Ben Bernanke on forgiving student debt:

[Tomconroy]

From this morning's NY Times Dealbook:


Bonus political controversy: Bernanke weighed in on the debate over forgiving student debt: “It would be very unfair to eliminate. Many of the people who have large amounts of student debt are professionals who are going to go on and make lots of money in their lifetime. So why would we be favoring them over somebody who didn’t go to college, for example?”

[Ninga]

1. 🤦‍♀️

🤦?♀️

[Celerity]

2. Mr Wall Street Bailout says wot

[Hotler]

10. I think the story goes he got down on his knee and begged Nancy for the bailout.

Two movies to watch. Margin Call and To Big To Fail.

[Poiuyt]

17. That was Hank Paulson

[Hotler]

57. Thank you.

[WhiskeyGrinder]

3. Imagine thinking this system we put up with is "fair" in any way, or that it even makes it possible

to be "fair."

[BumRushDaShow]

4. Funny I saw this OP because early this morning

that "talking point' hit the news on my local news radio station. It may have been part of a "business" report left over from the weekend (or perhaps since I caught it about 1/2 through, the story might have been referencing Bernake's remarks but never said that in the part I heard). I think the report also mentioned something about how there were "programs available" to re-do the payments so that it would make it more affordable, or something along that line.

But the gist was that "in the long run", forgiving the debt "would be bad for the economy because it would increase the national debt".

And first thing out of my mouth after I heard this report was - "And here we go... ".

One side = "DO IT!! DO IT!!! DO IT!!" and the other side = "NO FIX THE DEBT! NO FIX THE DEBT! NO FIX THE DEBT!"

And thus this drives the issue into a stasis while Democrats get the blame.

( "both sides" )

[Tomconroy]

5. It isn't obvious to me why we would bail out doctors,

lawyers and accountants.
I would consider the circumstances of others though.
PS Ben Bernanke was a brilliant leader of the Fed.

[HariSeldon]

6. Debt peonage

Yes, these professionals can earn a lot. However, having huge debts for their education can also make them nervous about doing the right thing when it conflicts with their superiors -- they can't afford to have their careers ruined. The result is bad medicine, law, and accounting driven by fear of personal ruin.

[Tomconroy]

7. I thought about what you're saying but I just don't see it

Why wouldn't having a big mortgage on a house or a large credit card bill have the same effect?

[HariSeldon]

22. There's (usually) a way out of a mortgage

A mortgage can be satisfied by selling the property, unless the property is "underwater" after a housing crash. Credit card debt often takes a long time to accumulate and can be discharged with a bankruptcy if circumstances warrant. Not so with student loans: they accumulate quite quickly and cannot be discharged with bankruptcy.

[Tomconroy]

24. I wouldn't have a problem with modifying bankruptcy laws

[MichMan]

30. In mortgages you are forced to relinquish the property

Similarily, should people who declare bankruptcy on student loans be forced to relinquish degrees and college credits as if they never attended?

That would allow those who dropped out or were working in lower paying jobs totally unrelated to get relief, while still letting those who were able to earn incomes in accordance to pay back their loans.

Someone who dropped out and was working in a factory would get relief in bankruptcy, but the Lawyer or MBA graduate earning six figures wouldn't want to relinquish their degrees to do so.

[delisen]

31. You can't sell your degree to another person or company and thus pay off your student loan.

With a mortgage, unless there has been systemic corruption in the housing market ala 2008, you have an asset that you can transfer by selling to another person or renting it, and thus pay off the mortgage loan.

With a student loan you have no ability to sell or rent that degree or asset to another person. It is not really an asset, it’ a potential, a gamble.
The only thing you actually own is the debt. That debt reduces your options. It reduces your freedom.

Other countries, in contrast, have invested in their students, the US turned students into profit centers for banks and universities. The banks got rich on low risk loans and the university administrations grew fat and self indulgent .

[MichMan]

42. When your house gets foreclosed, you don't get to live there anymore

You still have a college education after bankruptcy exactly as you did before.

[delisen]

53. By federal law, ( 2005) few people are able to bankrupt out of student loan debts

It requires a special proceeding after chapter 7 or 13 bankruptcy is achieved and the requirements for achieving this special student loan bankruptcy are difficult to meet. Few are granted.

This law was passed at the behest of lenders who claimed high paid professionals, such as physicians, were strategically using bankruptcy to discharge student loan debt they could well afford to pay.

