Cancel all student debt? No.

[simpleSimon]

Several presidential candidates are proffering plans to cancel all student debt?  Not to be outdone, the White House is working on a plan to address student debt though not outright cancellation.  Obviously many students are in favor of these plans, but I rarely hear any faculty or staff comment on the student loan crisis.  Do we all support the canceling of student debt?  I am not in favor of this for several reasons:

• when you borrow something you give it back.  We all learned this in elementary school.  A terrible moral hazard is created when you allow debts to be cancelled without consequence to the borrower.

• cancelling the debt does not eliminate it; the debt will merely be transferred to all taxpayers.  Is anyone specifically in favor of that?  "Transferring the debt to all taxpayers" is almost never mentioned when people talk about cancelling student debt.  The word "cancel" is used as if the debt just disappears.

• students need skin in the game.  While I do not believe anyone should be burdened with a $100,000 debt for an undergraduate degree, $10k or $20k is a reasonable debt burden for a student to shoulder.  Most students would not hesitate to borrow $20k, $30k, or $40k for a new car... knowing full well that five or six years later that car will be history and they will have moved on to another vehicle.  Yet many balk at the idea of having a similar burden for something far more valuable and enduring: an education.

• when your own money (debt) is on the line you take school more seriously.  There will be exceptions to this, of course, but on the whole I believe it to be true.  One is far less likely to treat higher education as a flight of fancy, an experiment, or drop out if you have skin in the game and know that you have a debt to repay if you end your studies without completing your degree. Not many well paying jobs are waiting for dropouts so "what kind of job can I secure that will allow me to manage my debt if I drop out?" is a question many students have to face.

• students need to make very careful and thoughtful decisions about where they go to school, what they study, how much it will cost, and how they will pay for it.  I appreciate this is a difficult thing to do when one is in high school, but far too many students (now burdened with huge debts) admit they gave almost no thought to this when they enrolled.  Everyone wants to drive a Benz or a Lexus, but if that is not within your budget you have no business buying such a vehicle.  Similarly, a luxury brand name out-of-state school is often a poor choice for a student of modest means when a perfectly suitable local state college or university is nearby and affordable.  As in other areas of life, you buy what you can afford—and be realistic about what you can afford. 

I am reminded of an article in the NY Times several years ago.  It profiled a young woman who ran up $170,000 in student loans studying for a bachelor's degree in photography.
https://www.nytimes.com/2010/09/04/your-money/04money.html?searchResultPosition=2&mtrref=www.nytimes.com&gwh=46D7A26E3971EAF80AF6EA08CEB04CCC&gwt=pay&assetType=PAYWALL

Most people would consider accumulating that much debt for a bachelor's degree in photography irresponsible (her fiancée cancelled their engagement when he learned the true level of her debt).  She is now working as an X-ray technician, presumably a job should could have obtained without her degree in photography.

Concomitant with talk of cancelling student debt is the notion of "free college."  I believe the rhetoric of "free" is unhelpful.  Nothing is free; we all know this.  What we are talking about is subsidizing the cost with taxpayer dollars and this is how these plans should be discussed.  Some plans involve "free" for the first two years, while others talk of a free four-year degree—at a public school.  A subsidized degree from a public institution makes perfect sense to me—particularly for families making below a certain dollar amount (an amount that would vary from state to state), but free college for all?  No.  Cancel all student debt?  No.

I welcome your thoughts.

[Vkw10]

I'd rather see improved state funding for public higher education and/or more generous federal grants for students from low/moderate income families.

[polly_mer]

I'd rather see improved state funding for public higher education and/or more generous federal grants for students from low/moderate income families.

I mostly agree.  People who have demonstrated and continue demonstrating getting full value from an education should be supported in doing so.

I am strongly in favor of restricting entrance to publicly funded institutions to those who want to learn and seeing how far that helps with the resources needed.  Someone who is underprepared, but highly motivated is worth teaching.  Someone who is so under motivated that they are sapping motivation from other people should do something else than be in college at this point in their life.

[Parasaurolophus]

I think that higher education should be free. Or, if you prefer, free at point of service. Work is a huge distraction from scholarity. Students who have to work do less well than students who don't, and the more they have to work, the worse they do. Moving to full public funding of higher education would, I think, greatly ameliorate the situation.

• when you borrow something you give it back.  We all learned this in elementary school.  A terrible moral hazard is created when you allow debts to be cancelled without consequence to the borrower.

