Yves here. Lambert pointed out in Water Cooler yesterday that the idea that the main student debt borrowers were from well off families is all wet, that they are typically from modest backgrounds. This article adds to that profile. However, I must add that even though people of color are hit hard, due also to discrimination in employment effectively adding to their debt burden, it bothers me that author Sonali Kolhatkar is likely correct in focusing on race as opposed to class, since Team Dem finds the former occasionally motivating and the latter not.
By Sonali Kolhatkar, the founder, host and executive producer of “Rising Up With Sonali,” a television and radio show that airs on Free Speech TV and Pacifica stations. She is a writing fellow for the Economy for All project at the Independent Media Institute. Produced by Economy for All, a project of the Independent Media Institute
“If America has a cold, then the Black community has the flu,” said India Walton, explaining how the burden of student debt is disproportionately borne by African Americans. Walton, who famously campaigned on a socialist platform to beat a Democratic incumbent in last year’s mayoral primary race in Buffalo, New York, is now a senior strategic organizer with RootsAction.org leading the organization’s “Without Student Debt” campaign. “Forty-seven million Americans carry student debt, but the burden of the debt falls disproportionately on Black and Brown people,” she said.
According to the Education Data Initiative, out of the 47 million Americans that Walton cited, about 92 percent of them (43 million Americans) have borrowed more than $1.6 trillion from the U.S. government in order to access higher education. The average federal loan size per borrower is $37,113, but when factoring in loans from private borrowers, that number rises to more than $40,000.
Because of how the income and wealth gap is so starkly delineated along racial lines, it’s not at all surprising that Black and Brown students are disproportionately represented among student borrowers. Women are also the majority of borrowers. Those at the intersection of race and gender are most impacted. “The average Black woman carries more than $35,000 in student debt,” said Walton.
The simple reason why nearly one-third of all undergraduates borrow money from the federal government in order to attend college or university is that the cost of higher education has risen dramatically. According to one in-depth analysis, it has risen nearly five times faster than inflation over the past half-century. And, if the price tag of higher education were in line with inflation, it would cost only about $10,000 or $20,000 per year to attend a public or private four-year school, respectively. Instead, while public universities are still relatively less pricey, private schools can cost upward of $50,000 a year.
Since wages haven’t kept up with the skyrocketing costs of higher education, student debt has ballooned as borrowers are unable to pay back the loans. It’s no wonder that some people consider suicide as they face the grim prospects of being unable to pay back tens of thousands of dollars.
It turns out that student debt, just like medical debt or the inability to pay increasing rents, is just another feature of a capitalist, market-driven system designed to ensure the health of Wall Street over the wellness of people. And—it bears repeating—those financial stresses affect people of color the most. “It’s a stain on this, the wealthiest nation in the world, that we are not even able to provide basic services to our people,” said Walton.
Meanwhile, since his election, President Joe Biden has tantalized debt-burdened Americans with indications that he might keep his campaign promises of forgiving federal student loans. His initial campaign promise of forgiving $50,000 in loans was dramatically downgraded to only $10,000. Walton said, “what we’re asking for, what we’re demanding, is that all federally guaranteed student debt be canceled,” not just a portion.
Corporate media outlets are predictably doing their part to help Biden water down the idea of debt forgiveness. Even though only a minority of Americans feel that it is unfair to forgive the loans of some people because others have found ways to pay them back, media outlets have elevated this talking point.
Walton said this argument is “not valid.” Citing the high cost of colleges and low wages, she said, “we’re just not in the same economic conditions as people were, who seem to tout having paid off their student loan[s].”
Additionally, some media pundits are labeling the demand to erase student debt as a radical idea, akin to “Defund the Police,” or “Abolish ICE” (none of these are in fact radical). David Frum writing in the Atlantic claimed that the call to erase student debt is a “trap” laid for Biden by leftist activists. He bizarrely compared it to the right-wing culture wars being waged by GOP leaders like Gov. Ron DeSantis of Florida.
How is DeSantis’ targeting of transgender youth to win political points from his rabidly homophobic and transphobic voter base anything like Biden erasing the student debt of 43 million Americans? If anything, the GOP may be opposed to debt forgiveness precisely because such a move would benefit disproportionately impacted Black and Brown people.
Americans are worried about the state of the economy, and are blaming Biden for it. In such a context, student debt forgiveness is a no-brainer. Not only would it amount to a retroactive government subsidy for higher education—a far more constructive use of tax dollars than, say, the fossil fuel industry—it would also amount to an economic stimulus. With fewer loan payments to make, borrowers would have more income freed up to spend on necessities. At a time of high inflation, any extra income helps household finances.
