Is Student Loan Debt Forgiveness a Good Idea?
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Is Student Loan Debt Forgiveness a Good Idea?

FEMALE 1: Going to college has become part
of, like, a necessity for everyone, that the government should be able to pay their part
in order for everyone to be able to go. FEMALE 2: The idea of taxpayers, sort of,
forgiving the debt is a good one in principle, but in practice I’m not really sure how
they’d carry that out. PROFESSOR DANIEL LIN: Student loan debt has
reached an all-time high, placing a great strain on many young graduates. This has led
some to propose debt forgiveness as a way to help the needy. Would debt forgiveness
achieve this goal? I’d say no, for two reasons. First of all
it would only be a temporary solution to help currently indebted students. It wouldn’t
change what got those students into debt in the first place. It wouldn’t prevent future
students from taking on even more debt. And it wouldn’t reduce the pressures causing
tuitions to rise. Second, forgiving the debt doesn’t magically make it go away: the government,
meaning taxpayers, would be forced to pay it. With our enormous national debt, that’s
pretty hard to justify, especially since college graduates, on the whole, are one of the more
privileged groups in the country. After all, college graduates have higher wages
and a lower unemployment rate than the national average. Plus, they have already benefited
from government subsidies in the form of grants, tax credits, subsidized tuition, and subsidized
loans. Forgiving the debt of college graduates would be giving money to a group that’s
already relatively well off. Of course, many college graduates are still
struggling to find jobs and pay back their loans. But instead of debt forgiveness there’s
another reform that would give relief to those carrying large amounts of student debt. Under
current law, all student loans, public and private, are nondischargeable. This means
that unlike all other types of loans, borrowers cannot get rid of their student debt through
bankruptcy. The government will get it back by taking your tax refund, denying federal
benefits, and garnishing your paycheck. This makes lenders less careful about who
receives student loans. There are no credit checks, no underwriting, and no collateral,
as there would be for virtually any other loan-approval process. Students are offered
loans even if they use the funds for a degree with little market value. Why be choosey if
a loan is guaranteed? One way to fix this is by allowing student
loans to be discharged in bankruptcy. Lenders could no longer use the government as a collection
agency. Bad loans would become a problem for the lenders, who would then have better incentives
to be careful with their loans. This would lead to fewer loans or loans with higher interest
rates. This may sound bad for borrowers, but it’d be important for giving borrowers the
right incentives as well. Instead of taking on debt before thinking through the repercussions,
they’d have to have a plan for paying them back. Finally, with fewer loans being given out,
colleges would have less fuel for tuition increases and feel greater pressure to control
their costs. Student debt forgiveness may be a tempting idea, but it would just shift
the burden onto taxpayers while doing nothing to address the fundamental causes of tuition
increases and mounting student debt. Making student debt dischargeable in bankruptcy is
a good first step toward reform that would better address the concerns of students both
now and in the future.

About James Carlton

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99 thoughts on “Is Student Loan Debt Forgiveness a Good Idea?

  1. In a way yes, since the government guarantees the loans. It's not called a bailout but that is basically what it is because they wouldn't get NEARLY the amount of business if they didn't have those guaranteed loans.

  2. This is one of the few LearnLiberty videos that I agree with. It's refreshing to see right-wingers say something that makes sense instead of surreal things like: "Why don't you just ask your parents to pay for you?"

  3. Two things:

    1. We aren't educated enough when it comes to what matters. Like it or not, a degree in pop culture doesn't really help the nation. We need more people to bite the bullet and go into math, science and technology.

    2. They say that our culture puts too much emphasis on having a degree because degrees are now required in many job sectors where they shouldn't be. Major corporations such as Verizon now want their customer service slaves to have degrees. There's no reason for this!

  4. It is obvious that you did not take mathematics in college. It is much easier to pay a loan of $40K on a salary of 18K when the dollar was worth and bought 7 times what it buys today, than to pay a debt of 150K on a salary of $65K today. The actual disposable income is much less. You are obviously a working class person with pretensions of being a temporarily embarrassed millionaire.

  5. I understand that the rising demand resulting from subsidies pushes up prices. But don't those subsidies also constitute a rise in supply, in the sense that the government is supplying part of the student's education? If demand and supply are both increasing, why are prices also rising?

  6. Demand is rising faster than supply because of easy access to student loans. Supply is fixed and does not change automatically with demand change.

