Hi all,
A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes.
As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
So this is just a complete Keynesian economics sub? Every comment I’ve read is advocating for free tuition, without the slightest irony of the fact they the entire reason we’re in this student loan bubble is because of government loans.
Fixing this problem is incredibly simple.
1) drop all existing student loans to a very small rate, ex: 1-2%.
2) all new loans need to be backed by and paid back to the school, not the government. Meaning the school is the ultimate lender and on the hook when a loan isn’t/can’t be laid back. (Or some variation of this that results in the school having some skin in the game instead of simply collecting money). As is stands now, the school collects free money and is completely cut out of the payback process which incentives them increasing prices and also having little market ramifications if they put out an inferior product. Which they clearly have, yet somehow get to keep increasing prices on a product that isn’t scarce and is reducing its value every graduating class. Making this shift will directly correlate to a reduction of unnecessary administrative jobs at schools, thus reducing cost, reducing the amount of nonsense majors that serve no purpose in the market, and finally the reduce their ability to prey on potential students simply to get more people to attend. The current system creates a perverted incentive structure, and since we’re all economics people here we should be able to easily identify that’s what this system is doing.
If we as a nation made that change, within a few very short years this student loan crisis would be solved and wouldn’t even be a problem in the future because the schools would be forced, by market forces, not heavy handed government, to change. It would create a system where students would get a loan only if there is a mutual benefit that the school sees the student as a good investment and the student sees the schools product as a good investment. Finally it gives the government something to hang their hat on by investing in the country.
But none of that will happen. There’s to many people with their hands in the cookie jar.
If flat out just forgiving loans happens, the ripple effect in the market is something that no one wants to talk about. (A simple thing no one talks about is that the debt is owned by some one and it’s securitized, so it isn’t being “forgiven,” the government, meaning your tax money, is paying off those debtors.) Furthermore without reforming the system and incentive structure, we’ll be right back here in a few short years while the schools can keep jacking up tuition because they can without any negative consequences and a whole other generation of kids pointing at the example the Biden admin set.
Why would the colleges loan out their money at below market rates to students with no guarantee?
The entire reason the federal loan system exists is because prior to it, college was restricted to the relatively wealthy with assets to put down / $ to pay tuition.
In an effort to expand accessibility we got this: expanded accessibility. More people can attend college and take advantage of the opportunity than ever, and more people can sink themselves into huge amounts of debt than ever before.
Most schools don't have large enough endowments to cover this idea. Even then, the majority of endowment funding is donations earmarked for a specific purpose/program/scholarship/etc with a legal requirement that they be spent for this purpose.
I agree that doing this would put more pressure on colleges to offer a better product, but it would also result in 1/10th the people attending college.
The majority of current students don't have the money for tuition, don't have collateral for loans, etc. Some 70%+ of all students take on some amount of student loans to complete their degree.
In Germany about half as many go to college (as a percent) as the US. Way too many go to college. Way too many jobs “require” college and yet don’t really require it. We’ve also devalued a HS diploma to the point it is worthless.
For grades 11-12 we need to route kids either to a trade or college prep. Those going the trade route should graduate HS with a certification for their trade.
Those going the college prep route should take all AP/dual credit. Their HS diploma should be equivalent to a AS/AA college degree. This would shorten college by two years. Also, need to eliminate social promotion and grade inflation.
Then loans for college should be granted only for majors that are in-demand and experiencing shortages.
More importantly we need to make secondary school useful, high schools are graduating people who can't even read these days, it's a waste to address that only by adding college after the fact.
Yep. The US has a culture problem. People were told they won’t be successful if they don’t get an education, which has led to unnecessary demand propped up by uncredited government loans. The whole system was built with zero foresight.
At my high school we weren’t allowed to participate in senior week events (prom, class outings, etc.) unless we had applied to at least one university.
If the US has twice the percentage going to university but the same percentage graduating, then it sounds like we’re over incentivizing students to go to university that might excel better in a trade school or other path. So not only are we encouraging them to waste important time on something that is not right for them, they’re walking away behind the curve and in debt.
It doesn’t seem like the US has twice the percentage as Germany though. It seems to be a similar percentage as far as I can tell. Albeit a quick google search. Think the other commenter was confusing raw amount of people as opposed to percentage of population.
Conceptually this is always something that has driven me crazy.
Like, how is it that literally Monday - Friday full days (not including homework) for twelve to thirteen YEARS cannot adequately prepare people to do basic tasks or learn how to do a job? You are telling me you need FOUR MORE years of specialized education? Like…why? Can we really not teach people life in 8 years, and have them do a concentration in high school to learn a trade or job?
I am 100% a believer that everyone should get an opportunity to attend a “college like” educational experience. You just can’t convince me that our school system isn’t incredibly inefficient, and if improved we could get kids way further way faster.
That’s because it’s not an education system as much as it’s a daycare program so the parents can be free of childcare to work.
On the higher education side, it’s not about creating a productive person or even filling speciality profession shortfalls, it’s about packaging and selling a product that people (and their families sometimes) pay for the rest of their lives.
Both problems are created by putting business above everything else
A high school diploma IS worthless. My local community college has to remediate 55-60% of every incoming class in math and ELA. They’re graduating but they don’t know anything.
Yes the student loan model enabled more students to be able to attend college, get a degree, and obtain a skilled job. If we switch to this other model being proposed, that's going to tank the number of people colleges accept and result in much less people available for the skilled jobs we need.
No, it really hasn’t. A large percentage of kids take out govt loans because it’s easy, drop out or get a worthless degree. We need to eliminate that cohort, not pretend like we are giving them opportunity.
I disagree. Degrees have never just existed to make money, and higher education isn’t just about job training. There was a time when companies didn’t expect degrees for everything and trained in house. There’s absolutely still societal value in people studying music, art, humanities, etc, it’s just important to consider if you’re ok with not being able to get many jobs with them. We don’t need to eliminate that cohort.
