Borrowers Got $127B in Student Loans Canceled

https://www.nytimes.com/2023/11/11/business/student-loans-debt-cancellation.html

by theoldlove • 3 years ago

19 47 3 years ago

superduty3• 3 years ago

Unless the teachers and schools were required to issue refunds, debt didn’t get “cancelled”, it was shifted to those who had no part in creating or agreeing to the debt. So no, it was not “cancelled”, it was shifted to you, your friends, you mom and dad..

lvl102• 3 years ago

I don’t think you understand how loan securitization work.

whatshisface• 3 years ago

You can't blame anyone for being wrong about an article that's behind a paywall...

verteu• 3 years ago

The article says: "The cost of that relief is ultimately borne by taxpayers."

jcalvinowens2• 3 years ago

It's a meaningless semantic argument, you're both right.

One valid way of looking at this is that the debt cancellation costs nothing: the value of the loan doesn't end up being paid by anybody else, it genuinely ceases to exist. The direct cost is $0.

But obviously, you've reduced the future income of the government by that amount: that necessarily means that at some future time, taxes must be raised or spending must be cut (or the deficit increased...) to preserve the status quo and cover the shortfall ($300B - $980B over the next decade for the original plan, according to the CBO).

The argument that forgiving the debt has no cost to society is disingenuous. But so is the argument that "the remaining value of the debt will have to be paid by other people". The reality is somewhere in between.

conk• 3 years ago

I’ll happily pay taxes to help other Americans achieve an education that allows them to contribute to society. Seems like a much better ROI vs other federal programs.

hotpotamus• 3 years ago

But we probably could have developed 1/10th of a really cool bomber with that money.

TheAceOfHearts• 3 years ago

My primary concern with student loan relief is that it doesn't resolve the underlying issues. Student loan relief should probably be coupled with some kind of educational system reform in order to escape the vicious cycle. Otherwise in a few years we'll basically end up in the same place.

superduty3• 3 years ago

Good for you.

I worked and saved to help my kids go to school, and they worked jobs to pay for their education.

I’m it paying for your kid’s education as well.

The right way to deal with this is go after the schools and get the money refunded, not force others to take on the debts.

yumraj• 3 years ago

You would, but what about others? Do they get a say?

I’m already playing in full for my kids college. Why should I have to pay for another person’s education too?

cedws• 3 years ago

What about useless degrees that have zero ROI?

sillystuff2• 3 years ago

It is a matter of priorities. Cancelling debt allows our youth to have a better start in life.

Alternatively, we could use that money to murder brown children overseas, as we usually do. Or, provide giveaways to the rich in the form of subsidies and preferential tax treatment for their unearned income which is always a favorite too.

Really, we should go back to free higher education like the older boomers had available to them, and is still available in many civilized countries. But, the right and far-right controls policy in the US.

superduty3• 3 years ago

Debt doesn’t get cancelled. It gets forcibly moved to those who had no part in creating it.

I worked hard to save for my children’s schooling, as did they, taking part time bd full-time summer jobs. We chose the schools that did not require loans or that required minimal loans.

veec_cas_tant• 3 years ago

These programs have existed for many years and at least some portion of borrowers took out loans with the expectation that the government would honor those programs. There is no real reason, outside of ripping off those that can't navigate bureaucracy, to argue against automating and streamlining these programs that already existed:

