As a person with an interesting but fairly useless MA (who has paid off my debt), I think students need to be encouraged to think harder about their careers before putting themselves on the hook for many tens of thousands of dollars. I am to this day not very career oriented, and I can't imagine how my 18 year old self was allowed to make those decisions with as little information as I had.
It would be good to allow smart high school grads with no sense of direction more choices for finding their path without so much pressure to go to an expensive college. Looking back one of my main regrets is 'sticking it out' rather than quitting for a bit to find myself, and then going back to school later as some friends did. We should also have more respect for the trades. The amount my plumber charges is ridiculous.
20
I think I just detached my retinas from rolling my eyes so hard.
Heaven forbid we ever do something that removes a barrier of upward mobility. Instead let's saddle poor people with with a giant millstone ten of thousands of dollars in debt because there are rich people who also have student loan debt.
I've read a lot stupid opinion pieces in my time but this really takes the cake. How long did it take you to come up with this heap of neoliberal garbage?
95
Americans’ toxic sense of fairness rears its ugly head: We can’t do the most needed thing because it won’t be equally provided; or worse, someone else will get something I don’t. It’s why we don’t provide homes to the homeless, we don’t want poor people to have quality healthcare they can’t afford, etc. We as Americans so religiously adhere to this that we aggressively apply it even when someone else getting something means we benefit as well.
So what if the highest-earning quarter holds half of all student debt? It is still a drag on the economy, as indebted former students forgo buying houses and small everyday goods, delay having families, etc.
And the author is flat-out wrong about much of this. Yes, public schools are far more expensive than they were when author David Leonhardt went to college a quarter century ago. Many important jobs – ex., doctors, nurses, nurse practitioners – run into hundreds of thousands of dollars of debt even at public schools, and it’s hard to attract them to primary practice – where they are needed – if those jobs can’t pay back Uncle Sam.
Even those with manageable payments forgo other economic activities in a big way. Mr Leonhardt graduated Yale with $22K of debt, and he is utterly clueless about graduates far younger than he. At a public university, one year’s worth a tuition may be $22K, not counting room and board, and part-time work simply won’t cut it. His op-ed is a toxic sense of fairness meeting a toxic sense of cluelessness.
23
handing out free money is not progressive? It is not buying votes?
6
How nice for David Leonhardt, to speak for every recent college graduate, after all, he has $22,000 in debt for attending and graduating from Yale.
His argument is pathetic and contemptible. If this country wishes to increase its abysmal productivity rate, the very basis and means by which it increases national wealth and power. Than this idiotic beggar thy neighbor approach to student debt and worker retraining must end.
All college and technical school costs should not be imposed on the students and future workers, who are after all asked to support an extraordinary entitlement burden for their parents.
How myopic of the country to pretend that it is perfectly natural to impose 5 figures of debt on the very workers who are required to support Medicare, Medicaid and Social Security.
Yet, I am sure David Leonhardt is going to pretend that the Baby Boomers had it hard when they faced a fraction of the costs in attending college. If Germany can make college free for its citizens and even its residents, the United States can do the very same.
9
Perhaps David Leonhardt doesn't understand how much more expensive college is now than in 1994 - now $71,290 per year at Yale. "This fee is comprised of $51,400 for tuition, $15,500 room and board, $3,670 for books and supplies and $0 for other fees.
6
If you REALLY, really, really want to making the so called working class Americans angry, go ahead, cancel student debts. If you want to be fair, reasonable and progressive, don't. It might be that some debt relief is warranted, but this idea is a red hot poker: want to hold it in your hand for an hour?
There is a basic principle of life and it even applies to 18 yr. olds who take out too much debt: we all have to live with our decisions, even bad ones, even if taken at a tender age, even if it winds up in a grossly unfair situation. Live with it, do the best you can and try to make as much money as possible to get rid of this burden.
I write this as one who detests, in general, the whole idea of massive loans for college. In my view, the whole program was an incredible mistake that is having a huge blowback impact on the last two rising generations. Student loans were a good idea with some very bad results.
Student debt, at its worst, represents a form of indentured servitude from the middle ages. Hey, kid, you want to enter the higher paying fields? Then you've got to wear a ball and chain around your foot for the next 10 to 15 yrs. You've got to pay me, your professor, for the chance to advance.
"Free college" is also a dumb idea. (More on that over four hours of conversation tonight.)
Democrats need, desperately, to get over the idea they can save the whole world. Make it a little better, bit by bit, and make sure EVERYONE benefits, not just college kids.
10
What does this even mean, "forgiving all student debt"? Most of it is held by private lenders and much of it securitized and sitting in the investment accounts of retirement funds all the way down to mom and pops. And debt contracts cannot just be "voided".
Or are folks suggesting just debt held by the government?
I am not interested in subsidizing people who borrowed too much to go to a bad school. I do support putting student debt on par with all other personal debt and subjecting it to bankruptcy laws. That would do a lot to bring discipline into the lending market.
Beware demagogues bearing unrealistic promises!
8
give me a break. everyone i know right now is absolutely struggling to make ends meet despite "doing everything right". is $15 a year too much for food stamps upper middle class? because that was my "upper middle class" financial situation when i was in college.
forget getting married, buying property, or starting a family... none of those things are possible with a ball and chain attached to my foot.
"not progressive enough". yeah right. smear from the left? next up: eliminating debt is RACIST! because more white kids went to college than minority kids therefore relief is racist!
8
I am another student loan success story. Most of it by some luck, and much pluck.
My first private college degree didn't work out for a living wage, so I went to the local Community College to get an Associate's in Nursing. Total cost, 3k, which I earned back in two months. I still had loans from the Bachelor's, but they were very reasonable. From there I supported myself, and moved up the ladder. I worked full time during graduate school, so I only borrowed tuition, not living expenses. My two year program took five years, but I was getting invaluable experience the entire time in my field.
I graduated with some 50k in loans. My first job didn't pay well, but when I got a significant raise, I didn't change my lifestyle, I put the money toward my bills.
Five years later, I had paid it all off. I know everyone couldn't do exactly what I did. I had some help and a second job that paid very well.
Still, a friend did a similar graduate program at the same time, but in two years, borrowing all her living expenses as well as tuition. In fifteen years, she has never been able to get out of that hole.
So, I think there is sometimes a way to do it. And definitely a way not to do it.
But some luck was on my side, no doubt.
6
Most first world countries provide health care and higher education for thier citizens. Its not upper middle class welfare but rather its an investment in the country as a whole. Think of it as soil conservation except much more productive. Actually all professionals except professional thieves are having a hard time getting going in the country today. I don't know anyone who thinks young people have it easy these days except bankers. They have enough money to send their kids to expensive schools and enough left over to subsidize articles like this one. Of course kids with billions of dollars really never have to work. They still like to punch up their resumes working for "stars" for next to nothing so kids that have to eat are forced into the less glamorous positions. It is really not very controversial that the "playing field" needs leveling. Higher education is a great place to start.
8
I agree with Mr. Leonhardt. Debt forgiveness will always come at a cost to those who have to pick up the tab.
Too many students are not good shoppers, especially when the money is offered carte blanc. One needs to consider that this inflates the cost of college since there is no incentive to lower tuition as the loan money floods in.
I have little sympathy for students crying about their debt they signed up for.
5
Please write a follow-up to this on how no progressives actually talk about getting rid of one of the most regressive policies currently on the books: student loan interest. The unfair part of the way college is financed is not that people have to pay but that poorer people pay substantially more for the same education because of interest the federal government collects. If you take three students all going to the same college and getting the same degree and same aid package, the student from the richest family pays the least because they pay up front without loans and therefore have no interest. The kid from the middle income family that can help pay some pays the second least because they have less in loans and can likely pay them off faster and therefore pay less interest. The poorest student takes on the most in loans and takes the longest to pay them off and can sometimes end up paying 2 or 3 times the initial loan amount due to interest. It amounts to a massive tax on poor people for getting a college education. Even the "loan forgiveness" programs aren't progressive since the loans accumulate interest for 10 years before you know whether you qualified and by that time you have probably paid down your initial loan amount anyway. It would be much simpler and much more helpful to just eliminate interest on federal student loans (e.g., make them interest free as long as you at least make income-based payments).
11
Simple solutions:
1) Do what Governor Jim Blanchard did in Michigan in the early 2000s: If the family of a newborn paid $5,000 at birth they were guaranteed free, four-year college tuition at any school in the state. For low-income taxpayers, allow their tax payments to be adjusted by that amount with a newborn.
A state would take over the investment to maximize their own returns, which would benefit taxpayers.
2) Let prospective students shop for the lowest mortgage loan rates currently avallable. Why should students have to pay a higher rate than mortgage borrowers? Or have the government supplement a 0% interest loan by covering the interestrate of the lowest cost provider. College students should either get the lowest possible rate for a loan, or a 0% interest rate that is either supplemented or forgiven entirely.
3) Allow community colleges and high school AP courses to be applied directly at the 4-year institution. They can allow students to take a test to pass out of the college course to verify that they should receive credit.
4) Forgive any and all interest after 10 years, and forgive the entire loan after 15 years.
The current structure imposes a hideous burden on college graduates. Let's think a little, open our hearts, and do this in a progressive, common sense way.
2
Until the democrats come up with ANY plan other that income redistribution I and most of the moderates out here will continue to look the other way and mark the party as simply picking winners and losers at their whim to buy votes.
10
With all due respect to the author, this is complete rubbish. As an attorney 10 years out of university and with a small mortgage's worth of student debt, I would add far more to the productivity of my country by investing in my business, my community, or the economy at large.
Also, the demographics of college and university students are not weighted towards upper middle class folks. The student body is predominantly middle income. I know because I was there for 7 years. Upper middle class kids had their parents pay for school. Us middle class kids got loans. Whoever researched the stats he's relying on in this piece got it wrong.
6
What we should do is stop guaranteeing student loans. Co-signers need to stop co-signing loans. The price of education is too high. College teachers and administrators are overpaid and underworked (especially at Ivy League schools).
5
@Steve Maybe at the Ivies, but nationwide, 70% of college courses are taught by low-paid contracted adjunct profs with no benefits and grad student teaching and lab assistants, etc. Two of many reasons...too much money is blown on administrators, and on deficit-spending sports.
8
As a millennial from a below-Ivy college with a relatively average paying job, I could not agree more with this editorial. I would like to see reform of some of the government programs that hurt/reject responsible borrowers, and I could get behind cheaper public universities/free community colleges, but total student debt forgiveness is silly. After years of teaching English abroad and barely managing payments, I finally got a real job (read average for a college grad, nothing special), and paid of my remaining debt quite quickly, about 40k in total. Yes it did involve making sacrifices and having to work a job with a real salary, but I've still got 35-40 years ahead of me with higher earning potential. I'm by no means rich, but I recognize that there are tens of millions of people in this country who are more in need of government aid than I am.
7
Let them take a loan against their future Social Security payout. Theoretically college educated workers make more, so they should be able to cover the reduced monthly Social Security payout with savings. It would also help with buy-in to the system by the younger generation.
A lot of details to work out, but something like this could work.
I disagree with Mr. Leonhart's contention that a student-debt-forgiveness program would disproportionately benefit the bourgeoisie. Certainly, in early years, such a program might benefit those students who have entered post-secondary education with the advantages that allow them to complete degrees, because that is who can *afford to finish* school now.
Student debt forgiveness and free college, however, doesn't end there. It provides a means by which to encourage post-secondary education among a larger percentage of the citizenry, which is an unalloyed good in a world where educational achievement is a strong indicator of future economic growth. China and India both send their students to the US to be educated at great cost, because they recognize the benefits to be reaped with an educated citizenry. Many of the social democracies in Europe take pains to ensure access to post-secondary education as well, for much the same reason. Without an educated citizenry, a nation in the current economic climate will inevitably fall behind, as technologically-driven jobs require more and more highly specialized expertise.
Does it cost money? Yes. Is it a better use of money than endless war? Probably. Why object to it? He only reason I can find are the same reasons cited to claim universal healthcare is a bad idea: it will cause sloth and a lack of initiative among people, and the wrong people will take advantage of it and waste it. And those aren't valid reasons.
4
I think there should be more conversation about why education costs SO much in the first place. What does it cost to run a college? What are the profit margins? What’s the return on investment? Why are we allowing these institutions to prey upon the young (and later working) people of this country?
Currently, Colleges are “for profit” institutions, so they charge more than just a what’s needed to cover operating costs. This to me is the root of the issue. College education is a public good, why not control its cost in the same way we do other types of education (grade school)?
Let’s not manage debt, but rather control cost!!
Sincerely,
Federally employed person from a lower income family who has over 65k in student loan debt, paying roughly 40% of my monthly income toward paying student loan debt.
7
OK, so people who are relatively better off get a benefit. And? Relatively well-off people collect Social Security, and get tuition-free K-12 public education, and police protection, and all sorts of other public services and benefits at the same level as people who are poorer. And? This equality of access and benefits is the chief reason people support the benefits in the first place. Saying we shouldn't apply this rationale to student debt relief simply does not make any sense. It's a complete non-argument from policy effectiveness, fairness, and financial perspectives.
Moreover, the whole discussion is misplaced. As a series of economic analyses have shown (the subject of a series of articles in the Atlantic), the total amount the US spends right now in student loan guarantees and subsides, tuition aid, and other direct grants to higher ed institutions roughly equals the total retail undergrad tuition bill in the US. But the profit-taking by banks and loan servicers and bloat of financial aid administration at three levels of government introduces huge inefficiencies and overheads. We can afford to eliminate tuition at public institutions by simply distributing that money directly to the schools, bypassing banks and financial aid bureaucracies.
A one time pay-off/write-down of student debt for all, coupled with a rationalization of aid distribution and elimination of tuition is affordable, and of enormous benefit to multiple generations of Americans.
9
I have a master's degree and am now doing a PhD, and I am not "upper middle class" by any realistic definition for someone living in a major city in 2018 (I previously lived in Boston). We could not all go to Yale, have our extended family offset what we couldn't borrow in loan, and get hired for our dream job at the New York Times.
6
No no no...we can only have welfare for billionaires friendly to Trump. They are, after all, the only people who truly benefited from his tax reduction.
Can we get rid of the conman and his incompetent administration AND quit attacking the straw dog that “liberals” are all set to get away 100% of everything…
4
Im sorry, but this has not been the experience of myself and most of my classmates. I started college in 2007, and after ten years in the workforce with a degree from a good university, I make next to nothing, have deferred payments on my loans for years, and stand no chance of being able to buy a house or a new car. Making thirty thousand dollars a year, as almost half of Americans do, makes forty thousand dollars worth of debt enough to cripple someones financial security and opportunity for decades.
9
Eliminating college debts goes right along with mortgage debt forgiveness - Not A Chance.
Why should someone who went to a well marketed, branded, over-priced, college for an education receive a handout? The should have examined their desired profession's salary history and then choose a college they could afford accordingly. Pay for what you can afford.
Additionally save your money for graduate program/institution and do not run up unnecessary debt for the undergraduate degree.
I followed this guidance and all three of my children graduated with post graduate degrees & debt-free and way ahead of the game. Now they can take the same money that would be allocated for debt payment and invest it in their 401K's and work their way to financial freedom and peace of mind.
5
The problem with your analysis is you treat families making $50,000-$81,000 as upper middle class. Wow! How out of touch are you, David? You assume that if parents are making a modest middle-class income, they have disposable income to hand their kids. Some of those families have 2-3 kids in or approaching college. They are trying to save for retirement (also a priority). Just because the parents have an $85K-$125K income doesn't mean they have disposable cash to give to their adult kids, who they probably helped out during college as well. I mostly enjoy your columns, David, bur your well-intentioned analysis here is simply wrong.
11
No kid 18 year old has money. Family wealth means inherited or unearned wealth. I would say tax inheritance and (or unearned income = not the result of work) and make all college education free. This will give opportunity to the brightest and hardest working to climb up in society.
A loser like Trump would have never achieved any of his numerous .... bankruptcies, that somehow he managed to pile up even though he cheated, not paying workers, contractors, and architects. He even lost money when he sold fraudulent products such as fake university degrees, even when he skipped paying taxes.
4
"But this country has too many big problems to start showering the upper-middle-class with enormous government benefits."
But it's okay to shower the 1%-ers with cheap money by way of the Fed printing press...or even in the form of outright cash bailouts to the banks as in 2008.
Right?
10
I wonder why he doesn't write about the taxes Exxon, GE pay?
5
Mr. Leonhardt writes: "The right approach is a debt-forgiveness program that helps families who really need it." Change the word "families" to the word "borrowers" and he is right. One of the most meaningful things Congress could do to assist these borrowers would be to make student loan debt dischargeable in bankruptcy once again, as it was when the current Bankruptcy Code first came into effect. That is, student loans could be discharged in bankruptcy once they had been in repayment status for five or more years. In that way, one could not discharge student loan debt on the way out the door with one's new degree, but borrowers who had been unable to make a meaningful head start on their lives and careers could get the fresh start of bankruptcy with the student loan debt discharged. We already allow taxpayers to discharge tax debt in bankruptcy after only three years.
2
Is Social Security a giant welfare program for the upper middle class?
Student debt is preventing many young Americans from getting married, buying first homes, starting families. All bedrocks of a decent, stable society.
4
@Samir No, Social Security is not a giant welfare program. It is self-funded and has a revenue stream apart from federal tax dollars. Strange that you wouldn't know that.
Student debt forgiveness, on the other hand, would be a giant drain on tax dollars needed for so many other bedrocks of a decent, stable society -- health care, infrastructure, environmental stewardship. You know, things that benefit us all, not the relatively few student debtors who voluntarily assumed unmanageable debt.
6
@sharpshin Never got the memo did you? Since Alan "markets are self regulating" Greenspan in 1982 or 1983, the payroll taxes that fund Social security were hiked on working people in order to create surpluses. Those surpluses were used to subsidize income tax cuts for the richest Americans while the federal government prioritized idiotic weapons programs and stupid wars. So, like it or not, workers today and yesterday are paying for their parent's entitlements - debt forgiveness so that they, like the Baby Boomers before them, don't get devastated by lifelong college repayment costs - is only fair and just. After all, just pretend it is another stupid war whose costs we absorb. The benefits of such debt forgiveness would be a more just and fair country and what is good enough for the Baby Boomers - is good enough for those who are supporting them after their lifetimes of stupid political choices.
1
The real problem here is the ever escalating costs of receiving an education at a private university.
When I graduated from Fordham in 1978, the tuition for my final year was $2,800. Today, a single year's tuition at Fordham is $43,000.
My first job out of college was an entry level position in the classical music business; it paid $7,500 a year, a paltry amount even in 1978 dollars; however, if the compensation for that same type entry level job in the arts had kept pace with the rise of tuition at private universities since 1978, they would be paying recent graduates upwards of $100,000 a year for that same type entry level slot - which, of course, they're not.
This is nuts.
While I certainly acquired important knowledge over four years at a private university, most of what I know today I owe to either self-study or the professors of The Teaching Company.
I not-so-humbly submit that a committed young person today could learn as much via a subscription to The Teaching Company streaming video service (which runs roughly $15 a month) than they would get by enrolling at one of these prohibitively priced private universities.
The problem is that, of course, there is no mechanism for receiving real-world credit for what they've learned.
3
No one is talking s blanket elimination of student debt but perhaps the government can offer different ways to reduce it through community service commitments and/or working for a government agency for a period of time...these traditionally are lower paying positions.
1
Each graduating class has winners and losers. While those that graduate in the top of their class have high earning potential while those that get the same degree but graduate lower in their class have less earning potential. Those in the lower 50% of their graduating class take lower paying positions. Those lower paying positions don't pay enough to get in front of the interest rate on the student loans. If this happens then the student loan debt balloons. Once it hits a threshold there is no way to earn enough to pay your way out. While forgiveness of all student loan debt is not a viable option those working individuals stuck in a lower income bracket have zero options. We must pay high monthly loan payments while watching our debt increase. We took on debt and purchased an asset, in my case a J.D., but since I was not top of my class my asset, J.D., is not worth the same as as my smarter classmates. I'm underwater in my student loan because I was not as smart as I thought I was. If I was underwater in a home loan I could walk away. If I was a business I could declare bankruptcy and close shop. What option is there for those that bet on ourselves and failed to meet market expectations? I'll work till the day I die and never come close to paying off my debt. If I could give back by J.D. and start over I would. I'm becoming a teacher. I'll teach my students its better to aim low and earn than to aim high and be saddled with debt for life even if you graduate.
3
I guess the idea of cancelling debts seems fraught with problems. This would be a gift to people who went to college and got loans. What about people who chose not to go, maybe because they were concerned about paying for it? Do they get a gift from the government too? What about the people who managed to pay off their student loans? Do they get a refund? The government owes trillions of dollars and is rapidly expanding its own debt. Forgiving loans seems like an odd way to deal with the problem.
That said, I recognize this is a difficult situation for many young people. I particularly blame colleges, who raised tuitions at a pace far exceeding inflation in order to pay for fancy buildings and more administrators.
5
It should be based on income. But truthfully I would rather see the money rebuild infrastructure or go to Healthcare for all.
1
Reading some of the anecdotes people have posted here is a bit depressing. Student loans should not burden anyone into poverty or a marginal living after achieving their education goals. The interest rates quoted are much too high and should be reduced…well…today.
Back in the 70s, with state tuition and a reasonable work ethic, it was not too difficult to put oneself through college without having any loans after graduation. I was able to do so working in a supermarket and later, as an intern with a company related to my major. This is not even close to a possibility today. The system seems stacked against students and there is no push from the government to ensure the overall system survives if loan default hit high levels.
One thing can be certain: The next generations will not have enough money to support the economy.
5
Nutty idea that would be an insult to persons who made choices to minimize their student debt, e.g., living at home, choosing the more affordable local college over expensive private school, working part-time, etc.
6
Free everything, no personal responsibility - is that really the kind of society we want to live in?
7
How about interest rates that actually reflect the market? And loans terms that also reflect every other loan you can get in this country. The student "loan" system is a scam meant to keep poor people in their place. The high interest, no basic consumer rights loan system has wiped out upward mobility entirely in this country.
4
@jaco Tell me, Jaco, do you think that people in the following countries believe in "free everything, no personal responsibility?" https://www.investopedia.com/articles/personal-finance/080616/6-countries-virtually-free-college-tuition.asp
Those countries seem to be doing pretty well, if you ask me.
1
@jaco
Terrible strawman. No one said "free everything, no personal responsibility." (except Trum[ and his associated bankruptcies.)
We do want an educated society and that education should not be out of reach of most people due to loans.
2
If most of the people struggling to pay off debt have no degree how did so many of them make it into the upper middle class? That's kind of a big flaw in your argument, don't you think?
7
Our government gives large tax breaks to the wealthy, thus eliminating money that could be used for the public good (such as investing in infrastructure and transportation), while honest, hardworking, middle-class Americans can't get a break, struggling to keep up with the interest on their student debt.
Depending on who you see to be responsible, this is the reason for the extreme anger on the right and left in America today.
6
David - The percentage of loans held by "high-earning lawyers, doctors an corporate executives" is miniscule. And if their higher-ed loans were forgiven, I bet many of them would be inspired to go into areas of medicine and law that pay less but are equally or more valuable in other ways to themselves and society. Who knows, some of them might even be able and willing to take a big pay-cut and become medical or legal journalists.
2
I attended university in the 50's through the 60's. I went to CCNY as an undergraduate, which at the time you could either pass a test to get in or have B+ or better High school average. I was a lousy student but could take multiple choice tests really well so I ended up paying no tuition + I got a regents scholarship, so in effect I got paid to go to university!
I then went to the University of Arizona for 2 years where as a grad assistant my tuition was covered plus a stipend which I could actually live on. I then transferred to Johns Hopkins and got my Phd, again tuition covered (actually if accepted by JHU in the grad program almost everyone got tuition covered) + I had a research fellowship that also covered my cost of living. My experience was not at all unusual and I would say that I was pretty much average as a student at least in terms of grades. Moreover, none of my peers with a degree/s had any sort of educational debt!
So how did we come to the present pass where for so many folks acquiring an education is a financially daunting task? How was "free" education once possible but now looks like an insurmountable problem?
5
@Peter Geiser There is a large demand for US education around the globe and foreigners (like Chinese) have a lot of money they are willing to spend. Number of attending students grew up drastically in public Unis. Here is enrollment history for UCSD :
https://ir.ucsd.edu/_files/enrollment/1960-2015-FTE.pdf
In 1970 it enrolled 4,310 undergrads and 25,960 undergrads in 2015. You need to build infrastructure, housing, hire more faculty and stuff and so on.
1
Once again - good intentions without understanding the economics of what you are doing lead to unintended consequences. The case in point is Prop 13 in CA. You forgive all student loans - taxpayer picks up the tab - say you freeze tuition in public Unis, but privates will raise their costs since anyone can borrow any amount which will be forgiven in the future - you can claim that it is a one-timer, but no one will believe you since it will be politically beneficial to forgive in the future. As a result it will be like providing "free" education at an enormously large costs, e.g. healthcare. Forgiveness is a BAD idea as it leads to moral hazard and escalating costs of education.
1
David,
I wish you had said more about those (often) older students who go to those so-called universities and post-secondary technical institutions—most online—that promise the world and deliver less than a degree. Although the last administration tried to call them out—because they get a lot of federal money for the veterans who enroll—Betsy DeVos has loosened the restrictions on them. These students are the least able to repay what a large loans for a futile exercise in bettering themselves.
Back in the good old days, when the US was concerned about the Cold War competition in education, the National Defense Education Act encouraged graduates (from college and especially graduate school) to teach in secondary and post-secondary institutions by forgiving one-half of the principal and one-half of the 6% interest, if one taught for five years. I’m sorry I didn’t take a larger loan, because I lived very close to the bone in several of my grad school years. But I never felt burdened by my monthly payments—and I earned $7,000 a year the first year I taught in a college.
1
This is an irresponsible piece of journalism. Please do your homework and think critically about what you are assuming and implying:
"The average four-year college graduate who takes out loans ends up with less than $30,000 in debt." Click the link - this figure does not include Parent PLUS loans and is actually the max students can take out in his / her own name. While Parent PLUS loans are in the parents' names, many graduates, myself included, send money to their parents every month to pay these off because we come from working class / lower middle class families. I would argue that many borrowers are actually paying $50-100k themselves before interest.
"People whose income is below a certain threshold should have some of their debt forgiven." Tell that to all of us who took jobs in areas we weren't passionate about, such as finance, for the sole purpose of knowing we could service our debt. I would have loved to have been a journalist such as yourself but knew I could never service the debt. Please do not punish us for forgoing our dreams and being responsible.
Make college free for current students. If you're going to forgive college debt, it has to be all-encompassing.
9
The highest earning quarter of the population, that you throw under the bus, makes 81,000 and up, and includes every adult in the country over 25, which means that those with the highest debt burden in that quartile are younger and are making, generally, less than those who are older and have less debt. Try living on even 100k in any coastal metropolis and tell me that those people are so well off that they can afford tens if not hundreds of thousands of dollars in debt that cannot be discharged, especially if those people are just starting out and cannot afford to buy a house, which is still the primary source of wealth generation for those who are not in the .1%. Those people are the new middle class. Even the study you cite calls them "relatively well off." Relative to what? Homelessness? Working 3 jobs for minimum wage? Is that really the standard you are using to determine who gets debt relief and who doesn't? But of course you will make carve-outs for the teachers, firefighters, and police officers, but that only undermines your position by declaring some in the top quartile more deserving than others based on your feelings about their professions. Remeber, the .1%'s kids dont have debt. Their parents paid cash. And even if they didnt and are gaming the system, you are suggesting cutting off your nose to spite your face.
Change course, good sir.
4
@Matthew I have lived in some of the most expensive coastal cities--San Francisco and Washington DC--making between $30K and $80K over the years. I have managed to pay off my student loans, save for retirement, save cash. I do have to live frugally and only very recently bought a house when I finally moved to a less expensive area.
One of things of living in those expensive coastal cities is that it gives you a warped perception of "struggling to get by." It's easy to make $100K and feel far from affluent. But that's just b/c there is so much wealth surrounding you.
I moved to a far less wealthy area, one that is also less educated. Not everyone has student loans, but I frequently hear about people struggling to pay for basic bills like medical bills and rent even working 2 or more jobs. People don't talk about buying a house b/c it's not something that ever seemed possible, student loans or not. And retirement savings? Ha.
So yeah, a lot of people have a ton of loans and can't buy a house and don't "feel" affluent. But there are SO MANY MORE people who are working multiple jobs just to keep a roof over their kids' heads, and don't have jobs that have retirement benefits, paid leave, or other perks.
If you'r feeling poor making $100K (loans or not), you're probably so deeply entrenched in wealthy bubble that you can't even recognize the privileges you have.
7
Mr. Leonhardt's argument is an old one. I first heard it during Ronald Reagan's tenure as governor of California. He ended tuition free education at the University of California. The net result of going from tuition free to a $14,500 per year at UC campuses has resulted in fewer students from low and middle income families. Tuitions go up dramatically as you go from two year schools to the CSU system to the UC system (the most prestigious). A not so subtle class structure.
Your argument ignores the fact that students are not the only beneficiary of their education - we all are. More people with more education is better for our economy and the nation as a whole.
Loading up kids with debt limits their choices when they graduate. They can't take internships leading to high paying or more interesting jobs. They can't join the Peace Corp, spend a year or two working for an NGO, teach in public schools or work in a community organization. Priority number one is paying off their debt.
I spent years traveling and living abroad. During that time I met many young people taking six months or a year off after graduating so they could travel and learn about the world. They came from all of the developed countries - except the U.S.A. Only wealthy kids in America get this invaluable (and sorely needed) education.
John Adams insisted that if we want to protect our nation and our liberties we must have public education - funded by the public, not private donors. It's still true.
11
Just forgiving loans wholesale is not the answer…with loans of any sort, people need to have some liability for their decisions. (and that goes for corporation too—which typically get a free pass from the GOP. Example: many Trump investment failures.) Adjustment to the loan interest rate or delaying the payment schedule along selected loan forgiveness would seem to be the best course.
Chances of that happening in the government environment is essentially nil.
I was prepared to be angry when I saw the title of your article, but I agree with you that debt forgiveness is the way to go for those in need. My wife, a librarian, is still saddled with her debts and does not earn enough to make a big dent in what she owes. As a teacher, I can't help her much. My son would have had close to $100K in college debt (he's a junior now), but I was able to take half the life insurance money (the other half is for his sister, now 12) after my first wife died and start a 529 for him. The rest of his tuition comes from the sale of my late father-in-law's house, which I split with my first wife's two brothers. So, I agree: do not help the upper-middle class, but design a program for people who truly have no other means to pay down their college loans.
1
How about curbing usurious interest rates of student loans?
8
Mr. Leonhardt has spent far too much time in an alternate reality. My wife is 57 and still owes $50 k on student loans. We are certainly not “doing well” as he seems to think student loan recipients are. Between my medical bills and her student loans we are fortunate to be able to make it through the month intact.
You know, I enjoy Mr. Leonhardts work and on most issues I agree with him. I’ve been a Democrat since my first vote in ‘72. I’ve backed progressive causes for ages in a deep red area. But when I see the (I hate to say the word) eliteism of this piece it gives me pause. Get out from behind your desk dude.
7
If Leonhardt is a democrat, he is so in name only-- like Bill Clinton or Hillary Clinton, yes the one who gave $600,000 speeches at Goldman Sachs and STILL won't release the transcripts.
By the way: Hillary, if you're out there listening, we STILL WANT THOSE TRANSCRIPTS. Set the record straight, so we can start recalibrating what our democrats should or shouldn't be, should or shouldn't stand for. Such documents would help provide context, by the way, for "journalism" like Leonhardts, so we can better categorize it as either progressive liberal politics or indeed (in classic Clinton mode) shilling for corporate interests in the guise of a democratic perspective.
2
I just looked at my student loan account. Since 2011, I have paid over $81,000 on $103,000 of student loans. In spite of all checks written, my balance is now $90,000. My interest rate is 9% - set by Congress according to the loan servicer's website. Current payments take up half my social security (yes, I am a perpetual student). I tried to get the loan re-financed, but me income was too low. Where is the justice in that?
9
I am surprised that the comments to Leonhardt's article are so overwhelmingly negative. The article does lay out a logical argument based on statistics presented here, and those statistics are in line with ones I have seen in objective sources. I hesitate to say this: could it be that very many of the commenters are of the upper middle class themselves, plus some in the real estate industry and retailers that would benefit from the windfall that would come with large-scale debt forgiveness? I agree that some lesser steps are necessary. But from my readings, the worst case is non-elite younger people (including GIs) who enroll in for-profit largely online universities. They often don't know people that would have advised them otherwise, lacking the connections that higher class youth have. Not surprisingly, few commenters here address this problem.
1
Any loan forgiveness program needs to be limited to community college or in-state four year state university programs. It should not cover private colleges that can chart $60,000 per year, and more!
3
Dear Mr. Leonhardt, I cannot agree with your conculsion. I graduated from a public university in 1978 (UCLA) debt free. My entire under-grad education cost my father $3,660. Over time, I re-imbursed him as he aged and I could afford to pay him from year-end bonuses. He didn't expect it, nor did he ask for it, but for me, it was the right thing to do. My older brother went to college, but my younger brother did not. So my father's sense of obligation to assist his kids with college was something that came from love.
Flash forward to my nephews and nieces who graduate from college with a student loan debt of $30,000+ and they are already behind in their start to life. It will take them years to get even -- and in the meantime, live at home because they can't even afford simple rent -- which goes to the loan pay-off. I'm sorry, but this trend is destroying the middle class as I knew it growing up. Public institutions, and in your case, a good private school education are necessary for a healthy society going forward. The idea that it only helps the "rich kids" is completely wrong. While that might be one aspect of your argument, it in no-way describes the real need to address and perhaps even forgive real public student debt. I for one would be thrilled to see one less fighter jet in order to forgive an entire generation of student debt. Don't call it progressive, call it a public emergency.
12
@DERobCo Why is living with your presumably loving parents such a tragedy? And yes, I know couples that live with one set of parents, so it doesn't prevent getting married.
If you take out student loans, you should choose a major and career that will let you pay off those loans. Period. When my wife and I had kids, we made it a point to save money so that if and when they chose to go to college, we would be financially prepared to pay for it so that they would not have to take out loans. Yes, it meant that we could not buy our dream house, get a new car every five years, have those $100/month phone and cable TV plans, etc., but we did it for them. Society is not and should not be responsible for bad financial decisions of students and parents - it is their responsibility to figure out what to do.
For those in favor of loan forgiveness, what would you say to those students and parents who avoided loans by saving and scrimping?
5
Arguing that universal student debt repayment is a bad idea because it benefits the "wrong" identity group is kind of like having progressives hating themselves. It is entirely a bad idea to forgive student loan debt. Someone has to pay the bill. This will ultimately be the loan guarantor, e.g. the taxpayers. A better solution would be, in the same vein as healthcare, to focus on the cost side of the equation.
Education costs have increased, over he past 20 or so years, at a rate well in excess of inflation. Why, one may ask? It's because they can. Having that college degree is more important than ever to see economic success. Those low skill, high paying (mostly union) jobs are increasingly fading away, increasing the demand for highly educated workers.
Great, so maybe the answer is to plow more funds into the public universities to allow less expensive, high quality education. Certainly this is a better solution to plowing funds to pay off existing debt.
Further, in a somewhat more pragmatic sense, maybe those college degrees more in demand by society (say engineering or medicine) would be subsidized more than those degrees with a lower societal value (say, art school or philosophy). This would be wildly opposed by the left, but certainly could encourage more students to study needed skills that lead to higher paying jobs.
