Sen Elizabeth Warren introduces bill to eliminate college loan debt

92tide

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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.
there is also a lot of this going on. bunk degrees being pushed by schools, especially for online learning. i remember a few years back that there was some attempt to crack down on the for profit "universities" that did this but it is still a problem

How Liberty University Built a Billion-Dollar Empire Online
With a hard sell to prospective students and huge amounts in taxpayer funding, Jerry Falwell Jr. transformed the evangelical institution into a behemoth. - nyt probably a paywall


The real driver of growth at Liberty, it turns out, is not the students who attend classes in Lynchburg but the far greater number of students who are paying for credentials and classes that are delivered remotely, as many as 95,000 in a given year. By 2015, Liberty had quietly become the second-largest provider of online education in the United States, according to The Chronicle of Higher Education, its student population surpassed only by that of University of Phoenix, as it tapped into the same hunger for self-advancement that Trump had with his own pricey Trump University seminars. Yet there was a crucial distinction: Trump’s university was a for-profit venture. (This month, a judge finalized a $25 million settlement for fraud claims against the defunct operation.) Liberty, in contrast, is classified as a nonprofit, which means it faces less regulatory scrutiny even as it enjoys greater access to various federal handouts.

By 2017, Liberty students were receiving more than $772 million in total aid from the U.S. Department of Education — nearly $100 million of it in the form of Pell grants and the rest in federal student loans. Among universities nationwide, it ranked sixth in federal aid. Liberty students also received Department of Veterans Affairs benefits, some $42 million in 2016, the most recent year for which figures are available. Although some of that money went to textbooks and nontuition expenses, a vast majority of Liberty’s total revenue that year, which was just above $1 billion, came from taxpayer-funded sources....

At the front lines are the “admissions representatives,” some 300 phone recruiters working two shifts from 8 a.m. to 8 p.m., deploying call lists that Liberty gets from websites where people register and search for information about online higher education, like BestCollegesOnline.com. There is such a race to get to customers before University of Phoenix and other rivals that the prospective students sometimes marvel at how little time has elapsed — just a handful of minutes — between their providing their information on a website and the call coming from Liberty. Liberty’s tax filings show that in 2016, the university paid Google $16.8 million for “admissions leads generation.” In other words, advertising Liberty to those searching online for degree options....
 

chanson78

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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.
I'm glad you brought this up. It was part of the reason I posted inflation adjusted values. If college back in 95-96 was 32K for a 4 year degree, and is roughly 36K for a 4 year degree in 09-10, using inflation adjusted dollars, the amount borrowed doesn't indicate that costs truly have increased. However looking at the data in the link below that is clearly not the case.

Tuition and Fees and Room and Board over Time

Above Link said:
Between 2008-09 and 2018-19, average published tuition and fee prices rose by $930 (in 2018 dollars) at public two-year colleges, by $2,670 at public four-year institutions, and by $7,390 at private nonprofit four-year colleges and universities.
Looking at the data on that page one could say that between 1998-99 and 2018-19, average published tuition and fee prices rose by $1,270 (in 2018 dollars) at public two-year colleges, by $5,210 at public four-year institutions, and by $13,120 at private nonprofit four-year colleges and universities.

So while the amount borrowed stayed relatively the same in adjusted dollars, the % of that borrowed money required to pay for tuition has increased.

I would be interested to try and figure out underemployed rate for people with college degrees back in the mid 90s versus today. I have a feeling that the real issue is that there is a glut of college degreed people, coupled with the devaluation of a degree due to online diploma mills, has put a lot of people in the college debt situation. There just aren't enough jobs that match the degrees of all of these newly degreed people. I know there is also the perception that kids coming out today just aren't as hungry/capable/whatever as they used to be.

I don't want to get into comparisons, primarily because it makes me feel like I am shouting at kids to "GET OFF MY LAWN" Anecdotally, one of the best new hires I have ever seen (25 years of dealing with new employees joining teams) came out of school in 2013 and she worked her tail off. So personally I am not buying the whole "all millennials suck" mantra.
 