Many of the programs that the Biden administration is using have existed for years, sometimes decades, but were notoriously troubled, forcing borrowers to navigate complicated bureaucratic hurdles. By adjusting rules and temporarily waiving some requirements, Education Department officials have accelerated long-delayed relief.
Public Service Loan Forgiveness... In 2007, Congress passed a law intended to entice more college graduates into public service careers: Those who worked for government agencies or nonprofit organizations would, after 10 years of monthly loan payments, have their remaining federal student loan balance eliminated... But the program’s complex rules turned it into a quagmire that rejected 99 percent of applicants — and an effort in 2018 to apply patchwork fixes became another debacle.
Income-Driven Repayment Adjustment... Income-driven payment plans are designed to eliminate any remaining balance after a set period of repayment, typically 20 years. Even for borrowers who never enrolled in those plans, the Education Department decided to count virtually any payment, for any amount, as a qualifying one — and it added to its tally many months in which borrowers made no payments at all because they had a long-term deferment or forbearance. The department chose to apply those adjustments automatically for all borrowers, no application needed. The result was that hundreds of thousands of borrowers abruptly discovered that their loans had reached the 20-year mark and been eliminated. The first notification letters were sent on July 14.
Borrower Defense to Repayment and Closed-School Discharge... The Obama administration began to build a system for handling those requests, but it ground to a halt during the Trump administration. When Mr. Biden assumed office, tens of thousands of claims — some that had been languishing for as long as six years — were pending, and over 130,000 others had been summarily rejected. In 2022, the Biden administration agreed to settle a class-action claim that covered 200,000 borrowers who had attended more than 150 schools.
Total and Permanent Disability... Borrowers who are permanently disabled are eligible to have their federal student loans eliminated. The process had long been a bureaucratic obstacle course, requiring doctors’ notes — which were often rejected, with little or no explanation, because of documentation errors — and years of income-monitoring and other compliance requirements. Many who would have qualified for relief never bothered to apply. But two government agencies already had data on people who were fully disabled: the Social Security Administration and the Department of Veterans Affairs. By creating automatic data-matching programs with both agencies and eliminating some income documentation requirements, the Education Department significantly expanded the number of borrowers who gained relief.

imtringued• 3 years ago

Anyone who received a loan under lenient conditions and paid it off benefitted indirectly by being allowed to receive the loan in the first place. Private lenders are selective and would only lend to the best students. So all these people on the margin with say a 85% chance of completing university would have to be denied, because there is no way they could pay the interest to make this lending profitable for the bank. The idea that the loans would be a profit center for the US was a pipe dream to begin with.

Eddy_Viscosity2• 3 years ago

Not entirely true. Some of it yes, but much of the debt wasn't money borrowed, but fees and interest accrued after borrowing.

kermatt• 3 years ago

Was there ever a serious look at restructuring loans that did not dispose of the principal? That could have been a more responsible solution.

h2odragon• 3 years ago

Can we get mortgage forgiveness next? Imagine what a boon that will be for the economy.

cramjabsyn6• 3 years ago

If there are demonstrably predatory mortgages in place then yes they should be forgiven, or at the the least converted to a low rate standard loan without mandatory insurance.

We need better laws and repercussions against screwing over the working class.

aeternum3• 3 years ago

Ah yes when those too-good-to-be-true variable rate mortgages ramp up the rate due to inflation, we can just relabel them as predatory.

It's not like the risk of was ever disclosed to the purchaser. Oh wait.

We continue to bail out and incentivize poor decision-making, then wonder why the proportion of poor decisions seems to be increasing.

tekla3• 3 years ago

I struggle to understand how student loads are predatory

aeternum3• 3 years ago

A good old-fashioned Debt Jubilee. There's definitely historical precedent.

FooBarBizBazz• 3 years ago

Not unless it includes a free house for everyone who didn't get in on the racket.

gustavus3• 3 years ago

For this curious it outlines various ways the loans have been discharged including

1. Discharging loans against colleges that have filed bankruptcy and closed

2. People that have taken jobs in the public service sector qualify for student loan forgiveness

3. Getting rid of fees and loans that were accumulated due to predatory behavior on the part of the servicers.

Maybe discuss the specifics rather than the generals of the article.

lokar• 3 years ago

It seems most of it was fixing broken rules that were intended to have forgiven most of this debt years ago.

hoppyhoppy22• 3 years ago

Gift Article link: https://www.nytimes.com/2023/11/11/business/student-loans-de...

hackeraccount2• 3 years ago

Why do I think that this will not lower the expectation of Universities that any future students will be able to borrow large amounts of money.

Borrowers Got $127B in Student Loans Canceled

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