You don't get something for nothing. Might as well maximize the societal benefit of such largess.
2
You avoided greater debt by, in part, relying on "the help of extended family members who pitched in" and were lucky enough to earn a scholarship at a prestigious university. I'm sorry, but I'm not sure that qualifies you as being a reasonable example. Canceling student debt means more expendable income (almost instantly) for millions of people which will very quickly translate into greater spending and savings - this means buying houses, having kids, etc.
4
No, the author is a perfect example of his position. It seems like he had a smart, practical family that helped him attend a prestigious school he was smart enough to get accepted to, with a minimum of student loan debt. I would bet money that if the author’s family couldn’t make Yale work with only $22k of student loans (perhaps no extended family to help, or no scholarship, or both), they would have told him to go to a much less expensive school. If the author could get into Yale, then he could have gotten into any number of prestigious state schools for much less tuition. Or maybe the honors program of a less prestigious state school.
Cancelling all student debt saves people from stupid decisions and puts the financial burden of those decisions on the taxpayers. Students and their families need to be encouraged to make sound financial decisions when deciding on what college to attend. It isn’t necessary to go to Yale to be successful. Studies have shown that if a student is capable of being accepted by an ivy league school, that student will be successful no matter what school they actually go to. You don’t have to graduate from Yale, you just have to be Yale material.
As for your argument about the economy, that is hogwash. Encouraging a lack of financial responsibility in paying for colleges people can’t afford will just encourage them to buy cars and houses they can’t afford. Then are you going to argue for mortgage forgiveness too??? Gimme a break.
2
Eliminating student debt for all is neither smart nor possible. Mr. Leonhardt is rightly against subsidizing high earning students but what is left unsaid is: "How can we teach students and their parents to make wise financial decisions?" In my 30+ years of university teaching I saw too many students who borrowed money to live well and have fun and few thought about the final bill for going to school until graduation. This is particularly true at for profit schools that encourage the student to borrow and pay the maximum amount when it is obvious the student cannot complete the program. Help students who take public service jobs but how about educating students on "smart" vs. "unsmart" debt!
5
I'm a public servant trying to make the payments I need to qualify for PSLF, should it exist by the time my 120 payments have been made. In fact, I've waived my deferral as a current full-time student in order to make qualifying payments.
I feel both sides of this argument. I've been a retail worker making $10.50 an hour, because I could not get hired for several years into a higher-paying situation despite a four-year business degree, and been mistreated by my loan servicer. I've also been solidly upper-middle class and had my means-driven payment--a requirement of PSLF--cut to half the amount that was my minimum payment when I was broke.
I think that whether we're for expansion of existing forgiveness programs or a mass amnesty on student loan debt, the clearest takeaway is that the system is broken. Private debt servicing, giveaways to for-profit schools that promised more than they delivered, and a Department of Education that currently comes down on the side of profits over people have created a perfect storm for student debtors.
4
I resent the implication that I, as a taxpayer, should bear the cost of student loans because this is all about decisions that other people made in the past. I didn't choose these students' colleges, majors, grades, or careers. I didn't choose how much their parents helped them. I didn't choose whether they had part-time jobs to help pay the bills. I didn't choose whether they applied for scholarships. I didn't choose what measures for frugality they may or may not pursue. I didn't set their expectations for their standard of living. So it's like, massive numbers of students just don't feel like paying the loans they voluntarily assumed and I'm now supposed to do it. Their argument is apparently that they will have more money to spend and therefore stimulate the economy. However, money does not come from nowhere; their having more money to spend means I will have less. In the Great Recession, even though my husband lost his job and my business almost went under, we did not lose our home. Because, we did not take out a larger mortgage than we could afford to pay. We never ran up credit card debt. We always paid cash for our modest car (we only had one most of our lives). Why should students somehow be exempt from financial responsibility?
8
How about a sliding scale on the interest. The interest is the crusher. I have read many times about people who pay for years and never get anywhere. If the payment really went to shrinking their principal, people might be more likely to attack their debt and get rid of it. For those truly in financial straits, maybe even some principal could be forgiven.
The money wasted on interest to lending institutions could better serve the individual and society as a whole as it enters the economy.
1
This is where we get it backward. If we invested tax money in tangibles such as free higher education for everyone, as other countries do, we would have more social mobility and fewer people chained for life to debt that will never be discharged. More money would circulate through other sectors of the economy, instead of just enriching big banks and flowing to the top. As it is now, with the upper crust hogging all of the tax breaks and most government subsidies, little to nothing flows to the middle or working classes. That creates resentment among all of the classes. Everyone thinks they are paying too much and not getting enough in return. As long as we keep pitting social classes against each other, we will continue to think of ourselves as separate from our fellow citizens, and not part of a larger entity that functions together for the greater good. It almost seems like a deliberate political strategy: keep the classes competing against each other for resources. Add gasoline, light a match, and voila: class warfare.
5
This article ignores the deeper reality that while college costs have ballooned in the last twenty years, Federal loan limits have not increased accordingly. Borrowing is limited by the Federal loan program, students hit the funding wall, and their parents are forced to step in to close the funding gap with Parent PLUS loans or by cosigning on private student loans. Retirement is still possible but repayment on limited retirement income is not. Income-driven enables them to repay little of the loan balance and it will be discharged upon their death.
Sadly these "middle income" parents, having diligently paid off their first student loans years ago now find that they will never be free of the debts of their children.
1
Focusing on student loans just feeds the beast. Colleges raise tuition and build ever more ridiculous and expensive amenities because there is a high willingness to pay and an extremely deep financing pool. The consequences for the customers are only felt years later.
What we should do instead is find other ways to signal to employers intelligence and work ethic that don't involve four years of life and tens of thousands of dollars, for education that not infrequently seems to be of marginal quality in and of itself.
6
Financial responsibility is fostered on financial responsibility, not debt forgiveness. The next generation needs to learn this lesson for their own benefit. How about debt restructuring at zero interest?
2
"To be clear, student debt is a real problem. But it’s a complicated problem. Most people struggling to pay off their debts are not graduates of four-year colleges. They are instead non-graduates — people who attended college (often a for-profit college) but never received a degree. They have the worst of both worlds: debt and no degree."
Perhaps a better idea would be to apply more rigor in determining who is a bad risk for completing their studies.
We need more emphasis on college preparation and analysis of individuals apptitudes.
Access to trade skill aquisition for needed vocational areas should be developed and maximized..
At the same time qualified students who are turned away from elite colleges and universities should be supported financially.
We need to tap the potential of all our aspiring youth if we are to compete globally -meet the challenges of technology AND to reduce the growth of the wide economic disparities which are threatening our culture.
1
If the kids who got swindled by for profit colleges are just poor struggling students they can't be all that smart. Doesn't it take intelligence to go to a university?
Making college free will just be like providing the upper middle class with free post teen daycare services. Why should taxpayers be asked to subsidize more film making and philosophy degrees?
How about asking corporations, industries and other organizations that need college educated people to pay for this advanced training? A scholarship with a guaranteed job isn't too much to ask from those who will ultimately profit.
2
Yes, I have a full time job in my field, but the 2008 financial crisis set me back 2 years of earnings and interest on my ballooning student loans. I grew up on the lower edge of middle class, but am now devoting so much of my income to student loans that every month I'm on the brink of defaulting or falling behind in other modest payments. I have children and will certainly be paying of my loans even after they have long finished college. Pre-2008, the banks were aggressive and predatory with private loans. Some of those loans get interest paid every month, but not much else.
I made my choices and got a very good education out of it, bu there's a lot that could happen to relieve this burden: restrict interest increases, give borrowers more flexibility and forbearance. Give partial forgiveness for on-time payments. No one in DC seems to have wanted to try anything until now.
2
Saddling the future taxpaying citizens with debt before they even finish school is insanity. It crushes the will. They know that no matter how they try they will not soon get out from under this weight. It creates despair and despondency. The problem, as it is with many of the problems in this country, is that cost has far outrun the ability of the taxpaying citizen to afford it. All of the increase in productivity over the lase few decades has gone to the class of people who own everything the government doesn't own. The average family has been left behind. Solve for that variable and you may be able to right the course of this country. The problem is greed by those with the means to control how much money they get.
1
David,
The shift of tax support to borrowing support of universities is a way to discourage students to major in science or other low paying professions. The idea is for the rich to enhance control of education and make sure only their kids can go to college. They don't realize that their kids will probably park their Mercedes close to the nearest watering hole and skip classes.
A more reasonable solution will be to make all student debt interest free. When federal funds rate has been so low for years, it makes no sense that federal loan interest rates range from 5 to 8%.
7
I have been thinking about this all day, and the more I do the more bothered I am by the premise.
As with most of the articles by Mr. Leonhardt, who writes about economics issues regularly, there is absolutely no depth. There is the acceptance of the frame of the status quo.
In this case, that somehow people should make money off of those who can't afford full tuition so that they can have a robust chance at the middle class.
It's fine to circumscribe normative or moral questions and just stick with existing practices and instruments and operate with those as given constraints.
But to claim that eliminating student debt isn't progressive is a moral judgment.
But it is progressive. And the next step in progressivism is to question an economy that can pay for wars but not for college tuition, which is a fraction of the cost of tuition.
This article is not progressive.
It's an indicator of just how far right our discourse has moved since the 1970s when movement conservatism started mobilizing libertarian economic discourse to become mainstream.
6
See my other comments labeling Leonhardt "neoconservative." You'll see I use terms like "social darwinsism," "complacency," "narcissism"..."might makes right,".... "America is a just meritocracy in which people get, if not exactly, approximately what they deserve."
I'm convinced these are all inextricably integral to Leonhardt's worldview and/or personality. I also suggest that how much of this comes from Leonhardt's college experience as Yale economics major (which would have inculcated these traits and indeas in all their cumulative crassness, shallowness and -to emphasize the point- complacency), or was merely reinforced by it, is certainly impossible to know. But as so many of the comments seem to confirm, the pattern is undeniable.
One thing is for sure: those who define the American dream as to go to college to get rich and succeed in doing so will certainly take much comfort and enjoyment in Leonhardt's columns (the same crowd who will respond similarly to Tom Friedman, who is basically an older version of the same thing, seeing the quest for a Lexus -"The Lexus and the Olive Tree" as the redemption of mankind).
You were lucky to get out of Yale with with a relatively small debt.
The current system of exorbitantly high tuitions is not in the interest of the US, as a better educated workforce will be needed for the US to prosper in the future. As state support for universities has decreased for decades, student costs have skyrocketed. Some intermediate steps would already help:
1. Stop the rackets that make the current loans so expense and refinance student loans at interest rates similar to those for home mortgages. Right now there is a lot of profiteering with student loans.
2. Provide performance based college scholarships that cut tuition by at least 50% for students that remain in good standing, and make college tuition free for the top 50% of enrolled students.
This would be a good step. Of course there are variation to this theme.
3
I'm a public servant trying to make the payments I need to qualify for PSLF, should it exist by the time my 120 payments have been made. In fact, I've waived my deferral as a current full-time student in order to make qualifying payments.
I feel both sides of this argument. I've been a retail worker making $10.50 an hour, because I could not get hired with a four-year business degree, and been mistreated by my loan servicer. I've also been solidly upper-middle class and had my means-driven payment--a requirement of PSLF--cut to half the amount that was my minimum payment when I was broke.
I think that whether we're for expansion of existing forgiveness programs or a mass amnesty on student loan debt, the clearest takeaway is that the system is broken. Private debt servicing, giveaways to for-profit schools that promised more than they delivered, and a Department of Education that currently comes down on the side of profits over people have created a perfect storm for student debtors.
3
Being middle class (father a teacher, mother a part time typesetter), I graduated in 1991 from a 4 year college with $35k in debt as tuition, R&B was 18k. My wife, whose dad worked in a factory, also attended that college, had a little bit more debt. My first job was in NYC, in financial services, making 25k. Her job was a rec director in CT making 18k. We waited and saved for 2 years, each living at home, before we got married. Our student loan payments were $350/month and $380/month. We lived 60 miles away from NYC (Danbury) which was the nearest we could afford as rents were $650/month . This resulted in my needing a $180/mo train pass and $80/mo parking pass. We had nothing. Our vacations were spent in a tent or home. Clothing, food and emergencies like car repairs were put on credit cards which quickly maxed. She worked part time in a grocery store to pay her taxes. It would be 4 or 5 years before we were able to start spending money and add to the economy.
Now that train pass is $422/mo. Parking is $10/day. Rents are starting at 1500-1600/mo for one bedrooms. $50,000 is the median income for NYC college grads. Some make $35k, some $70k. And as a now upper middle class parent of a child soon to go to college, I am seriously worried. $65k/year for school seems to be the average and I've ONLY saved $80k so far. I don't know how families making less than $100k can even dream of sending even one kid to college.
3
While you make some very valid points regarding this issue, it is much more complicated than that. I was the first person in my entire family (extended included) to graduate from college. My parents did not have the means to pay my way, so I took out loans and went to a state university, starting at a regional campus. I became a teacher, a career which requires one to ultimately obtain a Master's degree. Because my loans were taken out in the late nineties, I was not eligible for programs that were put into effect for loan forgiveness for those working as teachers. While I take full responsibility for financial decisions I have made along the way, including taking out loans to get a post-Master's degree, I do feel that there should be better, clearer programs for people who choose to work in public service (teachers, doctors, police officers, nurses, etc.) for loan forgiveness.
2
Why not consider an educated citizenry as 'Infrastructure' for the economy, and provide it free a all public colleges? Affluent students can still go to private colleges. You could put some restrictions on courses taken, such as basket weaving (come on basket weavers, with your criticisms!).
I would argue the same about universal healthcare. Consider it as societal infrastructure.
3
In some ways, it was better when Mr. Leonhardt kept some focus on NUMBERS. By substituting his Yale experience ... and REALLY distorting the pernicious issue of saddling 20-somethings with sometimes ridiculous debt loads - he does readers a serious dis-service. Mr. L. didn't have a "single mom;" millions DO!
#1 - YES, Cuomo's horrid bill in this area [not mentioned] shows just how easy it is to botch the necessary & overdue reforms. Advertised as making college affordable for all, it did no such thing!
#2 - I worked in a college guidance office, and even SUNY is now priced (with books, housing, etc.) at levels that make it unaffordable to many deserving young people - even with multiple aid sources. Remember, commuting from places like Red Hook to Kingsborough or CUNY does NOT make college success all that likely. (for 2! reasons)
Also, many DO work during their coll. years, but since that means they may need 6 years to graduate, NY's awful program boots them and they wind up in debt & with no degree! (It's not just Trump U. that is predatory!)
To his credit, Bernie (and then Hillary, if memory serves) jumped on "free community college for all," and while NYT readers may wonder if that prepares many/most much better than proprietary programs, at least it was "targeted" in a way that avoids the pitfall Mr. Leonhardt focuses on.
There will be plenty of time to target legislation more sensibly when "fiscal conservatives" insist on it. Now is not the time for "small ball!"
1
Nah ... all debt should be forgiven ... generations of people are economically destroyed because of student debt ... the fact that some percentage of college debtors achieve "upper middle class" status is fantastic ... but millions end up with the debt minus the big income ... it's an economic death sentence for a growing chunk of our population ... it's banks profiting off the young, off the financially inexperienced. Student debt is a moral abomination in our country. Who does it benefit? The rich ... rich bankers and their institutions. Not forgiving the debt benefits the 1 Percent even more ... so just forgive all the debt ... this is not an issue to split hairs over ... the debt is immoral and crushes people economically at a time when giving people a good start should be the goal of society ... not generating still more ways for banks to siphon $ from regular people.
5
Honestly? We shouldn't forgive student debt because doing so is not "progressive" and would actually help out some students who are well off? That's the argument here?
Seems like Mr. Leonhardt is using the very word "progressive" as some kind of personal political totem or fetish. Hence any measure that doesn't strictly conform to his peculiar (indeed almost Humpty Dumptyish) definition (according to which "Progressive" means "beneficial to the least advantaged and ONLY the least advantaged citizens") is politically suspect and possibly even reactionary.
By this logic, liberal voters should never embrace any policy that improves the lives of most, let alone all, citizens. To do so would allow even wealthy Americans to enjoy a benefit rather than suffer a penalty, and that, according to Mr. Leonhardt, would not be "progressive."
3
Why not a percentage of a graduate's income toward whatever student loans a graduate has.. That way we would continue to have teachers as well as doctors, art history majors as well as bankers.
No one should have to pay a premium (i.e., interest) on something so exorbitantly priced that should in any case be free. Between healthcare and education Americans get fleeced unmercifully for very basic services that should be free and then have to pay interest! to boot. The kicker: outcomes are often poorer than other nations! Cancel all existing medical and education debt. Fund public healthcare and education. Restore dignity and sanity to the American people.
2
Forgive all debt? What an atrocious idea. Sorry, but there's no social justice in that. There's little justice at all. How about a sensible, tiered, means-tested debt forgiveness system. I'm all for relieving the immense burden that educational debt has become but, from a party that claims to care about "fairness" so very much, this is absurd.
This policy would equally forgive the debt of millionaires and impoverished artists; of folks who got a degree and are doing low-paid public service and those who got kicked out of school for sexual assault. Just a couple examples. It will sure feel like punishment to many folks like my wife and I, who aggressively paid off our extensive debt early.
If this is a representative example of where the dems are headed, along with the recent absurd, unrealistic calls from Ocasio-Cortez and other new libs to eliminate fossil fuels in 5-10 years, prepare to see Trump re-elected and the GOP retake the house.
The democratic party has to find a way to meld the revolutionary left with reality. If they can do that, there's a coalition which could succeed, last a while, and do good things for our country. This is pie-in-the-sky stuff, though, and too many non-disciples just won't ever buy it. I hope these folks proposing such ridiculous policies are just playing politics to keep their base engaged, and aren't truly such shallow thinkers.
3
The rest of the world does it. Stop saying it's ridiculous because you don't want to fight for it
5
Eliminating student debt is a winning issue at the polls for Social Democrats.
3
David, your opinions are usually insightful and well researched, but in this case you reply on generalization, misleading averages (Remember the adage, "Figures don't lie, but liars figure!"), and over reliance on personal observations. The educational debt situation is a fiasco. and has catastrophic influences throughout all social and economic sectors. It is a crisis that only gets worse as its insipid influence is ignored and its problems rolled forward.
5
This Yale graduate is leaving out predatory private schools that the kids have no hope of landing a job with.
1
Forget about free college. Free preschool would give society much more bang for the buck.
2
Mister Leonhardt, thanks for obscuring the debate surrounding a scandal. Like American Health Care before it the American college education has devolved into a profit center, a way to make big money. And what a profiteer's dream, lending to college students has become with non-negotiable high interest rates and the proscription on bankruptcy unique to student loans as opposed to any and all other forms of indebtedness. High interest yet nearly risk free. It begs the question:Who makes these loans ? Well, of course, banks and not as noticeably hedge funds but who are the real people who have the money to make these loans? That would be the people with the money,the top One Percent and even more so the top One Tenth of One Percent. When you think about American Inequality and how it has gotten to where we stand now look at who got rich and whose incomes stagnated over the last forty years and why. But I tell you , in times to come, remember where we as a people stand now and after x number of years ,a generation, of , virtually, indentured ex-college students and their garnisheed lives and circumstances look back. Look back and imagine if we had had the foresight to ,simply, put the breaks on this obscene profit taking ! That is to greatly reduce these interest rates or eliminate them all together and have our taxpayers invest in our nation's future!
2
Mr. Leonhardt, you miss the most basic of ways in which we could benefit our scholars who are shouldering insane amounts of college and graduate school debt. How about we have a national program that provides loans at ZERO PERCENT INTEREST. My daughter is repaying graduate school loans and I am incensed that they are at 6 and 7% interest! This is usurious at best, and criminally stupid. Banks have no need to make money on students - their profits are enormous. You also fail to discuss how much less these debt-laden graduates are able to stimulate our economy through purchasing power for homes, vehicles, furniture, and other goods. We are losing out, as well as those who continue to shoulder these enormous amounts of debt. I also disagree with you about student debt being held by upper middle income wage earners. Not everyone who graduates gets a job, or a high wage job. Some people decide to take jobs with not-for-profit organizations. There has to be a better way to decide how much debt can and should be forgiven, as well as moving the interest percentage to zero.
1
While I do agree canceling all student debt is a bad idea, I think Mr. Leonhardt makes a terrible case against it. To say it's a "rare exception" to find someone with a 4-year degree struggling to make payments is a complete lie.
I forced myself to continue reading through the article, but was disgusted to see that was the basis for his starting point and shows his ignorance on the topic.
3
David Leonhardt is right as a matter of policy and of fairness (as he usually is). But he may be wrong on the politics of the thing. Maybe if it weren't means-tested, cancelling student debt would be more popular. That's how Social Security was sold to the public in the 1930s. It's not ideal, but it prevents the objection that the benefits are going to "those people."
How about a middle ground - interest free college loans?
That way people would have the sense of, and be seen as, repaying their obligations, but at the same time not be stuck on the never ending treadmill of making payments but never really paying down their debt. And such a program would not disproportionately benefit those who attended the most expensive, and often most prestigious, institutions.
1
I just don't understand this whole argument. If people can't afford to pay back their loans, then they shouldn't borrow the money in the first place. Don't go to a school that you can't afford. Why are we expected to live within our means in all areas but this one? Everyone can't go to Harvard or Yale, just like everyone can't afford a Rolex or a Tesla. Go to a college you can afford--and yes, there are still affordable colleges out there.
3
@Ms. Pea One problem is that student loans are so astonishingly easy for teenagers(!) to obtain, and no one pre-2008 was talking about the long-lasting consequences of taking them out. Before the recession students may have believed, as I wrongly did, that going to the best schools possible (not necessarily the cheapest) leads to high-paying jobs that would enable you to pay back loans easily.
Another point - entry-level jobs are increasingly competitive, and often times students do need to go to the "Rolex" school just to get a job in their field post-graduation.
Harvard, Yale, et al grads run the country. They are the aristocracy. Saying that you should have to be rich enough to go to a king-maker college only further solidifies the social stratification that's pushing America towards a rebellion
2
I respectfully disagree. College is too expensive in the first place, and in many cases disproportionately for people who are better off. There is no reason that such a large chunk of income and savings, even for people who can afford it, needs to be spent on education. The US is an outlier here.
5
Cool. So is it safe to assume that you support some kind of expended incentive to homebuilding and homeownership for low-income people, or at the very least a vastly more progressive income tax with substantial refundable credits at the bottom end of the income scale? That would allow the great majority of the youngest generations, who tried to do the right thing by staying in school, the luxury of paying off their student loans. The real problem is that honest work is becoming a thing of the past thanks to outsourcing and automation, and that overall wages are nosediving. More progressive taxation and incentives to homeownership wouldn't fix that, but it would be a good-faith effort to remedy the vast inequalities between generations.
1
Mr. Leonhardt exhibits precisely the type of purity that will doom a nascent progressive movement. So what if relieving debt would help the upper middle class? Guess who was responsible for the blue wavelet we just experienced? Political payback on a popular issue like this is hardly equivalent to the travesties put in place by the Trump kleptocracy, and might help ensure future political gains. Further, just because it would help higher income students doesn't mean it would hurt those from lower income families.
2
I think we are forgetting history when we burden students, whether rich or poor, with debt. Both the Morrill Act and GI Bill directed public funds to reduce the costs of education in order to promote the good of the entire nation. Arguably, free, public higher education and other forms of federal and state aid formed the foundation for the great economic and scientific advances of this nation during the 19th and early 20th centuries. Everyone benefits when education is broad and deep. Money that otherwise would go to bankers contributes to the economy as a whole when graduates spend it to advance the good of their families. Means-based public subsidies are more widely supported when everyone benefits equally. Progressive taxation balances out the fairness issue.
3
We've been through this before. State schools were quite inexpensive and middle-class people tried to and did send their kids to the more expensive private colleges.
Then, middle and higher income people began to use the state schools to get the cheaper education. A determined student could get a good foundation there. As the state legislatures became aware of this, they began insisting that the schools they supported should increase their fees. Now the expensive colleges are attempting to lower amount of loans their students need.
I think that because the college degree does increase your earning capacity, there should be some amount, such as two or three thousand dollars a year, that students should be able to borrow and pay back without suffering.
...not to mention that the subsidies to pay for middle and upper middle class kids to go to college for free will come in part from young Americans who didn't/don't have the option of going to a four year college or who went directly in the military or directly to work after high school or community college.
Perhaps we need to take a long, hard look at why so many students automatically go to college after high school yet have neither a passion for learning nor a clear idea of what they plan to do after school. Maybe we need to focus on creating a trade/apprenticeship program for students to enter blue collar trades -- we are increasingly short of qualified electricians, plumbers, skilled carpenters, etc. -- or to enter trades such as software and programming which don't really need a four year degree but instead need perhaps a one year training program.
I'm all for college for students who either have the passion to be there or who will need the courses for future work, but college as an automatic "rite of passage" has been oversold.
5
At least (1) change bankruptcy law to allow discharge of student debt; and (2) change income tax law so debt forgiven is not income. Why should a student who borrowed for school, bet on himself, and lost the bet be treated differently than a person who opened a business that failed? Bankruptcy should be a choice for both.
As for debt forgiveness, consider that the majority of the debt will probably never be paid. It is too much, and the debtors earn too little. It's bad debt. The sooner bad debt gets written off the books of lenders, the better. The sooner the next generation can get out from under this mountain of bad debt, the better for all of us as they begin to contribute to the economy.
Making the moral hazard argument only gets you so far. As a nation, we are all in this together.
2
Doesn't this beg the question, why college costs what it does and the ethics of crazy sticker price less discounts? It feels like forgiveness legitimizes a model of education and a cost base that is badly in need of reinvention. College costs have far outpaced incomes and inflation. Going away to university to be with the scholars is a vestige of medieval times. I would like to see more innovation in the fundamental model that reduce costs.
I concede that government backed loans probably delayed or inhibited innovation in the secondary education model that would have reduced costs. But remedying that error with blanket forgiveness creates its own distortions between those receiving the benefit and those paying for it. And it provides little incentive for those within the college industry whose livelihood depends on the present model to change. Debt forgiveness creates a problem of moral hazard if the drivers of the debt are not also remedied.
Who pays for the forgiveness? That changed a year ago with the new tax code. And whatever one's view of the net benefits of debt forgiveness, that too should be considered.
3
While I am not looking for handout as a doctor, I always wonder what I would do with the extra money that I do not pay out for student loan repayment. Certainly some of it would just go to making me money (I am being honest), but I think that far more of it would go to consumption of goods. This is the United States after all and we are (in general) not the best savers. I really think that a significant amount of money would go back into the economy. As with other "handouts" (universal healthcare, debt forgiveness, medicaid), if this is something that we as a nation want, taxes and other expenditures need to be adjusted for it.
I never understood the argument for government subsidies for college debt or tuition. Who pays for that? The kid who doesn’t go to college. I’d be thrilled to see the government provide loans to students and ensure they are issued at competitive/fair rates and that the repayment plans are structured so as not to harm the lives of students after college. Ideally any student,
no matter their background, could borrow what they needed so as to ensure college is possible for everyone. But college is a gateway to higher income - since many never get they chance, subsidizing it exacerbated economic inequality and injustice.
1
@Baldwin
Properly applied subsidies can be used to develop and enhance industries, farmers, etc,…and education for many. Example: If one looks at the internet overall, the initial push was subsidized by the government. (thanks in large part to Al Gore who saw the internet as a future resource—and why he is in the internet hall of fame.) As was energy and roads…etc.
Student education is really no different. The subsidized state school systems around the country allowed people with lower incomes to go to college to get needed skills. It has given the US the best secondary education system around.
In Norway, all education is free.
I think that for profit colleges/universities should be illegal. I'm not talking about a for profit 'school' that does intensive language lessons or defensive driving school or anything which is not a part of a degree or accrediting program.
For profit schools have to stink. I went to a great and famous small liberal arts college. Tuition room and board is north of 50 k a year. The college has a huge endowment as well as having very generous alums. Education is expensive
Cancel all debt
Make all education free/ public and private.
Tax it back
4
my wife and i made a commitment to our kids 25 years ago that they would graduate college debt free.
we saved and struggled, through job losses and medical bills and supporting her father through Alzheimers . but we kept our promise and they both graduated debt free.
now.. how about a refund for me!
8
My husband and I are professionals that make nearly $2k a month in student loan payments (mostly just covering the interest) with a combined student debt in the multiple hundreds of thousands. If I could go back in time and tell my 18 year-old self to make different choices for my education, I would in a heartbeat. Given that I can't, I can say that forgiveness would have a truly life-changing effect for myself and nearly everyone I know in my age group. While you may be right that forgiveness itself may mostly benefit the upper/middle class, forgiveness would have an overall beneficial effect for the economy as a whole because more young adults would find themselves able to invest in a way that they can't now...have children, buy houses, contribute to charitable causes, consume services and goods, etc.
1
The progressive place for someone like Bloomberg, for example (who's not a progressive, I grant you), to have put, say .8 billion of his recent gift, would be in programs like Head Start, Prep for Prep, the Oliver Scholars, and other programs that identify very young kids from struggling backgrounds and give them the kind of preparation, coaching and support the wealthy already have as a result of their money. That's where you equalize opportunity and level the playing field. By high school, by college, it's already too late.
7
FREE college tuition means the money has to come from somewhere. Eliminating all student debt is another tax on the upper middle class and the wealthy who have saved for their kids college education.
We are currently paying out of state tuition for two of our daughters. If student debt is cancelled, the two colleges will simply increase out of state tuition and price discrimate against those able to pay more.
Rather than free tuition for 70% of college students, colleges and the government should stop giving excessive loans to students who will never be able to pay them back.
What debt level makes sense for a recent college graduate?
25K might make sense. 100K probably not...
4
Ok, here’s a thought. Why do I never see an article about student debt that focuses on smart strategies for dismissing it in the shortest time possible? For credit card debt or for mortgage debt there is a raft of advice about how much money you can save by paying more each month than the minimum payment and making sure it goes to principle. For home mortgages there is a rule of thumb that if you just make one extra payment a year you cut the length of the mortgage in half. That’s a big deal. Perhaps student loan debt does not allow this kind of flexibility. If so, I would hope that that is something we can get changed.
I believe that student debt is a scandal. This country should care more about its young people and it should care more about having an educated electorate. I also believe that the astronomic rise in tuition cost and the proliferation of useless for profit “colleges” can be traced directly to the advent of the easy money represented by student loans.
That said, teaching graduates what happens if they just make the minimum payments vs what happens if they stretch (and I agree, it’s an enormous stretch) just a little bit further is important training in how to be financially savvy. All I can say is that when I was paying off my loans I had no clue about this and neither did anyone else I knew. I realize now that I would have benefitted hugely from knowing it.
2
@P. P. Porridge Each year in school, since I held government loans, I was required to attend a student loan "counseling" session that, you'd think, would cover these concepts.
Instead, it was like an information for taking out student loans. Can't afford to pay them back? No problem, you can defer and forebear payments! The fact that doing so simply ballooned your principle was completely glossed over. Need money for books and living expenses? Guess what, you can take out more loans!! And these loans are GREAT, because don't forget you can always defer and forebear payments.
These counseling sessions need to be revamped, focusing on how to pay the loans back quickly, and telling people the hard truths about all the ways principle grows if you're not paying attention.
2
I wanted to add, David, that I'm currently enrolled in a graduate program that (at least in my year) is 65% foreign students, primarily from East Asia. This is incredibly common in grad school. The truth is that these students have parents who pay full tuition, in cash, to the university. The short of it is that Americans can no longer afford our own higher education. Though I agree that we shouldn't indiscriminantly forgive all debt, it's a step in the right direction. At least then we could afford the universities in our own back yards. I'm applying to transfer abroad to Europe, where annual cost is about 80-90% more affordable.
3
Let me just say that if this would be considered "welfare" for the "bourgeoisie", please sign me up!!! Since I have NEVER qualified for any other "welfare" program in this country where I have been paying taxes for over 20 years, this would be life-changing and well-deserved for me. Not to mention that it would be a huge economy boost for our country as the ridiculous amount of money being spent on student loan debt could be used in many other useful ways that would potentially create more jobs, etc.
This is actually my second comment on Mr. Leonhardt's article. I am also an Ivy grad from a middle class family, so I was curious about Mr. Leonhardt's statement, given his lack of empathy for students who are not wealthy, that his father was a high school teacher. According to his Wikipedia bio, Mr. Leonhardt's father was head of the French-American School of New York, and Mr. Leonhardt attended the Horace Mann school, a feeder for elite private colleges. (If Wikipedia's information is incorrect, he might want to correct it.) I don't hold his background against him, but he has really depicted it in a misleading way, given the subject of his article. As others have pointed out, not all college graduates easily enter the job market with rewarding and well compensated positions that allow them to easily repay the debt they have incurred.
6
If you want to avoid a tremendous debt load, go to a state university and get a degree in a marketable field (i.e. STEM). Yes, university costs have gone up across the board, but many state universities are still reasonably priced. The career achievement that is available with a degree from a state university is still very good. You don't need a private university degree to excel in life.
4
@Ben Or move to Europe.
1
David, I usually agree with your columns, but I think your argumentation is off base. One should not be having to borrow significant amounts of money from family members just to attend college. That this even seems normal is an indication of how we can't see the forest for the trees in this country--numerous other countries don't have this problem. Maybe forgiving all student debt isn't the right solution (and I'm not sure how it would work moving forward), but you avoided talking about the real problem, which is that college is way more expensive than it needs to be or should be.
1
Good points David. What is tiring, however, is that there is absolutely nothing in these proposals (or even in bloomberg's article) that speaks to the inexorable rise in attending college. It is a very rare feat for any product or service to rise persistently above the price of inflation without the advent of competing ways to attain the same goals and technology driving costs down (Baumol's cost disease). So, while I agree with you that eliminating debt (I had it, paid it back) would be nice, finding ways to reduce the cost/length of attendance is definitely required. Making more government funding available, or donations like Bloomberg just signals to school administrators that college is an inelastic good and they have zero incentive to reign in costs, at lately, much of the cost increases have little to do with what goes on in the classroom, a further annoyance.
Attending college has become like health care, and further government involvement dislocates demand and supply. But, if they are going to enter and play a constructive role for everybody, better to make it affordable for everybody. $300K for 4 years of education is nuts.
2
I wonder if the rapacious collection tactics permitted by even government-funded student loan programs are still in practice. I hope not!
However, if current efforts toward collecting from those graduates provably most able to pay were as energetic and effective as those directed at the least able to pay were (back in the day), perhaps it would result in a better overall system. For those who are not earning at a level where they can reasonably be expected to repay, what about a temporary time extension on the loan, with smaller payments escalating with rising income? I think this is in keeping with what Leonhart is advocating, and support that idea.
But I fail to understand why tuition costs need to be ten times higher than they were only a short time ago. Isn't that at the root of the present problem?
The argument that forgiving student debt really takes the conversation from the middle, and not the beginning. Knowing that higher education incurs debt is a barrier for folks who would not be in a moneyed class at a high enough level for them to not see it as a barrier. So of course it tilts in favor of the bourgeoisie.
The problem falls out of the idea of the commoditization education in the first place. If our nation desires an educated public (which we desperately need right now), education should be a national priority. If we can spend $400 billion on a fighter plane that still doesn't work properly (the F-35), perhaps we could find the money to make sure our citizens (and voters) of all classes have enough education to prevent us from needing that fighter jet in the first place.