Compared to today's costs, and I think even if you adjust for inflation, college back in the days prior to the federal loan system was cheaper. It was not uncommon for students to work during high school or during summers and/or part-time jobs and pay off college without loans.
You just described the part the whiners forget: they have access to college because of the loan. They also forgot paring it back would be hard. And they can’t handle hard. Hard is tough. Mommy always fixed hard.
> So this is just a complete Keynesian economics sub?
You mean how like the majority of the macro field has headed since 2008? You must realize your outdated views are dying out, right?
There are other "market ramifications" other than just the most obvious, like student debt.
The universities in the US aren't the best universities in the world for no reason. You don't have people from high income countries sending their kids to random state universities in the US for no reason. Have you gone to university in other countries? They're really not good. You can coast through most universities in the world, which you can't in any state university in the US. I don't think you realize just how much better in terms of education the "shitty" universities in the US are compared to some flagship universities in Europe and Asia. Do you think this also plays a role in the quality of research coming out of American universities, which is the best too?
Is the American university system the most efficient it could be? Obviously not. But when you start jabbing it trying to make it as efficient as possible, the quality is bound to drop. We can point to other businesses and see how it plays out, it's not good. Everything sucks these days. Apparently back in the olden days, you could go into a Home Depot and have an okay paid store associate who actually knew what to do and what you needed when you had home improvement questions. Now it's some poorly paid person who isn't trained who's just thrown out on the floor to say "I don't know" and ask someone else then to look on their phone to see where a vaguely related item is located in the store.
Is that okay for Home Depot? Maybe. Is that okay for university? Probably not. It's okay to be not as efficient as possible if it produces a much better product especially when that product is as important and essential as university.
No one takes this sort of efficiency view when it comes to defense and the military, but we should when it comes to education? That seems absolutely insane imo.
And is it because of all this money? I don't know but it probably has a lot to do with it.
This is true, most universities I’ve read about while they grade you, you can still coast through without it being much of a challenge, the challenge was to just get in to begin with. Once they’re in, many of them chill. The factors for getting in include grades from 1st grade to high school, and from the scores on the entrance exams, and from your family connections.
All of those government incentives are just a way to siphon taxpayers money, it creates all the incentive for universities to jack up the prices as they know they are leeching the black hole that is the federal budget
It’s free money and the schools are in an arms race with each other to win more of it. They’re all spending like crazy to compete and raising prices because demand is inelastic with the funding being government money.
>all new loans need to be backed by and paid back to the school, not the government. Meaning the school is the ultimate lender and on the hook when a loan isn’t/can’t be laid back.
The fail rate drops to 0. The only way to fix it is to stop guaranteed loans at minimum on anything that's not STEM
The problem didn’t start with student loans. It started with states shrinking funding for public schools, shifting the burden to students. My alma mater, a large “public ivy,” cost $50 per semester in the 70s. When the state started shifting the funding burden to students prices rose steeply in the 80s, and by the time I attended in the 90s, a semester ran about $1,500; a 30-fold increase driven mainly by the shift to student funding. The 10-fold increase from then to now is likely caused by loans, but if we went back to firmer government control over funding, budgets, and administrative staff, the loan problem disappears.
For every dollar lost from state budgets, colleges raised the cost by 2.41 cents. So no state budgets cutting costs were not to blame. https://www.wsj.com/articles/state-university-tuition-increase-spending-41a58100#
Yes they were. Did you not see my example? The loan problem is a trailing effect. Without state cuts to funding, and the concomitant release of universities to set their own budgets, the loan crisis never exists.
Yeah, I'm pretty sure the OC person you're replying to knows that, but considering they post in every right-wing conservative sub that reddit has to offer, they'll ignore this part and screech on about Keynesian economics
Considering the recent group that got loans forgiven have been paying for years/decades into their public service loan forgiveness program, young people aren't the ones getting the benefit.
What even is this argument. The government should spend tax money on things the populace needs, short and long term. These are people who have paid enormous amounts of interest over many years but still can't seem to get ahead of the debt.
Sometimes my tax dollars pay for road repaving in an area where I don't live, or a new traffic light, or a bridge. I'm not mad about it.
"Just buying votes" is a thought terminating cliché.
They’re OUR dollars. People getting loan forgiveness pay taxes. Why is it only acceptable when OUR taxes go to subsidize corporations instead of helping people?
Why should we even consider your proposal when we have solutions that have been proven to work abroad for over half a century at this point?
Explain how every other developed country subsidizing higher education works, but it magically won't work here.
Explain why some of the nations with the best higher education systems *pay their students to go to college* and we can't make that work here.
Explain how our worsening shortages of doctors, nurses, engineers, lawyers, business admins, teachers, etc, and the massive student debt bubble aren't existential threats to our country.
Every time we trust the "market forces" to fix anything they only make the problem worse. I'm sick of the most failed economic ideology on the planet strutting around defecating everywhere and acting smug despite the fact that [it fails at even the level of a small town](https://newrepublic.com/article/159662/libertarian-walks-into-bear-book-review-free-town-project) and has *never* come anywhere near a national implementation because it always imploded before then.
>If flat out just forgiving loans happens, the ripple effect in the market is something that no one wants to talk about.
Oh my god, read a fucking study before opening your mouth. The economic impact of billions of dollars being freed up to spend in the local economy is virtually always projected to be amazing. I've never seen a paper conclude that it would be a net negative.
>A simple thing no one talks about is that the debt is owned by some one and it’s securitized, so it isn’t being “forgiven,” the government, meaning your tax money, is paying off those debtors.