As prospects for Democrats to hold on to their slim House and Senate majorities in the November midterms appear grim, it would seem to be an obvious electoral tactic, if not a morally sound decision, to forgive the student debt that has hampered the lives of so many people, and especially Black and Brown Americans. Polls show there is overwhelming support for doing so.
The response from the GOP does not go beyond the now-cliché label of “socialism” to describe debt forgiveness. Republicans are also claiming that Biden lacks the legal right to cancel the debt via executive order—a laughable position in light of former President Donald Trump’s constant executive overreach. But, in response to Republicans introducing a recent bill to thwart Biden’s executive authority to cancel student debt, analysts have pointed out that the Republican Party has inadvertently admitted that the president does indeed have the legal standing to do so.
“The Higher Education Act of 1964 gives the president the power to direct his secretary of education to cancel debt broadly,” said Walton. Indeed, for the past two years, Biden has used this same authority to pause the repayment of federal student debt in light of pandemic-related financial hardships.
Still, that hasn’t stopped Obama-era Education Department general counsel Charlie Rose from claiming that presidential action to erase student debt is legally questionable and suggesting that loan servicing companies might sue the administration.
“I’m concerned,” said Walton. “I don’t know what the reason for not [doing] broad cancellation [of debt] would be.” Republicans never seem to waver in their singular focus on ensuring that wealth flows upward and into the hands of wealthy white elites. And Democrats, far too often, fail to provide a countervailing force in the other direction.
Hmm…wouldn’t surprise me if someday we wake up and Republicans come up with their own version of debt cancellation.
2024 – President Donald Trump and Vice President Marco Rubio’s The American Jobs Creation ACT of 2024: Corporate Debt Cancellation relating to all stock buy backs, CEO bonuses, and all other forms of Corporate Debt to create American Jobs For The American Future.
Janet Yellen takes the lead in Congressional testimony in support of the proposal saying “this is what America needs to unlock supply chain bottlenecks. I know from personal experience in trying to find rare stamps for stamp collection that they are scarce and this might help address that.”
So that no one important is left behind or might oppose the American Jobs Creation Act, Included in the Jobs Act will be authorization for the Federal Reserve to digitally create money which will replace any unpaid debt if held by banks or corporations or VIP people who might donate or have donated to organizations such as the Republican Party that want to Make America Great.
Hillary Clinton – the Defeated Democratic nominee for HER 2024 Presidency (it was her turn after all) will issue a statement criticizing the American Jobs Creation Act on the basis only a tiny fraction of non white women will benefit from it as most top corporate executive are male – fueling rumors she is making plans for a re-match against Trump in 2028.
The GOP would only do that if they were worried. It’s like overturning Roe v Wade. They aren’t afraid of Biden and know Team Blue is more interested in obedience from its voters than winning elections. Clyburn and Pelosi were pimping an anti-choice Democrat this very week.
NC has had a few articles on Michael Hudson recently, going to his website i read one of his talks that goes into a quasi history of debt jubilees. Very interesting stuff, makes me look at debt forgiveness more seriously.
I highly recommend looking into it. Could be a great way to squash the financialization of our society.
The only way that will happen is if someone get into power that is wholly detached from Wall Street, and good luck finding someone like that.
Nah, the system now is so rigged towards insulating finance from liability that anything short of a full on rebellion will be futile. Sadly them mainframes do not burn as easily as paper ledgers do.
Who’s your crack supplier?
Another Democrat bit of means testing subterfuge. Cancel all of the debt for everyone is my thought.
Yep. Simply make student loan debt dischargable in bankruptcy – like every other legally acquired debt, like medical debt for example. ‘Means testing’ – after seeing the student loan forgiveness scams out there – is just another con. (Can you say ‘HAMP’ ? And, by the way, it was minority borrowers who as a group lost the greatest share of their wealth in the GFC foreclosure frauds.)
Keep in mind, bankruptcy itself is means tested. For normal citizens, bankruptcy is usually filed under either Chapter 7 or Chapter 13 of the code. (I’m not a bankruptcy expert but I’ve heard that high net worth people sometimes do Chapter 11.)
In any case, Chapter 7 requires the debtor to have a very small amount of assets and generally is a complete discharge. Chapter 13 (which is where I think most debtors fall) imposes a five year payment plan for a portion of the total debt to be discharged.
You’re right, and thank you for the note about existing bankruptcy guidelines. My point is the guidelines are already established and pretty much come down to numbers in bankruptcy. There’s no extra committee ‘means testing’ outside of the bk process itself. Why reinvent the wheel?
