Cancel all student debt? No.

[pigou]

Interesting that no one has brought up the very difficult prospect of bankruptcy code for student loans.  I find it appalling that our current code treats student loans essentially the same as non-dischargeable debt...

Because if the debt were dischargeable, there's one thing every student would do the day after taking out their last loan: file for bankruptcy. The hit to their credit score isn't even remotely a deterrent when you're tens of thousands of dollars in debt and aren't planning to buy a house in the next 10 years anyway. No lender would be dumb enough to make a loan under these conditions with no collateral, meaning the only students who could get student loans would be the ones who have wealthy parents co-signing.

I heard that was happening at first, but it wasn't the downtrodden doing it. Is was the recent law school and med school grads that knew they were walking into six figure jobs and could brush off the mild inconvenience of bad credit for 7 years because of the bankruptcy. Poor people don't bounce back from bankruptcies.

I bet the poor would bounce back much faster from a strategic bankruptcy than from $40,000 debt. Paying back that loan is a pretty huge cost with interest included... at that point, you can just buy a house with cash.

There's a big puzzle why, during the financial crisis, not more people just mailed in their keys. Florida, for example, would have given banks no recourse beyond taking the (now massively underwater) house, which they really didn't want to hold either. They couldn't have touched other assets. Talk about massive leverage in a negotiation... "lower my loan amount, or I'm walking out and leave you with an asset you can't sell and a huge loss." That not more people didn't do this is pretty surprising... they lost out on tens of thousands of dollars.

My completely unscientific opinion is that the poor and middle class look at debt as a moral obligation. That's why you see collectors successfully going after debt that had already been written off either as part of a bankruptcy or because they failed to collect on it for too long. And that makes bankruptcy a "failing" and "unfair" rather than a strategic decision.

[apl68]

  But a high school diploma guarantees so little now that to get a halfway chance of having a literate student, employers want a college degree.

The idea that an education guarantees anything leads to a lot of frustration. Whether high school, bachelors or doctoral, those who get the degree thinking that the credential guaranteed them anything end up being disillusioned.

I would discourage all educators and advisors from saying, or even implying, that there is such a thing.

The absence of a guarantee does not make the future bleak. Literacy and ambition are really helpful for career success, and education can be a great tool to achieve and demonstrate those things.

I think Hegemony was referring to what the high school degree signifies to employers.  Speaking as an employer, I can't assume that an applicant having a high school degree guarantees literacy, numeracy, basic work ethic, or an ability to follow any but the simplest instructions (And then only under constant supervision).  Since we can't pay enough to attract college degrees, we still have to go with job candidates who have only a high school degree by way of formal educational credentials.  Sometimes you still get good workers with only that.  But the degree in and of itself represents virtually nothing in the way of gatekeeping.  I can see why many employers now feel that they must insist on an undergrad degree in hopes of getting something better.

That being the case, it puts students who don't have the money to pay for today's high-cost college education in a terrible bind.  Many of them have no choice but to take out loans.  Some end up, through no fault of their own, stuck with unpayable loans.  Then again, student loan fraud is a real thing.  An overly broad student loan forgiveness program could potentially create significant moral hazard in the future.

True story.  I had an undergrad classmate who came from an impoverished and dysfunctional background.  She didn't get much scholarship assistance.  Despite very hard work and frugal living, she had to take out some thousands of dollars' worth of loans.  That she didn't have to borrow more to attend our SLAC, even in the late 1980s, is a testament to how frugal she was.  In some ways she could have been a poster child for deserving, struggling students. 

Then, when she graduated, she tried to welsh on her loans.  She moved so frequently that it took the loan officers about two years to catch up with her.  She lied and claimed that she just didn't know that she would have to repay the loans, because somebody had told her that if she majored in education (Which she did, but she didn't graduate with a teaching certification) her loans would be forgiven.  The lenders weren't taken in and ordered her to pay up.  Several years of interest-only minimum payments later, she got married and moved out of state.  Some months before the wedding she suspended loan payments, thinking that if she changed her name and moved 400 miles she could surely get out of paying.  They found her in her new home within a month.  Her poor new husband had a rude shock when he learned about all that debt she hadn't told him about.  He insisted that they pay it down, which they did in two years, mostly through his effort.  Six or seven years later she left him--with thousands of dollars' worth of credit card debt she'd run up without his knowledge.