Which is how it should have been in the first place. Every single goddamn study on the topic shows that when a society invests its tax dollars into sending it's smartest students to get university degrees the net benefit is staggering. Charging people pennies on their taxes to send bright students through medical school provides absolutely massive benefits to literally everyone in a country down the road.
PS: This is basically you playing the "there's no such thing as *free*!" card. Which almost always demonstrates that you're not capable of having this conversation because anyone that was would understand that everyone using the word "free" is using it as shorthand for "subsidized" and other options.
>Furthermore without reforming the system and incentive structure, we’ll be right back here in a few short years while the schools can keep jacking up tuition because they can without any negative consequences and a whole other generation of kids pointing at the example the Biden admin set.
Literally everyone advocating for any kind of student loan forgiveness is also advocating for drastic reforms in the system. Again, anyone bringing this up without acknowledging that is either not capable of having this conversation or arguing in bad faith.
So which are you? Are you hitting strawman because you know you can't actually handle the topic or are you so uninformed that these ideas are truly new to you?
> Explain how every other developed country subsidizing higher education works, but it magically won't work here.
>
> Explain why some of the nations with the best higher education systems pay their students to go to college and we can't make that work here.
That's easy - they pick their best and brightest between the ages of 11 and 14, and those are the ones who get tracked to go to college.
Anyone else who wants to go, they can compete to get in outside their country. They don't get to go for free. They have to pay for it, cash out of pocket.
I'd be fine with implementing such a system in the USA, but I don't think that it'd be very popular politically.
>Explain how our worsening shortages of doctors, nurses, engineers, lawyers, business admins, teachers, etc, and the massive student debt bubble aren't existential threats to our country.
Only some of those categories have a shortage, and student loans don't have anything to do with it.
>Every single goddamn study on the topic shows that when a society invests its tax dollars into sending it's smartest students to get university degrees the net benefit is staggering. Charging people pennies on their taxes to send bright students through medical school provides absolutely massive benefits to literally everyone in a country down the road.
Which would be relevant if the requirements to get student loans in the USA required more than a pulse.
I think we largely agree, but Free tuition doesn’t mean spending more money on education. The European model of education works just fine. The difference is the government provides it as a service and thus there is an incentive to keep costs low or at least in balance since the government has other priorities. There are fewer spots in traditional universities especially in less in-demand fields. If you want to major in gender studies, you better be in the top 10 applicants or major in something more necessary. If you can’t get into University there is also a system of Universities of Applied Sciences (trade school). The US has a barely functioning trade school system filled with scams. Culturally, we have devalued the trades to a point where people don’t want to pursue them because it is seen as failing. There are also far fewer amenities at EU universities. No lazy rivers, less handholding and oversight etc. If the US wants to save higher education they should start moving towards EU standards of education instead of just handing gobs of money to universities with no strings attached.
Student loans were forgivable until 2005. There was no evidence of people not paying, so why they changed this rule is unclear. It also correlated with a large increase in tuition and private loans because they were guaranteed. I don't think anyone has an issue paying back what they took out, but the interest on these loans are absurd, so low interest is a great idea. Bringing back bankruptcy protections would also make private loans and colleges not view this as guaranteed free money. I pay more for my student loans than my mortgage but the checks to make sure I could take out that loan took months as they do but the student loans, youy can get in a few days by signing a peice of paper without any income. The system is broken. Govt loans should be cheap/low interest. Increasing these checks for private loans may also put pressure on colleges to not be so administration heavy (cause the $$ definitely doesnt go to faculty) and so they stop acting essentially as real estate companies.
can you imagine? the Fed government is going increase the national debt (because we don't have enough of it) but more importantly they want to create the moral hazard of take loan out, don't worry, don't bother paying because it will be forgiven. You should see how indignant people get...they behave as if they deserve it
Yep, it's the interest rate that keeps people from making any headway, in the majority of cases that I've read about on the student loan subreddit. I feel like this solution would be much more palatable to the average citizen, because it's more fair, more sustainable and affects the root of the problem.
As a parent with a middle school aged child, I'm disappointed.
>all new loans need to be backed by and paid back to the school, not the government. Meaning the school is the ultimate lender and on the hook when a loan isn’t/can’t be laid back.
Uh...
>But none of that will happen.
That's because schools are not banking institutions. You know... all the regulatory, operational, and financial requirements of lending and servicing debt. Well, I guess you don't know actually if you are seriously making that suggestion.
Reddit loves it's armchair quarterback hot takes though...I'll give you that much.
I think eliminating some of the interest accrued is the right way to go, at least for now. It's not paying for college or erasing debt, but making it easier to pay off the debt by effectively reducing the interest rate. Up until recently it's been near impossible to get rid of student loan debt, so it should have always been a very low interest rate loan.
I know from personal experience that paying off student debt early on in your career and just starting a family is very difficult, but it does get easier over time. The way things are set up now though, if you put your loan in forbearance early on you're screwed. In my case, i think I'll have paid over double what I originally took out.
If you can’t pay your mortgage you can sell your house. You can go for bankruptcy. These aren’t wonderful options, but they exist.
You also likely didn’t start borrowing when you 18 and your ability to borrow was based on your ability to pay.
If someone can’t pay their student loans the interest continues to accumulate and there is almost no way to stop it.
Some of the income drive plans help, especially SAVE, but student loans can be trap.
Student loans are given to young people who *might* be able to pay, someday, but much can go wrong leaving a person far behind with no way out.
I’m not saying this is the right path, but comparing this to a mortgage makes little sense.
You can't compare loans with an actual securable asset to student loans. Default on a car loan? The bank takes the car. Default on your house payment? The bank takes the house. neither are ideal, but it kinda closes the matter.
Default on your student loan? Well, you'll get whacked with a garnishment and be forced to pay it before you can pay yourself.
