# Think Tank > Austrian Economics / Economic Theory >  That Student  Loan Forgiveness Thing...

## osan

I am of two minds regarding the student loan issue.

On the one hand, you signed the papers.  Pay the $#@!ing loan.

On the other hand, it is a bit more complicated than that.

I can see forgiving the loans, but not having the taxpayers foot the bill.  We, after all, are not the ones who issued the paper, nor did we guarantee that lenders would get paid.

Some of the real culprits in all this are... <drumroll>...  THE LENDERS!  If your reflex is "you're full of $#@!", then hold your bile a minute and consider the following.

The lenders use but one criterion for granting the loans: your status as a college student.  If you are in school, you get the money.  This seems innocent enough on the surface... at least to those who have no knowledge of finance.  But those of us that have been initiated into that particular brotherhood will tell you right off that this method of approval doesn't even rise to idiocy.  It is outright malfeasance, incompetence, lassitude, and pure corruption.

When you go to get a loan for anything, other than school that is, the lender dives into your credit history, examines whether you are employed, considers how much you bring home every month, and so on down a litany of criteria, the sum total of which paints for them a picture that tells them how likely it is that: a) you will be able to pay back the loan, b) how likely you are to be reliably punctual in repayment, and c) how likely it is that you will not decide one day to fly the aspidistra and sail away, never again to be heard from.

None of this is done with student loans.  OK, so it is clear that certain criteria cannot be reasonably applied to most 18 year old adults.  Generally speaking, they have little to no employment history, no credit of which to speak, no assets, and little to no experience.  They are, in these regards, blank slates.  But there ARE indicators that can give lenders statistically reasonable signs of how you may fare, once graduated.  

The most significant of these is the actual major you choose to undertake as your goal.  Were I a lender and you came to me with a major in Lesbian Dance Studies, you're not getting a loan.  Period.  Why?  Because the degree is economically valueless.  If you already had a degree in, say, Law or mechanical engineering and had perhaps three or more years of steady and good employment history behind you, as well as many of the usual indicators of credit-worthiness, then perhaps that otherwise economically useless degree, to be taken as a labor of love, would rise to the status of qualified for lending.  But as a first degree, no way.  English lit?  No.  Phys. Ed.?  Questionable at best.

Degrees in business, engineering, hard science, pre-med, pre-law... those are the promising avenues of pursuit, economically speaking.  The rest are "nice to have" at best.  They may be of some cultural value, but if you cannot make an economic go of your studies, then you should not be handed $100K, and often much more, because chances are you will never be able to pay it back.

Therefore, the lender institutions have grossly failed in their due diligence to make a reasonable effort at assessing the wisdom of investing in your degree as a human-development major.  Therefore, it is the lenders who should be placed on the hook for all this.  Forgive the outstanding loans - certainly for the economically worthless pursuits such as fine arts, music, and so on, and let the lenders eat the losses.  If they go out of business, well... that's business for you.  Proceed as a fool, have your lunch eaten by the sharks of the misfortune you have made for yourself.

The other culprits, of course, are the universities themselves, offering the most inane and worthless degrees imaginable.  They are largely enabled by the equally culpable, not to mention blindly stupid, students who attend these universities at extortionate prices with not even a reasonable assurance that your degree in Summer's Eve Disposable Douche Studies will provide you with even the most remote hope of leading to gainful employment, much less an actual career.

Were this situation not a threat to those who chose soundly and who work and repay as they promised, I'd find it all amusing while I broke out the popcorn and beer, drunkenly cheering as the imbeciles and morons died in the street of starvation in accord with the hard gravity issues that attach to the life choices we all must make.  Choose well, perhaps you live a good life.  Choose poorly, die.