Some degrees obtained in recent years may actually be of little value or even worthless.

[Doremus]

41. So that more young minds can enter the professions?

This argument, that we taxpayers shouldn't have to pay for rich doctors and lawyers, sounds far too similar to rightwing hate speech for me to ever endorse it.

[70sEraVet]

8. So what about teachers? I don't see riches in THEIR futures!

If its unfair to forgive the debt of the professionals who are in a position to make a bundle of money, then forgive the debt of those who don't have a prayer of making a DECENT living.

[Tomconroy]

11. Certainly more deserving than doctors.

I'd have to consider each individual circumstance carefully. Teachers in CT can get paid pretty well. Other places, probably not as well.

PS I had an occasion 20 years ago to see teacher pay rates in Guilford, CT. Some were well into six figures. And that was 20 years ago.

[PJMcK]

9. I'm ambivalent on this issue

On the one hand, I understand that having $50K-$100K of debt when you get out of college is a crushing obligation that can be very difficult to get out from under. This is especially true when starting salaries for so many jobs are so low. How can a young person fund housing, pay for groceries, insurance and gas and still service such outrageous debt?

Which brings me to my other hand. How in the world could anyone amass so much debt at such a young age?! Yes, the cost of higher education is ridiculously high. Frankly, however, the money spent on an undergraduate degree is often wasted when factored into one's earning capabilities over the course of a 40-50 year career. To earn a Master's or Doctorate degree-- which will have more impact on one's earning potential-- generally adds to the mountain of debt.

How do students and their parents think they'll pay off the loans that they willingly signed up for? Did they really believe that these degrees will translate into immediate high salaries? That seems quite naive to me.

Higher education, like health insurance, is far too expensive in this country. When I went to college, the tuition was much lower and my parents and I had been planning for the expense all through my high school years. I was terrified to take a loan for graduate school and negotiated with my school to get the Master's degree in one year, (I took all of the academic requirements as a senior), so that I would limit my costs. I borrowed $4,000 which I was able to pay off two years after graduation. I cannot imagine how these young people will ever be able to advance in life with such debt.

I don't know the solution and as I wrote, I'm ambivalent because those people who paid off their loans won't get the same benefits as those who didn't pay their obligations yet our society is deeply challenged by this issue.

[CrispyQ]

14. When I went to college at a state school in 1975,

my first semester cost me $1500 for tuition, books, room & board in a dormitory, & some mad money. An inflation calculator says that that $1500 would be about $8,000 today, a lot of money, but I believe still far less than what a semester at the same school would cost today.

We've turned our citizens into profit centers for the corporations. Saddling our young people with outrageous debt just as they're starting out is especially egregious. Everything for profit is killing everything fine & good on this planet.

[Caliman73]

40. My so went to a University of California

His fees were 48,000 dollars per year. I/He were fortunate enough that he qualified for almost full scholarship otherwise that debt would have crushed us.

I went to a UC in the 1990's. My fees were high, but substantially lower than 48,000 dollars a year.

This increase in tuition and other costs is exactly fueled by the proposition that education is a commodity that can be borrowed against and "repaid" at a later date.

Education is a benefit to society, and I am not talking just about a university degree. Trade schools and community colleges help people get into trades and paraprofessional careers. All should be subsidized to a large degree with the idea that you take your skills to help vulnerable people in society for a number of years to "work off " that subsidy.

They do this in European countries to pretty good effect.

[CrispyQ]

43. The show "Northern Exposure" was based on the premise of paying back.

Northern Exposure ran from 1990 to 1995 and featured the classic fish-out-of-water story of Dr. Joel Fleischman, who has been forced to relocate to the small town of Cicely, Alaska and to operate his practice for a basic income in return for the state footing the bill with his medical school tuition.

That sure was a quirky show.

[Caliman73]

44. I liked that show.

The reality is that Spain, Portugal, and other European countries heavily subsidize university costs (or at least did in the mid 2000's) in exchange for a length of time working for basic income with poor and vulnerable populations.

[MichMan]

16. Anyone in several minutes could research what average salaries are for any degree

and figure out very quickly that borrowing $75k for careers paying an annual salary of $45k might not make sense.

One would think that anyone bright enough to go to college could easily take the time to do that. Instead we encourage them to follow their dreams, attend their dream college, and figure out how to pay for it later. It might as well be monopoly money.

