Given that reality, the best political solution we've come up with is income-based repayment, which is basically a softened Chapter 13-style repayment plan for one debt in that you pay what you can and the remainder is eventually discharged. A better solution might be simply restoring bankruptcy rights as people have suggested for some time. Another prospective solution might be to either regulate loan origination by limiting tuition increases or by removing the government entirely and letting the free market scoff at paying ludicrous tuition rates for lackluster degrees.
(The LSTC would also propose retroactively recalculating due student loan balances based on CPI, issuing credits and taxing educational endowments for the deficiencies, but that would be, one suspects, politically unfeasible.)
I was all set to rip on Elizabeth Warren's unnecessarily convoluted and weirdly devoid of rational justice plan when, this morning, Bernie Sanders went whole hog and suggested a freaking student debt jubilee.
Lord, what did we do to deserve this fresh hell?
Do I want student debt relief? Yes, and I would benefit to varying degrees under either plan (tax issues aside for a second), but what the hell? The system as it exists needs rational, forward-looking, cohesive reform, not ludicrous, empty headed hip-thrusts at vacuous Millennial populism by elder statespersons who should know better.
We need bankruptcy rights. We need IBR free of any tax bombs. We need lower interest rates. We need credit bureaus and financial institutions to feel security that the full amount isn't going to ever come due because Congress changed its mind. We need an out when the government's been paid its fair share. We need educational institutions to bear the systemic costs of what we all know but the law can't say was fraud...
At the same time, Warren and Sanders are just playing the hands dealt to them. The arguments around student loans have become so polarized that the second any kind of reform idea emerges forth, one of two results invariably happens:
- Some jackass who owes like $15k won't shut up about how oppressive their student loans are and cheers wildly; and/or
- Some jackass whines that money borrowed has to be repaid, students knew what they were doing, the taxpayers shouldn't be on the hook, "but I ate canned soup for 5 years to pay mine ASAP," etc.
As with many issues, our journalism about the student debt crisis blows. When they focus on the debtor side, it's almost invariably Boomer-triggering anecdotes, often with gaudy headlines that bury the lede. Then there's the pie-in-the-sky solution subgenre and the ubiquitous live-at-home-and-give-up-coffee subgenre.
Screw these people.
The problem with all of these sub-styles of journalism is that they take what we know is a systemic problem caused by the intersection of well-meaning policies creating a bad outcome and transform it - or reduce it - to a personalized, dig-your-own-hole, bootstraps, etc. problem. Journalists, both educated and amateur, often deliberately seek the personalization, the pathos, the Dickensian aspect or whatever. This situation calls for more, or, at least something different. At a minimum, journalism should've learned from the housing crisis how to report on broken financial systems that incentivize bad consumer behavior.
That financial crisis wasn't about Raynette buying a 500k home in Vegas with no income any more than this one is about Raynette's kid spending $300k on a social work degree.
There are decent deep dives out there, but too often they seem to get bogged down in partisan politics or pandering to the audience; e.g., the WSJ article I just linked has the following paragraph:
The Obama administration also heavily promoted income-based repayment programs...This severed the link between the value of students’ education and how much they could borrow, providing a huge incentive for schools to raise tuition, since taxpayers would pick up more of the tab. Enrollment in these programs is one big reason that the government’s costs for student loans are exploding.Yeah, Bub....this is an political issue, for starters. That link between value and borrowing was already severed and schools don't care about repayment because they get the money upfront. Enrollment in IBR-style programs is irrelevant to the government's costs (which are dynamic projections, anyway, that change if current outlays on tuition were brought down or income to people in repayment would increase...as it often does over time) because the alternative, generally, is default, which means higher administrative costs being thrown at debts that would likely go uncollected - the funds simply aren't there. If these idiots think IBR "costs" the government any money, someone should actually report on what the default rate would look like if IBR went away.
Anyone want to report on that? Anyone?
The real frustration, of course, is that the Dickensian portraits, when they come, are only one-sided, like reading Great Expectations with half the subplots missing. Only rarely do these articles actually go after that group of antagonists, the policy-makers and the school administrators, many of whom absolutely knew what they were doing.
Because despite saddling millions of people with funny-money debts, no one wants to even suggest the f-word outside of those few truly awful for-profit colleges. It's a shame, because the real story of student debt isn't that Johnny carries $250k - it's that an American college or two had the audacity to charge Johnny $250k and he's not licensed to perform niche surgery.
Why don't the anecdote articles ever call out the schools that bilked the subject sucker? Why don't the "I gave up utilities to pay my loans" pieces not typically mention the institution partly responsible for lowering the standard of living of alumni? Why are people proud of paying off student debt like it's a race, anyway, and why are those articles newsworthy? Why, when the federal government took over loans, did it not heavily regulate the costs of attendance or the marketing of admissions materials?
Oh, and here's one: How can Bernie call out Wall Street while proposing what is, in effect, a massive bail-out of Big Education's malfeasance and, in many cases, fraud on the federal taxpayer?
It's regrettable that Warren and Sanders go straight to these bandage-style post-hoc debt forgiveness solutions that play directly into the well-worn "personal responsibility, ddddderp!" narrative so easy for journalists and editors to exploit for hits and social interaction. They could lead in awareness regarding the root of the problem in the event "free college" doesn't pan out (and it won't).
But successful politicians also need a partner in the media and it would sure be nice if the press high and low quit leading readers down a primrose path of reinforcing the lazy readers' preconceived notions. When framed correctly, there is a lot we could agree on (like if you owe $20k and make $60k+, get bent), just as with the underlying issues of the housing crisis, but it means we need journalistic skepticism towards not only the weary debtor but the institutions that created the debt, and loud enough for the butthurt ramen-eaters to hear.
You would hope that good journalism wouldn't even be necessary to stop the nonsense and discuss real, plausible solutions that Republicans may get behind - things like qualified Ch. 13 bankruptcy or making all student loan interest tax deductible - but we live in the world we've created and damn it I think I hear "It's Raining Men" and it's kinda hot, now that I think about it.