The US department of Education took my tax return one year for a remaining balance on a loan of less than $1,000. I never knew about it, and had thought I paid everything off. Well, turns out they took almost $4,000 with all their fees, interest such that had been just building and building for several years. No one had ever tried to contact me via phone, email, etc. for years.
The US Department of Education is known for their aggressive collection tactics, including garnishing of wages, taking tax returns and seizing homes and cars. I even heard of a single mother who had her child support taken away because she owed money to a fraudulent vocational school.
The US government is openly hostile to those who do business with them, and to their citizens and should be avoided at all costs.
The US government has seemingly been adversarial to their citizens for a long time. Not just in this, but in extremely onerous and expensive demands, like requiring expatriates to file US taxes - that alone cost me nearly $15,000 over 18 years in tax preparation fees (I'm self-employed).
Further, the FBAR reporting requirements. I have retirement money in Canada that makes no financial sense to divest yet, and I spent 5-6 hours filing an FBAR this year because the online form doesn't support OSX at all, and I simply could not get an Adobe Acrobat Reader to install on Apple silicon, so I had to rebuild a crappy Dell laptop in order to meet my legal requirements.
Now, I get requiring some sort of reporting requirements to stop tax evasion and the like, but the tax filing requirement is not based on anything like net worth, but rather if you are a US citizen you must file (US is one of I think 2 countries in the world with this requirement). And the FBAR requirement is anything up to or over $10k in a foreign bank.
For real?
If I sound like I am complaining, why don't you walk a mile in my moccasins.
Technically they didn't take your tax return, they seized the income tax refund you thought you were owed. A tax return is the 1040 (or similar) form you file with the IRS.
Regardless of debt collection issues, as a taxpayer it's best to set your withholding so that you don't get a tax refund. A refund essentially means you were giving the government an interest free loan.
Why do college students have to continue to pay back their loans when the legislature is bipartisanly comfortable writing off $50k+ PPP day loans per business from Covid Pandemic? [0]
There are two fundamental belief systems about truth.
One is based on reason, where people look for contradictions (like you're doing right now) in order to better understand truth.
The other is based on authority or faith, where people look to authority figures, such as parents, priests, pundits, or politicians, in order to understand "truth".
These are incompatible. You can't point out contradictions to an authority oriented person and expect them to care. While you are using your words, they have already made off with the money. Your reason got you nowhere, while their power got them $50k+ loans. They could do what they did with action while you are soothing yourself with words.
One thing authority oriented people understand is that actions matter most and that the highest truth is found within action on the physical world.
This is honestly insightful to me in a way that I struggle to relate to one of my family members because I try and make appeals to logic and the truth, and they make a ton of appeals to people they think I would find to be authority figures. I have never seen this stated in such a clean way that got me to that understanding.
I guess it doesn't help me solve it, but baby steps.
I think what you said is accurate, but I would describe the 2nd bucket different. It isn't just looking to what authorities say, which is often just noise. It is more about observing reality and patters.
One group looks to the abstract to try and make inferences. The other group looks to behavior to try and discern patterns.
To me, the first group seems overwhelmingly naive. It assumes that groups of people all act according to a unified principle across time and space.
The second group understands that behavior is circumstantial, based on the changing people and incentives involved. Government is not an ideologically uniform monolith.
I don't agree with this, since people who hold this belief generally ignore second order effects and are immune to hypocrisy/contradiction based arguments. Without respect of contradictions, there is no basis for truth only for feelings and actions, which I think I would call "genetic truth."
Clearly this group is evolutionary conserved, and there must be some truth to that ideology for that to be true.
The first group has to deal with the Karl Popper's paradox of tolerance, which is the rigorous description of what you just said. It requires constant maintenance and adjustment against selfishness and decay, it requires enforcement of universalized principles (assimilation of specific ideas).
The second group must deal with having beliefs that directly contradict reality and freedom and reality asserting itself.
Both groups have different fundamental strategies for the prisoner's dilemma and different failure modes for their strategy.
The first group says there is one theoretically correct strategy, to always trust/cooperate because from a mathematical perspective, under conditions of abundance and an assumption of universality, that is provably the correct strategy.
The second says that if you can win by defecting, you should.
The first group fails when they fail to defect in response to people defecting against them. The paradox of intolerance can be restated in prisoner's dilemma terms: if you think cooperation is always right, then how do you justify defection?
