Hansen Clarke's Bill Forum

[Sauer Grapes]

Maybe so, but personal responsibility is at the root of the issue causing the problem (amongst other causes).

That's like saying gravity is the root cause of airplane crashes. Technically true, but not usefully so. The "problem," in the sense of things we can solve through policy (as opposed to facts of nature we just have to deal with), is that given the information asymmetries in the market and bounded rationality of the participants, people overvalue education. How do we address that? Simply continuing to let people overpay isn't going to fix that market failure.

I don't agree it is the same as saying gravity is the root cause of airplane crashes at all.

Gravity technically causes airplanes to fall out of the sky. But gravity is not something you can change. You just have to design around it. The same is true for the moral character of the people.

I think we are looking at this different ways. People taking personal responsibility is not just about their moral character. It is far more complex than gravity (simplifying gravity to a layman's understanding of it and not a physicist's understanding) and it starts with the decision of whether or not to take out loans and if so, how much. It continues throughout school with your decisions as to your major (hopefully keeping in mind your debt or lack thereof), your decision of job (if you are lucky enough to have a decision or even a job), and also your decision to live within your means (again if you are lucky enough to have a job). Some of that definitely speaks to moral character but I don't view that as exclusively a moral character issue. Some of that can be changed or influenced though, unlike gravity in your example.

Also, moral character of the people is also unlike gravity in that it can be influenced by external factors such as public perception of non-repayers, legislation such as this "excusing" a decision not to repay (I understand there will be some that can't repay and it's not always a choice, but a lot of time it has to do with choices), and how easy it is to get away with not repaying. That is not to say I think the current laws making student loan debt 100% un-dischargable is how it should stay.

[abc12345675]

This student loan problem is going to have a crippling effect throughout the economy.

-Parents will retire later or with less money because they will be supporting their kids for longer
-People will have families later because they have no money
-People will hold off on things like buying new cars or taking trips because they have no money
-People will not buy their first home until much later in life

All of these things have a negative long term impact on the economy

[Sauer Grapes]

This student loan problem is going to have a crippling effect throughout the economy.

-Parents will retire later or with less money because they will be supporting their kids for longer
-People will have families later because they have no money
-People will hold off on things like buying new cars or taking trips because they have no money
-People will not buy their first home until much later in life

All of these things have a negative long term impact on the economy

While all of those will most likely have a negative effect on the economy, you can't go from that to the conclusion that this bill (or any additional loan forgiveness) will be good for the economy.

[abc12345675]

This student loan problem is going to have a crippling effect throughout the economy.

-Parents will retire later or with less money because they will be supporting their kids for longer
-People will have families later because they have no money
-People will hold off on things like buying new cars or taking trips because they have no money
-People will not buy their first home until much later in life

All of these things have a negative long term impact on the economy

While all of those will most likely have a negative effect on the economy, you can't go from that to the conclusion that this bill (or any additional loan forgiveness) will be good for the economy.

So what do you propose?

[Sauer Grapes]

This student loan problem is going to have a crippling effect throughout the economy.

-Parents will retire later or with less money because they will be supporting their kids for longer
-People will have families later because they have no money
-People will hold off on things like buying new cars or taking trips because they have no money
-People will not buy their first home until much later in life

All of these things have a negative long term impact on the economy

While all of those will most likely have a negative effect on the economy, you can't go from that to the conclusion that this bill (or any additional loan forgiveness) will be good for the economy.

So what do you propose?

There's no easy solution. I do think that we need preventive measures to keep people from getting into this position. That could be mandatory education in HS about personal finance and exactly what loans will mean to their future. Maybe they should include employment stats for different majors and occupations, I don't know what else it would need but there needs to be something. Maybe a cap on the amount of loans along with work-study programs to make up the difference. The problem with that is that it'll be accused of keeping poor and minorities from getting an expensive eduction. So maybe that should be coupled with incentives for organizations to provide more private scholarships. (still, that isn't easy to execute).

