Perhaps, but the alternative is to do nothing, and the existing system created the problem in the first place. It’s the same argument for why the Obama administration didn’t cancel people’s mortgages even when those mortgages were predatory loans. It means never doing anything except bailing out the lenders. Never the borrowers.
There is no moral hazard argument. It’s an argument for consistency, so people can plan out their lives. You can’t solve anything with a one time infusion of money, all you do make the problem worse for later generations without fixing the cost of education first.
Let’s also look at who you are helping.
The highest-income 40 percent of households (those with incomes above $74,000) owe almost 60 percent of the outstanding education debt and make almost three-quarters of the payments.
The lowest-income 40 percent of households hold just under 20 percent of the outstanding debt and make only 10 percent of the payments.
I know there are horror stories of people in debt, unable to get out, and that it’s an anchor to growth, but loan forgiveness is directed more to people that are actually doing okay comparatively.
Does that mean it’s right that there is so much debt? Not really, but I think targeting an already wealthy group doesn’t really help, at least without taking control of the prices of Higher Education to begin with.
Menzo
6147
You may be right, but in this case isn’t doing nothing better than making the problem worse? I’d say any program that causes college tuition costs to go up is worse.
It’s just unintended consequences all the way down. Just like how allowing people to borrow more for college at a lower interest rate caused college tuition costs to jump by the same amount, practically immediately.
We need to address the reasons why college costs so much and why so many people who probably don’t need to go to college feel like it’s their only option.
I’m also for free community college for everyone and figuring out ways to lower costs and increase quality of in-state universities to increase competition with private colleges (which would hopefully force them to lower their costs as well).
If you don’t want to read or respond to my actual suggestion, that’s fine, but I’ll repeat it here.
Emphasis added.
I don’t respond to claims that don’t seem to support the facts.
You have facts and studies to back up your claims, I will gladly listen. But a wall of text without citation or evidence?
Alstein
6152
I’d be perfectly fine with a forgiveness up to that median, and even a means-tested one, based on parental income or lack of it.
This should be front and center for a lot of people.
Me, too, but we aren’t going to be able to any of those things. They’re off the table.
Maybe the executive branch has some maneuvering room on what kind of loans they’ll back. Maybe they can simple refuse to back loans from private for-profit lenders and instead can loan the money directly or through non-profit lenders. Maybe they can stop issuing guarantees for loans to e.g. for-profit law schools. Maybe they can limit the amount they’ll guarantee, which will have a salutary effect on what colleges can charge. I have no idea what is possible here. But anything that requires Congress isn’t going to happen, and if the only solutions we can tolerate are those, there won’t be any solutions.
LockerK
6155
On average, the numbers suggest $35k forgiveness would “probably eliminate the student loan debt for the poorest half of debtors”.
Strollen
6156
It is a trade off. College graduates had an average have a starting salary of 55k and over the lifetime will make a $1+ million dollars, then high school grads. Only 37% of Americans have college degrees, so they are privileged. For the cost of forgiving a single 50K student loan, we can expand the child tax credit from 2000-$3600, for 31 years. The enhanced child tax credit reduce child poverty in this country between 25-40%. Once, we’ve almost eliminated child poverty in this country, then I’ll be open to helping out folks fortunate enough to have college degrees.
Aleck
6157
While I don’t disagree with you on this point, I do always find it somewhat distressing when students are so dismayed by how interest works. Compound interest is a miracle that cuts both ways. When you’re taking out a loan (student loans, car loans, mortgages, etc.), the interest will always be rough and much or most of your payment won’t touch the principal (esp. early on in a loan’s tenure). The flip side, of course, is the small sums you invest in your 20s should pay off rather nicely in your 60s/70s, provided you’ve invested them well.
I just finished a statistics-heavy master’s degree in public policy, and I was shocked by the number of classmates I had who didn’t understand how compound interest on their loans was going to make paying those loans back very costly.
(and, for the record, I’m all for reducing the cost of higher education, reducing the reliance on higher education for skilled trade jobs, and forgiving student loans when students are giving something back to their community, whether through jobs, volunteerism, etc.)
According to the Urban Institute’s data, 48% of student debt is held by households with graduate degrees. While graduate school means more time in school, it also tends to mean more debt at a higher interest rate — federal student loans for undergraduate students carry a 2.75% interest rate for the 2020 to 2021 school year, while graduate loans are higher at 4.3%.
Indeed, as well as a sizable amount of debt for people with graduate degrees.
Again, we are talking about a relatively privileged group in society.
41% of debt is held by families making 120k or more a year.
He is just going to ignore that data and keep saying the same thing. Forget it, it’s Chinatown.
I’m for both. Why choose?
Nope, I am going to point out that student debt is held mostly by people in higher income brackets, that the bottom 20% on average has less then 26,000 in debt, while the 80-90% has something like 50k in debt, and that Hispanics have the lowest overall debt levels, despite having some of the highest poverty levels.
If you want to help the wealthy part of our society retain their wealth, student loan forgiveness seems like a good way to do it.
LockerK
6162
Now imagine students at 17 and 18 years old taking out these loans for tens, even hundreds of thousands of dollars - amounts bigger than they’ve likely had to deal with or comprehend the impact of. The entire higher education industry is in desperate need of overhaul.
“Fuck the poor because the less poor might get some benefit” is certainly A Take. And I can assure you that federal loans will not necessarily cover the entire cost of an education. My non-federal loans were around 7% interest. My loan payments were around that of a mortgage, meaning I lived in a shithole apartment for my 20s and into my 30s - even with a relatively good paying job for the area - to be “fiscally responsible”.
Disregarding that Blacks have the highest overall debt levels. How is Black wealth doing in this nation, again?
CraigM
6163
Again the college experience and expectation is materially different for the millennial generation than prior generations
Like if you don’t want to acknowledge how the fundamental difference in job experience, college experience, pay, etc. are having a profound impact on people from younger generations, that’s fine, but don’t expect me to take your complaints seriously.
Note the age and timeframe. In 2018 the younger tail of the millennials would only be 22. So 39% had a degree at that point, but more will ultimately have a degree. If 37% is the national average, then millennials will ultimately end up north of 50%.
Scuzz
6164
That article above talked about $74k being the low of “higher incomes”…that is not very high in any urban area.
I don’t think you can simply forgive the debt, that would set a bad precedent, but reducing interest rates, forgiving a set percentage and changing the way things go forward would be fine.