The whole college finance situation is absurd beyond absurdity.  It is long overdue for people to start popping their heads from the Dark Place and begin using their brains as something better and more useful than mere hat racks.  This goes for lenders, universities, and borrowers, who share in the blame when they stupidly finance, offer, and choose idiotic majors that eventually bestow graduates with worthless degrees, the very notions of which dishonor and discredit universities across the globe and reveal the lenders as insufficient to their own better interests.  The schools have become bastions of raving Stupid and braying lunacy.  Until the consequences of their choices outstrip the perceived benefits, all parties will continue on their merry way with winks and nudges upon that yellow brick road that leads straight into the maw of Hell itself.

Choice is ours.  Always has been.

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## Invisible Man

> I am of two minds regarding the student loan issue.
> 
> On the one hand, you signed the papers.  Pay the $#@!ing loan.
> 
> On the other hand, it is a bit more complicated than that.
> 
> I can see forgiving the loans, but not having the taxpayers foot the bill.  We, after all, are not the ones who issued the paper, nor did we guarantee that lenders would get paid.
> 
> Some of the real culprits in all this are... <drumroll>...  THE LENDERS!


The lender here is the federal government, is it not? The federal government doesn't have its own money. Whatever bill it foots, taxpayers foot.

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## Swordsmyth

> The lender here is the federal government, is it not? The federal government doesn't have its own money. Whatever bill it foots, taxpayers foot.


The feds cosigned the loans.

Make the banks and colleges eat the loss for defrauding the students.

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## Invisible Man

> The feds cosigned the loans.
> 
> Make the banks and colleges eat the loss for defrauding the students.


Are these not the loans in question?



> The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (Direct Loan) Program. Under this program, the U.S. Department of Education is your lender.


https://studentaid.gov/understand-aid/types/loans

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## jkr

funny
i just started a contract
3 months at 100 perhr
i will be saving up to make navient an offer of money borrowed less payments, wish me luck
and since i have a job, i will also be paying for my own "forgiveness", looks like i effects everyone regardless. maybe its the value of the money itself...hemmm... wasnt there an old white guy talking about that?
work done= 0

oh, and i get to hear everyone bi ch about it- but not taxes in general...

how does this help?

just
allow
bankruptcy
like EVERY OTHER FORM OF "DEBT"

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## osan

> The lender here is the federal government, is it not?


No.  It is the guarantor.  Various banks and other institutions provide the finances, the fedgov guarantees the sanctity of the investment.  It's all a gigantic scam.  Fedgov is essentially the collateral in whom the lender places trust.  Now that the collateral body has placed the loans in question beyond bankruptcy protection, they double as the enforcer goons when someone is unable to pay. The power of the fedgov, especially these days, is effectively limitless.  The lenders are justified in their confidence, for even if the borrower dies penniless, the fedgov will repay the loan with full interest in the stead of the borrower.  The lenders have zero incentive for due diligence because they get their money no matter how stupid the borrower may be.  If you could get that sort of work, you'd be a fool not to take it, as it is basically a sure thing no matter what happens, barring the end of the world as we know it.  That is, unless you retain some shred of basic decency and decline to kneel before the devil, mouth wide.




> The federal government doesn't have its own money. Whatever bill it foots, taxpayers foot.


Technically, nobody has money... it's all vapors and lies.  That aside, my contention is to make the lenders suck it, at least for the various stupidly worthless degrees for which equally stupid people have taken on outrageous debt to attain.  I would add that this could be further specified to include all people who failed to complete their degrees, regardless of whether they are worthless or otherwise.  I'd make the usual exceptions for people accidentally crushed in industrial machinery, yet who survived.

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## Invisible Man

> No.  It is the guarantor.  Various banks and other institutions provide the finances, the fedgov guarantees the sanctity of the investment.


Source?

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## GlennwaldSnowdenAssanged

> The feds cosigned the loans.
> 
> Make the banks and colleges eat the loss for defrauding the students.


Banks yes colleges no. Colleges get paid for service rendered. They don't let students go to school without money paid. What you suggest would be like taking money from General Motors for a car debt. That is all on the lenders not the college or the auto manufacturer. If banks don't want to loan to students then that would affect the colleges. But taking money already paid is wrong.

