How 'bout lending your old pal Zoidberg a few bucks, Mr. Millionaire?
June 1, 2022 7:49 PM Subscribe
Biden administration cancels $5.8 Billion in student loan debt for former Corinthian students. The new announcement brings the total student loan debt cancellation approved under the Biden administration to $25 billion since January 2021. Advocacy groups say they hope the latest Corinthian action paves the way for future discharges for groups of borrowers.
Why pay any debts? Can he just waive all mortgages, auto loans, credit cards, pay day lenders, bookies, marks at a casino? I'll take a few thousand.
Good heavens... for the debts in question at least you might RTFA:
The Department of Education has found that Corinthian Colleges misled prospective students about the ability to transfer credits and falsified its job placement rate.
In 2013, Vice President Kamala Harris – who was California’s attorney general at the time – sued Corinthian Colleges, alleging the school was engaging in deceptive and false advertising and recruitment. The lawsuit triggered other federal and state investigations that ultimately resulted in Corinthian selling most of its campuses in 2014 and closing the remaining ones in 2015.
Wednesday’s announcement is the latest – and biggest – action taken by the Biden administration to cancel federal student loan debt for borrowers who were defrauded by their for-profit colleges.
There is certainly a debate to be had about the wisdom of a broader cancellation of student debt, but this monocle-popping slippery slope argument of yours doesn't seem like part of it.
posted by BlackLeotardFront at 8:37 PM on June 1, 2022 [92 favorites]
Good heavens... for the debts in question at least you might RTFA:
The Department of Education has found that Corinthian Colleges misled prospective students about the ability to transfer credits and falsified its job placement rate.
In 2013, Vice President Kamala Harris – who was California’s attorney general at the time – sued Corinthian Colleges, alleging the school was engaging in deceptive and false advertising and recruitment. The lawsuit triggered other federal and state investigations that ultimately resulted in Corinthian selling most of its campuses in 2014 and closing the remaining ones in 2015.
Wednesday’s announcement is the latest – and biggest – action taken by the Biden administration to cancel federal student loan debt for borrowers who were defrauded by their for-profit colleges.
There is certainly a debate to be had about the wisdom of a broader cancellation of student debt, but this monocle-popping slippery slope argument of yours doesn't seem like part of it.
posted by BlackLeotardFront at 8:37 PM on June 1, 2022 [92 favorites]
What type of government would want to encourage this action where no one is responsible for paying back anything?
A society with too much debt can get stuck that way - you end up with folks who just can never hope to pay something back, and folks who can never hope to reclaim their debts. There's a reason the torah mentions a Jubilee year.
posted by nightcoast at 8:39 PM on June 1, 2022 [45 favorites]
A society with too much debt can get stuck that way - you end up with folks who just can never hope to pay something back, and folks who can never hope to reclaim their debts. There's a reason the torah mentions a Jubilee year.
posted by nightcoast at 8:39 PM on June 1, 2022 [45 favorites]
I have read the article. Was it within reason to give the President the ability to bypass Congress, he can add every single one of these if he so chooses? That seems like a dangerous precedent.
posted by brent at 8:40 PM on June 1, 2022 [1 favorite]
posted by brent at 8:40 PM on June 1, 2022 [1 favorite]
What type of government would want to encourage this action where no one is responsible for paying back anything?
Notwithstanding that Corinthian was a for-profit "college" which fraudulently advertised high placement rates and high incomes of students, student loan debt is uniquely different from all other kinds of debt you describe.
Let me say it out loud for everyone in the back: STUDENT LOAN DEBT IS NOT DISCHARGEABLE BY BANKRUPTCY.
Unlike mortgages, which may have limited bankruptcy protection, auto loans, credit cards, pay day loans, every other kind of debt can be decreased or otherwise serviced by alternate means during a bankruptcy.
Why is that? It was, by some accounts I've read, intended to be the thin end of the wedge for nearly all debts to be bankruptcy-proof -- the loan industry salivated at the prospect of permanent debt -- and also some of the ALEC folks were lobbying certain states to have debts be transferred by inheritance -- not just against the estate, but all legal heirs having to assume the debts of their dead parents.
The student loan wedge was implemented and supported by people saying "well now they'll go make a bunch of money and then go into a fake bankruptcy so as not to pay it back" and people ate it up.
I spent 10 years diligently paying off over 30k in loans. It was usurious and abusive when I did it, and it's even worse now. I'd be in favor of a complete student loan debt jubilee, as a matter of fact. Just because my generation were proverbially - or literally - beaten by our parents doesn't mean the next generation should have to suffer the abuse of permanent student loan debt.
posted by tclark at 8:40 PM on June 1, 2022 [94 favorites]
Notwithstanding that Corinthian was a for-profit "college" which fraudulently advertised high placement rates and high incomes of students, student loan debt is uniquely different from all other kinds of debt you describe.
Let me say it out loud for everyone in the back: STUDENT LOAN DEBT IS NOT DISCHARGEABLE BY BANKRUPTCY.
Unlike mortgages, which may have limited bankruptcy protection, auto loans, credit cards, pay day loans, every other kind of debt can be decreased or otherwise serviced by alternate means during a bankruptcy.
Why is that? It was, by some accounts I've read, intended to be the thin end of the wedge for nearly all debts to be bankruptcy-proof -- the loan industry salivated at the prospect of permanent debt -- and also some of the ALEC folks were lobbying certain states to have debts be transferred by inheritance -- not just against the estate, but all legal heirs having to assume the debts of their dead parents.
The student loan wedge was implemented and supported by people saying "well now they'll go make a bunch of money and then go into a fake bankruptcy so as not to pay it back" and people ate it up.
I spent 10 years diligently paying off over 30k in loans. It was usurious and abusive when I did it, and it's even worse now. I'd be in favor of a complete student loan debt jubilee, as a matter of fact. Just because my generation were proverbially - or literally - beaten by our parents doesn't mean the next generation should have to suffer the abuse of permanent student loan debt.
posted by tclark at 8:40 PM on June 1, 2022 [94 favorites]
They’re good cancellations, brent.
posted by mochapickle at 8:55 PM on June 1, 2022 [168 favorites]
posted by mochapickle at 8:55 PM on June 1, 2022 [168 favorites]
> Was it within reason to give the President the ability to bypass Congress
It was Congress itself that decided to give the President this ability. If you're arguing for a transition to a parliamentary system where the legislative body also handles executive duties, then that's something I would join you in support of, but it's routine for Congress to delegate decisions to the executive branch. You can't complain about it after the fact just because you don't like the decision that was made.
posted by tonycpsu at 8:58 PM on June 1, 2022 [26 favorites]
It was Congress itself that decided to give the President this ability. If you're arguing for a transition to a parliamentary system where the legislative body also handles executive duties, then that's something I would join you in support of, but it's routine for Congress to delegate decisions to the executive branch. You can't complain about it after the fact just because you don't like the decision that was made.
posted by tonycpsu at 8:58 PM on June 1, 2022 [26 favorites]
IANAL but this is in the article:
But a September 2020 memo from lawyers at Harvard University's Legal Services Center and its Project on Predatory Student Lending argues that Congress has given the power to broadly cancel federal student debt to the Department of Education through a law known as the Higher Education Act. It gives the education secretary the authority "to create and to cancel or modify debt owed under federal student loan programs," the memo says.
posted by subdee at 9:03 PM on June 1, 2022 [7 favorites]
But a September 2020 memo from lawyers at Harvard University's Legal Services Center and its Project on Predatory Student Lending argues that Congress has given the power to broadly cancel federal student debt to the Department of Education through a law known as the Higher Education Act. It gives the education secretary the authority "to create and to cancel or modify debt owed under federal student loan programs," the memo says.
posted by subdee at 9:03 PM on June 1, 2022 [7 favorites]
read the room, brent. and tfa.
posted by j_curiouser at 9:06 PM on June 1, 2022 [16 favorites]
posted by j_curiouser at 9:06 PM on June 1, 2022 [16 favorites]
;_; won't someone think of the debt
posted by GoblinHoney at 9:12 PM on June 1, 2022 [30 favorites]
posted by GoblinHoney at 9:12 PM on June 1, 2022 [30 favorites]
...And the Higher Education Act, please.