During school, there should probably be mandatory counseling sessions for all those taking loans. Still that creates a problem of possibly creating another position. There is probably more for this.

After school, capping minimum payments at 10% of income isn't a horrible idea as far as I can tell. Maybe allow a more extended time to pay the loans back? Maybe make them more easily dischargeable, but still very difficult? This isn't an easy problem at all.

For those that already have the loans, I think allowing for a more extended pay back period is fine. As far as doing more than that, maybe give incentives to those that have never defaulted on their loans. Maybe for those that have paid every month or qualified for deferrals but always paid when it was required (or if not always, some benchmark), allow them to discharge the loans at some point farther down the road than they are currently proposing. That way those that can afford to pay will have paid and will not have taken advantage of it. <-- I'm not saying this is perfect, but you asked for ideas...

Anyway, I'm not saying I have all the answers... I'm just saying that this bill is not the answer, and I doubt anyone in Congress believes it is either. All the bill is doing is political positioning and it's an attempt for some to appear like they are doing something in order to get votes.

Cliff's notes... Basically, there is no easy answer, but any solution should include prevention (both before undergrad and for those still in school), and some kind of reform that doesn't encourage non-payment.

PS, I'm not proofreading, so forgive any errors.

[timbs4339]

This student loan problem is going to have a crippling effect throughout the economy.

-Parents will retire later or with less money because they will be supporting their kids for longer
-People will have families later because they have no money
-People will hold off on things like buying new cars or taking trips because they have no money
-People will not buy their first home until much later in life

All of these things have a negative long term impact on the economy

While all of those will most likely have a negative effect on the economy, you can't go from that to the conclusion that this bill (or any additional loan forgiveness) will be good for the economy.

So what do you propose?

There's no easy solution. I do think that we need preventive measures to keep people from getting into this position. That could be mandatory education in HS about personal finance and exactly what loans will mean to their future. Maybe they should include employment stats for different majors and occupations, I don't know what else it would need but there needs to be something. Maybe a cap on the amount of loans along with work-study programs to make up the difference. The problem with that is that it'll be accused of keeping poor and minorities from getting an expensive eduction. So maybe that should be coupled with incentives for organizations to provide more private scholarships. (still, that isn't easy to execute).

During school, there should probably be mandatory counseling sessions for all those taking loans. Still that creates a problem of possibly creating another position. There is probably more for this.

After school, capping minimum payments at 10% of income isn't a horrible idea as far as I can tell. Maybe allow a more extended time to pay the loans back? Maybe make them more easily dischargeable, but still very difficult? This isn't an easy problem at all.

For those that already have the loans, I think allowing for a more extended pay back period is fine. As far as doing more than that, maybe give incentives to those that have never defaulted on their loans. Maybe for those that have paid every month or qualified for deferrals but always paid when it was required (or if not always, some benchmark), allow them to discharge the loans at some point farther down the road than they are currently proposing. That way those that can afford to pay will have paid and will not have taken advantage of it. <-- I'm not saying this is perfect, but you asked for ideas...

Anyway, I'm not saying I have all the answers... I'm just saying that this bill is not the answer, and I doubt anyone in Congress believes it is either. All the bill is doing is political positioning and it's an attempt for some to appear like they are doing something in order to get votes.

Cliff's notes... Basically, there is no easy answer, but any solution should include prevention (both before undergrad and for those still in school), and some kind of reform that doesn't encourage non-payment.

PS, I'm not proofreading, so forgive any errors.

How does the bill encourage non-payment? You still have to make 120 payments/60 for PSLF.

[Sauer Grapes]

How does the bill encourage non-payment? You still have to make 120 payments/60 for PSLF.

My issue is with the length of time that they have to do so. Five years is not long enough, and IMO neither is 10 years if not in some type of limited public service position. I personally don't think government jobs need that incentive due to their other benefits even though they generally have lower pay for some employees (not for near as many as people think).


