Student Loan Forgiveness Act of 2012

[Midwest]

I don't think it's controversial. Nor am I concerned about individual fulfillment. I simply think that graduating a generation of people deeply in debt by the time they hit the job market is probably not a good thing overall if we, and our leaders, want to do things that foster innovation. What if STeve Jobs or Bill Gates had been deeply in debt and wound up working for "the man" to pay it off instead of doing what they did?

Student debt isn't an entirely new issue. Back in the late 90's when I graduated, some people were coming out of school with very large loans and some weren't. My wife and I graduated with $15,000 or $20,000 in debt and paid it off in a few years. My wife drove the same car she had in college for the first 5 years of our marriage. Simple recipe for payoff, live cheap and work hard.

I feel like my mortgage is stifling my innovation and wish someone would pay it off for me. Unfortunately, the govt can't and shouldn't do that. Instead, I've made a choice to pay it off myself by living below my means. At some point, personal responsibilty needs to come into play in all these decisions.

As far as "fostering innovation," forgiving student loans is just further interference into the market which will create more problems.

For an example of how you can pay off a crushing debt load from student loans, check out no more harvard debt. It's a blog about a guy who paid off $100k in a year.

[flowerseverywhere]

But in cases of catastrophic illness, death of breadwinner, unforeseen circumstances where there truly is no way you can ever pay it back, then perhaps bankruptcy could come into play. But then, I think bankruptcy should only be used for other debt this way too, not just a get out of jail free card.

Yes there are circumstances where bankruptcy could be appropriate in this case. But after seeing some people walk away from homes in which they knowingly took out $100,000 more than the house cost (for toys) and in one case walk away from credit card debt over $60,000 (twice no less) it is hard sometimes not to be weary. Your idea is great, tighten up all the bankruptcy laws, welfare laws (which has been done in many cases), child support collections and make people more responsible across the board for their actions, instead of punishing people who make good decisions, pay their debts and are responsible.

[peggy]

Actually I agree with your comment a couple of posts earlier about government interference in the market. This is probably the reason tuition has been able to rise so much faster then inflation, resulting in people paying more/taking out large loans, in order to try and get ahead.

I don't know if it's necessarily government interference, but it started with a trickle. First kids could work their way through college (my generation). It was hard, sure, but could be done. Then, the kid worked and mom and dad helped a bit with room, board, etc...Still hard, but still doable. Then kids started taking out loans, cause mom and dad were maybe not doing as well as they had. This kind of coincided with Reagan and the start of the giant suck from the middle class to the upper tiers. This is where the snowball started it's roll, faster and faster. Once kids were borrowing the money to go through school, well, that gave the colleges the freedom to raise their prices quickly. After all, there are only so many hours in a day and the kid couldn't work 35 hours a day, but they COULD add another zero to that bank loan.
So, yea, I guess it was government interference in a way. The slow and steady choke of the middle class meant parents couldn't help their kids get through college, coupled with the greed of universities seeing a fresh flow of money for ever bigger sports complexes and all the other bells and whistles on their wish list.

[cattledog]

I sympathize with young people today, especially those kids with parents who are unwilling or unable to help out. Tuition has just skyrocketed since I went to school. It’s crazy. Even our local community college is expensive. It costs $200 a credit. A second tier state school costs 13K with tuition (not including room and board). State schools are getting ultra-competitive now just because of tuition costs.

My advice for new parents is to start a college fund as soon as your kid is born. That gives them an 18 year head start. Even $50/month is better than nothing.

I don’t support this bill though. 10% of discretionary income is absurd (and way too subjective). However, the student loan business is out of control. It’s a no-lose for private lenders and it’s too easy for kids to borrow. Who guides 18 year olds if their parents do not? The financial aid counselor? No way.

[Gregg]

I said in the beginning that debt forgiveness was a good idea -- as we can see evidenced in Saudi Arabia and how it managed to help the economy and the people there.