I was literally working on the Corinthian fraud in ***2014*** (California may have sued first, for which they deserve credit, but other investigations were already underway when they did). The twists and turns of this story are unbelievable. The Obama administration was hot garbage for the longest time on these issues, too, and just when it looked like there might be some movement, Cruella DeVos came in and did her best to prevent a dime going out, including through extensive violations of the Administrative Procedure Act. Ten-plus years to clear up the handiwork of lazy, industry-captured regulators and exploiters without a conscience. It's probably still not all done.
posted by praemunire at 9:15 PM on June 1, 2022 [33 favorites]
I was literally working on the Corinthian fraud in ***2014*** (California may have sued first, for which they deserve credit, but other investigations were already underway when they did). The twists and turns of this story are unbelievable. The Obama administration was hot garbage for the longest time on these issues, too, and just when it looked like there might be some movement, Cruella DeVos came in and did her best to prevent a dime going out, including through extensive violations of the Administrative Procedure Act. Ten-plus years to clear up the handiwork of lazy, industry-captured regulators and exploiters without a conscience. It's probably still not all done.
posted by praemunire at 9:15 PM on June 1, 2022 [33 favorites]
Why pay any debts? Can he just waive all mortgages, auto loans, credit cards, pay day lenders, bookies, marks at a casino?
These are debts that are the government's to forgive, because the US government made the loans in the first place. Lenders get to forgive loans!
posted by BungaDunga at 9:16 PM on June 1, 2022 [37 favorites]
These are debts that are the government's to forgive, because the US government made the loans in the first place. Lenders get to forgive loans!
posted by BungaDunga at 9:16 PM on June 1, 2022 [37 favorites]
the US government made the loans in the first place. Lenders get to forgive loans!
Well, most of the Corinthian loans were federally insured (FFEL) rather than actually made by the feds (Direct) at the time, but the U.S. ended up owning a huge chunk of those loans after the Great Recession. And you can always refi a FFEL into a Direct, so it comes out to the same thing.
posted by praemunire at 9:19 PM on June 1, 2022 [9 favorites]
Well, most of the Corinthian loans were federally insured (FFEL) rather than actually made by the feds (Direct) at the time, but the U.S. ended up owning a huge chunk of those loans after the Great Recession. And you can always refi a FFEL into a Direct, so it comes out to the same thing.
posted by praemunire at 9:19 PM on June 1, 2022 [9 favorites]
Why pay any debts? Can he just waive all mortgages, auto loans, credit cards, pay day lenders, bookies, marks at a casino? I'll take a few thousand. Seems illegal from the start.
Ignoring the fact that the article links to a legal memorandum that explains the justification for student loan amnesty, and the fact that the Corinthian loans were steeped in fraud... debt is not a sacred and immutable thing. Why did we bail out banks in 2008? Because the government decided it was better to do that than let the economy crash even harder. Why do we give gigantic subsidies to farmers? Because the food supply is too important to fuck with, fiscal responsibility be damned. It's all value judgments. The TARP act, passed in the wake of the 2008 economic crisis, allowed the US government to disburse over 400 BILLION dollars to buy back toxic and illiquid assets from financial institutions that had been rampantly, flagrantly irresponsible. Why shouldn't those banks have been forced to take the consequences of their irresponsibility right on the chin? Because they were "too big to fail." I could argue that America's middle class is too big to fail, that it must not be allowed to fail, and that student loan debt is slowly choking the life out of it. That's a calculation that American government and American society is allowed to make, and has made in the past for reasons both good and bad. If you're going to ask why we bail out middle class student loan borrowers, you also need to be asking why we bail out banks and farmers.
posted by cubeb at 9:33 PM on June 1, 2022 [71 favorites]
Ignoring the fact that the article links to a legal memorandum that explains the justification for student loan amnesty, and the fact that the Corinthian loans were steeped in fraud... debt is not a sacred and immutable thing. Why did we bail out banks in 2008? Because the government decided it was better to do that than let the economy crash even harder. Why do we give gigantic subsidies to farmers? Because the food supply is too important to fuck with, fiscal responsibility be damned. It's all value judgments. The TARP act, passed in the wake of the 2008 economic crisis, allowed the US government to disburse over 400 BILLION dollars to buy back toxic and illiquid assets from financial institutions that had been rampantly, flagrantly irresponsible. Why shouldn't those banks have been forced to take the consequences of their irresponsibility right on the chin? Because they were "too big to fail." I could argue that America's middle class is too big to fail, that it must not be allowed to fail, and that student loan debt is slowly choking the life out of it. That's a calculation that American government and American society is allowed to make, and has made in the past for reasons both good and bad. If you're going to ask why we bail out middle class student loan borrowers, you also need to be asking why we bail out banks and farmers.
posted by cubeb at 9:33 PM on June 1, 2022 [71 favorites]
Hey $25 billion total is a great start! Almost up to 7% of the amount already forgiven to businesses for PPP loans
posted by Dr. Christ at 10:00 PM on June 1, 2022 [34 favorites]
posted by Dr. Christ at 10:00 PM on June 1, 2022 [34 favorites]
up to 7% of the amount already forgiven to businesses for PPP loans
which have massive fraud on the receiving end.
// ------------
cubeb & praemunire - it was patient and kind to cooly provide further information and examples. ty j_
posted by j_curiouser at 10:14 PM on June 1, 2022 [6 favorites]
which have massive fraud on the receiving end.
// ------------
cubeb & praemunire - it was patient and kind to cooly provide further information and examples. ty j_
posted by j_curiouser at 10:14 PM on June 1, 2022 [6 favorites]
Sorry, was being 100% sarcastic on that comparison j_curiouser - was trying to say it's clearly established precedent by the federal government to just scratch off $400b in business loans like it's nothing so these meager student loan write offs are disgustingly small compared to what could be done.
posted by Dr. Christ at 10:24 PM on June 1, 2022 [3 favorites]
posted by Dr. Christ at 10:24 PM on June 1, 2022 [3 favorites]
Debt cancellation needs to be accompanied by an overhaul of the for-profit college system. Students at for-profits go into more debt and have worse outcomes than students who attend public postsecondary institutions. More than any other type of institution, they leave students in the position of taking on debt while not getting a degree to show for it. Only 10% of postsecondary students attend for-profits, but they account for half of all student loan defaults.
There’s no evidence that for-profit college graduates have higher earnings compared to high school graduates that didn’t get a postsecondary education. Even if you’re only looking at short-term certificate programs to train students for specific industries, for-profit colleges still massively underperform. 90% of all certificate-granting for-profit institutions have a majority of their graduates earning less than the average high school graduates six years after their enrollment.
This isn’t even getting into the predatory recruiting of Black and Latinx students.
posted by theory at 10:38 PM on June 1, 2022 [18 favorites]
There’s no evidence that for-profit college graduates have higher earnings compared to high school graduates that didn’t get a postsecondary education. Even if you’re only looking at short-term certificate programs to train students for specific industries, for-profit colleges still massively underperform. 90% of all certificate-granting for-profit institutions have a majority of their graduates earning less than the average high school graduates six years after their enrollment.
This isn’t even getting into the predatory recruiting of Black and Latinx students.
posted by theory at 10:38 PM on June 1, 2022 [18 favorites]
Jeez, the guy can't win.
Doesn't swoop in and make sweeping, massive changes he doesn't have the authority to make? Lazy, uncaring bastard! Ineffecual! Impeachment time!
Forgives a relatively small amount of debt that the borrowers were swindled into borrowing under false pretenses, and Congress specifically gave him the authority to forgive? Slippery Slope! Dangerous precedent! Descent into anarchy!
posted by The Underpants Monster at 12:23 AM on June 2, 2022 [22 favorites]
Doesn't swoop in and make sweeping, massive changes he doesn't have the authority to make? Lazy, uncaring bastard! Ineffecual! Impeachment time!
Forgives a relatively small amount of debt that the borrowers were swindled into borrowing under false pretenses, and Congress specifically gave him the authority to forgive? Slippery Slope! Dangerous precedent! Descent into anarchy!
posted by The Underpants Monster at 12:23 AM on June 2, 2022 [22 favorites]
... Are those the same sets of people though
posted by ominous_paws at 12:37 AM on June 2, 2022 [16 favorites]
posted by ominous_paws at 12:37 AM on June 2, 2022 [16 favorites]
I’m assuming this doesn’t apply to federal loan debt that was originally incurred by a Corinthian student, but later consolidated and refinanced in the secondary market?
posted by Thorzdad at 2:45 AM on June 2, 2022 [1 favorite]
posted by Thorzdad at 2:45 AM on June 2, 2022 [1 favorite]
Debt cancellation needs to be accompanied by an overhaul of the for-profit college system. Students at for-profits go into more debt and have worse outcomes than students who attend public postsecondary institutions
Maybe the government shouldn’t be backing loans to students at for-profit colleges at all?
posted by jon1270 at 4:22 AM on June 2, 2022 [10 favorites]
Maybe the government shouldn’t be backing loans to students at for-profit colleges at all?
posted by jon1270 at 4:22 AM on June 2, 2022 [10 favorites]
Certainly not to fraudulent ones.
posted by subdee at 4:36 AM on June 2, 2022 [2 favorites]
posted by subdee at 4:36 AM on June 2, 2022 [2 favorites]
Why pay any debts? Can he just waive all mortgages, auto loans, credit cards, pay day lenders, bookies, marks at a casino?
