Sen Elizabeth Warren introduces bill to eliminate college loan debt

4Q Basket Case

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One of the guys in my praise band is a 37 year old electrician with a high school education and he’s debt free. He has a wife, a daughter, a nice home With a shop on two acres, a nice truck, a Camry for his wife, and a vasectomy. All he has to pay for is retirement.
I know he might not think of himself as such (many people like him don't), but he's an example to everyone, no matter their level of education, on how to provide for his family and himself.

Works hard, earns every dollar, doesn't squander it, pays cash for everything, and will probably retire wealthier than he could ever have imagined back in high school.

Interesting thing about human nature. These guys are doing it right, but don't talk much about what they do, how they do it, or the results (at a young age!) that their efforts and methods produce. It's the ones who live way beyond their means, pile up McMansions and toys, all financed with the longest term debt they can find, who brag at parties and on social media about how great their lives are.

Meanwhile, your buddy, if he goes to parties or has Facebook at all, just keeps his mouth shut, his head down, and actually builds the life the braggarts want others to think they have.

Kudos to him. I wish he'd teach a class.
 

4Q Basket Case

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Yep, IP law, particularly patent, is the huge exception to the usual backgrounds. Around here, for obvious reasons, there are a lot with engineering backgrounds...
I know a young lawyer who was the most brilliant, shyest, guy you could imagine in high school. Aced everything at the Jefferson County International Baccalaureate School, which is no mean feat. Grade inflation hasn't hit that place. Good kid to talk to, but painfully shy until you could pull him out of his shell. Accepted to MIT, but his mom wanted him to go to UA to get some social skills (a bit of irony there...social skills in the Engineering School, but I digress), then to MIT or similar for grad school.

Mom made the right call. The shy kid came out of his shell, and grew into the kind of guy where, if your daughter brought him home and said, "Dad, this is the one," you'd fall to your knees and cross yourself even if you aren't Catholic.

Aced the Electrical Engineering program at UA, then diverged from engineering. Went to UA Law School instead, and did really well there, concentrating in Intellectual Property Law. Is now about to be a partner in a firm specializing in that practice in DC. Which, because of its proximity to the Patent Office, you know is the hub for all things patent-related.

Huge success story for one of the good guys.
 

Go Bama

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I know he might not think of himself as such (many people like him don't), but he's an example to everyone, no matter their level of education, on how to provide for his family and himself.

Works hard, earns every dollar, doesn't squander it, pays cash for everything, and will probably retire wealthier than he could ever have imagined back in high school.

Interesting thing about human nature. These guys are doing it right, but don't talk much about what they do, how they do it, or the results (at a young age!) that their efforts and methods produce. It's the ones who live way beyond their means, pile up McMansions and toys, all financed with the longest term debt they can find, who brag at parties and on social media about how great their lives are.

Meanwhile, your buddy, if he goes to parties or has Facebook at all, just keeps his mouth shut, his head down, and actually builds the life the braggarts want others to think they have.

Kudos to him. I wish he'd teach a class.
You have absolutely nailed him. He’s as country as a haystack and one of the nicest young men I’ve ever met. And he hates DJT.
 

Jon

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I have to imagine someone with a hard skill computing software/hardware background could be a very valuable legal resource since the field is wholly reliant on the existence of intellectual property rights.


I considered the law school path at one time but just decided to stay technical.
friend of mine from highschool went this path, EE Degree from Ga Tech then out to Stanford law and been in IP/Patent law ever since. Haven't talked to him in forever but last I heard he was making a killing and still living in the Palo Alto area
 

BamaNation

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Good post.

Government policymakers are terrible with the concept of incentives. They seem to completely ignore that pillar of sound economics, and thus produce backwards results. Handing out loans (directly or indirectly) encourages people to pursue careers that aren't feasible. Or, just as often it seems, to pursue degrees that have no follow-on careers at all.

Now, if someone wants to major in underwater basket weaving, more power to him. I just don't want to pay for it in any shape or form.

The argument that government intervention is needed to allow poor kids to go to college is dubious. If you're smart you can get scholarships. If you are a minority there's all sorts of free money available. Beyond that, start at a community college where it is super-cheap and/or work your way through school. You should go to college if you have the intelligence and drive to do so, not because you receive misguided incentives from the government to do so. We can see the damage the government plan has caused in massive debt and years of lost productivity. (And is the federal government's involvement here even justified constitutionally? Is this an enumerated power?)