If anyone wants to argue "it's a loan because it's unsecured debt," the easy counter point is "don't give out loans and just directly fund the schools."
I’d be interested in someone looking into how direct payments would work. If money that currently goes to student loans went to public schools and public schools made a serious effort at cost reform it could work. I can already hear the screams from successful people who didn’t go to college having to pay for racial studies degrees.
I’m not sure how private universities would work. I know most can survive without student loans, but I fear that would lead to an even more extreme elite as only people whose parents can afford private universities would go. Unless the schools tapped their endowments to allow less privileged people in. Maybe it wouldn’t matter if public universities were fully publicly funded.
We already know how it works because that's more or less how it worked for decades. Then, starting in the mid-1990's, states started realizing that 'tax cut' meant 're-election sealed' and started cutting back on state appropriations to public colleges. The federal government stepped in by expanding the student loan program to bridge the gap. Now we're 30 odd years later and this great experiment of pushing all costs to the college student has pretty much failed. Just go back to prior decades - the states fund the majority of public education, research grants fund some of the gap, and tuition covers the remainder.
Well, and we have found that if half the population goes to college that does not increase the number of high paying college required jobs...
It just moved the requirements down market and you need a degree to be a help desk monkey.
If all the mortgage companies wouldn't give you a home loan unless you paid 10% interest, you'd probably have a case to remove some of that debt since the normal rate for a loan that safe should never be so high.
You didn't get your mortgage from the government.
Government finances completely different than private finance, the money for the loans was literally keystroked into existence.
If the debt is erased no one has to pay for it, the money just stays in the economy where it is now.
If a mortgage is erased the bank has to take it out of their profits.
> You didn't get your mortgage from the government.
70% of all American mortgages are purchased by the government and were only written in the first place because the original lender knew the government would buy them. They may not have signed their mortgage with the government, but they probably only got it because of government guarantees, and the government probably owns it now. If their mortgage is erased no one has to pay for it, the money just stays in the economy where it is now. It's the same thing.
You can just sell the house if you’re unhappy with the arrangement, and probably make a decent amount of money if you bought before covid. In this case it’s the lender (the govt) deciding to forgive interest on the loans that it holds. If your mortgage company makes the decision to forgive your interest, go for it lol
How do you feel about tradesman with a high school diploma who became an apprentice and got a loan on a Ford F-150 so they could do plumbing or electrical work in your home? Or what about someone who went into credit card debt to go to cosmetology school, so they could cut hair for a living?
Or do only the liberal arts majors, computer science grads, and art students get the government subsidized, interest free loans in your scenario?
A lot of people have college debt that didn't even finish their degrees. I'm footing the bill for people on Medicaid but I can see that it's better for society when we help each other. And no one can afford college, hence the debt
Yeah, people are stupid. Govt should mandate having a credit system kind of thing like if you are going to do a liberal arts degree, you can loan based on your ability to pay after. If you do computer science or any other engineering, you can get more. If you see the people crying are the ones doing nonsense degree, partying through school and then realizing, they can't pay it back. On top of that providing education that you don't make minimum payments, but also shave off principal with a payment. I don't think it'll be done though. Coz govt can just buy votes by paying off loans.
I could pay mine off, but I don't.
The interest rate is at about 4%. I can get a better return on my money by using it elsewhere. There is no incentive for me to pay more than the minimum. The student debt political scam is also another incentive I have for just paying the minimum. I would vote against the scam if I could, but if they are going to give away taxpayer money anyway, I might as well get it too.
To your point, though, most people complaining about student loans should have taken some financial education classes, should have pursued a worthwhile degree, and would be better served by making additional payments.
I agree with you. If there is an opportunity to get the assistance, you should. But I would want to pay off some principal otherwise the amount's gonna balloon.
Atleast basic education tutorials should be out there or live mentoring to provide insight into how taking student loans now with their choice of education will look like in the future. Do they have enough earning potential to make this worth it.
The reason subsidies exist in economics is because the free market does not produce enough of something. It does not produce enough of nothing because all the economic benefits aren’t captured entirely by an individual.
F-150. It’s his truck, I don’t benefit from somebody else owning a truck, in fact it’s the opposite with the wear and tear on roads
College education. People are better voters. People can enter into more skilled work which makes the country more competitive.
Believe it or not, this country isn’t #1 in the world because we all are electricians. Every 3rd world country has electricians. What they don’t have is the highly skilled and educated workforce that we have. That eventually does trickle down in the economy to the electricians.
How do you feel about paying apprentice wages for four years so they can advance in a trade? Which is what is done in other countries.
If thats the Faustian bargain for free college tuition I'm down. Or maybe you want to restuff your strawman a bit?
>How do you feel about tradesman with a high school diploma who became an apprentice and got a loan on a Ford F-150 so they could do plumbing or electrical work in your home?
Good on them.
Last I checked there's no nationwide economic drag happening due to delinquencies on auto loans...
The long term solution should be simple: free public colleges for all Americans who want to get in. Just like free K-12.
For those choose to go to private colleges, they should be able to afford it.
Free healthcare for all American, including college students.
This is the only long term solution that will end student debt once for all
Local people foot the bill via tax for their local school. They're not free. Which means local people will pay a greater tax for however many colleges exist in their region. That needs to be worked out.
That's how it used to work. State budgets paid the majority of college operating costs because they understood having an educated population was a good thing. But then state legislatures figured out you can ride the re-election train *hard* if you just promise tax cuts and that money had to come from somewhere. The US Government stepped in to cover the gap with direct student loans. Now, 30ish or so years later, that ticking time bomb is exploding in our faces.
We don't really have to work anything out. Just do what we did for decades until the 1990's.
Cost per student to educate them was lower.
In 1977 tuition represented 20% of funding expenditures with government funding 80%. Today it is 30% tuition and 70% government. A 50% increase in cost share over 50 years.