So there you have the dilemma, summed up in one student's career.  We want to give struggling, honest students a fair chance and some financial relief, without enabling frauds to take advantage of the system.  And it can be really hard to tell the deserving students and the frauds apart.

Yes, programs can be taken advantage of.  Just like some people would take advantage of universal healthcare, but that doesn't mean you should get rid of it.....oh wait, this is the US we are talking about...

No, the fact that people will take unfair advantage of aid is no excuse for eliminating it.  Trying to limit the amount of unfair advantage-taking is nonetheless a legitimate concern. 

[Kron3007]

  But a high school diploma guarantees so little now that to get a halfway chance of having a literate student, employers want a college degree.

The idea that an education guarantees anything leads to a lot of frustration. Whether high school, bachelors or doctoral, those who get the degree thinking that the credential guaranteed them anything end up being disillusioned.

I would discourage all educators and advisors from saying, or even implying, that there is such a thing.

The absence of a guarantee does not make the future bleak. Literacy and ambition are really helpful for career success, and education can be a great tool to achieve and demonstrate those things.

I think Hegemony was referring to what the high school degree signifies to employers.  Speaking as an employer, I can't assume that an applicant having a high school degree guarantees literacy, numeracy, basic work ethic, or an ability to follow any but the simplest instructions (And then only under constant supervision).  Since we can't pay enough to attract college degrees, we still have to go with job candidates who have only a high school degree by way of formal educational credentials.  Sometimes you still get good workers with only that.  But the degree in and of itself represents virtually nothing in the way of gatekeeping.  I can see why many employers now feel that they must insist on an undergrad degree in hopes of getting something better.

That being the case, it puts students who don't have the money to pay for today's high-cost college education in a terrible bind.  Many of them have no choice but to take out loans.  Some end up, through no fault of their own, stuck with unpayable loans.  Then again, student loan fraud is a real thing.  An overly broad student loan forgiveness program could potentially create significant moral hazard in the future.

True story.  I had an undergrad classmate who came from an impoverished and dysfunctional background.  She didn't get much scholarship assistance.  Despite very hard work and frugal living, she had to take out some thousands of dollars' worth of loans.  That she didn't have to borrow more to attend our SLAC, even in the late 1980s, is a testament to how frugal she was.  In some ways she could have been a poster child for deserving, struggling students. 

Then, when she graduated, she tried to welsh on her loans.  She moved so frequently that it took the loan officers about two years to catch up with her.  She lied and claimed that she just didn't know that she would have to repay the loans, because somebody had told her that if she majored in education (Which she did, but she didn't graduate with a teaching certification) her loans would be forgiven.  The lenders weren't taken in and ordered her to pay up.  Several years of interest-only minimum payments later, she got married and moved out of state.  Some months before the wedding she suspended loan payments, thinking that if she changed her name and moved 400 miles she could surely get out of paying.  They found her in her new home within a month.  Her poor new husband had a rude shock when he learned about all that debt she hadn't told him about.  He insisted that they pay it down, which they did in two years, mostly through his effort.  Six or seven years later she left him--with thousands of dollars' worth of credit card debt she'd run up without his knowledge.

So there you have the dilemma, summed up in one student's career.  We want to give struggling, honest students a fair chance and some financial relief, without enabling frauds to take advantage of the system.  And it can be really hard to tell the deserving students and the frauds apart.

Yes, programs can be taken advantage of.  Just like some people would take advantage of universal healthcare, but that doesn't mean you should get rid of it.....oh wait, this is the US we are talking about...

No, the fact that people will take unfair advantage of aid is no excuse for eliminating it.  Trying to limit the amount of unfair advantage-taking is nonetheless a legitimate concern.

Yes, but since we are talking about free university how would one fraudulently access that?  You can only defraud programs that are based on selction criteria or where you are indebted from them. 

When I was in the US, I remember speaking to someone who was against universal health care stating that people would abuse it.  There are some areas where this is true, but for the most part it is silly.  No one will go break their leg to get a free cast.

[pigou]

Yes, but since we are talking about free university how would one fraudulently access that?  You can only defraud programs that are based on selction criteria or where you are indebted from them.