Colleges know students will pay whatever they charge, so tuition keeps rising like crazy, and students keep borrowing.

[Fiendish Thingy]

12. "Many"? Try 26% How about the rest Ben?

Nobody should listen to Bernanke for anything other than neoliberal talking points.

[PBC_Democrat]

13. Or Maybe Consider This:

Forgiving student loan debt doesn't eliminate it - it just transfers it from those who ask for it to those who didn't.

[Sympthsical]

15. I ran into a friend at the store the other day

I hadn't seen in her in about five years and didn't realize she had recently moved close to me. We were chatting. She's an LVN. I was telling her how I returned to school to become at least an RN. Coincidentally, she told me her daughter was about to graduate high school (oh god, we're getting old), and had been accepted into University of San Francisco to be a nurse.

Now, USF is considered one of the best schools to go to for the medical field. Being able to go there is considered insanely good.

Then we got to discussing costs. $60-70k a year.

To be a nurse.

An 18 year old is being told she should be honored and grateful to have landed acceptance. She'd be insane not to take the opportunity. The pressure is on. Everyone thinks she should go. I raised an eyebrow. From parents to school counselors to professional advisors are all telling this teenager, "Yes, $200k+ in debt is a perfectly rational decision for you."

And we think this is a sane and fair system. That something isn't grossly out of whack.

I gamed this before I went back. For me, this is all running me about $40-50k. Fortunately, I have two things working for me. I'm in my early 40s and have savings, and I have a job where I work mostly from home and allows me to do both school and work while having a good income. Because I'm in my early 40s, I'm set up for this. Even then, it's a lot of money for me.

To be a nurse. You know. Those "heroes" who are incredibly short supply. "Thank you for your service! Now fuck you."

It is amazing watching ostensible liberals manage the attitudes they do in all this.

My partner is a PharmD who just turned 50 over the weekend. He's still carrying $80k in debt, and he graduated ages ago. I have friends in their 40s still paying off debt. They've made payments for years, and their principle just sits there like a bump on a log.

People keep talking like they know. They don't. They do have a lot of classist assumptions though. And all of this advice and judgement and fairness policing seems to be coming mostly from a cohort of people who had affordable education.

I'll just say this. Someone wish us luck in November, because the discontent being generated about this is real. And the sneering down the nose of people around this issue has created a lot of resentment. If our party's message for the past two years turns out to be, "We will tackle this problem! Nah, we have no intention actually, and how dare you be mad about it."

Well. That is certainly one way to approach politics. And of course, if it goes as expected, it will be everyone else's fault. Particularly those who keep warning what will happen. The messengers always get it the worst.

[Tomconroy]

18. I would think the young woman could take two years at a

community college and finish up at a state directional school and become a nurse for far less. But maybe I'm wrong.
Isn't USF a prestigeous private school?

[Cuthbert Allgood]

20. I don't think you can be an RN in most states without a 4 year degree anymore.

[Tomconroy]

23. That's what I meant. Two years at a community college and

transfer to get your bachelor. I think most community colleges have such programs.

[Justice]

27. but it might wind up to be 5 years if all of the credits don't transfer.

My child transferred from a little Ivy to a major university - the university wouldn't take her US history class from the little Ivy. The classes used the same book! The University professor's rationale was that she had some "additional materials" she gave to the class - so the credit couldn't transfer.

I get the student loan debt problem -

No one is attacking the underlying problem, which is how did the cost of college get to be so high?

I get Harvard, Stanford, Yale - but it costs about the same to go to USF or another generally fine college that is not Ivy League. In some cases, the Ivy's cost less! There should be a price differential between colleges/universities - they are basically the same price, no matter the ranking or resources.

[Tomconroy]

29. Education has definitely become a racket.

It's actually cheaper for most to go to the Big Three or Little Three Ivies. For people of modest means it will be a free ride. For my middle class nephew at Williams College the whole cost was about 10 grand a year. (And he got some help from a certain aunt and uncle).

[Caliman73]

45. The title of your post is the most accurate assessment of the issue.

Education is a racket. It is a commodity pushed as some "get rich" scheme, meanwhile people go into crushing debt, if they want to advance in a career or have the chance at making a decent living.

Education is not a commodity. It is a societal benefit. It should not be reserved only for the wealthy, and it should not leave people with suffocating debt.

[Demsrule86]

34. Not true...you can take a two year accelerated course and take you boards...we have them here.

There are even a few three-year schools still around.