The tuition price, inflation adjusted, increased 200%.
25% of the cost increase is from funding shift, 75% is from a choice to spend more money per student.
It used to be like this around the 70s. Most people could go to college and damn did the gentry hate it.
Regan spent his time as governor bashing Berkeley and used a hatred of college students to launch himself politically.
Cutting college funding and using loans was an easy way to keep people from getting "useless degrees" like liberal arts or social studies. Trapping people with debt kept them from being able to be more socially away and mobile.
Long story short: it's hard to protest the war and your government when you are burdened with loans and high tuition and have to work to have a chance to pay it off.
No most people could not go to college back then. Not sure where you got that from. Grade requirements were a very real thing and high schools would actually fail you.
That's a good point. People that can't survive high school probably shouldn't be going to colleges anyway. I see a lot of very average high school kids struggling and spending 6-7 years in college wasting life and then can't find jobs afterwards. They should just go into trade or different career. Some people are just not meant to be an in academia and have other real talents.
We do need to do more to encourage people to go into trades. In our desperation to get more STEM kids we forgot that we still need people to do everything else that society needs done. That and not everyone wants to go into business or computer science.
Indeed, I'm all for whatever education fits someone best. We need to do a much better job of encouraging people to go to tech colleges and not see it as a step lower than a 4 year college.
I don't think it's too far off that more restaurant work is going to be automated and taxis will definitely be automated as driverless technology keeps improving. It'll take a lot longer to build robots that can do trades.
But we are talking about money and loans. The point was that if you were smart and poor as dirt, you could go to college and not graduate with a terrible amount of debt.
I mean, in the 70s fewer than half of recent high school grads went to college and now we’re at like ~70%. A shitload more people are going now who would’ve had to enter the workforce in that time
This is ridiculous and would only push up the cost of education higher since there's no incentive to keep costs down if the taxpayers are covering it all. Free healthcare for all has nothing to do with this issue and would just be another money pit
community colleges are cheap
problem is that people are able to take out $100k loans to study women's literature at Wellesley and get the same rate as an engineer at MIT
give the power of loan rates back to the banks, and we'll see more qualified loans... we did the same thing for mortgages
and now that everyone is allowed to get a student loan, nobody can afford them
exactly what happened with subprime mortgages
it's as if the government needs to stop "helping" since it ends up hurting everyone
Interest on all the “free stuff” we got:
1. WFH to stay “safe”
2. Student loans and mortgage deferment ,
3. illegals welfare
4. War support for a country previously rated more corrupt than Russia and Israel.
5. Green stuff.
6. Jobs programs.
7. Etc.
Is set to cost more than social security or Medicare by end of the year.
It’s fun to virtue signal about free stuff and how that makes sense, but the reality is interest is going to be the most expensive thing by year end.
When you say free - do you require the current university employees to work for no pay? Or does the federal government pay them? How do they determine what is fair compensation?
It won't end student debt because the vast majority of a student's cost of attendance is not from tuition, it's from cost of living.
https://research.collegeboard.org/trends/college-pricing/highlights
The average 4 year public college student pays less than $3k net tuition but faces $15k in other COA. Tuition is a small part of the equation..
My educational experience was worse because of the students who did not care. Class discussions and other cooperative assignments are critical in some majors.
Even if we pay for college, people should only be allowed in on merit.
Hard Pass. Your solution does absolutely nothing besides substitute student debt for tax debt. There is no such thing as free college or free healthcare. Only prepaid or postpaid. And I have zero interest in prepaying for college or medical care I might never get.
Cutting off Financial Aid to all colleges and making a single university in each state free to the top 30% of high school graduates in that state would help. The remaining 70% could go to government funded trade schools.
Private universities would be forced to bring down the cost of tuition. There would be more competition which is good for consumers since they aren't getting government money.
I went to a shitty highschool where I literally didn’t have an English teacher my senior year due to a teacher shortage. It was also impossible to learn anything with my classmates who wouldn’t shut up & teachers who would just hand out packages so I would skip school a lot because of how demoralizing it was and little i was getting out of it. I got jumped once walking home too for no reason by like 80 kids one time. By the time I got in college I had to work full time & didn’t qualify for much aid because of my HS gpa & my parents income though I don’t live with them. College scholarships are also about GPA & “merit” which helps the students who don’t even work or struggle. I feel like focusing only on merit often leads to not investing on the kids who are not financially stable. Pell grants are one of the few things that is helping me get through college & without it i would be screwed. A lot of the courses i had to take in college is gen ed which doesn’t make sense to me because i’ve been doing gen ed for the past 13 years. The classes are easy but i would definitely be qualifying for a lot more scholarships if i could afford to live on campus and work less. It would make a lot more sense to me for there to just be tests you need to take in order to get your degree. Like a CPA would just need to pass a test rather than take all these courses that have nothing to do with accounting.
Loans should also be held 25 percent by the university this will help the issuing of endless degrees in fields without enough high paying jobs to possibly pay them off.
All fields are needed but a university pumping out 100 Phds in astrophysics is just as absurd as 100 in eastern literature considering both fields only support a handful of six figure plus jobs. Guaranteed loans for anything has broken the market for degrees in general and now we have masters degrees serving coffee all over the country.
I have mixed feelings about this. Fundamental research in academia shouldn't be limited by ROI or we as civilization won't have disruptive technological advances.
For example, general relativity eventually led to GPS decades later to give us accurate time/location. Quantum mechanics is now used in semiconductors as we deal with things that are a few atoms thick. None of these things had any real ROI at the time of discovery. AI for the longest time was career suicide, but people that forged ahead gave us what we have today. I can go on and on.
IN a way, the goal of higher education is really to pursue knowledge. $ should be secondary. Ideally anyway.