It depends on the details of the policy. Is it free tuition or is it, as some are asking for, tuition + stipend or tuition + housing (which many universities provide to low income students)? The latter is much easier to take advantage of: sign up for classes with no intention of passing them to collect the stipend or receive free housing.

In fact, there is already some student loan fraud where students sign up for classes to receive grants, then fail to show up. (And why universities have to report attendance to the DOE at least during the beginning of the semester. The government claws the tuition money back, but that's harder to do with the value of housing.)

When I was in the US, I remember speaking to someone who was against universal health care stating that people would abuse it.  There are some areas where this is true, but for the most part it is silly.  No one will go break their leg to get a free cast.

The kind of abuse one should be concerned about isn't from patients, but from providers. Why do an x-ray for $50 if you can do an MRI and charge $5,000? Right now, the answer is generally "because insurance won't pay for the MRI" -- not because the insurer is evil, but because there is no medical need for it. If you look at "GoFundMe," for example, virtually all requests for donations are for procedures for which there is no evidence that they do anything (and, in some cases, evidence that they are harmful on balance). But lots of providers make a killing (literally) from scamming unsuspecting patients.

There are other incentives that disappear under some proposals. For example, right now the vast majority of private plans have a higher deductible if you go to the ER than if you go to urgent care, which is still higher than going to a primary care provider. So when you have a cough at 10pm, you might decide to make a regular appointment instead of walking into the ER.

Then you have to deal with no-shows, where people just don't show up for their appointment. This is hugely expensive for surgeries, where you have a team of providers that still needs to be paid even though the patient didn't show up. Among Medicaid recipients (where there is no penalty for this), the no-show rate is somewhere around 30% (from memory). That's pure waste of resources.

[Hegemony]

There are so many countries that make this work — both the all-inclusive fully paid education (tuition + housing and support) and the single-payer medical system — and yet we act as if the challenges are insuperable and can't possibly be solved.  And yet there are all those other countries making it work.  Maybe we could go and see how it's done there.  It's not actually so hard.  Like, only the highest-achieving (and therefore most motivated) students are accepted to university study and hence get the free higher education, meaning that the problem of freeloading slackers does not arise.  And if someone begins to fail out, they leave the university, including their free housing.  There, that's not so hard, is it?  Certainly it would require huge changes to the U.S. system. But as a concept it's not insuperable at all.

[pigou]

There are so many countries that make this work — both the all-inclusive fully paid education (tuition + housing and support) and the single-payer medical system — and yet we act as if the challenges are insuperable and can't possibly be solved.  And yet there are all those other countries making it work.  Maybe we could go and see how it's done there.  It's not actually so hard.  Like, only the highest-achieving (and therefore most motivated) students are accepted to university study and hence get the free higher education, meaning that the problem of freeloading slackers does not arise.  And if someone begins to fail out, they leave the university, including their free housing.  There, that's not so hard, is it?  Certainly it would require huge changes to the U.S. system. But as a concept it's not insuperable at all.

Sure, there are just trade-offs. On education, it means vastly fewer admission spots and fewer majors. It won't be 50% of students attending college, it'll be 20%. It means closing more than half the current universities and eliminating all remedial education: if you're not in the top 20% on a standardized test (e.g. the SAT), you're out. It'd vastly change the economic and racial makeup of universities and it'd make it harder for non-traditional students to have a shot. It also means state-run universities, where incentives can be controlled by the government according to projected need for future majors.

You'd then need some mechanism to deal with private universities that wouldn't be eligible for this subsidy. Right now, there aren't great alternatives to college -- there are no equally prestigious (socially and financially) paths. Switzerland and Germany, in contrast, have very competitive apprenticeship programs that can lead to careers in e.g. finance, not just blue-collar jobs. So you'd need to establish a parallel system so that students ineligible for the free tuition schools won't all get sucked into crappy schools that'd still charge them a fortune (and now with no student loans/grants to offset the cost).