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## Swordsmyth

> Banks yes colleges no. Colleges get paid for service rendered. They don't let students go to school without money paid. What you suggest would be like taking money from General Motors for a car debt. That is all on the lenders not the college or the auto manufacturer. If banks don't want to loan to students then that would affect the colleges. But taking money already paid is wrong.


The colleges engaged in fraud against the students by selling worthless degrees in made up nonsense.

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## GlennwaldSnowdenAssanged

> The colleges engaged in fraud against the students by selling worthless degrees in made up nonsense.


Young kids that don't have a clue decide which college they want to go to and what major they want to take. These kids think they know everything and are not interested in hearing anything contrary to what they want. They chose the degree and the bank financed it. Are you suggesting that colleges should be limited as to what they teach or what degrees they offer? Buyers need to do due diligence. If you want to sue schools it should be every school prior to college because that is what got the kid to think they way they do and choose their major. What about the parents? They should be blamed for allowing their kid to seek a garbage degree.

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## tebowlives

> The colleges engaged in fraud against the students by selling worthless degrees in made up nonsense.


This post may actually have some merit. Granted there needs to be proof. Like a school saying degreed Dance majors earn an average of $85,000 a year.
BTW Do you have any proof of fraud from colleges?

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## jkr

I do

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## osan

> Young kids that don't have a clue decide which college they want to go to and what major they want to take. These kids think they know everything and are not interested in hearing anything contrary to what they want. They chose the degree and the bank financed it. Are you suggesting that colleges should be limited as to what they teach or what degrees they offer? Buyers need to do due diligence. If you want to sue schools it should be every school prior to college because that is what got the kid to think they way they do and choose their major. What about the parents? They should be blamed for allowing their kid to seek a garbage degree.


Everything you say is valid and true.  However, the other side of that coin is, in fact, the schools themselves.  It is the schools who contrived these most idiotically worthless majors and peddled them to the market.  They by all means hold some accountability for what they have done.  Claiming "market forces" cuts no muster, as not only are they the ones who cause those forces to come to bear, they were under no obligation to bend to them.

Running a university as a business is valid, but they are under no stress to follow the trends of other schools when said trends are idiotic on their faces. But they do. Why?  "Market share", which tells the world that a given institution is more concerned with profit - such as it may manifest for them - than with the ostensible goal at hand, which is to provide superlative education to their students.  Leading 18 year old products of our dopey public schools down the proverbial garden path of majors such as "gay studies" and "diversity studies" is 100% on the universities.  Market demand is irrelevant in the face of the MORAL demands of sound judgment in lieu of a young person's lack of ability to make such judgments for themselves, as evidenced prima facie by their expressed desire to  undertake the world's most idiotic, irrelevant, and stupidly worthless courses of study which can only lead to prospects that are poor at best and life-crushing otherwise.

Those corrupted institutions lose nothing by declining to meet the demands of foolish toddlers in adult bodies.  Engineering, medicine, and all the other actual professions will always be in demand.  If University A offers those studies with nominal competence and quality, barring some apocalyptic development, they have nothing to worry about in terms of their futures because the world will always need professionals.  Therefore, they have no justification for and forays outside of those areas of expertise, all claims to the contrary being pure bull$#@!, revealing to the world just how rotten the establishment in question actually is in terms of its administration.

Your point about the parents is especially relevant and I will say this: we now have at least one full generation of parents who were raised in such abominably ill fashion, that they can in no reasonable manner be considered as even remotely qualified to afford their issue such guidance as you have otherwise so correctly pointed out.

What is needed, sadly, is yet another organization - or even an author - who is able to competently report on the relative merits of the now vast array of majors offered by the manifold post-secondary schools.  The reporting should be factual and brutishly direct in its assessments with the least amount of editorializing possible.  Expose the stupidity of "women's studies", and so on down the drearily and depressingly long list of jackass pursuits designed for what must now coin as the "sucker class".

Were such an endeavor to be adroitly undertaken and made available to the public, for a nominal fee of course, then there would no longer exist any excuse for those in the sucker class to allow themselves to be corn-holed by these unscrupulous institutions catering their unvarnished ignorance for the sake of separating said sucker-class from as much of their money as humanly - or inhumanly - possible.

