Bad Mouthing the Holders of Student Loans
Tough Guy, senator Mitch McConnell making political hay over President Joe Biden extending a student loan moratorium for a few more months. The mistake Joe is making or has made is not deciding what to do. It is getting late in the game of politics. If your mind is tired of all these politics, you can rest easy on sites
Here is senator Mitch McConnell.
“I think in this country, it’s important to remind people that we ought to pay our debts,” McConnell opined. “We all pay our debts. And with regard to extending the moratorium, quoting Larry Summers again, he said it’s exactly the wrong thing to do in the middle of this over-heated economy producing this rampant inflation.”
You already know my thoughts on why inflation is so high. Lets take a moment and review who Mitch McConnell and “Dana Perino” are referring to on repaying student loans. Dana did mention we are still in the midst of a Covid pandemic.
Mitch is not noticing, the largest amount of debt per person is with people 40 years and older.
It is not the youngsters . . .
Literally, the people having these loans have been penalized by a system which has no relief on a loan similar to what a new pickup truck costs in 2020 or $39,000. In many cases of bankruptcy, you have a chance to keep your vehicle and lose your debt. If late on a payment old GMAC would hit you with a late fee of $30. The car payment did not double and neither did the loan balance. Most have tried to pay back the original loan amounts.
Let me break this down a little further.
Slightly more than half of the student loan holders who are 35 years old or older, hold 62% of the total loan debt. Greater than half of that debt is the result of penalties, interest on penalties, consolidation fees, and other fees.
Lets, take this a step further and look at older versus younger borrowers. The total dollar amount is $489.3 million. Fifty-four percent of the borrows are 50 years or older and are holding 78% of the total amount. This again is well beyond the original principal and includes everything I mentioned above inflating the total.
A more complete picture can be seen below. I had updated Alan Collinge’s of Student Loan Justice Org. data. There are fewer young people than older people holding debt. The likelihood of collecting the 1+ trillion dollars are slim. The penalties being exacted on this population hurt their productivity to contribute more to the economy.
This is more of Republicans turning up the heat for an election. Mitch McConnell and Republicans could care less about student loan debt or having an educated constituency.
There is no reason besides political influence that student loan debt should be treated differently than any other debt. I am not a great fan of forgiveness. But it should not be any more onerous than any other debt. It shouldn’t be any harder to walk away from than a mortgage. The fact that it is is a scandal.
I get the logic and kind of support it, but the implications are pretty big if the system changes like that. Risk assessments of very young people is hard for a non-tangible things like education……you can repossess a pick-up truck and mitigate a problem truck loan but somebody’s (mis)education doesn’t help the lender. So long as the country accepts that lenders will have much more skin in the game and that really impacts loan availability, okay, but I bet there will be an big reaction if stricter criteria starts resulting in a lot of denials or seriously different pricing on debt. On the other hand, I can imagine that education pricing might start being adjusted to make sense of the debt offerings.
well part of the increase in cost for upper education, and in addition to that, is that so many states essentially stopped supporting it. course costs are much higher than when i was in school (classes were about $200-300 a semester. plus books (maybe another $100 or 200). it was (and probably still is the most cheapest in the country) …but even there (a few decades ago i worked for that school for a short time) tuition had gone up to (at max) 1200 per semester. and they went up from there. but the state where that school had cut funding by about %50, and probably more now
Support went down appreciably in Wisconsin. but if you look at budgeting over the past 50 years, this money was arguably shifted to healthcare expenses and K-12 state support rather than simply eliminated to lower the budgets. Tuition/fees were low at a time when I sent to UW system in the mid-70s, but also Medicaid expenses in the state were very low and state support of local schools was very minor. Both of those now consume much larger portions of state public funds.
Eric377,
The sociologists supporting state legislatures know that K-12 education is essential as well as deeply troubled in many cities. A lot of the growing costs of higher education is the demand to support corporate HR credentialism. Also the higher overall costs of universities has grown from them becoming more dedicated to the NCAA and other popular social activity than academic performance.
