I was planning on writing a blog post about student loan forgiveness proposals. It was a hot topic on twitter a couple of days ago, but I think it has fizzled out.
Meh. I am not a fan. I don’t think a janitor should pay taxes that go towards paying off Jonah’s student loans. He’ll have around $30K when he graduates in June 2022. He’s taking an extra year to graduate, because he changed majors, he messed up his Freshman year, and he wants to do a semester abroad when the COVID’s over. After graduation, kids with a BA from his school typically start at a job that pays $40,000 per year. I mean it will be a pain to pay off those loans, but it’s ridiculous to ask a middle aged dude whose salary caps out at $40K to pay my kid’s loans.
I could say more, but I’m tapped out with this topic right now. I’ve also already written about 1,500 words today. I had to write a lengthy response to an editor’s email and a draft of a letter for Jonah to send to last summer’s internship office to ask for a recommendation.
For the first few years after high school, Jonah worked as a bus boy and waiter. Beyond an email to the manager to schedule hours for work, he didn’t really do written communication with a supervisor. He didn’t gain skills for the white color work world. But now that he’s getting closer to graduation, he’s getting a crash course in all that.
We’ve been looking through the job board for an internship for next summer. Many kids have already locked down that down, so Jonah’s behind already. We helped him make his first resume last spring. This fall, we’ve been working on cover letters.
I had to ask his slightly older cousin for the correct salutation on cover letters to an unknown person who sorts through stacks of resumes. Was it “To Whom It May Concern” or “Dear Sir or Madam?” No, she said. It’s now “Dear Hiring Manager.” Who knew?
But none of this information comes naturally to a kid. Jonah took a one-credit class on resumes and jobs at his school, but it was too generic to be really useful. Theoretically, staff at his school help students with that, but like most of the staff at his school, their help is of dubious quality. So, Steve and I are teaching him these skills.
Last week, I told him that his career office at his school should be able to hold recommendations for him and then send them out to prospective employers. He checked it out. I was right. But this was the first time that he heard about it.
With that information locked down, we worked on the correct letter to his old boss to ask for a recommendation. It takes a delicate hand to ask for a favor without groveling. The letter is now in a shared family google doc for future reference.
What happens to kids who don’t have the social capital at home to help them decipher the secret code of middle class employment?
45 thoughts on “Preparing Kids For the Work World”
My secret code which I try to make less secret by telling everyone is that if you want to work in a lab, you should cold email any lab in which you are interested or where you might acquire interesting skills.
Even trying to make the advice less secret still only helps a subset of kids: First, I mostly only know kids with a lot of resources anyway and second, cold email might result in an opportunity but is far less likely to result in a paying job.
Those who work in the endeavor of making opportunities more widely available say that formal programs are very important, career centers that handle recommendation letters, as an example, and collect opportunities and act as clearinghouses.
And, cold emails are selectively answered:people with names that identify them as women or who have “foreign” sounding names are less likely to get responses (with otherwise identical descriptions of skills).
I really really do not understand your (or most people’s) antipathy to student loan forgiveness, particularly on the basis of taxes. Taxes are progressive specifically so that those with lower incomes do not pay as much in taxes as those with higher incomes. Why can’t you think of it like his $750/year in taxes goes towards infrastructure and SNAP benefits and yours and mine go to student loan forgiveness? Or see it as if these middle class kids aren’t saddled with loans, they will be able to contribute that money to the economy and grow it and make it healthy, which will not only help the janitor but also his own children?
I know yours is a common position among Gen-Xers (my sister agrees with you, for example), but I see it as a failure to consider the benefits of student loan forgiveness to society as a whole.And I speak as someone who once wrote a check for almost $80K to pay off my husband’s and my student loans (mostly grad school, fwiw).
I worry about the capture of the money by universities, who set their own prices.
Kim Wheeden tweeted about the concept with Alaska Airlines & the Alaska fund. Early on, she said, Alaska arranged to offer vouchers instead of the direct payment from the Fund to Alaskans. That marketing maneuver resulted in a diversion of the fund’s payments from Alaskan individuals to Alaska airlines. First, the vouchers expired (which to me, in the loan forgiveness world is the equivalent of tuition paid that did not result in education). Second, Alaska Air had market power in Alaska and set the prices of trips (so, for example, the price of a flight to Seattle would magically be the value of the voucher (which was 20% over the fund payment), whatever it was).