Why not just cancel it all, with reparations for past student and parent debt that was paid off under those less cruel economic conditions?
A bankruptcy costs money in transaction costs that some people could not raise, and the “process” itself under current rules strips the “debtor” pretty bare. Plus, there is a huge credit stigma attached to bankruptcy, which follows the mope forever in our Matrix of a digital system.
The Feds have all the info on who is carrying what debt, it should be trivial to send out releases to all. Bankruptcy process, as noted, is a means test, and thanks to Biden et al is mean-spirited too.
End it. Costs a lot less, net-net, than a year of war spending, and will help cushion the inflation from the current Fed largesse to the wealthy and the blowback from the imperial sanctions proxy war “foreign policy.”
You don’t have this right. To qualify for Ch. 7, you need below average income for your state. I’d need to check if “average” or median and which years are used to make that determination.
If the debt forgiveness is not universal I see Republicans and some Democrats using inequality arguments to derail.
As the article mentions tuition fees and all the costs of education have increased extremely in recent decades. The cost of public university used to be hundreds per semester, now often 10s of thousands.
I think Lambert mentioned that most of the wealthy don’t need to borrow much if at all. The concept of pay them off who still have loan debt and pay those back who had loans could be close enough to a universal benefit even the right would find themselves unpopular to oppose it.
The wealthy do borrow. Not because they have to but because they can, ‘money is cheap’ to them. At a time in my life when I struggling to save a 3-6 month emergency fund, a wealthy friend said she didn’t have one because ‘that’s what a line of credit is for’. Sigh
>>focusing on race as opposed to class, since Team Dem finds the former occasionally motivating and the latter not.
If you talk to members of the hereditary upper middle class, it quickly becomes obvious they have a deep emotional and psychological investment in this.
For those who are white, it means they are not a privileged minority but a privileged majority. For those (few) who are Black it means they don’t have to “reckon” with inequality at all.
For a long time and somewhat even now, many of the Asian Americans and (relatively few) Latinos among them held tight to the idea that they overcame some kind of hardship, even though the Latinos were mostly descended from the oppressive white upper class of their ancestral countries and that, despite discrimination against Asian Americans, their top line economic numbers are roughly the same as for whites.
There has been a lot of pushback by Black Americans against this in recent years, including the messaging around Black Lives Matter (insisting on Black as opposed to poc). Also more and more Latinos with Black and indigenous ancestry speaking out. Of course, still kind of a dead end if your goal is universal rights like healthcare as opposed to just reducing prejudice.
There seems a lot of constrained thinking in this abstract bubble, obsessed with human taxonomic Systematics…”dead-end” implies limits, and in a context of “reality” the lower limit of real quantities(of tangible stuff) is zero and the upper limit is not infinity…this “reality” imposes itself at the lower limit with deprivation and starvation, and at the upper limit with not enough matter and/or energy to service debt that ‘exponentiates’ towards infinity…
“Standard of living” and “Quality of Life”, are resource dependent. IMHO, the qualifier for healthcare should be being sick, and the qualifier for education should be potential for contributing to the economic AND social well-being of all.
RE Biden’s means-tested faux relief, I’m still truly amazed at this bunch’s hubristic disconnection from reality. They seem stuck in the Rahm Emanual mentality that if they check the box that they got “a win,” everyone else will also be satisfied — or at least if they aren’t, fcuk ’em. Those young people Biden has “no empathy” for are supposed to be duty-bound to troop to the polls again this fall, as if they’re too dim-witted to notice that they still don’t have any money.
Really, it looks very much like the matching denial about Russia having a functioning army, or the price of oil going up when the supply get cut off, or Covid spreading if you take off your masks and breathe on each other in an unventilated dining hall. There seems to be no reality so crushingly obvious that the Democratic Party can’t be paid enough money to not notice it. How does Lambert put it: “When a man’s income depends on him not knowing it”? Bingo.
And, I agree with thoughtful person’s comment about Lambert’s proposal to pay everybody.
I don’t see why they expect old Joe to help solve the problem of student debt when he, more than any other person, is directly responsible for creating it by his landmark bankruptcy reform legislation that made it nearly impossible to discharge student loans. It’s all on him-
And as far as I can see, a call to cancel student debt on the grounds of racial justice is just a back-handed way of splitting the movement to bring this about. You cancel everybody’s student debt, then everybody benefits no matter their race, creed or colour.
I disagree with this idea because it further reduces seriousness.
A society or a person is serious if it deals with reality as it is. Serious people know they have skin in the game, and make careful decisions. Unserious people do what they feel like.
