It will be worse than that. The credit card rate is for people who have sufficient incomes such that they are good credit risk. Students have no income and no guarantee that they will have a sufficient income.
Exactly.
People (and organizations) respond to incentives. If you incent something like bankruptcy, you get more of it.
Before the laws were changed that made it very difficult to discharge student loan debt, student loan interest rates were only a little more than those of a car loan. I had a loan when I was going to school in the early '80s. I don’t remember the exact interest rate, but it certainly wasn’t a credit card rate. I do remember it being backed by the state. We can go back to that.
The same thing that discourages anyone from declaring bankruptcy. It’s a hassle, it makes it very difficult to take out loans in the future, and you look bad to anyone who checks your credit report, such as potential employers.
You’re assuming state taxpayers will go for this. Most states don’t have great credit or balance sheets right now. Who will want to add student loans that are dischargeable in bankruptcy, no less, to already messy state finances.
And you’re assuming debtors owing tens to hundreds of thousands in loans will care about wrecking their credit. Being in default has or will have already done that.
@hebegebe I certainly don’t support the idea that taxpayers can decide to stop paying teachers or allow 50 kids in a classroom with one teacher. Teachers and other public servants, especially those that require college degrees and licenses, deserve to be paid decently. There are rules and laws that define the parameters of a free and appropriate public education and the tax payers are required to pay to provide for that. An educated populace is a public good and we all benefit from that.
Could be why I always vote. 
On here putting things in more depth helps people understand what they are voting for. If we want only the rich to have things like education and everyone else being supplemented by them via welfare and similar while the jobs go to people overseas willing to work for less, that is an option.
Or we can keep the middle and lower classes “in their places” by wooing them into thinking they can do better with loans, then loan repayment keeps them in a similar financial spot as they were - or they can skip the loans and just take the low paying jobs to start with (pretty much the same, but all jobs get filled without increasing salaries).
We can relate the anecdotes of those who “made it” so people know it’s theoretically possible while ignoring all of those who “could have made it,” but didn’t because they weren’t fortunate enough to have the element of luck (because that’s usually the difference TBH).
We can feel bad for those who had to struggle and not change things for the future so more have to struggle.
Voters have a lot of options.
This is all totally different than what @RookieCollegeMom is relating with those who choose expensive over not for illogical reasons. That we probably can’t fix and no one I know of is suggesting paying off that much in loans or giving that much to someone. People of all socio-economic classes go bankrupt every day over similar spending in other venues. It, to me, is different than someone who went bankrupt over medical bills or something beyond their control. (I’ve seen both types - one I feel sorry for and the other I don’t.)
Plus, if those who are capable would otherwise have to stay in low paying (welfare-ish supplemented) jobs instead of becoming a full fledged decently paid taxpayer, we all benefit even more. I prefer my tax dollars supporting education vs the alternative for those who wouldn’t need it if given options.
No disagreement there. In fact, I am appalled at how little some teachers get paid.
But that pay should be transparent, not hidden through IBR.
Of course. And it is in everyone’s interest to raise those standards.
But as long as those standards are being met, it is the right of taxpayers to choose how much more they want to invest in a school system.
Hiding the true costs is antithetical to good governance.
If higher salaries are then required, what’s to stop the Powers That Be from deciding to go cheap and outsourcing the jobs overseas or doing the video teaching?
That speaks a lot to how local governments are not willing to pay for social workers to do actual social work that may be needed in their communities.
Instead, social work needs are neglected until they become crises responded to by the social workers of last resort – police officers who end up dealing with homeless people who are unsightly enough to get NIMBYs calling the police, people with mental health issues, domestic disputes that turn violent, etc… Of course, that is not what police officers are trained for (or really have the resources to do anything but bring the immediate crisis down to a sub-crisis level), nor what police officer recruits thought that their jobs would mostly be.
A local government can pay extra social workers (and more than what social workers are paid now) to handle the social work problems before they become crises, relieving some of the burden on and cost of the police department (police officers can be pretty expensive compared to actual social workers).
Maybe for some jobs but then it’s up to the government to formulate guidelines since most of those jobs are in the public sector. The salaries should not be higher if the point is that students are getting debt forgiven if they work these jobs. Either raise the salaries and no debt forgiveness or keep the salaries lower and part of your compensation plan is that all or a portion of your debt is forgiven.
Plus unlike the private sector states only have so much money to spread around since they don’t make money they just take it.