You make excellent suggestions! Let's do all of that! And then healthcare for all of us!
posted by Fleebnork at 4:54 AM on June 2, 2022 [35 favorites]
You make excellent suggestions! Let's do all of that! And then healthcare for all of us!
posted by Fleebnork at 4:54 AM on June 2, 2022 [35 favorites]
Why pay any debts? Can he just waive all mortgages, auto loans, credit cards, pay day lenders, bookies, marks at a casino?
It's almost as if money is just a shared illusion, something that we invented that can come and go with the stroke of pen of just brought into existence by belief.
posted by Damienmce at 5:13 AM on June 2, 2022 [18 favorites]
Why pay any debts? Can he just waive all mortgages, auto loans, credit cards, pay day lenders, bookies, marks at a casino?
i’m into it! a debt jubilee! we can do it every 50 years or so, but nobody knows exactly when. imagine the weird incentives it would create for both lenders and borrowers.
what’s so important about repaying debts to huge faceless institutions that are loaning you money that isn’t even theirs and then bundling that debt into financial instruments which they sell on other markets in order to hedge against risk etc. debts are no longer agreements between gentleman and repaying them says nothing about your honor or worth (even net worth, nobody skips out on debt more than the rich). try going into default some time, it’s liberating, and it only takes 7 years to fix your credit. most of the time for most debt they can’t do anything to you but tank your credit. life goes on and you’re a little more free afterwards, a little more lightfooted. fuck ‘em, better luck next time suckers.
posted by dis_integration at 5:25 AM on June 2, 2022 [18 favorites]
i’m into it! a debt jubilee! we can do it every 50 years or so, but nobody knows exactly when. imagine the weird incentives it would create for both lenders and borrowers.
what’s so important about repaying debts to huge faceless institutions that are loaning you money that isn’t even theirs and then bundling that debt into financial instruments which they sell on other markets in order to hedge against risk etc. debts are no longer agreements between gentleman and repaying them says nothing about your honor or worth (even net worth, nobody skips out on debt more than the rich). try going into default some time, it’s liberating, and it only takes 7 years to fix your credit. most of the time for most debt they can’t do anything to you but tank your credit. life goes on and you’re a little more free afterwards, a little more lightfooted. fuck ‘em, better luck next time suckers.
posted by dis_integration at 5:25 AM on June 2, 2022 [18 favorites]
The PPP loans had built in forgiveness provisions. We should reform student loans to also have built in forgiveness provisions based on ability to pay and other factors.
posted by interogative mood at 5:39 AM on June 2, 2022 [11 favorites]
posted by interogative mood at 5:39 AM on June 2, 2022 [11 favorites]
Some light reading on the subject
Debt: The First 5,00 Years
The Making of the Indebted Man
Governing by Debt
posted by JohnFromGR at 5:42 AM on June 2, 2022 [5 favorites]
Debt: The First 5,00 Years
The Making of the Indebted Man
Governing by Debt
posted by JohnFromGR at 5:42 AM on June 2, 2022 [5 favorites]
Yeah, the argument that debt incurred by poor people is sacrosanct and a moral obligation, while debt incurred by the wealthy and powerful is an inconvenience to be waved away, is, in the most academic terms, well and truly fucked.
posted by skullhead at 6:29 AM on June 2, 2022 [39 favorites]
posted by skullhead at 6:29 AM on June 2, 2022 [39 favorites]
Why pay any debts? Can he just waive all mortgages, auto loans, credit cards, pay day lenders, bookies, marks at a casino?
You're so very close to realizing something very important
posted by We put our faith in Blast Hardcheese at 6:34 AM on June 2, 2022 [35 favorites]
You're so very close to realizing something very important
posted by We put our faith in Blast Hardcheese at 6:34 AM on June 2, 2022 [35 favorites]
The Congressional Black Caucus favors what it calls 'broad-based student loan debt cancellation,' which some people have interpreted as 'all of it, for everybody.' 85 Congresspeople signed a letter saying they want Biden to cancel up to $50,000 per borrower.
These dribs and drabs, this picking and choosing the most egregious for-profit scam colleges for student debt forgiveness and issuing payment suspensions a month or two at a time, feels like it's coming from the same milquetoast place as Biden reminiscing about making deals with the segregationists on the other side of the aisle.
He should go big, both because the window to go big is rapidly closing and because it's the right thing to do. Means-tested forgiveness of up to $50,000 is good, but student debt jubilee is better.
posted by box at 8:05 AM on June 2, 2022 [7 favorites]
These dribs and drabs, this picking and choosing the most egregious for-profit scam colleges for student debt forgiveness and issuing payment suspensions a month or two at a time, feels like it's coming from the same milquetoast place as Biden reminiscing about making deals with the segregationists on the other side of the aisle.
He should go big, both because the window to go big is rapidly closing and because it's the right thing to do. Means-tested forgiveness of up to $50,000 is good, but student debt jubilee is better.
posted by box at 8:05 AM on June 2, 2022 [7 favorites]
(I don't necessarily agree with this recent edition of the Public Notice newsletter, but it's on the subject and it's, y'know, a thing that exists.)
posted by box at 8:06 AM on June 2, 2022
posted by box at 8:06 AM on June 2, 2022
I love (no sarcasm, really love) coming to a thread where an early bad comment was dropped like a flaming bag of dog turds on a doorstep and removed hastily after the OP was handed their arse. Very enjoyable. Happy Thursday to you all.
posted by custardfairy at 8:20 AM on June 2, 2022 [6 favorites]
posted by custardfairy at 8:20 AM on June 2, 2022 [6 favorites]
He should go big, both because the window to go big is rapidly closing and because it's the right thing to do. Means-tested forgiveness of up to $50,000 is good, but student debt jubilee is better.
I fully agree but I also grant that I'm traveling in somewhat rarefied circles, where the idea of debt jubilee is at worst greeted by a "wow, sure wish someone would have done that for me." The far more common response is the one deleted from the top of this thread, essentially DOGS AND CATS, LIVING TOGETHER, MASS HYSTERIA.
Sending out a test balloon that is very, very easy to defend and very hard to critique without sounding like a real asshat (people who were defrauded should be made whole) makes kind of a lot of sense. Clear these debts, and when the world doesn't end, the MASS HYSTERIA voices will get a lot quieter. Then you go big.
Do I have faith that this is what the Biden administration is doing? I do not. But as someone who wants the full radical ends, I understand these means.
posted by We put our faith in Blast Hardcheese at 8:29 AM on June 2, 2022 [7 favorites]
I fully agree but I also grant that I'm traveling in somewhat rarefied circles, where the idea of debt jubilee is at worst greeted by a "wow, sure wish someone would have done that for me." The far more common response is the one deleted from the top of this thread, essentially DOGS AND CATS, LIVING TOGETHER, MASS HYSTERIA.
Sending out a test balloon that is very, very easy to defend and very hard to critique without sounding like a real asshat (people who were defrauded should be made whole) makes kind of a lot of sense. Clear these debts, and when the world doesn't end, the MASS HYSTERIA voices will get a lot quieter. Then you go big.
Do I have faith that this is what the Biden administration is doing? I do not. But as someone who wants the full radical ends, I understand these means.
posted by We put our faith in Blast Hardcheese at 8:29 AM on June 2, 2022 [7 favorites]
These dribs and drabs, this picking and choosing the most egregious for-profit scam colleges for student debt forgiveness and issuing payment suspensions a month or two at a time, feels like it's coming from the same milquetoast place as Biden reminiscing about making deals with the segregationists on the other side of the aisle.
So, one of the interesting aspects of this is that while it's being treated as debt forgiveness and would likely be litigated as such, every federally-backed student loan incorporates what's known as "borrower defense to repayment." That is, as with the "holder rule" in other contexts, a borrower may assert the same defenses with respect to the loan against the lender that they might have against the school. That includes fraud--which makes a debt voidable at the borrower's discretion. This is just plain old mainstream contract law.
Thus, advocates and state AGs who might even now, but almost certainly then, say they aren't pressing for "student loan forgiveness," were seeking the voiding of these loans ~a decade ago on that basis (while also working to help borrowers seek to assert borrower defense to repayment on an individual basis). A fair amount of debt to Corinthian has already been wiped out through these and other efforts. By treating it as "forgiveness," this administration is helping clear the structural hurdle of establishing fraud for the students as a group (rather than proving it individually, which, as you can imagine, would be challenging even if many of these borrowers weren't from marginalized groups), but that's just one way of clearing the hurdle. Anyway, Corinthian wasn't really singled out by the administration as an easy win so much as maneuvered into position by a decade of people advocating from a different position.