Not that different on medical care: there are lots of things the UK and Canada get right, for example. But trying to get anything but a basic condition diagnosed can be a tremendous struggle that takes months or years when it would take days or weeks in the US. (A colleague of mine in the UK suffers from sleep apnea and is waiting months between appointments and *still* doesn't have the breathing machine you could have very quickly in the US.) I get that many Americans have bigger problems than that, in that they just can't afford care at all (but are too rich to qualify for Medicaid). But you're going to have a tough time convincing the 80% of people with insurance and who aren't worried about copays and deductibles to accept vastly inferior care to make things (potentially) better for the remaining 20%. Especially if an alternative would simply be to increase subsidies for those 20% and maintain the higher quality of care.

[Kron3007]

There are so many countries that make this work — both the all-inclusive fully paid education (tuition + housing and support) and the single-payer medical system — and yet we act as if the challenges are insuperable and can't possibly be solved.  And yet there are all those other countries making it work.  Maybe we could go and see how it's done there.  It's not actually so hard.  Like, only the highest-achieving (and therefore most motivated) students are accepted to university study and hence get the free higher education, meaning that the problem of freeloading slackers does not arise.  And if someone begins to fail out, they leave the university, including their free housing.  There, that's not so hard, is it?  Certainly it would require huge changes to the U.S. system. But as a concept it's not insuperable at all.

Not that different on medical care: there are lots of things the UK and Canada get right, for example. But trying to get anything but a basic condition diagnosed can be a tremendous struggle that takes months or years when it would take days or weeks in the US. (A colleague of mine in the UK suffers from sleep apnea and is waiting months between appointments and *still* doesn't have the breathing machine you could have very quickly in the US.) I get that many Americans have bigger problems than that, in that they just can't afford care at all (but are too rich to qualify for Medicaid). But you're going to have a tough time convincing the 80% of people with insurance and who aren't worried about copays and deductibles to accept vastly inferior care to make things (potentially) better for the remaining 20%. Especially if an alternative would simply be to increase subsidies for those 20% and maintain the higher quality of care.

That would be a good argument if the US paid less or had better outcomes (medical or educational), but that just isn't the case and it is not vastly inferior health care or education in Canada or the UK.  If you look at education or health care, the US tends to spend more per capita and often has worse outcomes.   

I have lived in both systems and will admit that the US has some nice hospitals etc., but the whole co-pay thing is bad and deters preventative health care.  Likewise, I was in a large state school and it was by no means superior to my experience in Canadian universities.  I will admit that if you are wealthy, you will get better/faster healthcare and access to top notch universities in the US but for middle income and especially low income people I feel Canada is better in these respects.  You are right that there are trade offs, but I feel that American's have essentially been fooled into thinking that what is best for the wealthy is what is best for them (private health care, all the tax breaks, etc.).

[pigou]

That would be a good argument if the US paid less or had better outcomes (medical or educational), but that just isn't the case and it is not vastly inferior health care or education in Canada or the UK.  If you look at education or health care, the US tends to spend more per capita and often has worse outcomes.

I guess this would be a better fit for a different thread. But a key reason why we can't just compare costs is that labor costs differ massively. A surgeon in a German hospital earns less than $60,000 per year (before taxes). There is just no way you could pay those wages in the US and not have people capable of getting through med school not choose a career in biotech or machine learning instead. These options either don't exist, or just to a much lesser extent, in much of Europe. (Switzerland is a notable exception in biotech and their costs are pretty much up there with the US. Despite having a heavily regulated, non-profit insurance system.) The outside options are just absurdly better. Specialists in the UK make GBP 115k which is about $150k. They're having doctor shortages that they can't even fill with Eastern Europeans anymore.

Canada pays about the same as US salaries. They constrain costs by constraining supply. Average wait times are longer than elsewhere: nearly 60% waited more than 4 weeks[url] to see a specialist, compared to an international average of 36% and 20% in the US. And again, averages mask the huge variation in care in the US: I can jump on Zocdoc and find a specialist for a random specialty that has open appointment slots within the next two days. If I lived in the middle of nowhere, not surprisingly this would not be the case (one of the many reasons I choose to live in a liberal city instead).

I have lived in both systems and will admit that the US has some nice hospitals etc., but the whole co-pay thing is bad and deters preventative health care.

Co-pay for much of preventive care is zero under the ACA. But even for things that it's non-zero, it's rarely more than $20 per visit. I get that any cost is a deterrent (and that's part of the reason for having them in the first place), but the people who are deterred from seeking medical care over $20 qualify for Medicaid, which I think has a $2 copay now (and no deductible).

