In response to my post about student debt, I hear a lot of people muttering, “But, LawDog, what is your solution to the student debt crisis?”
I’m glad you asked.
First the “student debt crisis” is the creation and bastard child of the Federal Government. It is, point of fact, squarely and fully the fault of Washington DC that this “crisis” exists in the first place.
Given that the Federal Laws and programs that created this whole mess are still in effect, any “solution” to said mess has got to start with eliminating those laws and programs. Period. It makes absolutely zero sense to attempt to fix a problem without directly addressing what created the problem to begin with.
So, any solution needs to start with the Fed.gov publicly admitting their responsibility for mare’s nest; and fixing the laws and programs that created it to begin with.
Second, it is manifestly unfair for the taxpayer to be on the hook for debt that taxpayer never signed onto in the first place. I didn’t sign a contract to pay for a useless degree in Gender Studies, why the hell should my hard-earned tax money go to pay for it?
However, while it is the fault of the Federal Government, some fault should be heaped upon the shoulders of greedy universities and colleges. They saw an opportunity in the feckless and unwise laws and programs of the Federal Government for those institutions to — quite frankly — make some extra money. These institutions took that extra money, and in return produced useless degrees, and students incapable of earning enough to pay their loans back.
So, it’s time for the penalty for producing graduates unable to earn a living to start hurting. The job of colleges and universities is to produce graduates capable of integrating into, and becoming productive members of society; if you simply can’t do that, there should be repercussions.
Colleges and universities have endowments — to the total of $854.11 billion (with a ‘B’) as of 2021.
If you graduate from Oberlin College and the degree you got from them can’t earn you enough to pay your student loans back, then I think Oberlin College (endowments: 1.201 Billion dollars) was grossly negligent in your education; and should pay the default on your student loans.
Your BA in Gender Studies from Columbia University (endowments: 13.28 Billion dollars) useless for getting you a job for anything more than barista? Why did they take your student loans in exchange for a degree any reasonable man would understand to be useless? Time for them to pay for that negligence.
This will have multiple effects. The first of which is that people with no skin in the game — the American taxpayer — don’t get their tax dollars ravaged.
The second is that colleges and universities faced with the prospect of having to be financially responsible will start throttling back tuition amounts which are quite frankly at exorbitant, extortionate, and outrageous levels.
Third, but by no means last, this will induce the universities and colleges to stop accepting loans for stupid degrees. Heart set on a BSc in Sub-Saharan Underwater Basket-Weaving? Sure, but you have to pay your own money for it. STEM degree? Bring your student loan money!
Now let’s have the national debate on the student loan crisis.
LawDog
Step 1: Pass laws forbidding the federal government from issuing student loans or providing student aid except as payment for serviced rendered to the federal government. Step 2: Make student loans dischargable by bankruptcy, contingent on surrendering all titles, professional licenses, and certifications that are dependent on the degree in question. Step 3: All student loans held by the federal government or guaranteed by the federal government that are discharged by bankruptcy will result in the college that the debt was incurred at being charged a penalty for the amount of the debt, since they obviously offered fraudulent services.
x2
Came here to say a portion of this, can’t say any of it better.
Step 4 (related to Step 2): Allow a “lien” to be put on the degree in question with the accrediting board, so any potential employer can call and verify the person is in good standing with their student lenders. (Obviously, if it’s in repayment but no missed payments, no lien is required.) Someone irresponsible enough to duck out on their student loans without a VERY good reason (that is probably spelled out in the loan contract) is probably someone you don’t want to hire.
X3
And stop the inflation (over 1200%) of university costs that get pawned off on the students for sub standard educations…
If student loans are all done privately by regular banks and properly underwritten, colleges that try to sell underwater basketweaving degrees for $300k will not be able to get students who need loans.
Agreed. Maybe give a tax subsidy to those that paid off the loan.
Colleges should bear the brunt of this. Idiots with soft arts degrees are never going to be able to pay a dime back.
Also, from where does the FedGov gets the authority to get into the loaning business, educational or otherwise?
Sigh!
