Barack Obama and the Senate Democrats want to help college graduates drowning in student debt refinance. Republicans, naturally, are against it. Natalie Kitroeff, who has reported on the ruthlessness of the agency that enforces such debt, explores the long-term damage: apparently student debt is one reason the housing market isn’t recovering.
Really and truly: if you’re not a fanatical partisan Democrat by now, you’re simply not paying attention.
Megan McArdle points out that there are other people than indebted college graduates who are worth helping, and also that there’s an alternative to the Warren/Obama proposal for debt relief: changing the rule that makes student debt undischargeable in bankruptcy. I agree on both points. We could also cut back radically on incarceration and use the savings to restore the savage cuts to public higher-education budgets. (Fifteen years ago, California spent 9% of its budget on higher education and 3% on prisons. Those numbers have now been reversed.)
I’d merely point out that Megan can’t find any actual elected Republicans willing to vote for any of those programs, any more than they’ll vote for the Warren/Obama plan. In the real world, we don’t have a choice between Democrats and an alternative party that cares about the needs of people under financial pressure but prefers a different set of programs to help them; we have a choice between Democrats and plutocrats. That - and not the details of debt-relief policy - is what I claim Megan and her fellow libertarian-leaning but socially concerned pundits aren’t paying attention to.
Doing something to help young adults cope with their college-loan debt is an immediate imperative, but we really need to confront the profoundly distorted and idiotic way we pay for higher education in the U.S. Why should high school be free (at the point of service), while post-secondary education is not merely expensive, but ruinously so? When I went off to college in 1970, my parents, people of very modest means, were able to pay for my tuition, fees, and living expenses without incurring any debt at all, nor did I even need to get a part-time job while I was wasting my parents' money not really taking much advantage of the schooling I was supposedly getting. The cost of higher education, though, has inflated even faster than the cost of health-care, and nobody has any "college insurance". Why doesn't this look like an emergency to much of anyone?
I agree with trying to help out student loan debtors — and I mean, I *really* do — but the housing market's not your strongest argument, imho. Unless you just mean it in the sense that people should be able to find sellers if they wish to move. And responsible people who wish to own the home they live in should be able to (though I've no idea how the make that possible for everyone).
I don't see why I care what level prices are at, otherwise. Anyhow, where I live, housing is already "too expensive." (Or, wages are too low?)
I certainly favor lower rates for student loans and, as a lifelong Democrat, I am always happy when my party tries to do the right thing. And I take a back seat to no man in condemning and ridiculing the lunacy of the contemporary Republican Party. Nevertheless, the horrible abuses documented in the NYT article are fairly attributable only to the current Democratic administration and not at all to the Republicans.
The last time I looked, the program being complained about was supervised by the Executive Branch headed by President Obama. The abuses are being committed by companies hired by the Government and, presumably, overseen by the president's appointees. This is something Obama could fix with a phone call—if he chooses not to, that's on him, not the Republicans.
Many pundits focus on financing and discharging student loans, but I don’t understand why we don’t focus primarily on the cost side. As noted many, many times over, costs are exploding, yet the only prescription proposed is lower financing costs, more government support, or discharging of debt (via bankruptcy, forgiveness by working for certain favored employers, etc.)
As college costs show no slowdown, and we already have > 1 trillion in debt, how far do we go with this? Why do we continue to use government money to finance college as a benefit for some of our wealthiest citizens, when the money could be better spent elsewhere? It’s not like we have a massive government surplus we have to use.
So I oppose this solution, since when we hide the costs of something, folks over consume, and there are no signals to the suppliers that prices are too high.