I do think that the student loan system funnels money to universities, while placing the burden of repayment on the individual. Without safeguards, there’s a real problem of the Universities using that money without providing value to the loan holder, with the most egregious examples being the for-profits (especially the ones that straight out engaged in theft).
If the education was a good value for the money, the individual would typically be able to pay their loans off with the job that they got with the education.
Also, a lot of this talk about BAs is misdirection, because the bulk of student loans are acquired doing graduate and professional degrees. Either students can pay those loans off with the jobs they get with the degrees or they can’t. If they can’t realistically pay off the loan with the graduate degree–why do we want to encourage them to get the degree and for us to pay for it? The way things are today, we shouldn’t be incentivizing vast hordes of students to get law degrees, as there aren’t unlimited good law jobs for them. For a lot of people, a law degree is wasted money. There’s also been a lot of credential inflation. It’s not clear, for example, that elementary school teachers need MAs to do an adequate job teaching 1st grade. There are some cases (like maybe social work) where the level of education needed is out of balance with the pay–but those fields can be dealt with individually, as opposed to the taxpayer writing a blank check.
I am open to bankruptcy as a solution for student borrowers who have made really bad decisions and can’t possibly repay their student loans, especially since a lot of today’s student debt is accrued via living expenses. I’m also open to suggestions with regard to penalizing colleges whose students are unusually prone to being unable to pay their loans. *cough* NYU *cough*
I personally think it’s kind of nuts to combine the idea of free higher education with everybody-gets-to-study-what-they-want-to-study, with the idea that the taxpayer needs to subsidize the whims of young people whose brains aren’t “done” yet. In the old Soviet Union, there were a limited number of slots for different academic specialties, and if you didn’t get in, you didn’t get in. I believe in Germany, the rule is typically that if you fail out of your academic program (which happens after a sufficient number of exam failures), you’re banned from that academic program…in ALL OF GERMANY.
That all said, the median US student loan upon graduation is now about $29k for graduates of non-profit institutions and only 62% of students graduated with debt. Meanwhile, the typical new auto loan is about $32k.
The median student loan for a BA is not astronomically large or impossible for a typical person with a BA to pay off. Also, as a rule, higher income people carry more debt than lower income people–debt level goes up as income rises.
The average American has $52k in debt. Here’s what the profile of debt looks like for the typical American:
I’d love to see a similar breakdown for younger folk (maybe 22-40?), but the bottom line is that the typical American is not drowning in student loans. If young people are drowning in student loans, we need to consider whether the degrees they are getting are actually a good deal, both for them and for the taxpayer.
Also, student loan totals and percentages of students graduating with debt vary a lot from state to state.
For example, only 40% of Utahans graduate with student loans, and their total is under $18k.
47% of California graduates have student loans, and their total is somewhat over $21k.
Meanwhile, 64% of New Jerseyites graduate with student loans, and their total is is over $33k.
Pennsylvania somehow has 65% graduating with student loans, with a total of $39k.
Yes, student loans in and of themselves can have that economic effect. But I am thinking more about the current state of the economy and how student loan forgiveness could be a good thing.
I would like to see SLF in the context of a larger structure of reform of the student loan system and the economics of the university.
“If the education was a good value for the money, the individual would typically be able to pay their loans off with the job that they got with the education.”
Yes, I see that. But I am not thinking about whether the student loan system is good in and of itself. I am thinking about the *current* economic benefits of forgiving student loan debt.
“I believe in Germany, the rule is typically that if you fail out of your academic program (which happens after a sufficient number of exam failures), you’re banned from that academic program…in ALL OF GERMANY. ”
In 20 years of living in Germany, I have never heard of this.
In 20 years of living in Germany, I have never heard of this.
Never let things like facts or the need to do research interfere with a good polemic.
I often pull out those figures about student loan debt versus the price of a car in these discussions and when I teach this issue. I think it’s really important to remember that for most people, like Jonah, the debt they have is not crushing. I am generally in favor of student loan forgiveness, but I do think there should be limits. We/our kids will end up with some debt when they graduate, and I don’t think anyone needs to help or forgive that for us.