I haven't followed the political platforms that closely yet. I'm still looking for a presidential candidate to advocate for turning off the spigot of stupidity that is federal involvement in student loans? Which candidate(s) have set aside the urge to pander and actually show some applied intelligence on this subject? TIA.

You are prescient. Here's an article in today's WSJ about trying to game the "need" system. (Article is behind a paywall if you're not a WSJ subscriber)

https://www.wsj.com/articles/college-financial-aid-loophole-wealthy-parents-transfer-guardianship-of-their-teens-to-get-aid-11564450828?mod=hp_lead_pos6

If you're like me and you actually started thinking about your kids going to college (before) the day they were born and planning for that inevitability by eventually saving a little bit every week/month/year long before they started applying to schools, the current financial aid system punishes me for saving, not buying a bunch of bling-bling and therefore wasting resources, getting a job that actually pays a decent salary (i.e. using my talents and hard work in a productive way that doesn't suck resources from others), etc. We're definitely rewarding the wrong behaviors and punishing productive behavior.

Look, I recognize that there are many that haven't had fortune in life but opportunities abound for anyone who is willing to work hard. Merit and hard work (of any kind) are very underrated in this current environment. Maximizing your "disadvantages" is the prevailing theme. Psychologically, that is recipe for disaster (and we're seeing this playing out on the political stages, as well).

I have students that turn down promising internships because they have been told it will reduce their family's aid from one source or another. They never think about how much advantage it gives them over their peers to have been employed in their field while in college. Instead of looking at how to get out of the poor cycle they continue it because they have to maintain their disadvantages.

As far as free tuition for everyone, don't we have that in the public education system?

This works out so well we should try it at the college level.

My then-11 yr old daughter heard this nonsense last year and, without me commenting on it at all, stated quite literally, "Don't they realize that if everyone gets free college they will pay much more in taxes over their lifetime than they would in just paying back their own student loans?" Her own stated goal is that none of the money we have saved for her to go to college will actually have to be used because she wants to earn the money she needs through work and scholarships. She has a much better grasp of real macroeconomics than 20+ people who are presidential wannabes. Meanwhile, I really need to work on my 8 yr old who recently stated "If there was no money then people wouldn't be poor." :D Her grasp of economics is about as sophisticated as those 20+ wannabes.

Parents who try to game the system (either by refusing paying jobs, giving up guardianship, having tests taken for them, etc etc etc) or give their kids a bunch of woe-is-me excuses are pushing their kids toward life failure.

As an aside and slightly tangential to this, but definitely correlated, aside from actually getting into an ivy league school (or at least very top rated school) for undergrad, your best bet is to go to a decent state school in your state, pay in-state tuition (or earn a good scholly), work hard and get into a top grad school where in many cases the grad school covers your tuition AND pays you to go to school. Not a bad deal, indeed. BUT, you have to earn it. Even better for many people who say they can't afford it is as mentioned above: go to a community college for 1st 2 years.
 
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Bamabuzzard

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It ain't just skilled labor. I can't find software developers worth damn yet everyone in my generation was seemingly going into computer science or an information systems related field.

Of course my problem is we just flat-out cannot pay market rate for the skills we need and this ain't the wake of a major recession so the public sector benefits aren't easing the private v. public pay gap. Hell, I can't get anyone at the university to understand that their "good benefits" are only good for people in jobs where quality employer subsidized healthcare doesn't exist. Sure the facilities guys are getting something there but a software dev is getting good benefits from nearly any employer they speak to in the job search process. Furthermore, private sector has things like serious performance bonuses/raises and stock options or revenue sharing. The pension is the one leg up the university has but pensions have a really poor perception amongst people in my generation despite the fact that Alabama's is quite secure.

Can't really fix this problem without paying public sector tech folks more but can't really do that when we consistently undermine our tax revenue base by giving cuts to the rich.
In the pursuit of money higher education (in many fields) has been watered down. I'm an accountant and a few years ago I sat on a hiring panel as part of an interview process to fill some accountant positions within our department. There were several applicants with MBA's who couldn't even pass a basic accounting quiz that was taken before the actual interview (before the panel) took place. We currently have an accountant in our department (25 years old) who just received her MBA that is an embarrassment to what a person with an accounting degree and MBA should bring to the table. It is a running joke within our office "They must be giving them out like Halloween candy if Ashley has one." Unfortunately, this same thing is creeping into other, more important fields as well (medical field).
 