Even fifty years ago the kids from upper income families went to the best party schools and the nerds went to the best academic schools. This sort of bifurcation of higher education enrollment places pressure on the more effective to become like the more profitable.
Eric:
“this money was arguably shifted to healthcare expenses and K-12 state support rather than simply eliminated to lower the budgets.”
You and the Repubs and that former D.A. governor blew yourselves up Eric just to pimp those making less than 150% FPL. Wisconsin could have expanded Medicaid, Repubs could have had the Feds pay 90% of the expansion up to 138% FPL. Instead, Repubs did not want any of that Dem welfare for healthcare.
Biden expanded this up to 150% (no cost to you Eric) with discounted rates up to 250%. Did the Repub Wisconsin legislature take it up? Nope, we are Repubs, lets pimp those slackers, they need to work and make it on their own.
Support went down for the University of Wisconsin due to their being liberal bastions and the desire to pass on tax breaks to business interests and higher income people.
Hey, how is the new FoxConn plant build going in Racine County, Racine, and Sturtevant? Plowed all of those Wisconsin homes over in Mt. Pleasant for the Taiwanese LCD facility because Scottie Walker was going to bring prosperity to Wisconsin. Did Wisconsin pay out the subsidies when FoxConn hired the first 260 employees. Didn’t happen, did it in an area needing help. A failed Repub promise and a lie by trump supported by Walker and Vos.
“Of the $100 million gift Gou promised the University of Wisconsin-Madison, the school confirmed that only $700,000 ever arrived from FoxConn.”
FoxConn promise: “build” a $7 billion factory in the US and employ as many as 50,000 people”
I wonder how much trump made on this deal with FoxConn? Not the first time Terry Gou put one over on a country. Did Paul Ryan or Robin Vos help Wisconsin out?
“IN MANY WAYS, the Foxconn debacle in Wisconsin is the physical manifestation of the alternate reality that has defined the Trump administration.”
The Eighth Wonder of the World
And your idiot leaders Scott and Vos followed right along. Yet, it is Evers fault for this ever happening.
When you are out of slits, you are out of pier.
You are an embarrassment to Wisconsin, a state I would cross-country ski, camp, backpack, hike, teach my children and others the fundamentals of the preceding, and pay the high property taxes in to support schools in my community and UW.
When you are out of facts, you are out of excuses too Eric.
“I get the logic and kind of support it, but the implications are pretty big if the system changes like that.”
Now you’re talking! 🙂
my real problem with student loans, is why are there student loans needed to begin with? it seems like that that attending upper education, is an investment in not just the student, but one for the entire country. we didnt used to have so much upper education debt, and seems like we have outsourced that investment to private sector, which demanded that student loans not be subject to bankruptcy. and if you look at who is paying the most for student loans, its those who just barely can afford to be in school. and then there are huge medical debts, which medical doctors have to pay, leading to higher medical cost, and doctors not being in smaller cities and rural areas. this also didnt used to happen, we (US) invested into this, by making an agreement with med students that they would work in such areas for x years, that they their schooling cost them less.
No credit check 100% government funded endless supply of cash to institutions. The more cash the borrowers can get, the more they charge.
my real problem with student loans, is why are there student loans needed to begin with? it seems like that that attending upper education, is an investment in not just the student, but one for the entire country. we didnt used to have so much upper education debt, and seems like we have outsourced that investment to private sector, which demanded that student loans not be subject to bankruptcy.
and if you look at who is paying the most for student loans, its those who just barely can afford to be in school. and then there are huge medical debts, which medical doctors have to pay, leading to higher medical cost, and doctors not being in smaller cities and rural areas. this also didnt used to happen, we (US) invested into this, by making an agreement with med students that they would work in such areas for x years, that they their schooling cost them less.
dw,
I totally agree with both of you (i.e., the 1st and 2nd dw) on the need for higher public education. Public education is supposed to cover the majority of the educational needs for the jobs that we need to fill, no longer just enlisted soldiers and factory workers. If needs have changed since the unCivil War (and they have changed tremendously), then so should the public coverage. And screw all that means tested BS, because that just pours gas on the class warfare bonfire of the vanities.