The second group fails by failing to get out of zero sum thinking. They can never be greater than the sum of their parts, they also generally create a ruggedly darwinistic society you wouldn't want to be a part of.
I think there is a third dimension to this: identity.
What Trump has done is make his followers feel they are the brand. They are MAGA. That means it doesn't matter what system of truth you adhere to, because you will always go with your identity, which is MAGA.
Pedantically, it would be a second dimension, but I don't think that it is orthogonal, I think it's an aberration of the result of "truth as authority."
As the authority figure deviates further and further from reality, it makes them increasingly hostile to those who reason, but it also creates a cost to acknowledging reality. The cultists would have to acknowledge they were suckered or otherwise deficient. All those contradictions that were ignored protect their alternative reality because they represent pain that must be overcome. Without being willing to face the pain of being wrong and all those you have harmed through being wrong, you must stay in your alternative reality.
It may also be a factor that the student loans cannot be discharged through bankruptcy. The government may be afraid of (even scammy) businesses shutting down, but there's no danger with student-debtors.
Because that program was designed from the beginning to be forgiven. It was about keeping businesses afloat during extraordinary times and keep paychecks going to folks. People who compare student loan forgiveness to PPP are not making a good faith argument.
It certainly wasn't sold to the public as "these are going to be forgiven". After all they are called loans not grants. And given all the retoric around "it's simple you took out a loan, now you pay it back" or "why should my tax dollars pay for your loan forgiveness" I think it's very fair to why this logic applies to people not businesses.
It was literally in the bill when it passed! What are you talking about? I very distinctly remember this being promoted as part of the package.
The deal was “if a business spends a percentage this money on payroll, it will be forgive”. It was designed to keep businesses afloat for a set amount of time as we locked down for COVID.
Sorry, wouldn't student loans be about keeping businesses afloat during extraordinary times? Otherwise they risk losing a workforce that otherwise would've come out of college during the pandemic?
That's a good to society as well. Arguably one with likely better payoff given that a lot more college graduates succeed in getting a degree than businesses succeeded in paying their PPP loans.
Most of the money wasn’t used for business expenses or payroll. That’s why it even ended up in the forgiveness bin. It was so unregulated that it was a joke that anyone used it for what the program was intended for.
that would be like 0.765% of PPP loans… (I got two of them as self-employed running as S-Corp, certainly did not need either and didn’t even want to apply until I realized that Los Angeles Lakers have…)
America loves corporate welfare while hating on individual welfare.
If a business fails we have no problem bailing them out. It isn't the businesses fault. It's the current economic situation.
If an individual fails then they made mistakes and failed to pull themselves up by their bootstraps.
I'm being a bit hyperbolic but really, America loves corporate welfare.
Look at the south: they'll sell themselves down the river for 20 oil refinery jobs but the second someone needs food stamps they're a loser.
A lil bit of it is also the "not yet a millionaire" mentality that a lot of Americans have. They believe that one day they'll also be rich so we shouldn't punish the rich, it may be them one day.
> America loves corporate welfare while hating on individual welfare.
More the case that America is run (directly or indirectly) by the ultra-rich and they designed a system that works for them and sucks for everyone else.
The straightforward, blunt answer is that the financial economy depends on having a class of high-earning people who are on the hook for paying a lot of interest and unable to get out of it.
The vast majority of these loans are held by the US Government, so solvency risk from delinquencies is not the concern that it was in 2008 with privately held MBS.
Well, I’d say the solvency risk is from a significant number of people going bankrupt and still not being able to discharge the debt. I think you’re right it probably won’t be as dramatic but it won’t be great. Especially combined with the various other negative economic actions taking place.
Just like social media is the cigarettes of our generation, student loans will be the "preexisting conditions" of it.
Student loans are an odious conflict of interest. People will hold themselves in disbelief that we offered predatory "no risk" loans to literal children, burdening their entire futures with decisions made before they had the faculties to consider it. The moral hazard of protecting a class of loans from completely irresponsible lending alone is enough before even looking at the consequences for the people who took them.
Then you have second and third order effects... Authoritarians don't consult experts believing they know better so Nth order effects of short sighted policy are authoritarian kryptonite. Nth order effects have a way of asserting themselves into reality and breaking through authoritarian denial about the state of reality and nobody is happy when reality asserts itself.
We should have never permitted minors to apply for federal student loans.