1
David, I appreciate the intentions of your op-ed, but you are making a judgment on a program based on your own anecdotal experiences, rather than statistics. The number of students admitted to the class of 2022 at all ivy league universities totals 21,856. The total number of students in the United States in all four-year undergraduate degree programs totals approximately 15.3 million (according to the National Center for Education Statistics). If we multiply the ivy league class of 2022 by four to get an approximation of total ivy league undergraduate enrollment, we see that Ivy League students make up 0.014% of total American population, a vanishingly small number. If you include 2-year degrees, that percentage drops to 0.09%. Additionally, remember that most students don't qualify for financial aid at ivy leagues, unlike public universities and community colleges, where the majority do.
Since we're doing anecdotes, I'll tell you mine. As someone who made it to an ivy league school on a nearly full scholarship, didn't have much help from an extended family and worked 20 hrs a week to make ends meet during college, I can tell you that "anecdotally" I struggled because of the cost of my undergraduate degree. The cost of my education forced me into career decisions that were bad for building my career but allowed me to pay the bills.
Economic mobility is shrinking, and college is one of the last hopes for people who want to do better than their parents.
2
I do not agree with Mr. Leonhardt. His "n" of one (himself) that he uses to say that most of the people in debt can pay it all off doesn't sound as though it is grounded in facts. Also, he keeps talking about income and debt when I would ask what is the debt to income ratio across his population of study. Isn't that what we should be looking at to address the question of whether a debt relief program only benefits the middle class. He has also failed to address the increase in middle class income versus the increase in the cost of attending college. That ratio is also very meaningful.
I have an "n" of one who has an income of about $120k/year, pays state and federal income taxes, and owes $250k. Much of his debt can be attributed to compounded interest while loans were in "deferment" bu the interest on the total amount owed was accumulating.
I do not have confidence that this generation will be able to buy a house and educate its children.
I suggest that we look at some of these ratios, and actually look an the data instead of scaling up from an "n" of one, and then discuss a plan to educate the generations that will be taking on the mantle of this country in the future.
I haven't read all the comments so I don't know if I'm duplicating someone else's response, but... two hundred years ago (to the best of my knowledge) there was no legal obligation for parents to send children to school. Whether or not they did, it was a choice and might often be either primarily religious education or simple literacy and numeracy or a combination. Then the idea of universal elementary education took hold and then mandatory education to somewhere around sixteen years old. Thus the public school system. It was generally agreed that an educated population was needed for an increasingly urban, industrialized population that would work in offices--or deal with people who did. Now, it's a virtual Luddite who resists any familiarity with computers, digital communication, etc. Isn't it time for the government to step up and say that as the need for expertise has increased so has the obligation of the state to insure that every citizen has access to "higher" education? Which, for at least the last twenty-five years hasn't been higher education but rather the new norm.
True progressives are not for total loan forgiveness. Rather, the idea is to relieve the poorest and most predated to give them a chance at achieving purchasing power and contributing to the economy.
We should not be bailing out students with married parents who make a combined >$250k a year. But, we can help those who have been swindled and hard done by by the great recession.
1
Your logic mistake is thinking that eliminating debt wouldn't change the make up of college. Too many people don't go to college because they know they can't afford it, some give up the dream in high school after watching an older sibling financially flunk out of their dream.
We want the best surgeons operating on us, the best lawyers advising us, and we don't always get that because too many are filtered out of the system financially.
Make all education affordable.
2
I have no problem with seeing the kids of some 1 percenter get a free university education if it means millions of talented and motivated young Americans from low income neighborhoods suddenly have access to universities as well.
This could transform our country.
3
And this is why you poor people cant have nice things - cos someone less poor might benefit too.
How about just raising taxes on wealth and then eliminating student debt - would that be progressive?
1
I agree with you; some kind of means-testing would be in order. The problem with cancelling debt of those who need it most is the perception that our tax dollars are paying for nothing, since the person didn't finish and therefore didn't derive much benefit.
David, I appreciate the intentions of your op-ed, but your making a judgment on a program based on your own anecdotal experiences, rather than statistics. The number of students admitted to the class of 2022 at all ivy league universities totals 21,856 (self-reported numbers). The total number of students in the United States in all four-year undergraduate degree programs totals approximately 15.3 million (according to National Center for Education Statistics). If we multiply the ivy league class of 2022 by four to get an approximation of total ivy league undergraduate enrollment, we see that Ivy League students make up 0.014% of total American population, a vanishingly small number. If you include 2-year degrees, that percentage
drops to 0.09%.
Additionally, remember that most students don't qualify for financial aid at ivy leagues, unlike public universities and community colleges, where the majority do.
Since we're doing anecdotes, I'll tell you mine. As someone who made it to an ivy league school on a nearly full scholarship, didn't have much help from an extended family and worked 20 hrs a week to make ends meet during college, I can tell you that "anecdotally" I struggled because of the cost of my undergraduate degree. The cost of my education forced me into career decisions that were bad for building my career but allowed me to pay the bills.
Economic mobility is shrinking, and college is one of the last hopes for people who want to do better than their folks.
Your argument seems to contain an inconsistency. First you state that "Most people struggling to pay off their debts are not graduates of four-year colleges." Then you go on to argue that forgiving debt is an unneeded benefit to four-year-college graduates who don't really need it.
Leonhardt is trying to get us to fall into the trap of "let's not help college students because some of them are wealthy." As a public policy debate, conservatives' reluctance to help individuals should take a back seat to the larger issue of what sort of investments we want to make in the country's human infrastructure. As in the healthcare debate, conservatives are missing the forest for the trees.
For us as a society, the question is whether we stand to benefit from a better-educated workforce. Given the demands of a globalized 21st century economy, guaranteeing access to college education for all is an appropriate expansion of the 19th century commitment to free primary and then secondary instruction. There is no doubt that the American economy benefited greatly from mandatory universal education. Do we need another Horace Mann to take that commitment to the next level?
4
Here's another twist on the logic.
If a preponderance of those who default on their debt are those who did not finish their degrees, then perhaps we should ask:
why they didn't finish their degrees, or
if colleges should have admitted them in the first place.
If you are a marginal student or have life circumstances that will likely prevent you from finishing college, why not start your collegiate career at a community college. The cost of failure there is far less.
4
@ML
Breathtaking logic there, Marie Antoinette!
1
I'm not sure how representative Mr. Leonhardt's experience is. The quality of financial aid packages varies widely from school to school. Well-endowed institutions like Yale are able to offer more generous combinations of grants and loans. Poorer schools often ask their students to take on more debt. Young people are not the greatest financial planners - it would be nice if there were guard rails to prevent kids from making really bad choices. For example, debt amounts could be limited, especially for first and second year students who are far from completing a degree.
1
Hundreds of thousands of poor and low-middle class income students would benefit as well as a few thousand wealthy students. That's what's progressive. Not the amount of debt held by the top quarter.
Also, this is about federal loan forgiveness not all student loan forgiveness. The wealthy students who had to take out 200k loans to go to private schools will only have their public debt forgiven, not their private debt. The forgiven debt would be only a small piece of the total student debt.
This article is misleading.
2
Dear Mr. Leonhardt:
I find that the status quo is the best kind of public policy for our dear republic.
"We the People" must continue to elect representatives (i.e., public employees) at the federal level who will put our American tax dollars to good use.
They must fund past and present government-assistance programs, which transfer vast sums of public money (i.e., the American People's money) into a few private hands.
Take these tried-and-true government-assistance programs:
(1) The financial aid for the private, American military-industrial complex;
(2) The financial aid for the private, American prison-industrial complex;
or
(3) The financial aid for the bankers whenever they harm the international economy through rampant fraud.
The mere suggestion that "We the People" would ever transfer federal educational spending from a discretionary program (i.e., an optional spending program) to a "welfare program" (i.e., an entitlement mandatory spending program, like Social Security, Medicare, or Medicaid) would only place our fellow Americans one step closer to that "general Welfare" clause cited both in the Preamble and in the Taxing and Spending Clause of the Constitution of the United States of America.
Sincerely,
Yours
P.S. "It is good to begin life poor; it is good to begin life rich—these are wholesome; but to begin it poor and prospectively rich! The man who has not experienced it cannot imagine the curse of it."
— Mark Twain, "Autobiography of Mark Twain"
3
A perfect rejoinder to Mr. Leonhardt's hunky-dory isn't the status quo oh-so-great complacency.
The very definition of narcissism is defining the general reality from your own personal experience, and few excel Leonhardt at this, his utter indifference to how his Yale undergrad economics background informs his perceptions, above all that America is a just meritocracy in which everybody gets, if not "exactly," very approximately what they deserve. It's quite natural that someone priviliged in that way would treasure the "social darwinism" outlook, however mutedly presented, but Leonhardt's complacency and unreflectiveness on the matter verges into the obscene, to say the least. That this passes for some sort of journalism (and not the pathetic propaganda it is) is rather deplorable. "Most graduates of 4 year colleges are doing just fine ['don't worry about it, just be happy with your lucre]. I know you've read stories [i.e., 'just' stories]... rare exceptions."
That remark of Leonhardt's would even be beneath Donald Trump to utter, and just think what kind of standard that is. I've seen neoconservative jibberish, I've seen self-serving political jibberish. But this exceeds any bounds even in our mendacious "truthiness" culture.
2
When we spend trillions on stupid useless wars its OK, when spend billions on bank bailouts its OK, when we help the farmers its OK, when we help those flooded out its OK but a student needs help suddenly there is a problem. The fact is the Chinese are going to run over us with high quality college graduates and research so we had better get our act together if we don't want to end as a second or third rate country.
3
remove the interest accrued and have debtors just pay back the principal.
3
I'm 51, 140K in student loans (70k is interest) mainly due to the difficulty in getting a GOOD job after grad school, worsened by accumulating interest (race card? no, not gonna play that even though I could). 20K of that is old 90s grad school debt (shaved down from 44K), been paying it off slowly, but the rest is suffocating. Worst part—my wife's (nonprofit salaried) income is added to calculate my payment, making it much higher, causing requests to lower it thus extending the debt longer, accumulating yet more interest, and round we go. Why so hard to find a good job? In part, a necessary career change, but also competing with a glut of highly educated millennials living at home, who can take lower salaries to land the job and get desperately needed experience. Eventually I created my own employment, but the cost of living here is brutal. Move you say? To a place that pays even less, yeah, that makes a lot of sense, not. I make about $22K a year as it is, and I'm working every day on increasing that. So David, I don't think you get this, at all. Or maybe you do, but fail to address key points. I support the elimination of all student debt, even for us ''bourgeoisie'', a laughable argument when you think about it, because GOP constantly gives the 1% huge BILLION$ tax breaks. We spend TRILLIONS on unending war, and for what? So which makes more sense, more TRILLION dollar war to create more misery and tax breaks for Jeff Bezos & the Koch Bros, or INVEST in the middle class?
2
Heck, I’d be happy if the interest rates were lowered to something reasonable rather than that the 7-8% I’m carrying on a 250k federal loan.
1
We need massive new tax increases on income earners to make the world a fairer place. High taxes make good sense!
1
Dear Mr. Leonhardt,
Our annual medical student tuition charges come to some 0.35% of our annual health care costs. Yet, they have led to greatly depressed medical school applications for over forty years degrading our medical work force. Virtually any college graduate can become a medical provider with a medical degree. This is a fact. n
Physicians are responsible for 80% of health care costs. We will never rein in health care costs unless we train our doctors to think lean. To solve our opiate epidemic we need a fundamentally higher quality and more socially minded physician. We also need to provide physicians in our rural and depressed areas.
To do all that we need to fundamentally change the way we approach medical education. That is most easily begun with financing medical education differently.
I would love to continue this conversation offline.
Bohdan A Oryshkevich, MD, MPH
4
Even among people who disagree about student loan forgiveness, I hope one thing people can agree on is that graduate student loan interest rates place an enormous burden on people who pursue advanced degrees.
Grad Plus loan interest rates are currently 7.6%, and that is lower than when I was in Grad School ten years ago when they were 8.5%. Someone with $30k in undergraduate loan debt taking on another $60-$80k in grad student means they can easily end up paying $6,000-$7,000 annually just in interest . Compared to the 2.25% fed funds rate or the 3.12% rate on the 10 year treasury note that 7.6% is a huge premium on loan debt that cannot be discharged through bankruptcy.
Just lowering the interest rate to the same as the 10 year treasury note would significantly reduce the burden of student loan debt.
2
Not buying this one, Dave, at least completely. First of all, you might be projecting excessively based on your own experience. So I’ll project based on mine. It cost about $7,000 a semester when I went to Columbia in the mid-80s and $30k a year when I went to Harvard for grad school in the late ‘80s. My dad was a physician and so my parents could pay out of pocket. When my son goes to college in eight years, we may be looking at $100k per year if he goes private. Point is, rising debt levels seem to at least in part the kind of unrestrained inflation we see in health care. Kids then take on more debt, and the working off of that delays things like home ownership and child bearing - although with climate change, doubt a lot of the next generation will want to have kids. I think the underlying and rising cost of higher education is something with which your piece does not grapple. We’re headed toward price regulation in health care. Maybe declining birth rates and slumping enrollments will force university and college administrators to rein in their own bloat - gold-plated salaries and athletic centers and other monuments to their own egos. Or maybe declining demand for a fixed cost business just drives prices higher. Net, we also have no idea whether the cost education is driving people not to attend at all, which is really worrisome in a world where the kinds of skills you pick up in college are essential. I would suggest you think this one through a bit further?
294
@Suneel
The answer is for him to go to a public school. Why should the US government or states subsidize private institutions?
28
@Keith It is not the institution that is being subsidized but the needy (and hopefully deserving) student. What you propose would result in a two-tier system based on inherited wealth. If elitism is a good thing (and I agree that it sometimes is), it should be based on merit, not privilege. That is what the US is all about, isn't it?
8
@Suneel then go to public college if parent can’t cash flow private.
Debt for undergraduate degree is crazy
5
It’s not wrong to have student debt. What’s wrong is the excessive interest rates charged. Student loans have higher rates than mortgages or home equity loans. We punish young people for trying to build a better future.
425
@Randee
Not only are they above these rates, not being able to discharge the debt in bankruptcy should make these loans even safer than mortgages, and thus have an even smaller interest rate.
Before we hand out blanket loan forgiveness, we should fix some grievous errors in the current cost and financing of colleges.
60
@Randee
Mortgages have very low rates because the debt is secured so mortgage companies are taking on little risk in general because if you don't pay they take your house and sell to get most or all of the money you owe. Loan companies can't take back your education, but not allowing the debt to be discharged allows for some protection so rates are still pretty good. You want to see what rates would be without that just check what your credit card charges.
9
@Randee I agree completely. I’ll be paying my loans well into my 50s because of high interest. I always thought it would be unfair to have my debt cancelled altogether, as so many people have paid in full, but I fantasize about a 1.8% interest rate
3
I want to not pay federal taxes on the amount of student loan principal I pay off. I don't have the freedom to pay off my loans b/c the government only gives tax incentives for buying real estate, investing in 401ks, etc.
I could also get behind plans that help out the lowest income earners, but i wouldn't want to FURTHER incentivize stay at home parenting (which can also be a tax strategy for households where two parents are educated at not-inconsequential societal/public cost).
Also, forgiving loans at the bottom ignores the predatory lending from for-profit schools, who will indirectly benefit from such loan forgiveness.
This author seems to have neglected to look at a lot of intersecting issues.
1
I disagree David. Capacity, or lack of, to pay back can be the determining factor. One size fits all, doesn't have to be the standard.
Mr. Leonhardt, I beg to differ with your conclusion. I have a solid job teaching high school music in the public school system of a prosperous town. I am at least good at my job- I have achieved tenure, and my students have been recognized for their outstanding performances. I am solidly middle class, but nothing more- my parents' net worth is at most $150K. mine is less.
I have been paying my student loans for fifteen years, and I am barely keeping up with the interest. Every month I pay a substantial chunk of my income just to keep up with the interest. I could be using that money to buy a house, or start a side business (I have several solid ideas), or give more to the charities I care about. All of which would do a lot more good to the economy and the country at large than paying some third party loan contractors. I am treading water.
To add insult to injury, the government created a program for folks like myself, that if they choose public service- teaching in a public school for instance- and keep up with their loan payments, after 10 years of service and payments their loans will be forgiven. The government has rejected more than 90% of folks who have applied for loan forgiveness under this program. Talk about a bait and switch.
So please tell me again how good I have it, and why I don't deserve a break?
582
@Pat
And if your loan is forgiven, then you will be taxed on that amount as income.
17
@Pat You hit the nail on the head regarding endless "interest". What many don't understand is there is no student loan crisis, only student loan fraud being perpetrated on borrowers by the DOE and servicers like Navient, American Education Services and National Collegiate Trust. When you take out, say, a loan for 10k at 2.5% interest, then after making ten years of on time $120 a month payments and still owing 9.5k, guess what, you've been scammed!
29
Thank you for sharing your story. This editorial is poorly reasoned and your story demonstrates in stark relief, why.
36
I disagree with the conclusion of this article. I am not interested in arguing over some semantic tomfoolery about what is and is not 'progressive.' Universal debt forgiveness is a far more equitable and fair way to handle this issue, regardless of who can be considered able to pay, and is more likely to garner support from the populace.
Besides, forgiving debt is only the first step in righting a historical wrong, which is the need to go into debt in order to get a University degree in the first place. We need to make an education affordable to average Americans again, more in line with the cost up until about 20 years ago. Higher education does not need to be as expensive as it is today, and in every way it should not be.
2
Something seems seriously lacking in this analysis.
The rich will ALWAYS have the advantage.
The richest don't need any loans at all. They have the advantage from the start, parents who can afford tutors, SAT exam prep classes ... graduate without debt, turn to their parents' "old boy networks" to get plum jobs after graduation and start accumulating wealth from day one.
An education at a high quality university is a necessity to succeed in many fields, from engineering to medicine. This costs $$$.
The high cost immediately puts many people in the lowest income brackets out of the running altogether. Those fortunate enough to find a way in, and those from middle incomes as well, have to pay exorbitant costs, graduating with major amounts of HIGH INTEREST debt.
Reducing (or eliminating) the cost of higher education is about making access to a substantial education available to everybody. It's about opening opportunities for the best and brightest, even among the lower income brackets.
America suffers when the full potential of its most talented citizens does not get developed and harnessed for the good of the country.
THIS is what it's all about.
Of course, the lenders of that $1.5 trillion in HIGH INTEREST debt don't want to see the cash cow disappear. So they're bound to push back.
I hope the DEMs have the courage to resist the bankers and fight for America's bright and talented young people who deserve the opportunity to develop their skills to the maximum.
3
"I know you’ve probably read stories about liberal-arts college graduates who ran up enormous debts and now can’t find decent work. But they are the rare exceptions."
Good. Just what we need, more boomers who wrecked the economy telling me how my financial life is going as a result of their "mistakes."
We were not "rare" in 2008, 2009, 2010, 2011, and so forth when we graduated. It might be a "rare" occurrence now, but please be advised that the financial implications of graduating in a down economy have followed many of us significantly. I just got my student loan burden down to where it was *before* I graduated-- so much interest capitalized when I my first job was deferred because of the economy you wrecked. Many of us started in or are still in lower paying jobs than we would have had if we graduated a few years before the crash. Worse starting jobs = worse opportunities = worse pay = worse career advancement.
5
David,
Neither of my parents graduated college and neither understood student loans. I graduated from a state university in 2000 with a degree in music. Even though I had a full ride academic scholarship, I took out some loans to help pay bills while I was in school and some to pay for my fifth year of school, while I fulfilled all my academic requirements. They totaled $17,000. I consolidated my loans at 8.25%, which was a mistake, that I still regret. I did it so I'd have less to keep track of. I had no idea how much lower interest would be down the road. I am now 43 years old and I still owe $13,000 though I have paid well over $21,000 in payments. The debt remains a drag on my budget year after year that has kept from making other investments and saving for retirement.
3
Wow, one of the best columns I've seen recently. I was glad to see Mr. Leonhardt note the problems of predatory for-profit colleges and the fact that for most graduates of four-year not-for-profit colleges, debt is manageable. Excessive student loan debt most often comes from the bottom of the market: unprepared students who should never have gone to college in the first place and fail to complete exorbitantly priced programs at for-profits that will let anyone in the door who can sign a loan check.
We need better options for academically unprepared students. Rather than dumping tons of money into subsidizing college for students who don't have the skills to do college work, we should spend the money to offer extensive remedial programs at local high schools. The K-12 system failed these people; put the responsibility for remediation where it belongs. When their math, reading, writing, and critical thinking skills are up to speed, then they can go to college and succeed.
We also need more subsidies for trade and technical schools, so people have career options besides college or McDonalds. This is another sector where the predatory for-profits need to be stepped on and opportunity needs to be expanded at local community colleges for people to learn marketable skills.
I was grateful to have gotten student loans for both undergrad and grad school, and have paid them all off. Student loans work for those who make smart choices.
Rather than cancel all debt, why not cancel just the interest payments and just have borrowers pay back the amount of the original debt? This way, we get to punish the financial institutions that preyed on students via high interest loans and allow borrowers to keep a clean credit history and a sense of closure.
4
I see three problems:
1. While college has never been inexpensive it wasn't always as expensive as it is now. The costs of a higher edication, including room and board, have risen much faster than inflation. I am flabergasted at what schools charge now as compared to when I attended. Higher costs resutl in loans that weren't previously taken, or higher loans.
2. While college costs have increased relative to inflation wages have been, relative to inflation, pretty stagnate. Higher costs relative to income make the loans harder to pay back.
3. The incomes that students expected to have to pay back those loans have either not materialized because of pay levels or the students had to settle for a lesser paying job, or more likely multiple jobs beccause no one job covered 40 hours or paid benefits. Again, making it more difficult to pay back their loans.
Social contracts have been broken. And as usual we blame the victims.
2
‘Eliminating All Student Debt Isn’t Progressive’
That’s funny. Go tell that to Ocasio-Cortez and her acolytes who elected her so they could get out of paying college debt, and get a job because they deserve it.
Better even, let’s watch Ocasio-Cortez crash, burn, and fail miserably. Maybe then her fans can have a wake up call, a nice smack in the face when reality hits the dumb lies their Liberal college professors told them
1
I think the gov't should get out of subsidizing education entirely except for people near the Federal poverty line. Look what a mess they made with a straightforward plan to subsidize borrowing. People borrowed and struggle to repay it. If it was going to be grant rather than a loan we could have admitted that at the outset.
Just look at the clownishness in DC lead by President Trump. I don't want to send them more money to try to solve problems. I just shudder when I send in quarterly estimates to be managed by bickering clowns.
Consider the fact that all people who took out these loans did it under the legal assumption that they would be paying it back. Now, we are going to tell our youngest generation that loans can actually be forgiven if they can get enough people to agree? How about the students who worked (often multiple jobs) during college in an effort to graduate with only minimum debt? How stupid will they feel when they see their classmates who didn't work get the free ride of debt forgiveness?
3
Gee golly David Leonhardt I'm so happy that you think that it is okay for a student starting out in life after school to pay off almost $50,000 in school loans for undergraduates at public colleges and the same for 4 year private non profits. When did you ever struggle buddy. Your father was the head of FASNY, a $30,000 a year school from kindergarten through 12th grade, and your parents sent you to the Horace Mann school for the same $30,000 per year. Information available at the schools advertisements on the Internet. From there you went to Yale, a rather expensive college if there ever was one. You are not qualified to speak on this subject, having been born with a silver spoon in your mouth. Moreover, what about all the people from poor families who may be as smart as you but never had the ability to go to a major institution of learning? Perhaps you should get off your high horse?
5
No handoutas for any student debt. How does one incur hundreds of thousands in student loan debt? Stop going on spring break vacations to wherever; e.g., Cabo, FL, HI, Europe, etc. Have universities/colleges use some of their endowments for salaries and not on separate facilities for the different ethnic/racial groups; e.g., Harvard Management Company is a subsidiary of Harvard University, providing investment management of the University's $37.1 billion endowment and related financial assets. Have the students get off their dead butts and get part time, seasonal and summer jobs.
1
You don’t get it David. My daughter has a doctorate in education. She owes 100,000$ .Every month she has a payment of 500$ on her student loan. Her income is 70,0000$.after all that education.-of course we are in Texas where they don’t value education much. She runs the continuing education programs and the local college. This is called scraping by.How do you Keep committed teachers when the incentives are not there ? A forgiveness program would sure help.
1
Forgiving all (or even most) student debt would be a political suicide for the party pushing it.
There are three groups of people: (1) Never had student debt (worked in school, went to school they could afford, etc) (2) Had student debt and have paid off at least the bulk of it (3) Have substantial student debt and haven't paid off most of it.
All three groups or their offspring will, of course, see higher taxes or reduced services - $1T doesn't grow on trees.
Group (1) will be insulted by Democrats taking their money to pay for something they never took advantage of. Group (2) will feel Democrats made a fool of them - they paid off their debts as they promised and had they waited they would get "free money". Group (3) of course will love it -- but there aren't enough people in group (3) to offset all the votes the Democrats would lose from groups (1) and (2).
This is as ridiculous as a few quickly aborted proposals to pay off people's mortgages during the housing meltdown.
3
I was middle-aged when I lost my job in the early 1990's, with considerable unemployment my area. I had an excellent record in HR but that didn't help when I was competing with 26 year old grads with master's degrees.
After completing job applications emphasizing my successful experience in reducing turnover and thus costs in a 400+ employee manufacturing plant, I went for interview after interview. I saw eyes glaze over when I appeared for interview after interview. I looked at returning to school.
I got information on pay for teachers and nurses; got tuition/book costs; information on loans.
Teaching was not a good option - there were ed grads selling clothing in department stores. Nursing was a good option. I applied for and got a nursing scholarship from a local hospital, and worked there for 3 years; repaid the scholarship by working after graduation; recently retired.
I returned to school, clepped English and math; asked to take Economics as honors course; on Dean's list from first quarter through last quarter; graduated summa cum laude and president of my class.
I paid my student loans within 6 years. No new car, wardrobe, vacation.
Eliminating student debt isn't progressive or conservative. It's unreasonable.
Instead, have prospective students make a budget, using future earnings, all expenses plus loan payback. Let them look at the dismal records of online schools.
Treat students as the adults they are - prepare them for life.
3
"Most graduates of 4 year colleges, by contrast, are doing just fine. I know you’ve probably read stories about liberal-arts college graduates who ran up enormous debts & now can’t find decent work. But they are the rare exceptions."
That someone purporting to be a professional journalist (for the NYTimes, no less) could be so cavalierly dismissive ("I know you've probably read stories..") of the plight of millions of graduates whose realities utterly contadict Leonhardt's asininely complacent fantasy is just about beneath comment, beneath contempt.
The remark is nothing short of deranged.
What if Leonhardt's loved ones were in a cancer ward, and in the context of discussion of under-funding of cancer research, a commentator writes (specifically having in mind multi-billionaire potential donors who'd otherwise spend their lucre on yachts and Lear jets), "The whole cancer thing is overblown, don't worry about it so much; I know you've probably read stories...." (That's what Leonhardt would truly deserve, if "what goes around...")
Where does Leonhardt get the gall to pooh-pooh the misery or literally millions of people caught in such a cruel and unforgiving process or predicament?
I've rarely read anything so repulsive. Mr. Leonhardt, does your Yale econ (even granting its saturation w/ pro-business propaganda) diploma literally come with a pair of rose-tinted glasses? (Must you use the Times to purvey such essentially neoconservative propaganda?) Outrageous.
3
I had to check up on one of your highly suspect statements; i.e., that college grads can expect to make $50k as starting salary. It turns out to be arguably true in a technical sense: for those fortunate enough to actually *land* a job in one of a selected set of fields, that's the average salary. But how many such jobs are actually filled by recent grads, compared to the number who don't get hired? What is the reasonable expectation for everyone in that big pool of recent grads? I think this would tell a different story that would undermine your arithmetic and reasoning. BTW, college loan debt is a complex problem that can ultimately be traced back to the notion of higher education as a money-making endeavor for the providers, both unabashed for-profit "schools" and the ever-expanding programs, amenities, and administrative bureaucracy of public and private colleges and universities. I agree that a blanket debt forgiveness is not a great idea, but for different reasons than those you emphasize.
2
There is nothing wrong with helping the middle class and the upper middle class, particularly if it helps the nation at large. Crippling young people with massive debt just as they are out of school and starting their lives doesn't help them and it doesn't help the economy. Means testing and an extended grace period might go a long way to help the people who need help the most as well as people who are strapped starting out but who grow into larger salaries later on.
1
Bankruptcy reform is probably the way to go. Student loan debt is the only kind that cannot be discharged in bankruptcy.
People who are doing well and benefitting from their educations will not want to file for bankruptcy.
After trying for a time to repay, maybe there should be a cram down when the value of the degree clearly is not worth the amount of the loans. This would not be true for medical school graduates. But it would be true for some for profit college scam victims.
1
Apart from the issue of student loan debt, Mr. Leonhardt's column is a good reminder that progressives need to think through the consequences of proposals before signing on. What appears to be progressive policy may actually draw funds away from more significant programs and squander political capital as well.
That said, student debt is a genuine problem for our times, but it's a complicated one. Two students with the same debt, say, $50,000, may have vastly different abilities to pay it down. Not everyone who acquired debt pursuing non-monetized degrees -- degrees that are important for our society -- qualifies for forgiveness programs; some of them come from well-off families that can help, others do not.
By all means, let's devise a better program to help those who truly need the assistance. Inevitably, those who don't make the cut will feel aggrieved, but that doesn't mean we should forgive everyone's loan or do nothing to help anyone. We should also be looking at how we got into this situation and propose ways to avoid it in future, including greater regulation of predatory lenders, additional support for public universities, and non-traditional educational alternatives.
Education, like healthcare, should be free. There should be no profit earned from either. It should be paid for by a very progressive income tax, taxing the rich. All student debt incurred during a less enlightened time should be abolished. In the meantime, any measures which can lighten the cruel burden of student debt on our children and grandchildren should be taken.
2
I have $150K in ParentPlus loans (one daughter at Rutgers who lived at home, another from Temple who lived there). My numbers (unlike my glucose): 60 making 90 with 120 mortgage remaining. My daughters are doing fine.
I'll be dead before I meet this obligation.
I find this eminently manageable, too.
2
I appreciate the perspective that this type of loan forgiveness should go to those who need it the most. Many so called middle class families face big financial struggles. While many colleges have capped student debt, they have no problem with parental debt. Middle class parents take on significant debt to put their children through college ( I put two through very expensive schools).
Many students will continue to rely on their parents after graduation. The total debt that a family, including the student, takes on to pay for every rising college costs crowds out other opportunities for parents to support a student (e.g. down payment on a home). The solution is to design a debt forgiveness programs that includes the middle class with levels of forgiveness based on each family's situation. This type of program would be a better sell politically with voters.
3
David
Thanks for your very insightful article. It hits the heart of this specific issue but also points to a general principle that should be guiding American policy – the need for a balanced perspective that draws on ideas from across the political spectrum. Forget ideological pedigrees, pursue direct analysis and ask simple questions like
1) how does this proposed policy affect the overall well being of the nation including citizens at all income levels? 2) What are the long-term benefits to the broad economy (including all citizens)? 3) Can the nation afford this given reasonable (not zero) levels of national debt?
Your analysis fits a pattern that is often the best path: “the best ideas borrow from many points of view”
Basically this is like the argument over regressive taxes (Sales Tax) vs. Progressive Taxes (Income Taxes).
I am sure there is a workable compromise available if you throw away the politics and class warfare.
Fall 1963, as a HS senior, I took the NY State Regents College Exam. 300 questions--your score was how many you got right. 220 was an average cutoff. Above 220 you"won" a Regents Scholarship. $400/year for 4 years at any accredited college (public or private) in New York State. No income test etc. You even won the $400 if you went to a CUNY school where tuition was free. It paid for lab fees, books, etc. Clearly a regressive program. Oh well- Sigh!.
I do not know if there was a waiting list for the unused scholarships. I hope there was!
$400 was a lot of money back then.
Also as I remember Cooper Union was tuition free.
Mayor Bloomberg's generous gift will hopefully increase the # of applicants from the lower income group.
Where the schools will have to be careful in accepting these newly trendy offers is when the donors attach conditions related to curriculum and other academic areas..or sports.
Leonhardt talks in terms of averages, which never typify all cases. For instance, 2 or 3 classes who graduated at the height of the great recession not only suffered low job opportunities at graduation, but also then suffered reduced opportunity for years afterward, watching more recent grads get the inside track on the professional-quality jobs.
Many of those unluckily timed graduates are now, 10 years on, still struggling. Many would be delighted beyond words to have a shot at one of those $50,000-a-year jobs which Leonhardt says are the first-year norm among newly employed grads.
2
I wonder, David, how you feel about who is benefiting from student debt. The interest rates go from 5% - 8% (depending on the type of loan and many students are only offered the 8% rate). That is high. I agree that forgiving debt for some is a good idea... But I don't know many grads of the institution where I teach (I do teach in a film program) who make 50K out of the gate. The number I hear is in 30-35K range and that includes grad students who have much higher debt -- many over 100K. I haven't done the math but if the loans were interest free for those who can't demonstrate high need, I believe it would be a big help.
3
This all seems very interesting, but why is there not a discussion about the costs of college when we talk about paying off everyone's debt (making college "free")?
College will never be free unless we enslave professors and administrators and staff to work for free and that can't and won't and shouldn't happen.
So this is a question of who pays for college, if it's going to be the government (out of the wallet of all taxpayers) shouldn't we also discuss what it is we are paying for and if we can negotiate a lower price?
3
Universal forgiveness is the simplest solution to this problem. I don't care if upper middle class Americans are granted forgiveness as well--why not? In a better America, they wouldn't have paid for school in the first place. Income-based forgiveness has the potential to be extremely invasive; we low-income Americans have enough invasion of privacy as it is. I can only imagine the nightmare of having to explain to some stranger why I work only part time (mental illness) and why I'm not on disability (fear of stigma and desire to maintain choices and freedom). I've been paying my student loans for 10 years and owe nearly as much as I did when I started paying. I know I got myself into this, but there's no way I'll ever get myself out. If there is going to be forgiveness, I'll take it. And I'd rather take it while preserving some dignity and taking care of my mental health in the way that makes the most sense (part of which is not working full time).
3
So, if you go to college, work hard, study hard and excel, thereby getting a well paying job upon graduation, your debts should be enforced. But if you don't work hard and graduate with poor grades, or fail to complete a degree, thereby likely not getting a well paying job, your debts should be forgiven. This concept seems to reward less effort. Perhaps need based financial aid that limits the need to accumulate debt in the first place would be a better approach. A poor kid who applies him or herself in school and does well after graduation should not be penalized.
2
I think incentives should be put to maintain fees low. Something i the spirit of being able to get a student loan only if the program fees are under 15K / year. Otherwise the universities and college will raise the fees indefinitely.
For comparison: in some progressive countries such as France or Canada the universities are mostly public and hence the tuition fees are under control. Their system is to give automatic scholarships + loan to students with low family income (self + parents).
1
@Solarae. At least in France, the system is vastly different from that of the US. By law, all students who achieve the baccalauréat are eligible to go to university, but the choice is restricted by program and location. At the undergraduate level, because institutions are underfunded and large, there is huge variation in the preparation and talent of students, and professors often are demoralized teaching students who are underprepared.
At the level of the grandes écoles, there is enormous competition for something like 6000 places for the entire country. Often students spend two years in Classes préparatoires aux Grandes Écoles to achieve test results necessary to gain admission.
Yes, fees are low, but one wonders whether American students and their parents would sign on for this kind of two-tier approach.
Many of my children's friends went away to school for the "College Experience." That was the point of college. They were not as concerned with the education. Many of their friends took out loans to pay for housing and meal plans which can easily add up to $40,000 after four years.
