How can these two things both be true?
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They can’t. While the British system has been transitioning from directly subsidized education to subsidized loans. The reality in both cases is that the government bears a much larger share of educational expenses there than here.
According to the internet, average student debt in the UK is 13000 pounds. The average student debt in the US is $39000.
P.S. the numbers are for England, not the whole UK. But I would guess the are similar to the other parts of the UK.
The average debt among the cohort of borrowers who finished their courses in 2020 was £45,000 .
https://commonslibrary.parliament.uk/research-briefings/sn01079/
The average student debt in the United States is $32,731 , while the median student loan debt amount is $17,000.
https://www.valuepenguin.com/average-student-loan-debt
Not directly comparable figures but illustrative of the difference. Almost everyone in the UK pays the same amount per year for tuition. In the US you have some colleges charging $3000 per year and others charging $60000 per year, so debt is much more variable. You can also borrow unlimited amounts for graduate degrees which is where the most extreme problems occur
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Actually, it’s not debatable for anyone who understands accounting. The banks paid back the terms of their loans with interest. Full stop. And the government made an accounting profit.
If you expand the problem statement to say “Did banks pay for all the problems they inflicted on society?”, that’s an entirety different question with a different answer.
In contrast, if the accounting for student loans used generally accepted accounting principles, the government would show massive losses due to the large number of defaults. But just like the government can run social security using accounting practices that if used for a private company pension would land company executives in jail, it uses loose accounting practices for student loans that assume unrealistically low default rates. Student loans are in fact are already a massive money sink.
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Ah, you are right, and I can’t read.
Take it up with MIT Sloan. They calculated the costs in the article above at about a half a trillion dollars. And as I said, even if the money was paid back, it was still a bailout.
As for applying “generally accepted accounting principles” to the student loan system, there are obviously benefits (and costs) of government subsidized student loan programs that don’t show up on GAAP ledger. Likewise regarding your conclusion that student loans are “a massive money sink.” There are benefits to an educated populace that go well beyond return on the loan.
The comparison is extremely misleading because the UK’s the income-based payment schedules, forgiveness programs, and subsidized interest rates make the burden in the UK much different than the burden here.
Why would debt which was assumed voluntarily ( for education, when there were likely cheaper options available to the borrower) be forgiven when debt for medical expenses ( not discretionary and unlikely to have other options) not be forgiven?
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Only 18% of college loans are owed by persons earning in excess of those income levels.
Medical expenses are not federally held debt so the president can’t issue an executive order to forgive it. Two different things, but if you want private medical debt to be paid by the government, congress would have to appropriate funds for that. It is dischargeable in bankruptcy (not that I think that is a good solution), it is a deduction on taxes (not that I think that is enough).
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The Forbes article I read yesterday said it would be a lot easier to not have income limits and may cost less to administer if there are no limits.
If there are no limits on income, the Dept of Education could just write off $10k on every account. If income qualification is part of it, borrowers would have to apply for forgiveness, prove income, and then that application would have to be matched with an account. A lot of manual labor and it wouldn’t be done by Sept 1, when the ‘pause’ is supposed to end.
Undergrad Direct loans have been repaid. Grad school (regular grad school) loans have been repaid. Kids have been out of undergrad more than 10 years and always paid on time.
Professional school Direct Loans are being paid by one kid. Kid continued to pay during the pause. Was very happy that no additional interest accrued during that time.
I have no problem with this loan forgiveness proposal.
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I agree; I would be happy to forgive community college debt. Debt for private residential colleges? Not so much.
The median individual income in the US is $44k, the average is $63k. We are asking the majority of citizens to forgive debts of those far wealthier than they are by multiples.
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Please don’t turn this into a debate thread or it will be closed.
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i think i’d rather see a change in federal grants up front - maybe making pells easier to get, or grants for lower income/ mid income kids.
i know a first gen kid who has lots in loans from attending his state school; no support at all from parents; first in his family to ever graduate. I’m thinking if more had been given on the front end, he’d have less loans now. and he’s floundering honestly. 
I started the thread as a debate. Nothing in my last thread your removed was wrong. I simply replied to @roycroftmom saying I agreed.
This does nothing to address the real problem: too expensive colleges. What about all the kids in future years, will we be forgiving their debt too?
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Different groups of people get different government benefits, some because they are low income (TANF, medicaid, WIC), some because they are high income (mortgage deductions, estate taxes). Some get deductions because they do things the government wants them to do (child credit because they have children, solar panels, electric cars, savings credits, 529 accounts).