I also think we forget in these conversations that the people most likely to struggle with debt are not graduates, but those who take on debt and then dropout. People often assume that these students drop out because they couldn’t hack it academically, but at my university, that’s not often true. We do have some students who flunk out, but the lack of persistence is often due to the fact that these students have very complicated lives that get in the way of them being able to do college in the way that more privileged kids can. After they dropout, they are not likely to be earning the kind of money that makes paying even modest amounts of debt bearable, and the debt they carry often prevents them from finishing a degree that would give them the salary to pay those debts off.
I do think we have to be careful about how we forgive this debt – as noted above, without fixing the root causes, this will continue to happen. We need to think about this more broadly, but in the short run, I am hopeful that some Obama era regulations on for profit institutions are put back into place, so they stop preying on the most vulnerable.
I wrote: “I believe in Germany, the rule is typically that if you fail out of your academic program (which happens after a sufficient number of exam failures), you’re banned from that academic program…in ALL OF GERMANY. ”
Doug wrote: “In 20 years of living in Germany, I have never heard of this.”
You could look it up!
I know about this because my brother-in-law is German, my sister did her college in Germany, and their son is currently studying engineering in Germany (with somewhat mixed results). Hence, we’re all keenly interested in German ex-matriculation rules.
AmyP 1, Jay 0.
You could look it up!
Oddly enough, I did.
That’s the involuntary form of exmatriculation. The pdf you want is here:
Click to access ab062017.pdf
You’ll want to look at page 13, §17 (3) where §17 (3) 4 is the relevant paragraph.
Similar regulations for Bamberg, in notoriously strict Bavaria:
Here is Frankfurt:
While it is possible to be forced out of a university in this fashion, you really, really have to work at it. Remember, the exams in question are typically the “Zwischenprüfung” and the “Abschlussprüfung” which are a bit like the comprehensive exams that some English-speaking universities require within a major. You choose to take those, and you choose when to take them. It may be that universities have imposed time limits on how long one can be in a course of study before signing up for one of these exams, but that was not previously the case. One of the key words in the regulations is “endgültig,” (“…eine vorgeschriebene Püfungsleistung endgültig nicht bestanden haben”) which in this context would mean after an unspecified number of attempts.
So, to be forced out (zwangsexmatrikuliert) of a course of study you would have to fail, probably multiple times, an exam that you can choose to wait to take until you think that you are properly prepared.
Frankfurt, for example, is at pains to say that you can avoid being forced out by changing major. Further, exceptions can be made. I took as an example the regulations for a BSc at the University of Frankfurt in Bioinformatics. In §21 (4) it says that the examination committe may decide about exceptions.
(In fact, the vast majority of the text in the university ordinances covering ex-matriculation are concerned with what happens when you have successfully completed a course of study. You have to take yourself off the rolls; it doesn’t happen automatically but there is a process with rules and forms. Because Germany.)
What Amy is describing is such a corner case that it isn’t surprising I hadn’t heard of it. (Before the year 2000 how many of us would have thought that “hanging chad” was a kinda preppy doofus out by the pool?) It is far from the common disciplinary instrument that she implies.
I agree that forgiving current debt, especially in cases where students did not receive a career enhancing degree, should be discussed as an intervention to put young people back on economic paths. If we have reason to believe that there will be a net benefit to individuals (the argument for bankruptcy, which doesn’t relieve individuals of student debt) and potentially to the economy, forgiving debt could be part of a stimulus package.
But, I also think we need to have discussions about how we are funding education and the impact of asking young people to take on lifetime debt, sometimes with the advice of misleading and manipulative advice.
If only there was a set of courts with experience in evaluating the situation of people in debt and determining what was necessary and appropriate to enable them to get back on their feet and moving forward!
Ah yes, if only there was and student loans were dischargeable in bankruptcy.
O, I agree. I just meant that making student loans dischargeable, with rules to prevent abuse, would be a much better solution that blanket forgiveness, much less than blanket prohibition we have now.
bj said, “If we have reason to believe that there will be a net benefit to individuals (the argument for bankruptcy, which doesn’t relieve individuals of student debt) and potentially to the economy, forgiving debt could be part of a stimulus package.”
I’m open to making student loans bankruptable again.
Having been on the other end of this – admittedly some 20 years ago and in a different country – what I think works/doesn’t work:
* I’ll do 3 (max) interviews. My time is important. And this is just a short-term role – not a disaster for my company if I get it wrong. The job of your email/letter is to make it into the final 3.