DzynKingRTR

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In the pursuit of money higher education (in many fields) has been watered down. I'm an accountant and a few years ago I sat on a hiring panel as part of an interview process to fill some accountant positions within our department. There were several applicants with MBA's who couldn't even pass a basic accounting quiz that was taken before the actual interview (before the panel) took place. We currently have an accountant in our department (25 years old) who just received her MBA that is an embarrassment to what a person with an accounting degree and MBA should bring to the table. It is a running joke within our office "They must be giving them out like Halloween candy if Ashley has one." Unfortunately, this same thing is creeping into other, more important fields as well (medical field).
There was a time when my alma mater was giving out architecture degrees to people that maybe didn't deserve it. They lost their architecture accreditation because of it. They got it back the following year and a lot of people did not pass that otherwise would have. The accreditation thing happened the year after I left.
 

jthomas666

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In the pursuit of money higher education (in many fields) has been watered down. I'm an accountant and a few years ago I sat on a hiring panel as part of an interview process to fill some accountant positions within our department. There were several applicants with MBA's who couldn't even pass a basic accounting quiz that was taken before the actual interview (before the panel) took place.
A lot of companies are implementing basic competency screenings for just that reason, whether it's accounting, programming, whatever. One of the companies I applied to recently had me take a writing grammar test. (Not only did I ace it, I corrected the test; you ask for the bull, you get the horns. ;) )

Hell, the reason I got my last job was because they had to fire someone BECAUSE HE DIDN'T KNOW HOW TO USE MICROSOFT WORD.
 

Tidewater

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If the United States were running $trillion/year surpluses, this would be an interesting policy debate.
As it is, we crossed that bridge about $20 trillion ago.
 

Bazza

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I know he might not think of himself as such (many people like him don't), but he's an example to everyone, no matter their level of education, on how to provide for his family and himself.

Works hard, earns every dollar, doesn't squander it, pays cash for everything, and will probably retire wealthier than he could ever have imagined back in high school.

Interesting thing about human nature. These guys are doing it right, but don't talk much about what they do, how they do it, or the results (at a young age!) that their efforts and methods produce. It's the ones who live way beyond their means, pile up McMansions and toys, all financed with the longest term debt they can find, who brag at parties and on social media about how great their lives are.

Meanwhile, your buddy, if he goes to parties or has Facebook at all, just keeps his mouth shut, his head down, and actually builds the life the braggarts want others to think they have.

Kudos to him. I wish he'd teach a class.
Great post!
 

4Q Basket Case

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If the United States were running $trillion/year surpluses, this would be an interesting policy debate.
As it is, we crossed that bridge about $20 trillion ago.
Back on post #79, CharminTide posted a link to a great examination of why England went from a free tuition model to a pay model. Here's the link to his post.

https://www.tidefans.com/forums/showthread.php?t=310288&p=3426460&viewfull=1#post3426460

Essentially, free tuition didn't work out like they thought. Because of insufficient resources, quality of education suffered. Also because of insufficient resources, they had to cap enrollment, and ended up shutting out a lot of the under-privileged that they originally sought to help. The worst of both worlds. Crappy education for the guys who would have gotten in anyway, and no education for a lot of the ones the program was intended to help.

So for differing reasons, re-instating the pay model actually had the support of both the Liberal Party and the Tories. Hard to believe in today's polarized world.

Regarding some of the solutions, I didn't see a practical difference between (1) deferring all tuition payments until post-graduation, then putting the recipient on a means-tested debt repayment schedule, vs. (2) student loans, but maybe it was the interest. Anyway, England would tell us that, like a lot of well-intended governmental programs, free college ain't all that.

The piece is a bit long, but is well worth the read, and I didn't want Charmin's information to get buried.
 
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bamamc1

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I went to school on a student loan and a Pell grant. Guess what, I paid that loan off. If you want to talk reparations, let’s throw that in as well. I paid my loan off. Repeat.
 

92tide

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Only the really dirt poor gets pell grants. My parents did not make jack and I got turned down. I got one after my father died because "my income" went from what he made to zero. The next year I got a job and got turned down again.
i had a couple of friends from high school who got them to go to community college.
 

