President Biden has approved a program of student loan cancellation up to $10,000. Matt Yglesias isn't happy about it:
The student loan cancelation issue is white collar nonprofit workers making the transition from class-in-itself to class-for-itself.
— Matthew Yglesias (@mattyglesias) May 28, 2022
I get Matt's irritation about this. It really is a triumph of relatively privileged young activists who are demanding cancellation of debts that they went into with their eyes open and with signatures on loan documents saying they'd pay them back.
On the other hand, Biden's $10,000 program is also the best compromise available here. It means that by far the biggest share of the money will go not to MBA students and Harvard grads, but to folks who went to community colleges, trade schools, and state universities. These are people who ran up big debts they might not have fully understood in return for fairly workaday degrees. I can live with that.
But there's one piece of this that I continue to think isn't as appreciated as it should be: this is really not a federal problem. If there's a presidential election in progress, then sure, you lobby the president. Anyone would do the same. But the federal government can't cancel pieces of student debt forever, so this is merely a one-time benefit, not a solution to the high cost of university education.
For the vast majority of students, this is a state problem because they're attending state universities. That's who liberals should be lobbying. Conservatives are very good at grinding out policy victories state by state, but it's hard, often unrewarding work. That goes with the territory, though, and this is a case where states are the ones who raised university costs and they're the only ones who can lower them. Anything else is just a bandage on a suppurating wound.
All the wonks like Yglesias flexing against each other why this is bad policy completely have forgotten that this is an issue because:
* Congress made student debt non-dischargeable in bankruptcy
* Congress refuses to act so what's left is
Shit you can do by decree. Everyone wants a bigger fix but the best argument is that NOOOO THIS IS WROOONNG or whatever would sit better with me if anything remotely like optimal were on the table.
We can't pass laws to fix kids getting shot in school and Yglesias thinks some technocratic higher education fix is on the offing?
And really the only "working class" people complaining about this are the "real americans" dancing in these people's minds. Most people do not care. Except the debtors.
And before I get a litany of "what abouts," let's review
* BBB killed in senate had bennies for working class people, killed.
* First COVID package had $$ for parents, not renewed
* COVID packages straight up sent out cash
This is all on Congress for not doing more working people not Biden for doing less or doing something extra for student loan debtors.
Believe me my 125k debt agrees with you but all that money exploded inflation. Yes it wasn't just the spending, but part of it certainly was.
Agree. Plus interest rates on student loans were often higher than what someone in good standing could get on ordinary credit card or car loans. And they have been very inflexible and hard to refinance at lower rates. Plus there was very real fraud in for-profit schools making promises to students on future earnings and arranging loans that many from less-educated, lower income families couldn't understand.
What needs to be done is for Pell Grants to fully cover the cost of tuition/fees for lower-income students. Plus, states need to increase college and community college funding. For many students from moderate-income families, the costs compel debt at levels that young people have little hope of being able to pay off in their early working years.
Yes, the states should fully fund their universities, which is an essential part of the solution. But the debts must also be made dischargeable in bankruptcy, another essential part. Not sure why that's regarded as just being unpossible, despite it being routinely an option for more privileged classes.
You're not sure why?
OK, so do I start with "Congress literally cannot act to stop kids from getting shot in schools" or do you have that part? Congress won't do shit.
Yeah I get that passing laws is hard. My comment was more toward policies that might work and policy positions that might attract some votes.
Yeah I would say that if Congress can't stop kids from being shot in schools - something which generates no income for anybody, not even for hospitals if the kids being shot have no health insurance - they certainly aren't going to act to screw over creditors by allowing student loans to be discharged in bankruptcy.
No private lender would extend credit, so the feds would underwrite the entire shebang. There’s little difference between the feds taking a hit in bankruptcy court or just writing the things off anyway.
Exactly. In the 1980s, I went to a public university in California where the tuition ranged from $320/semester in my first year to approximately $380 in my last year. At the time, the state subsidized most of the costs of the UC and CSU systems. I don't recall the exact numbers, but somewhere in the 70-90% range. Then, as Proposition 13 took a firmer hold and the anti-tax mania continued, the state contribution dropped so that it is somewhere in the neighborhood of 10-20% of the two systems costs. (My numbers are totally educated guesses, they likely aren't exact.). With the state's contributions declining so much, the systems were left with covering costs by tuition. hence the problem. Society no longer pays for the value of a college-educated work force. The students and their families do.