They could have gotten a fine education by going to the local community college and then transferring to a four year school.
How much of that $1.4 trillion debt is for living expenses? Student loans forgiveness programs should help with tuition only.
1
I disagree. Certainly some students are looking for the “college experience,” but many serious students who go away to 4 year universities do so because there is no local university that offers the major they want. For example, my brother had to leave the state for his college education because his major was not offered at any in-state schools, public or private. He was fortunate to receive in-state tuition in a different Southern state because of a reciprocity agreement, but he certainly didn’t have the option to go to the local community college for any part of his degree or to go to a local university. And the closest school that offered opportunities to explore research for me was just under 50 miles away. There’s no way I could have reasonably lived at home and received the same educational opportunities.
@JAC "Many of my children's friends went away to school for the "College Experience." That was the point of college."
That's not the point of college!
What is the college experience?
I generally agree with your columns, but in this case I think you have really missed the boat and it may be that living in and around the bastion of privilege of NYC (my home town) has thrown you off, along with the statistics you have selected. But the boots on the ground reports should be filling you in that even PhD's are struggling to find employment. You say the liberal arts types with this sort of debt are rare, but that is not at all the case in my experience and throughout my extended art world community. There is some very serious suffering going on, especially with graduates in the more creative fields. Those of us who trained to teach at the university level are facing a horrible situation with limited adjutant positions, no benefits and pay rates that are stuck at 1995 levels. Teachers are not doing well at all! I appreciate why you don't want to help out upper middle class doctors and lawyers, but that is by no means an accurate picture of those who hold high debt. And some people go back to school! I have an incredible debt from my mid 30's that I can not find remedy for in secure employment in my mid 50's. I think this is much more common than you seem to credit because I see it very often, especially in more rural areas, such as where I now live. Numbers are great, but they only provide a partial picture; we must see with our heart as well.
4
There's a big difference in the prices of private vs public college so yes paying off loans would be unfair. Better ideas would be no interest loans with some forgiveness options plus tax rebates on interest and finally an annual stipend equal to public school tuition.
There is one very easy and extremely painful solution to all this. Cut off all student loan aid. All of it. The resulting implosion of the colleges will allow something to grow properly in the new vacuum that is left behind.
Schools are not teaching skills people need for the current economy and are too slow. They are also too powerful to exclude from the debate over a solution. They must be destroyed and society needs to be punished with an unthinkable amount of collective suffering for going back to a failed system over and over again.
College became the only answer. It's time to take back the mantle from them.
2
received and spent the loan. why don't they have a degree?
3
Says the white dude working from late 20th century understandings of class and the American economy. College grads are working at Starbucks. Grad students are facing a 25-year clock before they can save anything. Get real.
6
I hate it when liberals don’t get it. Bankruptcy should be an option. Forgiveness is unnecessary. Don’t give grist to the naysayers who are okay with the stupid student loan scandal plaguing several generations.
1
In response Mieke ter Poorten
Santa Monica Nov. 18.. I graduated from law school ..watch my law school debt compound daily at 7.9%.
You can become a lawyer in CA (and many other States) without ever setting foot into a college. All you need is to pass the bar exam
That's it. There are plenty of free resources from your local library to free on line courses.
Nor will attending Yale insure that you will pass the bar
Hillary Clinton, famously , failed the bar in Washington DC
1
@Gerhard That may be the case in California (and I believe about 5 other states), where something like an apprenticeship is allowed to substitute for law school. But in the other 44 states, that's not an option. Both Maryland, where I'm licensed, and Colorado, where I hope to be soon, require graduation from law school.
@RW It used to be possible to take the bar exam and assuming the apprentice passed the exam, he/she was an attorney.
No need to go to college or law school. It was called 'studying for the law'.
That was embarrassing to colleges and law schools.
But the apprentice program produced some excellent attorneys. The most famous apprentice-to-attorney in Georgia, Bobby Lee Cook, whooped the rears of some fancy attorneys in courtroom after courtroom in his time.
Not sure what my loans would amount to in today's dollars, but I came from what started as a middle class family (but with 7 kids) that entered poverty when my father was diagnosed with cancer my freshman year-I was the oldest-6 still at hom... I should have gotten grants, or at least federal student loans, but my father had signed me up for high interest bank loans...they took me 30 years to pay off (1976-2006) in fits and starts, near bankruptcy, deferments and forbearances. I even taught for a while in a high needs area...but it didn't qualify for some reason for the forgiveness program which was coming to an end. As I had promised myself not to get married until my loans were paid off, I ended up staying single due to the long drawn out payback of the loan. Could have used some relief.
Some people coming out of medical or law schools don't get those high dollar jobs right away, and are in school for so long that the debt is quite high. Particularly medical, the cost of health care is high partly due to the high loans that they are paying back for their training....would like to see loan forgiveness for those who work in Legal Aid, non-profits, or high need medical clinics and hospitals in under served areas, or military service. Definitely there should be loan forgiveness for the SCAM for-profit colleges that often lead to poor training and no real credentials for getting work, or bankrupt the student before they even finish the so called degree.
1
@Mary Agree with your statement on "SCAM for-profit colleges that often lead to poor training and no real credentials for getting work".
Why don't high schools hold seminars to teach prospective students how to budget? Students should know the pay range for their chosen field; the cost of tuition and books; how to calculate their debt after graduation.
Want to teach? Start by learning.
Want to study and practice your art? Get a part-time job as a cook / waiter that will give you plenty of time for art school.
Want to study yourself (women's studies etc.)? Find out if any employer other than the government needs workers.
Want to go to law school? Look at the pass-the-bar-exam rate for the school.
And look carefully at the costs of online schools..... then look again: look before you leap: that river is full of alligators waiting for you.
2
The premise of your piece is that under current proposals, all outstanding student debt would be wiped out, while new debt could still be incurred by new enrollees. That indeed would amount to a one-off gift (much like a one time tax on repatriated corporate profits) to graduates. But that can't be what is on the table. The only way to truly eliminate student debt now and forever is to do so for selective institutions (i.e. taxpayer funded public schools) and also make them tuition-free. This would benefit all students from all backgrounds. Your position seems more geared to protecting the privileges of the elite and preventing others from joining your rank.
2
Where is the outrage over the rate of the rise of the cost of higher education?
It far, far exceeds Inflation.
How much is spent on non educational expenses by the institutions?
How much goes to tenured instructors?
Are any of these issues ever addressed?
4
@Sela Great questions.
The cost of higher education is ......well, too high. Like anything else funded with Federal dollars, colleges and universities looked at never-ending dollars rolling in.
One cost is tenured instructors - and there seems to be a correlation between being tenured and working fewer hours.
The questions you raised would be prime fodder for colleges and universities to address.......but don't hold your breath. To answer the questions would mean disaster for the giant welfare programs for college and university instructors and top administrators.
2
It seems that a major part of the problem is the way the loans are written. As far as I know, these loans are unsecured personal loans and in that sense similar to a credit card loan. The people who loan the money want to be sure they get a reasonable return on what is a fairly high risk loan. It seems that the lenders, or many of them, are abusing the fact that young people feel they must have a degree or fail in life. Maybe the solution is to regulate the precise way in which these loans may be written and to provide means for the borrowers to pause payments without interest when they are unemployed for a period of time. Rather than forgive the loans, it might be worthwhile for the taxpayers to guarantee them if they are made following a set of guidelines.
This is an embarrassing error. The statements "Eliminating All Student Debt Isn't Progressive" and "Eliminating All Student Debt Isn't The Most Progressive Thing That Can Be Done" are two PROFOUNDLY different statements. The latter is true, the former is not.
The gulf right now is not between the upper class and the lower class. It is between a tiny sliver of the top 1% and the entire rest of the country. That top fraction of 1% does not have student debt, or if they do, it's not meaningful next to their assets and income. You couldn't possibly rack up enough student debt for it to matter at that point, because even millions of dollars is pretty insignificant to billionaires and their families.
If a program benefited EXCLUSIVELY persons in the 10%-1.01% wealthiest, while conferring no or nominal benefit to the top 1%, it would still be progressive, so long as the funds to pay for it were not raised by way of regressive taxes on those below the top 10%.
2
what a profoundly sad, narrow and disappointing viewpoint. The more students are forced to focus on servicing loans is the more we generate only worker bees incapable of letting their young minds soar and alight upon fulfilling education paths to achieve lasting beneficial impacts for betterment of our country and the world. frankly blue and red aren't the only colors out there, and it's time NYT writers begin to see the world through a broader lens
5
very few upper middle class students have huge student debts their parents pay for college. You could put a ceiling for those making 100,000 or more currently. or gradually decrease it after 75,000. that would solve the problem.
@Terri It puts a huge burden on the parents. Will the parents be able to retire?
I tweeted you but I'm particularly salty about this one. As others have mentioned, I've had to drastically adjust my spending in my first career-level job. My parents were both teachers and were generous w/ their support but I still had to work 2, sometimes 3, jobs to pay for everything while studying full-time AND still had to take the maximum gov't loan amount every year. I was fortunate to have a graduate assistantship for my master's but even then I had to take on some debt. At the bare minimum, all student debt payments should tax-deductible AND the gov't shouldn't be making a profit on the loans. I have a few low-interest loans but the lion's share of my debt is sitting at 5.5-6.8%, over 3x what my auto loan is.
6
Eliminating student debt would essentially be stealing from the lenders. I know "progressives" are all for federal government stealing from those considered not politically correct, but consider who would ever give student loans again? It would make college unattainable for millions.
2
How about a one time debt forgiveness, then we work on subsidized tuition??
1
@Scott We have subsidized tuition, Scott. Every state college and university is subsidized by the taxpayers of the state.
My state (Georgia) pays 75% of tuition costs. This is something that should be considered by every prospective college student - know what your tuition will be. You can get a fine education at state schools.
2
We are a country of predators. It has always been this way. Two of the largest frauds in this country involve the predators in education and in medicine.
That we allow these vultures to prey on our children is a travesty. (not even counting the total fraud called Trump university-debt which can't be erased by bankruptcy-but hey, t is still rich).
Banks got bailed out with negative interest rates-bank execs got huge bonuses. The middle class got foreclosed on and our kids got 6.5% interest and a lifetime of debt payments. America, this is what we've become.
My advice to kids, do not take out loans any more than the value of a used car to get an undergrad degree. There are still plenty of colleges where this is possible. Anything else is financial suicide.
College should be free or low cost...period.
5
I beleive students should pay into their higher education but I don't believe anyone should be profitting from what we should hold as one of our highest goods - educating our youth.
Interest rates should be the absolute lowest cost of borrowing by banks and the federal government. Students should pay back loans as a reasonable percentage of their post college income so that these folks can get on with their adult lives.
Students ripped off by for-profit colleges should have their debt forgiven and student debt for for-profit colleges should be outlawed because it is nothing less than financial fraud.
I'm just going to have to disagree outright with this analysis.
The true cost of college has gone through the roof, and we can't figure out where it goes after that? It doesn't drop in to the pockets of professors, because they don't make that much money. Who's taking all on the money?
Tell us that, then tell us you want to them to get paid all of this borrowed money. Tell us that what they do is so important that kids should be indebted from the time they exit the womb to support these activities.
Let keep it simple. Erase the debt.
4
Ok. See your point. Where are you on either a tax deduction; or a tax credit? Thanks.
The availability of student loans is what has allowed college closts to go up, up, up with no end in sight.
5
I agree that eliminating all student debt is a bad idea. I think the government getting involved in loan forgiveness b/c the borrower made decisions that limit that individual’s ability to pay back a loan is ridiculous. The government should use the leverage of federal funds to force schools to limit tuition increases and encourage states to fund their colleges more adequately. As long as state schools can just increase tuition to pay for amenities and students can get loans to pay that amount no party is incentivized to change behavior.
2
In the short run, I hope we do as Mr Leonhardt suggests and help those who need it the most first. But I also hope that we bring back affordable tax funded higher education. I had the good fortune to graduate from a California public university in 1970 before Ronald Reagan's tax cuts to higher education had been fully implemented. My tuition to UC was $200 a quarter, full-time. All applicants who met admissions requirements were accepted. One could matriculate at CSU for $45 a quarter. Public education has been under attack since Ronald Reagan was first elected governor of California. We didn't get here by accident. This is the result of decades of Republican tax cuts and a secret war on publicly funded higher education. That we are now denying large numbers of intelligent, motivated and hard-working young people access to higher education is the height of social insanity.
2
A blanket transfer of student loan debt to the taxpayer is a very bad idea. Not only does it put a huge drain on funds that are needed for other purposes, such as infrastructure and health, it also encourages the venal interests of that subset of 'students' whose main goal was/is a subsidized vacation at a nice resort (read university) and the venal interests of universities who then can offer ever more expensive 'studies' that have low performance standards and little or no significance in the real world.
This attitude is not in conflict with the fact that efficient and well managed support of actual meaningful education with high standards for both student performance and faculty performance is a top priority for any successful society.
Some debt relief, yes. Debt cancelation, no. Cessation of throwing money at anyone who says they want to be a 'student', and then expecting them to use it wisely and well, yes.
3
For-profit colleges and for-profit trade schools are at the root of the 40% of defaulting students who have not received a degree. These "schools" expedite student loans to negligibly qualified who have little chance of success, who decide it is pointless and drop-out. Many offer fluff "courses of studies" that never lead to bachelors or any certifiable degrees or certificates. Trump's esteemed Secretary of Education, Betsey DeVoss and her family, as well as Wall Street firms such as Goldman Sachs, are neck-deep in the "for-profit" college scheme. They are in it for the money.
6
What about those of us who have $350K in debt. I became a primary care doctor (one of the lowest paying fields in medicine yet most needed) and work in an academic setting to train our future doctors... so get paid less than the national average and get paid $100K less than those in private practice. My monthly payments do nothing towards my loan as the interest is a whopping $50K each year. I am doing PSLF yet it is scary thinking about the fact that 90% of people’s debts haven’t been forgiven. There needs to be a conversation about the cost of education! It’s absurd now. A graduate degree leaves u in debt the amount of a mortgage. An undergraduate degree leaves you in atleast 30K-50K in debt and usually more... for Many a 4 year degree isn’t enough to pay their debt and keep up. Countries besides the US have lower cost education and some ask that you pay that back by working in underserved areas. Maybe we should take a look at that instead of making education a business.
7
If upper middle class means priced out of buying a house and fear of starting a family because your student debt will burden you into middle age, then that describes most people I know. Can't be good for the economy.
5
The missed point is the opportunity cost of student debt. If Zuckerberg or Musk had $50,000 in student loans when they first had their ideas for their companies, would they have become entrepreneurs? Almost certainly not. Same with so many people who have changed the world as teachers, social workers, writers, and artists. Many older successful people love to brag about how they started with nothing. My generation would LOVE to have started with nothing -- instead we begin adulthood $50,000+ in the hole.
5
@Lisa Musk is not a good example to use:
"Los Angeles entrepreneur Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into space.
"And he's built those companies with the help of billions in government subsidies.
"Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. "
That's the Los Angeles Times: https://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html
1
@Lisa Musk is not a good example to use; neither is Zuckerberg.
Zuckerberg was hired by two friends who had started a program they called Facebook. They asked him to help write a particularly difficult section of code. So much for friendship...........but maybe he did see more value in Facebook than they envisioned.
Elon Musk as an entrepreneur - with billions from US taxpayers:
"Los Angeles entrepreneur Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into space.
"And he's built those companies with the help of billions in government subsidies.
"Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. "
That's the Los Angeles Times: https://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html
1
@Azalea Lover Your point supports mine, we're not disagreeing. Musk and Zuckerberg were able to succeed because they came from privileged backgrounds and had access to Ivy League education without incurring student loans. There are probably many more middle-class young people as smart and entrepreneurial as those two who cannot afford to work on a start-up idea because they need a stable salary to pay off their loans.
Less radically, instead of "cancelling all student debt," how about changing the bankruptcy laws so that government-guaranteed student loans were dischargeable in bankruptcy? That seems like a much more practical approach. The obligation to re-pay the loans still rests upon the student and any co-signer, but the option of discharge in bankruptcy puts such debt on a more equal footing with all other consumer debt.
1
What this article fails to address is the causes of massive student debt becoming the new normal. Why does this generation (my generation) have to go massively into debt just to have the same thing that the generation before us was able to pay for by working a part time summer job? We are asking the youth to pay a much higher price just to be able to compete for a chance to make it to the middle class. That's regressive, not progressive. No wonder so few of my friends and coworkers are way behind where their fathers and mothers were at our ages.
The progressive agenda of forgiving student debt is valid because the existence of that debt should never have been allowed in the first place.
12
A modest proposal. First some background.
Most large corporations offer to match employee contributions to 401(K) programs. In most instances the employee and employer contributions are not taxed until they are withdrawn. However, employees with student loan debt might not contribute to their retirement accounts because of their student loan repayment burden.
The proposal - Mirror the 401(K) program with student loan debt. Employees can "contribute" after tax money to pay down their loans and employers can match that money using the same match formula as the 401(K). The combination of contributions that are subject to the match (student loan and 401(K)) can't exceed the current annual amount.
This would allow students to pay off their debt as well as have money contributed for their retirement. They'd be incented to pay down debt. It's after tax money so the government doesn't lose, and employers pay only for the incremental people who otherwise would not have saved for retirement.
Will it solve the whole problem, no. But it should be a bi-partisan way to start chipping away at it.
1
A country interested in citizens that understand their Constitution and their civic duty, that wants to invest in the future productivity of its work force, that understand that basic research is tomorrow's inventions, and that education in general is the key to a better future for everyone, pays for education for all students.
Maybe there should be limits to the total, so get we are not paying for the Ivy League educations of the mega rich, but I have no problem paying for college for the top 25% of earners, if we are also paying for the bottom 75% to go to school.
First of all below the top 2% or so, money doesn't go very far these days. Almost all of the income gains over the last 40 years had gone to the richest .1% of the population.
One of the main reasons students end up with debt and not degrees is that they can't afford to finish school, and have to work too many hours while in school to do well. I know plenty of ex-students in this situation.
The USA has to stop being penny wise and pound foolish. We can't afford to not invest in education. We could make some changes to dissuade universities from paying so much for administration instead of tenured professors, and to channel more resources into education facilities than into extras, but investment in preserving and critical thinking pays for itself many times over.
Invest in our future, or we will continue to fall behind countries that invest in their citizens.
5
This article ignores the reality for many people in my generation. Why should income alone determine whether one deserves help on student loans? The amount owed is just as important. After all, these repayments can significantly diminish one's effective income.
The article points out that $27,000 might require monthly payments of $300, or $3,600 a year. That's a big cost for someone with a low income, and a drop in the bucket for someone wealthier. But what about someone who took $120,000 out for law or medical school? They might pay $1,500-2,000 per month. Suddenly, that "high income" salary of $80-$100k before taxes doesn't go so far.
Student loan forgiveness is fundamentally progressive, because the exorbitant cost of education and high interest rates represent the absolute worst of capitalism and it needs to be reined in.
The cost of education does not correlate to its value (if it did, why has tuition skyrocketed since the 1970s?), and many young people sign a devil's contract for decades of their life before they are legally trusted to rent a car or drink alcohol. Adding insult to injury, these loans get special treatment, making them nearly impossible to discharge. Shouldn't lower risk correlate to lower interest rates? Apparently not.
9
This is a dangerous article.
If one were to be cynical, one could say that it's an argument to avoid doing anything at all.
For example - a minimum living wage won't solve all poverty issues, so let's not do it. Or controlling carbon emissions won't solve global warming without moving away from fossil fuels entirely, so let's not even control carbon emissions.
It's dangerous because in the name of not doing enough, it advocates doing nothing.
This argument has often been used to deflect and delay until the issue passes over and the status quo is maintained, to the benefit of some.
8
So I suppose we should keep pumping money into off-shore conflicts and massive "defense" spending, instead of injecting money back into the domestic economy via more disposable income for younger tax payers?
4
The debt doesn't need to be forgiven to make a difference for ordinary Americans. (I say this as a holder of significant loan debt.)
Actionable steps that would make a real difference:
1) Cap all interest rates at a low rate. My rate through the federal government is 7.5%. I owe more now than when I graduated because my payments can't keep up with the interest.
2) Cap all payments at 10% of discretionary income and standardize how that will be calculated regardless of income tax filing status. There is a random mishmash of payment plans. IBR. New IBR. PAYE. REPAYE. They're all over the place with what counts as income and what that rate is. These are based on when you borrowed, nothing more.
3) Put the liability on the servicers when they provide bad information to borrowers or when they certify borrowers as eligible for public service loan forgiveness.
4) For public service loan forgiveness, don't make it all or none. Allow partial forgiveness. This will still encourage people into public service, but will also provide options to leave.
5) Don't capitalize interest during forbearance. This is just a KILLER. People have emergencies and it's just a slap in the face to recover from it only to have to start paying interest on interest after capitalization. I only recently learned that cancer patients will now not have their interest capitalized. A tiny step in the right direction, but the practice of capitalizing interest needs to end period.
7
Current undergraduate costs range from $80K for 4 year public institutions to $250K for private institutions. To this we need to add the almost mandatory cost of graduate school. This is a lot of money. It is my experience as a parent, that getting the $20K to $60K in cash for a school year requires even some members of the top of the middle class to take loans unless there is generational wealth available.
The question should not be is student loan forgiveness progressive or not. It should be are all we better off eliminating the current student loan burden.
The current student debt regime is equivalent of loan sharking: promoted by the recipient of the money, with high interest rates, and no restructuring through bankruptcy. All debt should be subject to bankruptcy. To add insult to injury, kids taking student loans are partially subsidizing low income students that get need based grants.
We need to revisit how we provide higher education to our citizens. It is my understanding that kids in other countries can go to college for minimal tuition. Just google tuition at public institutions at the EU. It is difficult for our kids to compete in the world when their price of entry is at a minimum $80K more than their peers worldwide. Our public universities should be tuition free or at a low nominal fee. Education is a public good. Students needing loans should get them at zero interest rates or almost zero like our top financial institutions do.
9
Maybe before people are allowed take out student debt there should be a document that show how much someone will have to earn at various points in the life to get it payed off, and then compare that to what the current average salaries are for current graduates of their intended majors. Maybe less people would go to private colleges they can't afford to get degrees in liberal arts fields with little chance of ever getting ahead of their debt. I think there is a case to be made for relief in cases of for profit schools which are arguably frauds. But if someone took on too much debt at a legitimate school in a field where salaries doesn't cover the costs of the debt I can't see why we should nationalize their errors in judgement.
2
But... what if upper-middle-class students didn't need to take those top-paying jobs to pay off their loans and, instead, used their (presumably) first-rate minds and privileges to fulfill their dreams by opting for careers that served society better than corporate law or Wall Street work? Your take does nothing so much as reinforce the class system. The world would be a far better place if more Yalies became teachers and social workers (many of their parents would even be proud of them for deciding to make/have less). They could still afford a perfectly sufficient life-style while doing something less craven than selling their souls to pay off their debts instead of managing money or playing the necessary games to become a federal judge. They might even be happier and more connected to the world. The most successful programs in our country are universal - lots of affluent people love their Social Security and Medicare and, because these are not "needs based," they are that much less likely to support taking them away from those whose lives depend upon them.
6
I think an unanswered question by those who tout tuition free or debt-free higher education: what happens when my $40k B.A. becomes the cost-equivalent of a high school degree?
(yes, I know there's a debate about the quality of a bachelors already becoming the 'new, ubiquitous high school diploma', but that's not my point right now).
I'm not saying we should shower our children with thousands in debt and a 6.7% interest rate, what I am saying is we should be skeptical of making everything free and accessible.
1
In the event - Students who are not able to find jobs to support loan repayment. Why not allow these Student to renegotiate these loans under personal bankruptcy. Unfortunately these loans have been systematically removed from personal bankruptcy proceeding - if businesses are allowed to renegotiate any type of loans / leases under bankruptcy why not allow individuals. The objective hear clearly seems to harm people with student loan and bind them in financial bondage.
1
Mr. Leonhardt,
I think you are misunderstanding the benefits of this. Sure, progressives need to focus on reducing inequality, but there are lots of types of inequality. For example, people of my parents generation went to college without generating large debts, for the most part, because their parents paid, either directly or indirectly through public funding of universities. and the economy flourished afterwards. Those people now own the banks, at least in part, and are profiting off of the next generation rather than supporting it. The current generation of graduates are inheriting a massive national debt, collapsing environment, and massive personal debts on top of it. It is preventing them form buying homes, having children. Etc. The young people are a disadvantaged group compared to their elders and it is progressive to help them out.
5
The issue of universal debt forgiveness is a political issue as well as a policy issue. From a policy perspective, it is hard to argue that there should be no income test to forgive student debt. From a political perspective, it may be necessary. Social security is a universal benefit even though from a policy perspective much of the benefits go to those who don't truly need it. Warren Buffet is eligible, for example. The importance of universality is that it broadens the base of political support. Just as the Trump tax cuts threw a sop to the middle class in order to give benefits to the rich, so too debt forgiveness needs to throw a sop to the top quarter of income earners in order to secure its political success.
1
Rather than debt forgiveness, I'd like to see a program that reduces interest on debt to zero for those who qualify--not to include the super-earners that Leonhardt refers to. I'd also like to see the courts compel the Federal Government to follow their own rules and grant loan forgiveness for public service jobs.
5
We were on the right path when the law was that lenders had to discuss and disclose income stats for areas of study or when there were meaningful discussions that student debt should not be allowed to exceed a percentage. Voldemort and His Swamp rats are making a bad situation worse by removing truth in lending or school qualifications.
We should seriously make school really affordable for everyone.
Student debt for legal and medical and specialty trades are absurdly high. Doctors have to avoid basic practices in favor of higher paid ones to cover debt. Paralegals and Dental techs are taking out loans while jobs are scarce or the "gig" economy has then scouring for multiple gigs to make ends meet.
Fairness, I guess, is what would be really nice!
Missing in all of this (and in Bloomberg's recent $1B+ donation to Johns Hopkins University) is that all of this money being spent on higher education (whether from loans, or raided retirement accounts, or family savings) is going somewhere. Skyrocketing costs and debt for one is the cushy salary and benefits of another.
And the dirty secret is that less and less of this money is actually spent on education. University presidents and provosts and deans and assistant deans and assistant vice deanlings have accumulated power and wealth in the current system.
Rather than redistribute the costs of this corruption through government fiat, how about we celebrate and empower schools like Berea that deliver a world class education, tuition-free, through financial discipline and the proceeds of their modest endowment?
5
How about a common-sense approach to lowering skyrocketing tuition costs? How can any university justify $65K in tuition plus an extra $15K or more for room and board?! The US needs to prioritize education at all levels and make the costs approachable for all students. This issue goes way beyond forgiving debt.
Democratic House or not, this administration is not going to do anything about this problem with a champion of charter schools and for-profit colleges in charge of the Dept of Education!
4
Means tested programs become welfare. "Why should I have to pay for something that other people get for free", is the popular refrain. Programs like that are non-starters. Programs like social security and Medicare are popular because they benefit everyone. If some upper middle class families get a break to make education more accessible to everyone, then so be it. With that said, graduate school debt should not be forgiven. Graduate school is a luxury not a necessity.
@Typical Ohio Liberal-Graduate School (I.e. Medical School) is luxury? Tell that to the patients I do surgery on each day. The price of graduate schools, who professions are vital to a functioning first world country, has greatly outpaced salary compensation.
Leonhardt makes a good point -- Anyone who is talented enough to benefit from a college education is already relatively advantaged. Paying off their student debt is welfare for the wealthy.
However, education is presumably a good investment, like investing in a 401(k). A good case can be made for deferring the taxation of income that is used for such purposes. This would mean making tuition tax-deductible for students, parents, or benefactors, with a carry-forward for those who currently have little income.
2
According to the Baum Lee study linked in the article, the bottom three quartiles of household income owe nearly 100%, of their annual household income in student debt, and for the poorest families over 100%. Surely a debt forgiveness program could be focused on helping these families.
I generally find David Leonhardt's columns insightful and in line with my values. This one I question. Most really rich people have paid off their loans. Those remaining with some debt would not take much of a bite out of the budget.
People are more likely to support a debt cancellation program if it is universal. Once we start excluding rich people, it is less likely to become law. It is the same with social security. We could exclude recipients who have a certain level of wealth, but that is guaranteed to put social security in jeopardy. While in a perfect (progressive) world your proposal makes sense, we don't live in that world.
3
Is there really an upper middle class today? I think you overestimate what people can afford after they pay their living expenses. And I am including the student's debt and two working parents.
Also, high student debt prevents people from choosing important but poorly paid professions. The answer is not "well, maybe your social worker niece should have learned to code."
I believe that there should be a limit to how long one has to repay their debts. Say, student X pays $Y amount per year (based on one's salary). They pay for, say, 10 years. And the rest is forgiving. Also, any university that receives federal funding should conduct a needs-blind admission process, and tuition should be capped. I'm a liberal. but our liberal colleges have failed us with their astronomic tuition prices. A mediocre college can charge $50,000 a year. No working parents with non-investment banker salaries could say enough to pay $200,000 for their child's tuition and
3
I'm almost 60, and still paying off student loans. I went back to school for a masters certification (after working for 30 years) in hopes of getting a foothold in an online teaching career so I could work while caring for my son, who has a disability. It didn't pan out. Thankfully, he's doing much better with good treatment, but now I have my own medical issues and $350 a month in student loans on a very limited retirement and support check. I care for him so he can attend college, now. Many older people who have had problems like mine end up with student loan debt that hangs around well into retirement years. At some point, we need a forgiveness program that recognizes that some people simply cannot repay debt.
2
I graduated with very little debt because I worked 30 to 40 hours a week as an undergraduate to be able to go to college at all. Also there were not the generous loan programs or Pell grants in my time. It was hard to find time to study so my grade point average suffered. I still managed to get into a graduate school after serving in the army and using the G. I. Bill I got to go with out working and oh my God it was easy. I got sleep I got to study and I loved it. I borrowed a little after I got married but I ended with career and a god life.
That would not be possible today tuition have gone up to much housing costs are over the top.
We need to lower the costs to where someone can go collage and pay their way with a part time job.
To be fair we need to give some sort of debt relief to those who have immense student debt and a. re serving in low paying professions like teaching at all levels.
Interesting. So Progressive policies, if enacted, should not extend to all Americans? Figures. Does the Left need to be reminded of the main tenet of Marxist-Leninist-Socialism that pledges free access and distribution of goods, capital and services, which the more radical of their lot embraces? Marx stated, “From each according to his ability, to each according to his needs." Marx stated all people, not just a few people. But in order for this Utopian world to work, all people must surrender their assets, their property, their means of production to the State, so it can redistribute it accordingly. Are the upper middle class and elites going to do that willing? In the past is any guide, the confiscation of wealth requires a revolution, as in Russia in 1917, in China in 1949, and in Cuba in 1959, after which a totalitarian dictatorship is required to enforce it. Is that what America wants?
Sounds like the argument for eliminating the home mortgage deduction, claimed to benefit mainly the afluent. So the Republicans took it away and gave the money to giant multinational corporations. Is the world a better place for that? Yes, college students mostly come from more affluent families. Most that I know are struggling even well into their thirties when they should be buying homes and starting families but can’t afford it. Most don’t go straight to Wall Street. Yale is not representative. Yale does not give loans today either. Their families end up helping support them for years after college. Yes, it would be more progressive to help the truly poor. Is that going to happen or are we going to continue subsidizing the rich?
1
This article's premise is utterly wrong.
The average young person in America today has at least some college education. All but the richest and very very smartest got that college education at least partially via debt. If the phrase "middle class" is going to mean anything at all, it should mean the class of people at approximately the 50% mark, and that means for anybody between the ages of approximately 18-45 somebody saddled with student debt.
There are also some knock-on effects that Leonhardt is ignoring: A really big one is what happens to the housing market when elders go to pay for their retirement by selling their homes, only to find that the kinds of young couples that 40 years ago would have been interested in buying their home now are out of the market because they're busy paying back their student loans and can't take on more debt.
2
Asserting a debt forgiveness program is not "progressive" because it helps the middle class is nonsensical. Any reform intended to make citizens' lives better is progressive. Even assuming it's true that people who have significant debt usually make comfortable salaries, it's worth considering whether they might have made different, less lucrative choices if they weren't saddled with student debt and the potential societal benefits that inure from that calculus.
1
I’m seventy and paid off my student debt, as did my children. Is your plan retroactive, or does it merely make life easier for these young adults?
2
I am confused about something when it comes to college debt. I have never borrowed money to go to school so I dont know how it works. When I borrow money for a car, a house, etc I know exactly how much I owe. Why do people who come out of college seem shocked at how much they are in debt? Don’t they know when they borrow the money how much they are going to have to pay back?
3
@KCE No, they don't! That's part of the problem. There's a few factors at play:
Some loans have variable interests that aren't locked in until graduation.
In a given year, you know only the amount of loans that you are taking out that year. Next year, you might need more loans depending on if tuition increases, you lose scholarships, etc.
Whether you pay your loans back over 10, 20, 30 years depends on a number of factors, and it's not all figured out until graduation. The payback period has a huge impact on monthly payments.
When I went to grad school in 2005, it was virtually impossible to get an accurate estimate of what your monthly loan payments would be. Now, it's getting a little more transparent, but still has a ways to go.
4
@Itsy thanks for the reply. That would scare me to death. Are “student loans” the only way to go? I guess you would have to have some collateral to borrow from a bank. I am not being critical, it just seems like there should be a better way than borrowing money that u have no idea if you can pay it back. But it also doesn’t seem right to just forgive a debt because I made a poor decision. Its all very confusing. How did we get to this point?
2
@KCE
Your questions are great...
It is true that going into the student loan debt, we have some idea of how much we are borrowing. However, two things make student loan debt distinct from home ownership.
First, the on interest rate on government loans is double a home mortgage. Think of how much principal you actually pay on your home every month - then halve that. It compounds far too quickly, and at this point I would say unfairly.
Second, you can sell your home and repay some or all of the debt; you can't sell your brain to pay back your student loan. You make educated decisions about how much you will earn, but if the job market is bad or life happens (kids, illnesses, etc.), you are still stuck with the loan payments.
So while I call my debt my second mortgage, in reality I am beginning to look at my government student loans as a permanent tax to bootstrap myself up from working at the gas station. Unpleasant, but a reality.
How we got here is a complicated, messy story. It involves helping low-income families obtain educations, workplace demands for college education without increased pay, increasingly high tuition rates at state colleges, and of course 2008. It is truly too much of a problem for one comment, much less an opinion piece.
But it is absolutely a problem, not just for people on a personal level but for society: what happens when no one goes to college in a generation because of their parent's experiences? It needs to be talked about...
I think a better answer is a straightforward financial aid system.
I left home at sixteen and matriculated several years later at Columbia. I was so poor that I got a free ride on the tuition. The $8,000 in loans I took out were subsidized and no interest accrued until the repayment period started many years later, after graduate and medical schools.
Flash forward thirty years: Our two kids go to college, and, thanks to our situation, they do not have to take out any student loans.
It seems my life has bracketed the extremes, where the financial aid system either works, or is not needed. For most, it's an absolutely labyrinthian process. I've heard countless parents reject private colleges without any consideration because of costs. Few seem to know that the cost of a private college is often less than a public college once financial aid is included.
Yet other parents own too much real estate, often just their homes, for their kids to qualify for aid. And many other students take out loans because they haven't looked at other options.
I think it's good for students to have some skin in the game, but not so much that they bleed to death. Families that are not familiar with the financial aid application process, often poorer families, need resources and good advice on financial aid options, choosing a college and future career plans. Many of the horror stories I hear could have been averted if the families had had access to coherent resources and guidance.