* Generic emails/applications get filed in the ‘maybe’ pile. If I have 3 ‘good’ applications, I’m not even going to look at the maybe pile.
* Applications which address what my business is – and how X candidate can help/benefit – get a bump up the list. [This needs to be specific, and demonstrate understanding of who we are]
* Do your homework. Why do you care about what we do? If it’s just a paycheque – then I’ve got plenty of other candidates who get preference.
* Don’t go over the top. I’m not expecting a lifetime commitment from an intern/holiday worker.
* Personal connection matters. Sad, but true. People with a personal recommendation – known to me, or someone I trust, get a bump up the list. Some opportunities will never be actually advertised – it’s all who you know.
* Cold calling, by-and-large, doesn’t work. My time is too valuable. However, if you know someone at the company, then get them to give you a tour. [NB: this is reportedly different in non-corporate environments – I know several people who’ve gained apprenticeships by cold-calling small businesses]
* I don’t even read reference letters. If you’ve made it to the top 3 – and the interview is good – I’ll call referees and talk to them. Written refs are uniformly positive, but you can listen for the silences and hesitations in a verbal one.
AFAICS this is not taught at school at all. And most organizations (campus, unemployment office, student services) seem to produce an institutional style – which comes across as generic.
I have a friend who has been working with her 19-year-old son (on the spectrum) on job applications (he’s just landed one in a fruit-packing warehouse – which fits his OCD personality/skills). He was astonished when she taught him how to ‘tune’ his CV and application letters for different roles. No one had ever mentioned to him that your CV could be more than a list of jobs, qualifications and dates. He’d been through school careers advisor, Unemployment office, and Student Job services……
>What happens to kids who don’t have the social capital at home to help them decipher the secret code of middle class employment?
When I graduated from college in the mid-2000’s, I googled phrases like “how to address a cover letter” and “how to prepare for a job interview”. I applied to a lot of positions, bombed a few interviews, and generally flailed it ’til I nailed it. I was extremely motivated to become employed so I wouldn’t have to continue living with my parents. It worked out in the end. (Before I graduated, I found summer internships by cold-emailing, and school-year on-campus jobs on the campus job board.)
I’m always a little mystified by (envious of?) how much you and Steve intervene on Jonah’s behalf. It was absolutely not my parents’ style. I don’t think my background is that much different from Jonah’s (grew up in a suburb, white, middle-class), but my parents were significantly less educated than you and Steve. I think they just trusted that my schools would give me the skills I needed, and that if I needed more help it was because I wasn’t paying enough attention at school
I am quite certain that neither of my parents would have drafted a letter on my behalf, combed internship boards for me, etc. But then, it never would have occurred to me to ask.
All that to say, Jonah is really lucky to have you.
“I am quite certain that neither of my parents would have drafted a letter on my behalf, combed internship boards for me, etc. But then, it never would have occurred to me to ask.”
My parent taught me the cold email strategy but also helped with the “who you know” (my first internship & job, both in high school, were with people my father knew). My kiddos have not used this method, partly because their interests are different, but also because they have resistance to using the connection (also, we make them do some of the investment — I’m not willing to ask a friend, I make them ask the friend).
My kids are pretty good at generating the letters/emails (we review, but won’t write). Older kiddo has been successful at the cold email and at internships, writing her letters herself, though she does get a review.
bj said, “My parent taught me the cold email strategy but also helped with the “who you know” (my first internship & job, both in high school, were with people my father knew).”
I’m planning on asking my BFF’s husband (who is a scientist) to take on my 10th grader as a lab gofer this summer. It’s easy in this case because there’s such a good convergence of the 10th grader’s interests and our social circle. I can’t think of anything similar for my college freshman, though.
“My kiddos have not used this method, partly because their interests are different, but also because they have resistance to using the connection (also, we make them do some of the investment — I’m not willing to ask a friend, I make them ask the friend).”
CLAP CLAP CLAP!
Now I’m going to inflict on you all the story of my worst babysitting hire.
The way we wound up with each other, after our youngest was born and I was feeling in need of an extra set of hands, I called our college Catholic chaplaincy hoping to circulate my babysitter-wanted ad. The secretary told me, my high school daughter needs to earn some college money–she can do it!
I’ve had a lot of sitters over the years, and this was the worst one. She didn’t do anything terrible, but she had no enthusiasm or talent. I realized afterward the mistake that I’d made–I hired someone whose mom was excited about her getting the job, but wasn’t excited herself.