While I am a strong advocate of the notion of _caveat emptor,_ I am equally fond of _caveat vendor_.  Raw and raging dishonesty is one of the core reasons our lives suck so badly.  Everyone's a God damnable crook attempting to get over.  That $#@!'s got to get reeled in, IMNSHO.  Probably won't, but at least I put out an idea in pursuit of a possible solution, or amelioration at the least.  The world can run only for so long on this much Stupid.

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## osan

> This post may actually have some merit. Granted there needs to be proof. Like a school saying degreed Dance majors earn an average of $85,000 a year.
> BTW Do you have any proof of fraud from colleges?


Fraud is too high a bar to meet in this case, for it requires proof of intent.

We could chalk it up to blithering stupidity and incompetence, sufficient by a broad margin to place the schools on the hook for the results of their rotten offerings.

There is a whole body of tacit notions that attach to that ideas of "university" and "college".  They may not be correct - and many are not - but they are nonetheless there.  The institutions play on these vaporous assumptions to their advantage.  So when the schools offer a new major in "monkey spanking", it carries the tacit authority, guaranty, and so forth that comes with the school's name, prestige, reputation, etc., and that sets up trust, expectations, and so on based on those faulty assumptions, none of which have I ever seen any school attempt to clarify, much less dispel.  They cannot reasonably claim ignorance of such factors, and therefore cannot vlaidly repudiate their responsibilities toward their young, naive, and ham-fisted educational wards.

There's blame aplenty to go around and IMO all parties should have their feet held to the raging fire that is the clustercopulation of American education from K-postgraduate.

And to add my usual paranoid's element: I don't think that any of this is so innocent as corrupt jerkoffs chasing dollars.  This has the stench of social engineering all over it. Offer absurdly easy degrees that appeal to a generation raised on lassitude and entitlement, then pump their heads full of even more air.  They become the new majority of our... <AHEM>... "democracy" such that the people who are retain the ability and will to think for themselves are so outnumbered, that their opinions become mere noise in the general foeld of common perceptions, and therefore opinions.  We retain nominally competent engineers and scientists who, if their opinions are divergent, make no difference as they have become the relegated minority occupying the basement offices, and whose voices are therefore disregarded as eccentric and irrelevant.

Theye are busy.  Very busy, and Their works are masterful.

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## osan

> Are these not the loans in question?
> 
> https://studentaid.gov/understand-aid/types/loans


If this be the case, it is different from the old days where the banks were the lenders and the "government" the guarantor, which was the case when I was in undergraduate school.

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## Invisible Man

> If this be the case, it is different from the old days where the banks were the lenders and the "government" the guarantor, which was the case when I was in undergraduate school.


According to this timeline, the Student Loan Reform Act of 1993 began the program of the government itself lending directly to student borrowers.
https://lendedu.com/blog/history-of-student-loans

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## osan

> According to this timeline, the Student Loan Reform Act of 1993 began the program of the government itself lending directly to student borrowers.
> https://lendedu.com/blog/history-of-student-loans


Then it has indeed changed.  "Government" goes from frying pan to fire.  Color me shocked.

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## dannno

> This post may actually have some merit. Granted there needs to be proof. Like a school saying degreed Dance majors earn an average of $85,000 a year.
> BTW Do you have any proof of fraud from colleges?


I think it is fraudulent to say somebody with a Dance major earns $40k/year as a waitress and use that in the average calculation, they should say they earn $0 and use that to calculate the average.

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## Invisible Man

> If this be the case, it is different from the old days where the banks were the lenders and the "government" the guarantor, which was the case when I was in undergraduate school.


One payoff of this distinction is that forgiving student loans helps starve the federal government of revenue.

It seems like that could be seen as a silver lining. I am of two minds about it.

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## acptulsa

> According to this timeline, the Student Loan Reform Act of 1993 began the program of the government itself lending directly to student borrowers.
> https://lendedu.com/blog/history-of-student-loans


There were such things in the 1980s, called NDSL, as well as private loans called GSL.

