Borrowers Got $127B in Student Loans Canceled(nytimes.com)
nytimes.com
Borrowers Got $127B in Student Loans Canceled
https://www.nytimes.com/2023/11/11/business/student-loans-debt-cancellation.html
48 comments
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..
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.
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.
This is a valid concern. Of course, the problem is Congress is dysfunctional so a strategic fix (universal public higher ed) being enacted is potentially many years in the future (if at all). This is immediate, tactical relief for people who are suffering financially. In the same way that someone bleeding to death on the pavement doesn’t care about dysfunctional healthcare policy at that moment; they want to get stabilized.
(I hit the highest marginal income brackets and support this policy; good policy is the interaction of compassion and pragmatism at scale)
(I hit the highest marginal income brackets and support this policy; good policy is the interaction of compassion and pragmatism at scale)
I don't understand why people are pushing universal higher ed. Based on everything I see and have heard the first 2 years of college end up recapping everything you should've learned in high school. So we'd be served just as well by making high school optional and actually focus on teaching while not forcing students who don't want to be there to be there. It's accomplish the same thing but not cost nearly as much.
Depends on the high school doesn’t it ? I didn’t have Computer Science in my high school so it was all new to me Anyone who was good in any subjects would have taken a College Course or AP classes to skip the classes you’re talking about.
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.
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.
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?
I’m already playing in full for my kids college. Why should I have to pay for another person’s education too?
What about useless degrees that have zero ROI?
But we probably could have developed 1/10th of a really cool bomber with that money.
In the last 15 years the US spent something like 700B on modernizing nuclear weapons. I can see how freeing people from debt so they can do things like buy houses, have kids, buy stuff benefits me. I can't see how the US's vast nuclear arsenal benefits me at all. What's the US going to do with them, kill 500M Chinese? Allow some religious nutter politician to cosplay the end times? No thanks.
The very principle of erasing loans that students willingly made a promise to pay rubs me the wrong way.
You entered into an agreement and then borrowed money. But now are expecting the country to pay your loan back?
I would’ve been ok with erasing the interest. Just not the principal.
You entered into an agreement and then borrowed money. But now are expecting the country to pay your loan back?
I would’ve been ok with erasing the interest. Just not the principal.
What other options and choices did the system make available to them? For many the choice was take on loans and go to college. Or not go to college. With everyone and his dog telling them to pick the first choice.
Also if one knows how it all works it's obvious it's just a give away to the banking industry.
Also if one knows how it all works it's obvious it's just a give away to the banking industry.
I can’t find the source so please refute the following but you find evidence suggesting otherwise, but a non-trivial portion of the loans were for graduate degrees which are totally extra and unnecessary in the sense of “what choice did they have”
But again, I’d personally like to find that source to verify if this is true. And if it is, those loans had no business getting forgiven.
But again, I’d personally like to find that source to verify if this is true. And if it is, those loans had no business getting forgiven.
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.
Not entirely true. Some of it yes, but much of the debt wasn't money borrowed, but fees and interest accrued after borrowing.
Was there ever a serious look at restructuring loans that did not dispose of the principal? That could have been a more responsible solution.
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.
> 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.
I don’t think you understand how loan securitization work.
The article says: "The cost of that relief is ultimately borne by taxpayers."
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.
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.
You can't blame anyone for being wrong about an article that's behind a paywall...
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.
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.
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.
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.
People making low wages work hard (harder than the majority of folks on this site; e.g., there wasn't a single janitor at my last office that didn't have multiple jobs to make ends meet), but it is unlikely they will have excess funds to pay for an advanced degree without taking on substantial debt.
Funding education via individual ability to pay vs. taxation perpetuates class divisions from birth-- a defacto caste system. It sounds like you and your children chose your parents sufficiently well that this is not a concern for you. Lucky you.
I predict that the "Fuck you, I've got mine," attitude is, in large part, going to be what brings western society crashing down. And, I would argue that this attitude, and the policies that naturally flow from it, absolutely had a part in creating our fucked up system-- where people who did not choose their parents as well as you have to take on debt to get an education, in the first place.
Funding education via individual ability to pay vs. taxation perpetuates class divisions from birth-- a defacto caste system. It sounds like you and your children chose your parents sufficiently well that this is not a concern for you. Lucky you.
I predict that the "Fuck you, I've got mine," attitude is, in large part, going to be what brings western society crashing down. And, I would argue that this attitude, and the policies that naturally flow from it, absolutely had a part in creating our fucked up system-- where people who did not choose their parents as well as you have to take on debt to get an education, in the first place.
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.
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.
It seems most of it was fixing broken rules that were intended to have forgiven most of this debt years ago.
Can we get mortgage forgiveness next? Imagine what a boon that will be for the economy.
