Student Loan Repayment

magick · March 1, 2021, 8:45pm

I feel that this hinges on what a college education is meant to be. A lot of people went to college on the assumption that it leads to better earning potential, and thus increase in social status and all those other “awesome” things. Therefore, I think it’s fair to treat college as a financial investment.

It seems plain that this investment didn’t work out for many people, while for others the debt feels harder to deal with now that it’s actually saddled on them. That’s why we have the student loan crisis and serious proposals for forgiving debt outright for many people.

It’s on this basis that i’m comparing it to investing in stuff like the stock market. In this case, investing on margin seems roughly equivalent to taking on large student loans. You think you have a “winning” play and are hoping that it works out…

On a broader sense, I think one could argue that giving normal people free money to invest with may be a good way to get people involved in the broader financial system and… well… make free money. You will probably make money in the long run if you invest in total market index funds. Heck, that may be better for society in the long run since everyone would have more money.

Government should give every newborn 50k in VTSMX or some newly created government equivalent and let them have access to it when they turn 18. At least that way they’ll “probably” have a good 100k (taking the performance of VTSMX over the last 18 years as an indicator) of their own money to waste on a degree in Asian American Studies.

mnben87 · March 1, 2021, 9:01pm

I think there are positive externalities associated with college education that are not currently accounted for (in regards to how most view it). When one gets a college education, it helps the individual sure, but it also helps out the broader economy. I have patents that my previous company is making far more money off of than I ever got paid. Other workers at that company are boosted by my ideas (that I likely would have never come up with if I hadn’t attended college). My company profits and pays taxes on those profits. That helps a lot of seemingly unrelated people.

Often when there are negative externalities for actions we make people / companies pay fees or fines to account for them. Oil companies perhaps pay a carbon tax.

Would it not make sense to compensate someone for things they do that end up having a positive impact to the economy? We subsidize public transportation which if not looking at externalities seems to only benefit the riders. However, positive externalities exist when people ride public transit. It is less busy on the road for those in cars (a positive externality). It would be tricky to quantify, but we could account for the average value to the economy that occurs when one is college educated.

magick · March 1, 2021, 9:19pm

Yes, and there’s also apparently a lot of people out there who are being dragged down by their student loan debt, which is supposedly a massive drag on the economy.

It goes both ways! No way to tell which is more beneficial to the economy overall. In fact, I’m not even sure if it does matter which is more beneficial to the economy overall.

I now lean towards thinking that “good for economy=good for average people” is misguided and too simplistic. I’d rather see a much smaller economy if it meant a smaller income gap, for example. I’d rather do without my iphone and my internet if the average people had more financial security and better mental health. I remember life without those things and I don’t think it was any worse than my life now. Of course, there are clearly other people who benefits greatly from these inventions and can’t imagine life without it.

Anyways.

I agree with what I feel that you’re arguing overall. I disagree that it has anything to do with college education.

Since you have patents in your name, I can only assume you’ve been productive and responsible with making use of the degree you obtained through considerable work.

I am going to guess that those who are incapable of paying off their student loan have not been nearly as productive and responsible as you have.

I feel that responsible and productive attitudes, not college education, are the positive externalities in your example. I thought the goal of schooling was, among other things, to instill and promote these qualities and attitudes in people. I feel that those who are incapable of paying off their student loans failed to learn these and they are suffering the consequences.

Also- I feel that you’re making an indirect argument that you should get paid some sort of royalty from your previous company for your patent. I agree! I think it’s bullshit that companies force you to sign away your rights to your patents if you get it while under their employment.

doogie · March 1, 2021, 9:28pm

Would any bill to repay/forgive student loans ban student loans going forward? If they are predatory, immoral, a drain on the economy, blah blah blah, how can we allow them to continue to exist?

Californiagrown · March 1, 2021, 9:32pm

No, but I would assume the bill would also involve a hefty dose of student loan reform. How could it not, right?

magick · March 1, 2021, 9:35pm

Those silly folks in congress do the darnedest things!

