Student who went into music had $250,000 student loan forgiven

The real question I have in my mind is WHY did the government loan this young man $250,000 ?

It seems in the late 90s and early 2000s, society was convinced these student loans were a good idea, no questions asked.

The reasoning went that if money was loaned to some students, they could later repay it, and it would then in turn be used again to lend to the next generation of students.

But this student was unable to repay the $250,000 that was given to him. And now, under the Biden Administration, that loan has been FORGIVEN. It is never going to be repaid now.

What a colossal waste many of these student loans were. And maybe not the best idea, lending out gigantic sums of money to very young adults who had no idea what they wanted to do in life.

Here's an article about one of these students:

Joel Lambdin, 49, received $250,000 in student-loan forgiveness in January. Lambdin said the relief will allow him to save for retirement while considering longer term dreams.

Joel Lambdin finished graduate school in 1998 -- but as a professional musician, he was hardly making enough money to pay off his student loans and his other bills.

So Lambdin, now 49, said his only option to make ends meet was to put his student loans on forbearance -- in which he was not making payments, but interest was still accumulating. "It was just so that I could subsist, so that I could survive," Lambdin told Business Insider. "With the hope that at some point, I would be making enough money that I would be able to take them out of forbearance and start paying them down."

But he grew to realize that the only way he could make a significant dent in his student loans was by switching careers. Since he didn't want to do that because he loved working in music, he decided to keep his larger student loan in forbearance and begin paying off his smaller loan with a lower monthly payment.

He continued making those payments until the pandemic student-loan payment pause. He discovered the Education Department's account adjustment initiative, which allowed the department to evaluate borrowers' accounts and update payment progress toward forgiveness on income-driven repayment plans and Public Service Loan Forgiveness.

The account adjustment led to Lambdin receiving a letter (reviewed by Business Insider) from his student-loan servicer Aidvantage on January 31 stating: "Congratulations! The Biden-Harris Administration has forgiven your federal student loan(s) listed below with Aidvantage in full."
That meant his $249,255 outstanding student-loan balance was effectively wiped out.​

"A Gen Xer who got $250,000 in student loans forgiven said he can now finally start saving for retirement -- and consider his dream of studying in India Story", by Ayelet Sheffey, Business Insider, April 21, 2024
Gen Xer Got $250K in Student Loans Forgiven After Decades of Payments (businessinsider.com)

 

I think it's just great that at 43 years old and not having any children I get the benefit of adopting all of these freeloaders.

I just wish I could get a postcard from them once a month similar to the feed the children in Africa thing so I could see how my little kwame is doing in life.

 

It really makes one question whether the student loan program was such a good idea. Lend out gigantic amounts of government money to irresponsible young adults with almost no scrutiny whatsoever about what education program the money is being spent on.

More questions should have been asked. And it strains the imagination that one student could have been allowed to borrow $250,000 from a government guaranteed loan. It's not even like he went to medical school either.

Of course I blame him, but I think a larger share of the blame was that something was fundamentally wrong with the school loan program. These almost seem like "predatory" loans, where it was unrealistic or unlikely these massive loans could ever be paid back.

A private finance company who made these loans gets the profit, while meanwhile the government is left on the hook for the unpaid amount. (Student loans are government-guaranteed to the private lender)

A lot of these massive student loans ruined the lives of young people, who borrowed that money when they were young and unwise at the age of 18 to 22.

And now the student loan program is going to need a big fresh injection of taxpayer money to be sustainable. Is this whole thing going to just repeat all over again?

 

And keep in mind that the vast majority of them are supposed to be making significantly more money than I am but here I am as a hard-working taxpayer who gets the benefit of paying for their loans.

It's kind of like George Carlin said..... They call it the American dream because you have to be f****** asleep to believe it.

 

I had no idea that the student loan program came into existence as late as the 1990s. To be fair I didn't know when it started.

There have been some recent changes to the student loan program either this year or one of the past few years around the COVID-19 recession. The thing is that most undergraduate program student loans now let you tap into grants more than it used to be, a split between grants (free education money) and student loans (stuff you need to pay back). I see that this musician had a graduate degree, so this doesn't apply to them.

Generally, I take it that the student loan system we have is considered broken. I have heard for years that student loans make the education system more expensive while putting many students into debt. There needs to be a reorganization of our higher education system. But before that happens we need a government friendly to reform. That isn't possible with our current round of politicians in office. And until that happens, we have to face the fact that there are people who have been harmed by our system of education and the solution to fix that will be applied unequally because of, again, our current government politicians are blocking it.