6
@hammond
Bam--with this sentence you nailed it: " I think it's good for students to have some skin in the game, but not so much that they bleed to death."
4
Written by a Yale graduate?
This student debt is another part of what is dismantling the middle class. The students who without debt would normally enter the housing market are instead paying debt; they are deferring marriage and aren't even able to buy cars. If their parents leave them money guess where it goes. They can't declare bankruptcy on this debt, the remedy of the rich. Forgiving this debt gives the middle class a chance to stay middleclass
3
As educators, the author's parents probably had something most upper middle class families do not: a government backed pension. The annuity value of a teacher's pensions is quite high (maybe $1-2 million each) so in reality the author comes from an upper class household where ALL income can be used for housing, education, etc because their employer is paying for a lifetime of retirement benefits that don't go down if the market goes down and can never run out. The author is approaching this problem without understanding the real financial realities of the upper middle class. The upper middle class now needs to save $1-2 million in a DIY 401K (and invest well, withdraw well, etc.) to retain their same lifestyle in retirement. That's why it's wrong to examine this problem solely by looking at upper middle class income as the basis for determining whether student loan debt should be forgiven. Wealth, including the annuity value of government backed pensions, would be a better way of examining who might be worthy of governmental assistance with student loan debt.
4
@JC25
As a person who will one day be the beneficiary of a generous public pension, I an admit: you are 100% correct. The annuity value of public pensions must be brought into this conversation, and all conversations about remuneration.
2
@JC25 Agree with you on this: the class of people in the USA who are better off than any group other than the really wealthy is government employees.
Government employees have the most secure jobs, the better if not best health care insurance, and the best pension system of all.
I wish I had known this 40 years ago, and wish I had convinced my children to get government jobs.
2
It would be beneficial for High School students to be required to take a personal finances course as part of their high school curriculum. I had no such course by 1971, when I graduated HS. I accumulated a debt of only $5,000 upon college graduation, but had to rely upon BEO Grants, Work-Study jobs, and a 3-year college hiatus to work off debts. I suggest better money management skills from having at least one high school course in the reality of money management, would have made the road to college graduation easier.
Living under a parents roof, it is a shocker for most entry level college students to begin to understand just how much money it. takes to survive in this society. Let's give the kids a heads up by instilling money management as part of the HS curriculum.
1
David Leonhardt states that reducing student debt is welfare for the middle class. He cites one study by Baum and Lee. I disagree with the conclusions of the authors, to begin with, but even if true, the conduit to higher education is skewed toward the upper middle class. Many families of modest means do not conceive and know how to finance education, and do not even try. Upper middle-class homes have a higher percentage of debt because equality of opportunity is not widespread in the US. Anecdotal experience has shown that student debt is widespread and particularly so for graduates of non-commercial programs, even teaching, nursing, the arts and other occupations where salaries are capped. I think Mr. Leonhardt is arrogant to throw these statistics around without further research.
1
Who wants 'debt forgiveness'? What we need is debt fairness...Student loan debt needs to be re-financeable (pref. at T-bill rates)….rather than being stuck at 7%. That is unpaid balances double every 20 years rather than every ten. Students can used the freed up income (where they have it) to move out of the basements, rent/share their own place and become adults. Crushing debt is infantilizing the next generation.
Where do you get your stats. Average student tuition debt is in the mid-$30s, not below it. And average entry level wage with a college degree is $11-$12/hr, not the $50K you quote. That might hold at CNN but how many grads start their work-live at CNN. I would suggest you use gov't sources for economic data where available.
2
While one may argue that students can make sound financial judgments in their late teens, I would argue that they cannot... nor can they judge the job market years later that will enable the paying-off of the loan.
What seems to be missing from the argument, is the student-loan-banking complex that both enables schools to raise tuition and fees at an accelerated pace, and the interests of financial institutions often charging predatory rates who have successfully lobbied for laws which unreasonably bind borrowers giving them less recourse than other loans.
4
Even if you are able to pay the debt back, student debt forces people into career tracks that aren't right for them or for the public good. The work of behavioral economics and the power of default options should really come into play here.
I graduated law school with over $150k in debt, which is about the same or lower than many of my classmates (at a top school). Had it not been for this huge burden, I would not be working in a big corporate law firm, but instead pursuing a public-interest focused job. It's true that LRAP and other repayment programs make this easier for some, but the "safer" option is usually seen as a firm job (understanding that obtaining a job is not that easy for law grads in the first place). Once you begin down a path, there is a lot of resistance to change, which filters out many people who want to do good, but also want some sense of security.
Instead of funneling idealistic and hard-working minds toward furthering corporate well-being, lowering student debt burdens would enable people to take on the bigger problems facing our society.
8
I like the idea of eliminating financial aid scholarships (although providing some remuneration for sports, theater, research type things) BUT allowing any student to get interest free loan for education. Parents who can pay upfront are encouraged to do so to lessen the burden of interest free loan program. Private colleges (and perhaps public) can use their endowments to make this possible. Leftover endowment money should go to buildings and program which help students participate in profit sharing businesses throughout college and after performing and designing useful work such as remodeling houses they can purchase or rent out, having day care share programs to lessen this expense after college, etc.
1
> The highest-earning quarter of the population holds about half of all student debt
That's probably skewed due to the enormous loans necessary to go to law and medical school (not that many of today's lawyers are necessarily rolling in it either).
3
We need to be more creative than just making promises that others will keep. Do progressives realize how much MORE resentment this will build with others who didn't attend university? This would be the surest way to lose the lower income voter who compares themselves to others and has a jealous nature. Its how people are.
3
As someone whose entire adult life has been about one thing and one thing only, having finally accomplished my goal of becoming debt-free entirely by my own efforts last year, watching everyone else get "forgiven" would be an elegant closure to the circle of futility that "higher" "education" made of my life. At 45 I have no family, no home and a career I mostly don't enjoy. That's a pretty big penalty for youthful dreams and other than economic choices made as an adolescent.
1
It’s hard not to suspect that the ever-escalating costs of college are directly tied into the easy money of the student loan industry. But it strikes me as peculiar that nobody says a 19 year old, who does not go to college, and signs a car loan, should have that “forgiven”, while people who are presumably bright enough to go the college keep blithely signing their name on loan documents, perhaps with little awareness of what the payments are going to look like. Some of this is perhaps the result of wants over needs, all abetted by the marketing push of colleges in league with lenders.
I have seen friends and co-workers come back from college visits amazed at the facilities, dorm “suites” health clubs, 24 hour food services, etc., compared to what college was 30 years ago……a twin bed in a cinder-block room, a bathroom down the hall, and a 2 hour window to get a meal of limited selection. But I got a great education. And I paid grad school off low and slow. Good Investment.
I totally support having the interest rates as low as possible and doing something about the way this debt can mushroom in non-payment, along with having reasonable options for those who have had hard times, or are willing to work in under-served areas with less income potential, but borrowing money that is going to be beyond your means to pay back is not something society should be subsidizing. I’d rather see the money go to taking care of the poor, our elders, curing cancer and Alzheimer’s etc.
3
@Ponderer Curing cancer and Alzheimer's, etc. requires that talented young people are incentivized to study science and enter a research profession. Contrary to what Leonhardt seems to think, scientific grad school is expensive, stipends are barely a living wage, grad school takes at least 5 years, and entry level jobs don't pay enough to allow expensive loan repayments. So if smart young people refrain from "borrowing money that is going to be beyond your means to pay back," medical research in the U.S. will be slowed dramatically. We have already seen a large drop in the number of talented individuals from the U.S. choosing to enter scientific grad school.
@Ponderer
One of the many differences between a car loan and a student loan is that the former can be discharged in bankruptcy. So if the 19-year-old somehow managed to get a $30k car loan that he can't pay off, he can do something about it that might hurt him but won't leave him ruined forever. Same if he runs up a $30k credit card bill on iPhones and lobster dinners and diamonds. Even if he loses it all at the race track or casino, he has recourse. But if he takes that same $30k to pay for the required degree for social work or another low-paying but extremely necessaryy field, or even if he merely lacked a crystal ball to see that the field he was interested in was no longer hiring much by the time he graduated, well, too bad for him. He'd have been better off diamond shopping. Personally, as much as I'd love forgiveness for the debt I took on for the career that didn't pan out, I'd take bankruptcy in a heartbeat if it were an option. Congress ought to work on THAT. It would probably be cheaper because not everyone would take it, and it would also force schools and lenders to change how they do things.
Leonhardt's assumptions are wrong. Not everybody who graduates with a load of student loan debt comes from upper middle class families. For many students who come from working and middle class families, there are limited choices to finance a college education, so they have to rely on student loans. Financial aid workers in most colleges, instantly steer the students to student loans. Since the Reagan administration, the federal government started replacing educational grants with student loans. This trend proliferated, and coupled with University greed,the price of tuition exploded. University administrators took advantage of this "gold" rush and salaries also exploded, look at what University presidents and administrators make. All of this has happened at the expense of students, who are crippled by student loan debt. I strongly agree that student debt should be immediately forgiven, and the system reformed. Stop the abuse, return to educational grants, and make scholarships more available, coupled with work study programs that actually cover true tuition. Universities must be fined and face punitive consequences for any financial abuse of the system. The government bent over backwards to bail out banking gangsters in 2008, and for much less than what was given to the criminal financial institutions, the government can fix this rotten, broken student loan system.
2
It all hinges on how "upper middle class" is defined. I am thinking of the example set by the ACA (aka Obamacare). A good idea that should have gone much farther & been better implemented. With the ACA, "upper middle class" (meaning apparently that one is so wealthy one can afford anything) means an approx yearly income of $48000 for an individual. If one's income is even a few bucks above that cutoff, the consequences for one's health insurance premiums is crushing. I personally pay $860/month for the cheapest (and therefore least comprehensive) health plan I can find. If I made just a little less I could get assistance through the Exchange that would allow me to pay about $150/month for better coverage. Please don't be ridiculous & advise me to slack off, take a worse job or maybe quit working and live off unemployment.
I have the same concerns about criticisms of forgiving student debt for the "upper middle class". Just because an individual or a family works long hours to make a decent income doesn't mean we can afford to be ripped off.
4
Yes - will primarily help the upper middle class. Also remember that about 40% of student debt is for MBA's Doc, etc, who will be fine.
The people suffering due to student debt tend to be low income at risk students who often never graduate. This is a much smaller number than you would suspect and these are the people we need to help.
In the case of Hopkins only 13% of their student qualify for PELL grants, while over 35% of all students in the country qualify. They have not been serving poorer students.
2
To me, that was sort of a throw-the-baby-out-with-the-bathwater piece. I don't think anyone is arguing that wealthier people shouldn't benefit from forgiveness or that such forgiveness needs to be "progressive." Obviously, in any given graduating college class, there are going to be people who do very well (physicians) and people who don't (teachers), but that doesn't mean loan forgiveness is a bad thing because some of those borrowers will end up doing well. There's still the issue of gouging interest and inflated tuition (because universities know the loan money will be there to cover whatever they charge in tuition). The primary push for loan forgiveness is economic stimulation. If a new physician is saddled with $250,000 in student loan debt, it's going to hamper their spending and home buying as much as someone on course to earn a lower salary, with lower student loan balances. Canada, Europe, etc. have low-cost or no tuition, no matter what field you choose to go into. They don't cap it at what they think you might earn later in life. Loan forgiveness is simply a retroactive conferring of a no-tuition education on the last couple of generations, who paid for school and should not have had to - because decent, first-world countries don't charge their citizens tuition. The U.S. only offers guaranteed loans to students in order to enrich banks through exploitation of government aid. Legislators and banks care little if anyone in this country is actually educated.
2
The real Progressive platform is free public college for all and admission must take into account the average score in your high school and not the average score citywide, statewide or nationwide. This is the only way to prevent college from being filled by students who attended the best high schools because they live in the best upper middle class neighborhoods.
Pro according to the working poors, their kids will have the exact same access to a 4 years college degree than kids born upper middle class.
Cons according to the upper middle class, their kids will have the exact same access to a 4 years college degree than kids born working poor.
3
Perhaps this is a quibble, but a number of writers, including David Leonhardt, refer to the student debt situation incorrectly, I believe. In the above column he said “Americans now HOLD (emphasis added) $1.4 trillion in student debt.” He later says “The highest-earning quarter of the population HOLDS (emphasis added) about half of all student debt . . .” I believe that student debt should be described as “owed” by the borrower rather than “held.”
For the record, I agree that the student debt issue needs a more nuanced solution than across the board debt relief.
1
Student loans are fine. Charging interest is not
1
Its obvious you don't have a clue Leonhardt. My daughter is a Biology teacher in Lynchburg Va city schools and has been teaching for 20 years. Know what she makes a year,m 45,000, yes 45,000 after 20 years. She is a single mom and has a student loan of 20,000 and all she can do is pay the lower payment which means she never will pay the loan off. But as you say collage graduates make 50,000 their first year and it just keeps going up , tell that to a school teacher.
4
A good solution requires only a minor edit:----
"Cancel all debt for community college students."
Only debts accrued during community college years could be cancelled.
There might still be some small benefit to upper-middle class students, but this would benefit working class families to a far higher degree.
2
Right, graduates of 4 year colleges not going to Wall Street or Google so regularly make a $50,000 in salary or wages. Not.
I see Leonhardt has never queried a waiter in NYC (many of whom went to 4 year colleges Yale included) why she/he is waiting tables--yes one can make $50,000 per year waiting tables in NYC.
And I see DL has never asked an Apple Store employee (almost all of whom are college grads) how much she/he makes in a year.
Duh, the guy with $250,000 in B school debt, who went to Harvard Business, really doesn't have to worry about paying the debt off. But that's grad school. Medical school is grad school too.
Then about the French Literature Phd grad from say Princeton: Will he/she have job offers of $100,000 per year, not on Wall Street, up thesis completion?
Times and Leonhardt are reminding everyone how/why Trump won.
3
The author just uses his singular experience to judge all student debt while I have seen hundreds of students struggle, some failed to graduate just because they drowned in debt. They do need help - but most of all, we need to change the system.
I think general debt forgiveness is not a solution - but for different reasons than the author. It covers the systemic injustice of college cost.
1) It will encourage college administration to keep increasing tuition - unless THEY have to carry some of the bad loans.
2) How can that be fair to the thousands who struggled and just paid off their debt?
Solutions?
While not easy - we should drop our acceptance of college cost. Cut the luxuries, the outlandish upper admin salaries and focus on academics and research.
To reign in the spiral of college cost, any government support of universities, even of students should depend on the university's effort to lower tuition or offer scholarships and interest-free loans.
Any interest-bearing loans should be as low as regular market loans (it is a crime students have to pay 7%).- and given by the state - not a commercial bank. Interest should only start accumulating upon leaving the school with incentives built in for those who graduate.
I did not think this up - that loan model works in Germany.
3
How about starting with LOWERING interest rates on student loans.
7 to 8% is insane when compared to rates Corporations receive.
5
make community colleges and tech schools free, that's where the debt piles up.
1
Higher education should be free. Period. Don't we want an educated population? Isn't this more important than punishing the upper middle class?
2
Let’s think of it using different language: we fine people when we want to discourage certain behaviors. So, with tuition we fine students for wanting to learn more and increase their skills so they can make a bigger and better contribution to society. America’s success has always depended on the education of its people, so why are we fining students, any students, for getting more education?
Jeb Bush as a candidate in the 2016 campaign proposed a student loan program where payback was determined by earnings after graduation. Those above a threshold earnings level would repay a fixed percentage until a defined repayment has been achieved. Those that earn below the threshold would repay less. Poor families would not be impacted. If their graduate is a financial success, she would repay from ample earnings. Those in the social service fields and other lower paying fields would not be penalized for choosing social service, mental health or public school teaching. This plan would expand opportunity while enabling well-educated people to stay in social work fields where loan repayment could become onerous. See - https://www.brookings.edu/research/jeb-bushs-student-loan-plan-should-outlive-his-campaign/
1
I agree with the writer. Debt forgiveness should be targeted to those who were ripped off (non-grads of for profit scam schools) and those whose school debt is truly unmanageable.
This is Hogwash. If there is a concept for debt forgiveness it should be universal and not just be relegated to the poverty line for a free ride. This keeps people under the line to continue to take advantage of entitlements and punishes the lower and middle class who are already building families, carrying debt from education and homes, horrible health insurance policies that cripple the income, possibly killing the incentive to strive, struggling to attempt the American Dream. However, hide income and stay below the poverty line and our Welfare state rewards. We in this country love to argue about values but out there in reality it's a hustle and we can delude ourselves but it is we who have caused and created this hustle by all classes of Americans. Every class has got their own hustle. Now lets stop being silly and trying to classify debt forgiveness. Very small percentages of upper classes are actually carrying student debt very long compared to working classes, middle classes and striving lower classes. It's universal or nothing.
2
Starting salary for a college grad is $50K ?? Where? On Wall St, perhaps.
2
What a waste of paper this column turned out to be. It amounts to just another "I walked five miles to school in the snow, who needs a school bus?" You're clearly quite a successful guy. The rest of us schlepp college loans instead of being able to pay for healthcare and save up to buy a condo or a house. Forget the boot straps nonsense. Let's not continue to ignore lessons from Europe. Have you been there lately? They live far more balanced lives than do we. Let's start examining the cost of a college education in this country. Start with debt free college for public universities. Sorry if that threatens the Yale alumni.
2
I was fortunate for I was able to attain a 4 year degree due to the Post 9/11 G.I. Bill. Granted I had to risk my life for my country and did three combat tours in Iraq. Class of 2016.
2
I usually praise Leonhardt's opinions, but on this one, I'll pass. On a fundamental level of consideration, my first reaction is to wonder about the general impact of payment of post-secondary education through tax money (well spent rather than on some other things, IMHO) in all those other countries that have that system. This issue is in the same category as the universal health care plans. I think Leonhardt falls into the trap of an outdated U.S. philosophy that intentionally rejects the notion of the greater good, as he confuses a fair benefit ultimately for all with a narrow focus on danger of privilege. (His opinion also doesn't consider the immense wealth already even continuing to increase in certain sectors in this country--there's privilege for you!) Maybe having more people debt-free from receiving health care and seeking higher education (perhaps thereby being healthier and even having enough relief to finish college) would accomplish something that citizens in those other countries experience--productivity with peace of mind that is priceless. The age of anxiety here is from many things, including the adverse impact of our current higher education and health care systems based on money--or the lack thereof for citizens who aren't wealthy. BTW, I wonder if that stress is also correlated with the exponential rise here in the suicide rate alone, a rate which is significantly higher than in most other countries. (See the recent article in the Times.)
1
"The average four-year college graduate who takes out loans ends up with less than $30,000 in debt."
And the author seems to have internalized the concept that this is just and equitable. It isn’t. Students borrow the money and shoulder the debt because the only other choice is to not go to college.
It is wrong to look at student loan debt as a problem of individual borrowers’ choices. It’s an embodiment of the deterioration of this country’s social contract over the past 50 years. When the Boomers were college students they could earn easily earn enough to cover tuition with a summer job and perhaps part-time work during the school year. In the ‘60s it was possible to attend state schools in California, Florida, and the CUNY system tuition-free.
We used to understand higher education as a public good. In strictly utilitarian terms, when cost is a barrier to smart people attending college it is a waste of this nation’s human capital. Now we treat higher education as a private commodity, one that individuals acquire in order to boost their personal earning potential. As a percentage of the total cost, state support for higher education has declined dramatically in recent decades. Simultaneously, middle class wage stagnation means that tuition inflation has outstripped wage growth by a factor of 3 or more.
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Out-of-control college expenses are the problem. In the current system the colleges have zero incentive to control costs. All the risk and burden of payback is on the student. Calling for the taxpayer to pick up the tab ("forgive student debt!") creates no incentive for cost control.
1
Disagree strongly David. Your argument is akin to that made by the GOP around healthcare: that people need to have "skin in the game" or they'll just go to the doctor for every little thing. So there are deductibles, co-pays, co-insurance, coverage limitations and many people lose everything when they get some catastrophic illness.
Public education should be taxpayer-funded, from Pre-K through to Higher Ed graduate degrees. Especially with AI coming on strong in the next few decades - wiping out restaurant waitstaff, bartender, Uber/Lyft driving, etc. In other words, the kinds of jobs college kids might take until graduation.
Free Healthcare and Education for all!
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My kids can graduate with mountains of debt or my husband and i can raid our retirement accounts. We hoped to use our home for retirement but with the current market that looks less and less likely. The '08 downturn ate our funds.
1
While I accept my debt (it's my choice, after all) and live comfortably (albeit on a week-to-week budget, even as a professional), I have come to realize the real problem of student debt is not my own debt.
It's the fact that I can save nothing for my children's future.
The student debt problem has gotten so far out of hand it is turning into a negative feedback loop, passed on from generation to generation. With parents being unable to help put their kids through college; with the costs of tuition increasing to a degree; and with the need for secondary education at an all-time high in the work-force; student debt is rapidly becoming a de-facto tax for a young person to enter and remain in the middle class. I don't see this changing in the slightest for my daughters.
That's a tough pill to swallow as a parent. Given the 2018 tax cuts net me an extra $15 a month - and that goes to pay off my loans - I am beginning to think some assistance might be necessary to help out the next generation.
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i don't disagree that this is an upper middle class problem. but the solution is obvious. student debt (or a percentage of student debt) should be forgiven for service to the community (ie non profit jobs, teaching in underprivileged/underserved areas, etc..) over a certain period.
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This is one of those problems that probably needs to include means testing as part of the solution. The left opposes that on the grounds that treating all participants equally is the simplest and fairest solution. But when Federal Outlays are forecast to increase rapidly over the coming years due to aging demographics and increased medical expenses, expenditures on the forgiveness of student debt will inevitably collide with Social Security, Medicare and Medicaid. Social Security and Medicare benefits may eventually need to be means tested to avoid draconian cuts to the benefits of all participants, that will hit the poorest hardest. I think the same type of thinking is required to provide student debt relief for those hit hardest, even if that doesn't seem fair to everyone. In any case, forgiving student debt for all is very unfair to those individuals and their families who sacrificed to avoid accumulating debt in the first place.
The writer assumes that the upper-middle class wealth of the parents is available to the student to pay off the debt. This is a false assumption: the debt is the student's and not that of the relatively wealthy parents. It is likely that the student took out the loan because his/her upper-middle class parents refused to pay some or all of the costs of a college education.
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What we need to do is not to get rid of everyone's student loan debt, but to make student loan debt dischargeable in bankruptcy again. Currently, student loan debt is like super debt, that can't be gotten rid of except in the most extreme circumstances. There's a hardship exception to the non-dischargeability of student loan debt, but it is almost never allowed.
Some people can pay back their student loans, and some people can't. But ordinary people tend not to file for personal bankruptcy unless they have no other option. And even for those people, if they have overwhelming student loan debt, they have no option at all.
According to the Yale Book of Numbers (1976-2000), the gross cost of Mr. Leonhardt's four-year education was $91,830 or an average of $22,958 per year (inclusive of room and board). Based on his debt of $22,000, let's say he paid for one year or 25% of the total cost of education.
Today, a Yale undergraduate needs $53,430 to cover just one year of tuition and fees ($73,180 inclusive of room and board).
Even if an undergraduate gets 75% of the cost of education covered by the University, they are still leaving with 230% more debt than Mr. Leonhardt did 24 years ago.
Further, while federal income-based repayment programs like PAYE (pay-as-you-earn) are great since they cap monthly debt payments at 10% of discretionary income, this calculation is not adjusted based on other expenses, such as housing.
In high-cost rental housing markets like Boston, New York, and San Francisco, graduates are often paying more than 30% of their income on housing. This additional cost burden, often overlooked, dismissed, or discounted, can take what is an affordable debt service payment and make it unaffordable.
Policymakers should consider this and other cost burden factors (such as health care costs) when calculating the impact of student loan debt forgiveness would have across socioeconomic spectrums.
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I teach at a state-funded community college. There's a new dynamic facing community colleges: four year institutions, public and private, are competing for entering freshmen by actually reducing their tuition structures and relaxing once stricter admissions standards. Most of my students gained admission into four year colleges but chose the community college route to avoid the heavy debt of paying for an extra two years' tuition. They will still incur debt once they transfer to four year colleges. I agree with Leonhardt that having some debt is progressive, for it requires graduating students to accept fiscal responsibility. The emphasis is on SOME debt, not the kind of debt that incapacitates graduates at age 22.
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So those responsible parents who opened 529 accounts for their children, made the necessary contributions, and used those funds to finance their children's education are essentially to be punished for their efforts. Will those who feel it is now the taxpayers obligation to pay off these loans also refund all those monies that were put in 529s?
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Absent from the comments I've read--I haven't read them all--are any addressing the root causes of much of the problem of student debt: The cost of higher education is unjustifiably high and many who enroll in higher ed really aren't making a good investment because they're in the wrong program.
Many young people including my own kids deferred serious study to college and beyond. They also didn't decide what to do with their lives until very late in the game.
A lot of time is wasted from 6th to 12th grade. The amount of remedial work required at the college level (and at high cost) demonstrates this.
Pouring more money into higher education under the present arrangement will just pour fuel on the fire whether it supports institutions or individuals. Major reform of the institution is needed.
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I agree that it is the upper middle class that hold the most student debt but that is because they do not get any financial assistance from the colleges. Just because they are upper middle class doesn't mean they can pay over $70,000 per year. Children of business parents show loss and get a free ride, children of low income family get a free ride. So why do upper middle class people mostly in costly urban areas have to bear the brunt.
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Our government prioritizes subsidies for real estate barons and billion dollar corporations over everything else. Why are we not talking about *those* welfare programs in op-ed columns, on a weekly, if not daily basis?
If we can subsidize business, we can subsidize students.
How about this? Instead of cancelling debt, students get to write off their debt in a manner that foregoes them paying any income tax for the next 20 years?
Sound familiar?
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I'm trying to balance conflicting objectives to evaluate what serves the broader interest of our society as a whole.
On one hand...
1. We do endorse personal responsibility and encourage citizens to stand on their own 2 feet.
2. We don't want to encourage institutions to let costs spiral upwards, knowing that students have access to easy money.
3. We don't want for-profit colleges with dubious educational programs to run up student debt that leaves students with little likelihood of earning enough to pay back their debt.
On the other hand...
1. A bachelors degree today is as necessary as a high school diploma was 30 years ago. We've accepted that high school education should be available to all at no cost. Perhaps it is time to include that benefit for college education.
2. While it was formerly possible to attain solid middle class status without a college degree, the number of blue collar jobs that can provide that income level has sharply declined.
3. If we value families, we must acknowledge the difficulty today's young people face in pursuing what was once readily attainable. College debt, the cost of pre-kindergarten child care, high real estate prices, saving for retirement, care for longer living parents, all make a middle class life style out of reach for so many.
True, we should not be subsidizing the upper middle class, but some sort of relief seems justifiable as an investment in our young people that will ultimately make our nation stronger.
But of course anything like this that has a chance of passing would be needs based. If that is done correctly, I would support it.
In 1981, my tuition for Carnegie-Mellon, one of the most expensive universities in America ($6000), cost me $400. I was 21 years old, spent the past two years waiting tables, and so my income was at the poverty line. I qualified for many grants. Over the next four years, I would take on 10k worth of debt, leaving my monthly payment at $125 a month. The sum was paid off in several years, and rarely (if ever) was I late.
Today, Carnegie’s tuition is over $50,000 per year (room and board NOT included.)
Student debt is a massive problem, but the lack of federal and state financial support of schools is the real culprit. In Canada, tuition is 5k. In Germany, higher education is free. Until America places the importance of education far above the $700 billion given to the military, or trillions of tax breaks given to Wall St, the problem of mounting debt and rising tuition costs will only worsen.
Yet perhaps the most telling fact of how Americans see education played out recently. Kindergarten thru high school teachers are paid so little they must take second jobs, and are even forced to have kickstart campaigns for student materials. In multiple states they walked out, yet received no response from the Federal government, nor was this the primary issue in any campaign in the midterms, republican or Democrat.
It’s a bad time for education and it doesn’t seem like it will change in any near future.
@Burke Moses: in your state of New York, the average pay for a public union teacher is over $100K a year -- for a part time job, six hours a day and all summers off with pay.
If you think that is "low paying", I have no idea what would EVER be enough then.
BTW: college in Germany is "free" but only the very top students get to go.
College tuition in Canada varies by university, but it is NOT $5000 -- try closer to $15,000 a year and that does not include books, fees or dorm expenses.
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Here is a better idea: Convert all student debt from accredited (or just not for profit) institutions to be 0% interest. The federal government through the federal reserve has essentially done that for financial institutions with the rationale that private lenders are essential and the bedrock for economic growth. So are our predominantly young students and graduates. The banks won't like it because they profit from being intermediaries between public money and its recipients. However, for the purpose of promoting educated citizens, this should be an exception.
My husband and I collectively owe more in student loans at much higher interest rates than we owe on our mortgage. We both started law school before the economic crash and graduated in the midst of the recession. Because we started law school before the crash, the vast majority of our student loans carried interest rates of 8.5%. Nearly ten years later, I am underemployed in a position that does not require a law degree (but thanks to my undergraduate degree, is relatively lucrative), and my husband works for the government but struggled to find positions other than contract work for several years following graduation. Our lives feel permanently on hold until we can dig out of student loan debt. Yes, we are, by definition, upper middle class, but when minimum payments on student loans are approximately $2k/month, student loan debt can still be debilitating.
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The whole premise of this opinion piece is simply wrong.
The reason to eliminate student debt is not in order to provide support for all people. The reason is in order to encourage college, and even to make it more possible for people of all income levels. It's not intended to be a progressive anti-tax - it's about encouraging people to be able to do more with their lives. It's about encouraging behaviors that tend to lead to success.
And yes, it benefits higher income Americans, because getting the college degree (or even an incomplete couple of years of college) tends to provide a higher income, it takes someone who was raised "poor and working-class" out of only poor and working class. That is not a bad thing. We should be supporting that, not acting like someone not being poor is a bad thing.
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Most college students upon graduation do not secure employment commensurate with their studies. Especially in the non-technical fields. For many college is often a dubious
investment in their younger years. Especially relevant is the acceleration in college faculty salaries - America’s most privileged “entitlement class”. Profs elsewhere outside the US
are generally paid far less, work longer hours and educate students focus on the modern STEM subjects. Granting loan aid relief just perpetuates our huge entitlement class.
The argument for college aid ought focus on the perpetual American underclass. Years ago students from round the globe were attracted to CUNY’s tuition free facilities and helped transform
America. Still a good argument for low cost high quality public college.
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Eliminating All Student Debt Isn’t Progressive
Yes, it's stupid.
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Lower the interest rate charged to the Treasury rate since the loans are guaranteed by the US Treasury. The crime is allowing 7 to 8 percent compounding interest on debt with the full faith of the US.
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Student loan debt is an enormous drag on our economy. Over one-half of people I know who are over 50 are STILL paying off student loan debts from college. This creates a burden on the elderly. If a debtor encounters a rough financial patch during their life, and must defer payments, the amount owed escalates. The debt go on and on and becomes almost impossible to pay off. Not only is this a drag on the economy, but it keeps people from achieving higher degrees, which is a negative for the economy, since an uneducated workforce is not as productive. Student loan debts should be forgiven for everyone over age 50. I estimate that on an original debt of $35K I have paid over $100K and am still paying. It's ridiculous.
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@IonaTrailer Who do you think will pick up the cost of student loans that are forgiven? It will not be the original university or college. If tuition claw-back was part of the proposal I might be in favor of the idea. Otherwise, why should I subsidize out-of-control university and college costs? I already subsidize state universities and am happy to do so as some of the benefit stays in-state and the costs are under some oversight.
If you want to propose national tuition price controls I might be in favor of that as well.
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Most of the discussions are about student debt. That is putting the cart before the horse.
The place to start is the cost of college. Too many schools focus on "wants" the students or parents have--like fancy gyms, student unions, spots fields and complexes---instead of reasonable versions of these.
Also high cost of sports teams, coaches, layers and layers of administration to take care of every "assumed" need, high salaries and bonuses of administration. Majors and courses [and staffing] few take, that don't lead to jobs or even well educated citizens.
Colleges have lost their function to make well educated, productive citizens. Instead they have become very expensive social clubs.
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Whats's wrong with helping the upper middle class? Unlike the filthy rich, their money goes back into the economy rather that stashed in tax havens.
When college graduates have to make student loan payments, that takes money out of the economy. If the loan were instead forgiven and the money spent, the government would get the loan repaid by the multiplier effect of spending that money, and by the increased income resulting from the college degree.
As an example, suppose the graduate has to pay $500/month of his take-home pay to repay the loan. And suppose the average tax is 20%. If that money is spent instead in the economy, there would be the following multiplier effect: The recipient would get the $500 and pay $100 in taxes. He or she would then spend the remaining $400. The recipient of that would pay $80 in taxes, and spend the $320. The next recipient would get that, pay $64 in taxes, and spent the $256. And so on.
Take all this through, say, 15 people, and one ends up with a total tax paid of $382, and an addition to the economy of $2430 - all from the original $500. So the loan payment deficit is $382-$500=$118. But if the graduate makes another $600/month due to his degree, he will be taxed $120 (again at 20%). So, even if the loan is forgiven, the government gets its money back, and everyone benefits from the added money injected into the economy.
So, although it's not obvious, forgiving loans to college graduates has economic advantages.
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Granted it may not be a perfect solution but at least it is a starting point.
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Let me humbly suggest that eliminating student debt is one of the true "rising tide lifts all boats" ideas. The prospect of coming out of college owing more than the price of a starter home deters low- and lower-middle income talented students from taking on college. It's nice that the "average" loan coming out of college is much lower, but (a) people don't live in "average," they live in their life where they find it, and (b) the "average" is lower because people self-select out of expensive educations if they don't have family money or a very good scholarship.
Sometimes you have to give a benefit to everyone in order to get it to the truly needy. Social Security, Medicare: not "needed" by the upper middle class, but would not be as hugely popular and almost insulated from defunding because people with money ALSO get them.
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At least with the government student loans, an income based repayment plan is available. It is not difficult to qualify for and simply requires an annual recertification to determine the payment amount.
@mikecody Income Based Repayment plans keep people paying less than the accumulating interest. They never touch the principle, which continues to expand. In an economy of permanent wage stagnation this creating a "forever debt."
@Megan Until your income goes up to a point where you can start repaying principle as well. They are not intended to be permanent.
While I agree that the inability to default on student loan debt is important, colleges and universities need to shoulder some responsibility of the current crisis. The author cites an average student loan debt to salary ratio of 7% but no student is informed of this metric when signing up for classes or selecting a major. Why do colleges get a free-pass when allowing students to pile on massive debt in search of careers that offer limited salaries relative to their loan amounts?
Credit card statements now indicate the impacts of minimum payments to all borrowers. Why can't schools indicate average salaries by major relative to a students required debt?
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I cannot understand why anyone would attend any form of higher education, undergrad, MBA, even trade school, etc... if the field does not have the prospect of income sufficient to pay off the loan.
Sounds like someone who buys an 18 wheeler truck for 100K because they like to sit in it or show it in their driveway.
I completed a state univ on part time work and GI Bill. When I could not make the books and tuition I worked two jobs and ate beans and Ramen until I could cover the costs for the next semester.
Hard for me to find empathy for someone who buys more than their future can pay for. If anything this is a case for hard nosed economics classes in high school.
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I went to a prestigious public university paying out-of-state tuition. With the exception of one semester, I had a job the entire time I was there. I had some scholarships, but it was primarily loans and my single mother that put me through college. I graduated with about $17,000 in debt, mostly paid off now.