All good points but the real question is should you take on $60,000 in debt for a career that will make it difficult to pay off? Do social workers need a masters? Could colleges add a major to address areas specifically needed to be a social worker? I don’t know, but kids are in college for 4 years. It seems like they should be able to get the education needed to be a social worker within that time frame.
In terms of what I would recommend to an individual considering a career as a social worker:
Social work is certainly not the only field where students and their parents seem to have inaccurate ideas of what the job and pay prospects are. Certain STEM majors (e.g. biology for those who do not get into medical or other health professional school) are other common examples.
I don’t know that we should cancel student loans, but we definitely need to address to out of control upward trend of education costs and look into some loan forgiveness options. Getting a good education should not put you in a position of debt for the rest of your life if you’re working in your field of study (or any other for that matter).
Personally, I like what my public high school has done and created a “tech area” where students can take classes all the way through getting certified for jobs like welding. It’s akin to Vo-Tech in many places (BOCES where I grew up in NY). The goal is to help tech oriented kids to avoid paying for trade schools.
Naturally our tax dollars had to go up to support it - even for those without kids in school (like me), though they also got some contributions from local companies who will later employ the workers. The kids can avoid the loans and be employed upon graduation from high school. I see this as a win for everyone, because otherwise my tax dollars would have been used to support those who didn’t choose the loan route via food stamps, heating assistance, and more. The school is expanding its options, but can’t do all trades.
I personally would like to see “something” to expand it all so we can have social workers, public defenders, doctors for all levels of income, teachers - you name it - and the income of the parents doesn’t matter. Chances are they’re paying more in taxes (or at least they should be!). The kids can still succeed without being weighed down for life. It can’t all be done in high school, though at least that’s a start.
I could be in favor of loan forgiveness for lower paid jobs. To me, it accomplishes the goal. A guidance counselor can say, “here are your options,” and there are truly workable options to get the student where they can successfully support themselves doing something they are good at.
The mention of my state loan was simply a counter-example to the claim that school loan interest rates would necessarily be the same as credit card rates. It wasn’t a proposal about how school loans should be primarily funded in the future.
My main point was that lenders, both direct and indirect, need to accept some of the risk of making bad loans. That way, they’ll be more careful about loaning money to students who want to attend $60K/year art history programs or storefront cosmetology schools. There’s no fair way to deal with the student debt problem, which is why I’m saying that the pain from the fix needs to be spread among banks, taxpayers, schools and students.
It’s not a choice between having bad or good credit. It’s a choice between having bad credit and being burdened by huge debt for the rest of your life, or having bad credit and being able to get out from under that debt. The latter case, which results from being able to more easily declare bankruptcy, is a better choice for many.
As someone who will die with more student loans than anyone with sense should ever have, I feel the issue deeply. I was stupid, stupid, stupid when I was younger. First person in my family to go to college, zero support, young kids. I was dumb. And I’ll be paying for that for the rest of my life, really. Erasing any of that would make my life completely different long-term, really, but I do understand that I was stupid and maybe I should be stuck with that. I have useless degrees and now taught my kids to avoid student loans at all costs, so I guess at least I learned a lesson and can prevent it from being a generational problem… and at least I know it’ll die with me someday.
I agree in principle but the reality is lenders won’t bother to make that assessment (especially because they’ll receive huge backlash for making those types of judgement calls) and they’ll just get out of the student loan business.
If we return to the bankruptcy laws as they were in the '80s and '90s, I’d expect loan providers to revert to the way they gave out loans in '80s and '90s. I don’t recall much complaining about how student loans were disbursed back then, and while some lenders may get out of the business, there will still be plenty of other lenders who will adjust and provide loans for students.
Student loans became non-dischargeable in bankruptcy in 1976.
When Did Student Loans Become Nondischargeable in Bankruptcy?.
I’m not in favor of broad debt cancellation across the board. But it also doesn’t make sense to me to try to make moral judgments about people’s individual decisions. We need to look at data about who defaults and why, and ask what is the effect on the economy of having so many people burdened by student loan debt. Also, as others have pointed out, the government only has the power to alter the terms of federal loans, not private ones.
Here’s a helpful piece by the Brookings Institution about who owes student loans and who accounts for the defaults: Who owes all that student debt? And who’d benefit if it were forgiven?. Note that those who hold the largest debt are not the borrowers who account for most of the defaults.