Reality as it is, is that getting a degree in a non-STEM subject will not provide a good income. Therefore, getting such a degree and expecting to pay it off with a low salary is stupid. If the country were full of serious people, few people would pay ludicrous amounts of money to get such a degree, and universities could not charge these amounts. Then they’d either do it cheaper, or not do it at all.
A serious person might decide that although he loves philosophy, he should forego university, or he should study something he doesn’t like, such as becoming a lawyer. (A serious society might wonder why waste so much IQ lawyering instead of engineering, but that’s another topic). A serious person might decide he cannot have holidays so as to pay off his debt. He will have made sacrifices to deal with reality. In a normal world, these are correct decisions. However if debt is forgiven, it is the unserious person who gets ahead, rewarded for making bad decisions.
It’s one thing for our society to decide that education should be free, because IQ is spread out equally over all classes, but it’s another to forgive debt. I actually am in favor of the former, but only if there is another gate to screen out the unserious: tough entrance and exit exams. Instead, we’ve been hearing about discarding SAT and other entrance exams to make things easier for “disadvantaged minorities” and now we’re hearing about forgiving debt to help “disadvantaged minorities”.
Encouraging people not to suffer the consequences of their decisions is a great way to create even more of an Idiocracy than we already have. We’re already leaning too far in that direction which is why we had the Covid debacle (Fauci has a history of failure), the coming crash of the EU (Von der Leyen has a history of failure), the Afghanistan debacle, etc. In the real world, cause and consequence matters. This needs to be second nature to the people making decisions, but if their environment has shielded them from this fact (because of wealth, debt forgiveness, being born into a certain societal strata, etc), they will make bad decisions. If anything, our “deciders” need to be subjected to harsher cause and consequence than anyone else to ensure their skin in the game is commensurate to the import of their decisions.
“Moral Hazard,” eh? Puritan cruelty is the gift that keeps on taking…
And the reality is that the moral hazard argument is in reality only ever applied to the lower orders.
Respectfully, I think that this is overly simplistic.
Decades ago, you could get a degree in most anything while working during the summer, like all my older relatives. You were almost certain to get a decent job. Now, you cannot. The situation that allowed my relatives to climb out of poverty using education are gone because all the steps have been remove. And the degrees were not all STEM, but the skills learned from the cheap college education still got them those good jobs.
You can find all the very many administrators that have replaced full time teachers. What many would consider STEM degrees excludes much of the sciences and anything in the liberal arts. Then there are all the unemployed STEM graduates.
Suggesting that literature or philosophy are not serious or even crucial, in my belief, deeply flawed because it reduces everything to only money and not any other measurements. It is like an expression of neoliberalism and like neoliberalism it greatly reduces the ability of society to handle its problems.
I call bullshit on what you are saying. You forget the stupid people you mention here are only 18, and have had their entire school career brain washing them to get further education at all costs. I’m not exaggerating when I say brain washing, it is true.
You are looking at it from the wrong angle. Don’t look at it in terms of the “unserious” students. Instead understand that maybe the entire college system is preying on our countries youth, shackling them with a burdensome and life long debt.
Debt is endemic to our culture, yes the average American makes many stupid financial decisions but our entire system today runs on debt entrapment, making people slaves of a financial system. It is all by design, who runs our country? The banks….
So, to paraphrase a little (via a famous Japanese writer): the stupid non-STEM students should cheer for the STEM students, and they will. “The STEM students will succeed because are serious, they embrace ‘reality’ i.e., they are superior students. And yet a not-small number of them do graduate and remain unemployed. How can this be? They’re unemployed because the backward students were indulged by their families, the universities, and by society as a whole. In effect, they pulled the serious, reality-minded STEM students down. The backward students stood in the way of their success. Their loss is really due to a decision to indulge the backward, non-STEM students, rather than focusing all available resources on the STEM students. Those who failed to acknowledge the superior, reality-minded seriousness of the STEM students bear responsibility for this mess.”
It is interesting how this post triggered reactions in people, arguing against things that weren’t said. Thanks however for your comments.
@JTMcPhee: I made no mention of Puritan Moral Hazard. It’s not about morality, it’s about coldly looking at what works, rather than privileging one’s dreams or desires. The rich can avoid the consequences of bad choices to themselves, but it does not prevent their bad choices from harming everyone else.
@JBird4049: I am not arguing that Literature or Philosophy are unimportant. Indeed, the Scientific method is based on philosophy. Mathmatical logic came from Philosophy. But people who make real contributions to those fields may, or may not, have studied them at University. Many famous authors never attended University. What is not serious is to expect a degree in such fields to pay off a giant loan, unless one is brilliant. And, as an aside, STEM actually seems overly broad to me (architecture? education?)
