds me of using your fingers to plug leaks in a dam. What we need to do is quit signing blank checks by giving loans to those who have no reasonable expectation of ever paying them back. From now on you only get a student loan if there is a reasonable expectation that it will get paid back. We're giving way too many loans to people who just want to get out of their parent's house and partake in sex, drugs, and rock 'n roll and then wind up working at McDonalds. For those who do get loans, if you default on a government backed loan then you are required to do some form of governmental service in order to repay, such as enlist in one of the military services. If you don't do that then you go to jail.

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But if you're a rich developer, and default on a series of loans, totaling well over a $billion, you can use the losses to offset income for a decade or so and then become President, or Senator, or anything else!

If you want to bring back debtors prisons, just say so and apply it across the board, including to businessmen, farmers getting loan guarantees and all the rest in our society who get to file for bankruptcy and then go on with their lives.

cpwill said:

The odds of the Federal government - last seen arguing that colleges need to stop worrying about things like test scores instead of students' "adversity score" - is likely to accurately judge 18 year olds' reliability is roughly nil.

If you want this result (and, I'm in sympathy and agreement), point #2 is for you.

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I don't think that was government arguing that, but the College Board, who administers the SAT. And exactly no one ever said to my knowledge - quit worrying about test scores. The idea was to put test scores into perspective, if colleges wanted to do that, by highlighting what are effectively poor kids.

SAT-Takers Will Not Be Assigned 'Adversity Score,' College Board Announces : NPR

And the idea is simple enough, and legitimate IMO - if you score a 1350 SAT from inner city Chicago, and a family income of $20k, that's fundamentally different than a 1350 from some spoiled rich kid who grew up going to $12,000 per year private schools K-12. The latter often get affirmative action for rich white kids through legacy preferences, or rich daddy preferences like Kushner and many, many others.

Amelia said:

#2 doesn't sound great ... unless government is going to pay for school outright.

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Somebody once said repeating something over and over and expecting different results is a fools game.

I don't how any reform is possible without stopping doing what caused the problem.

jimbo said:

Somebody once said repeating something over and over and expecting different results is a fools game.

I don't how any reform is possible without stopping doing what caused the problem.

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What caused the problem and what is the problem?

We have what is widely considered the best higher education in the world. It's expensive, and the reasons for that are many, but there's a ton of competition, lots of choices to fit just about everyone's needs, etc.

JasperL said:

What caused the problem and what is the problem?

We have what is widely considered the best higher education in the world. It's expensive, and the reasons for that are many, but there's a ton of competition, lots of choices to fit just about everyone's needs, etc.

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Government intervention in college funding without any regard for the ability to pay it back, no expectation of the degree resulting in better job possibilities. Loans which no lender still in business would touch. What could possibly go wrong?

So the current suggested solution is forgive those who never should never should have been there, and do the same thing over again. What could possibly go wrong?

jimbo said:

Government intervention in college funding without any regard for the ability to pay it back, no expectation of the degree resulting in better job possibilities. Loans which no lender still in business would touch. What could possibly go wrong?

So the current suggested solution is forgive those who never should never should have been there, and do the same thing over again. What could possibly go wrong?

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But you haven't identified the "the problem" or any solution, or how loans caused them except by assertion.

And how would you identify who should be there? Further, if not for government backed loans, poor people might get a college education or vocational training at 29% interest or something. So if you make loans to families who are good credit risks, then that means poor people don't get them, or they pay at rates approaching usury. How is that better?

JasperL said:

But you haven't identified the "the problem" or any solution, or how loans caused them except by assertion.

And how would you identify who should be there? Further, if not for government backed loans, poor people might get a college education or vocational training at 29% interest or something. So if you make loans to families who are good credit risks, then that means poor people don't get them, or they pay at rates approaching usury. How is that better?

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Do what's your solution? I gave you mine. Government has no place in the junk lending business. And now we have a problem. A big problem. A trillions plus problem.

I have identified the problem. Poor risk borrowers are defaulting on loans they should never have received.

And I have offered a solution. Government needs to stay out of the unsecured lending business.

I don't know what you mean by loans caused them. The loans are the problem. Not the cause.

What part of that is assertion?

jimbo said:

Do what's your solution? I gave you mine. Government has no place in the junk lending business. And now we have a problem. A big problem. A trillions plus problem.

I have identified the problem. Poor risk borrowers are defaulting on loans they should never have received.

And I have offered a solution. Government needs to stay out of the unsecured lending business.

I don't know what you mean by loans caused them. The loans are the problem. Not the cause.

What part of that is assertion?

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OK, and if the government doesn't lend to pay for college, the poor are just ****ed in your view? Or do they pay for it by squeezing blood out of turnips, or rocks?