Also, I do think it's worth noting that no one has had to pay a federal student loan payment since March 2020 (with no interest accruing), which includes a year and a half of Biden administration. That's both a significant period of time and unprecedented. No extension has been shorter than three months. There's some can-kicking here, but if I had to guess I'd say the payment pause has been the single most successful long-term COVID relief program behind the child tax credit, and one of the very few that's still ongoing, which is by the administration's own choice.
posted by praemunire at 8:51 AM on June 2, 2022 [15 favorites]
So, one of the interesting aspects of this is that while it's being treated as debt forgiveness and would likely be litigated as such, every federally-backed student loan incorporates what's known as "borrower defense to repayment." That is, as with the "holder rule" in other contexts, a borrower may assert the same defenses with respect to the loan against the lender that they might have against the school. That includes fraud--which makes a debt voidable at the borrower's discretion. This is just plain old mainstream contract law.
Thus, advocates and state AGs who might even now, but almost certainly then, say they aren't pressing for "student loan forgiveness," were seeking the voiding of these loans ~a decade ago on that basis (while also working to help borrowers seek to assert borrower defense to repayment on an individual basis). A fair amount of debt to Corinthian has already been wiped out through these and other efforts. By treating it as "forgiveness," this administration is helping clear the structural hurdle of establishing fraud for the students as a group (rather than proving it individually, which, as you can imagine, would be challenging even if many of these borrowers weren't from marginalized groups), but that's just one way of clearing the hurdle. Anyway, Corinthian wasn't really singled out by the administration as an easy win so much as maneuvered into position by a decade of people advocating from a different position.
Also, I do think it's worth noting that no one has had to pay a federal student loan payment since March 2020 (with no interest accruing), which includes a year and a half of Biden administration. That's both a significant period of time and unprecedented. No extension has been shorter than three months. There's some can-kicking here, but if I had to guess I'd say the payment pause has been the single most successful long-term COVID relief program behind the child tax credit, and one of the very few that's still ongoing, which is by the administration's own choice.
posted by praemunire at 8:51 AM on June 2, 2022 [15 favorites]
I love (no sarcasm, really love) coming to a thread where an early bad comment was dropped like a flaming bag of dog turds on a doorstep and removed hastily after the OP was handed their arse.
Gotta disagree. Brent’s comment was both stupid and wrong, but deleting things for being stupid and wrong generally isn’t done around here (for obvious reasons, like all the contextless replies in the thread) sans actual rule/guideline-breaking, unless things have changed? I mean, hound the bad/stupid opinions to the ends of the earth, but mods nuking them without note seems like a troubling development.
posted by a box and a stick and a string and a bear at 8:52 AM on June 2, 2022 [13 favorites]
Gotta disagree. Brent’s comment was both stupid and wrong, but deleting things for being stupid and wrong generally isn’t done around here (for obvious reasons, like all the contextless replies in the thread) sans actual rule/guideline-breaking, unless things have changed? I mean, hound the bad/stupid opinions to the ends of the earth, but mods nuking them without note seems like a troubling development.
posted by a box and a stick and a string and a bear at 8:52 AM on June 2, 2022 [13 favorites]
Mods attempting to stop derails or one person's comment taking over a thread is pretty common, I think; also this should be in Metatalk.
posted by sagc at 8:54 AM on June 2, 2022 [5 favorites]
posted by sagc at 8:54 AM on June 2, 2022 [5 favorites]
I'm opposed to means testing for loan forgiveness. The rich don't have a lot of student loan debt, either because they didn't have to take any loans in the first place or because they paid them off quickly. All means testing does is lead to a bunch of arguing about where to draw the lines and inefficient, slow, and error-prone implementation.
If there has to be some kind of testing I think it should be based on time since the loans were disbursed (something like $10k of forgiveness for loans up to 5 years old, $20k for loans up to 10 years old, etc up to $50k for loans 25 years old or more). That way people who have been struggling for longer get the most benefit, and the benefit to the rich will be limited because they generally pay their loans off sooner, if they have any loans at all. It also doesn't require any information (such as income) that the Department of Education doesn't already have and so it can be done efficiently.
But the simplest, most sustainable thing to do is just to make income based repayment forgiveness amortized rather than all-or-nothing. Every loan payment (income-based or not, including $0 payments if someone's income is low enough) should be matched with a reduction in the principal such that at year 20* (or year 10 for people in public service) the loan will be paid off. Nobody gets stuck with loans forever, nobody gets capitalized interest leading to a debt spiral, being in public service is significantly incentivized, and the rich still pay the full amount. And if the program is removed by Republicans at least a lot of loans will have been reduced in the meantime, unlike the current all-or-nothing program.
Make it retroactive and there's your immediate loan forgiveness, but in a way that a) doesn't just kick the can down the road for people entering college today and b) doesn't particularly benefit the rich.
* 20 years because that's the current program, but I think it should be 10. There's a huge difference between having (for most people) your loans done with at age 32 versus age 42, especially for people who want to have children.
posted by jedicus at 8:56 AM on June 2, 2022 [9 favorites]
If there has to be some kind of testing I think it should be based on time since the loans were disbursed (something like $10k of forgiveness for loans up to 5 years old, $20k for loans up to 10 years old, etc up to $50k for loans 25 years old or more). That way people who have been struggling for longer get the most benefit, and the benefit to the rich will be limited because they generally pay their loans off sooner, if they have any loans at all. It also doesn't require any information (such as income) that the Department of Education doesn't already have and so it can be done efficiently.
But the simplest, most sustainable thing to do is just to make income based repayment forgiveness amortized rather than all-or-nothing. Every loan payment (income-based or not, including $0 payments if someone's income is low enough) should be matched with a reduction in the principal such that at year 20* (or year 10 for people in public service) the loan will be paid off. Nobody gets stuck with loans forever, nobody gets capitalized interest leading to a debt spiral, being in public service is significantly incentivized, and the rich still pay the full amount. And if the program is removed by Republicans at least a lot of loans will have been reduced in the meantime, unlike the current all-or-nothing program.
Make it retroactive and there's your immediate loan forgiveness, but in a way that a) doesn't just kick the can down the road for people entering college today and b) doesn't particularly benefit the rich.
* 20 years because that's the current program, but I think it should be 10. There's a huge difference between having (for most people) your loans done with at age 32 versus age 42, especially for people who want to have children.
posted by jedicus at 8:56 AM on June 2, 2022 [9 favorites]
It does make it confusing for people who just got here, this talking about a comment that doesn't exist anymore.
posted by Melismata at 9:09 AM on June 2, 2022 [2 favorites]
posted by Melismata at 9:09 AM on June 2, 2022 [2 favorites]
I don't have an issue with the cancellation itself, but it does grind my gears a bit that the government has basically ended up bailing-out a pretty obviously fraudulent, criminal enterprise.
And yes, yes, I know, the government bailed out Wall Street and all that—but the government didn't just hand out free taxpayer money to Bear Stearns shareholders. (The Fed provided an emergency loan to try and prop up B.S. before it collapsed—which triggered a lot of pretty reasonable discussion of "moral hazard"—and in the end basically officiated a shotgun wedding between the shambling corpse of Stearns and JPMC, the latter getting the "opportunity" to buy Stearns at 1/10th of its original value.)
Is there any hope of ever recovering any of this from Corinthian? Why is the government not a secured debtholder in this instance? It seems like the Dept of Education ought to have been the one to liquidate all of Corinthian's campuses, whatever dogshit IP they might have had, etc., but instead we're just taking a $5.8B kick straight in the teeth? I have some issues with that, to put it mildly.
Like, fine, bail out the students if they were actively mislead, but I want to see blood. Why are the assholes responsible for this not looking at some serious time playing don't-drop-the-soap in a Federally-run facility?
The entire higher-ed industry in the US is enormously fucked, and to be pursuing bailouts without any discussion of structural reform seems like it'll almost certainly create a feedback loop of more of this going forward.
posted by Kadin2048 at 10:07 AM on June 2, 2022 [3 favorites]
And yes, yes, I know, the government bailed out Wall Street and all that—but the government didn't just hand out free taxpayer money to Bear Stearns shareholders. (The Fed provided an emergency loan to try and prop up B.S. before it collapsed—which triggered a lot of pretty reasonable discussion of "moral hazard"—and in the end basically officiated a shotgun wedding between the shambling corpse of Stearns and JPMC, the latter getting the "opportunity" to buy Stearns at 1/10th of its original value.)
Is there any hope of ever recovering any of this from Corinthian? Why is the government not a secured debtholder in this instance? It seems like the Dept of Education ought to have been the one to liquidate all of Corinthian's campuses, whatever dogshit IP they might have had, etc., but instead we're just taking a $5.8B kick straight in the teeth? I have some issues with that, to put it mildly.
Like, fine, bail out the students if they were actively mislead, but I want to see blood. Why are the assholes responsible for this not looking at some serious time playing don't-drop-the-soap in a Federally-run facility?