@Mike: Yes, that aspect of the US is unserious. Getting young people into debt, encouraging them not to think about the consequences of not being able to pay their debt, is not looking at reality soberly. It’s not serious. Apprenticeships in Germany, where 19 year olds are paid to learn skills needed by companies, make more sense: these youngsters are not looked down upon, and can start a family without fearing debt.
@Acacia: Studying STEM does not make one serious. However serious people who expect to pay for their degree with their income from a job are more likely to choose a STEM class. Why? Because, if you’re good at STEM, and you are not unlucky, you’ll get a job that lets you pay off your degree. Even if you’re exceptionally talented at the history of witchcraft, you’re unlikely to get a job that will pay your bills. Notice I said good at STEM. If you’re terrible at it, even if you attended a university studying that topic, you probably won’t last very long in that job. So it is important that people are given accurate feedback on how they are doing, which is why entrance and exit exams matter.
It appears that you did not read our written site Policies. Your remark contains multiple instances of bad faith argumentation, compounded by a unwarranted condescending attitude, which is yet another rule violation: “Being an asshole,” starting with your very first statement above: attempting to denigrate rebuttals (“triggered responses”) that were clearly were consistent with the position you took or an obvious extrapolation.
As to the substance, it’s disingenuous or obtuse to pretend that your “seriousness” is anything other than extreme form moral hazard. You don’t get to play Humpty Dumpty from Alice in Wonderland and dictate the use of language. JTMcPhee’s depiction is apt.
Your black and white depiction of “getting a non-STEM degree will not result is a good income” is abjectly false and another rule violation, “Making Shit Up”. You are twice as likely to become a billionaire in asset management as tech. Law schools don’t care what you majored in in college as long as it is not a known “gut” major (English is rigorous at Yale, a gut at Harvard) and you have very good grades and strong LSATs. I personally know someone whose parents were wetbacks, who majored in English at Stanford (which BTW is also recognized as a rigorous major), and is now in private equity, the highest paying area of finance. Oh, and his first employer went specifically looking for Stanford English majors because he knew they were wicked smart. While we speaking of finance, banks and corporate employers look very favorably upon an undergraduate economics major. In other words, what may be generally true is not always true, but you asserted otherwise. You failed to consider the distribution of incomes.
And you would reject bankruptcy as “unserious” when it is widely acknowledged by economists and policy-makers that the US bankruptcy process is key to our record of innovation. People need to be given a chance to start again if they fail or make a bad decision….or have a spouse divorce them, which is a significant driver of bankruptcies (one of my brothers would have gone under as the result of hefty alimony if my mother didn’t give him a significant five figure loan).
And per you, it would be utterly unserious to start a new business, since 9 out of 10 fail in the first three years.
More generally, you choice of handle and the tone of these two remarks demonstrate that you think you are entitled to sit in judgement of other readers. We are not interested in readers whose objective in commenting is thought policing and proving themselves right.
Our Policies clearly state that commenting is a privilege, not a right. I trust you will find your happiness elsewhere on the Internet.
Not surprising you’re being attacked for advocating responsibility. If you borrow money, you understood – hopefully – the costs, interest, etc. You should have also done some homework on what jobs pay in your chosen major or related field.
This has nothing to do with whether college is a good value. It clearly is not. That’s a different issue that needs to be addressed.
Even more interesting are all the people who went to a trade school, bought trucks, tools, etc to do their job, but have been excluded from this issue of debt forgiveness.
I would love to see a breakdown by major of where this debt is pinching graduates the most.
I couldn’t tell from your comment, Disagrees a Lot, if you believe IQ is spread equally among the classes or not. What is the evidence?
This is not to say that greater efforts should not be made to cultivate bright students from lower class backgrounds, and that a lot of potential brilliance is not lost with our current focus on cultivating the Upper Middle Class in the public school system, and, in my state, providing funds to facilitate their attending college. (It doesn’t go ONLY to upper middle class kids, but mostly, because the PMC parents have the time and skills to advocate for their kids and influence the teachers who make the recommendations for who goes to what level class).
However, I agree with Charles Murray that there is an intelligence component in life outcomes. There is a reason he is the most hated sociologist in America.
Murray is hated because he speaks uncomfortable truths. Our egocentric culture – our fear of admitting mistakes – is hindering our odds of learning from them. It’s incredibly stupid to live life like that. It’s why we don’t trust.
Our culture is egocentric and has a fear of admitting mistakes(Oh god, do we every), but Charles Murray is problematic not because he is making a honest attempt to deal with intelligence. He is. His problem is that he takes a vast, complex, and still poorly understood or defined concept of intelligence and shoehorns it into vast, complex, and still poorly understood or defined problems. This without acknowledging both that and the emotions and biases with which we filter our conclusions. Much like neoliberal does. Or science.