Just another usurpation and no apparent way to reverse the trend.
So much to undo, so many dead brained.
A not insignificant percent of the default loans were also due to shady fly by night “private” colleges. Go after them for fraud.
There’s also a problem in that there were once many reputable small colleges that the Department of Education allowed to be purchased by the fly-by-night types.
Eventually the DoEd shut them down, and the reputations of the good schools in that massive bundle are as valuable as Charmin.
DoEd shut them down for fraud, but the students are still on the hook for loans on degrees that don’t lead to work because the shut-down killed the reputation of the schools the degrees came from.
There’s a narrow “relief” course where the graduate of these schools can get the loan discharged, but has to count the loan’s outstanding balance as income.
Now they owe the IRS.
I already worked my @$$ off to: a. get a degree with some value, b. leverage it to get a better job with more income, and c. pay off my student loans (early, I might add).
I have zero interest in having my tax dollars go to pay the loans for irresponsible parasites who couldn’t be arsed to do that first step right.
As everyone here is pointing out, student loans — just like mortgages or credit cards — are contractual agreements, entered into voluntarily, and binding on both parties. Among loan agreements, they tend to be much less predatory or punishing than many others. Compared to car or personal loans, they have lower interest rates and longer terms (read: lower payments for the same principal amount), and repayment doesn’t usually start until 6 months post-graduation — the idea being to give the graduate time to find a job with enough income to pay the loans back.
My questions about this administration’s “student loan forgiveness” scheme have always been the same:
1. Under what Constitutional authority does the government claim the power to absolve individuals from voluntarily-entered contractual agreements?
2. Under what Art. I, Sec. 8 power does the government claim the authority to use public tax money to pay privately-incurred debts?
3. Even if #1 and #2 were found to be OK, what compensation or reimbursement is required to those of us who did everything right and paid off our loans, that the admin’s scheme is not offering as required under the 14th Amendment’s guarantee of Equal Protection?
I’ve not (yet) read the opinion, but I’d bet SCOTUS was thinking along some of those same lines.
#1 and #2 are OK legally because the debts in question are to the federal government. Note that I said OK legally, not morally. #3 is the correct stance morally, but is in iffy ground legally. So for the legal case those objecting went with a different argument with stronger legal footing.
While these debts can be discharged legally by the federal government, they cannot be discharged by the executive branch. Such a thing must happen as a result of an act of congress. No such act happened. That was what the SCOTUS ruling boiled down to.
What SCOTUS was thinking:
4. Under what Constitutional authority does the President give away federal funds that Congress has not appropriated?
The only correct answer is NONE. The Constitution clearly says Congress controls the purse. Let the President hand out $400 billion without the specific agreement of both houses of Congress (not some vague authorization years earlier for an unspecified but small amount), and we no longer have a balance of power between three branches of government, but a dictatorial executive fighting a dictatorial court and a mere sideshow in the Capitol building.
It wouldn’t be so bad if they could turn out grads that could at least make change without the register telling them what it is. Recently made a 6.14 dollar purchase. Gave her a ten, and she entered it before I could give her the 15 cents change. That brought her propeller clear out of the water, had her groping for her phone to do the math, all the while me saying “it’s four dollars and a penny”.
These kids are getting cheated big time.
Seen it too…
I’ve learned to pay the change first, then the big bill.. So in this case I would hand over the .15 and then the 10.
$.02 & YMMV!
But, I did read somewhere that the IRS is deeming the forgiven loan amounts as income, with taxes due. So, there’s that.
IIRC, always been the case, that office debt is taxable income.
Wtf. How did I get office from forgiven?
All future student loans must be dischargeable by bankruptcy and be co-signed by the University. If you go bankrupt, the University has to pay off the loan.
That will make universities a little more cautious about who they allow to take worthless degree programs while taking loans to pay for it.
College: “You’re accepted to study Lesbian Feminist Poetry of 19th Century Peru. $39,478 please.”
Student: “I’d like to take a student loan for that.”
College: “F-U, pay me.”
College: “You’re accepted to study Mechanical Engineering. $39,478 please.”