The entire higher-ed industry in the US is enormously fucked, and to be pursuing bailouts without any discussion of structural reform seems like it'll almost certainly create a feedback loop of more of this going forward.
posted by Kadin2048 at 10:07 AM on June 2, 2022 [3 favorites]
It's always funny to me how these discussions inevitably have conservatives crying, "Oh great, why don't we just give everyone free stuff! Everyone gets free housing and healthcare!" They're so close.
posted by star gentle uterus at 10:09 AM on June 2, 2022 [14 favorites]
posted by star gentle uterus at 10:09 AM on June 2, 2022 [14 favorites]
In the case of Corinthian, there may have been nothing much to liquidate. I can't actually find much evidence that they had physical real estate assets, and the college around here that I think was theirs (Everest) was just renting space in a mall. Defaulted lease space is not an asset.
posted by ivan ivanych samovar at 10:21 AM on June 2, 2022 [1 favorite]
posted by ivan ivanych samovar at 10:21 AM on June 2, 2022 [1 favorite]
the government didn't just hand out free taxpayer money to Bear Stearns shareholders
Maybe not Bear Stearns, but there were many, many maneuvers during 2007-08 that essentially constituted handing cash to banks through either the noncollection or downward valuation of debts or the purchase of distressed assets at well above "market" value at the time.
Corinthian is not being bailed out, because it's shut down. The entities behind its private loan arm, and those who bought those loans, took substantial hits in earlier settlements, but you're right that any government loan guarantee program offloads risk onto the government. Ultimately, you're arguing for much closer supervision of school operations by ED, which I don't think you'll find many people (here at least) opposing. There has been a years-long struggle to require successful borrower outcomes (measured by gainful employment post-graduation) to retain access to federal student aid, but who knows where it will end up. The prior administration killed it dead.
posted by praemunire at 10:30 AM on June 2, 2022 [3 favorites]
Maybe not Bear Stearns, but there were many, many maneuvers during 2007-08 that essentially constituted handing cash to banks through either the noncollection or downward valuation of debts or the purchase of distressed assets at well above "market" value at the time.
Corinthian is not being bailed out, because it's shut down. The entities behind its private loan arm, and those who bought those loans, took substantial hits in earlier settlements, but you're right that any government loan guarantee program offloads risk onto the government. Ultimately, you're arguing for much closer supervision of school operations by ED, which I don't think you'll find many people (here at least) opposing. There has been a years-long struggle to require successful borrower outcomes (measured by gainful employment post-graduation) to retain access to federal student aid, but who knows where it will end up. The prior administration killed it dead.
posted by praemunire at 10:30 AM on June 2, 2022 [3 favorites]
(here is the CFPB Aequitas settlement, for those interested)
posted by praemunire at 10:32 AM on June 2, 2022 [1 favorite]
posted by praemunire at 10:32 AM on June 2, 2022 [1 favorite]
the government didn't just hand out free taxpayer money to Bear Stearns shareholders.
It handed out free taxpayer money to the private banking industry. Paul Krugman was right, if the 2008 crisis was so bad that the government needed to step in and bail these companies out, then they should have been nationalized to force major changes.
If the private industry had fucked up so badly that they needed saving then it should no longer have been private, at least not until some serious fixes were put in place. Instead, government officials made no serious attempt to extract concessions from bankers, even though these bankers received huge benefits from the rescue. Their losses became public liabilities while they and their industry continued on as they had been and are now richer and more powerful than ever.
posted by star gentle uterus at 10:45 AM on June 2, 2022 [5 favorites]
It handed out free taxpayer money to the private banking industry. Paul Krugman was right, if the 2008 crisis was so bad that the government needed to step in and bail these companies out, then they should have been nationalized to force major changes.
If the private industry had fucked up so badly that they needed saving then it should no longer have been private, at least not until some serious fixes were put in place. Instead, government officials made no serious attempt to extract concessions from bankers, even though these bankers received huge benefits from the rescue. Their losses became public liabilities while they and their industry continued on as they had been and are now richer and more powerful than ever.
posted by star gentle uterus at 10:45 AM on June 2, 2022 [5 favorites]
One of the less inarticulate and compassion-deficient arguments I’ve heard against jubilee-type non-means-tested general student loan forgiveness is that it would benefit a class that, on average, is substantially better off than general population, at the expense of the general population. It won’t surprise me if there’s a good rebuttal to that, but it would be nice if it felt safer to ask about it here. The deleted comment wasn’t constructive, but neither have been a whole lot of the responses to it.
posted by jon1270 at 10:56 AM on June 2, 2022 [2 favorites]
posted by jon1270 at 10:56 AM on June 2, 2022 [2 favorites]
For the life of me, I will never understand why anyone is against forgiving crippling, non-dischargeable debt.
And my student loans are paid off. All $446,000 of them. I'm not mad about other people struggling less. The ability to access an education shouldn't mean that a person is subjected to slavery for the rest of their lives.
posted by honeybee413 at 10:58 AM on June 2, 2022 [8 favorites]
And my student loans are paid off. All $446,000 of them. I'm not mad about other people struggling less. The ability to access an education shouldn't mean that a person is subjected to slavery for the rest of their lives.
posted by honeybee413 at 10:58 AM on June 2, 2022 [8 favorites]
it would benefit a class that, on average, is substantially better off than general population, at the expense of the general population
Nope. Some of the worst student borrower outcomes are among the substantial group of people who took out relatively modest loans to attend crappy schools and didn't even get their degree. If your job options are retail and fast food, a $9000 student-loan debt might as well be $9 million.
posted by praemunire at 11:18 AM on June 2, 2022 [7 favorites]
Nope. Some of the worst student borrower outcomes are among the substantial group of people who took out relatively modest loans to attend crappy schools and didn't even get their degree. If your job options are retail and fast food, a $9000 student-loan debt might as well be $9 million.
posted by praemunire at 11:18 AM on June 2, 2022 [7 favorites]
jon1270 - People who currently have student loans are not necessarily "substantially better off." You don't have to have a degree to have loans, for example. Also, there are racial disparities in who took and still has loans.
"Black student loan borrowers would receive approximately $5000 more in forgiveness on average than White borrowers."
"Blacks are more likely to borrow compared with other racial groups and borrow higher amounts."
posted by soelo at 11:21 AM on June 2, 2022 [3 favorites]
"Black student loan borrowers would receive approximately $5000 more in forgiveness on average than White borrowers."
"Blacks are more likely to borrow compared with other racial groups and borrow higher amounts."
posted by soelo at 11:21 AM on June 2, 2022 [3 favorites]
Praemunire, means-tested forgiveness covers that sort of case, does it not?
posted by jon1270 at 11:25 AM on June 2, 2022
posted by jon1270 at 11:25 AM on June 2, 2022
Means-testing is a barrier to access that affects those with the fewest means the most. The government has the ability to forgive these loans without requiring paperwork or action from the borrowers.
posted by ohneat at 11:29 AM on June 2, 2022 [7 favorites]
posted by ohneat at 11:29 AM on June 2, 2022 [7 favorites]
It handed out free taxpayer money to the private banking industry.
I mean, that's not really true, at least if you are referring to TARP, which was the most bailout-y of the various programs that happened in 2007/08 in direct response to the subprime collapse.
From Emergency Economic Stabilization Act of 2008:
I what I'd like to see, rather than just taking general Federal budget dollars and using them to bail out the corpses of failed colleges, is a fund that all schools receiving the benefit of Federally-backed student loans (and their associated enforcement infrastructure, i.e. the no-bankruptcy rules) have to pay into, basically as mandatory insurance. When a school starts to show signs of impending failure, there should be a mechanism for the Dept. of Education to step in like the FDIC does and involuntarily unwind it.
posted by Kadin2048 at 11:30 AM on June 2, 2022 [1 favorite]
I mean, that's not really true, at least if you are referring to TARP, which was the most bailout-y of the various programs that happened in 2007/08 in direct response to the subprime collapse.
From Emergency Economic Stabilization Act of 2008:
TARP recovered $441.7 billion from $426.4 billion invested, earning a $15.3 billion profit or an annualized rate of return of 0.6%There was an arguable government expense in real terms (inflation adjusted), although it's not big and Federal expenditures are generally not accounted for that way in my experience. The 'bank bailouts' were structured as mandatory loans that various banks (struggling or not, the better to hide the sick ones) had to accept and then pay back.
I what I'd like to see, rather than just taking general Federal budget dollars and using them to bail out the corpses of failed colleges, is a fund that all schools receiving the benefit of Federally-backed student loans (and their associated enforcement infrastructure, i.e. the no-bankruptcy rules) have to pay into, basically as mandatory insurance. When a school starts to show signs of impending failure, there should be a mechanism for the Dept. of Education to step in like the FDIC does and involuntarily unwind it.
posted by Kadin2048 at 11:30 AM on June 2, 2022 [1 favorite]
Jon1270 - No because they want to cover black people who have gone to graduate school, who may make over 150k as a result.
posted by Selena777 at 11:35 AM on June 2, 2022
posted by Selena777 at 11:35 AM on June 2, 2022
What ohneat said. Means-testing will exclude many of the most vulnerable, as it does with basically every other government program that uses it.