There was a veteran on something, somewhere talking about how she refuses to let her tax money be spent paying for other people’s problems. She said she worked hard for years in the military and earned a college degree through hard work and the GI bill.
I just did the sec. 33 calculator and if I signed up for 36+ months, completed the time honorably, they would throw me $13,500 a year for tuition, $1,000 for books, and a graduated housing allowance starting at $1,467 a month for the first six months. The VA footing the bill…hmm.
MS
Tuition was a lot different too. My Masters out of Loyola-Chicago was $6000 plus books. My BA was ~$2000/year at a Lasallian college called Lewis. Datsun 510 was great for going to Lewis 40 miles away while I worked part time. I had the Illinois State Grant of $1000 annually and my VA Benefits of ~$300 per month during my BA. VA also paid monthly for my Masters which was three years of night classes downtown Chicago. Loyola for the same degree is $85,000 now.
The prices have changes as have the support.
As far as the military, I was in the Marines and left a Sergeant. I did that to myself. Nobody owes me anything for my required service after I joined. I made the choice. Thanking me for what I chose to do embarrasses me. I am here and some of my friends are not. Thank them for the ultimate sacrifice. The greatest debt I owed was going beyond what my father achieved and making sure I achieved something during my spared life. Fifty years plus three successful children and still supporting ourselves.
That we weight these people down with debt which has doubled and sometimes tripled in size from penalties, fees, interest on both makes no sense. It will not be paid as most of the people who hold the debt are not kids and over 40.
i have no problem with Vets having access to the GI bill, i do have a problem with some not recognizing that is taxpayer money and its not just their tax money that is funding GI bill.
dw;
Have you ever watched “Full Metal Jacket?” Show me your war face was reality for nine weeks of almost getting the crap kicked out of you. That was the Boot Camp I went to on the west coast. Most vets would tell you, they earned it. When I left, I was making $425 per month, free meals, a rack, and all the attention I did not want to have as an NCO. I was not at Hue like the movie portrays. I was elsewhere. Came home nuts and told my wife not to touch me if she left our bed and came back.
And pretty cheap for a killer. heh?
In that respect, they earned it what ever bennies we got. However, I did not earn it at the expense of another person. To claim these people deserve the pain they are in is just plain wrong.
in my comment i said i had no problem with Vets getting the GI bill. in fact they got it because they gave up and contributed effort. and GI bill is much better than what previous vets got
i just dont understand why some folks will say that others dont matter
dw
Me neither. In most cases they are robbing these people of a life.
run
agree with you entirely. my uncle came home from korea and told his mom not to touch him to wake him up..call him from the door. she forgot and touched him. he threw her across the room before he woke up.
they should make it clear that the “benefits” are part of the pay. people are too stupid to figure it out for themselves.
Coberly:
Literally, I would wake when she entered the room. I did the same when my Master Sergeant entered the NCO quarters. He would just look at me and say “damnnnn.”
My soon to be wife tried to kiss me near the diamond center NYC where we were going to get her engagement ring. I almost hit her. My arm was drawn back. She got that close. I was wired.
It was a stupid war and I still grieve for my friends. I was not there to save them.
When I got my loan in the early 60’s things were a lot different. There weren’t fly-by-night for profit schools scamming kids into taking out loans to pay for questionable education. Those loans need to be forgiven, period. Still, people do need to be responsible and pay their bills. Let the student loans be like any other – dischargeable with bankruptcy. I would also limit the amount of interest to be paid – when you have already paid 3 or 4 times or pick your multiple, the principle balance is considered paid.
Jane:
Mostly right. Pay a processing fee up front and interest of 1-2%. We paid more than TARP to bail out Wall Street gambling with the nation’s economy.
So long as we accept what the loan market looks like under dischargeable rules, I think it is a real improvement, but I fear that society is not going to be able to accept that higher education funding has significant risk factors applied to it. In the long run, I think it could provide incentives for serious repricing efforts in colleges and serious reforms of K-12 education, but these would potentially be so serious that getting started will not happen when very, very interested parties decide that blocking it is critical to their own situations.