  7. With free education that will increase taxes. It may not give students the incentive to progress in school if they are not paying for it. Visit any junior/community college and look at the passing rate among first time college students that received federal aid.

  8. So making student loans soluble in bankruptcy would provide lenders with incentives to be more careful… but would the average 18-year-old borrower see that as a reason to think through a plan to pay it back, or view bankruptcy as an easy-out later?

  9. But if a service is being provided in greater quantities than before surely that constitutes a rise in supply? Why not just set a maximum tuition fee limit? Universities don't HAVE to charge more just because demand is greater; they do so only because they can, because they know people will pay when spaces are limited. Set a fee cap, problem solved.

  10. Absolutely. We had a far lower cap in Britain a few years ago than we do now, and it worked just fine. Now fees are three times more expensive and people from poorer backgrounds can't afford it, or they have to work while studying which hurts their results. A decade down the road we're going to feel the effects when less of our young people can succeed in the marketplace corporations have seized enormous profits and power from the influx of cheap, young, unqualified labour.

  11. Because universities decided to raise quality instead of supply, meaning there is only a rise in demand.

  12. No supply in this model is the enrollment limits. They would have to expand limits at the same exponential rate of availability of loans. With no, or little, expansion in enrollment limits, supply remains low.

  13. Bottom line here folks, gov't involvement in the market typically ensures a higher cost and a lesser quality of product. Bear in mind, gov't also provides subsidies directly to the higher public education system via your tax dollars. That which is intended to help the lesser among us usually has the opposite effect.

  14. This is because supply/demand is only a base function of economics and not the only driver for good economics.One factor is the loans themselves. A business lowers prices to bring in more consumers, but loans enable consumers to go to higher costing schools. Instead of lowering costs, schools find investing in perks on the campus more reliable for bringing in students and thus compete for higher quality without regard to cost since many people don't factor cost in as much.

  15. The day these loans are forgiven are the day I leave this country. I am not paying for your lack of thinking. You couldn't afford it, you shouldn't have gone. Not my fault at 18 all you wanted to do and think about was party and not read the fine print on that loan paper you signed. TOUGH SHIT. YOU BORROWED, YOU PAY MOTHERFUCKERS. Funniest part of these kids, they all most likely put down people not in college. WHOS LAUGHING NOW BITCH!? HAHAHAHA ENJOY PAYING THAT INTEREST UNTIL YOU DIE!

  16. So he said college students are to well off to have there loans forgiven, but yet they give tax cuts and money to multimillion dollar companies that are "to big to fail".

  17. If you want to get rid of the loan, borrow more to pay your loan. THATS WHAT AMERICA DOES IT, WHY CANT U DO IT. The only thing you cant do it like America is to print money, but hey borrowing is still a good idea. Be a keynesian.

  18. Loved this comment… people need to think about this more often… If you have computer issues are you going to call someone with a comp sci major, an english degree, or no degree? I have my ideas about economics but they all come from ideas explained by proffesionals like Milton Friedman.

  19. If you signed on the dotted line to pay back that loan, it dosn't mater what it's for, collage, car, credit card or underwater house payment, you promised to pay back the loan. Maybe we should bring back a form of debter's prison, only call them factories. Pay them minimum wage, put them in factory housing. It work's for Apple in China !!! No suicide net's

  20. On the other side don't the banker's and the government have responsibility for their action's ??? If you have a pulse you could get a house mortgage. Shouldn't the banker's be held responsible for their bad practices ? Government was never meant to turn a profit, or run a business ( Health care, Social Security, Medicade, Medicare) isn't that unconstitutional ? Isn't borrowing money to pay the countries bills, and raising the debt limit to do it a Treasonist act !!! If not why?????

  21. Fixing the problem for the future may be needed, but it doesn't remove the need to clean-up the mess already made. For many, loan forgiveness of some kind is the only hope for survival, rather done formally or allowing and orgy of bankruptcies.

  22. My argument was not for student loan forgiveness, it was AGAINST the bank bailouts. Maybe the banks should have to pay back that aid we gave them like students have to pay back their debts?

  23. what a load of bullshit. the goverment is me, you, and everyone else. the taxpayer! if someone didn't go to college they don't owe you! i went and busted my ass to pay off my loans… why should i pay off yours too! don't buy a new car, tv, or clothes.don't go on vacation. don't blow a couple hundo at a bar each weekend. live fiscally responsible and pay it off.