I think that what we label intelligence in our society is usually a small set of skills, which often don’t mean as much as social connections. One of the dumbest men I knew was the VP of marketing in a company I worked at. He was still making a seven figure salary while I was earning five. He had his people skills and his social connections with which he got other people to do the thinking for him. I do not have that.
If we are using the standard intelligence tests that come from Alfred Binet’s, we have a problem. It is a Victorian age attempt at justifying racism and even social darwinism. It is true that it an attempt, an honest one, at measuring intelligence, but it, like modern intelligence tests, tries to reduce it to a single number, which is kinda nuts. As someone point out to me, people judge someone’s intelligence by how facile they are with modern technology. Binet’s test was used to label and quantify people. To determine their value on a piece of paper. Not their skills, talents, but their education. Someone who is facile, who can deal with the current techological setup is supposedly smart. Someone who has difficulty with parsing all the clutter, bright lights, bells, whistles, and whatever else shoved onto a screen like a dyslectic is deem not so smart.
Further, what is deemed intelligence depends on the environment that the group or society is functioning in. Keep an accurate mental map of an area, county, city, or stater in your head (before the age of GPS) you’re smart. Same if you can take apart an engine, fix it, and put it all back together. How about writing a book, or raising children, or hunting, or being good at debating? Or even being able to memorize an entire book? However, today, you are only really smart if you are a good techie or can BS well with words, or have legally stolen enough money.
Or me? Some people I knew were, in raw intelligence, more so than I, but they were dyslectic, and I could read and write ever so much better than they. So what? I can manipulate squiggy marks much, much better than they could. But where they were exhausted with squiggy marks, I get exhausted with the spoken word. Not because I do not understand people, or that my hearing aids are not working, but because, like with writing for them, it takes that extra effort to keep track, decipher, and understand it. Often I am half a second behind everyone especially if I am taking notes and that delay just gets longer, and longer, and longer the classes, or the business meeting, or whatever is running. Remembering wtf was said so that I can work on it, while keeping track of the new at the same time is ever so much fun. Yet, one on one, I’m good. But people have claimed me and mine as not bright because we lack facileness in certain things.
Lets expand on this. 170 years ago, much of my family would have been considered white chimpanzees, but today many are members of the PMC. What changed? Their looks are much as before as is their inherent abilities, but the centuries of colonization, of theft, invasion, legal social and educational oppression, of at times near genocide stopped. They became White. They went to the right schools and made the right connections.
Then there is the other half of my family who, between the world wars and the Great Depression, lost everything. Bombs, bubbles, and fraud although the boom times of the 1950s to 60s helped them get some of it back. However, carpenters, warehouse workers, fruit pickers, cannery workers, and restaurant workers are not considered too bright by some. They were failures because, otherwise, why would they be doing such work? Notwithstanding that they were responsible for nothing that ruined the family economically.
What makes successful people successful usually comes from what their base, their start was. The longer the success is, the more their apparent intelligence is. They go to the good schools. The live in the less violent and less polluted neighborhoods. Their parents and grandparents have the time to help them, to read to them. They speak the right words with the right diction, say the correct things, and have the best connections to everything. If anything does go wrong, they have the friends and family to help them. John not so bright, gets a sinecure. Jane the unlucky goes on vacation to Mexico and has a “condition” fixed. Mike gets “helped” into Harvard.
More directly, just how “intelligent” is our ruling class? Just how did they get to be our rulers? I can tell you that the ruling class of California is more ruthless and facile than intelligent or wise. Great liars as well.
A few observations on the student loan debt issue.
1. If people are having trouble paying off $30,000 or $40,000 of student loans, this reality seriously calls into question whether higher education really boosts income for the average person. The general rule of thumb for student loans is that the borrower should not have much trouble paying off the loans if the borrower’s total principle does not exceed his or her post-graduation annual salary.
2. There is a distinction to be drawn between undergraduate and graduate debt. Undergraduates may not be that sophisticated and social pressures encourage them to attend college. In comparison, a college educated individual presumably can assess the risks and merits of taking on significant debt, especially since the purpose in virtually all cases of graduate study is the pursuit of a job in a particular field (yes, academia is a job, even if that market in the humanities is horrible). This distinction disfavors forgiving graduate loans to the same extent as undergraduate.
Interestingly, this distinction favors giving graduate loans better tax treatment (it’s more explicitly borrowing towards one’s own future). Also, this framing implies this debt should be dischargeable in bankruptcy like other business-like debts.