Kadin, do you really not know about shenanigans like this?
posted by praemunire at 11:40 AM on June 2, 2022 [2 favorites]
Kadin, do you really not know about shenanigans like this?
posted by praemunire at 11:40 AM on June 2, 2022 [2 favorites]
No because they want to cover black people who have gone to graduate school, who may make over 150k as a result.
Sorry, I don’t follow. Why is excluding people with graduate degrees and six-figure incomes a problem?
posted by jon1270 at 11:49 AM on June 2, 2022
Sorry, I don’t follow. Why is excluding people with graduate degrees and six-figure incomes a problem?
posted by jon1270 at 11:49 AM on June 2, 2022
Sorry, I don’t follow. Why is excluding people with graduate degrees and six-figure incomes a problem?
It isn't. The problem is asking people who have exorbitant loans with no degree, or no real income to speak of, to prove that they deserve the forgiveness. Finding documentation, completing paperwork, meeting with bureaucrats etc., are all substantially more challenging for the people who would need this forgiveness the most.
There's no magic way that only the rich people with cushy 9-5s would have to do the paperwork required for means-testing. Everyone would. Which means also the single parent who's working 3 jobs on varying shifts and can't spare the hours to pursue the forgiveness. Which means that single parent won't get the forgiveness.
posted by We put our faith in Blast Hardcheese at 12:06 PM on June 2, 2022 [11 favorites]
It isn't. The problem is asking people who have exorbitant loans with no degree, or no real income to speak of, to prove that they deserve the forgiveness. Finding documentation, completing paperwork, meeting with bureaucrats etc., are all substantially more challenging for the people who would need this forgiveness the most.
There's no magic way that only the rich people with cushy 9-5s would have to do the paperwork required for means-testing. Everyone would. Which means also the single parent who's working 3 jobs on varying shifts and can't spare the hours to pursue the forgiveness. Which means that single parent won't get the forgiveness.
posted by We put our faith in Blast Hardcheese at 12:06 PM on June 2, 2022 [11 favorites]
If the grad degrees aren’t being considered why is the congressional black caucus asking for universal cancellation?
posted by Selena777 at 12:09 PM on June 2, 2022
posted by Selena777 at 12:09 PM on June 2, 2022
Ok, so the argument is that forgiving the loans of the affluent, at the expense of the general population, is a worthwhile sacrifice to make it easier to forgive the loans of those who are struggling?
posted by jon1270 at 12:17 PM on June 2, 2022 [2 favorites]
posted by jon1270 at 12:17 PM on June 2, 2022 [2 favorites]
to make it easier to forgive the loans of those who are struggling
To make it possible. If you want any sort of aid to reliably reach struggling populations, you cannot put administrative barriers in front of them.
posted by praemunire at 12:20 PM on June 2, 2022 [14 favorites]
To make it possible. If you want any sort of aid to reliably reach struggling populations, you cannot put administrative barriers in front of them.
posted by praemunire at 12:20 PM on June 2, 2022 [14 favorites]
I'm pretty aware of the AIG shenanigans, and there's a lot that should have been done differently and more transparently there. (And, obviously, nobody working at AIG should have gotten a fucking bonus once they were taken into what was basically government receivership. I mean, that's just galling.)
But characterizing the AIG bailout as a straight giveaway of cash isn't really correct. The NY Fed and US Treasury basically bought AIG, and became its notional controlling shareholder. Once the initial CDS-triggered emergency was over, AIG was forced to sell pieces of itself off to generate cash, and the Treasury sold its AIG shares starting in 2012 at a profit.
posted by Kadin2048 at 12:23 PM on June 2, 2022 [1 favorite]
But characterizing the AIG bailout as a straight giveaway of cash isn't really correct. The NY Fed and US Treasury basically bought AIG, and became its notional controlling shareholder. Once the initial CDS-triggered emergency was over, AIG was forced to sell pieces of itself off to generate cash, and the Treasury sold its AIG shares starting in 2012 at a profit.
The U.S. Department of the Treasury in December 2012 published an itemized list of the loans, stock purchases, special purpose vehicles (SPVs) and other investments engaged in with AIG, the amount AIG paid back and the positive return on the loans and investments to the government.[87] The Treasury said that it and the Federal Reserve Bank of New York provided a total $182.3 billion to AIG, which paid back a total $205 billion, for a total positive return, or profit, to the government of $22.7 billion. In addition, AIG sold off a number of its own assets to raise money to pay back the government. On December 14, 2012, the Treasury Department sold the last of its AIG stock in its sixth stock sale for a total of approximately $7.6 billion. In total, the Treasury Department realized a gain of more than $22 billion from the sale of AIG common stock and $0.9 billion from the sale of AIG preferred stock.When you set aside the bonus scandal (which was, rightly, a fucking scandal), it's sort of how a bailout ought to work. The public bought an institution that was on the skids at a fire-sale price, in doing so preventing it from failing. Once it was out of the woods, the public was made whole again and then some, in return for having taken on that risk.
posted by Kadin2048 at 12:23 PM on June 2, 2022 [1 favorite]
It’s also a way to address generational wealth disparities. Those who had wealthy parents at the time they attended college mostly do not have federal loans because they had other sources of cheaper money to pay for college. There are major race and wealth disparities in terms of who needed to take out loans for college in the first place.
posted by ohneat at 12:26 PM on June 2, 2022 [3 favorites]
posted by ohneat at 12:26 PM on June 2, 2022 [3 favorites]
But characterizing the AIG bailout as a straight giveaway of cash isn't really correct.
I really don't think you're familiar with the details here. It was a giveaway of cash to Goldman Sachs via inflated payouts on AIG's CDSes.
Also, to address a point you keep reverting to, just because the U.S. government ultimately made a profit on the purchase of risky assets that were price-depressed at the time does not mean it was not a handout at the time.
posted by praemunire at 12:29 PM on June 2, 2022 [6 favorites]
I really don't think you're familiar with the details here. It was a giveaway of cash to Goldman Sachs via inflated payouts on AIG's CDSes.
Also, to address a point you keep reverting to, just because the U.S. government ultimately made a profit on the purchase of risky assets that were price-depressed at the time does not mean it was not a handout at the time.
posted by praemunire at 12:29 PM on June 2, 2022 [6 favorites]
Ok, so the argument is that forgiving the loans of the affluent, at the expense of the general population, is a worthwhile sacrifice to make it easier to forgive the loans of those who are struggling?
In the absence of literally any other workable solution for relieving the suffering of the struggling, YES.
Man oh man, tell me you've never interacted with the welfare system without telling me you've never interacted with the welfare system.
posted by We put our faith in Blast Hardcheese at 1:53 PM on June 2, 2022 [10 favorites]
In the absence of literally any other workable solution for relieving the suffering of the struggling, YES.
Man oh man, tell me you've never interacted with the welfare system without telling me you've never interacted with the welfare system.
posted by We put our faith in Blast Hardcheese at 1:53 PM on June 2, 2022 [10 favorites]
In the absence of literally any other workable solution for relieving the suffering of the struggling, YES.
But why should the struggle of student debt take precedence over every other variety of struggle, financial and otherwise? I know the President has the ability to "just issue an executive order" to erase this particular form of debt, but there are obviously other reasons people are advocating so passionately for student debt forgiveness.
posted by cinchona at 2:15 PM on June 2, 2022 [1 favorite]
But why should the struggle of student debt take precedence over every other variety of struggle, financial and otherwise? I know the President has the ability to "just issue an executive order" to erase this particular form of debt, but there are obviously other reasons people are advocating so passionately for student debt forgiveness.
posted by cinchona at 2:15 PM on June 2, 2022 [1 favorite]
Why would it need to take precedence? Why would issuing an executive order on debt forgiveness preclude action on any other issue?
posted by ohneat at 2:19 PM on June 2, 2022 [2 favorites]
posted by ohneat at 2:19 PM on June 2, 2022 [2 favorites]
But why should the struggle of student debt take precedence over every other variety of struggle, financial and otherwise?
It was one of his campaign promises, suggesting forgiving $10,000 per borrower.
posted by soelo at 2:55 PM on June 2, 2022 [2 favorites]
It was one of his campaign promises, suggesting forgiving $10,000 per borrower.
posted by soelo at 2:55 PM on June 2, 2022 [2 favorites]
why do anything if you can’t do everything? the cool thing about student loans is the president already has the power to forgive them, all of them all at once just by issuing an executive order. some will say it ain’t so but it’s a plausible enough interpretation of the statute that nothing is immediately stopping him. while if challenged it’s likely that the supremes will rule it unconstitutional because they’re 6 goblins but in the mean time it will be too late, i think. so many other things that are yes more important require laws to be passed but this is already in a law so mitch mcconnel can’t stop it from happening. biden of course is a weird old dude who won’t do anything bold, but he should and could
posted by dis_integration at 3:05 PM on June 2, 2022 [6 favorites]
posted by dis_integration at 3:05 PM on June 2, 2022 [6 favorites]
But why should the struggle of student debt take precedence over every other variety of struggle, financial and otherwise?