92tide

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I'm glad you brought this up. It was part of the reason I posted inflation adjusted values. If college back in 95-96 was 32K for a 4 year degree, and is roughly 36K for a 4 year degree in 09-10, using inflation adjusted dollars, the amount borrowed doesn't indicate that costs truly have increased. However looking at the data in the link below that is clearly not the case.

Tuition and Fees and Room and Board over Time



Looking at the data on that page one could say that between 1998-99 and 2018-19, average published tuition and fee prices rose by $1,270 (in 2018 dollars) at public two-year colleges, by $5,210 at public four-year institutions, and by $13,120 at private nonprofit four-year colleges and universities.

So while the amount borrowed stayed relatively the same in adjusted dollars, the % of that borrowed money required to pay for tuition has increased.

I would be interested to try and figure out underemployed rate for people with college degrees back in the mid 90s versus today. I have a feeling that the real issue is that there is a glut of college degreed people, coupled with the devaluation of a degree due to online diploma mills, has put a lot of people in the college debt situation. There just aren't enough jobs that match the degrees of all of these newly degreed people. I know there is also the perception that kids coming out today just aren't as hungry/capable/whatever as they used to be.

I don't want to get into comparisons, primarily because it makes me feel like I am shouting at kids to "GET OFF MY LAWN" Anecdotally, one of the best new hires I have ever seen (25 years of dealing with new employees joining teams) came out of school in 2013 and she worked her tail off. So personally I am not buying the whole "all millennials suck" mantra.
i remember when my gen x arse was graduating i was constantly hearing how much we sucked and didn't know the value of hard work like previous generations because we spent all of our time playing video games, listening to devil music, having our heads buried in the walkman, and watching mtv and pro wrestling, etc.
 

4Q Basket Case

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I'm glad you brought this up. It was part of the reason I posted inflation adjusted values. If college back in 95-96 was 32K for a 4 year degree, and is roughly 36K for a 4 year degree in 09-10, using inflation adjusted dollars, the amount borrowed doesn't indicate that costs truly have increased. However looking at the data in the link below that is clearly not the case.

Tuition and Fees and Room and Board over Time



Looking at the data on that page one could say that between 1998-99 and 2018-19, average published tuition and fee prices rose by $1,270 (in 2018 dollars) at public two-year colleges, by $5,210 at public four-year institutions, and by $13,120 at private nonprofit four-year colleges and universities.

So while the amount borrowed stayed relatively the same in adjusted dollars, the % of that borrowed money required to pay for tuition has increased.

I would be interested to try and figure out underemployed rate for people with college degrees back in the mid 90s versus today. I have a feeling that the real issue is that there is a glut of college degreed people, coupled with the devaluation of a degree due to online diploma mills, has put a lot of people in the college debt situation. There just aren't enough jobs that match the degrees of all of these newly degreed people. I know there is also the perception that kids coming out today just aren't as hungry/capable/whatever as they used to be.

I don't want to get into comparisons, primarily because it makes me feel like I am shouting at kids to "GET OFF MY LAWN" Anecdotally, one of the best new hires I have ever seen (25 years of dealing with new employees joining teams) came out of school in 2013 and she worked her tail off. So personally I am not buying the whole "all millennials suck" mantra.
Your research brings a huge distinction into the discussion.

What college costs has unquestionably gone up faster than inflation.

However, that's not what we're discussing. We're discussion whether student loans should be forgiven, and if so, why.

The point that per-person loans haven't gone up very much in terms of inflation-adjusted dollars is huge. So often, those in favor of forgiveness point out the cost of college. They don't pay attention to the loan factor.

In my own case, when I graduated, I had about $10K in student loans bearing interest at between 5% and 7%. Sounds like a pittance in today's terms. Until you consider that my starting salary was $25K -- not bad money in 1985. So my loan balance was 40% of that starting salary, and more than most new cars cost at the time.