[Sympthsical]

25. It was the first thing I told my friend

RN takes four years. Less for me, as I have a degree and other classes and certifications over the years. So I should be done earlier.

But that's the thing. USF is a prestigious school. If you go there and succeed, your career is made. It's considered a massive opportunity if you can go there. And an 18 year old has no idea what $200k+ debt looks like. That's a problem for another day. And all the adults are telling this teenager, "Do it!" The whole system is pressuring her to do it. And these financial systems will happily indenture her.

But let's look at someone doing public school. The UC system that I'm managing - the public system - is now about $15k a year. For public college. That's tuition alone. Not including materials, fees, and housing.

Boomers got that system for free.

Now they've got nothing but lectures for current generations about the responsibility of it all when your average UC student is looking at $75k+ for four years.

It's absurd, and I don't think people understand how out of touch and insulting all these lectures about fairness are, particularly from people who not only didn't have to deal with this system, but who are fairly responsible for instituting it.

[MichMan]

26. Boomers all went to college for free ?

Didn't know that.

Why did I have to take out loans for my Engineering degree then?

Went at night for 2 classes at a time while working low paying jobs.

[Sympthsical]

33. The UC system was free

Until 1970, when it started instituting a $150 fee. Fees remained relatively low until they exploded starting in the 1980s.

Here's a chart for the California public systems over 25 years. Note the chart ends at 2015, so it only gets worse from there.

https://www.kqed.org/news/70585/csu-and-uc-tuition-hikes-over-time

300% increase from 1992-2015.

Did incomes increase 300% and I just missed it?

[MichMan]

38. I never lived in California, so it wasn't free for me

Why isn't it still free in California ?

We need to figure out why costs went up so high before just writing the same colleges a blank check courtesy of taxpayers

[Caliman73]

48. Two words, Ronald Reagan

Reagan started shifting the burden from the wealthy to the average person for education in California before he did it to the whole country.

As I said earlier, I went to UC in the 1990's came out with about 11,000 in debt, which I was able to take care of. My son went to UC in the 2010's at a cost of 48,000 dollars a year.

A big part of the reason that Tuitions have gone up is that there is a sea of money out there in the form of loans. The Universities will get paid regardless so there is a built in "inflation" based on this free money to attract more students.

[MichMan]

49. Reagan hasn't been governor for 47 years

Why haven't any subsequent governors brought back free college since then? Plenty of time since then to undo anything he did.

I agree that easy money loans have caused tuition to skyrocket. How much do you think they will continue to go up, if students aren't paying themselves?

[Caliman73]

51. The tax rates were set up around the same time, how many Presidents have rolled them back?

When you shift the burden of payment away from the wealthy (as they like), it is incredibly difficult to shift that burden back to those who benefit most from what society produces.

The thinking was that an "educated" populace would produce more. We did. The wealthiest among us also advocated that they (who get most from that educated populace) shouldn't have to pay for any of it. They had the money to influence the thinking around that at both the State and Federal levels. Even Bill Clinton, that leftist, advocated for loans instead of subsidy. Remember "the era of Big Government is over"?

I think tuitions will likely continue to go up, until a stop is put to it by some external force. I would advocate for a cap and a work requirement with low income or vulnerable populations for a number of years in exchange for debt free or very low cost education.

[MichMan]

52. My response was regarding California's state program you mentioned

I have heard this from several California residents here before.

"California had a fantastic free tuition program until Reagan got rid of it when he was governor"

OK. but that was 47 years ago. Why haven't any of the many governors since then, brought it back ?

[Caliman73]

55. Same response.

Same reason that stupid ass Proposition 13 has not been repealed or amended. Wealthy people have made the situation a third rail in the state. California is fairly solidly Democratic, however there is a big red streak throughout the state. Shifting the burden for education back to the wealthy would likely be political suicide for many people and would tip the balance of power back to what it was prior to the 2nd Jerry Brown administration. The reason why California has some better policies is that we have a 2/3rds majority in both houses of our legislature. If we lose that then everything we can do to push the state forward is basically stalled as you need 2/3rds super majority to do any revenue legislation (again, thanks Proposition 13).

Unfortunately we are not the FDR Democratic Party any more, we are the Democratic Party of Kristen Sinema and Joe Manchin where holdouts can wield a great amount of influence, even in Blue California.