Until we get back to where we were in the 1960s and 1970s -- recognizing the benefits brought to all by having an educated workforce and thereby having society cover those costs -- this is going to be an endless problem. This is my issue with the forgive student debt concept -- it does absolutely nothing to address the underlying problem.
Yeah I went to state Schools in Washington State from 84-88. My tuition was a little over $400 per quarter for a full load (you go for 3 unless you pick up extra classes over the summer)
Rent for a nice dorm room (single room, living room, kitchen and bathroom shared with just 3 other people) was $200 a month.
Minimum wage was $4.75 so between a part time job and loans I was able to graduate with only $6000 in debt which had a low interest rate for the era so there was no rush to pay it off.
Long term the cost of higher ed needs to be adjusted back to something like that or better.
That’s the other problem with public universities in California. They use their dorms as a money-making enterprise. $1,000 a month for each student. And that doesn’t include food. $1,000/month to share a room with one or two other students and share a bathroom with six other students. It’s disgusting.
$2,000 a month for 2 people (or $1,000 per individual) is much cheaper than market rents in most California cities. And it's unclear why, if you're studying, you shouldn't have to pay living expenses... but if you're "just" working at, say, McDonald's or Wal-Mart full-time, it's OK for your living expenses to not be subsidized by the state. Any argument that students of all income and wealth backgrounds should be prioritized ahead of the working poor is very morally suspect.
What does somebody get for that $2,000 per month? In much of California, that will get at least a one bedroom apartment and in many places a two bedroom apartment. With a kitchen and a living area and a bathroom just for the two occupants. What does it get you in a college dorm? A room with no kitchen that is barely big enough for the two or three people sharing that room to be able to move around and a bathroom shared with 5-10 other students. It’s not even close to comparable.
I get it. Those who had their education paid for by wealthy parents and never had any debt don't want anyone else to get a helping hand in life. Also, isn't Matt always arguing that politicians should do things that people want them to do? Like the promise Biden made during his campaign? There are zero swing voters who would vote for Biden just because he shafts people who voted for him in the last election, but their are millions of disgusted borrowers who would be mad enough to sit out the next election.
Three thumbs up. These goniffs have no loyalty anyway.
It will be interesting to see what happens to borrower behavior in the post-forgiveness era. Will $10,000 be enough to get most borrowers who are currently behind to be on track with payments? Is it a small enough reduction in debt that few borrowers will be incentivized to go into default by choice, in the hope that all their debt will be cancelled in future? Will today's college students view it as a one-time thing that will never benefit them? Or will they see borrowing more now as a gamble worth taking?
I keep hearing of people who went into default years ago, once debt forgiveness became a common topic of conversation, because they figured a big write-off was coming. I wonder what will happen to them.
Slashing the interest rate on student loan debt seems the easiest long term option, and it is one that would save people a ton of money. Not as exciting as a write-off, though.
IIRC ~75% of the debtor population has less than $15K in debt, the horror stories about tens or hundreds of thousands are a small number of poeple
Do you have a position on out-of-state tuition costs?
Someone should run the numbers to see how forgiving $10K per borrower compares to what the borrowers would have saved if the government had made the loans zero interest or whatever would have made them essentially profit free. It is crazy that federal student loans command interest rates of 6 or 7% when the government was borrowing money at negative interest rates. The money should have been borrowed by the government at 0% or whatever and just passed on to the students at 0% instead of allowing loan servicers to make profits of 600%!
Agreed. This is the point Democrats should hammer. Forgive student loan interest, not the original borrowed corpus, and make the point that large, private corporations were given the exact same deal.
Yes!! The interest rates are outrageous.
The universities went down a bad path when they decided to run their schools like businesses and to treat their students like customers. The result has been an explosion of managers with titles like "Assistant Dean for .... Whatever" while the professors who actually teach students and conduct research are shit upon.
Well, the thing is, if you want to accept, retain, and actually graduate students from minority and non-traditional backgrounds, you have to provide these support services that require "Deans of Whatever" to administrate. Otherwise the washout rate is unacceptable. So your choice is, limit your student body to conventionally-abled, upper middle-class white students from families who have gone to college for generations and prepared them for it since they were toddlers and ditch all the administrative bloat dedicated to serving non-traditional students, or admit a diverse student body, but commit to the very substantial costs of supporting them and helping them graduate.