Which brings us back to my original question (I paid mine...why can't they pay theirs?), and your much more eloquent rephrasing ("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?").

You just did it from a different and much more data-based angle -- a far better approach. Thank you for taking the time to do hard research and post your findings.
 
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4Q Basket Case

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Additional factor for consideration.

Bankruptcy Abuse Prevention and Consumer Protection Act

In 2005 it became significantly harder to discharge student debt through bankruptcy. I have a feeling this made it much easier for banks to decide to make loans for people wanting to get loans for cosmetology school or a bachelors in underwater basket weaving.
Having spent a long time in the distressed end of banking (administration, not collections), I can tell you that's probably not the case.

From a bank's perspective, a student loan is unsecured consumer installment debt. Even worse, the source of repayment -- expected future earnings -- doesn't exist when the loan is made. That's why the interest rate is so high for student loans that aren't guaranteed by the government and not co-signed by a creditworthy individual (usually, but not always, parents).

By the time it gets to someone filing bankruptcy, the loan is often (not always) far past the delinquency point at which it is charged off. Now, that's the bank's own accounting treatment, and has no bearing whatsoever on what the borrower owes.

Most of the time, the charged off loans are sold in the open market. Again, from the perspective of the bank's books, that balance is $0. So one would think that whatever they get on that sale is gravy. Not so in the real world.

Typically, unsecured consumer Zero Balance Loans (ZBLs) are going to sell for between 3 and 10 cents on the dollar. Where it falls in that range depends on a lot of factors, but non-dischargeability could play a minor role. Still, you're talking about pennies on the dollar. On top of which, the collection efforts that the bank would have exerted before the situation deteriorated to the point of charge-off and sale are expensive.

Those costs definitely eat into the gain from sale, and most often will exceed it. Which means that even if the bank sells the loan for more than it has on it's books (likely $0), that gain is more than offset by the expenses it took to get to that point. Which gets back to the idea that non-dischargeabilty might slightly influence the decision of whether to grant or turn down credit in the first place. But not much, if at all.
 
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92tide

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Additional factor for consideration.

Bankruptcy Abuse Prevention and Consumer Protection Act

In 2005 it became significantly harder to discharge student debt through bankruptcy. I have a feeling this made it much easier for banks to decide to make loans for people wanting to get loans for cosmetology school or a bachelors in underwater basket weaving.
how are we going to have a functioning space force without cosmetologists
 

Bodhisattva

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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.
Yep. We set up a 529 for Lily when she was born. She's going into 8th grade and, with a $100/paycheck contribution, there's enough money in her account now to pay for four years of public university. And since Lily should be able to get a full ride merit scholarship, her 529 money will be for graduate school.

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).
When we moved last year, Lily started the 7th grade in the middle of the school year. She is on a STEM track. Periodically there are guest speakers who talk about various STEM careers. During one of these events, all of the speakers were professional women. I was excited for Lily to people about to talk to the women and expand her horizon on what types of careers were possible. To my surprise, Lily came home extremely irritated. She said the women only talked about how few women were in STEM careers and how inherently discriminatory that is. As evidence the women noted that six of the 25 students in the class were girls. Unfair! Lily was the sole student to disagree and pointed out that six girls chose to do the STEM track; the rest didn't. Self selecting not to do STEM is not evidence of discrimination. Lily also pointed out how comparatively few boys look to become nurses. Is that discrimination? I don't think the speakers foresaw the push back. Lily was po'd that they expected her to view herself as a victim. She definitely does not.
 
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Tidewater

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there is also a lot of this going on. bunk degrees being pushed by schools, especially for online learning. i remember a few years back that there was some attempt to crack down on the for profit "universities" that did this but it is still a problem

How Liberty University Built a Billion-Dollar Empire Online
With a hard sell to prospective students and huge amounts in taxpayer funding, Jerry Falwell Jr. transformed the evangelical institution into a behemoth. - nyt probably a paywall
Holy smokes. I just checked and Liberty U's endowment is $1.4 billion, almost double UA's $887 million.
Not bad going from financially distressed institution ($100 million in debt) to a $1.4 billion endowment in what, 23 years?
 