I will admit that if you are wealthy, you will get better/faster healthcare and access to top notch universities in the US but for middle income and especially low income people I feel Canada is better in these respects.

The poor in the US who are eligible for Medicaid actually have really excellent coverage, with no deductibles and co-pays that vary by state, but are usually around $1 or $2. In Canada, about 10% of people forgo drugs because they can't afford to pay for them -- and, importantly, it's the very poor and not the not-poor-enough who do so. It's people who are just too rich for Medicaid and whose state government decided not to expand Medicaid coverage that get screwed in the US.

To some extent, I feel for those people. But so much of this pain is self-inflected by the people they choose to vote for. If your state shut down Planned Parenthood centers and now has a massive uptick of STD spread (because nobody else provides free testing)... there's only so much the rest of the country can do. I'm not willing to give up progressive states' ability to not-suck and have all policy determined at the federal level just to protect people from their own choices.

You are right that there are trade offs, but I feel that American's have essentially been fooled into thinking that what is best for the wealthy is what is best for them (private health care, all the tax breaks, etc.).

The US has the highest average incomes among developed countries, and even more so once you start looking at non-rural areas (i.e. major cities). Every policy has trade-off and the ones that seem to lead to more economic growth and higher average wages also seem to lead to more inequality. At some point, it's down to preferences and not just people being idiots: some people may legitimately want to live in a country where they (or their children) have a better chance of earning a high income, even if they don't currently do so. Hence why there's a lot of demand from people to move to the US (such that all work-based quotas get exhausted the day they become available). Something that seems to persist despite current attitudes toward immigrants.

But a second trade-off is the availability of drugs: there are a lot of drugs that you can get in the US that simply haven't received regulatory approval in Canada and the EU. Not because they're not safe or effective, but because they'd be too expensive for the national health care system to cover. This isn't such a big deal right now (well, to the extent that you think 3 months longer life expectancy and fewer side effects for a cancer patient isn't worthwhile), but it's about to become a much bigger issue with individualized care. The latest generation of drugs are individually engineered for a specific patient. You can get this care in... the United States and Switzerland. I don't see single payer systems covering those costs, so we'll soon find out what actual two-tier health care looks like.

[Kron3007]

Yes, this is off topic but somewhat relevant I think.

There are many models for universal health care, in fact the US is the odd man out within the developed world.  As a population, the US does not have the best health outcomes, so it is measurably not the best approach for all.  If you have money it is great, but if not, it's not.  You can argue that costs are hard to compare, but differences in labour costs are part of the equation. At the end of the day Americans spend more than many without better healthcare.

As for policies that lead to higher average income leading to inequality, I don't think that is the case.  The rise of America over many decades was accomplished with high tax rates on the wealthy, it is only recently that this has drastically shifted.  Recently, reports have found that middle class Canadians are better off than middle class Americans (of course you could debate this).  I would bet that upward mobility is harder in the US than many other nations with more socialist policies.  Overall, it seems that large segmants of the American population have been convinced that socialist = bad, even when it would benefit them.  I find it is especially true in the areas that would benefit the most from these programs where they are so strongly against them.

[Anselm]

Well, if school is too expensive in the USA then there are options elsewhere.   

https://www.marketplace.org/2019/12/17/faced-with-high-education-costs-southern-california-students-look-to-mexico/

[Hegemony]

I lived in the UK for many years, including recently, and even in its underfunded state, the NHS is a wonder and we would do well to emulate it.  Yeah, in its current underfunded state, you could wait months for a CPAP.  You could also pay for private health insurance at a much lower rate than in the U.S., and get that CPAP right away.  The big difference, though, is not how a regular person gets a CPAP.  It's that there are no uninsured people dying of diabetes or other eminently treatable conditions, as there are in the U.S. That's actually a more important outcome than getting a CPAP quickly.

I might note also that once when I had severe food poisoning, my doctor in the UK came to my house in the middle of the night. Twice. Because it was clear I was in no state to get to medical care.  And when I was hospitalized, and they suspected I had developed a new condition, they just casually wheeled me down for a scan — without checking with my insurance company for pre-authorization, without my panicking that I hadn't checked with my insurance company for pre-authorization, without my panic about how many thousands in deductibles this was going to cost me. So efficient, such a relief. 