Not all things you borrow are equal, and I think that borrowing money (especially from an institution) is relevantly dissimilar to borrowing a friend's or acquaintance's possessions.

Also: I don't believe that debt cancellation does create a moral hazard. Or, if it does, it's not through "lack of consequences". Negative reinforcement doesn't actually work very well at all; it only reinforces the trainer and her recourse to negative reinforcement.

• cancelling the debt does not eliminate it; the debt will merely be transferred to all taxpayers.  Is anyone specifically in favor of that?  "Transferring the debt to all taxpayers" is almost never mentioned when people talk about cancelling student debt.  The word "cancel" is used as if the debt just disappears.

Yes, I'm specifically in favour of that. Your terminological quibble strikes me as just that: a quibble without much argumentative force.

• students need skin in the game.

Why? And is money/debt the only skin they can have in the higher educational game?

• when your own money (debt) is on the line you take school more seriously.  There will be exceptions to this, of course, but on the whole I believe it to be true.  One is far less likely to treat higher education as a flight of fancy, an experiment, or drop out if you have skin in the game and know that you have a debt to repay if you end your studies without completing your degree. Not many well paying jobs are waiting for dropouts so "what kind of job can I secure that will allow me to manage my debt if I drop out?" is a question many students have to face.

I'm not sure that's true. But even if it is, it's still the case that students who have to work to pay for school do less well than those who can devote themselves to study, especially when they have to work a full-time job in addition to going to school.

•  As in other areas of life, you buy what you can afford—and be realistic about what you can afford. 

It's often said that the "purpose" of higher education is upward social mobility. Now, I don't think that's true, but I do think it's widely believed. And if it is widely believed, then it seems to me that the idea is that you should "buy" aspirationally, not realistically. Dress for the job you want, and all that.

Concomitant with talk of cancelling student debt is the notion of "free college."  I believe the rhetoric of "free" is unhelpful.  Nothing is free; we all know this.  What we are talking about is subsidizing the cost with taxpayer dollars and this is how these plans should be discussed.  Some plans involve "free" for the first two years, while others talk of a free four-year degree—at a public school.  A subsidized degree from a public institution makes perfect sense to me—particularly for families making below a certain dollar amount (an amount that would vary from state to state), but free college for all?  No.  Cancel all student debt?  No.

I don't think this is a helpful talking point, either. It seems like just another equivocation, and it seems to willfully ignore the fact that, very often, when these schemes are proposed, politicians are upfront about the concomitant tax increases. Just think of Sanders's version of Medicare for All: he's been clear from the beginning that shifting to a universal, publicly-funded healthcare system will entail some tax hikes, but that the vast majority of people will see the money they spend go down dramatically overall. Everybody knows that, technically, these things aren't "free". Nobody in this discussion is operating under the illusion that we can wave a wand and make the cost disappear.

What we're talking about is a service being provided for free at the point of service. And, like Sanders's version of Medicare for All, that really is an important distinction. Means-testing makes access to services a pretty shitty experience (e.g. constantly gathering and filling out all the forms, waiting to hear back from bureaucrats, etc.), it makes access difficult, and it introduces a lot of uncertainty into the equation, because one's situation isn't very stable (and I say this as someone with extensive experience caring for someone who relies almost entirely on public assistance). Technically, something as small as receiving a gift on your birthday/at Christmas, being taken out to lunch, or getting a jar of homemade jam from a friend should entail a flurry of paperwork on your part to declare the reception of in-kind support, thus potentially leading to a reduction in your public assistance. That's a lot of bullshit work for everyone involved.

Making it free eliminates a lot of unnecessary bureaucracy, and makes the experience a much better one for everyone involved.

[marshwiggle]

I'd rather see improved state funding for public higher education and/or more generous federal grants for students from low/moderate income families.

I mostly agree.  People who have demonstrated and continue demonstrating getting full value from an education should be supported in doing so.

I am strongly in favor of restricting entrance to publicly funded institutions to those who want to learn and seeing how far that helps with the resources needed.  Someone who is underprepared, but highly motivated is worth teaching.  Someone who is so under motivated that they are sapping motivation from other people should do something else than be in college at this point in their life.

If post-secondary education were to be "free", would it be free for as long as a person wants to continue? How many degrees can a person get "for free"? How many "almost degrees", (i.e how many times can someone switch programs without actually completing something)? Why not eliminate getting kicked out for failing? - If the education is free, what good reason is there to prevent someone from repeating or trying a different program (ad infinitum)?