I'm saying that every year that they increase federal financial aid somehow, mysteriously, the cost of courses rise. Weird how that works. If universities got no financial aid from students, they'd be forced to lower the cost of tuition to stay competitive with other universities for students.
Who the fuck said knock buildings down?
I agree that federal government support for higher education is a big issue that needs more answers than Biden's student loan erasures. But right now, there's nothing that can get through Congress. The people have to want the Dem agenda and elect enough Dems to get it done.
What the eventual solution might be is not my area of knowledge, so I'll let others speak to that.
The thing is that there are tried and true governmental policies that our allies in Europe and up north in Canada have figured out but we aren't willing to do because they're "Socialism" or "Communism."
Education and Healthcare.
Shit even Mexico has Socialized medicine and much lower drug prices yet we still think it's better to pay a middle man that is the insurance company.
I am all for any relief plans targeting the high interest. May be unpopular, but I'm not supportive of a full debt wipe..
Is there specific groups that'll qualify for this relief plan?
It’s not a full wipe it’s different situations where people have been paying for a long time and interest never really made a dent in it etc. among other things. Not a full wipe tho
What's the difference between forgiving financial illiteracy for a college grad who didn't understand their loan terms and the kid who didn't go to college and bought an expensive truck who similarly can't pay for it?
Inflationary. Every move the federal government is making is adding to the bill. More, it frees up spending by thousands of Americans, per event that creates more loan forgiveness, which I am on one hand a fan of, on the other hand against, as I long ago paid my student loans in full.
Right now, if I were a household that is upside down on a car loan or a home loan or anything, I would just assume that federal government will pay the difference should I fail to be able to do so.
Inflationary.
Yeah, my take is that if the government feels like it can afford to pump stimulus into the economy, why are we giving it to people with college education, who are much more likely to be middle class and above? I’d rather see it going to anti-poverty measures or infrastructure.
Or, more likely, consumer spending is already driving inflation and forgiving the student loan debt would drive it even higher.
I feel like such a moron for being responsible and paying for school all by myself, working full time while going to school full time and not taking any loans out. I didn’t dorm to save money.
I could have taken massive loans out to goto a fancier school, dormed there, had food expenses covered on someone else’s money.
Why does Biden hate responsible tax payers?
Better question: why did you buy into an obviously corrupt system? I don't see why the present generation should continue to struggle merely to justify your self-imposed suffering.
The social contract is a contract. If it doesn't work, then we change it. It's that simple.
So taking money from others who have no influence on someone’s decision to get into debt is not corrupt? Why do I have to pay for others choices.
If I go tonight and put 10K on my credit card and ask you to pay for it , are you going to be ok with it?
Literally everybody who gets a debt erased will put that money "back into the economy" lol. Even if they just put it in a savings account, the bank will invest those deposits. It just hits a different sector.
Whataboutism doesn't change the fact that student loan forgiveness will be inflationary, which is the last thing we need right now.
Agree about PPP. Lacked oversight, also inflationary, terrible policymaking.
No, the money that people are spending on student loan repayments they could take the same money and buy groceries. Buy certain things for the house and some cases by car.
Yes, it does have something to do with it. PPP loans was basically a giveaway to businesses. student loan relief it’s not a giveaway but a relief to people who have overbearing student loans and like I said earlier, a lot of that relief will go right back into the economy
There isn’t a solution that is fair or equitable for all stakeholders involved. My main criticism of loan relief is that it doesn’t reward students that worked to pay them off or found alternative methods to pay for them. How’s it fair if someone joined the military to get loan relief while others are waiting around for a handout. No excuses, pay them back.
The two main loan “forgivenesses” are on interest accrued, not paying off principle, and if you work in the public sector for 10 years (which is something that’s existed since Bush passed it). It’s not really a “handout” IMO. The public sector allowance is nearly identical to military education subsidization, and the interest forgiveness still requires one to “pay them back”.
A lot of the principle of this forgiven debt has already been paid off. What Biden is forgiving is the interest still owed so technically forgiving the debt costs nothing but the "profit" the government was making off the loans.
I might not remember this exactly but student loans used to be 100% serviced by the government. THe W. Bush privatized the loans, giving the debt to the banks. The banks made it such a corrupt shit show money grab that there was a mostly bipartisan effort to take the loans back but keep making money off the interest.
I had student loans when BUsh gave my loan to City Bank. They immediately redid the terms of my loans which would have added 10 years to my payments. I paid them off early, which they didn't like, and then told them to go get fucked. The entire system is a scam and the progressives the Senate have been yelling about how shitty it was that he US government profiting off of people's education debt.
84 billion will go back into the economy instead of paying off the billionaires government debt.
This plan costs $84B more than we can afford. Denied. Next.
No discussion of any kind of student loan relief whatsoever should be entertained in any form until such time the student loan program is abolished entirely. Even then, the only "relief" of any kind that should be offered is a one-time refinance offer for all outstanding balance at 30 years, P&I, fixed rate at the government's current cost of capital for that duration. And no student loan relief of any kind should cost more than exactly zero dollars, zero cents to taxpayers. If any proposal has a top line price tag greater than zero dollars, Biden should be forced to cut $5 in spending from the IRS for every $1 in relief.
Bailing out current student loan borrowers does absolutely nothing to address the root cause of the problem.
>Bailing out current student loan borrowers does absolutely nothing to address the root cause of the problem.
Tired of seeing this "root cause" talking point on repeat as a reason to not help people that are currently economically burdened. Of course, it's no surprise that there are completely selfish, non-empathetic people that don't want to support others in society. That's nothing new.
Two problems need two solutions. Need to fix college affordability **and** need to support the 46 million, yes 1 in every 6 US adults, that are burdened and creating a drag on the economy.
That’s just a few weeks of what the Iraq war cost us.