I do far less for Jonah than other parents. He’s overwhelmed right now with five upper level classes and a ton of writing deadlines, so we help out when we can. And when he’ll let us. He’s smart enough, so that I teach him one thing and he retains it. This is the first time he had to write an email asking for a letter of recommendation, so he needed a nudge. With his previous experience in the restaurant world and an internship that fell on his lap last summer, this is his first time writing cover letters.
He went to a job fair a few weeks ago, so he had a chance to talk directly with potential employers. This is his strong suit. He’s got excellent social skills and is very polished. He’s thinking about pharmaceutical sales. We didn’t have to coach him with that stuff at all. If he gets into an interview room, he’ll be fine.
That’s a real skill. In my world, pharmaceutical sales representatives were ex-cheerleaders (occasionally had to chase them down halls in medical buildings telling them they weren’t allowed to be there — some spaces they were, but others they weren’t).
To my understanding, pharmaceutical sales representatives do tend to be pretty girls, many of whom are no doubt former cheerleaders. And pretty young girls are prone to develop a sense of entitlement, which makes the concept of “not allowed” difficult for them.
Things are shutting down around here. Steve just got a call that the historical society, where he volunteers on Wednesdays, is shutting down. NYC schools shut down this afternoon. We’re making a shopping list for all the Thanksgiving stuff and will do a big food shop tonight. Ugh.
Laura said, “What happens to kids who don’t have the social capital at home to help them decipher the secret code of middle class employment?”
We have a kid who HATES asking people for things, even things that are clearly part of their job. For example, kid didn’t want to ask a teacher for reading suggestions for a big college paper, and kid balks at the idea of emailing a professor when there’s some kind of problem that kid needs guidance about. Kid has a really hard time believing us when we say that yes, it’s 100% normal and expected to ask.
It’s a work in progress and I’m hoping kid gets it in a few years.
I was a lot like that. It still is an issue for me in that I try to do too much on my own without enough input from others. Luckily it’s not been bad enough to overly impact any project I’ve worked on, but there have been a few stupid glitches over the years that I still cringe at. I still am absorbing the idea that in the work world a lot of the work is picking others’ brains rather than figuring it out yourself.
I do think there needs to be an effort to get in front of the student loan issue by which I mean do something preventative. A lot of MBA programs are just cash cows for their schools. In my (not particularly great) mba program there was a woman whose quantitative skills were just not up to what was needed. She kept dropping classes to avoid failing grades but then ended up massively in debt with no degree. She was borrowing a lot because she was a single parent. She would have been better off taking a leave and attending community college to get her math up to speed. But no one suggested that. It was also the recession in 2010 and she was afraid of finding a job to replace student loans.
(This program did ultimately implement a math boot camp for entering students like many other mba programs).
“It was also the recession in 2010 and she was afraid of finding a job to replace student loans.”
One of my worries about our current system, that it encourages students to sign on to the debt because they have no other choice for income and why I support some form of basic income. Then, potentially an individual with poor math skills but great skills in something else (say, a risk taking entrepreneur) might be able to start another kind of work.
bj said, “One of my worries about our current system, that it encourages students to sign on to the debt because they have no other choice for income and why I support some form of basic income.”
I don’t love the idea of basic income, but I agree that this is a situation that seems to come up a lot under the current system: people using student loans as DIY welfare to get through rough patches.
Another thing that comes up is the not uncommon situation where financially struggling families use a kid’s student loan as a lifeline.
I’m reading through the Matthew Yglesias piece on what’s wrong with the media that Laura tweeted:
Interestingly, it may have something to contribute to the student loan discussion. If you page way, way down you hit some interesting stuff about the current US economy.
Yglesias presents a chart on the US personal savings rate. “What actually happened is that starting in March  the household savings rate soared (people are taking fewer vacations and eating out less) and while it’s been declining from its peak as of September  it was still unusually high.”
(As I recall, in these discussions, “savings” often refers to both socking money away and debt-repayment.)
“One result of this is a lot of people have been able to pay off old debts. At the same time, interest rates have plunged without sparking an increase in borrowing, so household debt service costs have plummeted.”
Yglesias includes a chart on “Household Debt Service Payments as a Percent of Disposable Personal Income.”
Basically, it’s fallen off a cliff. It’s lower than it’s been at any point for the past 40 years.