Tidewater

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When we moved last year, Lily started the 7th grade in the middle of the school year. She is on a STEM track. Periodically there are guest speakers who talk about various STEM careers. During one of these events, all of the speakers were professional women. I was excited for Lily to people about to talk to the women and expand her horizon on what types of careers were possible. To my surprise, Lily came home extremely irritated. She said the women only talked about how few women were in STEM careers and how inherently discriminatory that is. As evidence the women noted that six of the 25 students in the class were girls. Unfair! Lily was the sole student to disagree and pointed out that six girls chose to do the STEM track; the rest didn't. Self selecting not to do STEM is not evidence of discrimination. Lily also pointed out how comparatively few boys look to become nurses. Is that discrimination? I don't think the speakers foresaw the push back. Lily was po'd that they expected her to view herself as a victim. She definitely does not.
That trend continued for older age groups. When I was teaching at Virginia Tech, VT recruiters were "encouraging" female applicants to pursue STEM fields. A lot did. Then they hit the buzzsaw that is the College of Engineering (differential equations and dynamics being the biggest offenders) and decided that another degree might be a better fit. In fairness, a lot of the male students came to the same conclusion, but by the third year of engineering, the classes were mostly male.
Women get to choose their majors. You cannot make them stay in engineering.
When we see disparities in outcome, we may look for institutional discrimination to entry, but if there are no institutional barriers, then let the chips fall where they may.
 

bamamc1

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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.
Yes we were poor. As a result of the education that I obtained, I have been able to support my daughter and myself comfortably. I am a single dad who receives absolutely nothing from my ex. I learned a great deal from being “dirt poor.”
 

rgw

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Highlights something though. FASFA is wholly ill-equipped to deal with the rising prices of college. We're to the point where upper class people are giving up guardianship to their kids so they can qualify for more federal assistance.
 

BamaNation

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I see a lot of references to rising costs of college. If we actually look at the numbers provided by College Board, they look like the graph below. Most of the big increases were in the 98-09 period and about 3% more than overall inflation. Mostly at public 4-yrs that were having their gov't funds slashed.

At 3%, costs double about every 24 years. At 4%, make it 18. So with 4%, over the 31 year period, college is about 3.5X what it was when I started at Bama in '89. Even then, UA's tuition is about $11K per year. Georgia is about $12k. Incredibly reasonable in my view of the world. If people in other parts of the country want to go to a schools that cost 2-5X+ that per year, why should we/I pay back their student loans? We shouldn't.

The points remain that a) nobody forces you to go to college b) nobody forces you to choose an expensive college c) nobody forces you to take a loan d) nobody forces you to choose a "career" whereby you will have a hard time paying back the loan. My guess (actually a real observation) is a lot of students take out maximum student loans for self-support and bling bling instead of just for their immediate educational needs.

Just as Bodhi indicated re: his daughter's CHOICE to be in a STEM program, lots of choices in life actually matter and consequences (good and bad) accumulate. Unfortunately, too many families make terrible choices about their allocation of limited resources and it is totally unacceptable to me for them to now want the public (i.e. me) to cover theirchoices. I really don't understand anyone wanting this or supporting this, much less basing presidential campaigns on it, but I don't understand a lot of things about our country anymore.

One back-of-napkin view I've always had is that, generally, your 4-year total tuition costs should be less than or equal to your first year's expected annual salary for the job you think you want (can get) (there are a few exceptions* to my heuristic). If you're only going to take 12 hours per semester, you better be working at least 20 hours a week. If you take 15-18 hour load, 10 hours a week or be on scholarship. If you're paying $60k / year out of pocket via loans to get, say, a degree for a career that only pays 30k or 40k/yr you're quite foolish, IMHO. You'll most likely forever be in debt. But, that was YOUR choice, not mine. And lest anyone say "But, but, but.." I apply this logic to any amount of student debt taken out by anyone for any reason.