4Q Basket Case

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I went to school on a student loan and a Pell grant. Guess what, I paid that loan off. If you want to talk reparations, let’s throw that in as well. I paid my loan off. Repeat.
I hadn't considered that. I had a couple of loans to go to graduate school, and paid them off...early, to stop the interest clock. Lived in a studio apartment in Southside Birmingham to do it. Didn't hurt me. In fact, reinforced some lessons.

I want reparations!

Actually, I really don't. I just want everybody who took out a student loan to live up to the promise they made when they signed the agreement: pay the #+%*^* thing back as you promised you would.

I did. Why can't they?
 

sabanball

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I hadn't considered that. I had a couple of loans to go to graduate school, and paid them off...early, to stop the interest clock. Lived in a studio apartment in Southside Birmingham to do it. Didn't hurt me. In fact, reinforced some lessons.

I want reparations!

Actually, I really don't. I just want everybody who took out a student loan to live up to the promise they made when they signed the agreement: pay the #+%*^* thing back as you promised you would.

I did. Why can't they?
Same here. For a Bachelors degree in Software Engineering, had almost 6 figures in student loan debt with interest on loans ranging from 3% to as high as 14% on 15 year term. Sacrificed when and where I could, paid them off last year in just over 10 years.

The day I sent that last payment was one of the most invigorating and best days of my life.
 
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chanson78

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I like numbers. As a result I wanted to try and see what the differences is between when I think many of use who used loans graduated and kids today.

I am going to use numbers provided by the link below, (I downloaded the Excel spreadsheet) and focus on when it was cheapest and when it was most expensive. Those time frames being 95-96 and 2009-10.

Federal Loans in Current and Constant Dollars over Time: All Postsecondary Students, Undergraduate Students, and Graduate Students

What I found most interesting is that according to this data the while the number of people borrowing money to go to school, more than doubled, when adjusted for inflation, amounted to roughly the same amount of money per person.

95-9609-10
Sub + Unsub Total Borrowers
# Borrowers (000)4,39610,177
Total $ Amount (Current)$22,783$84,638
Total $ Amount (Constant)$36,571$96,206
Avg. per Borrower (Current)$5,183$8,317
Avg. per Borrower (Constant)$8,319$9,453

According to the data in the link above the amount borrowed per person ranged from $8,319 (95-96) to $9,453 (09-10) while the number of people getting loans went from 4.4M (95-96) to 10.1M (09-10). Granted this is for federal loans only.

Now that only shows a part of the picture, so I went looking for information on private loans. Best I could find was the link below.

Share of Undergraduate Students with Private Loans over Time

Average Private Loans Among Borrowers (2016 Dollars)
1999-002003-042007-082011-122015-16
All$7,000$7,500$7,000$6,100$8,700
Public Four-Year$5,400$6,800$6,700$5,700$7,800
Private Nonprofit Four-Year$8,400$10,000$10,100$8,200$12,400
Public Two-Year$5,500$4,100$3,800$3,300$4,100
For-profit$8,400$7,000$6,600$6,300$8,100

For the same time periods that I broke out in the first chart it looks like the privately held student debt went down on average per person.

Why is all this important? I think it is important to figure out why there is this huge debt bubble looming when if you look at the data, the amount borrowed remained relatively constant.

I am starting to solidify my opinion on how I feel about debt forgiveness but would be interested in more discussion.

Why are kids today, when the average borrowed in inflation adjusted $ remained relatively the same, so worse off than just 15-20 years ago that they need a federal bailout?
 
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jthomas666

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Same here. For a Bachelors degree in Software Engineering, had almost 6 figures in student loan debt with interest on loans ranging from 3% to as high as 14% on 15 year term. Sacrificed when and where I could, paid them off last year in just over 10 years.

The day I sent that last payment was one of the most invigorating and best days of my life.
Here's some key questions--these also might shed some light on chanson's numbers below:

1. What's the difference in the cost of your education then and what the same education would cost now?
2. What's the average starting salary of a software developer then v now?

I suspect that's where the problem is originating--costs have been increasing faster than students' ability to repay.

We, as a nation, got into the habit of sending our kids to college, and the easy availability of student loans--like the easy availability of credit cards and ARM mortgages--made easy to push aside worries about paying off the debt.

I still think some form of debt relief is a good idea--though total forgiveness may be excessive. But the root problem is the spiraling costs of college itself.