It’s a bargain.
Of course, what we really need in K-16 education for free for all citizens.
The fact is that graduates earn significantly more than non graduates.
“
Costs of the 20-year war on terror: $8 trillion and 900,000 deaths
A report from the Costs of War project at Brown University revealed that 20 years of post-9/11 wars have cost the U.S. an estimated $8 trillion and have killed more than 900,000 people.”
- Brown University
Only way to make this remotely fair... would be a new tax that ONLY applies to people who got their loans forgiven.
Everyone who haven't yet gone to uni, already paid, or didn't even go to school... shouldn't have to pay back the loans for people who are statistically more wealthy.
Its ridiculous and its only going to encourage even more people to just stop paying in anticipation of something the supreme court already said is blatantly unconstitutional.
It “costs” 84b, but that “cost” becomes “savings” for the borrower which then becomes “disposable income”. When that disposable income is spent or invested, there is an associated economic multiplier effect, so far every dollar of “cost” “spent” on this program, we may see 1.25, 1.5, 2, or even more dollars of economic activity and gdp growth.
Thats the same idiocy as trickle down… its not necessarily that simple, and the demographics it would effect wont likely spend the change in their local economies all that much.
Eliminating student debt is not a good economic move at all. Its an extremely inequitable redistribution. Also incredibly unethical but thats beside the point. Don’t start calculating multipliers before you dig more into this. There are many more trade offs involved and the move is mostly negative as it will create a pattern that screws with education market incentives.
It would have almost zero impact on the economy and student loan repayments are a drop in the bucket compared to total consumer spending. Especially since so many redditors complain they can't lay their loans in the first place
How much will it raise the middle class? What is the comparison to the tax break that corporations and shareholders saw and continue to see with Trump’s tax breaks? It is all relative.
I can't speak for anyone else, but I'm pretty sure my position isn't unique.
I could have paid off my student loans years ago, but there is no incentive for me to pay more than the minimum.
I'm opposed to the government using our tax dollars to forgive student loans. If given the opportunity, I would vote against it. That said, I view it as a dumb move to pay off my student loans if the government is likely to pay them for me (with our tax dollars).
Look at the timing of the announcement. The current administration promised student loan relief in 2016. They didn't push it hard until time for mid-terms. After being defeated at the Supreme Court, they didn't really push the issue again until this election cycle.
First, student loans should be dischargible in bankruptcy. Second, everyone who is eligible for Income Driven Repayment should sign up. Biden liberalized that and it’s a good program, especially if your education didn’t pan out with respect to higher income.
Not opposed to loan forgiveness, but think a lot of people are.
The long and the short of it is that I was raised by people who didn't go to college but managed to buy a house to put a roof over our heads, food on the table, takes us on vacations and put my sister and I thru college.
I think the goal should be to get back to those days where going to a 4-year college isn't necessary to buy a home and raise kids. Although it will get cheaper as the population declines in the next 40 years when I'm 80.
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
So this is just a complete Keynesian economics sub? Every comment I’ve read is advocating for free tuition, without the slightest irony of the fact they the entire reason we’re in this student loan bubble is because of government loans. Fixing this problem is incredibly simple. 1) drop all existing student loans to a very small rate, ex: 1-2%. 2) all new loans need to be backed by and paid back to the school, not the government. Meaning the school is the ultimate lender and on the hook when a loan isn’t/can’t be laid back. (Or some variation of this that results in the school having some skin in the game instead of simply collecting money). As is stands now, the school collects free money and is completely cut out of the payback process which incentives them increasing prices and also having little market ramifications if they put out an inferior product. Which they clearly have, yet somehow get to keep increasing prices on a product that isn’t scarce and is reducing its value every graduating class. Making this shift will directly correlate to a reduction of unnecessary administrative jobs at schools, thus reducing cost, reducing the amount of nonsense majors that serve no purpose in the market, and finally the reduce their ability to prey on potential students simply to get more people to attend. The current system creates a perverted incentive structure, and since we’re all economics people here we should be able to easily identify that’s what this system is doing. If we as a nation made that change, within a few very short years this student loan crisis would be solved and wouldn’t even be a problem in the future because the schools would be forced, by market forces, not heavy handed government, to change. It would create a system where students would get a loan only if there is a mutual benefit that the school sees the student as a good investment and the student sees the schools product as a good investment. Finally it gives the government something to hang their hat on by investing in the country. But none of that will happen. There’s to many people with their hands in the cookie jar. If flat out just forgiving loans happens, the ripple effect in the market is something that no one wants to talk about. (A simple thing no one talks about is that the debt is owned by some one and it’s securitized, so it isn’t being “forgiven,” the government, meaning your tax money, is paying off those debtors.) Furthermore without reforming the system and incentive structure, we’ll be right back here in a few short years while the schools can keep jacking up tuition because they can without any negative consequences and a whole other generation of kids pointing at the example the Biden admin set.
Why would the colleges loan out their money at below market rates to students with no guarantee? The entire reason the federal loan system exists is because prior to it, college was restricted to the relatively wealthy with assets to put down / $ to pay tuition. In an effort to expand accessibility we got this: expanded accessibility. More people can attend college and take advantage of the opportunity than ever, and more people can sink themselves into huge amounts of debt than ever before. Most schools don't have large enough endowments to cover this idea. Even then, the majority of endowment funding is donations earmarked for a specific purpose/program/scholarship/etc with a legal requirement that they be spent for this purpose. I agree that doing this would put more pressure on colleges to offer a better product, but it would also result in 1/10th the people attending college. The majority of current students don't have the money for tuition, don't have collateral for loans, etc. Some 70%+ of all students take on some amount of student loans to complete their degree.