There is a difference between programs that actually help students and programs that are meant to be shown off to potential donors. People actually helping the kids are overworked and underpaid. Those talking about those helping the kids, that's another story....
One thing that easily loans have done is drive demand for nice housing and student recreational centers sky high, similar to health insurance paying for five-diamond resorts known as “hospitals.”
Back in the day, tuition and room and board were cheap, but the facilities were pretty spartan. $1 movies and a keg on Thursday nights was the extent of the student activity program.
Every college has to be a University.
University administrators are rewarded for cutting costs and bring in money in their section. Buildings leaks, research gets lost...well, it didn't happen under their watch and they've moved on. Graduating students can't get jobs--well they've already given their money and those stats will fall on someone else.
Research grants were supposed to help support research in partnership with the school. Then it covered overhead related to research. Then overhead is a negotiated amount. Then overhead for maintenance becomes planned obsolescence--easier to raise money for a new building then spending money keeping what you have in good shape.
That the son of a famous and successful writer, who went to Harvard, I'm sure paid for by daddy, is complaining about student loan debt forgiveness is beyond parody. Also, Matt is a f*cking idiot regardless of being the product of nepotism.
Why oh why does anyone pay the slightest account to that douchebro? Last time I checked, Yglesias didn't know the difference between the what wasspent per pupil in a district, the cost per pupil in a district, and the marginal cost per pupil in a district. In fact, his big beef back in the day was that his teachers/professors didn't realize what a special, special snowflake he was, and who knows how many others undeserverdly escaped recognition.
As my partner pointed out the other day, sure he finds an acorn every so often. But so do the two drunk guys at the end of the bar, and nobody's offering them a column now, are they?
I was one of the lucky duckies. I was at VA Tech in the mid to late 1980s and the school was a bargain back then. Then boom in the 1990s the GOP gained control of the state government and slashed funding for the state universities.
There actually IS a ton of student activism in regards to tuition being too high in state schools but sadly there's not enough reporting on this so Kevin isn't aware. But until we get a sea change in who controls government substantial change to how we fund higher ed is just not going to happen.
On the other hand, Biden's $10,000 program is also the best compromise available here.
It's also something he promised to do when elected. So why keeping a campaign promise has caused such political churning is beyond and he's getting it from both sides: leftists who think it's not enough (especially that ridiculous writer in a recent New York magazine article whining about Biden causing her so much "uncertainty" when she hasn't paid so much a fucking in loans since Biden became President to those on the Right who won't take any responsibility for students taking out so much debt because costs have increased in the wake of state funding cuts.
You're right Kevin this is much a state problem as it is a Federal problems but liberals myopic focus on the Presidency once again becomes an embarrassment. No! this is not the West Wing.
This topic hits home, and I still don't know what I think about it. Back in the 90's when she and her husband took out $150K for student loans, that was considered the smart thing to do. Her life took some unfortunate turns, and she has been unable to pay back the money nor can she get a job that can pay the bills. She is in her 50's now, and still horribly in debt, making minimum wage. Her husband stiffed her for his share of the loans, and it makes no sense for her to work. She made bad choices all along the way. These kids were allowed and encouraged to take the loans. She had no idea what she was getting into. I don't understand why bankruptcy laws do not cover her.
Oops! Bad editing by me. The second sentence should have read: "Back in the 90's when my daughter and her husband..."
Cutting state government funding for universities costs state politicians almost nothing these days since the unis directly serve such a small fraction of the state at any given time. The only meaningful push back comes from the mega-donors within a state.
Thank you Kevin The whole topic of student debt has been all over the place and totally ignores the source, State funding, and not all the other noise (capital costs, bureaucracy, Fed Loan program, etc).
And if you ignore the source, you never address the issue. Treating the symptom and not the illness.
In Washington State, it was Republicans who led the charge to limit undergraduate in-state tuition. Increases have been capped at about 3% per year for many years now. And they’ve backfilled any gap with appropriations from the state general fund.
When Republicans aren’t foaming at the mouth, they can be thoughtful. At times.
"Biden's $10,000 program is also the best compromise available here."
Or the worst. It will not satisfy any of those activists who rail against the injusticeof crushing college debt and usurious interest rates. It will not solve the problem of massive debt, which impacts everything from housing to career choices. And it will still allow the GOP to rail against Democratic giveaways to woke college students.