You can’t just look at one credit or benefit program and say "that’s not fair.’ Every program is unfair to those who aren’t getting the benefit and we are asking those who don’t get the benefit, the tax deduction, the stimulus payment to pay for those who do get it. If every benefit program was eliminated and everyone just paid for themselves, that wouldn’t be fair either.
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I’d like the people who hold up the education systems of other countries as the gold standard to attend university in those countries. They are nothing like colleges or universities in the United States. It’s not even comparing apples to oranges. They aren’t better or worse they’re just very different: for example, Fewer bells and whistles, study is limited to one subject, often fewer classes per semester, limited professor office hours and availability, many don’t provide residential housing and much more limited dining options (most students cook for themselves or live at home), many are only 3 instead of 4 years. American students are also free to attend any of the unis.
The reason the costs of college in this country have skyrocketed is due to a number of factors many of which are unique to American schools and which students and their parents expect (yet aren’t supposed to cost any money to supply), including nice dorms, amazing athletic facilities, multiple dining options with every type of food allergy or sensitivity accommodated, mental health and counseling, student healthcare centers, first class academic, engineering , science and library facilities, and low professor to student ratios just to name a few.
“Demand for higher education has increased steadily over the past 50-60 years, with emerging professions requiring increasingly specialized training,” Ollenberg said. “That specialized training, whether coming from a university, a college, or a technical school, comes with expensive equipment and training facilities. It is no longer being facilitated on-the-job by employers like in generations past.”
The result of that dynamic is that college graduates now out-earn high school graduates by $1 million over the course of their careers, according to a study from the Manhattan Institute (MI). Those income aspirations can drive a blind pursuit of college based on what the study calls the “golden ticket” fallacy, which increases enrollment and therefore, cost.
“The subsequent result of increased enrollment is schools raising their costs so that they can increase staff numbers and meet faculty needs, improve services and amenities on campus, and in general, expand financial aid programs,” Berkey said.
US Colleges Have Extravagant Facilities
No country spends more than the U.S. on student-welfare services — what OECD refers to as “ancillary services” — such as healthcare, meals, housing and transportation. In fact, the U.S. spends more than three times what the average developed country spends on ancillary services.
“Features like picturesque academic greens, expansive academic facilities, and posh study spaces all cost money to build and maintain, and those costs are also passed along to the student,” Ollenberg said.
Labor Costs at Colleges Are High
Fancy dining halls and game rooms are actually just a drop in the bucket. The OECD report shows that high-priced employees — university staffs are almost all college-educated themselves — gobble up much of the average college’s budget.
“Attracting those specialized faculty members means paying them competitive to what they could make in the private sector,” Ollenberg said. “All that adds up to additional costs to the student.”
Other contributing factors include:
- Cuts to education: Many cash-strapped states have cut funding to public college systems, particularly in the wake of the 2008 recession. Many pivoted by focusing on wealthy out-of-state and foreign students who pay full tuition. The Atlantic cited Purdue University, which lost 4,300 in-state students in the 2010s but gained 5,300 outside students who pay triple the tuition.
- On-campus culture: American students are much more likely to live away from home during college, which is far more expensive than living at home.
- Nonteaching staff: Colleges employ legions of coaches and athletic staff, lawyers, admissions officers, maintenance staff, food-service workers, diversity liaisons and marketers.
In addition, the constant rehashing of how these student were some how hoodwinked into borrowing money without understanding what repayment entails is frankly a rather scary indictment of the intellectual ability of millions of people in this country. They didn’t understand about federal student loan repayment but they definitely understand how mortgage, credit card, and car loan payments work? They can’t afford the former but they can absolutely handle the latter?
I also keep reading about how forgiving $10k will enable borrowers to buy homes: I’m confused how these borrowers expect to be able to afford monthly payments on a $200,000 or $300,000 mortgage if they couldn’t afford to repay $30,000 in federal student loan debt?
I’m on board with restructuring student loan debt, especially with regard to reducing interest rates. People and businesses refinance debt all the time for better rates and payment schedules.
However, I really haven’t read a solid reason why loan forgiveness is fiscally responsible to the taxpayers or otherwise necessary. For example, if the economy is so hot that it’s causing inflation and the fed has to raise interest rates to cool it down….then why is loan forgiveness needed to boost the economy?
Bottom line is it’s a boondoggle like most of what’s coming out of congress these days. The people who reap this benefit will end up paying for it many times over in the coming decades. The bill always comes due, one way or another.
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What can the president do to address the real problem?