Student: “I’d like to take a student loan for that.”
College: “Sign here.”
Problem solved, problem staying solved.
I paid off what college debt what little I had because I worked my ass off summers. This was back in the 1970’s and I paid it out of a $120 a week dairy herdsman job. I did end up using my biology degree even though I chose farming over the original premed plan!
On another topic, if education went back to actually expecting students to learn the material and be graded for it and if that parents insisted that the students did the work affirmative action would not be needed anyway!
I like your proposal. But, I would add one other thing: The maximum amount of student loans you can acquire will be based on the the average potential earnings of the degree you are seeking. This will be based off of the earnings in the first 10 years of people graduating with the same degree from similar universities.
Simply make the college liable for part of the college loans that they help arrange or receive payment from. Help a student get a government loan for $45,000 for trans-gender studies, and they wind up serving coffee and can only pay back $15,000: The government claws a third of the default ($10,000) back from the college.
Well said.
As to “The first of which is that people with no skin in the game — the American taxpayer — don’t get their tax dollars ravaged. ” I also saw this with my more well to do friends whose parents paid for their college. They didn’t work as hard and partied more than those of us who were working our way through school.
I’m a big believer in having skin in the game.
Cause and repercussions. Absolutely.
Don’t forget the repercussions for those that caused the fed gov nonsense, including but not limited to Congress, POTUS, Congressional staff, lobbyists, etc.
My late father was a professor of the History of Science. He was a scholar by avocation and loved it. He also didn’t see any point to anyone who WASN’T a scholar by nature getting a degree in most humanities programs (I suppose there must be SOME that are objectively valuable).
I strongly suspect that the whole student loan mess came about because a lot of colleges – probably most of them – didn’t relish the idea of downsizing once the Baby Boom had passed, and the Progressive Establishment finds Academia a handy place to stash their pet Radical Intellectuals. So as a society we have brought up generations of young people who have been told that whatever they want to do, they need to get a degree.
Which was highlighted by that poor shmoo from the ‘Occupy’ protests who owed 30K on a Masters Degree in Puppetry. A lot of people mocked him, but I felt sorry for him. He’d been brainwashed to the point that it simply didn’t occur to him to hitchhike to LA, get a job with Jim Henson Studios as a gofer, and work his way in.
Yes, the College and University endowments should be made to pay off these debts. I won’t hold my breath.
Given that the people who created the problem, support the problem, and benefit from the problem are more than happy to continue the problem… my solution is generally 40% distilled spirits with branch water and occasional additives.
I’d add a few items:
1. In order to be admitted to a post-secondary education program (college or trade school) a student must take and pass a class in personal finance, and demonstrate the ability calculate the monthly payment of a loan given interest rate, amount of loan, and duration of the loan.
2. Advise prospective students on the industry accepted estimates (no false numbers made-up by the college or one of high performer salaries) of of potential salaries over their working lifetime. Include planning for retirement. Just because Tom Brady made tens of millions of dollars a year doesn’t mean you will. No loan will be granted until the student prepares a payback schedule for the prospective loan and estimated salary.
3. In addition to imposing requirements on majors that qualify for loans, student must demonstrate a suitable GPA, and SAT score. You want to be a Mechanical Engineer? You have a D+ average in high school? Fine, but you’ll be doing it without a loan.
4. All loan recipients must enroll in a work-study program for a minimum of 2 years in their field of study.
Wait… lemme see if I have this right.
The FedGov offers money (that they strong-armed from law abiding citizens), to young proto-citizens to whom they have promised that a college degree equals a Good Job.
People (said young proto-citizens ) use that money to pay horrifically inflated college tuition costs.
Having realized, sometime later, that they have made a horrific mistake, the young proto-citizens say “Wait! we can’t fucking afford to pay this money back!” Since, in fact, a college degree has been rendered useless by… (well, we should probably leave that part out, amiright??)
So… please pay our misbegotten debts for us? We didn’t know that the contracts we signed were… well… contracts…
It makes me crazy. OK, crazy-er, if one listens to my soulmate. Oy.