What I see could be useful is capping tuition at a fixed percentage of the median income. That way, over time it would keep the same relative cost regardless of inflation (or deflation). That would also make the proportion of financial aid required constant. It would also mean parents saving for their kids' education would know how much to set aside each year without having to worry about whether it would be enough or not.

[Caracal]

If post-secondary education were to be "free", would it be free for as long as a person wants to continue? How many degrees can a person get "for free"? How many "almost degrees", (i.e how many times can someone switch programs without actually completing something)? Why not eliminate getting kicked out for failing? - If the education is free, what good reason is there to prevent someone from repeating or trying a different program (ad infinitum)?

Well, I went to college for free as a staff/faculty benefit. I certainly didn't feel incentivized to stay longer in college. My tuition was free but board and food weren't. I can't claim I was paying for those things, but I'm pretty sure my parents wouldn't have kept paying for them if I just wanted to take some random classes for fun. There are still pretty significant opportunity costs to being in school and taking classes. There was actually a cap on credits at some point. Supposedly it was created because there was some legendary student with a parent on faculty who spent 8 years in college avoiding taking one class required to graduate, while taking electives.

[Hegemony]

I went through the educational system in England back when it was free.  How it worked was not rocket science.  The universities had a certain number of students they could accept.  People applied; the most promising were chosen.  Their education was free, including housing.  (I am skipping over a lot of bureaucratic detail about how this all worked, but the upshot of it was that there was no cost to the student.)  If they wanted to continue on to a post-graduate degree, they had to apply again, and the number of available places was smaller than the number of undergraduate places, so the people accepted were supposed to be the most scholarly and accomplished. 

There were some hitches, such as that if you had done more than one year, and then dropped out for whatever reason, you lost your remaining grant if you wanted to go back in the future. But anyway, the system worked.  It did mean that only a percentage of the population had a university degree.  With the idea that it would be better if more people had degrees (and that socialism was evil and should be eliminated), the system was discontinued, whereby all the problems of the American system then became rife in the UK too.  The rich having much greater access, so many universities proliferated that they started lowering standards to get the necessary students to support them, heavy debt burdens for graduates, and a commercialization of the whole process.  In my experience the academics who think the current system is better are few.

[pigou]

"Free college" and cancelling student debts make no sense, unless you just want to shift a lot of money to for-profit schools (that'd expect much of the debt to be written off).

Free state school is something worth debating, but it's not clear what the benefits really are: state universities already offer substantial need-based scholarships. Why not extract money from people whose parents can afford it? There are tons of private gains to education, which is why people are willing to pay tens of thousands a year for it.

Most students, however, graduate with very little in terms of student loans. The people who go for a Masters in Women's History at $60k/year? Yeah... that's not going to happen at taxpayer expense.

[Hibush]

This is one debt cancellation I can get behind. It is narrowly targeted and paid for by the perp.
University of Phoenix Cancels $141 Million in Debt for Deceptive Ads

[Caracal]

"Free college" and cancelling student debts make no sense, unless you just want to shift a lot of money to for-profit schools (that'd expect much of the debt to be written off).

Free state school is something worth debating, but it's not clear what the benefits really are: state universities already offer substantial need-based scholarships. Why not extract money from people whose parents can afford it? There are tons of private gains to education, which is why people are willing to pay tens of thousands a year for it.

Well, the argument would be that even though the current system does offer a lot of need based aid, it does so in a way that is pretty inefficient and results in people falling through cracks in the system. It would be a lot more efficient and fairer to just extract money from people who can afford it through taxes. It also reduces a lot of the problems involved in schools relying so heavily on tuition dollars.

Many, many years ago, I spent a semester abroad in Ireland and, although, that doesn't make me an expert, it was pretty apparent that if education is largely paid for through taxes, it really changes the attitude towards students. There wasn't much in the way of support services or advising, or fancy facilities. Basically, the attitude towards students was "You get this for very little. We have good teachers, you could learn a lot. You could also just ignore your classes all year and try to cram for exams in the last week. If that doesn't work out for you, it isn't our problem."

[pigou]

Well, the argument would be that even though the current system does offer a lot of need based aid, it does so in a way that is pretty inefficient and results in people falling through cracks in the system.

That's not that hard to fix. FAFSA is complicated, but it doesn't have to be. Especially since most people's taxes are simple enough to do on a 1040-EZ, which is two pages long and contains just about all the information you need to determine need-based eligibility.