  24. Wake up America!!! Student loans are NOT DIFFICULT TO PAY OFF!!! Every American students that owe money for student loans needs to know what benefits are offered to payoff those student loans. The fact is student loans can be paid off in as little as 90 days using an IPN (Government Money). See my channel to learn more. If your serious about paying off your student loan we are serious about the IPN.

  25. I'm paying my loans back at 6.8%. How much higher do you want them to go when my car is 1.69% and my house is 3.25%. It's fucked up that my so called value Education cost more than my house or car.

  26. "Is Student Loan Debt Forgiveness a Good Idea?" – No, you signed the paper. You owe the debt, you pay the debt. Being an adult means you own and face your responsibilities… not try to worm out of them because you 'feel' bad about them.

  27. The problem I think is that we live in the kind of economy that only rewards only a few kinds of activities.
    I am sure that some people has made the argument that STEM students get jobs and liberal arts don't, huh?

    We need a society where money is disconnected from things like human needs, creative resource, scientific resource, and education. It is possible and real. Capable with today's mainstream technology within 10 years.

  28. I've heard they are thinking of introducing a regulation that would stop you from leaving the country if you have delinquent student loan debts.

  29. This is this biggest crock of shit I have ever heard. Doing what this man has proposed would decrease the amount of poor children going to college therefore leaving them stuck in poverty. This channel is a joke. Forgive all current student debt. Make all public universities and community colleges free paid for by the money we already currently use for higher education. That's how you fix it. Stupid idiots.

  30. Debt forgiveness? I had to stop college to deploy and when I came home and tried to pick my college back up they said I owed 1200 dollars…. @ Carl Albert State College. I bring them all of my paperwork and they said that I was ok and would get it taken care of and here 4 months later I'm getting calls from debt collectors. Let their name be known!

  31. While I understand the premise of Prof Lin argument; I believe he is possibly not seeing the reason that student loan debt became nondischargable.

    In the past, graduates were just waiting out their student loans. Stories abounded about doctors and lawyers being the biggest abusers of this practice. Lenders took on more stringent risk management practices and less people received loans.

    Politicians then took this as a campaign tool and exhorted how this was unfair and a potential detriment to the progress of our children and country.

    "Instead of taking on debt before thinking through the repercussions; they would have to have a plan for paying it back."

    Unfortunately the incentive of nondischargability has not persuaded borrowers to consider the incentive that Prof Lin has suggested. Borrowers are taking on debt thinking that a college degree will land them a high paying job, right out of school. When the reality hits or a down economy compounds reality; borrowers are now taking on more debt, with the assumption that more schooling will somehow remedy their current situation.

    I actually would like to remove the nondischarge issue and allow lenders to set risk management requirements. Unfortunately, if we did this; we would just see a recycling of putting risk on lender and then back to borrower. We had this same problem with the housing crisis. Politicians screamed how it was unfair or discriminating or against the American dream. They required that lenders remove their more stringent lending requirements

    When the problems arose, we (yes I said we, the public) complained that it was the lenders fault for not being more careful with who they lended to. When lenders where allowed to be more restrictive, we (yes I again said we, the public) cried how it was so hard and unfair that we couldn't get these loans.

    I'm sure I will receive thumbs down because it sounds like I am just in support of the big bad banks. But I have always understood that it is upwards of two peoples fault when a loan doesn't get remedied; the borrower and the lender.

    If a lender has provided enough due diligence to consider the risk potential of lending  to a candidate; they will set up a credit limit for the borrower.

    It is upon the borrower to improve their ability to receive credit.

    Government should not artificially set the floors and ceilings of this practice.

    I don't have a great solution to this, but perhaps like other loans, the borrower should have to put some skin the game. A percentage of the tuition, a collateral to recover from, something. Make these loans more restrictive and watch as college tuition drops and your degrees become more valuable.

  32. We should just get rid of the loans entirely and let the schools decide how to control the cost. Most big time Universities normally raise the cost of tuition just to build a new stadium or gym and is expecting the everyone to pay for it through debt. If this fails the only good thing is an associates degree becoming more valuable (most community colleges are affordable).

  33. It is in the best interests of society to have a population as highly educated as possible.  All education should be "work-study".  Students should have jobs in their fields of study and would receive compensation in the form of housing, food, education and a stipend.  No banks, or loans would be needed.  Life would not have to be "put on hold" until the student earns some magic degree.  Americans are so obsessed with squeezing money out of everything, that they make themselves poorer in real wealth which is not a matter of money.