* Exceptions: If your expected job is at an investment bank, you're going to an Ivy, or you have the aptitude to work at one of the FAANG companies.


source: https://trends.collegeboard.org/college-pricing/figures-tables/average-rates-growth-published-charges-decade
 
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4Q Basket Case

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I see a lot of references to rising costs of college. If we actually look at the numbers provided by College Board, they look like the graph below. Most of the big increases were in the 98-09 period and about 3% more than overall inflation. Mostly at public 4-yrs that were having their gov't funds slashed.

At 3%, costs double about every 24 years. At 4%, make it 18. So with 4%, over the 31 year period, college is about 3.5X what it was when I started at Bama in '89. Even then, UA's tuition is about $11K per year. Georgia is about $12k. Incredibly reasonable in my view of the world. If people in other parts of the country want to go to a schools that cost 2-5X+ that per year, why should we/I pay back their student loans? We shouldn't.

The points remain that a) nobody forces you to go to college b) nobody forces you to choose an expensive college c) nobody forces you to take a loan d) nobody forces you to choose a "career" whereby you will have a hard time paying back the loan. My guess (actually a real observation) is a lot of students take out maximum student loans for self-support and bling bling instead of just for their immediate educational needs.

Just as Bodhi indicated re: his daughter's CHOICE to be in a STEM program, lots of choices in life actually matter and consequences (good and bad) accumulate. Unfortunately, too many families make terrible choices about their allocation of limited resources and it is totally unacceptable to me for them to now want the public (i.e. me) to cover theirchoices. I really don't understand anyone wanting this or supporting this, much less basing presidential campaigns on it, but I don't understand a lot of things about our country anymore.

One back-of-napkin view I've always had is that, generally, your 4-year total tuition costs should be less than or equal to your first year's expected annual salary for the job you think you want (can get) (there are a few exceptions to my heuristic). If you're only going to take 12 hours per semester, you better be working at least 20 hours a week. If you take 15-18 hour load, 10 hours a week or be on scholarship. If you're paying $60k / year out of pocket via loans to get, say, a degree for a career that only pays 30k or 40k/yr you're quite foolish, IMHO. You'll most likely forever be in debt. But, that was YOUR choice, not mine. And lest anyone say "But, but, but.." I apply this logic to any amount of student debt taken out by anyone for any reason.


source: https://trends.collegeboard.org/college-pricing/figures-tables/average-rates-growth-published-charges-decade
Full banjeaux for that!
 

4Q Basket Case

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Yes we were poor. As a result of the education that I obtained, I have been able to support my daughter and myself comfortably. I am a single dad who receives absolutely nothing from my ex. I learned a great deal from being “dirt poor.”
There's nothing wrong with being born dirt poor. We don't choose our birth circumstances.

You did what a lot don't do...you learned. I'm sorry your ex isn't shouldering the responsibilities of parenthood. But I guarantee your daughter is learning lifelong lessons from you. She'll pass them on to her children, and your influence will be felt even after anyone reading this is in the dirt.

Congrats on making lemonade when life dealt you lemons.
 

BamaNation

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Anecdotally, one of the best new hires I have ever seen (25 years of dealing with new employees joining teams) came out of school in 2013 and she worked her tail off. So personally I am not buying the whole "all millennials suck" mantra.
Exactly right. The key is she "worked her tail off." I tell my students that those who want work-life balance immediately after undergrad will get a lot of life and not much work. WLB is earned. Or, move to France where it's built into the culture :D
 

Bamaro

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Why don't we hear much (if any) about the unfairness of canceling this debt. Are we going to reimburse those who paid for college without borrowing? I don't think so.