Listen, I realize that I'm fighting a losing battle by advocating for anything other than complete forgiveness to all on this forum since most here have a lot of student loan debt or will have a lot in a few years.

[timbs4339]

How does the bill encourage non-payment? You still have to make 120 payments/60 for PSLF.

My issue is with the length of time that they have to do so. Five years is not long enough, and IMO neither is 10 years if not in some type of limited public service position. I personally don't think government jobs need that incentive due to their other benefits even though they generally have lower pay for some employees (not for near as many as people think).


Listen, I realize that I'm fighting a losing battle by advocating for anything other than complete forgiveness to all on this forum since most here have a lot of student loan debt or will have a lot in a few years.

Nobody is talking about wiping away 1 trillion of student loan debt. But all this discussion about moral hazard is pretty lulzy given what has happened over the past half-decade.

PSLF includes a lot more than just gov't jobs.

[Sauer Grapes]

PSLF includes a lot more than just gov't jobs.

I am well aware of that and nowhere did I say that PSLF was limited to government jobs... I spoke to keeping at least some government jobs from qualifying for it.

I can see how one could read that into what I wrote though.

[Slobberson]

.

[NoleinNY]

Doesn't the bill also have a provision in it that says anyone not grandfathered in will only get the benefit of 45k in loan forgiveness to encourage personal responsibility?

[drmguy]

From huffington post:

Clarke's bill, which currently has five other sponsors, is aimed at helping current and future student borrowers. If it passes, people who take out student loans could see their debt forgiven up to $45,520, equal to the average cost of a four year degree at a public university.

[Reprisal]

Hmm, a position with a massive, illogical support base?

This will pass, if not this year then in Obama's second term.

I have a boatload of student debt and this would be great for me, but it strikes me as unfair to people who made choices to prudently remain debt-free, and if it passes, it'll be a back-door fiscal easing of epic proportion.

Think $700 billion to banks to was bad? At least that $700 billion was repaid eventually. Here we're talking about a similar amount being simply forgiven.

[abc12345675]

From huffington post:

Clarke's bill, which currently has five other sponsors, is aimed at helping current and future student borrowers. If it passes, people who take out student loans could see their debt forgiven up to $45,520, equal to the average cost of a four year degree at a public university.

Yes, but current borrowers are grandfathered in and can get forgiven whatever is left after they make the minimum payments

[fatduck]

i don't understand why people are acting like this would bankrupt the government. you can't compare it to bailing out toxic mortgages where the government had to give money to private lenders. federal student loans are all issued by the department of education so they don't have to pay anyone. they just zero out your account.

[drmguy]

From huffington post:

Clarke's bill, which currently has five other sponsors, is aimed at helping current and future student borrowers. If it passes, people who take out student loans could see their debt forgiven up to $45,520, equal to the average cost of a four year degree at a public university.

Yes, but current borrowers are grandfathered in and can get forgiven whatever is left after they make the minimum payments

How does this address "up to 45,530"?

[timbs4339]

Hmm, a position with a massive, illogical support base?

This will pass, if not this year then in Obama's second term.

I have a boatload of student debt and this would be great for me, but it strikes me as unfair to people who made choices to prudently remain debt-free, and if it passes, it'll be a back-door fiscal easing of epic proportion.

Think $700 billion to banks to was bad? At least that $700 billion was repaid eventually. Here we're talking about a similar amount being simply forgiven.

You didn't read anything about the bill, did you? Only people making 120 on-time payments can qualify.

[ahnhub]

From huffington post:

Clarke's bill, which currently has five other sponsors, is aimed at helping current and future student borrowers. If it passes, people who take out student loans could see their debt forgiven up to $45,520, equal to the average cost of a four year degree at a public university.

Trying to understand this. You pay 10% of your income for 10 years and you get 45K of your loans forgiven?