I've said many times what I support is something like what Tennessee does, which is offer free tuition to any public community college and some trade schools for every resident. It also funds full tuition for qualified students at the four year public institutions like UT-Knoxville and a broader programs that funds 100% of tuition for families making less than $50k/year. So those students have little need for loans because their tuition is paid for with taxes.

You can read about it here: University of Tennessee launching free college tuition program UT Promise

cpwill said:

From the other thread, an idea sparks:

1. Allow anyone to re-finance current student loans at federal rates that match the rates we lend to banks (Left Wing Idea)
2. Immediately cease issuing new federal student loans (Right Wing Idea)
3. Make all student loans bankruptable after 10 years (so it dovetails with point 4, below) (no one has really pitched this, AFAIK).
4. Forgive the student loans put under the federal rates after 10 years of payments, not having missed payments (ie: Deferment time doesn't count) (Left Wing Idea with Right Wing Modification)

What say ye, members of DP? Is this an issue in which there can still be overlap and compromise between the sides?

Accepting that people will want (and, hopefully, mention below) modifications, which of the options is closest to correct?

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I independently support student loan forgiveness and a termination of the student loan program. So this would be in all respects an improvement over the current situation,from my POV.

AmNat said:

I independently support student loan forgiveness and a termination of the student loan program. So this would be in all respects an improvement over the current situation,from my POV.

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I still have 50K left on my car loan. Will you forgive that too?

BahamaBob said:

I still have 50K left on my car loan. Will you forgive that too?

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If it were up to me, the government wouldn't enforce any usurious loan (that is, an interest bearing loan which holds the borrower personally on the hook for repayment). Usury is condemned by the Christian tradition, and has been recognized as morally iniquitous or at least questionable the world over.

As for car loans, they're technically personal-recourse but function in practice like asset-recourse loans. The abolition of personal-recourse wouldn't substantially affect them.

cpwill said:

From the other thread, an idea sparks:

1. Allow anyone to re-finance current student loans at federal rates that match the rates we lend to banks (Left Wing Idea)
2. Immediately cease issuing new federal student loans (Right Wing Idea)
3. Make all student loans bankruptable after 10 years (so it dovetails with point 4, below) (no one has really pitched this, AFAIK).
4. Forgive the student loans put under the federal rates after 10 years of payments, not having missed payments (ie: Deferment time doesn't count) (Left Wing Idea with Right Wing Modification)

What say ye, members of DP? Is this an issue in which there can still be overlap and compromise between the sides?

Accepting that people will want (and, hopefully, mention below) modifications, which of the options is closest to correct?

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I think if there is a national bank, why do they only lend to other banks? Or better yet, if the federal bank is only loaning to certain private banks, why are those banks being given cheap loans to just charge us more for? Is that not just free usury?

So to point 1, all loans if loaned from federal dollars should have mandated rates no higher than the current rate unless they go above and beyond to prove substantial burden servicing the loan.

I don’t think any unsecured loans like these should be bankrupt able at all. Maybe they can get some sort of judgement but IMO this like child support the burden should never be more than someone can afford. That is the risk, that’s why they get interest. You get repaid what they can afford to repay.

I don’t like at all the idea of forgiveness. It too heavily distorts the cost/reward to make a proper decision on what your career choice is. Well have too many underwater basket weavers with a second major in the 27 gender studies that still can’t get a latte right.

Amelia said:

#2 doesn't sound great ... unless government is going to pay for school outright.

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I am a practical Conservative but can't understand why public tax support stops at 12 grade years. Isn't that rather early 20th century thinking? Isn't it so, that we ae dealing with a new reality where college education is essential? In a world competition in trade and governance, shouldn't it include College education, or at the very least, a vigorous and encompassing High School graduation criteria that would include substantial education at the least excelling above secondary education in the rest of the world?
I am, and have been for a long time a taxpayer, but would see education of our young as one of only a few good investments of my tax dollar.
Regards,
CP

cpwill said:

From the other thread, an idea sparks:

1. Allow anyone to re-finance current student loans at federal rates that match the rates we lend to banks (Left Wing Idea)
2. Immediately cease issuing new federal student loans (Right Wing Idea)
3. Make all student loans bankruptable after 10 years (so it dovetails with point 4, below) (no one has really pitched this, AFAIK).
4. Forgive the student loans put under the federal rates after 10 years of payments, not having missed payments (ie: Deferment time doesn't count) (Left Wing Idea with Right Wing Modification)

What say ye, members of DP? Is this an issue in which there can still be overlap and compromise between the sides?

Accepting that people will want (and, hopefully, mention below) modifications, which of the options is closest to correct?

Click to expand...

We are seeing alarming trends toward secularism and communism in too many modern college graduates. I think America should make colleges private institutions and get out of government funding of schools and student loans all together.