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.
We need better laws and repercussions against screwing over the working class.
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.
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.
Whose poor decision is that? The banks created those products, the banks profit from them massively, and the banks receive the socialized bailout using our money.
How exactly is being approved for a loan to buy a first home the fault of the purchaser?
We can shop in any grocery store trusting that the products are safe to consume. Meanwhile, banks are allowed to legally sell financial poison?
Sure, compare rates, terms, insurance, etc. But financial time bombs like you describe should be illegal. The banks should suffer the consequences of their greed. And the working class should not be left homeless as a consequence.
How exactly is being approved for a loan to buy a first home the fault of the purchaser?
We can shop in any grocery store trusting that the products are safe to consume. Meanwhile, banks are allowed to legally sell financial poison?
Sure, compare rates, terms, insurance, etc. But financial time bombs like you describe should be illegal. The banks should suffer the consequences of their greed. And the working class should not be left homeless as a consequence.
> Meanwhile, banks are allowed to legally sell financial poison?
You will rarely catch me defending the banking industry... but what you're calling "financial poison" here is just how mortgages work in most of the world. A variable rate loan isn't inherently predatory, that's how most loans work.
There are many legitimate reasons a buyer might prefer a variable rate mortgage: the trade off is easy to understand. It takes ten seconds to do an internet search for "interest rates past 30 years" and see the risk. I refuse to accept that most people with ARMs were taken advantage of.
You will rarely catch me defending the banking industry... but what you're calling "financial poison" here is just how mortgages work in most of the world. A variable rate loan isn't inherently predatory, that's how most loans work.
There are many legitimate reasons a buyer might prefer a variable rate mortgage: the trade off is easy to understand. It takes ten seconds to do an internet search for "interest rates past 30 years" and see the risk. I refuse to accept that most people with ARMs were taken advantage of.
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The people who took variable rate loans made the poor decision. The banks didn't force them to take the loan the banks didn't sign the paper saying the purchaser understood. At some point adults need to be treated like adults and be allowed to make bar decisions.
Sometimes they're good and sometimes they're bad. I tend to have most faith the parties with the most interest ( :-) ) in the question - the borrower and the lender - are the best ones to manage the risk.
3rd parties will both be lacking in information and have obligations beyond just seeing the loan paid back.
3rd parties will both be lacking in information and have obligations beyond just seeing the loan paid back.
No. Again. Tax dollars bailed out the banks, after they pocketed billions in profits from predatory arm and similar loans.
Who bailed out the home owners? No-one. They lost their homes, their credit was ruined. Decades worth of setback. But they deserved it? Please. It was a trap in the name of shareholder profits.
The problem is systemic and blaming the consumer is myopic at best.
Who bailed out the home owners? No-one. They lost their homes, their credit was ruined. Decades worth of setback. But they deserved it? Please. It was a trap in the name of shareholder profits.
The problem is systemic and blaming the consumer is myopic at best.
This is what annoys me about people living in the US. Like why not move to Singapore or something if you want government allocated housing. It's probably the best implementation of government housing, government healthcare, etc. in the world, so just go there and be happy.
Let the US remain free where consumer choices matter. You can take a risk with an ARM mortgage and might hit it big, but you might also have to pay the price. That's freedom. People can always downgrade homes, foreclosures are not necessarily a bad thing when there is limited housing supply.
Let the US remain free where consumer choices matter. You can take a risk with an ARM mortgage and might hit it big, but you might also have to pay the price. That's freedom. People can always downgrade homes, foreclosures are not necessarily a bad thing when there is limited housing supply.
I struggle to understand how student loads are predatory
some are predatory. They are structured in a way that after years of on time payment the principal amount increases
School loans should not be modeled after payday loan sharks.
School loans should not be modeled after payday loan sharks.
Can anyone show me one of these loan agreements?
I distinctly recall talking to a loan officer when I made my 100k+ student loan, and the paper had in very large numbers, amount loaned, loan duration, per month loan cost, the interest rate, and total loan cost.
I want to see a student load agreement where the minimum monthly payment simply does not create an expected end date for the load.
I distinctly recall talking to a loan officer when I made my 100k+ student loan, and the paper had in very large numbers, amount loaned, loan duration, per month loan cost, the interest rate, and total loan cost.
I want to see a student load agreement where the minimum monthly payment simply does not create an expected end date for the load.
As just one data point look into navient
I have had loans with Navient. It wasn't anything particularly interesting.
Uhm did you receive your settlement from their class action lawsuit?
A good old-fashioned Debt Jubilee. There's definitely historical precedent.
Not unless it includes a free house for everyone who didn't get in on the racket.
Gift Article link: https://www.nytimes.com/2023/11/11/business/student-loans-de...
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.