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## TheTexan

I will not forgive

and I will not forget

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## osan

> One payoff of this distinction is that forgiving student loans helps starve the federal government of revenue.


Nah.  Theye'll just issue more currency.

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## TheTexan

Some debts cannot be discharged through bankruptcy.

Like the government's debt to me.

I will claim all that is owed, with interest.

Some day.

Soon.

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## Invisible Man

> Nah.  Theye'll just issue more currency.


That's true. But if there were no constraints on their ability to do that, they would just eliminate all taxes and fund everything solely by money printing.

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## TheTexan

> That's true. But if there were no constraints on their ability to do that, they would just eliminate all taxes and fund everything solely by money printing.


One could make an argument that any constraints are artificial, and exist solely to create the perception that there are, indeed, constraints

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## Invisible Man

> One could make an argument that any constraints are artificial, and exist solely to create the perception that there are, indeed, constraints


I think there are constraints with more teeth than that. The fed's ability to lend money relies on borrowers having confidence that relies on predictable revenue for the government that isn't just printing more money.

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## Occam's Banana



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## osan

> That's true. But if there were no constraints on their ability to do that, they would just eliminate all taxes and fund everything solely by money printing.


No sir.  They would continue to tax because Theye see EVERYTHING as a zero-sum.  And even if Theye didn't, they nonetheless need to keep us as close to poverty as possible for the sake of keeping us down, so they can continue to accumulate with no fear of competition for either power or material wealth.

We're dealing with devils here.  Never forget that.

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## osan

> Some debts cannot be discharged through bankruptcy.
> 
> Like the government's debt to me.
> 
> I will claim all that is owed, with interest.
> 
> Some day.
> 
> Soon.


I hope you prove correct, but at this juncture I cannot help but whether you've developed a severe meth habit.

These pricks are not only running roughshod, they are doing so without any apparent threat of consequences.  Theye are not afraid of you, or me.  Theye are developing tech that will keep them in control, most likely.  That said, Theye DO seem to be $#@!ing up in overstepping, so a sliver of hope remains, so far as I can see.  But even so, I maintain advocacy of press on regardless, come what may.

We may have no choice as to when we die, assuming here it is at Theire hands, but we sure as hell have a choice in how we meet our respective ends.  I have no intentions of going on my knees, one of my very few fears in this life being that I will fail at the critical moment.  Only time and circumstance will tell.

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## osan

> One could make an argument that any constraints are artificial, and exist solely to create the perception that there are, indeed, constraints


If you think about it, that is precisely what the Constitution has played as its role as a political artifact.

We should be slitting the right throats, yet here we remain, effectively inert and despicably so.

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## Invisible Man

> No sir.  They would continue to tax because Theye see EVERYTHING as a zero-sum.  And even if Theye didn't, they nonetheless need to keep us as close to poverty as possible for the sake of keeping us down, so they can continue to accumulate with no fear of competition for either power or material wealth.
> 
> We're dealing with devils here.  Never forget that.


I see them more as a cross between devils and livestock owners, where we're the livestock. They take our interests into consideration only inasmuch as they overlap with their own. They want us to continue to produce for them, so, as long as they can keep that going, they'd prefer we not die. And while they're at it, if they can find ways to get the goose to squawk less while still taking as many or more feathers off of it, they'll make use of those methods.

Nothing you said would support preferring direct taxation over money printing in any amount, if it really were the case that they didn't have to rely on both. But they do have to rely on both. The two means mutually support each other and maximize the amount of the economy under the feds' control. They couldn't give up either one and rely solely on the other without losing some of that control.

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## tebowlives

> I think it is fraudulent to say somebody with a Dance major earns $40k/year as a waitress and use that in the average calculation, they should say they earn $0 and use that to calculate the average.


I've read just over 40% work in their degreed field and about 2/3 of degreed people have jobs that require a degree.
Maybe the parents should get sued for enticing their kids?

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