I’m seriously considering taking several months reading through the latest stimulus bill just to see what bullshit they added into it.

Californiagrown · March 1, 2021, 9:54pm

I suppose that large student loan debt is a “known” danger now, and prospective college students shouldn’t be blindsided by it. So maybe it doesn’t get reformed.

A big reason why it’s an issue for graduates is the great recession hurt an entire generation’s ability to pay off their loans.

mnben87 · March 1, 2021, 10:06pm

I don’t want to sound down on myself, but I am not all that productive in a traditional sense. I am good at inventing and designing things (especially mechanisms). Out of about 50 mechanical engineers, I was likely near the bottom when it comes to work output (writing reports, creating project presentations, implementing engineering changes…), but I had the highest rate of patents. Basically, I am smart (in a limited area of design and invention), but kinda lazy (I think part of this is diagnosed ADHD which is untreated).

I’ve always seemed to be good with money. I graduated without debt and I am far ahead of my peers financially (at least most of them). I am good at some shit, just I wouldn’t label myself as productive.

I have friends that I think work much harder than I do, that are not close to as well off as I am. The guys building the stuff I design work harder than I do. My work just has a much larger impact on things like company profit. Some of that is probably natural ability, but I would never be allowed to design medical devices without a degree.

I think working hard is great, but I guess I haven’t been convinced that it is a reliable ticket to financial success. Things like getting into a lucrative field, being a good sport / friendly (I’ve seen a many intelligent hard working assholes get fired) go a long ways.

H_factor · March 1, 2021, 10:20pm

One of my annoyances is the sheer stupidity of the arguments. Roger Marshall (one of my senators) said he had no student debt with a part time minimum wage job. Which is terrific for him. But the minimum wage hasn’t gone up much since that time and college tuition costs are much higher.

One article showed that RM could have paid off his tuition with 343 hours of minimum wage work but that today it would take 1214 hours. And that’s just tuition. Housing, books, utilities, etc all more expensive than back then. Roger Marshall today would have had an exponentially more difficult time staying afloat and in all likelihood would have came out of college with a ton more debt even if nothing else changed.

I just get annoyed at the old timer type arguments when they have no comparison to the reality of the situation now. If people don’t want to have forgiveness I think that’s a fine argument to have and people can go into pros and cons and all that. But to pretend that the situation for a kid trying to get a bachelors degree now to one 40 years ago is pretty much the same is just stupid.

H_factor · March 1, 2021, 11:32pm

Well I would hope that it would be part of reforms made to higher education/student loans in general moving forward. Much like the situation in Texas I feel as if we are going to provide relief to those people then we should also make changes to prevent the same problem from happening in the future.

But no one is saying well if we’re going to help those people out we may as well ban electricity are they? Why would this be different? Like I said not every argument surrounding these types of things must be taken to the extreme ends. A lot of ground exists between forgive all loans no questions asked or don’t forgive any loans. And a lot of ground exists between forgive some amounts of loans and yet don’t ban them or if you do forgive some you must.

Alrightmiami19c · March 2, 2021, 3:23am

I bought a Ferrari and I can’t afford the payments. We need luxury/sports car loan forgiveness. This issue also disproportionately affects minority groups that are targeted by predatory luxury automobile advertising and lending.

zecarlo · March 2, 2021, 2:07pm

But why would someone choose one over a good paying job sitting on their ass?

And look at this country: how many people are physically capable of working with their hands and lifting anything that weighs more than an iPhone or Big Mac?

zecarlo · March 2, 2021, 2:55pm

If you couldn’t afford the payments, you would not have been allowed a test drive, let alone the car itself.

mnben87 · March 2, 2021, 2:58pm

Many Ferrari’s can’t be bought even if you have the money. You need to have prestige to buy some of them.

Enzo has said that people who buy Ferrari’s are suckers. I guess, he only got into road cars to fund his racing habits.

zecarlo · March 2, 2021, 3:59pm

Posting here doesn’t give that?

jshaving · March 3, 2021, 9:33pm

Kinda skimming through this and not very well versed on the topic…please share opinions:

This would probably be much more complicated (and unrealistic) but what if, when looking at repayment, the person’s life circumstances are taken into consideration?