For years the Boomers have worked to strip the advantages given to them from others to make a better life for themselves. Education provides the greatest determining factor in improving your life and to contribute to society. The Greatest generation funded schools, built infrastructure, and seemed to understand the need to work together. Their children the Boomers took these gifts and believed it was their right and none others, instead to giving a hand up top those that followed they slammed the door shut and demanded tax cuts.
Now they have the gall to complain about Millennials that have chosen to not put up with their BS.
TR,
Well sort of, but not exactly thanks to a lack of age discrimination :<)
The post war baby boom always starts with 1946, but according to various sources may end as late as 1964. That is a broad swath given the degree of change during that time.
I was born in 1949. My mom and dad were each 13 years old on Black Tuesday. Things were bad enough on the farm that my dad ran away from home. Just about four years later my dad was working in a CCC camp and my mom was pregnant by her first husband. After 12/7/41, then my dad was drafted with his CCC camp background placing him in combat engineers. My dad was an illiterate mountain man whose best gig in life was renting out aluminum jon boats from his concession stand on a small Virginia Game Commission man-made lake. Until my mom died and he married a railroad retiree’s widow, then he lived in a trailer that he sided with T1-11 and roofed himself. Dad revered FDR and always voted Democrat despite he disliked all Democratic Party politicians in my lifetime, just not half as much as he disliked Republican Party politicians. My mom and dad voted the same, but she actually liked both Jack and LBJ. She also despised Nixon less that my dad despised him. They both thought Carter was a nice man. Politically, then I am just like my dad.
My wife was born in 1958, which makes her a Boomer too. Her parents were each just two years old on Black Tuesday. So, they did not strike out on their own right away. What her parents knew of the Great Depression and WWII was the stuff for which they were deprived. Both her parents came from upper middle class families. So, they were not all that deprived especially compared to my dad. My mom’s family was more like my wife’s parents, but my mom’s parents had poor health and mom was mostly raised by her black nanny a la The Help. My wife’s parents grew up to be Republican and so did my wife. In 2008 my wife voted for Obama, her first time with a Democrat, but she reverted to Romney in 2012. If not for my influence on her though, she likely would have voted for Trump same as all of her siblings. Both my wife and I are Boomers.
Without arguing overly about when generations start and end and exactly when public policy should be considered their responsibility, I think the implicit message that older people have slammed the door may not be all too accurate. A more credible case can be made that public funding of higher education has simply lost some priority battles to healthcare and K-12 education and that within higher education, priority battles for things benefitting direct student instruction have lost out to things like administration and facility spending that is not core to instruction. Lot of ups and downs, but it is not hard to look at Wisconsin (for example) and see that state public funds that might have gone to the UW system in 1970 have not generally been turned into tax cuts but moved to healthcare programs and K-12 state funding programs. Obamacare Medicaid expansions is a good example. Worthy spending, but it is a new priority for state public funds that works against some of the existing priorities.
why maybe not all of the cuts to upper education came from boomers (my wife and are ones. and my father and step mother. and my sister and her husband are too). but a lot of it, usually to cut or reduce the increase in taxes (in fact there is one example of that in California, prop 13. which essentially made it so that if you owned your home prior to it passing, property values were frozen. which basically cut funding for things like police/fire, but the state made up for that. for a time). but most of the impetuous for that was that the ‘elderly’ were at risk of loosing their homes (and that was true for those who were poor. but the law makes takes no notice of that). and state funding for ACA was minimal, and it didnt start till when? 2009 or so? so why did upper education funding cuts start long long before that? and other than ACA, exactly what health care programs were added and when? and while k-12 education may have gone up in some states, it didnt in many. so not so sure that counts either
The moral to my story was that the ones that suffered least and gained the most from public spending are much less appreciative of the value of public spending that those that suffered the most and gained the least.
IOW, the poor man will give a stranger the shirt off his back while the rich man will give a stranger the shirt off the poor man’s back too.