 

Does that include the taxpayer?

I hope it's obvious that the whole point of this thread was bringing up the question of whether $250,000 should ever have been loaned to students like this.

You are being unclear what type of solution you think would fix the problem.

Many fair-minded people would say there is no easy fix to this problem. Any big change would come with both advantages and disadvantages, and likely to be very politically controversial.
I suspect there is an impulse on the Left to just make government pay for college education, while on the Right there would be an impulse to greatly scale back these loans.

A third direction might be to put student applicants under a lot more scrutiny concerning which individuals get the biggest loans and grants.

 

One thing that they can do is free education. Being unrealistic, the next best thing is price controls.

 

By being willing to spend $250,000 on each student?

 

Oh goodness no!

There would be price controls so that, for example, an arts degree would be, say, $113,000 max. That's why I said free education is unrealistic. Although I have also heard that Europe was able to finance free higher education at some point in recent history.

 

Then you are able to see the problem? You agree that this student should NOT have been loaned $250,000 ?

 

I can't respond to this because saying that shouldn't be the case means that the poor can't go to college.

 

Let me ask it to you this way: What is the maximum amount of money that college education would have to cost for you not to be in favor of government paying for it?

$250,000 is a ridiculously high amount of money. Surely you don't believe government should be paying that, for poor people to be able to go to college, do you?

But it sounds like you are saying that if $250,000 was the minimum that college cost, that you would be in favor of government paying for it.

 

sounds like more then just Music, that is a lot of $$$

 

I would assume that a large proportion of that 250k is interest. Still, the principle is the same. Not the best use of money for the student or society.

 

Of course. How will you manage the future?

 

Education is not a business, it's an opportunity to manage our future.

 

The problem is, many of those on the Left want to spend money now, and then deal with the issue of where that money will come from later.

This is such a case, in my opinion.

It ends up creating lots of debt and a bad situation. And then usually the taxpayer often ends up footing the bill... which is probably kind of half what those supporters on the Left were expecting or hoping for.

Before any more money is loaned out, before any money was loaned out, and before government ever promises to guarantee loans, there needs to be an in-depth discussion and plan about exactly what will happen if things go wrong.
And I'm referring to specific types of situations like this one.


The issue in this story is government told private lenders that if they loaned money to students, then government would guarantee the loan, and pay back the private lender if the student didn't. But the expectation was that the government would then take on the role of going after the student for the money, in that situation. And the law said the student still was under obligation to pay back that money, even if they filed for bankruptcy.

This system would never have been agreed to unless all these things were in place. No private lender would be willing to lend to students without a government guarantee. And if students were allowed to get out of debt through bankruptcy, everyone could forecast that would end up being very widely abused, and it would end up pushing many young people into bankruptcy, in fact (probably also severely hurting their ability to ever be able to borrow to buy a house later in life).

Fiscal conservatives were told that if they agreed to put out the money, that money would end up being able to fund many generations of students going to college - the idea being that money would be loaned to students, they would eventually pay it back, and then that money could be loaned out again to another round of students.
The whole concept, what everyone was promised, was that this system being set up wouldn't cost the taxpayers anything (or at least any losses would be very minimal).

Well now we are beginning to see, that's not in fact what has ended up happening.

The whole college bubble is popping, and it's left many students in a bad and untenable place. And now we are being told they need a bailout.
Surprise, surprise. Who could have predicted this?

And with this happening, can fiscal conservatives trust the progressive side again, to agree to a scheme that uses "magical economics", which we are told will not end up costing anything?

 

And the music teachers will be willing to work for free?

 

the real question is how can a degree in music cost 250,000?

 

It's been quite a number of years now, so I barely remember this, but I remember young people protesting in the streets as one of the European powers decided to end their free higher education system. And it wasn't Greece. But going back to free education, it was possible at one point in some European nation.

 

Have you seen the teachers' salaries? Their benefits packages? And their retirement plans?

 

Probably something similar to the Cloward and Piven strategy- overtax the system and cause it to fail so a new system can be built from its ashes. Undoubtedly one where the state gets more resources and more authority and We The People get ****ed harder in the ass and told its a back massage.

 

Once upon a time American music led the world now it isn’t even making music