  34. As a college student smart enough to live with my parents and go to an affordable school to get my MS, I  wish the government would stop trying to interfere with the market. It can only make things worse

  35. Doesn't this violate Amazon's "image on white background" patent??
    Bet a collage grad came up w/ that one.

  36. Hey Obama how about all of us work in class that went to the school of hard knocks? Where's our perk???

  37. Excuse me Mr. Economics major (unemployment 6.3%), how come you get to become an academic and still have the nerve to call your own field worthless? Your ego isn't supposed to insult itself.

  38. Based on what he is suggesting, borrowers need to have better strategies for paying off their debt before they embark upon a degree? Technically it seems that this would favour majors with "higher market value" which I think will put a limit on academic advancements/research that is not technology/scientifically oriented. Some majors are not "practical" in and of themselves (especially some humanities) but still their value when connected to a diverse intellectual discourse can be in-discretely significant. As social sciences incorporate technologies and methodologies that provide substantial and quantifiable benefit to the economy, it should not be the burden of the student to choose between academic fields that have immediate value (by today's standards) versus academic fields that are still attempting to match our sociocultural, political, ethical, linguistic, traditions to the rapid, almost bacteria-esqe pace of our technology's growth.  (i apologise for the run on sentence.)

  39. Why not do both, though?
    The proposed solution only fixes the underlying problem, but leaves the damage done unhealed.

    The point of forgiving the debt is not to fix the problem, but to undo damage.
    Taking care of the problem is a separate issue from undoing damage – I can see no reason why we should not do both.

  40. Lots of people want to go to school. The demand is really high. In a way, it is understandable why education is so expensive, because why not increase tuition if people are willing to pay for it?

    Great video!

  41. make future student loans erasable via bankruptcy. Banks will stop giving out loans and colleges will be forced to drop their tuition prices to affordable levels.

    Problem solved.

    I'm a genius.  

  42. Why doesnt the govt give out 0% interest loans to students and then use themselves as a collection agency the way they do for the private lenders. This wouldnt solve the problem with students getting into debt but this would solve the problem of debt gradually increasing due to interest rates after you graduate.

  43. Eliminate student loans period, for a at least 5 years. It will weed out the schools that lavishly spend on garbage perks and reel in administrative pay. AFter 5 years, severely reduce the loan cap to insure that schools concentrate solely on education and not comfort,for the faculty that is , not the students. 

  44. this only proves the world runs on debt, guess what dept and money are imaginary things made to control the masses. Its time to stop being a slave to money

  45. This is a well thought out argument and I think one that could garner broad based political support.  This would be good for students ultimately in that those who truly do need a degree in a specific major won't have to compete on price with students who don't really need the degree but are there because they're supposed to be.  Allowing market forces to work to ultimately price out students who shouldn't be there would be in everyone's best interest.  Well done on this one, Learn Liberty.

  46. You took the debt, you pay it.
    The cure for the problem?
    Cash is king!
    You may have to wait to take that class until you can afford it.

  47. Follow Mike Rowe.  Catapiller and other corporations can't fill semi technical position.  The US government created a H1B visa program in response to US children not being interested in the actual white collar opportunities that industry can't fill.

  48. How about instead of paying for public college we make it free for everyone and government funded  by cutting the defense budget drastically.

  49. if you forgive student loans, then who is going to pay for the loans? The answer is the tax payers, who will have to pay for the student loans that the burrowers can't or refuse to pay. What a bunch of lazy, irresponsible morons. Don't burrow money you can't pay back, you idiot.

  50. Cool. I am 50 years old. I paid my own way. I would like to go back to get my Ph.D. Can I get it for free now in the new world order? 🙂

  51. Has anyone contributing here had their student loan forgiven? I have. After being declared mentally disabled by social security, (one of my symptoms is an inability to hold a job), my $40,000 debt was forgiven. Then the Department of Education sent me a 1099-C turning my forgiven debt into income. So I now owe the IRS $20,000. Each month the IRS takes $400 from my $1,400 social security check. It just seems wrong.

  52. They might as well forgive it. "We will take your taxes and garnish your wages", well to bad mr. government, we actually have to have a job for that to work….huhh the irony.