Frankly, the direct federal student loan program was probably a mistake. We shifted everything from private loans with federal guarantees to direct federal loans because of the perception that it benefited banks over citizens, but all we ended up doing is shifting animosity from banks to the government.
Worse, the easy availability of student loans has made it easy for States to substantially reduce subsidies, shifting the burden onto students while jacking up rates along with private colleges.
unlike other loans sent to collections, collection costs are added to the loan. the amount varies by loan type, but it’s typically 25%. so for example, if you owe 50k: you miss a few payments, and put into default, the loan is sold.. and you immediately owe 62.5k. they can then start garnishing wages and any tax refunds based on this amount.
The easiest and most expedient way to resolve this issue is to a) freeze interest payments on student loans, so long as b) borrowers make timely, reasonable payments. You can't squeeze blood from a rock and you'll only hurt someone in the process.
College studentsare seen as cancer to the current administration. They used to be sweetheart pawns for the previous administration. This is why financial literacy should be mandatory education in high school so they can make more informed decision while borrowing for college.
"And the obvious question that another poster has raised is why are all the COVID era loans being forgiven then?"
And the obvious answer is that the COVID era loans being discussed were designed from the beginning to be forgiven if certain conditions were met. Those that accepted the loans did so with that understanding. Student loans are also issued under specific terms which those that accept the loans agree to. In both cases the government is living up to the terms of the loans when issued and expecting the borrowers to do the same.
I've rarely had my hate spiked so highly so quickly by a comment.
Many of these loans are handed out predatorily to people classified as children, 6-8 years before their higher level thinking pre-frontal cortex fully develops, with no life experience, little work experience, a wide range in quality of parenting and childhood, with a society that has said "this is how you achieve the American dream of doing better than your parents."
The loans themselves shield the lender from consequences and put risk squarely on the the loan taker.
The seeming goal of these loans being the same for most of the structure of American society, to ensure desperate workers that have no freedom and no ability to say no to businesses.
When society offered these loans to people who in no way would have been able to get them on fundamentals, which was already a failure of society to invest in the future, there was an implicit promise that they would lead to a better life and they didn't.
You can't blame societies young for believing what their elders and even society at large tells them.
Universities failed their students, society failed students and universities, our own culture decayed in terms of earning vs receiving credentials, and the people you want to pay the cost of that are the people that the system victimized the most?
> 6-8 years before their higher level thinking pre-frontal cortex fully develops
This is a myth. The prefrontal cortex doesn't appear to ever stop developing.
Early brain development studies involving MRIs simply only looked at people up to the age of 25 and the findings that they "develop until at least 25" turned into this myth that they stop developing and are "fully mature" at 25.
The age of majority was a conservative choice based on society's view of when the vast majority of people were capable of the level of self-sufficiency required to do things like enter into contracts. If most are incapable of self-sufficiency without a parental guardian, then the age of majority should be increased.
That said, we also ignored our own rationale and started allowing minors to apply for student loans. This is a travesty.
Maybe then ban giving them out for anyone under age of 25. Absolute total ban. Start solving the problem today. Anyone currently taking loans do not get any more of them until age of 25.
Unreasonable if there are no alternatives to achieve higher education. You start solving the problem by cutting potential opportunities without no replacement scheme for it, only creating bigger problems.
There's no easy solution to this, it's structural, it's systemic, the model the USA uses for higher-ed funding is structurally unsound and unsustainable. Replacement the model can only be done through a measured policy change but I don't see much of that coming from the US in the past 10-15 years, it's mostly flailing around with no clear vision for what it wants to be in the future, just an everlasting chase for GDP growth no matter how, at some point this narrow objective comes crashing down.
Requires Congress to act, which will not occur in its current configuration. If what is reasonable is impossible, it's only a thought experiment. Can consider trying again after midterms in 2026, depending on outcome.
A social movement where everyone decides not to pay any form of debt has a higher chance of success than getting congress to act, especially act in the interest of people rather than the interest of bankers, corporations, or oligarchs.
We don't make people take out loans for K-12. Education is an investment. It should be funded, just not in a way that is so rife with conflicts of interest. Everyone benefits from an educated society except priests and other kinds of authoritarians.
Hate? Maybe close the browser and go outside. Plenty of people were presented with the same information and options and made different choices and sacrifices.
Understood as 18 year olds who were told everything would be okay so long as they just did what they were told.