Person A making $100k a year with no kids doesn’t need his loans paid for him, or would get a smaller percentage of his loans paid back than Person B, who makes $50k a year and has 3 kids.

Person A can probably pay off his loans if he makes smart financial choices or lives below his means for a couple of years. He wouldn’t get as much as of a “break” but it also wouldn’t be that hard for him to do so. Unless he has hundreds of thousands to pay back, he could probably be right back where he currently is in 5 years.

Person B could go one of two ways…he could be a teacher, knowing he wouldn’t make much money before going into his field but had a desire to teach (and we need teachers), and lives frugally, but just can’t really continue surviving and also pay back his loans. In that case, I’d say he’s a good guy, trying to do a good job, making the best decisions that he can in his current situation, let’s help him out.

But Person B could also be someone who took out a ton of loans, didn’t even actually finish a degree, and is now working a “lazy” job that requires very little of him, and if you really want to get personal, had his kids with different women, none of whom is he with today. I’d say all that points to a series of bad decisions made on his part, and so does he deserve the help?

It seems like people are saying that the people with the most loans to pay back are often the ones who will go on to be the highest earners, like doctors, lawyers, etc. I agree with that, and feel like they can probably get by without the help, or at least without as much of it.

Then people like teachers, social workers, etc. who don’t make great money but are also doing jobs that we need them to do? Yeah, if you take out a loan you should be prepared to pay it back, but if none of these people took these jobs I think we’d be in trouble. I feel like some people say “I don’t ask for help paying my mortage.” Well, you don’t have to take out a loan to pay for a house or a car, and can get through life without ever owning one of these, but you can’t really get through life not having someone to teach you how to read and do basic math + everything else.

Just my thoughts. Like I said, not very well versed on these things.

I normally have the expectation that people take personal responsibility for their actions and decisions, and I also don’t believe that people need college degrees to do well in life - my dad is a bricklayer and while I am in college at the moment, I’m strongly considering pursuing a career in the “trades” field. So I see both sides. Oh, and I have not taken out a single loan and highly doubt that I will ever need to, for school. Student loan repayment is not something that will help me.

I just think college has gotten insanely expensive, and while someone studying one of the ridiculous subjects that people like to joke is all college has to offer probably doesn’t have much to benefit us, teachers and others need college to perform jobs that we all benefit from but don’t pay well.

punnyguy · March 3, 2021, 10:03pm

I would add overpriced as well. Salaries haven’t risen at the same rate imo. Colleges own tons of real estate, that’s gone up; prime real estate is probably the only thing that has kept up with college costs lol. What is the reason for the insane rise?

Cheap money fuels bubbles. “College education” is no different.

Add to that the whole price fixing structure of “college education” -yes, there is some differentiation in pricing (not talking state subsidized colleges), but there should be way more difference in costs between colleges at the top of the heap vs bottom of the heap. i.e. those colleges at the bottom of the heap shouldn’t exist in the first place.

A better example than the Ferrari one would’ve been when all those S & Ls were encouraging people into buying houses they could not afford. Everybody needs a house, just like everybody needs a college education…

wanna_be · March 3, 2021, 10:35pm

Pretty sure this is only for a new one. I’ve heard you have to go through an interview process for some of them. I see used ones for sale at nicer car lots, I know they aren’t turning down any buyers

twojarslave · March 3, 2021, 10:58pm

I wish I could say this is the dumbest policy being advanced by the Democrats, but a few others probably take the cake at this point. I suppose it isn’t dumb from a political perspective. Handing other people’s cash to voters tends to find favor with those voters. Indeed, the Democrat party was founded on the principle of using government power to grant one group of people the fruits of another group of people’s labor. Back then it was called slavery, and the same basic idea has been the cornerstone of Democrat policy and voter appeal ever since.

The obvious questions that follows is…