And then there was grad school. Granted, I didn't have to attend, but several people I respected said getting the degree would be smart. But the school offered zero financial aid outside of loans, and the job I had that offered tuition reimbursement laid me off.
I loved my graduate program, but every time I look at my degree I only see the amount of debt incurred, now $100,000+. And it didn't help me much in my chosen field, filmmaking and media. But I was diligent in paying my loans with whatever corporate jobs I had.
Then 2008-2009 happened. Lost a job, couldn't find another one. Started living off of my savings. Today, living with my mother and trying to rebuild. But the loans still hover over me.
This piece conveniently ignores post-grad student loan debt, recent financial calamities, and that it's not just millennials reeling. Many Gen Xers like me are still trying to dig out as well. A forgiveness program could be income-based if you're worried about bailing out rich people. But honestly, I don't care if some affluent people benefit. If it helps a larger group NOT of means, then I say go for it. If we can bail out the banks, we can bail out our citizens.
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@bklynfemme. As a fellow Gen Xer, I agree wholeheartedly. After lay offs related to the dot com bust, I decided to go back to school and earned a law degree . . . just in time for the Great Recession. Took me a decade to get non-contract work in my field. I've been making payments on my loans ($800 a month) but I worry I'll be paying them with social security some day. If social security still exists.
Debt forgiveness is a nice dream. I'd settle for having the interest rate slashed.
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David, you make good points in this article just as you have in the past. Your conclusions are based on statistics, not anecdotal stories. Almost all of the reader responses are personal stories and not representative. I have my own stories but realize that I'm not typical.
I am not concerned when 50% of the debtors are in the top 25% of income earning families - they will do fine, but I am very concerned for the bottom rung where student debt can be crushing. You document this quite well.
Keep up the good work. Statistics often get a bad rap but they are far better than a bunch of personal anecdotes. I prefer data-driven policies over personal story policies that we currently get from this fact-free administration.
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Cancelling all student debt would be grossly unfair to those who struggled to pay off their debt. If there is so much money for education available, let's invest in K-12 education and make it so that graduates are qualified for decent paying jobs on graduation. Let's eliminate pre-K and instead start primary school education a year earlier. Let's pay teachers a respectable wage (starting salary at least equal to one year @ Yale) so that they can better afford Yale for their children.
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@CDN I don't agree that fixing a horrible problem now is "unfair" to those affected by it earlier. Such an attitude locks us into bad policy. Try to celebrate if our country finally comes to its senses.
Goody, another means tested safety net program with plenty of cracks that people can fall through. And we can use the money we save to cut taxes on corporations and the top 10%.
I am not very stoked on the idea of paying people's way to ivy league colleges. Fund public colleges so that they are quality institutions, free for all.
If you apply this logic post hoc to the G.I.Bill that educated a generation of returning World War II vets, and vets ever since, and thereby change the past such that only vets whose parents did not own their homes would have received college benefits, or only vets who had been wounded in combat could apply, how much economic growth would you have forestalled? The argument is this column is short-sighted. Education is always a good idea. It is part of the national defense. It is part of common sense. If Republicans want to save money by quibbling about who is or is not worthy of benefits, they should look first to oil drillers, frackers, and the like. Let them prove poverty before they get help. Allow young people in this individualistic nation to be treated as individuals, not hostages to the assets of their parents.
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FYI, income adjusted repayment only adds to the student loan debt. The difference between the required payment and the income adjusted payment is added to the debt principle. The debt principle grows from interest charges and the payment income adjustment. This practice appears usurious.
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I totally disagree. As someone from a low earning middle class family, I relied on grants, scholarships and loans to complete my college education. I would fully support a loan forgiveness program. The amount of money my friends and myself spend on student loan payments each month could be used to fund our children's college funds or prepare for retirement. As someone who works in HR, student loan debt is the biggest compliant I here from new hires. They seek out companies that offer some type of student loan debt relief.
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I agree with Mr. Leonhardt. Graduating with a modest amount of debt to finance an education is a wise investment, and does not require a bailout. Like Mr. Leonhardt, I also pieced together a patchwork of scholarships, grants, and loans to balance the state school tuition I could afford with my part time jobs. I also graduated with today's equivalent of around $20K, which I paid off within 4 years of employment - an excellent lesson in budgeting and money management that has served me well into my 40's.
If the cost of a private university is too expensive to repay, then there are many fine state schools that offer a world class education at a fraction of the cost. At those schools, you can actually afford most of your tuition with a part time or summer job. I almost never hear about college kids working part time to pay for their tuition today. Are they allergic to hard work?
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Not sure his numbers for average debt load are correct. I have seen debt burden 3x the average he is citing.
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I agree with Susan - those statistics inevitably benefit from the highest end earners with degrees in finance in other fields. As someone with a Master's Degree in Architecture, my starting salary was 50K.
I do agree that blanket debt cancellation may not be nuanced enough to create more equitable access to education, but you've completely missed the point that 8% interest rates on federally backed student loans amounts to government-supported loan sharking. I have no problem repaying my 200K+ in student debt, even after my university assured me I would accrue no more than 75K. I have a problem with the fact that I accrued 40K in interest before graduating and that I owe almost 20K a year in interest alone.
Perhaps the best solution is to overhaul the lending industry and prevent schools from treating students as blank checks with federally backed money.
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The burden of student loan debt is complicated, and will require a hybrid solution. Here's my proposal: let's lower the interest rate on existing debt to zero, and offer forgiveness of a lump sum, maybe half the average debt. (Don't forget, loan forgiveness is treated as taxable income.) Add a cap on loans to avoid this problem in the future. Strengthen Pell Grants to support lower-income students. Work with the states to support state universities adequately, so that in-state tuition escalation abates.
Part of my rationale for not supporting outright forgiveness is based on conversations with someone who has a six-figure student loan debt, including private grad school. He knew what he was getting into, lived beyond his means, ended up not liking the career he trained for, and if his debt were paid, he would go right back to school and borrow another six figures, knowing that could be forgiven too.
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If student loan debt could be cancelled by bankruptcy, there would be fewer lenders, and those lenders would be much more careful about who the money was lent to.
Forgive the college debt for middle and upper income students? Sure, when someone comes along and forgives my mortgage debt! You take out a loan, you pay the loan back. That's how that works.
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@Ms. Pea A really poor analogy considering homes be sold or even foreclosed on while student debt stays with someone until they die.
Maybe when I can get a HELOC on my student debt it will seem fair.
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@Ms. Pea Most old folks get a lot more back from Social Security than they've put in. Let's stop coddling senior citizens. You get back what you pay in!
Upper-middle class? I don't think so. I am a slave to my student loans. And I accept that. They were my choices, but when you only have one choice is it really a choice? I grew up lower middle class and now I am stuck in the middle with student loans that won't be paid off until my kids start going to college. I can't save for retirement, my children's colleges, or even a home.
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The problem with your column is that student debt forgiveness and help for the genuinely poor are not mutually exclusive. We can do both.
And we should. But it should be part of a larger program designed to cut educational costs until they're comparable to other developed nations.
Our current approach to higher education discourages people from seeking education -- a bad outcome for society at large.
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You've got to be kidding me. Undergrads starting out at 50K?
What universe is this journalist from? Undergrads in most fields need experience first, they're lucky enough if they find an entry level job in their field. And entry level jobs don't pay 50K. Only 30K in loans? No, these are not accurate numbers whatsoever. New York Times get real with your reporting. Slanted article for sure.
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@susan
everything he says is correct. https://money.cnn.com/2018/05/14/pf/college/class-of-2018-starting-salary/index.html
@susan Why write this comment when you can quickly google these numbers to confirm them? Without looking too deeply at how the numbers were calculated, it looks like the numbers reported in this article are correct. Though it would be useful to know if the average salary includes the unemployed, which is not clear.
Additionally, these are averages. And if the distribution is right skewed, as it probably is, the median income of college grads would be lower than 50,000. Add this too the fact that if higher debt is correlated with lower starting salary, and there could be a lot of people struggling out there.
But this is all speculative, and I suppose a good article would address these concerns. So it looks like I commented my way into agreeing with you!
@susan average earnings in all fields are hyper inflated in statistical data for most localities because they average the national earnings. What someone makes in the same job is not the same in New York as it is in Omaha. I advise students to look at the actual job listings for entry level jobs in their field in the area they plan to live and never give those kinds of statistics a second thought or any allow them any influence in career choice. The statistical earning information available is at best, misleading for most individuals.
Yes, it would disproportionately benefit the top 25% of the country, but that doesn't negate the benefit it does to everyone else. I've repaid my debts and no longer have a horse in the race, but I still think eliminating student debt is a worthy cause. Education is in desperate need of an overhaul at all levels in this country.
I do agree though that worrying about college debt isn't a priority right now. Public education needs to be fixed first. The way it's currently funded creates immensely unequal education opportunities between wealthy and poor students that effectively cripples social mobility.
I'd like to live in a country where going through public education means you actually receive an education. This should not be dependent on where you live or how much money your parents have.
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The original scam was of the student-lenders, with the pain not felt until the marks had graduated and discovered that their passport to plutocracy was bogus. -- but they still have to make payments on it for the rest of their lives.
No risk for the banks,, as the federal government guaranteed payment. If the loan had been direct from treasury to student, the interest rate could have been like a bond, 2-3%, but our corrupt Congresses (over both party's control) allowed the banks to charge -not a markup for servicing like they do with bonds, but a multiple of what they pay.
Graduates with often worthless degrees now owe this money without the otherwise universal privilege of bankruptcy-- in effect a life sentence to sacrifice a bountiful life to the banking-congressional complex.
If we are amazed that the current occupant won an election for President, being enraged at the entire establishment for colluding in this monumental scam, is an example of the diffuse anger he marshalled. His not having a clue on how to fix it, hardly seemed to matter.
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A more sensible solution would be to charge a minimal interest rate for student loans instead of the current rates which are much higher than what can be considered reasonable.
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You’re on a slippery slope once you start apportioning benefits differently. Think of the Pandora’s box that Medicare would have opened if it had been designed that way. Think of the recriminations which Obamacare causes with its subsidies for those below certain income thresholds.
The lesson? Finance based on income/wealth; benefits the same for everyone.
The open spigots for housing and education loans over the past quarter century have caused widespread financial harm for the many, and a bonanza for the few.
As in healthcare, we need a major rethink: since college is now increasingly what high school once was, it should be “free” for all. A combination of tax regimens can finance it. And ALL outstanding loans should be forgiven.
1
I don't disagree with Mr. Leanhardt in principle. As a practical political matter, however, whatever program we devise to ease the burden needs to be available in some version at all income levels. We already have unreasonable (verging on hysterical) resistance to taxes in this country, and any program that is going to involve higher taxes on the only group of people able to pay them will go nowhere if they don't see at least some personal benefit from them. Why do you think Social Security and Medicare are so hard to kill, despite their demise being the Republican definition of Nirvana? I live in GA, and we have lottery funded Hope scholarships that pay 90% of tuition for students with a B average, and 100% for students that maintain a 3.7 GPA or higher, regardless of income. Does it help families that don't particularly need the help? Sure. But by continuing to exist, it also helps poor students who wouldn't be able to attend college otherwise. And it wouldn't continue to exist if it was purely needs based.
5
Thank you, Mr. Leonhart. I appreciate that you're focusing on the big problem, rather than the sound-bite problem.
I, too, went to Yale, a decade earlier. They offered a loan program that would get repaid as a percentage of earnings each year. If I went for a graduate degree (as I did), I would not pay while I was studying. My debt would be paid off when my class, as a whole, had repaid its debt, or when I paid 150% of my original debt. The latter would, and did, happen if I had higher-than-average earnings. I was happy to pay more; I had received more.
Yale put in the program so non-rich people could afford to go to Yale, and to go on to graduate degrees, and choose to take low-paying jobs (e.g., many in the public sector).
I think President Obama had recommended a similar plan. (Guess what happened.) In my opinion, it is a wonderful, progressive program.
6
There is a difference between government student loans and private student loans.
The private loans are predatory. My daughter has a private
student loan and as soon as she makes a dent in the principle
the interest rate is increased and the loan goes on
with little hope of ever being satisfied. She cannot pay it off
and cannot get out of it. Maybe just changing some of the
laws would at least help those college grads who do not earn
anything near 50K to one day pay off their loan.
5
The problem with David Leonhardt's analysis is that the student's themselves are not wealthy. While many may have upper middleclass parents, that does not be default mean that the students should be considered in the same economic class. Very rarely will parents pay a students loans off for them, so the parents financial status should be irrelevant. Additionally, if you want pushback against the plan, then excluding some groups of students is a great way to accomplish that. A one size fits all approach is the fairest and most likely to succeed.
7
@Upstate Joe Having children without at least the intention to pay for their college is tantamount to abuse. True many can't afford it, but for those, there is help available. I am so sick and tired of hearing well-off people say 'I paid for my education, now my child needs to do the same.' Tuition/room/board/fees have skyrocketed, while salaries/pay have not. Parents, plan/save/sacrifice for your kids' educations. And kids, if they didn't, live within your means and go to community college while living at home. In other words, if you can't afford a Mercedes, a Toyota will do just as well.
1
I hope that you would at least agree, David, that the loan interest rate on student debt should be tied to the government's cost of money. Usurious interest rates do not encourage people to further their education.
9
Do you think free college education in Europe and Asia has somehow made the recipients into less motivated members of society?
When Hillary Clinton was running for President, she made some absurd comment when asked what she thought about free college education, that it meant people needed to have "skin in the game". In other words if it were provided, somehow people wouldn't appreciate it.
This was all said without a shred of evidence. We have only to look at countries where people graduate without debt, to find that there is no inherent virtue in having debt. It's a peculiarly American idea, it seems. And it's not helping improve things. It's especially odd when progressives such as yourself advance such notions.
4
Means testing for income and age would work. I Don't know about too many upper class, well off folks who are struggling with student loans but, I paid off two student loans over my life time, even using my GI bill in the 1960's, and working at low wages I did it but, after graduate school in my later years (I was sixty at the time) trying to hold on in an increasingly competitive employment arena, I found out that older employees just weren't wanted no matter how much education they had or debt. I had one twenty something in Human Resources say to me, "why don't you just retire." I was finally rifted with a bunch of others. Don't let anyone tell you age discrimination doesn't exist. I rolled the dice and lost. Now, I'll die in debt. The self-righteous need not reply.
6
Our government student loans sometimes seem more a profit making venture than a means of ensuring the stability, future, growth and success of society, which is what you get from educated and/or vocationally trained citizens.
You can't discharge them in bankruptcy, you can't refinance them and, of course, go bury yourself in a hole or otherwise hide your shameful self if you happen to be vulnerable in any way because of a disability.
The disability discharge has always been punitive and continues to be so, involving what i brought up in another comment to a piece about being disabled, government sanctioned poverty. This also affected those on VA disability until veteran's advocates spoke up (and good for them). I believe there is plenty of data to show that those with a disabilty of some kind are impacted in what they can earn.
Despite this. the records show I was able to pay off part of the loan and the rest was in payment. I believe I paid it all off but can't locate the records. Even if I can't find them, I would think disability + a record of payment would equal something better than what is essentially debtors prison. What i would give to be free of this suffocating burden.
It would be great if anyone at the NYT took an interest in this travesty.
5
Mr. Leonhardt, you have no idea what you are talking about. I am a graduate of a nationally ranked university, but I have never been "upper middle class." I have been "the working poor" my entire career, and probably will remain so.
In 2009, I lost my job, right at the start of the Great Recession. I did not find another full-time job until 2015. I went to graduate school to pursue teaching certification and a Masters degree. Student loans not only paid for my tuition, but they also kept a roof over my head and food on my table. At the same time, my daughter went to college, and I took out PLUS loans to help her with tuition.
I am working full-time again, but I am making $12,000 LESS than I made in 2008. After various deferments and forbearances, I am now facing almost $200,000 in student loan debt. The company that services my loans wants a monthly payment of $2,200 a month. I don't even GROSS $2,200 a month, let alone take home.
I am now 59 years old, and I have NO idea how I will pay off my debt. I have applied for loan consolidation and an income-contingent repayment plan, but there is no guarantee I will be accepted. I am scared that I will spend my "golden years" working to pay a debt that will never end.
I suspect that you went through college on Daddy's money or some very generous scholarships. You have NO idea what it is like to struggle every day with the LACK of money. Your opposition to student debt forgiveness strikes me as heartless and elitist.
18
@Jack Connolly, I completely agree. I know people who are financially crippled by crushing student debt that does NOT lessen over time. If there could be a way to forgive debt in those circumstances it would be a boon to the economy and the spirit of the country.
5
Eliminate all student debt?
What a horrible idea.
This proposal, typically, is conflated with Medicare for everyone, which is, in fact, an excellent idea and likely an inevitability, given the private sector's inability to provide health care in the way that health care should be provided. But forgiving all student loans, or making college free (an even worse thing), would only hasten the spiral of educational institutions.
I have read a lot of stuff about student debt, mostly in NYT, and I have yet to read a single piece--not one story--that was convincing enough to make me think, "Yeah, we should put forgiving student debt up there with Medicare for all and a $15/hr minimum wage (also a good idea)." Without exception, every one of these stories came from a person who made bad choices--going to a private school when there were less expensive options, majoring in gender studies instead of more practical subjects--and now is calling on taxpayers for a bailout. The most recent example was from a NYT editor who went to NYU, incurred six figures in debt and now whines--his parents borrowed against their house for tuition and face disaster. I'm sorry, but you made that nest. There are also for-profit schools that ripped off everyone in sight--if we're going to do this (and it's not on my priority list), we should start with them.
We can't fix everything. Medicare for everyone, then $15 minimum wage and then we can talk about student loans.
6
Higher education -- college, community college, apprenticeships -- is good for America. Therefor make financing available that reflects its value. Fanny Mae loans are twice the cost of home mortgages. Why? Education loans should be available at or below market rates -- because it's good for America.
9
Public colleges and universities should be free. Eliminate the debt equivalent of tuition/fees for public institutions paid, and cut the interest in half for the rest.
There's too much means testing for public services as it is - it's causing too much "blame the poor" resentment.
4
Most liberal economic plans wind up being huge welfare programs for someone. How about the federal government gets out of the student loan business. What do you think would happen to tuition rates if that happened? My guess is they go down.
4
One overlooked downside of debt cancellation is that, once again, higher ed is given a pass for its spendthrift ways and grotesque pricing practices. Put yourself in the position of a university president—what better solution to the problem of fast-growing, high college costs than to have the government pick up the tab.
4
I fear that as an alumnus contributor, you end up being an enabler. The more you give, the more your alma mater can raise tuition. Thus, by giving, you are not helping students and their families. Rather, you are making it possible for administrators to increase their own pay.
Compounded interest and the fact these loans are part of the stock market is part of the problem. When people are not able to pay their student loans they might get lower payment plan but the interest just keeps making the loans higher. So a person who has been paying a loan is suddenly unemployed or underemployed such as when the crash happened they might have gotten lower payments but the loans ballooned. So when that person is back on their feet they now owe twice as much as the original loan. There is no way to go into bankruptcy when you see a problem a rises to keep the loan from growing larger. That in itself would keep people from having these ridiculous school debts. The stories of people who have a 35,000 debt, have paid half of it off and now owe twice as much. The thing I really don't like about the article is that he ignores the fact they we give "handouts" to the people in this country all the time who really don't need it but we can't cancel student debt because it might help the middle class who can afford the debt? We have to decide in this country if we are going to reform this problem for the good of the country. This article has the same old theme of look who is getting something they don't deserve. I would suggest we think of the problem as this is what it costs us to educate our people. College education is not a luxury. We can't compete in the world if our people are not educated. As this financial problem loomed and grew our policy makers did nothing.
88
@Thea Don't you think out-of-control college costs are part of the problem? Cap college costs or propose tuition claw-back for loan defaults and I might support the idea of more subsidies. Right now colleges have zero incentive to control costs. It's a gravy train for them at the expense of the students and, under the "forgive the loan" movement, the taxpayers.
1
@Thea
Couldn't agree more.
1
Eons ago, in the 80s, UCLA was $750 a quarter for in state tuition/fees , about 2,500 a year. Now it is over $12k.
Costs have risen, but the real driver is taxes have fallen.
Thank the GOP, and the rich. Their greed has led to our kids debt.
4
@Paul - I went to UCLA in the 80s, and I agree that the tuition rises there have been abhorrent. Having said that, please remember which political party has controlled California now for decades. It isn't the GOP.
2
@George Ferguson George, please remember who passed Prop 13.
1
The writer almost certainly has not looked for a job lately. The starting salaries for all but the top tier jobs are falling rather than increasing. Young people are living two or more to an apartment if not at home. This is not the economy I grew up in.
When I went to college in the early '70's, annual college tuition was less than 10% of my father's middle class income; today it is more like 50-70% or more. The $300 per month that goes towards the load is money that is not fed back into the economy. Ultimately, at this point in time, people are working for lower wages and if you divide the salary by the hours worked, it is lower still.
Solutions? Roll back the latest tax changes and apply them to education; the rich don't need it and the poor and middle class with genuinely benefit.
5
Yes, eliminating all student debt is a bad idea. However, the writer of this article and the researcher he quotes gives me the feeling that they have not lived on the streets lately. Education loans are and have been a bad idea from the start predicated on the assumption that education is equal to money without considerations of connections that one needs in order to get a job that pays beyond a base salary and the actual experience requirements. There is nothing magical about education. It's like saying that since you know about architecture, you can now build a house. It takes more than education and knowledge in order to be able to build anything--hammers, nails, land, zoning laws, etc.
2
This is the law of unintended consequences.
The private market used to provide loans to college students and, given that the federal government was already guaranteeing these loans, the federal government decided that it should socialize the market and provide these loans directly in order to (1) lower interest rates for students, (2) increase the availability of loans and (3) save money for the federal government.
Once the system was socialized, the amount of loans provided skyrocketed and the resulting influx of demand caused colleges to dramatically increase services provided (usually by building expensive new facilities) and like clockwork, tuitions skyrocketed across the board.
Now, tuitions are much higher, bigger loans are required and families need to look very hard at whether the decision to go to any college makes sense if they have cheaper alternatives available.
In the end, the government's decision to socialize student loans ended up hurting students. I'm not sure if the federal government makes money off of the loan program or not as there are significantly higher delinquencies than before.
4
The anxieties about student debt are real for sure, but none of this anxiety fixes the elephant in the room - our fundamentally broken labor market. College graduates can be treated poorly because poor treatment of all workers is allowed. Getting a college degree or an advanced degree does not put you on a lifeboat that escapes poor treatment.
The education race, and the credential inflation it produces, diverts our attention from this basic and fundamental problem that “more education” will not solve.
1
I have no problem with the governenment assiting those in trouble with their student loan debt. But what about those who paid their’s off in a timely manner? Should they also be reimbursed? And what about the univerisites who have raised tuition 260% since 1980? Are they going to help foot the bill? And will they be held responsible for the future debtors they create?
2
@Patrick Mallek and what about those (like me) who saved and sacrificed (no new cars, no fancy vacations) to save for my four kids' tuition and have paid for two four-year educations to state schools so my kids have no loans? Debt forgiveness isn't fair to us, either.
I understand that the main focus of this article is on undergrad debt, but it should be expanded to the problems of graduate school debt: https://www.washingtonpost.com/news/grade-point/wp/2018/01/05/where-student-loan-debt-is-a-real-problem/?utm_term=.d3d61c531c45 ("Where student loan debt is a real problem," 5 Jan 2018).
The introductory paragraph from that WP essay:
"Politicians and reporters often trot out recent college graduates struggling to pay off their student loan debt to illustrate the dangers of runaway college costs. But usually ignored in the outcry over student loan debt — which has doubled since the Great Recession to nearly $1.2 trillion — is that it is disproportionately the result of going to graduate school. ... graduate students, including those pursuing professional degrees, accounted for 38 percent of federal education loans but just 17 percent of students. What’s more, those pursuing advanced degrees borrowed, on average, three times as much as the typical undergraduate — $18,210, compared with $5,460. Perhaps even more worrisome is that the share of advanced-degree recipients borrowing at least $75,000 more than doubled between 2008 and 2012."
The subsequent discussion is based on a report from the Urban Institute: https://www.urban.org/sites/default/files/publication/95626/graduate-and-professional-school-debt.pdf ("Graduate and Professional School Debt: How Much Students Borrow," Jan 2018).
74
@JSK I wish I could recommend your comment this over and over and over.
6
@JSK - the statistic he cites about most of the debt being held by those with high incomes INCLUDES graduate debt: doctors, lawyers ... etc. It's world of duh.
1
@JSK, good point. And I think graduate-student debt makes the case against universal debt forgiveness even stronger. Cancelling the debts of high-earning surgeons, Wall Street traders, technology executives or corporate attorneys does not seem like a good use of taxpayer money.
31
Is there no personal responsibility anymore? A student should just go to the college of their choice and worry about the bill later? When I was selecting a college in '81, I glanced at the lovely campus photo on the cover, then opened each brochure to the tuition and fees section first. I made the decision that this particular college was out of reach. Instead, I went to CUNY (Baruch) and one year at St. John's.
Currently, it's $30-40,000 per year with room and board - multiply that by 4. That's a lot of debt for a BA or BS degree. What jobs are paying that six figure salary right out of college? NONE.
It's time for a reality check -- stop the enabling!
2
Nonsense. Student loan debt is a terrible drag on our economy. People living with parents, putting off having kids, seriously.
Stop building massive rec centers on college campuses and let’s stop spending all of our money invading Iraq and protecting Germany and Japan. They needed our help for a while but not now, and they don’t even want us there. Not to mention stopping the tax breaks for Amazon.
Just when I was leaving UF in 1993, they had built a massive rec center. Why?
This country really needs to put its thinking cap back on. Sports and war > thinking and health care ?? Dumb.
3
As with health care, the root of the problem is the taboo topic of costs.
4
Instead of loan forgiveness, students with outstanding debt who have NOT graduated should be given tuition credit and a living stipend equal to the amount owed to FINISH THEIR DEGREE. So they get the "forgiveness " only if they finish college to completion of a degree. This could work as a great incentive for many students. Perhaps they should also be required to attend mandatory advisement sessions. If this program was administered through the university where the student attended but did not complete, with the school only getting the money once the student graduated, BOTH the school and student would be incentivized to work together toward student graduation.
The author has a good point but there is so much middle ground between wiping out student loans and letting them continue as is. Lower the interest rate! It’s insane that so many of us are paying interest rates on government student loans that are well above the average mortgage interest rate. Also, make student loans dischargeable in bankruptcy for those who really need it.
6
Small thinking. I bet you were in the bailout Wall Street crowd that didn't want to help main street. You can pass legislation that would help without just canceling all the debt for everyone.
5
Sending mediocre performers to high-priced undergrad schools seems to be a disease in America's middle class.
I graduated 7th in my high school class. I would have loved to have attended Yale or Dartmouth or Williams but there was no way my parents or I could afford it, even with some good scholarship contributions. So I went to a state school for undergrad where I worked my tail off, didn't spend my nights drunk like Justice Brett, and went to Yale for grad school. I graduated with my MS summa cum laude with $2300 of debt, paid off in my first year of work.
Sorry to say this to dreamer kids and parents, but you're debt for bad decisionmaking is not my problem, it's yours. The government needs to focus on taking care of the elderly, the sick, the poor, the military, and the infrastructure. The last thing we need to do is bail out hacks, partiers, and fools.
3
@Farfel couldnt agree more...I had to pay off my loans. Took four years of monthly payments. Can I get that money back if they discharge everyone else's debt?
2
...and we can't have any programs that help the middle class.
Have you been on campus lately? Have you seen the proliferation of vacuous programming and support for every aggrieved group imaginable? Give the middle class a shot, too!
3
Here's an idea that most successful nations have embraced - free tuition at all public universities. That way only the rich and dumb end up at the private institutions.
Only 34% of Americans possess a bachelors and 11% a graduate degree. Good luck competing with China on those numbers. America does not have an educated population (our president is proof enough of this). Do we really think we can continue to compete with people around the world when so much of our educated population is saddled with crippling debt? And what about the other 64% that have no education beyond a high school diploma (if that)? Are the rich here so stupid that they don't see how the society they have created by giving themselves tax breaks at the public's expense is completely doomed?
I have been teaching Chinese students for many years now. They are smart, disciplined and know how to work hard. After years of dumbing down our schools (and our teachers), the results are painful. My second language Mandarin speakers run circles around my native English speakers. Americans are really kidding themselves with the horrible for-profit university system we have created. And to then charge kids interest on top of their loans? It's Baby Boomers making money off of their own kids' education, and it's disgusting.
4
Said the guy who went to Yale. What about debt relief for students who worked hard to get through their state's second tier land grant university and are anchors of their small communities but are burdened with many thousands of dollars of debt? You really should step out of your bubble.
8
The journalist writing this piece really has no clue about the subject.
Student loan debt ruins lives and needs to be eliminated.
I'm all for free education and health care. That way, Americans can live the lives they were meant to rather than being imprisoned by debt.
4
Obviously never took a close look at who goes to school in the San Joaquin Valley.
1
You do realize, don't you, David, that the very idea of "debt for education" (of all things) is repulsive to most "progressive" western democracies?
It's the same repulsive attitude we Americans have (and we don't even know we're doing it) when we never shut up about how "smokers/alcoholics/...pregnant women next..?" "cost" society "X" dollars a year.
We ought not to care "why" a student needs an education, and then charge them for it; as we ought not to care "why" someone is sick, but treat them.
Is there simply nothing left in our society which is not somehow about a financial balance sheet.
4
Agree. Progressive/sustainable economics needs to focus on making the basics of life that are required to get ahead in the world affordable to people below 50% of household income levels.
The four pillars of moving upward for people born in the bottom 50%: affordable to them healthcare, housing, higher education and transportation. Easy to say but harder to do for various reasons - housing costs in attractive places to live are out of control and no attractive place yet has found the winning formula - just occasionally pieces of it. As Leonhardt points out, college debt at the average level for graduates (which my daughter had a decade ago ($18k), and paid off by age 32) is not really a burden. I borrowed about $36k to support her college, and was able to pay that off fairly quickly as well. But if she hadn't finished - it would have been a waste for both of us. College drop out rates are unacceptably high and that needs to be addressed as part of the formula.
1
Eliminating for-profit colleges from student loan eligibility would be the best first step in preventing further problems. Republicans of course would not support this. They are the leading protectors of these mostly unscrupulous institutions.
I would support charging no interest to lower income loan holders so that their debt doesn’t increase and suspending payments if their family income is below 200-300 percent of the Federal Poverty Level.
3
Lots of great comments here. Interest rates should be capped, and why not create a national service program that says, go to college, work 2 years in X field, and have your loans forgiven? We do that for some fields already - why not expand? For example, get an engineering degree, and work two years for the government on public engineering projects at a reasonable salary?
People who worked hard to pay their loans and taxpayers will be very happy--or at least grumpily acquiescent--if the money they pay to subsidize loan forgiveness goes the greater good of the nation. We could use a national program to address climate change, for example. And can we please value the liberal arts, which teaches critical thinking, problem solving, and creativity?
3
I consider the enormous college debt burden in our country the great sin of my generation (baby boomers). The point is not who needs debt forgiveness the most. The point is where our incentives lie. My nephew from the solid middle middle class built up a large debt studying to be a high school French teacher. High school teachers don't make enough to pay off such a debt quickly. Even the plans to limit the size of monthly payments left him unable to buy a home or start a family in Chicago for many years. I helped him reduce the size of the capital so that he could start a family. I told him I considered the help an obligation. Few young people have the benefit of extended families who can help out in these situations. The result is that teaching is a poor financial choice for young people and they know it. Same for nursing, music, journalism and any public service profession that requires a college degree. This is lousy policy and is hurting our civilization. Let's not quibble over precisely which young people should get debt relief. High student debt hurts all of them and hurts all of us.
5
@mbkennedy If he was from the solid middle class, why did his parents not help him? Were they busy purchasing new cars, taking ski vacations in Vail, eating dinner out 3X per week? Doesn't add up, and I think you've been had.
Eliminate the interest component of the loan . This will enable people to pay them off and further reduce the default rate.
6
Forty years ago, state universities were subsidized in good part by states. The goal was to give every deserving person an opportunity to have a college education. Some schools even had the "if you breathe, you are admitted" policy, promising to weed out the slackers as time went on. Of course, there were some humanities courses that were required for graduation, you know those courses that don't lead straight to a high paying job, but do teach critical thinking. And some people I know took that education and then went into hands on professions like plumbing, where they made a decent living, but also had free time to spend with family and to do things like write books. These loans cripple students. They limit what one can do and set the goal of education as getting the highest paying job, no matter what it takes. It would be nice if those graduates who did not end up starting at $100,000 a year or more right out of school had their loans reduced or eliminated to give them more freedom to work at lower paying, but perhaps more useful to society jobs. To base decrease on family wealth overlooks the way money and wealth can be manipulated and hidden. Also, the unknown factor is whether the family wealth is used as a tool to attempt control the child's behavior, and again, a loan relief program could help a graduate from that kind of family as well.
4
I could have taken steps to mitigate my debt. I could have worked a minimum wage job on top of my 19 credit schedule, attempted to convince my research supervisors to pay me, applied to more scholarships, eaten exclusively canned beans, or avoided any social engagements that required money. But, as I sit on approximately 90,000 dollars of debt, those countermeasures probably wouldn’t have made an appreciable dent. My standard of living is comfortable but strained due to the massive monthly payments I make – notably, I find it difficult to afford healthcare. I have a degree in engineering, and come from a middle class family.
Maybe ‘deleting debt’ is a difficult prospect for political leaders to grapple with, and maybe it sincerely isn’t the answer. But alleviating the associated costs of living, such as healthcare, would be a step in the right direction. Capping educational loan interest rates more aggressively and more widely available loan forgiveness programs would be helpful to people currently in debt. For the sake of those entering college, I would like to see the cost of education immune to uninhibited inflation at the very least, if not subsidized by the government like every other ‘first world’ nation. Also, can we agree that universities don’t need to spend millions of dollars on ‘rebranding’ every couple of years? Or perhaps not every research institution needs a multimillion dollar drone cage...
7
Eliminating student debt - or any legitimate debt, for that matter - is not progressive.
Condemning the next generation to indentured servitude for their attempts (and failures) at becoming the educated generation to follow - is similarly not progressive.
David, I agree this is not a simple problem. But it begins with the outrageous cost of higher education and what that alone does to Americans seeking a solid educational foundation - and it ends with predatory lending.
What is progressive is the idea that our American youth should have an unfair advantage in becoming the generation that solves the difficult problems we have left behind for it - not the current system which burdens the middle class with unreasonable debt while favoring those for whom the cost is not a concern.
Ability to pay cash for one's education should not be the limiting factor in gaining higher knowledge.
5
Our family is not upper middle class.....3 of my children have more than $25,000 in debt for college....one has worked herself out of defaulting on her loans.....maybe completely forgiving loans is not the best but moving towards that would help many young people.....reduce university costs, lower the interest rates and give some loan forgiveness.....
2
This writer isn’t grounded in reality.
$300 a month is a lot of money, clearly this person has lived a charmed life, must be nice.
6
Better this than these constant "welfare" programs for the super-rich.
2
eliminating all student debt??...want another four years of Trump??...please, Democrats, stop all this talk of "free college", and "eliminating student debt"...I'm all for lowering tuition for community college and state colleges going forward, and maybe lowering interest rates on current student debt, but this idea should be should be discarded at once...
2
On the other hand, what group forms the backbone of our society? Right, the bourgeoisie. Without them the NYT wouldn't exist, and Mr. Leonhardt wouldn't have a job.