Saudi Arabia managed to reduce their public debt in 8 of the past 11 years and overall has reduced it from 103% of GDP in 1999 to under 10% in 2010. It took a lot more than loan forgiveness to do that, but if we can produce those results I'd be happy to write off all kinds of debt.

The real deal is jobs; if it hit us in the face any harder it would break our nose. If college graduates had a strong job market to enter and could earn a good return on their investment (aka tuition) we would not be having this discussion because this bill would never have been introduced. Another typical, high priced, bureaucratic, nonsensical government band-aid placed on a severed limb. Oh but wait, treating the disease instead of the symptom would reduce dependence on Nanny G. We can't have that.

[Midwest]

Saudi Arabia managed to reduce their public debt in 8 of the past 11 years and overall has reduced it from 103% of GDP in 1999 to under 10% in 2010. It took a lot more than loan forgiveness to do that, but if we can produce those results I'd be happy to write off all kinds of debt.

The real deal is jobs; if it hit us in the face any harder it would break our nose. If college graduates had a strong job market to enter and could earn a good return on their investment (aka tuition) we would not be having this discussion because this bill would never have been introduced. Another typical, high priced, bureaucratic, nonsensical government band-aid placed on a severed limb. Oh but wait, treating the disease instead of the symptom would reduce dependence on Nanny G. We can't have that.

It's almost like someone is trying to distract us from the real issue (jobs/economy) and buy votes in an election year.

[Gregg]

It's almost like someone is trying to distract us from the real issue (jobs/economy) and buy votes in an election year.

Ya' think?

[ApatheticNoMore]

I'm with Bae, tell me if there is going to be a debt jubilee because I'm going shopping! New car, tap my heloc, new RV, new motorcycles. Look out here I come. all those things that we talk about but don't buy because we don't think it is sensible to do so

Meh, you know that's funny as humor and all, but it doesn't really ring true to my pscyhology, if there was really a debt jubilee I would not go shopping on debt (at most I'd be a little carefree with I don't know buying books on Amazon on credit? ). For the most part, I'd really just continue to be the same live with in my means person I've always been. Because it's kind of who I am and really not that likely to be changed at this point in life Perhaps if I was 19 and still kinda unformed, I don't know ....

If it would somehow restore a better world though hmm. College loan forgiveness seems in many ways forgiveness to those who are already priviledged (compared to most of the country that doesn't have degrees anyway). As for money creation, it is being created anyway, it is just currently filtered through the banks (wonder why they are so rich?).

[jennipurrr]

I think there are a lot of problems in the pricing of higher education and the real financial/academic benefits of some "college degrees", especially in the for profit sector that need to be addressed before we (as a country) go and do something like this. Many of the for profit colleges are still ripping off the federal financial aid system and saddling nonsavvy students (the kind of students who would have likely chosen a trade school or community college previously) with huge student debt and worthless degrees. I have seen a few positive trends in that direction, but this is still going on at an alarming rate.

DH had $91,000 debt when he finished his second bachelors degree (and a stint in law school). We graduated with decent but not high earning positions. We saddled up and made the private loans with variable interest rates our top priority. His debt is less than $40,000 on a 1.5 interest rate currently.We love to travel and we did not go on a trip for those three years. We drove old beaters. It can be done it just takes restraint...something I see less of each and every day in our society.

[flowerseverywhere]

Meh, you know that's funny as humor and all, but it doesn't really ring true to my pscyhology, if there was really a debt jubilee I would not go shopping on debt (at most I'd be a little carefree with I don't know buying books on Amazon on credit? ). .

of course I was being funny to an extent. But I think most people would do so if they could get away with it. How do you think we got into this mess in the first place? People taking risks, borrowing more than they could afford, liar loans, bundling bad debt together and selling it fraudulently all went on and it was widespread. Every day you can read a paper and read about people stealing from the soccer concession stand, people who are arrested for welfare fraud, stores being robbed all over. for some reason people have talked themselves into thinking they deserve whatever they want dammed the consequences to anyone else or society as a whole.