  53. 0:53 "forgiving the debt doesn't magically make it go away. the government (meaning tax payers) would be forced to pay it" … WRONG you should learn how banking works – it really is magic. a magic system of fraud – not kidding.

  54. Taking student loans, mortgages, car loans, credit card loans is method bankers and the government use to enslave us.

    They can't enslave you for your skin color, or any other reason, it is better to enslave 90% of the population rather than one segment of the population.

    You MUST go to work in that pathetic Cubicle or silly Office for the rest of your life so that you can pay your debts.

    Live in a shack or a motor home or any dwelling as long as YOU DON'T HAVE TO PAY THE BANK USURY!


  55. In Cuba, education is for free.

    In the USA, education costs are enslaving our citizens.

    It is sort of ironic that the above is true!

  56. I blame the US education system and of course some terrible parenthood for raising stupid teenagers and young adults for not knowing how to be financially responsible for themselves. You simply cannot just "want to do something" and expect someone to give you the money without considering a practical plan to pay it back! You Reap What You Sow.

  57. If college graduates have higher earnings and lower unemployment rate, wouldn't it make sense to forgive the student debt? Because the college graduates would be paying it back.

  58. I don't understand. You want students to be able to erase the debt with bankruptcy. It would still cost taxpayers. Who does it benefit to mess up the student's credit?

  59. Yes, let's forgive college debt until the loan can be included in a bankruptcy filing. Paid $20,000 on a $10,000 loan and still owed mored than $11,000. Yes there are penalties, but any person that has paid more than twice of the $ amount borrowed should be free of debt responsibility.

  60. Agreed with an extra couple of points: The big argument that initially made student loan debt difficult to discharge was that medical students would take out loans to pay for school and then discharge them through the bankruptcy process while making very little money as residents. This can be easily addressed by keeping the statute as it is until the debt is more than 10 years old and the debtor then submits to a Chapter 13 repayment plan for five years (i.e. all their disposible income has gone to repay the debt for 5 years). Thus we're not giving a fresh financial start to a 22 year old art history grad, but more likely an adult in their 30's or 40's who needs to start saving for retirement.

  61. I think you should only study at a university if you seriously intend to work at a university when you graduate and that is the goal of the university in educating you as their student.

  62. i am excited that Warren's idea to forgive student loan debt will extend to reimbursing everyone who spent any money ever on college with interest in the sake of fairness, and that the people and institutions who benefitted from outrageous prices for college will be the donors and not the taxpayers. I hear that she is calling it the tuition reparations act. when endowments run out of money she will either print more or tax the russians

  63. I can't believe everyone is missing one fact. When debt is forgiven, the principal amount forgiven is claimed to the IRS as income, for that calendar year. The same candidates will also raise taxes on upper earners. Funny how they don't bring that part of it up. 🤔

  64. Maybe we are paying too much of a salary to college professors that in most cases are not qualified nor deserving to receive that high of a salary . Maybe we are paying college football coaches too much money. I would guess that if we all look close enough, there are many reason to why a college 'education" is not much 'bang for the buck' these days.

  65. The university ultimately got the loan proceeds when the student used them to pay tuition, ao make the university secondarily liable for the loan. If the student couldn't pay it back, then the university would have to. After all, if the student can't repay the loan it would be in large part because the education that the university provided didn't prepare him for a career.

  66. Hard to justify? How about the bank bailouts and CEOs that walked away with bonuses? Also you said college students are privileged however how about the banks and stock exchange and Goldmansacs etc???? Explain how is that justified and different??

  67. I can think of no reason to forgive one debt instead of another. If we forgive student debt then why not the debts of everyone else who say, tried to start a business and failed? I'm sorry, it sucks, but you can't purchase money for free (which is what a loan is). You can't set that precedent.

  68. Bernie, Warren, and Biden will reduce funding to our military, CBP, ICE and other protection agency to pay for this leaving us defenseless. His next agenda will be diverting massive amounts of funds to his climate change agenda and kill growth to the economy. Taxation will be widespread among all the classes to fund his social programs and reduce personal wealth and standards of living…

  69. I do think interest rates should be limited. Either have no interest until after a certain amount of months, or make it much smaller.

  70. No. Forgiving debt while others had to pay off theirs (took me 20 yrs to pay off mine) is unfair. Reducing the cost of education is the real solution. $100K for a degree is just outrageous.

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