The benefits of paying off everybody's debt would almost certainly outweigh the costs. You can't maintain a modern society with just billionaires and poor folks. And billionaires and poor folks are both (albeit in different ways) a drain on the middle class. So let's borrow another $1.4 trillion and pay off college debt. It's bound to be a better investment than borrowing for things like cutting taxes for the rich and building more weapons of war.
5
He said it all in the Yale financial-aid woes sentence.
1
David, do let me know when I'm getting that raise. It's just a bit overdue.
4
Who cares if it is progressive? It makes common sense not to penalize people to get education and job training that puts them in higher tax brackets so we can keep funding our government, military and social programs. The republicans just gave away 1.5 trillion to the ultra rich and corporations, we just bailed out Wall Street and the Banks in 2009 with trillions of taxpayer dollars and you are whining about upper middle class welfare. It will be the taxes on the upper middle class and middle class that will bailout our economy after dumb dumb leaves office. Nobody should pay interest on student loan debt. Let them figure out another way to rip is off.
6
I wonder how many former poor people sit in Congress?
4
This is disappointing coming from Mr. Leonhardt, who usually bases his argument on data. While he makes some valid points about the concentration of college debt in the middle and upper classes, he then veers off into worthless personal anecdotes. He had extended family members helping to pay for his Yale education? Lucky for him! What about college grads who are underemployed, working in positions for which they are overqualified and underpaid?
Maybe universal cancellation of student debt isn't the answer, but this patronizing piece offers nothing meaningful and could have been written by someone on the right.
4
How very hypocritical of you!
Many of those in debt who find it an enormous burden to repay their student loans are teachers - and others in public service - who came from families like yours.
Graduate degrees are requirements in these fields and yet salaries are low. Unable to pay off the loans through these graduate school years led to high fees, penalties, and interest.
Your father was a teacher. Do you think teachers don't deserve loan forgiveness?
4
This is the out of touch thinking that lost Hillary Clinton her election and saw the youth vote flock to Bernie Sanders. Litterally the same thinking. In fact I think Hillary’s education advisor wrote a book on this very same subject.
It is the same beltway myopia that had her claim that the piece of fecease legislation know as the ACA was actually doing just fine, when it isn’t.
And the reason people hate the “elites” who listen to the corporate lobiests over the voters.
Let me tell you something. I have been to college twice. Wracked up debt both times. Paid it off both times. And even I can see that we are in a system that is designed to indenture young people.
5
So what I got from this is: "Getting rid of student loan debt would be good for the country, but I'm a socialist, and therefore I'm going to fight it because the solution helps *those rich people* too and not just the poor, so I want the whole stinking thing to collapse just to spite the rich kids."
That's quite the unifying take on how to fix the country, NYT. Glad you're giving divisive socialists a platform to counter the right's divisive rhetoric.
2
I don't understand Leonhardt's anger over the "upper middle class." After all, they pay about 85% of the cost of our entire government and its the upper middle class Yale grads who heavily subsidized Leonhardt's Yale education.
And if these students were "upper middle class," they wouldn't be qualifying for loans. This is a sloppy article reflecting Leonhardt's inability to overcome his class-based biases.
3
As someone whose debt from grad school has ballooned to over $350K, due to unemployment during the recession, unemployment while taking care of a sick mother, predatory lenders due to shuffling of debt from lender to lender without my consent, I am happy to pay the amount I borrowed and a capped interest. But this has reached a ridiculous amount. I would like to see debt limited to the amount borrowed and X% above. NO MORE!
3
You so often show good sense, but here you are seriously under informed, about the state of higher education, class lines, and how college debt has metastasized. You are certainly right about the poison of for profit schools, but you seem stuck in a time warp in re the rest. I suggest you do more research before opining in public on this subject. Beginning with some of the well informed comments already posted.
3
Is this the setup for another means-tested government benefit? If you're poor, your debt gets eliminated, if you're partially poor, your debt gets reduced, but if you or your family are well off, you have to pay back every cent.
There is a good case for such programs, but there is also a threshold where they become too ubiquitous. They require a bit of bureaucracy to verify who really has what means.
What happens if your parents are well off but don't help you?
Finally, education is too expensive, period.
America made a commitment to educate everyone once. At the time, a high school education was enough, so that was what we paid for. Now, it isn't enough. You need college or vocational training. The magnitude of our commitment should be adjusted to fit the times. We should not force people of any means into debt to get the education that they need to be fully functioning citizens in the modern economy.
3
I graduated from University decades ago. At that time, tuition at a top University was only a few thousand a year, easily attainable to those who wanted to go.
As an outsider to the US system (I'm Canadian), it seems that the solution is somewhat simplistic. Lower the interest rate on the loans to the market rate. Better still, since the gov't guarantees the loans, the IR should be what the Fed charges Banks.
One caveat, loans issued for profit Universities are not guaranteed by the gov't.
5
There are good alternatives to cancelling student debt. First would be to charge a very low rate of interest. Second would be to limit the years of payments. Third would be to limit the payments to a small percentage of income. Fourth would be to eliminate for profit colleges. I am sure there are others, but these would be a start.
4
You need student loan forgiveness in order to achieve publicly financed tuition. Debt cancellation and public tuition go hand and hand. Anyone, rich or poor, is going to resent public tuition when they are still paying their own loans. By handing the upper middle class a break, you're actually generating the political capital needed to help lower class students in the future. Taken holistically, the agenda is progressive.
And anyway, I don't think anyone is realistically talking about a blanket debt cancellation. That's hyperbole. I think what members on the left are really advocating is a universal loan forgiveness program. Meaning, you don't need to qualify for a needs based program in order to receive some refund on your student loan debt. Our current forgiveness program with qualification is a complete disaster. That's the wrong way to go both politically and practically.
Finally, I'm not sure where you get your figures regarding college graduate success rates. The numbers presented here seem delusional. Your're discounting the years spent seeking professional employment through underpaid positions or internships. The debt levels obvious don't account for graduate debt either.
The one advantage middle class students genuinely hold over their peers is cost of living. They're more likely to receive support in the form of food or rent. More than tuition, cost of living is the true barrier to a college degree. If you want a needs based program, that's where you start.
4
These former college students owe their debts. They should pay them.
But for all these years the Fed was loaning money at ZERO percent, and the banks were paying NO interest on deposits, and even mortgages were available at fixed 30 year rates of 3.5%, why are these former students obligated to continue paying 8% interest?
Don't tell me "because they signed on for it". That argument went out the window with the 2009 bail-outs.
How about a few years of ZERO percent interest invested in these citizens, instead of Treasury loans to giant banks?
9
I have a close friend with a 50-year-old student debt that has been repaid ten times over. He’s 70. Decades ago, his union wages were garnished and the interest and principle has been repaid at an astronomical amount. Last month, this retired stage hand received a letter informing him they plan to garnish his Social Security Retirement for a student loan that has been repaid more times than anyone knows. This is a bankster GOP racket. The loan never disappears, and none of the records he has show a balance due. The original loan was only $3600. Seriously...? He has retained the services of an attorney who loves to fight bullies. Wish them luck.
6
If the government is going to step in to pay off current student debt, then I also demand to be reimbursed for the student debt that I already paid back!!!!!
2
Lest we forget, many of those now "burdened" with student debt didn't bother to earn any income during their college tenure. And many did not budget their social vs study time well. How do I know this? Because they were my classmates.
It is possible to exit college after ten years with three degrees from excellent universities with no debt. I did it, and many others do it also. I worked every semester, in whatever job that I could find. As an ethic, I chose to not over-party and to not become indebted. Should I now be penalized for my choice. and forced to pay another's debt?Was I stupid, for following an ethic? Is that the message we wish to communicate to the next generation?
I have served as a college counsellor for many years. Every semester, there are scholarships that go unused, simply because students and parents cannot be persuaded to apply for them. Yes, one scholarship is only for books and tuition, another for housing, and another only if the student keeps their grades up. Some require writing a short essay. There are also work stipends and fellowships. These applications are easier than applying for a student loan.
5
The middle class has had enough. We can give huge tax cuts to the 1% which in turn reduces grants available for the poor and middle class. We can give huge tax incentives for big corporations yet easing the burden on the middle class is "counterproductive".
Mr. Leonhardt pulls in the old and bitter bromide that paying back debt builds character (this elixir is only reserved for the middle class and poor. If you are a big corporation or the President of the United States debt elimination is good medicine).
Let's eliminate all current student debt.
Create an opt-in 25 year Educational Payroll Deduction fee for students based on a small percentage of income - say between 1 and 3%. Once a student opts-in, it is automatic and can not be revoked and therefore might encourage retention and completion.
2
No one would loan an 18 yo $80,000 for a car, but with all the guarantees, it is a good deal for the school. A couple of real world fixes.
1) Cap the total amount and the interest rates.
2) Allow at least a portion of the loans to be bankruptable.
3) If the student does default on the loan get a part of that sum
from the school. they need some skin in the game
4)Fix the public service repayment so that it is real
4
After liberals solve tuition debt, they will move on to car loans.
My question is "How many colleges have a class that explains the ROI of tuition debt and how to evaluate amounts and terms.
My guess is ZERO.
4
Who is making $50k right out of undergrad??? We’re still paying for my husband’s loans from his bachelor's degree and he's 42.
5
Why have any free education at all? What is the point of educating anyone? Someone once thought that an educated society helps the society live better lives. Seems like a silly objective, to help one another. Education, David suggests, is just a tool in the capitalist game of life that has no inherent intrinsic value to people. Get rid of all "free education" and lets all follow that dollar!
Finally some slightly bitter-tasting, but thankfully not too sweet, reality and sanity. Thank you. We cant make all the unpleasantness of life go away, but we certainly can end the misery of the worst-off.
For once, I would argue for the good old days where education loans could be partially (only partially) paid off with public service, as so many comments either describe or recommend. And the public service can come first, as it did with the GI Bill after WW II. Leonhardt’s on to something—fact is, people are longing for public service, to counter the facelessness and anonymity of life in corporate America, among other things. Democrats should listen up. Listen up to their humanity, not to their pocketbooks. You, too, Nancy.
This is actually very perceptive. The Democrats are becoming the party of the rich, the Upper Middle Class, and the poor / immigrants. So eliminating student debt caters to one of their core constituencies. The Republicans, in contrast, are becoming the Party of the White working / middle class which often doesn't go to college or goes to trade schools. Follow the money as our two parties re-align. The money drives the policies.
So the idea is to force everyone to pay for the debt of irresponsible people? There are a few problems with that.
1) The people who assumed this debt were adults (18+), they took the money with the responsibility to pay it back. There is no reason to break this contract.
2) Think of the Moral Hazard. While this concept might be foreign to the socialist readers here, it is an actual issue where you remove consequences for poor decisions and we will enter a cycle of dumb financial (college or otherwise) decisions and get the tax payers to bail out the result.
3) You're forcing people in the working class, who chose not to go to college and instead enter the work force, to pay for the 1-4+ years of college/party for people too incompetent to now repay for that experience. This is more than economically wrong, its moral wrong.
There is plenty wrong with colleges from the administrator/student ratio, sky rocketing tuition for non critical educational items or false job promises with useless degrees. Look into those before you subsidize their abuse and give away a trillion dollars in tax payer money.
3
Coming up next: universal healthcare is not progressive, because people with money might get it. See what kind of political legs that has.
1
The superficial fairness doctrine is what promoted mindless globalization and now underpins the discourse around student debt. The worst part of this article is the faux liberal "..This country has too many big problems to start showering the upper middle class...' This is not correct but more importantly its simply not true. Maybe 35% of a birth cohort goes on to higher education of some type. OF this, about 5% of the cohort are from very wealthy families and borrow nothing ; roughly 10% of the 35% are from quite poor backgrounds; The remaining 20% are from middle middle income homes who are not at all wealthy..their only asset is their house and maybe an IRA or company pension if they are lucky.
Last but not least: Its expensive to means test. Finding the deserving in the rats nest of student loans is very costly. Therefore just forgiving all of it is cheaper.
Keep in mind the whole globalization is great for everybody mantra and how it worked out for your community
2
How does one identify "Student Debt". Is just Federal loans? Does it include private Sallie Mae loans? Other private loans? Credit cards carrying tuition? What about kids who bust their humps to pay down their loans where other kids don't?
There is no equitable way to do this. Unless every recipient of a Bachelors degree is given a flat amount.
2
Unfortunate that the current education secretary is a shill for predatory for-profit colleges that exist to mine student loans and military educational subsidies.
1
Bottom line: It's a means to bailout the criminals--college and university administrators.
If they (and their parents) were so foolish to-borrow, and to-borrow, and to bottom, for a university "education"--so sad.
Get two jobs, maybe three, and sell mom and dad's house.
But pay off the debt--personal responsibility--, something that should have been taught in all those "colleges" and "universities." Just ask the administrators--they'll tell the truth.
1
Is free primary and secondary public education "a giant welfare program for the upper middle class"; is the public library, is every benefit for the general population? Or is that characterization an attempt to deprive Americans of the benefit of any program that benefits society as a whole.. Take away the portion that benefits the middle class and you deprive the program of enough support to pass it. This editorial is a poison pill.
1
Of course, it is more complicated, as is seen in some of the comments.
For one thing, it depends on whether you are counting a family's wealth or an individual's wealth. And which family is being considered - does the family mean the parents and other relatives of a recently graduated 22 year old, or the spouse and/or children of that 22 year old or of an older recent graduate?
Then there is the profession or work chosen or available after graduation. A school teacher (or even a primary care physician) in a poor rural county can pay back less than a teacher or plastic surgeon in a wealthy suburb. Do we want to encourage the grad to work in the rural county or in the suburb and at what profession?
So, yes, a one-size fits all solution might be counter-productive. The only way to go would be through a well-thought out (complicated) policy helping those who need the help and encouraging socially oriented work -- and this requires some basic agreement on what is to be encouraged and what not. Democracy, morality, and public policy are complex but worthwhile and necessary factors to take into account. It can be done; just not in a short op-ed. But a good beginning of such a discussion.
Mr. Leonhardt engages in a series of "statistical" arguments that remind me of the ones that gun advocates try to make about why gun murders don't matter -- in otherwords: nuts.
Most of his arguments are couched as the proposition that if the average person feels no pain, nobody feels pain ... that's balderdash. (At the very least he should look at the median, but even that does not capture those who are in the most trouble)
Let's start with that reference he provides, about the average starting salary. If you go read it, it says:
"For example, the survey found that average pay for entry-level software developers is $67,236, while customer service reps start at just $35,360."
The perspective here looks a lot different at 35 k$, doesn't it?
"The highest-earning quarter of the population holds about half of all student debt, according to Baum and Lee." Well duh! All those doctors and dentists and lawyers, sprinkle in some MBA types.
So, are we talking about all student debt? Or just bachelor's degree debt?
"Liberal-arts college graduates who ran up enormous debts and now can’t find decent work. But they are the rare exceptions."
Where's your evidence? A "Survey of Juan" -- you trot out your story from back when.
Given how badly argued his claims are I actually do agree with his conclusion -- that debt relief should be based on income after graduation, nothing else.
3
Debt forgiveness is unlikely to succeed as a policy solution anyway. Why even argue about it as if it is a real possibility? Let’s think of another way to approach the problem. Framing the problem as a class issue is by nature thinking in terms of winners and losers. We would all benefit if a thoughtful, well informed strategy to make the problem smaller could be negotiated.
1
I met some Australians and their system seems brilliant. Maximum lifetime debt for doctors and such, minimum repayment rates based on income that are linked to your taxes, “interest-free” loans that are rated based on the Consumer Price Index. Fair and reasonable, instead of shackling you to a shady private system.
4
I am not a fan of forgiving student debt. I see students making very poor decisions (taking on significant debt for a degree in Sociology, for example, at a mediocre school). What we should be doing is encouraging people to learn a trade. College is really overrated and there are far too many mediocre ones that likely should be closed. Students need to learn a profession. You don't necessarily need college for that.
2
When it comes to government programs and benefits, Americans seem less interested in ensuring that they themselves get it and more in making sure somebody else doesn’t get it. And now, we are worried the upper middle class will benefit from student loan forgiveness? Whether left or right, everything is driven by an obsessive zero sum mentality...when we waste so much money on nonsense like Middle Eastern wars and prestige defense projects.
Why do you want to risk killing support for affordable higher education by offending the upper middle class. The same upper middle class that pays progressively higher taxes? The same upper middle class that votes at high rates? If you want political support for affordable higher education, these are the people you need. And it’s not like you are cutting out people from lower income backgrounds, and the tax burdens will fall on higher incomes so long as we have progressive taxation.
And besides, if easing their student loans lets some idealistic young lawyer can take a lower-paying job at a non-profit legal aid, or if some young doctor takes a lower-paying job at a free clinic, is that not a significant social benefit?
4
Somebody always pays. All discussion of "free college" and "debt forgiveness" is ridiculously incomplete without a clear discussion of precisely how things like this are paid for. The debt fairy doesn't just wave a magic wand that makes debt disappear with all other variables involved remaining exactly as they did before.
2
Liberals have no problem with being well-intentioned but they are horrid when it comes to implementing policy that does more good than harm. Witness the failed "slum clearing" public housing boom of the 1960s and 70s, for example, which destroyed entire neighborhoods and entrenched poverty rather than ameliorated it. Moderate Republicans used to be the grown ups in the room--coming up with ideas such as pollution taxes, cap and trade, and Romneycare. But now both sides are bonkers. So good luck to us all.
1
To generalize is to say nothing. “Most” graduates with four year degrees are doing fine. (Insulting). Except those who attended liberal arts colleges. (Double insulting - and our three did not attend said colleges) Really??!! Our family might be considered upperish middle class but I opted to be a stay at home mom. We lost my income and, as our three kids grew up, the economy changed and their hard-working, intelligent, college-educated father saw his wages stagnate and prospects diminish. We could not contribute much to our kids’ college costs and they are saddled with a lifetime of debt — without the financial stability the author so glibly assumes. We hurt for our kids. And it is frustrating to hear, falsely, that they are doing fine Eliminate college debt? Overwhelmingly — yes!! It would enable ours and hundreds of thousands of Americans, to better provide for their families and to contribute more to society instead of to the for-profit college loan companies.
2
Low interest government loans and a return of federal funding to universities and colleges for tuition reduction. Basically return the system to what it was before the war on education by the GOP for the benefit of predatory lenders and to punish poor kids. It's not likely that 20 democrats can do anything. Unless they are blue dog democrats siding with republicans and giving us the ACA rather than a real healthcare system. You know as well as most that there is little if any chance that complete cancellation of debt would occur so stop pretending it might. However, this country is so onesidedly in favor of the wealthy that it's good to start a discussion with more than the rights extreme views as something to be consider.
I know you worry about all those wealthy people and how this would be so unfair to them, but don't worry, they have enough money and they really aren't needed for anything.
1
Republicans benefit from the votes of people lacking college education. They will do everything in the power to make attending universities as expensive as possible. They are already doing so.
2
Things have really changed David. In 1961, while attending The University of Corpus Christi (now Texas A&M Corpus) it cost me $430 per semester. I’m not going to go into real dollar comparisons to 2018, but however you slice it, it’s not even close to todays debt.
My daughter did her entire education on-line while raising 3 children and working. I’m talking University of Phoenix for 2 years, Penn State for her BA and Grand Canyon College in Phoenix for her Masters. You know what her student debt is now? Over $80,000 and that’s for a teaching degree.
Want to figure out how many years that’s going to take to pay off?
I totally agree with you David about student debt being so high for non-graduates, but wouldn’t it be wonderful if after graduation, that debt could be forgiven, especially if you worked in community like a teacher for say five years or longer? To me, this makes sense. Good luck getting that bill passed with current Republicans in control.
I worked mutiple part-time jobs to pay for college rather than using loans, mostly those nasty jobs that the elites claim Americans won’t do. I got lots of useful life experience and plenty of genuine “diversity” exposure to all kinds of people from every corner of life without the University have to practice racial discrimination to give me a fake version.
I use the knowledge I gained of society and people from that experience more than what I got from the classroom.
But tuition was lower. The college president didn’t earn ten times what the professors earned. Administration was the smallest building on campus. The cafeteria and housing was very basic and no thrills.
1
A big fly in the ointment here is Mr. Leonhardt's sub rasa belief that if he had to pay, then others should whether it helps national wellbeing or not.
As for his argument that it benefits the "well off"($81,000 household income or more) and is therefore not progressive. This is a specious argument. If you are "well off" presumably you will owe a lesser percentage of household income or nothing, thus a larger financial hole to those who are not "well off" having a larger percentage of income to pay off. If you come from a household with a $200,000 income versus a $50,000 household income, a $10,000 dollar debt represents 5% of the former while 20% of the latter.
The other factor is a matter of resources and is reflected in the Urban Institute Study. There are more "well off" students than their opposite having loans. Education's cost discourages or makes it impossible for qualified students to attend college. There are many more potential students in the lower 3 quartiles than in the highest. The nation is losing a precious resource.
The basic question is tackling and eliminating student debt a boon for this country or not. Careful studies say it is.
http://www.levyinstitute.org/pubs/rpr_2_6.pdf
1
I think Mr. Leonhardt judges too much from his own perspective. He graduated from one of the countries' wealthiest universities. What if he had graduated from a private college like Carnegie Mellon, which is an excellent school with a small endowment. Then perhaps you went to graduate school and were unfortunate enough to graduate just as the country went into one of the worse recessions ever. Some of these people, whatever there previous class status, will never get out from their six figure debts.
Also, under the Republican party rule, the bankruptcy laws were changed guaranteeing that these unfortunate people will never be able to discharge their debts. Who is the beneficiary of this? The banks that brought about the recession in the first place, and changed the bankruptcy laws so they have no skin in the game.
The result is a tragedy for the people caught in this web, and will be a substantial drag on the economy for some time to come. I'm surprised and disappointed by Mr. Leonhardt's lack of empathy.
1
This article is very incorrect on many levels. Student debt is strangling young americans. The DOE and the government has been unforigiving with student loan forgiveness where it could easily have programs for loan forgiveness using public service and voluntering. The DOE and the government may say they have those types of programs--but that is a joke. I have tried for years to get some forgiveness for my 18 years of public service only to be told of thousands of hoops to jump through and that my loan was not the right type. Allowing debt forgivness will help the economy and our citizens. If we have millions for war and foreign countries, why not our own people?
3
The problem that needs to be addressed is why have colleges allowed the cost of education to rise from $8,000 in the 1980's to $75,000 in 2018.
Congress has been silent and the media has been silent.
Why??
2
David Leonhardt is right. College should be affordable. It need not be free or debt-free. And we don't need more programs that steer resources away from the have-nots to the haves.
2
Well good for you! You got a job straight out of Yale. Imagine that! A Yale grad was able to land a decent paying job. What about all those grads from FAR lesser known schools? What about those grads who came into the job market during the Great Recession?
No worry, we'll just expand the Income Based Repayment Plans and they'll be all paid up after 25 years...and if there's any balance, well it just becomes part of their income on the 26th year -right when they might be getting ready to retire. What an added bonus that might be when the IRS is asking them to fork over 20, or 30, or even 75 thousand dollars on that extra income. Maybe those relatives of yours can fork over some extra cash to help them out like they did you. Because gosh all mighty, we wouldn't want the government to bestow and extra wealth on the upper middle class. We all know that that largess is for the 1% only!
2
Necessary tax hikes on the upper middle class and above would be way more palatable if they didn't need to save for their kids' college. And debt-free college would make education infinitely easier for those who need to work while in school. This op-ed is over-thought. Cancel all student debt, and make education debt-free, please & thank you.
David Leonhardt claims that "The fatal flaw of universal student-debt cancellation is that it’s not, in fact, progressive. It mostly benefits the upper middle class."
He's wrong. In fact, it is the high cost of college education that makes it the purview of the middle and upper classes, excluding moderate and low-income students. Indeed, it is the Reagan tax cuts for the higher income groups that has led to the starvation of funding for higher education, dramatically pushing up its cost for all Americans.
The rest of the world has it right: make college free or nearly free for anyone who can handle it. Germany, Japan, Korea, Ireland, Denmark and others. David Leonhardt is flat wrong.
1
It is also absurd. It is a classic example of rewarding families for bad choices. How many of these students came from families that saved nothing for the child's education during there formative years? This is not like health care,... a basic human right. There is much reasonable debate among Progressives on how to avoid the conditions that fostered this mess. But, bailing out those who have the responsibility at a personal level, is no different than bailing out bankers. Countless wrongs will never make things "right."
3
Why debt forgiveness?
Let's go all out and have forgiveness for all debts. Let's start with my house, then my car.
Most students, and their families, who took out these loans made foolish decisions---they went to for-profit colleges. They didn't have the preparation for college, didn't work hard in high school, and thought that they could be college students anyway.
Virtually any student can go the community college and then state university route and, with hard work, get a degree with very little debt. We already have that mechanism in place for students.
But these students with debts didn't go that route. They chose another. That's fine. But they should bear the costs of it, not the rest of us.
Instead, let's have a huge infrastructure bill, one that will benefit blue-collar families. Not only will it help our country but that would take Trump out at the knees.
2
Mr. Leonhardt, which coast do you live on? Here in the flyover states, new college grads can only dream about making $50,000 per year. The number is closer to $35,000 for all but those in the IT professions, and when one figures in rent, food, health care, utilities, and other necessities, a $300 per month student loan payment isn't trivial. This column is really out of touch with what happens in the heartland.
1
And everyone is fine with the 7-8% interest-rates. Can’t believe no one talks or cares about the huge burden this is
3
What an incredibly out of touch article from a normally reliable columnist. We are a blended family with 5 kids. We are good earners. We get no tuition breaks - because we are good earners our kids pay full price - this is cost shifting to pay for less fortunate kids. We are in essence subsidizing colleges. The burden of college debt at 8%is staggering on our family. 2 of our kids got Jobs in a huge company in NYC. They didn’t earn enough to pay rent and college debt. We thefore ended up subsidizing this company as well so our kids could afford to work there. This is almost entirely where our money goes. these kids are not buying cars or houses or even getting married any time soon. We can’t retire.
You are crazy to think this wont hurt our economy - not to mention that we need more educated workforce going forward to compete in world markets. We are struggling with this at our income level. We work with many people who are completely crippled by this debt.
1
No you're starting to think like Trump... "this might be a good idea but it helps too many on the other side, so nah..."
This is nothing like the tax break. This ALSO helps the poor.
With the ridiculous cost of college these days, upper middle class parents need to decide between keeping enough savings to pay for their own healthcare later in life, and covering college costs for their kids. That’s not right, and it makes today very different from the days when we went to college. Even public schools now cost a small fortune if you are from out of state.
1
@Mary Then don't go out of state.
There are several competing narratives here and I am not sure that Mr Leonhardt addresses them.
The first and foremost, based on my readings in other publications and the comments here are the usury rates being charged to students. In many cases unwitting students and their parents ( from lower middle class families and those economically below that) who were sold the idea that college is the gateway, indeed the only way to a better life and only through a high priced school. The loans were easily obtained but not so easily retired. It is a wall street tool much like the mortgage crisis became, for a few to prey upon many ( " you're a hairdresser? Of course you can afford this 1M dollar mortgage with just 10% down!")
The second problem is that state and city schools are no longer modestly priced - not compared to 1st tier schools , but compared to real peoples income. When I attended CUNY in the 70's it was....FREE! for all residents of NYC. State schools were only a modest, though for me unaffordable amount - approximately $3500 - with board.
The answer for the Nation's children is low cost higher education accompanied by long term low cost loans.
Money on education not on dumb walls.
1
If a plan like this goes through, please make it retroactive, so that those of us who worked hard and did the right thing and paid off our debts can get it back. We will definitely thank the taxpayers for buying us our degrees!
As Mr. Leonhardt well documents, "Most people struggling to pay off their debts....are instead non-graduates — people who attended college (often a for-profit college) but never received a degree. They have the worst of both worlds: debt and no degree."
What's wrong here is his passive use of "received a degree." One does not "receive" a degree. One earns it.
Not everyone can do that.
Part of the solution, politically incorrect as it may be, is to screen out applicants who have no real shot at completing a degree, who have no real means of paying back the "loans." It would be like if banks sold home mortgages to people with no real means of paying off the house. That could create a huge bubble of bad loans, and a housing market crash. Good thing that could never happen.
Follow the money. Who's making the money selling loans to people who can't afford them, to people with no real capacity to earn the degrees, and who anticipate a taxpayer bailout? That should be criminalized.
As long as we have the H1B visa program which allows the U.S. import a crucial alien workforce that we do not, or cannot produce here, we'll never be serious about homegrown education for progress instead of profit.
1
Mr. Leonhardt claims concern for some bizarre notion of 'real progressivism" citing the utter unfairness of helping upper middle class students and their families to obtain the education that our titans of industry now proclaim to be the minimum price of admission to "good jobs".
Apparently it does not occur to him all that money, plus interest, flows directly to finance behemoths who specialized in milking the tuition support system for their own corrupt benefit for decades, who take every increase in Federal Aid as a signal to increase the cost of borrowing, who ignore all manner of legislation regulating how they go about collecting delinquent payments.
Our author advocates tuition support along the lines of our welfare system, for the benefit of "those who really need it", unaware ours is a penurious and punishing system of welfare designed, first of all, to wreck the lives of recipients, making ludicrous demands, making services maximally painful to access, communicating at every turn stern judgement that yes, they may qualify for aid, but only because they managed to prove what unworthy, unmotivated, unproductive slugs they really are.
It would be an excellent idea to cancel all student debt, the "I worked and slaved and paid off my own tuition so why should you get any help" group notwithstanding. Then, confident we're not ruining lives or over-burdening our national productivity, we can take a little time and come up with a more rational system going forward.
1
Paying off all student debt unfairly punishes individuals who were responsible and didn't borrow irresponsibly as well as those who already paid off their debt and general tax payers who will have to make up for the lost revenue. Just another example of the government changing the rules in the middle of the game. It would be massively inflationary. If we were going to do it, we should give everyone who paid taxes the money whether they have student debt or not. Once again, massively inflationary. What could we do to balance the inflation? Simple, deport the 22 million illegals. The deflation caused by the deportations would be offset by the free money giveaway.
If someone borrows money to finance their education, especially at rates significantly higher than inflation, they are not flush with money. Mr. Leonhardt did not define what he considers "well off" families.
To his credit he finally agrees there is a problem and notes Republican resistance(whose bank lobbyists are making a bundle from these loans) have no skin in the game.
With over 40 million graduates or no longer attending students with over $30,000 dollars on average, a burden in a sense has been imposed that does not help the economy.
As for "tuition free" college that only pertains to public universities.
There are careful studies that have shown the reverse. Taking away student debt is a boon to the economy, not a drawback. He has presented a one sided view.
https://www.demos.org/what-cost-how-student-debt-reduces-lifetime-wealth
https://www.sandersinstitute.com/blog/the-macroeconomic-effects-of-student-debt-cancellation
http://www.levyinstitute.org/pubs/rpr_2_6.pdf
1
Professor Leonhardt, I believe your privilege is showing. I had a son two months after I graduated high school and spent the next eight years working full-time to support my family while attending night school to complete an associates degree. I entered a degree-completion program so I could finish my bachelors degree before it was time to send my son off to college. However, since I was still working full-time, I did not qualify for need-based financial support. That led to my needing student loans, while others who were not working qualified for need-based support. I was a cop for a decade, but became disabled on the job. That required more education in order to change careers, and more student loans. I brought up my boy in California to achieve a 4.47 GPA, valedictorian, International Baccelaureate scholar who achieved a 5 on the 7 AP exams he took. He applied to UCLA and UCSD - but he was not admitted to either as he did not reflect the diverse candidate pool they were trying to achieve. And since I worked for a living - he also did not qualify for any need-based financial aid. More student loans. Flash forward to today: we rose from teenaged family on welfare to never once qualifying for need-based financial aid because we “worked for a living.” As a result, we have been able to achieve our academic goals, but remain generations from any hope of freeing ourselves of the yoke of student loan debt. Now you contend that we are looking for a handout? I beg to differ, sir.
2
Of course eliminating student debt for everyone is not progressive. It is also true that social security without a means test is not progressive. Social Security is rock solid because it is for everyone and debt relief for everyone would be very hard to oppose. Democrats have shot themselves in the foot more times than I can count by screaming giveaway because some program might benefit a few too many when universality is the thing that would guarantee success.
The author is missing the point. The reason for Democrats to win elections is to confer goodies on the people who elected them. That is what Congresswoman-elect Octasio-Cortez understands.
1
Who held a gun to the heads of these students and their parents to take out exorbitant student loans? My son owns a hair salon in Boston across the street from Northeastern University. He has student clients who have between $50,000 and $150,000 in debt with no job prospects. You know what many of them do? They double down, take more loans, and go to graduate school. People make bad decisions. In the immortal words of Tony Soprano, "What are you gonna do?"
1
You miss the essential question. Does market-based education make sense?
Exactly the rich and near rich families send their kids to college. To eliminate this debt would be catastrophic gift to the rich and who would pay for that? us poor working slobs. This may be a neat election campaign slogan that some of the poor might buy thinking they'll gain from it. Why don't the elitists in our midst conquer healthcare for all first please. Or how about getting out of these nation building wars and wasteful global war exercises that we seem to have all the time.
I think it's safe to assume that any high priority for Ocasio-Cortez is a priori a bad idea.
2
David,
I like your columns but this one I couldn't finish. Why? Because the danger you're warning of is just never going to happen. Why not warn us of a volcano suddenly springing up in the middle of Manhattan or the President being too welcoming to the caravan. There is zero chance the federal government is going forgive all student loans. It's going to be difficult enough to get the government to just LESSEN the debt burden on low income students.
My parents started out together by living in trailers in rural WI and working towards a home. They worked hard and achieved a lot since the early 80s but couldn’t afford to help me with school in the mid-2000s. However, they made too much for me to qualify for aid. I thank my lucky stars I graduated in 4 years with a double major and minor, but unfortunately did so in 2010 with nearly $50,000 in debt and a lousy job market. I couldn’t afford to live in a big city. I couldn’t afford to do unpaid internships. I’ve been in repayment for 7 years and have probably spent over $20,000 and still owe $42,000 in principal. I’ll let this author in on a secret, when the only option for “relief” is lowering your payments, you’ll never touch your principal. So, no, I have no expectations that Congress will ever do anything to help. They have long made it clear that non-dischargeable debt at exorbitant interest rates is here to stay and there’s NOTHING you can do about it. Even though you’re gouged with income tax, Social Security, Medicare, mandatory unaffordable health insurance, here’s ridiculous student loans on top of it! Glad we can spend trillions on war, bank bailouts, and corporate welfare, but student loan relief is just too large of a pill to swallow.
130
@Anonymity well said. Your experience mirrors my own with one big difference. I also had $0 dollars for higher education and had to rely on work, grants and loans. The big difference is that in the 60's and 70's state schools were relatively inexpensive. Upon graduation I owed a manageable amount of school debt. My children actually ended up owing a comparatively much larger debt for their higher education. There is a big difference between owing a manageable debt and a burdensome debt. There is also a need to provide for 1 or 2 year post high school education at NO cost.
11
This is the problem with using the average debt to make decisions for all. Many students who pursued higher degrees at state universities still end up with $130K in debt. When Congress decided to give taxpayer money to the wealthy last year, totally destroying any hope of a balanced budget, they did not tie those tax breaks to corporations to a single requirement to hire more people, or distribute those funds to the people that produce and sell their products. There was no means testing required for that wealthy welfare package. But now while the banks make out like bandits with high interest rates on these loans, and the universities charge whatever the market will pay, there is an attempt to make it appear that most debtors do not need this help. How selfish and hypocritical are we? Certainly aid could be delivered to debtors in two ways. Restore the remedy of bankruptcy for students with debts over $200,000. Or you could get banks to cut interest rates in half. Make the banks that caused 2008 crisis pay up. Millions lost homes and yet banks were never required to cut a single mortgage balance to pay for what they did. They lost nothing after gambling wantonly at 30 to 1 odds and losing. The taxpayers picked up the bill. Without any conditions. I think it's great if you get a degree and you find a job paying over $50,000. But in my neck of the woods even PhDs are only getting about $60k, with hundreds of thousands in debt.