[abc12345675]

From huffington post:

Clarke's bill, which currently has five other sponsors, is aimed at helping current and future student borrowers. If it passes, people who take out student loans could see their debt forgiven up to $45,520, equal to the average cost of a four year degree at a public university.

Trying to understand this. You pay 10% of your income for 10 years and you get 45K of your loans forgiven?

Yes. Unless you are already a borrower. In which case you get whatever is left after those 120 payments

[bjsesq]

Maybe so, but personal responsibility is at the root of the issue causing the problem (amongst other causes).

That's like saying gravity is the root cause of airplane crashes. Technically true, but not usefully so. The "problem," in the sense of things we can solve through policy (as opposed to facts of nature we just have to deal with), is that given the information asymmetries in the market and bounded rationality of the participants, people overvalue education. How do we address that? Simply continuing to let people overpay isn't going to fix that market failure.

You fix it by not giving out loans like candy.

Your analogy is bullshit. We can't control gravity, we can control ourselves. Decisions made by individuals are the root cause of the problem. One person decides to give a loan, or to subsidize one, the other accepts. This happens too often. This is the problem.

Pro tip - using big words doesnt make you sound smart.

You completely ignored his point about imperfect access to info and rationality issues.

Protip: coming at people as hard as you can does not make you right. htmfh

[Slobberson]

.

[Reprisal]

Hmm, a position with a massive, illogical support base?

This will pass, if not this year then in Obama's second term.

I have a boatload of student debt and this would be great for me, but it strikes me as unfair to people who made choices to prudently remain debt-free, and if it passes, it'll be a back-door fiscal easing of epic proportion.

Think $700 billion to banks to was bad? At least that $700 billion was repaid eventually. Here we're talking about a similar amount being simply forgiven.

You didn't read anything about the bill, did you? Only people making 120 on-time payments can qualify.

I saw that. I don't see how it would change that an enormous amount of student loan debt would be written off under this proposal.


The peril this bill is that it could minimally contribute to inflation, and worse, send a really bad moral hazard signal to borrowers of student debt.

[Perseus_I]

I sure hope it doesn't pass. Where will they get the money? The G has it's own debt problems to be worrying about paying others.

Where will they get the money? Same place they got the other $16 trillion.

Which is why it is a horrible idea.

Americans need to learn to take responsibility for their decisions again. What happened to the days when we paid our own debts?

"Personal responsibility" is a total non-basis for government policy. It's useless moralizing.

The question is should the government subsidize higher education or not and how? I think the government should subsidize higher education, but I think the bill is a retarded way to do it. They should just nationalize all universities instead of playing this weird game of publicly funding entities they have no control over.

+1. Government giving money to private corporations (universities these days are basically corporations) is just asking for abuse. Since they are part of the "free market" there's nothing to keep them from raising tuition by the amount of whatever aid they get (and more, so they get more aid). It's so wasteful.

[Slobberson]

.

[Perseus_I]

+1. Government giving money to private corporations (universities these days are basically corporations) is just asking for abuse. Since they are part of the "free market" there's nothing to keep them from raising tuition by the amount of whatever aid they get (and more, so they get more aid). It's so wasteful.

Right, but government run entities don't waste any money. You guys are geniuses.

Public money appropriated to a public institution tends to turn into a poorly-run organization that everyone loves to hate (See the Social Security Administration). Public money appropriated to a private institution has a tendency to become somebody's bonus. Student aid is no exception.

Allowing students to discharge their debt in bankruptcy without consequences to the university who admitted the student and took federal money provides all the wrong incentives. If we want an even worse mess than what we have, then yes, pass this bill. On the other hand, shifting the burden of defaulted student loan debt from students and the public, onto the universities, might not be a terrible idea. If Thomas M. Cooley got a bill in the mail from Uncle Sam every time a student discharged her student loan debt in bankruptcy, they might think really hard about some of their shady practices.