But back to the university system. As for the question of private universities, the old UK system had the answer: you get your grants (i.e. financial educational support) from your local authority, which can be applied anywhere in the country, so private universities are not excluded. As I said upthread, sure, transitioning to that system would be a major upheaval, and require a whole rethinking of how we treat education — probably a rethinking that many people would resist.  But the question was not "How would we persuade people?"  It was more "How could that even work?"  How it works is perfectly clear.  We may decide we don't want that system.  But we shouldn't pretend that we can't envision how it would be set up.

[backatit]

I'm currently in the US and waited over a month for a sleep study, then a month for a CPAP. My father in law got one faster in Yorkshire...and my partner was homeless as a teen (in the UK) so he qualified for a special grant for university.

[pigou]

There are many models for universal health care, in fact the US is the odd man out within the developed world.  As a population, the US does not have the best health outcomes, so it is measurably not the best approach for all.  If you have money it is great, but if not, it's not.  You can argue that costs are hard to compare, but differences in labour costs are part of the equation. At the end of the day Americans spend more than many without better healthcare.

Different labor costs are part of the equation, but we can't live in a hypothetical world where a doctor in the US makes $60k per year. It'll be a world in which we won't have any qualified doctors. Even now doctors choose to go into specialist care rather than become GPs because the pay there is higher. And rural places suffer from doctor shortages, largely because highly educated people want to live in places with diversity and cultural offerings, not hang out at a local diner listening to people complain about immigrants. No amount of universal insurance coverage is going to change those realities.

It's absolutely true that the US doesn't have uniform quality for health care (or education, or anything). But you generally don't need to convince people who get the short end of the stick to support reform. You need to convince people who receive outstanding care (or have an excellent education) that they won't lose access to that. That's the harder sell.

[Kron3007]

There are many models for universal health care, in fact the US is the odd man out within the developed world.  As a population, the US does not have the best health outcomes, so it is measurably not the best approach for all.  If you have money it is great, but if not, it's not.  You can argue that costs are hard to compare, but differences in labour costs are part of the equation. At the end of the day Americans spend more than many without better healthcare.

Different labor costs are part of the equation, but we can't live in a hypothetical world where a doctor in the US makes $60k per year. It'll be a world in which we won't have any qualified doctors. Even now doctors choose to go into specialist care rather than become GPs because the pay there is higher. And rural places suffer from doctor shortages, largely because highly educated people want to live in places with diversity and cultural offerings, not hang out at a local diner listening to people complain about immigrants. No amount of universal insurance coverage is going to change those realities.

It's absolutely true that the US doesn't have uniform quality for health care (or education, or anything). But you generally don't need to convince people who get the short end of the stick to support reform. You need to convince people who receive outstanding care (or have an excellent education) that they won't lose access to that. That's the harder sell.

I suspect that this is also in part related to the original topic of education and student debt.  In countries where medical doctors dont make as much money, medical training is generally much more affordable.  One of the main justifications for doctors being paid so much is that they are highly trained (but so are university professors) and that their schooling is extremely expensive.   Obviously you would have problems if you suddenly implemented universal health care and told doctors that they would have their pay cut to a fraction of what they make, but these things are all related and the American obsession with private market driven everything leads to inequality.

As for it being easy to convince people who have low quality services that reform would be good, that seems logical but is not what I have seen.  When I was in the US I was in Mississippi (so I may have a very skewed version of the US in my mind) and they are the last to support any social program, including universal health care, even though their state would benefit more than most.     

[pigou]

I'm not sure student debts are such a big barrier. For doctors who go into rural areas, they can see signing bonuses of up to $200k, which effectively pays off their loans from med school. For those who go into urban areas, salaries just tend to be pretty high. A cardiologist pulls in about $500k base salary (+ incentives/bonuses), so they have recouped their loans in a couple months.

The main justification for these salaries is just that doctors also create a lot of revenue for the practice that employs them. It's also why a psychologist in a business school has a starting salary of $220k (+ consulting and summer exec ed classes), while the same psychologist in the psychology department at the same university could make less than $100k.