Same reason we are having this discussion on Democratic Underground. Some people have bought into the Conservative framing around "It's not fair that you have your debt forgiven or reduced because...." They think (with good reason I suppose, that the burden of debt would be shifted to the middle and working class). The proposal is to make a small tax on high speed stock transactions (the kind that billionaires and corporations use) to offset the cost, or to do a 2% wealth tax on the highest asset holders in the country. Naturally the middle class and working class are afraid that the wealthy will balk and the burden will be shifted down.

Like it or not, the wealthy have an influence in the Democratic Party too. They shouldn't, but they do.

[Demsrule86]

35. It took us 17 years to pay off my husband's loans.

[delisen]

36. Lots of truth here

Children were once encouraged to save; when banks reached out to extend their markets into low risk student loans, borrowing was encouraged .

There is a a huge social price to be paid when a society is seduced by commercial interests into becoming debtors instead of savers. When large numbers of people are immersed in debt they have little energy to build and participate in building and enjoying a shared society. They also have less ability to buy houses. We then have more renters and fewer homeowners.

We end up working for our economy instead of our economy working for us.

The unionization we need is way beyond unionizing individual workplaces; we need a citizens union.

[TexasBushwhacker]

58. USF is run by Jesuits

Perhaps the Catholic Church could provide more support. Lord knows they have the $$$.

[Cuthbert Allgood]

19. Why do we give welfare to those people that don't have enough money?

Isn't it unfair to those that do?

Jesus, these people.

[MichMan]

28. We don't give welfare to people earning well above median incomes

Yet, many believe all their student loans should be forgiven.

[Hoyt]

21. Don't have a real problem forgiving most undergraduate debt. Graduate school, is another matter.

If one is making an extra $25K to $50K, or more, because of a graduate degree, they ought to have to pay a portion of that for their loans.

Student loans should be dischargable in bankruptcy, and everyone should be put on a repayment plan that is based upon that "excess" income. More importantly, we need to find a way to offer affordable education.

[In It to Win It]

32. I'm not convinced that 100% of student debt should be forgiven either

[SoonerPride]

37. It will further alienate blue collar voters from Democrats.

Maybe it will motivate those whose debt is forgiven to vote blue.

But maybe not.

[liberal_mama]

39. I don't know how some families will be able to manage student loan payments with the current high

inflation and rising prices on everything. Most middle class people I know are stretched thin and hurting financially right now.

[gratuitous]

46. Don't help anyone, lest someone be left out

Sure, we could help out some people who have been saddled for life with a never-ending debt, a debt that's been bought and sold a dozen times over the years such that the current creditor has practically no connection to the original loan, having purchase the debt for pennies on the dollar.

But if we did that, think of all the people who don't need this kind of assistance. If one person gets help and another doesn't, it's The Worst, Most Unfair Thing To Ever Happen in History. So we'd better not do anything about it. Besides, if people can build a financial cushion and not worry that a bad cold is all that's standing between them and homelessness, they'll start feeling secure and be less easy to frighten. And that would be bad, very bad.

[lindalou65]

47. Bernake and student loan debt

I think that there are many, many of us who are not professionals and who cannot easily repay their student loan debt. I am almost 75 and still owe about $20K. Has been nice to have a break in paying it back. I am in the camp of those who believe that each case is different and there are likely a large number of us who won't even get it paid back before we die. The good news is that the debt goes away when we die and none of our family members will be stuck with it.

[GoodRaisin]

50. People making "lots of money"

shouldn’t get shit. But lots of people aren’t making lots of money.

Look, we need to do what Biden promised when he said “up to $10,000 in student loan forgiveness”. We need to keep our promises. But pick an income cap that is common sense, and then provide tax credits that people can use to pay off up to $10k in their own loans. And, then make state and community colleges affordable for everybody in specific income ranges so we don’t keep perpetuating the education affordability problem.

[treestar]

54. Maybe, but the bigger problem would be

if the loans don't stop, what's the point of forgiving them for the current debtors. Unless we are also going to make college affordable without loans. Or may as well just make them dischargeable in bankruptcy again, in which case only those who truly could not pay would be the ones to have them "forgiven" (discharged). That could be an easier issue to campaign on, that is, having them dischargeable in bankruptcy again. Was there ever good reason to make them not dischargeable?

[asa4ever]

56. Is it right to pay off student debt for people out of college,

and not for those starting college in the Fall?