America Turned the Greatest Vehicle of Social Mobility Into a Debt Machine
posted by praemunire at 3:09 PM on June 2, 2022 [6 favorites]
America Turned the Greatest Vehicle of Social Mobility Into a Debt Machine
posted by praemunire at 3:09 PM on June 2, 2022 [6 favorites]
I was literally working on the Corinthian fraud in ***2014*** (California may have sued first, for which they deserve credit, but other investigations were already underway when they did). The twists and turns of this story are unbelievable. The Obama administration was hot garbage for the longest time on these issues, too, and just when it looked like there might be some movement, Cruella DeVos came in and did her best to prevent a dime going out, including through extensive violations of the Administrative Procedure Act. Ten-plus years to clear up the handiwork of lazy, industry-captured regulators and exploiters without a conscience. It's probably still not all done.
I can concur with this. Corinthian was more crooked than a barrel of snakes. I should know. I worked for the student loan guarantor that bought Corinthian and converted them to nonprofit. I can't prove it, but I think we were probably tipped off by the Obama Administration & asked to buy Corinthian just shortly before it went bankrupt. If Corinthian had gone bankrupt, I believe the practice at the time was to write off the outstanding loans for the institution that went financially belly up. I believe Obama had the opportunity to write off the debt for the defrauded Corinthian students, but he didn't.
I was on the due diligence team to do research into Corinthian before my company bought it, but I was under the impression that absolutely nothing was going to stop that deal from going through. As part of my research, I had access to spreadsheets that gave info about the place of employment for Corinthian graduates who got jobs related to their credential. I could tell by looking at those spreadsheets that Corinthian had outright lied about their placement numbers.
posted by jonp72 at 3:28 PM on June 2, 2022 [7 favorites]
I can concur with this. Corinthian was more crooked than a barrel of snakes. I should know. I worked for the student loan guarantor that bought Corinthian and converted them to nonprofit. I can't prove it, but I think we were probably tipped off by the Obama Administration & asked to buy Corinthian just shortly before it went bankrupt. If Corinthian had gone bankrupt, I believe the practice at the time was to write off the outstanding loans for the institution that went financially belly up. I believe Obama had the opportunity to write off the debt for the defrauded Corinthian students, but he didn't.
I was on the due diligence team to do research into Corinthian before my company bought it, but I was under the impression that absolutely nothing was going to stop that deal from going through. As part of my research, I had access to spreadsheets that gave info about the place of employment for Corinthian graduates who got jobs related to their credential. I could tell by looking at those spreadsheets that Corinthian had outright lied about their placement numbers.
posted by jonp72 at 3:28 PM on June 2, 2022 [7 favorites]
In the case of Corinthian, there may have been nothing much to liquidate. I can't actually find much evidence that they had physical real estate assets, and the college around here that I think was theirs (Everest) was just renting space in a mall. Defaulted lease space is not an asset.
Corinthian had some assets in terms of equipment used for various vocational education classes etc., but my experience is that most of the real estate assets were leased, although Corinthian did have an HQ building in California, which it may have owned outright.
posted by jonp72 at 3:31 PM on June 2, 2022
Corinthian had some assets in terms of equipment used for various vocational education classes etc., but my experience is that most of the real estate assets were leased, although Corinthian did have an HQ building in California, which it may have owned outright.
posted by jonp72 at 3:31 PM on June 2, 2022
Man oh man, tell me you've never interacted with the welfare system without telling me you've never interacted with the welfare system.
Nice quip, but wrong.
posted by jon1270 at 4:00 PM on June 2, 2022
Nice quip, but wrong.
posted by jon1270 at 4:00 PM on June 2, 2022
I agree that any broad-based student loan relief has to be coupled with reform of how educational institutions have their runaway tuition increases subsidized by taxpayers. As kadin mentioned above, without the reform, you’re looking at another million-plus students deep in debt in just a few years. Indeed, for-profit institutions are especially incentivized to screw over their students this way.
I’m not sure what the answer is, but a real, sustainable solution seems to need both.
posted by darkstar at 4:49 PM on June 2, 2022 [4 favorites]
I’m not sure what the answer is, but a real, sustainable solution seems to need both.
posted by darkstar at 4:49 PM on June 2, 2022 [4 favorites]
Student loan forgiveness is a one-off patch a system that is fundamentally charging massively inflated costs that prevents students from ultimately achieving the goal of getting an education, i.e. becoming better able to understand and succeed in the world they live in. I'm not opposed to it because frankly, we bandage bleeding wounds for good reasons. But it honestly has too many long-term negative impacts - including setting the expectation that at some random point student loans will be forgiven if we lobby hard enough, what a nightmare for anyone trying to control ballooning school cost! - to think it's a genuinely good idea.
Targeted relief of fraud and making the public service loan forgiveness easier to understand and stay in compliance with seems like a genuinely better idea to me. And I say this as someone who is going to be paying my student loans into my 40s and possibly my 50s. Making community college free and starting to wean people off the expectation that school should require loans seems like a much better use of my tax dollars.
posted by Ahniya at 7:44 PM on June 2, 2022 [6 favorites]
Targeted relief of fraud and making the public service loan forgiveness easier to understand and stay in compliance with seems like a genuinely better idea to me. And I say this as someone who is going to be paying my student loans into my 40s and possibly my 50s. Making community college free and starting to wean people off the expectation that school should require loans seems like a much better use of my tax dollars.
posted by Ahniya at 7:44 PM on June 2, 2022 [6 favorites]
setting the expectation that at some random point student loans will be forgiven if we lobby hard enough
I think we should set that expectation. Other countries have pursued other methods of financing public access to higher education over the last 40 years and some of those turn out to yield similar or better results in terms of access while creating fewer negative consequences for the students, their families, and communities. Our country chose the wrong path and while it did a lot of good it created a lot of harm along the way. We should be doing everything we can to undo the harm that our country’s bad policy choices caused - pushing for immediate forgiveness, ongoing forgiveness, reimbursement of any funds already remitted, relief for private loans, bankruptcy changes, altruistic action, new ways of funding higher Ed that have fewer problems, and more, in any order and through any pathway - federal, state, local, legislative, judicial, executive, political, corporate, public opinion. There isn’t a finite number of things we can do, we should keep asking for more from anyone who is in the position to give it to us.
posted by ohneat at 11:45 PM on June 2, 2022 [2 favorites]
I think we should set that expectation. Other countries have pursued other methods of financing public access to higher education over the last 40 years and some of those turn out to yield similar or better results in terms of access while creating fewer negative consequences for the students, their families, and communities. Our country chose the wrong path and while it did a lot of good it created a lot of harm along the way. We should be doing everything we can to undo the harm that our country’s bad policy choices caused - pushing for immediate forgiveness, ongoing forgiveness, reimbursement of any funds already remitted, relief for private loans, bankruptcy changes, altruistic action, new ways of funding higher Ed that have fewer problems, and more, in any order and through any pathway - federal, state, local, legislative, judicial, executive, political, corporate, public opinion. There isn’t a finite number of things we can do, we should keep asking for more from anyone who is in the position to give it to us.
posted by ohneat at 11:45 PM on June 2, 2022 [2 favorites]
Nice quip, but wrong.
All right, so since you have apparently interacted with the welfare system, please explain what part of it was like, "oh, I definitely want MORE people to have this experience about MORE things, I want poor people to have to do this just, a lot more often than they already do."
posted by We put our faith in Blast Hardcheese at 6:20 AM on June 3, 2022 [3 favorites]
All right, so since you have apparently interacted with the welfare system, please explain what part of it was like, "oh, I definitely want MORE people to have this experience about MORE things, I want poor people to have to do this just, a lot more often than they already do."
posted by We put our faith in Blast Hardcheese at 6:20 AM on June 3, 2022 [3 favorites]
If you want any sort of aid to reliably reach struggling populations, you cannot put administrative barriers in front of them.
And there's also the *cost* of creating and maintaining those administrative barriers, which rarely seems to be a consideration in discussions among folks eager to implement means-testing. From Vox last October:
According to Georgetown University political scientists Pamela Herd and Don Moynihan, the administrative costs for programs like SNAP, the family assistance program known as TANF, and the Supplemental Nutritional Program for Women, Infants, and Children can range from 15 to 40 cents of each dollar of benefits distributed in the programs. That includes money used to interview people, check the documentation they provide, and ensure that their claims of need are valid.