38
@Cynthia Adams, thanks very much for your response.
I'm in favor of more generous income-based debt forgiveness programs -- and it sounds like your neighbor is one of the people who could benefit from such a program. The problem with universal debt forgiveness is that it will help a lot of people who are making very nice salaries. The Urban Institute study I cited in the column found that almost half of all outstanding student debt is held by households making at least $81,100 a year. And many of these households are headed by young adults, which means that they're professionals who are likely to make six-figure salaries and beyond in coming years. I'd much rather see the federal government spend its resources helping people who need help -- like your neighbor.
10
@David Leonhardt How about doing it differently? Let's do what they do in some Euro countries. Little upfront obligation, but graduates face surcharge to support higher education based on income. That might incentivize people to work in more public-spirited positions with lower levels of remuneration -- lessening the financial opportunity cost.
9
@David Leonhard
With all due respect this whole argument is predicated on three obvious logical fallacies.
1. Significant student debt is not held by the upper middle class, student's parents or later earners, it is help by students: people with no income.
2. The issue of progressive policy is not about how the debt is paid but access to university and how debt might skew course choice.
3. The last obvious fallacy is that you constructed your argument as though any increase in Federal spending would/could not be accompanied by changes in Federal taxation, so that future earners pay past debt.
There is yet another flaw in reasoning which is that the problem of qualified people not earning enough is related to loan access or forgiveness. That is a product cost/benefit issue and has do be dealt with in completely different ways.
Cost is dealt with through research into course inflation/course competition/demand followed by structural changes, public awareness, advertising and possible regulation.
Benefit is dealt with through the reassessment of the value of work versus that of gambling/investment which has swung very much in favour of capital and is dealt with through taxation.
Ending student debt:
1. Liberates students from parental cooperation.
2. Liberates course choice from cost.
3. Pushes cost onto taxed future income.
4. Requires that course availability is matched roughly to market demand.
You don't need to reinvent the wheel in the USA. This is all done elsewhere.
3
In America too many students are pushed into college who are not ready, not interested, or not academically inclined. The education system has created this problem because it no longer offers a viable way to graduate from high school ready to earn a living. We don't have apprenticeship programs or internships or academic tracks that do more than sort people into college bound versus the rest. It's unfair to students who are not going to succeed in college no matter how hard they try to force them into a mold that is unsuitable for them and will cause them to wind up owing money without having the corresponding salary to repay it.
It's time we looked at how we've organized our educational system rather than going on about how eliminating student debt isn't progressive. No student who is not going to college should graduate from high school unable to find a job that offers him/her the opportunity for a life of decent pay for a decent day's work. Even minimum wage jobs should have a path that leads to more responsible work with greater pay.
The lack of a college degree is not indicative of a lack of intelligence. It can signify that the person's interests and abilities lie elsewhere. Why should 16 years of education be a prerequisite for jobs that don't require that sort of qualification to begin with unless the 12 years aren't rigorous enough?
I don't really think this guy understand the crisis. I graduated 6 years ago with a nursing degree and $75,000 in debt. Parents couldn't help (not even to live with) and I have always live below my means and had amazing credit with no other debt. Had to take a variable rate at 7.8% because other wise it would have been 9.7%. Got a decent paying job at a hospital. I pay $1100 a month, with all OT/extra $ going to this loan and still barely see a change in the principal. It's depressing. House, kids, car? Nope. Won't be able to afford them. This is the problem of the student loan debt. We are not lazy, looking for a handout. I'd like to not feel like a prisoner to my debt. I'd like to save for retirement, take a vacation, and save for a house. According to this article, I'm considered upper middle class. Too bad all my $ is going to this loan. Don't even need forgiveness - I'd be happy to have a reasonable interest rate. Not these shark loans. It is economically crippling an entire generation of people.
7
Great thinking. Relieve debt in the upper classes UNLESS it helps the lower class. I must have missed that class.
First of all, the rise in college debt is the result of typical American corporate greed extended into universities. Average and below average universities were able increase their tuition rates way beyond what they were and offer students "financial aid," selling them loans to benefit the school and the loan companies but to the detriment of millions of low income students. It is/was probably one of the biggest scams of our times and the universities should be ashamed. Forgiving the total debt is a very good idea not to be avoided just because some wealthy people will benefit. That part is absurd. Don't help the poor and middle income families just because you are helping wealthy people too. What kind of reasoning is that?
4
Student debt may be a problem for the upper middle class, but skyrocketing tuition is absolutely a problem for everyone. It is already extremely difficult, and still getting harder, to move up in the world without a degree. We are going to have to tackle tuition sooner or later.
But if you lower tuition without doing anything for people who already have student debt, that is a terrible deal if you happened to go to college too early. Lowering tuition will help everyone, the future upper middle class included.
You might bring up some means tested "fix" that wouldn't help upper middle class students. And that would work as far as reducing inequality goes. But it would do nothing to solve skyrocketing tuition. Wealthy parents are still going to send their kids to good, expensive schools whatever you do and whatever it costs and tuition would keep on rising. A true solution will fundamentally lower tuition across the board and not merely shift the ever-growing costs from students to taxpayers.
So given all that, you should offer some concession to past students. Maybe forgiving all student debt is way too much. But you should offer something. Otherwise you risk turning millennials against your tuition-reducing plans, which would end those plans outright. Not to mention that, as a matter of fairness, you try not to give preferential treatment to one generation over another when you can avoid doing so.
1
Wouldn't it be a great idea to be able to discuss whether policy proposals were good ideas or bad ones without being preoccupied with whether they are "progressive"?
Locking ourselves into identity niches is one of the major reasons that we cannot have productive political dialogs and spend our time instead hurling insults at the other "side". And assuming that any disagreements are the result of personal deficiencies in our opponents.
1
Maybe it's time for the federal government to get out of the student loan business. Or, at least charge just 2% - enough to cover costs. Tuition has exploded since the Feds decided anyone and everyone can get a loan at 7% interest. There is a reckoning coming to higher education, the number of high school graduates continues to decline. Less customers coming in, and make no mistake college is big business.
2
Fifty plus years ago my middle class parents were able to pay my tuition, books, boarding and incidental fees with my only needing to supplement this with a summer job. Education was not free but it was not as costly as it is today. I was free to concentrate on my schoolwork and take advantage of extra-curricular activities which included plays, lectures, clubs and other activities which influenced the rest of my life. I cannot tell exactly how different my life would be today had I needed to work while getting an education or if I had graduated with a huge debt, but I have no doubt I would be a significantly different person--and not necessarily a better person. In fact, I suspect instead of a career devoted to helping others, as well as a life involved in volunteering to advance the social good, I would have chosen instead to devote myself only to paying off my debts and advancing my own narrow interests. And I likely would not be a progressive but might well be a Trumpist, angry towards anyone getting a helping hand and interested only in what would enrich me.
4
Is there any real push for this? Some thoughts I have that seem to make more sense and might be more practicable:
Eliminate student loan interest deduction caps. Student loan interest is already a regressive backdoor tax on people with low ECFs. I see no justification for this except the false belief that everyone affected is a millionaire doctor (depending on the loan types, you could borrow as little as $50k and still hit that cap... we are hardly unicorns).
Alternatively, you could make student loan interest payments eligible for a dollar-for-dollar tax credit (radical, but less so than discharging principal).
Multi-tier IBR for EVERYONE (automated and based on tax filings) streamlined to eliminate PSLF and the need for ECFs that the DOE won't honor when the time comes anyway. Shelve it and make it simpler and better. Save a lot of man hours and money on administration. Maybe people who pay 10% of discretionary income get forgiveness at 20 years, 25% at 15 years, 50% at 10 years, etc. Maybe you forgive on an annual basis accordingly to allow for more predictability and flexibility. Maybe you create a special rate for discharged ed debt and tax the write-off.
TVM would mitigate some of the interest revenue and discharged debt lost to these measures, and I'm assuming the same "trickle down" that justifies tax cuts for the wealthy would help recapture some $ in the form of tax receipts elsewhere. Is it that hard to have the CBO run an analysis on this?
2
If this will also benefit those with less than stellar prospects for a job, I say do it. I went to a private women's college in New Haven, down the road from Yale as a matter of fact, David. The tuition then? $3000 per year. My dad was a furniture refinisher; my mom a secretary at the gas company. They put three children through private colleges - my brother went to Providence, my sister and I to Albertus Magnus. We all worked summers beginning in high school. Those were the days parents could afford college. Today, Notre Dame's tuition is $63,000 per year. Forget all student debt, I say.
2
I was just chatting with a 38-year-old neighbor with $40k in student debt. She's in an income-based payment adjustment program because she pays half her take-home pay to rent her $800/month one-bedroom apartment. Unfortunately, while her low income "lets" her have lower monthly loan payments, the interest still accrues and her principal grows each month.
She's not exactly from the upper middle class. She first came to this neighborhood twenty-five years ago to find her mother, a drug addicted homeless prostitute (it's that kind of 'hood, with 20% of the residents unhoused). She met her mom, connected for a while and then returned to her very poor adopted family.
She may some day get these loans paid off, but only after she leaves her important job securing housing for vulnerable people to do something that pays better. Will she ever own a home? Maybe, just about the time she qualifies for Medicare.
If the only way to help people like my neighbor is to give some freebies to the middle class, so be it. While it would be better to target those of limited means, let's not keep waiting for the perfect proposal before we take action to make lives better.
85
@hmnpwr
Thank you for this story.
If you run into your neighbor, tell her that many strangers like me wish her all the best in life.
Tell her that to have overcome the adversities she has, and to have gone to and finished college, is remarkable. Tell her that if this country had a soul, any soul at all, it wouldn't abandon people like her.
4
I can think of two things that would help. First, allow refinancing of current student debt to low interest loans. Second, make financial counseling mandatory for all college-bound high school seniors and their parents.
For some reason, many students seem to have no idea what impact heavy borrowing at 18-21 will have on their lives. And curiously, their parents don't seem to have a clue, either.
Forgiving student debt only punishes those who act responsibly. And shifts the burden to many who cannot afford it in the slightest -- like seniors living on small fixed incomes.
1
@sharpshin
I respect your opinion but, just how does a poor or working class person afford college, graduate school, or any other legitimate educational program at the tuition rates charged today, plus living expenses, etc. I'm seventy years old, still paying for graduate school costs when I went back to school in my sixties to try to keep my career, and I've worked at every kind of job you can imagine. I've family members daughters, sons-in-laws, grand children who live and work everyday trying to survive and pay out student loans that keep them from getting up the next rung of the ladder and we've all acted responsibly.
1
As a private lender in real estate, my philosophy is that if I make a loan and it fails, it is mostly my fault.
The current system, which makes it almost impossible to discharge student debt in bankruptcy, is a disgrace. Some special rules should be formulated for student loans to deal with situations where a student is technically insolvent, but with future earnings has a very good ability to repay. (so that physicians, for instance, who are technically insolvent when they graduate can't use bankruptcy discharges) However, if someone graduated from school with $100,000 in debt and can't get a job that will be able to pay off the loan (say 12 years later), that student should be entitled to a bankruptcy discharge.
65
@JD
So your idea is to double charge those who chose a valuable field? The physician not only has to pay for their education but through taxes now have to pay for the student who chose to get a PHD in underwater basket-weaving?
How about we underwrite college loans like we underwrite business or other loans- you only can borrow the amount you could reasonably pay back. Going for a doctorate in basket-weaving- you're eligible for nothing. Nuclear engineering- you're approved.
9
@Dave -- guess what? Nuclear engineering is in collapse -- no jobs, no new reactors getting built.
3
@Dave
I am not for double charging anyone. I am for discharging debts that have almost certainly no chance of being repaid. The loan amounts would be the same, but those with legitimate inability to pay would be discharged.
Have no problem at all with your underwriting point in a general sense. The loans should be financially based on the ability to repay for a major that has true financial worth.
2
I think the article misses the more important point. College shouldn't be free, but it should a lot more affordable. The value of a knowledgeable educated population cannot be over estimated.
2
However, if we were to have another Great Recession (likely, on account of our Leaders' economic ignorance) and Keynesian Pumping is needed to avert depression and aid in recovery, next time let's use College Loan Forgiveness as the Keynesian instrument rather than just gifting the dough to Wall Street Bankers, like we did in 2009.
2
Life’s curveballs skew this argument a great deal, and many middle class couples are heading into retirement years still trailing student loan debt whose balance continues to rise due to interest. Compounded with the anemic rate of retirement savings, this is a disaster unfolding now. Plus just think of the huge shot to the economy when all those debt payments revert to home buying and the like. It’s easy for a young man with a good job who was fortunate enough to clear his debt to dismiss these ideas, but that’s not so easy for many Americans for whom debt forgiveness would be an extraordinary and life-changing event.
And the US can afford it if we just skip the next stupid war or billionaire tax cut.
73
@Alex Miller
You are correct. I am retired, previously paid off two student loans, but am still paying off graduate school loans taken late in life to try to hold on to a career that ultimately was short lived due to (ready for this) my age.
Means test and age testing would work. Or, better yet, elect progressive politicians that push this issue.
6
Public Service Loan Forgiveness: A huge gamble, which also means I can't afford anything similar to my similarly educated peers. Retirement contributions? Pitiful. Down-payment? Dreaming. Savings? Laughable. The future is terrifying.
While I hope my federal loans will be forgiven after 120 approved/accepted payments, due to income based repayment (which I depend upon) and the current interest rate, my federal loans are increasing.
I didn't have extra help. I also took out public/private loans (offered through the university and created through the state)- so, no federal law protection. I have sold personal items to make payments. Yes, I know possessing salable items is a privilege.
I comment not because I expect sympathy or understanding. No one wants to hear professional degree travails. But please remember there are people, strapped with insurmountable burdens, whose careers are dedicated to combating inequity and injustice.
So. Hopefully I'll make it to those 120 payments (PSLF won't be eliminated). Because, again, my federal loans are increasing due to the discrepancy between my income and my monthly loan obligations. (Again, not including the public/private loan which is also not considered in setting the monthly income based repayment).
I think the universities should cosign loans. If we default they are on the hook. They should have a stake in this. after all, they are providing the service and setting the prices. Why aren't they accountable?
1
@Y
You are correct. The institution should have some skin in the game. However, I would also ask, did you choose the most affordable way of getting your degree, knowing you would need loans? Did you choose a public or private institution? Did you commute to a local college or was that option not available? Did your field of study and career goals justify the size of the borrowing? You do have to think about that when borrowing. That said. the government should only guarantee a portion of the loan. As you state, the institution should be on the hook as well. Johns Hopkins will have to insure that those students who are accepted "need blind" will indeed be able to repay the institution, hopefully many times over, so that Mayor Bloomberg's generosity serves many, many future generations.
@Greg H.
1. Yes.
2. Public.
3. Not available. I lived in unsafe/unacceptable conditions - at times eating out of CVS (food desert/no transport).
4. Yes, if the principles our society supposedly possesses matter - consistent an ethical approach to humanity.
I don't have to justify anything to you or anyone else. Your comment, purporting to be understanding, is, rather, the expected blame-the-borrower approach.
If you knew my job would you think I did the right thing? Well I work in an undesirable location in a job no one wants to help a marginalized population drowning under structural inequity and injustice.
But my life is meaningful. I have a vocation rather than a job. I can face myself.
Still, I have no safety net, no assets (except a used car). I made that choice. The people I serve didn't. They don't deserve the circumstances in which they live. I am not a masochist, nor am I a saint. I landed in this position, which I don't regret, due to a series of circumstances beyond my control.
To do this work I live in an isolated, impoverished area, without security. The people I serve need structural change. How is that possible whey they are dependent upon people willing to make these compromises?
The next time you encounter a person living homeless - someone who fits your personal definition of "not deserving this situation" don't look away. For a moment, think about what it may take to change that person's trajectory or, better, prevent it in the first place.
David, I hope that you read the comments to your article, because they portray the reality of student debt that about which you paint such a rosy picture. The system, which perhaps used to be more humane, has become a nightmare, and the banks are the only one benefitting. I am solidly middle class, make a decent living as a college professor and my student loans have driven me to bankruptcy. I will never be able to buy a home. You should do some real reporting on this.
2
This article is a great example of how important it is to drill down into policy ideas that may seem great (or terrible) or the surface. Once you look behind the curtain of any policy idea, there are complexities there that may change whether or not you chose to support it. However, I think it is important not to get entirely mired down in the question of who benefits from whatever policy, and whether they "deserve" it. It's better to look at society as a whole. In what ways does society benefit (or not benefit) from forgiving students loans, regardless of who holds those loans. Is there a benefit to us all of forgiving the loans of people who didn't finish college? Of upper middle class kids? (who are arguably not upper middle class anymore if their parents are no longer supporting them, or if their parents are behind on their own retirement)
2
@Syliva
Agreed, however, as this article discourages broad sweeping generalities about who holds student debt, so also broad sweeping generalities of benefit to "society" likewise need scrutiny.
The idea of eliminating all student debt is as preposterous as the notion that everyone should go to college and it should be paid for by the government. These are typical Democratic concepts which fall into the "something for nothing" category. A better idea would be how to solve the student debt problem which exists. Certain European countries have rules we should consider when dealing with the idea of borrowing for a college education. First and foremost, the amount of debt should be limited to tuition, fees and books. No cars, apartments, travel, nothing else. Next, tie repayment to income levels, and make it a paycheck deduction. If salaries go up, so does the fixed amount of student debt repayment--and vice versa. It's unhealthy for the country to graduate generations of college educated people whose economic freedom is restricted because they learned that borrowing is a lot easier than repayment. Perhaps the colleges--who rode the wave of cheap money by expanding and overbuilding--will get the idea that none of us are entitled to a free ride.
4
Somewhere along the way to equating a college education from a mental exercise in the classical sense to a value in securing a profitable job seems to have occurred. The securing of a Degree in the Liberal Arts was an exercise by the well -off in itself. It was not equated with acquiring an income producing skill. Today education beyond high school is virtually a necessity. The use of public funds to support higher education through Community and State Colleges is enough to satisfy those needs for everyone. If one wants to get a mental exercise at an elite private institution it is their choice and they should pay for it.
1
@Eddie
In the 16 and 17 century in England the second and third sons of the gentry went to the colleges in hopes to gain "preferment" i.e. jobs in church and government. In 19th century America the demands for practical study eroded a classical model which sought to produce the "undifferentiated" graduate -- fit for positions of leadership in society. By and large, through the Morill Acts and the rise of professionalism, the practical view took hold for the many (embodied in the great Universities), even as the classical model and its outcomes persisted in the liberal arts (characterized best in the Harvard Lampoon). Without doubt, we are all paying for this through direct and indirect taxation, and it is clear our common subsidy has extended even to the "for profits" given the intricacies of our financial structures no less than the debt question. On the whole, we do fairly well, and no one is blocked from obtaining as much schooling as can get paid -- whether out of pocket or by credit. The greater question for a democratic-republic is how to ensure mobility in the free exercise of talent and association. I should add that all of these issues (the nature and purpose of the curriculum, who has access to it and how much they pay) are central to the current suit against Harvard College admissions -- complicated further, of course, in that Harvard's reach is international. Whether it can continue to exercise private judgement is the question before the court.
David,
My co-worker is Australia. He said they have a higher education loan system that is provided as a government benefit. The college student borrows at a reasonable rate from the government and pays back the loan as part of their taxes over the course of their career. The low rate and the length of the term of the loan make the payments low and manageable. Sounds reasonable, sounds like it would be an investment in our nation's human resources. O' no, maybe it's, God forbid, 'socialism'.
2
I disagree. Where is DL getting his numbers from? I graduated from college in 2011, and was lucky to get a job starting at $32,000 per year. With 35k in debt. I work in the legal field with lawyers who make well under 100k per year, and almost all of them have 200k in student loan debt, even from law schools most people have never heard of. Where is he getting this average starting salary of $50,000 per year for graduating students? I see job postings everyday offering 15 to $20 an hour, and requiring a master's degree or Ph.D.
After 7 years of diligent payments, I'm just starting to see the principal balances of my loans go down. But I have next to no savings, and will likely have to take out significant loans to put my own child through college.
I would like to buy a home, but even if I could afford it, I fear locking myself into any location permanently, because like so many of my generation, we have to go where the jobs are. So much of our income goes to debt and healthcare premiums, the term middle class almost seems like a joke. The government can make their class distincticons based on income. But down in the trenches of real life, I am most certainly working class.
12
I am aghast at the commentary posted to this article. The overwhelming response goes something like the following:
"My student debt and the associated interest burden is extremely expensive. The interest rate charged is too high and I am unable to live the lifestyle I desire to live. The Government should forgive my debt."
IOW, all of the rest of us (the 47% or so who actually pay income taxes) should pay off the the $1.4T in debt you signed up for.
No one forced this debt on you, this was your choice -- you did it to yourselves betting on a better outcome which unfortunately did not happen. We all have choices to make in this life. People need to choose wisely and live within their means.
6
@David C While it's true that these people did take on these loans themselves, for many it was the expectation that we would go to college. The societal pressure made it that the only way to get a well-paying job in a field we enjoy was to get a college education.
Now, should all the debt be forgiven? Probably not. But, can you imagine how much better off all people would be if we didn't have 1.4T in debt? Many of us would be able to eat out, helping the restaurant owner. Many of us would be able to buy that new toy, helping out the store owner. Instead of money going to the banks to pay off loans, that money would instead be going back into the local communities to help the store owners and retail workers. If we want a strong economy that works for everyone, the right thing to do is to find some way to relieve the student debt in some fashion.
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@David C -- do you understand "blood out of a turnip?"
Think of these bad loans as being like the bad loans of the housing crisis. There was no chance those would be repaid, and they weren't.
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I’ve been waiting for someone of influence to mention the unfairness of taking money from our blue collar segment to put white collar-bound students through college.
On the other hand I do think Leonhardt exaggerates the economic success of most college graduates, and I certainly wouldn’t call those earning $50,000 to $100,000 “upper middle class.”
I do believe we need to offer citizens a near-universal free college education with a regularly adjustable means test.
In order to fund college education we must start electing public officials who don’t represent weapons manufacturers or espouse unproductive tax cuts for the wealthy.
2
Bankruptcy court with a federal judge is the best way to deal with the individual person's situation. The law today prevents a bankruptcy judge from dismissing any education debt. Change the law, let a judge dismiss some, even most of the debt, but not all of it - let the judge examine the situation including health and employability and make a decision.
2
Thank Joe Biden for being instrumental in changing the bankruptcy laws when he was a US senator(2006?).
An alternative opportunity is to make the Public Service Loan Forgiveness Program more user-friendly and better advertised. This helps higher-debt degree individuals feel freer to take lower salary jobs, and improving it requires no new legislation (although perhaps does require executive lobbying...).
Additionally -- and an important point David missed -- is that more people may embark on *any* degree with the knowledge that debt is zero or limited. That student debt is concentrated among wealthier families is an *outcome* of their confidence to take on debt based on a good fiscal and social cushion. For me, a good 'progressive' agenda allows more people to decide they can take on a new challenge (college) in order to achieve their 'fair shot'.
As long as you’re looking to cancel student debt, how about paying back the families that scrimped and saved to pay for some college costs so their child would take on less student debt.
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Well David, your $22,000, in today's dollars as you say, is about the price of a lower rung Toyota. Completely doable in a couple years. I just looked at the figures for graduates and the current average of debt is about $30,000. I had assumed it was quite a bit more. I've heard horror stories of $100,000 plus in debt, but I guess that's the very high end of things. At $30k, that should be within reach, you can see the end of it from here. $100k plus? That would be a problem. I agree with you that $30k shouldn't be a problem. Do without a new car for a few years, it will be over before you know it.
2
My parents and I made sure that my daughter would not have any debt when she graduated. She went to a Community College for the first two years and is now at a university to complete her degree. I have made great sacrifices for this to happen so if there is debt relief, I want the money that I have paid returned to me also.
6
@Rich
The California Community Colleges are treasures in their quality and ubiquity and low cost. They work best as transfer paths for students 18-20 staying at home -- a solid middle class demographic. The Board of Governor's waives tuition for those who cannot afford the astonishingly low $46 cost per credit ($2760 for two years, or 60 units).
But this model works less well for the outright poor, the "emancipated" and the older student because the high cost of living juggles school, work and debt. Needless to say, this takes a toll on college completion, and does feed the numbers of degree poor and indebted. Thus, we circle back to the issue of who benefits from such subsidies.
I would argue for a return to the system that was in place when I was in college in the 1970s. I came from a middle class home; my Dad worked an hourly wage job. I earned a scholarship that paid half my tuition at a state university. I worked full time in the summers and when I borrowed what was to me a significant amount so that I could do a junior year abroad, there was a Federal loan program in place. I paid no interest as long as I was in school full time, and there was a 10 month grace period after graduation. If you paid off the loan in those 10 months, you paid no interest. Otherwise, your payments were spread out over 10 years. I got through undergrad and grad school, and although I did a lot of frugal living to pay off my loans, it was manageable.
5
“True - debt forgiveness is mainly a gift to those already doing well.” - People who have paid their student loans
“Wrong - student debt is an excessive, unfair burden.” - People who still owe on their student loans.
2
Mr. Leonhardt is right. If Democrats are going to spend money on subsidizing the upper middle class in this way, they will have less money available for other purposes. I understand the political attraction, because the upper middle class is up for grabs politically, but I'm not sure I can justify the proposed policy on the merits.
1
Do you know many people who aren't well off and struggle enormously with student debt, or do you just happen to run around in bourgeoisie circles? I don't know one individual, from my 40 year old friends on down, who is in the upper quarter of earners and has paid off their student loans. Each one of these individuals has a 4 year degree, some even higher than that; some of them have been gainfully employed with no periods of unemployment but, despite the falsely rosy reports of low unemployment nationwide, a shockingly large number of younger workers are getting laid off by employers with their eyes only on increasing profit margins and/or a too-large pool of potential applicants willing to work for less than they're worth because wages have stagnated. Perhaps eliminating all student debt isn't the best solution but certainly lightening the load is--and not because the individuals who may be benefited are nearly all from the upper classes.
7
The economic system in the U.S. is rigged and the"American Dream" is a fantasy.
Crushing student loan debt is real and threatening for thousands of undergraduate and graduate students, and it is fast becoming an enormous drag on our already divided economy.
The government doesn't care; we used to care for each other, but now we only want to punish, demonize and blame people who desire a better chance to become more fully human. Education, both undergraduate and professional, is our birthright, as long as we demonstrate aptitude in our studies. Other, more civilized countries know this. The U.S. is consumed with money, money-making, and wealth. Our identity as a country is diminished and reduced in the eyes of much of the world: we have sold our souls to the dollar. Everything has a price. All is reduced to cost: people, health, the mind and its yearnings, growing old with dignity. How very sad.
Marx was so right. I hope that one day capitalists will become their own gravediggers.
2
The reason college cost so much as the government subsidizing loans. We all know the professors do not make the money, where does all the cost come from? Let's start with reducing the cost of education. Yes, help those in need, but make sure every student has skin in the game. Take a risk on students that want to learn and not just party. Connect students to jobs, so they graduate with a path to success, not just debt.
2
While I appreciate Mr. Leonhardt's perspective, at age 45, he is ten years older than my daughter who did graduate from a four year college with loans, increased by loans for graduate school,(essential for becoming a speech language pathologist) making her responsible for more than triple what he stated as his total student debt. Yes, she is has a career, but her loans demand payment of a significant portion of her weekly salary. I suspect his perspective may be colored by his age. A quick glance at today's information for incoming students at many 4 years colleges shows that his total debt isn't equal to a single year's tuition, room and board.
6
It would be nice just to have an interest rate on my federal, direct loans (all taken out to attend a public professional school; no private loans) more in line with that of my mortgage (currently held by a giant national bank who shall remain nameless but has been in the news lately for various misdeeds). 7.25% on student debt (generously reduced from 7.5% for enrolling in autopay!) vs. 3.75% on my house.
In the meantime, I continue to chip away at each balance, one more quickly than the other.
3
Student debt is what keeps these needed generations from stepping into leadership to clean up our mess. Cancel the debt to save your grandchildren’s future. Seriously.
5
Great points made in this article. I think many commenters disputing the claims in this article are missing the point.
The crux of the argument is that forgiving all student loans would not be a progressive action. This seems inarguably true. The majority of beneficiaries of this proposition, which has been proposed by several democrats, does not align with the progressive, pro-equity rhetoric and agendas that many of those same democrats subscribe to.
The researchers and authors here are not negating the fact that higher education is in fact unaffordable for some demographics, or the fact that higher-ed costs are rapidly rising. While these are true statements, they are not solved by relieving all student loans - in fact doing so may further exacerbate the latter issue. However, it is clear not only through the research but also in logic that many higher-ed degree holders earn either a moderately or largely higher wage than their non-degree-holding counterparts. Therefore student debt forgiveness would be a large subsedy in a limited budget, whose beficieries would largely be the middle- to upper-class. We could instead focus on welfare programs for the lower class in the name of equity.
Student loan forgiveness overall is not a progressive and equitable solution after all, and there are other solutions to be considered.
1
what about those who have loans deducted from their Social Security. That is the most outrageous move one can conceive. As if anyone's social security is adequate enough to live off of, now to have hundreds of dollars taken out for student loan is preposterous. Also forgive loans over a certain amount for seniors over 65.
2
David Leonhart's argument that, because elimination of student debt would mostly benefit the upper middle class, we shouldn't do it, is way off base.
We should not eliminate student debt, but for another reason entirely.
Who it benefits is not the issue.
The issue is personal responsibility.
When people make decisions, they need to be made accountable for those decisions, or we as a nation will continue to make bad decisions.
These people chose to borrow money to spend on themselves, in an attempt to better their lives. All well and good. But it sounds like they misspent it.
I went to Brooklyn College, not a private college or for-profit university. I did not major in some arcane area that was interesting but offered no job prospects.
Brooklyn College was a bargain.
And, I worked throughout college to pay for it.
I lived at home - no dorm life, no nights swilling beer with my friends.
So, yes, I missed out on many opportunities for personal growth, live dorm life, extracurricular activities, research opportunities with professors.
But I came out of school with virtually no debt.
And now you want to raise my taxes so I can pay for others who did not make wise decisions ?
I don't think so.
12
Leonhardt says we should help the people who actually need it. That's fine as far as it goes. But given that most of the people he is talking about enroll in for-profit -- often shady -- institutions and then fail to get a degree, public policy should focus on enabling people to get access to reputable, high quality institutions and then completing their studies so they can be employable and, hence, able to repay their loans.
As a general matter, students and their families should be required to shoulder some of the costs the college of higher education -- the old "skin in the game" principle.
6
How about 2 major changes?
1- Allow students to refinance their debt at the rate the Fed loans cash to banks
2-Allow students to shed student loan debt through bankruptcy
The more than 1 Trillion in current student debt is a drag on their lives as consumers - they can not afford homes, cars, other durable goods because they're servicing debt that - unlike Donald Trump in business practice - they can not shed legally due to misguided public policy.
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@howard
Why promote bankruptcy? Why not evaluate what the student is doing to pay off the debt? Maybe some public service or other type of work program to work of the debt in a realistic fashion. Bankruptcy to make all of us pay for the student's decision to take on all the debt. Interest rates, so be what a bank pays so there is no profit.
@howard Agree wholeheartedly! Enough of this scam by the Feds and banks!
Cap the costs of state college, and subsidize state tuition. Private schools should not be subsidized by the government via loan forgiveness. Just like the discussion of socialized medicine, we need to consider the cost side of the equation. I work hard, and no way should my income taxes pay for middle class kids to attend expensive elite and liberal arts colleges, and not even graduate in many cases. Lets not reward such poor decision making. This is not a 'safety net.'
8
@southern mom
Yes, true we need to consider the cost side of the equation. State aid to public colleges is declining in real dollars (i.e. inflation adjusted) and as a percentage of the total revenue of state institutions. How are they supposed to make up the gap to support the rising costs of their labor force and service provision if you are going to "cap" tuition (unless you are willing to support higher taxes so more state funds can go to those colleges)? Capping tuition at state colleges would itself be a subsidy to the upper middle class, as large numbers of these students enroll in public colleges as well.
Furthermore, graduation rates at the "expensive elite and liberal arts colleges" you are disparaging, tend to be much higher than at public colleges. In fact, graduation rates at 4-year private, not-for-profit colleges are 53% (although this is actually typically 80% or more at the "elite" schools), versus only 35% at public
4-year institutions. https://nces.ed.gov/programs/digest/d17/tables/dt17_326.10.asp
Obviously some state institutions do a wonderful job, but many private colleges do as well. And by the way, hardly anyone pays the private college "sticker price," due to generous financial aid policies at many institutions.
How about some parent responsibility. When my twins were born I started a 529 for each of them. A manageable $ amount was deposited every month. At 18 they both had funds to pay for Ivy League schools and half way through grad school. At that time they both took out some loans to finish. Result, one doctor and one teacher. Having children requires some planning. Nothing is free.
12
I agree that forgiving student debt is not the most prudent solution, but a couple things:
- My federal loans have an IR of 6.8 percent. This is set by Congress and can't be refinanced during the life of the loan. I'm 10 years out of college, I have a credit score over 800, and my mortgage IR is at 3.8 percent.
- My wife, a speech pathologist in a hospital, is on an income-driven payment plan. Her payments do not cover the month's accumulated interest. Therefore, her balance increases monthly.
- If we file our taxes jointly, my income will factor into her payment equation, causing her payment to skyrocket beyond its current position of $1,200. This isn't including the $400 I pay monthly.
- If we file separately, neither of us can deduct interest payments from our taxes.
- When more than 25 percent of your take-home pay is going to debt that you aren't retiring, you sure don't feel upper middle class, despite your credentials and paycheck.
Since nobody seems to acknowledge how this whole system contradicts itself at every turn, is it any surprise that people look to full forgiveness?
25
Finally! A bridge too far even for the New York Times to cross in the left-wing idea that more "free" stuff from the government is a good thing. Seems to me that I remember someone saying "A government big enough to give you everything you want is a government big enough to take away everything you've got". He was right after all, wasn't he? Thank you, Mr. Reagan.
A cost free college education will be valued as such by those receiving it in many cases. And, if it's free, the government will demand that all receive it, whether they deserve and have earned it or not. Otherwise, free college will have a discriminatory effect.
Much like a stopped clock, even the New York Times opinion pages can be right (although generally less than twice a day).
3
@Ron Wilson
" Seems to me that I remember someone saying "A government big enough to give you everything you want is a government big enough to take away everything you've got". He was right after all, wasn't he? Thank you, Mr. Reagan."
Mr Reagan was quoting Thomas Jefferson.
@Ron Wilson Interesting. Given this theory, my free internships to offer me "rewarding and invaluable experience" amount to nothing as well. However, that internship was highly competitive and merit based just like debt-free college can be. Also, that internship was a requirement to even get a basic interview because almost no one hires without experience or a degree anymore.
@Ron Wilson
I'd also be thrilled if the super rich and corporations stopped getting quite so much free stuff from the government. Because face it - governments give away free stuff all the time even if it's not to individuals. Can you say "Long Island City"? The idea is to look at where the free stuff is going and weighing how or whether it benefits society. I think smart people on both sides of the aisle have points to make there, so knee-jerk partisan responses are childish.
1