There's a cool paper in which prospective students at Michigan received a "scholarship" prior to applying, equal to the amount of need based aid they would have been eligible for anyway. How did they know household income when the student hadn't even applied yet, much less filled out a FAFSA? Turns out, if you take the SAT, College Board links your score to data from all kinds of third party sources and sells that to universities. Maybe you get it wrong in 0.1% of cases, but that's not a meaningful amount of money to worry about.

Many, many years ago, I spent a semester abroad in Ireland and, although, that doesn't make me an expert, it was pretty apparent that if education is largely paid for through taxes, it really changes the attitude towards students. There wasn't much in the way of support services or advising, or fancy facilities. Basically, the attitude towards students was "You get this for very little. We have good teachers, you could learn a lot. You could also just ignore your classes all year and try to cram for exams in the last week. If that doesn't work out for you, it isn't our problem."

That doesn't strike me as a great model. Also, I wouldn't want to be a faculty there: research support is as non-existent as support for students.

[downer]

If there is going to be debt cancellation, it needs to be part of an overall reassessment of the idea that most people should get higher education. Is it going to just be retrospective, or will all future college be free? There are a lot of junk degrees and junk universities out there. Many students who are currently attempting to do higher ed are manifestly unfit for it. Seems that we could grant limited scholarships or subsidies for some college education without cancelling all debt.

I'd also want to be clear on the economic costs and benefits of cancelling all student debt. I would want comparison with, for example, initiating single payer health care, or the 2008 bailout of banks.

[eigen]

To me the biggest issue is not in the debt directly, but the interest collected on it.

If there were greater availability of low- or no-interest federal loans, then people could directly "invest" in education.

The interest on many loans is so great that many students can end up paying back several times what they took out.

I would be significantly in favor of making college loans a non-profit endeavor.

[Caracal]

That's not that hard to fix. FAFSA is complicated, but it doesn't have to be. Especially since most people's taxes are simple enough to do on a 1040-EZ, which is two pages long and contains just about all the information you need to determine need-based eligibility.

There's a cool paper in which prospective students at Michigan received a "scholarship" prior to applying, equal to the amount of need based aid they would have been eligible for anyway. How did they know household income when the student hadn't even applied yet, much less filled out a FAFSA? Turns out, if you take the SAT, College Board links your score to data from all kinds of third party sources and sells that to universities. Maybe you get it wrong in 0.1% of cases, but that's not a meaningful amount of money to worry about.

Many, many years ago, I spent a semester abroad in Ireland and, although, that doesn't make me an expert, it was pretty apparent that if education is largely paid for through taxes, it really changes the attitude towards students. There wasn't much in the way of support services or advising, or fancy facilities. Basically, the attitude towards students was "You get this for very little. We have good teachers, you could learn a lot. You could also just ignore your classes all year and try to cram for exams in the last week. If that doesn't work out for you, it isn't our problem."

That doesn't strike me as a great model. Also, I wouldn't want to be a faculty there: research support is as non-existent as support for students.

Simplifying things would help. Right now the people who have to jump through the most hoops are precisely the same people who are likely to have the least access to information on how all of these things work. However, if you think about the whole model, it isn't how other forms of public schooling work. Property taxes are a bad way to pay for schools for all kinds of reasons, but the basic idea is that schooling is something that people should pay for regardless of whether they have kids or not.

I'm with you on Ireland. But, broadly speaking students are treated like consumers because their tuition dollars are needed.

[marshwiggle]

Simplifying things would help. Right now the people who have to jump through the most hoops are precisely the same people who are likely to have the least access to information on how all of these things work. However, if you think about the whole model, it isn't how other forms of public schooling work. Property taxes are a bad way to pay for schools for all kinds of reasons, but the basic idea is that schooling is something that people should pay for regardless of whether they have kids or not.

The difference with public school is that it's intended to be more or less uniform and universal; i.e. it is the amount of education needed by any member of the society. Post-secondary education, on the other hand, is highly individualized based on the goals of each person. Even the choice about whether someone needs more formal education is individual. Consequently, the benefit of post-secondary education is much more to the individual, whereas the public school education benefits society by producing an educated populace.

As an alternative, if the taxpayers are going to fund everyone's post-secondary education, then the number of spaces available in each program should be determined by what society needs. That would have some sort of economic justification, rather than just allowing the proliferation of "Social Transformation of Basketweaving Theory" programs if any program can get funding as long as they can rope in recruit students.