I feel that this information ought to inform our discussions of whether or not throwing a bunch of cash at forgiving student loans is actually the best use of our money right now.
There is a lot of economic pain out there right now (I have never seen so many empty storefronts or experienced so many business closures in my life), but it’s concentrated in specific industries, and student loan relief may not target it well. In fact, the people who are hurting the most right now may have little to no student debt.
I recently got an email from Guitar Center (which was where our oldest had been doing music lessons for quite a few years until March 2020). They are filing for bankruptcy.
Here’s the profile of the music teacher we worked with there for a number of years:
–is a 50ish heart patient (i.e. high risk for COVID)
–has been financially conservative despite/because of being a working musician (yay!)
–teaches music at Guitar Center (which is going bankrupt)
–performs in live bands (which is a problem cause COVID)
–recently bought a bar (which is a problem cause COVID).
I haven’t spoken to the music teacher since March, but he’s pretty close to being a worst case scenario with regard to the economic impact of the pandemic.
Meanwhile, student loans can be deferred in the case of hardship…
Student loans are a complicated topic, because politicians have been involved. Decades of politicians do not make for good outcomes.
Like any other loan, student loans should be dischargeable in bankruptcy.
Lenders should be able to practice due diligence. There are some students who will not be able to complete their selected course of study. If we want to collectively believe that anyone can do anything they want, we (i.e. the government) should make it a gift, not a loan. Below a certain level of literacy, the student’s chance of success is negligible.
It is not a kindness to the student to pretend that the lender can be paid back. It is not a kindness to the student to saddle him with an ever-increasing burden.
Student loans should only be payable directly to colleges and universities. This would eliminate the temptation to use it as income.
The cost of tuition, room & board should be subject to audit by the entity paying for the service–that is, the government.
If the government is paying, why do we demand interest payments? Set the payments at reimbursing the government for the sums expended.
We all benefit in general through the education of others. If a completed college degree means a student earns more, the government is first in line to get directly rewarded, through taxes.
Yay! It looks like there’s at least a plurality of 11ders who want student loans to be dischargeable in bankruptcy.
I always recommend askamanager.com for new grad/internship questions.
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I have to admit that I am a little bit peeved regarding the student loan forgiveness issue and the discussion here.
ONCE AGAIN <– sign of my being peeved and raising my voice virtually
The very nature of saying "student loan forgiveness" is that it is a TEMPORARY solution to a current problem. All this discussion of making student loans dischargeable in bankruptcy etc. is about LONG-TERM REFORM. It has nothing to do with whether the current population of people with student loans should have these loans forgiven. If student loan forgiveness was going to be made an ongoing thing, we would simply call it giving people free college. There would be no loaning involved.
If you keep saying you don't like student loan forgiveness because you think the student loan system sucks, you are really not dealing with the problem that student loan forgiveness is designed to solve.
I have very little of the concern of “undeserving” recipients of the benefit I see around the discussion. But, I am wary of “temporary” solutions to a current problem. In my coding days, I used to joke about how I would write “temporary” code to, say, clear all the variables, that would then become embedded as necessary in ugly ugly ways. I worry about the same thing with temporary solutions to long term problems. We pass them arguing they are temporary, but then I worry that the temporary fix becomes embedded in our system (in this case, in the way we treat funding for education, funding for recessions, funding for basic needs, . . . .).
To support temporary fixes I need to hear that they are a solution to a crisis, not a chronic and systemic problem in the system. I can be convinced — say, an example of an argument I would listen to is that bad higher educational reforms resulted in predatory behavior among educational institutions (IIT, Corinthian, Argosy as clear examples, but I know there are others) that resulted in students being burdened with debt for money that was either literally (Argosy) or effectively stolen from them. There’s also the argument that debt forgiveness will be an effective economic intervention, freeing up young people who are burdened to more fully participate in the economy. But temporary fixes should be for temporary problems.
Oh, yes, when intractable politics is the reason for a temporary solution to a chronic problem, I will accept the necessity of accepting that perfect cannot be the enemy of OK. If there is no possibility of addressing the chronic problem then we do what we can do to help who we can help.
Student loan forgiveness does not solve the problem, though. Only through long-term changes can the situation be improved, and the temporary band-aid of loan forgiveness might reduce the pressure on the system to make the obvious changes.