3. Generally speaking, I think a universal benefit is required for all borrowers _past and present_. I’ve said it before on this blog, but it’s just not going to work if people who paid off their loans are given nothing but a pat on the back. Forgiveness only for current borrowers smells like vote buying–universal reimbursement feels like an acknowledgement of an unjust overcharge. Let’s be honest, a significant reason for the amount of debt is the economic incentives created by the debt programs themselves.
4. Legislation is required along with forgiveness. It’s clear the colleges and universities are behaving like rational bureaucratic actors. Due to student loans, their students generally are able to “pay” despite the schools’ consistent, above-inflation price increases. There are no consequences to the schools if their students, the actual borrowers, run into financial trouble. Unless the universities are brought to heel both by restrictions on student lending (public and private) and by some kind of cost regulation, the schools will simply continue to raise prices because the money spigot is continuing as normal from their perspective.
I am not at all up on technical details, but I expect a big issue is interrupted income. And then penalty interest rates.
Regarding your first point, the first few years post college you’re likely nowhere close to earning enough to make hefty student loan payments AND rent AND transportation costs AND entertainment and so on.
My daughter has $30k of student debt (we paid her entire education, including sorority, car, insurance, spending money, etc. so don’t ask me why, is). Meanwhile, in process of divorce, two kids, no job prospects at present (stupidly took an English degree instead of what she said she was there doing, but not the time or place to get into this). Anyway, in the process of getting divorced. Once that’s finalized we’ll take care of her debt so she gets a fresh start.
However, to the question of debt relief? I don’t agree with US Tax Payers doing this. She (and all students) undertake debt willingly. Why? In the expectation of paying it off with a job earning enough to do so.
1. You took a shit degree and can’t find a job? Not my problem!
2. You quit before attaining said degree? Again, not my problem!
3. You took a degree and aren’t earning enough to pay it off? Not my problem!
People buy cars and homes they can’t afford. They loose said car or home. There’s a process of bankruptcy for this.
What is my problem? 1, 2, and 3 above despite what I said. It’s my problem as a citizen if we let colleges hose the kids – we did, look at how;
1. Tuition went through the roof once free money was available.
2. Kids were recruited into worthless degrees (my daughter is exhibit 1).
. . . and we’ve failed them;
1. In letting inflation eat away at everything
2. In letting wages stagnate instead of using the taxing power to encourage (guide, force, whatever) private companies to do the right thing vice wages vs. outsource. We do it to encourage spending on plant through depreciation so we can figure a way to encourage hiring and good wages.
3. In letting private enterprise buy our politicians to achieve their aims.
Fortunately, it’s reversible. How? At the ballot box. How? Above my pay grade.
High debt levels across the country are all of our problems whether you like it or not. Excessive and easy access to debt does not allow our country to operate effectively.
Law of unintended consequences multifold or deliberate wealth transfer? The student loan programs were perhaps some of the earliest attempts at social justice. The federal government sponsors banks to underwrite loans with no collateral and no risk algorithm to “under privileged ” students. The banks need protection because there is no collateral or allowance for risk. So the feds say “OK, we’ll exempt this debt from traditional bankruptcy rules.” The education market is FLOODED with cash and surprise surprise the price of education inflates faster than mean inflation. And some say now this was the result of an abusive practice of the banks and the education industry. Partly perhaps, but It`s the law of supply and demand and the federal programs created it. Then the feds say “we don’t like the way banks are handling this we will take it over.” Now the tax payers are directly on the hook for the the federal programs of lending billions of dollars to people who had no realistic expectation to pay it back. The loans aren’t canceled. The worker who didn’t take the loans and the worker who paid those loans back are now on the hook as taxpayers. And low and behold what started out as a charitable attempt to increase underprivileged access to higher education has become a systemic abuse of the underclass! “We must cancel the debt” because the borrowers were abused!
It’s even worse than wealth transfer. It’s wealth destruction.
The market is flooded with cash except for the students and teachers. The actual amount of resources needed for an education is about as it always was and yet, unlike my parents’ generation, it is unaffordable for most either because they simply cannot go or they are buried alive in debt. The jobs actually available pay less now then they did decades ago anyways if only because the cost of just staying alive is so much higher. All these are reasons why too many people are acting like poisonous piranha and devouring their fellow students.
Student loans did not so much support education per se, but the enrichment of the administrative class, via the massive inflation in the cost of such education. The money should be directed to a universal free (at least nearly free) tertiary program.
Listen, you can’t just go to cancelling student debt with no reforms to the loan process and college admissions. Or how about bailing out only those who went to public universities. I’m not footing some silver spoon’s ivy league loans!!