I was lucky enough to grow up and go to university in another country. The magnitude of the financial decisions I was making at the time were < 1k and I remembered how much money that felt like.
IMHO blaming people for 100k bad financial decisions made under duress just as they entered adulthood is victim blaming.
18 year olds have enough agency to sign their life away to fight on foreign soil but are too stupid to sign for a loan? Or are you arguing we should raise the age of majority to > 18?
Doing it while knowing that it will absolutely wreck them is, yes. Not to mention doing it with such short notice, and when we're on the verge of what will most likely be a serious recession.
This has been the plan for months, even during the Biden administration - the plan was to restart in 2025:
> “Involuntary collections will not occur before 2025," a White House spokesperson said in a statement. "Defaulted borrowers won’t see collections until 2025.”
Which choice is that - pursuing higher education to have a better life, or being unemployed? What would be your advice to them, what should they have done differently?
None of these are free or cheap, and I’ll wager bottom dollar the majority of debt holders went to a public school of some sort. In fact student debt is most pernicious for people of lesser means and fewer opportunities, and who most need the debt to make it possible to go to school. These are also the people who are most incentivized to leverage public schools. (Quick google shows 62% of debt is held by public school attendees)
State school attendees face lower debt burdens than private for-profit schools. I can't find the data you are referring to that 62% of student loan debt is incurred by state school attendees. By these numbers [1], only 40% of public school attendees even incurred debt.
I want you to honestly think back to 17 when you had to make this choice - did you make it alone? How many of your peers were aware of the financial risk they were taking?
I'm probably not a good example. I thought to myself, "am I living my life for myself or for other people?" and dropped out of school after my first year.
The debt isn’t real, it could be forgiven. If moral hazard wins, those who can will continue to leave the country, those who can’t will pay this tax, diminishing economic output, and less people will go to college in the future.
If we’re going to keep speed running the decline of the US, it’s a fine strategy. The people making these choices will be long dead by the time the consequences arrive.
IMO the cost and value of college have long since diverged. Colleges and creditors are colluding and, unfortunately, many borrowers feel they have no choice but to participate in this sick game.
Arguing discharging debt not originated in good faith is not trolling. My argument is this debt could be discharged without ill effect, to not to is a choice (and a poor choice at that, with economic consequences).
Debt is not written in stone. It is always negotiable, and only sometimes enforceable. There is no morality around debt, so I’m unsure why the strong feels around why this debt can’t be forgiven or renegotiated.
I've defaulted on hundreds of thousands of dollars of federally insured debt strategically (as the credit hit was cheaper than paying back the debt), so I guess make better choices than pay debts you don't have to? It's just a contract. If someone sees it as a moral issue, that is a personal deficiency; I recommend speaking to a therapist. The loss rate is baked into the credit pricing and potentially credit insurance the borrower is required to pay. Don't allow your feelings to bind you beyond contractual requirements, that's a self made prison. Like religion, it’s just another belief system used to exert control.
This is just hacking another system imho. Your opinion may differ.
In general, I agree that people don't have a moral duty to act beyond their contractual obligations.
With respect to student debt, it isn't just an individual choice to default. That isn't a contractual option available.
Instead, some people are seeking positive action from others to void the contract, and this is action is politically contested by those with the power to do so.
Did you incur that debt because your country is dysfunctional, doesn’t provide education at a reasonable cost, and you were told it was the only path to a good job? Probably not.
I have plenty of friends that graduated from state schools and incurred no debt, all in the US. Does that invalidate your points about the inability to get an education at a reasonable cost?
> I’m sure you’d have no problem burning millions of dollars of VC funding on a low value business idea, as if that would be of superior economic value.
I know several people that went to school in NJ. I just looked up the costs and it's < $10k/year. That's pretty reasonable and NJ is a high cost of living state. No one said there is a magical catch all.
Look, I am definitely NOT making any suggestions here. But you know that debt collectors are using these “lawyer gig worker” platforms to outsource their court appearances, and handing full authority to those outsourced lawyers to do the final negotiations on debt amounts that are entered as court judgements.
The US Department of Education is known for their aggressive collection tactics, including garnishing of wages, taking tax returns and seizing homes and cars. I even heard of a single mother who had her child support taken away because she owed money to a fraudulent vocational school.
The US government is openly hostile to those who do business with them, and to their citizens and should be avoided at all costs.