The largest problem is lobbyists, who represent the interests of well-financed industry groups directly to politicians, many of whom are generalists, not specialists.
The rational first response to the student loan debt problem would be some simple, relatively moderate bankruptcy reforms designed to provide relief while preventing abuse. For example, the law could provide that student loan debt was dischargeable in bankruptcy if (i) the debt was more than ten years old, (ii) the total debt exceeded twice the debtor’s average annual income over the past five years, and (iii) discharge would not be patently inequitable. This new rule would apply to current and future debt. (You may say, that’s changing the rules mid-stream on the creditors, but life is hard and laws change. So be it.) If those reforms didn’t ameliorate the situation, it could be revisited.
If I recall correctly, the reason it was made non-dischargeable in bankruptcy was the claim that medical and law students would declare bankruptcy as soon as they could, to get out from under their large student loans. (and it appears that was exaggerated: https://consumerist.com/2015/03/17/you-cant-discharge-your-student-loans-in-bankruptcy-because-of-panicked-1970s-legislation/)
I rather think there must have been another way to handle that. When a class of debt is declared non-dischargeable, a certain number of debtors will never escape. The most annoying are those who could repay their debts the normal way, although they might have to live modestly & without expensive vacations while doing it. There’s a big difference between feeling strained by debt and having no chance of ever repaying it.
Going through bankruptcy is not easy. But if someone is tied to a debt that pays the lender 12% interest per year, that provides the lender a secured income stream, forever. After 10 years at 10% interest, the lender will have recouped the starting loan.
Right now, any investment paying 7% would be very attractive.
Certainly, people lend money to make money. However, so much of this process is now under government control, it is appropriate to ask if the system is working well. Normal lending practices charge the highest rates to the weakest borrowers. Is it fair to saddle the students with the smallest chances of being successful with the largest, non-dischargeable loan?
An alternative would be a student loan interest jubilee. Or even anchoring allowable interest to the 30 year bond rate.
I just read your newsletter Laura and when you were asking about books about problems with positive messaging I thought of A Paradise Built in Hell by Rebecca Solnit – maybe not quite the genre you’re referencing but I found its tone was a good balance. Mary Pipher also came to mind although it’s been a while. I’ve been mulling over a similar issue.
My parents didn’t really help me much in the high school to university path which in hindsight was weird as my dad was a professor. I think once I opted out of the US schools I was accepted into they kind of gave up, and I ended up rudderless at a tiny school in a tiny town in Canada. (At least tuition was only $1200 a year and my husband and I both made it through debt free and were able to buy a house in east Toronto in the mid-90s, which remains our one smart decision financially and has provided a lot of stability.) Your approach sounds sound.
Job search skills are just information, and it really doesn’t matter as far as I can tell who gives our kids that information, as long as it’s decent and they get it. I’ll also recommend Ask A Manager, including her book on job hunting. Sometimes that site makes me want to tear my hair out (especially the comments) because it’s a little divorced from reality, but I do send young new staff there from time to time.
Thanks to the book recommendations (I’ve heard good think about Solnit) and thanks for the parenting affirmation!
I’m just curious if anyone has ever read Elizabeth Warren on canceling student debt: https://elizabethwarren.com/plans/student-loan-debt-day-one Among other things, she says, “And I have proposed eliminating the onerous “undue hardship” standard for discharging student debt in bankruptcy, but until Congress acts, I will direct my administration to stop standing in the way by opposing borrowers’ bankruptcy petitions, and to instead push for a less strict interpretation of undue hardship.”
And Bernie Sanders: https://berniesanders.com/issues/free-college-cancel-debt/
From this page: Sanders would “Place a cap on student loan interest rates going forward. The federal government shouldn’t make billions of dollars in profit off of student loans while students are drowning in debt. We should invest in young Americans – not leverage their futures. Today, the average interest rate on undergraduate student loans is more than 5 percent. Under this proposal, we will cap student loan interest rates at 1.88 percent.” Sanders doesn’t address bankruptcy/discharging debt.
In other news, my sisters and I all realized that our hairdressers are ALL Trump supporters, and one sister’s hairdresser is full QAnon. My hairdresser’s father (a Portuguese immigrant, fwiw) was very pro-Biden. My hairdresser didn’t come out directly to say she was pro-Trump, but I inferred it from her discussion of the argument she described between her pro-Trump brother and her father.
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