If cancelling student debt creates a larger bailout than what was needed for the Great Financial Crisis, then someone will have to investigate precisely how we got into this situation, and how we can prevent it from ever happening again.
This includes investigating the role of universities and banks who receive student loan interest and proceeds ( their benefit includes the nearly $1.75 trillion in outstanding student debt ).
The government shouldn’t be involved in this. Student debt should be allowed to be discharged in bankruptcy just like other debt. Screw the banks. By getting involved in student loans, the government created this mess.
I agree that “can’t be discharged in bankruptcy” is part of the problem. But a discharge will not hurt the banks. The loans will not be “forgiven”. They will be paid for under the terms of the contract by the guarantor- the government, in other words, “Us”.
Why is the government in the business of making college loans at all? Kids at MIT are not defaulting on loans; in a free market MIT would pony-up the money for 3% loans. Kids who often don’t qualify for “real” colleges are being lured into lousy schools and lousy programs by these loan program. In a free market those would be 12% loans; this is called “a price signal.” And poor kids with good high school grades would be commuting to the local junior or community college with 4% loans provided by lenders who could tell the difference between an art degree and an accounting degree.
If car loans were made under the same government subsidized loan system, a lot of 18 year-olds would not be buying two year old Hyundais. They’d be buying 4WD Ford 150 trucks with a slick paint jobs and the $2,000 magnesium wheel option, all for no money down and the first payment on the 8% loans not due for 4 years. Ford would be happy. Lots of campaign contributions would be made. Car salesmen would be marking up the product and making $250k/year like the college “counselors” did. Lots of four year old F150s which had never gotten an oil change would be for sale cheap. The NYT would be telling us how poor students had been duped and would never be able to afford a home and that “Something must be done!”.
All government loan programs start out with great fanfare. They all turn into a subsidy for well connected borrowers and quiet campaign contributors. Student loan programs and flood insurance programs should both be abolished for the same reason; they are both actuarial unsound.
They had already found the dangers of compound interest in pre-history.
5,000 years ago, in ancient Sumer, the scholars studied the doubling time of debt ensuring they were aware of the need for Jubilee years to ensure their society wasn’t crippled by debt.
This is where the first cuneiform writing developed.
This knowledge was passed down, and woven into many religions.
This knowledge flowed down for thousands of years before disappearing sometime around 1980.
“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it” Albert Einstein
He’s dead of course, like everyone that has ever understood compound interest.
I just want to point out that the Education Data Initiative frames the numbers in a different way than the WSJ. I can’t provide a link, because this was on the editorial page. May 3rd, 2022.
‘More than half of borrowers owe less than $20,000.’
‘White collar workers with advanced degrees account for 56% of the $1.6 Trillion in debt.’
‘Doctoral recipients in the humanities in 2019 earned $53,000 per year on average.’
‘To avoid the appearance of helping the affluent, Mr. Biden is considering limiting loan forgiveness to borrowers making up to $150,000 a year ($300,000 for couples). Yet this would cover 97% of all borrower debt, including most recent law and medical school grads.’
A $300K income limit on loan forgiveness is not a limit that does anything, other than being
a ‘cover your butt’ political talking point. Especially if 97% of all borrowers fall thru that crack.
If you took these loans out as a graduate student – then the ’18 y/o’ free pass doesn’t apply
if it ever should, as a lot of loans were co-signed.
And then there is always the people who didn’t take out loans knowing the costs, as well as
those that paid them back.
Focus resources on those that were defrauded by their institutions, and those that made
legitimate and material repayment efforts, or clearly struggled financially. Let the others
fight it out in bankruptcy or we shall forever ingrain it in society, that for individual choices,
upsides are personal and downsides are covered by the public at large (i guess no
different than corporations with their hands out or back dealing their way thru political donations).
– No debt cancellation without reforming process; should be claw backs on under performing colleges.
– Perhaps anecdotal but several people I know earning $500k plus sent their kids to state U to get degrees in Engineering and Accounting. Another group I know with much lower income sent their kids to Columbia and BU for humanities type degrees and high debt loads. Sorry, but there is bad parenting going on out there too. Or at least in many liberal areas it’s unbearable to tell your friends that Madison is at UMass Amherst rather than Columbia swimming in debt.
I’m sad to see such blinkered, unenlightened comments on this subject. Particularly all those who effectively are saying either “shame on you for not going to college for the purpose of making money” or “I got mine, so screw you”.
I have so little hope for this country. We are in for a new Dark Age.
There is little to no solidarity between Americans. People seem to love the symbols, but not the people symbolized by them.