A couple of good Congresspeople in WaPo around the same time:
The reality is not that simple. Means-tested programs cost more to administer, because complex systems, processes and entire offices must be created to determine who qualifies. A 2011 study by the Center for Economic and Policy Research found that administrative costs “would add substantially to the operating cost of the program” and “eliminate most, if not all, of the savings from a plausible means test.”
posted by mediareport at 2:21 PM on June 3, 2022 [4 favorites]
And there's also the *cost* of creating and maintaining those administrative barriers, which rarely seems to be a consideration in discussions among folks eager to implement means-testing. From Vox last October:
According to Georgetown University political scientists Pamela Herd and Don Moynihan, the administrative costs for programs like SNAP, the family assistance program known as TANF, and the Supplemental Nutritional Program for Women, Infants, and Children can range from 15 to 40 cents of each dollar of benefits distributed in the programs. That includes money used to interview people, check the documentation they provide, and ensure that their claims of need are valid.
A couple of good Congresspeople in WaPo around the same time:
The reality is not that simple. Means-tested programs cost more to administer, because complex systems, processes and entire offices must be created to determine who qualifies. A 2011 study by the Center for Economic and Policy Research found that administrative costs “would add substantially to the operating cost of the program” and “eliminate most, if not all, of the savings from a plausible means test.”
posted by mediareport at 2:21 PM on June 3, 2022 [4 favorites]
And there's also the *cost* of creating and maintaining those administrative barriers
Although I think that (assuming a $10K forgiveness) this might be the rare case where it might not actually cost more to operate the gatekeeping machinery than to just give everyone the money. But it will be a cost, and it won't be trivial.
posted by praemunire at 2:30 PM on June 3, 2022
Although I think that (assuming a $10K forgiveness) this might be the rare case where it might not actually cost more to operate the gatekeeping machinery than to just give everyone the money. But it will be a cost, and it won't be trivial.
posted by praemunire at 2:30 PM on June 3, 2022
What Everyone’s Getting Wrong About Student Loans [single link Hank Green]
40% of people with student loans do not get a degree.
posted by Glinn at 3:40 PM on June 3, 2022 [2 favorites]
40% of people with student loans do not get a degree.
posted by Glinn at 3:40 PM on June 3, 2022 [2 favorites]
As with all government programs, you have to decide whether the priority is to help everyone who needs it or to make sure nobody gets help they don't deserve. You can't have both.
You literally have to decide how many kids you are willing to have going hungry to make sure some rich kid doesn't eat for free. Or you can give every kid a free lunch.
posted by straight at 11:32 AM on June 4, 2022 [9 favorites]
You literally have to decide how many kids you are willing to have going hungry to make sure some rich kid doesn't eat for free. Or you can give every kid a free lunch.
posted by straight at 11:32 AM on June 4, 2022 [9 favorites]
The cost of forgiving the loans of everyone who needs it is the cost of forgiving all the loans. That is the price tag of the outcome people want. I think we can afford it and it's a worthwhile expense.
posted by straight at 11:35 AM on June 4, 2022 [2 favorites]
posted by straight at 11:35 AM on June 4, 2022 [2 favorites]
In many (most?) public programs (health care for sure) we choose instead to spend a greater total amount of money and what we get for that money is fewer total people in need helped and a huge mountain of bureaucracy (which, to be fair, creates some jobs).
posted by straight at 11:37 AM on June 4, 2022 [1 favorite]
posted by straight at 11:37 AM on June 4, 2022 [1 favorite]
Means testing is not a cost-saving mechanism. It is a coping mechanism for keeping people's visceral, "Hey, that's not fair!" reaction from killing public programs for the common good.
posted by straight at 11:44 AM on June 4, 2022 [2 favorites]
posted by straight at 11:44 AM on June 4, 2022 [2 favorites]
You literally have to decide how many kids you are willing to have going hungry to make sure some rich kid doesn't eat for free. Or you can give every kid a free lunch.
Sometimes, too rarely, but sometimes they get it right.
Community Eligibility Provision
Sometimes, too rarely, but sometimes they get it right.
Community Eligibility Provision
The Community Eligibility Provision (CEP) is a non-pricing meal service option for schools and school districts in low-income areas. CEP allows the nation’s highest poverty schools and districts to serve breakfast and lunch at no cost to all enrolled students without collecting household applications. Instead, schools that adopt CEP are reimbursed using a formula based on the percentage of students categorically eligible for free meals based on their participation in other specific means-tested programs, such as the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF).posted by mikelieman at 3:16 PM on June 4, 2022 [4 favorites]
Yeah, a program I worked for did some work related to school nutrition, and every school we worked with that went to free-lunch-for-all saved so much in admin costs they all felt like they were better off.
posted by The Underpants Monster at 1:36 AM on June 5, 2022 [4 favorites]
posted by The Underpants Monster at 1:36 AM on June 5, 2022 [4 favorites]
means testing is great, it allows the lazy to think that a balance has been struck, while the cruel get to flex, and the poor, as always, suffer, which is their lot
posted by inpHilltr8r at 3:36 PM on June 5, 2022 [4 favorites]
posted by inpHilltr8r at 3:36 PM on June 5, 2022 [4 favorites]
ouch, that's good.
posted by mediareport at 3:42 PM on June 5, 2022
posted by mediareport at 3:42 PM on June 5, 2022
Debt forgiveness, including one person's good experience with the Public Service Loan Forgiveness (PSLF) program waiver (Oct. 2021: "for a limited time, borrowers may receive credit for past periods of repayment that would otherwise not qualify for PSLF"):
‘It was like a miracle’: This public service loan borrower had over $100,000 in student debt forgiven and $15,000 refunded (Fortune reprint via Yahoo News, June 15, 2022) [...] Nancy Wadsworth opened her bank account app to assess her finances after the trip. What she saw astonished her. It wasn’t because the 54-year-old had overspent or miscalculated the exchange rate. Rather, her checking account balance was $15,000 more than she had anticipated, thanks to 20 deposits from the federal government worth between $730 and $790 each. [...] Wadsworth is a professor at the University of Denver—where she’s worked since 2004—and she qualifies for the Public Service Loan Forgiveness (PSLF) program. Since she graduated with a Ph.D. in 2001, she estimates she’s repaid the $70,000 in student loans she borrowed over seven years, and then some. But her remaining balance was still over $100,000—her loans had been compounding at a 6% interest rate—until May, when her loans were forgiven.
The refund deposits showed up in her account a few weeks later. Though Wadsworth learned about PSLF in 2010—a few years after the program was launched to reward those working in public service professions—she didn’t know she had to consolidate her loans into direct loans until 2015. She was always unsure if those five years of payments would end up counting toward the 10 years she needed to have her balance forgiven. [...] Once Wadsworth filed a waiver in January, the Education Department determined she not only made the 120 qualifying payments necessary for forgiveness, but that she had actually made 140, thus the 20 separate refunds. After 19 years of paying hundreds of dollars each month, she almost can’t believe her debt is gone.
posted by Iris Gambol at 4:26 PM on June 15, 2022
‘It was like a miracle’: This public service loan borrower had over $100,000 in student debt forgiven and $15,000 refunded (Fortune reprint via Yahoo News, June 15, 2022) [...] Nancy Wadsworth opened her bank account app to assess her finances after the trip. What she saw astonished her. It wasn’t because the 54-year-old had overspent or miscalculated the exchange rate. Rather, her checking account balance was $15,000 more than she had anticipated, thanks to 20 deposits from the federal government worth between $730 and $790 each. [...] Wadsworth is a professor at the University of Denver—where she’s worked since 2004—and she qualifies for the Public Service Loan Forgiveness (PSLF) program. Since she graduated with a Ph.D. in 2001, she estimates she’s repaid the $70,000 in student loans she borrowed over seven years, and then some. But her remaining balance was still over $100,000—her loans had been compounding at a 6% interest rate—until May, when her loans were forgiven.
The refund deposits showed up in her account a few weeks later. Though Wadsworth learned about PSLF in 2010—a few years after the program was launched to reward those working in public service professions—she didn’t know she had to consolidate her loans into direct loans until 2015. She was always unsure if those five years of payments would end up counting toward the 10 years she needed to have her balance forgiven. [...] Once Wadsworth filed a waiver in January, the Education Department determined she not only made the 120 qualifying payments necessary for forgiveness, but that she had actually made 140, thus the 20 separate refunds. After 19 years of paying hundreds of dollars each month, she almost can’t believe her debt is gone.
posted by Iris Gambol at 4:26 PM on June 15, 2022
« Older Admiral Linda Fagan (USCG) becomes America's first... | Certain Uncorrelated Nonparametric Test Statistics Newer »
This thread has been archived and is closed to new comments
posted by rrrrrrrrrt at 8:29 PM on June 1, 2022 [8 favorites]