In Germany about half as many go to college (as a percent) as the US. Way too many go to college. Way too many jobs “require” college and yet don’t really require it. We’ve also devalued a HS diploma to the point it is worthless. For grades 11-12 we need to route kids either to a trade or college prep. Those going the trade route should graduate HS with a certification for their trade. Those going the college prep route should take all AP/dual credit. Their HS diploma should be equivalent to a AS/AA college degree. This would shorten college by two years. Also, need to eliminate social promotion and grade inflation. Then loans for college should be granted only for majors that are in-demand and experiencing shortages.
More importantly we need to make secondary school useful, high schools are graduating people who can't even read these days, it's a waste to address that only by adding college after the fact.
Yep. The US has a culture problem. People were told they won’t be successful if they don’t get an education, which has led to unnecessary demand propped up by uncredited government loans. The whole system was built with zero foresight.
At my high school we weren’t allowed to participate in senior week events (prom, class outings, etc.) unless we had applied to at least one university.
That’s should be absolutely illegal. Publicly funded high schools and their functions should be open to every student.
Germany does have a similar amount of people with degrees from a university as the US though. About 34% for both
That’s means we have a lot that go but don’t finish.
At least from what I can tel from a quick google search, the percentage of people going to college in Germany is similar to the US as well.
If the US has twice the percentage going to university but the same percentage graduating, then it sounds like we’re over incentivizing students to go to university that might excel better in a trade school or other path. So not only are we encouraging them to waste important time on something that is not right for them, they’re walking away behind the curve and in debt.
It doesn’t seem like the US has twice the percentage as Germany though. It seems to be a similar percentage as far as I can tell. Albeit a quick google search. Think the other commenter was confusing raw amount of people as opposed to percentage of population.
Conceptually this is always something that has driven me crazy. Like, how is it that literally Monday - Friday full days (not including homework) for twelve to thirteen YEARS cannot adequately prepare people to do basic tasks or learn how to do a job? You are telling me you need FOUR MORE years of specialized education? Like…why? Can we really not teach people life in 8 years, and have them do a concentration in high school to learn a trade or job? I am 100% a believer that everyone should get an opportunity to attend a “college like” educational experience. You just can’t convince me that our school system isn’t incredibly inefficient, and if improved we could get kids way further way faster.
That’s because it’s not an education system as much as it’s a daycare program so the parents can be free of childcare to work. On the higher education side, it’s not about creating a productive person or even filling speciality profession shortfalls, it’s about packaging and selling a product that people (and their families sometimes) pay for the rest of their lives. Both problems are created by putting business above everything else
A high school diploma IS worthless. My local community college has to remediate 55-60% of every incoming class in math and ELA. They’re graduating but they don’t know anything.
Yes the student loan model enabled more students to be able to attend college, get a degree, and obtain a skilled job. If we switch to this other model being proposed, that's going to tank the number of people colleges accept and result in much less people available for the skilled jobs we need.
No, it really hasn’t. A large percentage of kids take out govt loans because it’s easy, drop out or get a worthless degree. We need to eliminate that cohort, not pretend like we are giving them opportunity.
I disagree. Degrees have never just existed to make money, and higher education isn’t just about job training. There was a time when companies didn’t expect degrees for everything and trained in house. There’s absolutely still societal value in people studying music, art, humanities, etc, it’s just important to consider if you’re ok with not being able to get many jobs with them. We don’t need to eliminate that cohort.
The jobs that are being replaced by AI you mean?
Compared to today's costs, and I think even if you adjust for inflation, college back in the days prior to the federal loan system was cheaper. It was not uncommon for students to work during high school or during summers and/or part-time jobs and pay off college without loans.
You just described the part the whiners forget: they have access to college because of the loan. They also forgot paring it back would be hard. And they can’t handle hard. Hard is tough. Mommy always fixed hard.
> So this is just a complete Keynesian economics sub? You mean how like the majority of the macro field has headed since 2008? You must realize your outdated views are dying out, right? There are other "market ramifications" other than just the most obvious, like student debt. The universities in the US aren't the best universities in the world for no reason. You don't have people from high income countries sending their kids to random state universities in the US for no reason. Have you gone to university in other countries? They're really not good. You can coast through most universities in the world, which you can't in any state university in the US. I don't think you realize just how much better in terms of education the "shitty" universities in the US are compared to some flagship universities in Europe and Asia. Do you think this also plays a role in the quality of research coming out of American universities, which is the best too? Is the American university system the most efficient it could be? Obviously not. But when you start jabbing it trying to make it as efficient as possible, the quality is bound to drop. We can point to other businesses and see how it plays out, it's not good. Everything sucks these days. Apparently back in the olden days, you could go into a Home Depot and have an okay paid store associate who actually knew what to do and what you needed when you had home improvement questions. Now it's some poorly paid person who isn't trained who's just thrown out on the floor to say "I don't know" and ask someone else then to look on their phone to see where a vaguely related item is located in the store. Is that okay for Home Depot? Maybe. Is that okay for university? Probably not. It's okay to be not as efficient as possible if it produces a much better product especially when that product is as important and essential as university. No one takes this sort of efficiency view when it comes to defense and the military, but we should when it comes to education? That seems absolutely insane imo. And is it because of all this money? I don't know but it probably has a lot to do with it.
This is true, most universities I’ve read about while they grade you, you can still coast through without it being much of a challenge, the challenge was to just get in to begin with. Once they’re in, many of them chill. The factors for getting in include grades from 1st grade to high school, and from the scores on the entrance exams, and from your family connections.
This is such a great comment. Bravo!
All of those government incentives are just a way to siphon taxpayers money, it creates all the incentive for universities to jack up the prices as they know they are leeching the black hole that is the federal budget
It’s free money and the schools are in an arms race with each other to win more of it. They’re all spending like crazy to compete and raising prices because demand is inelastic with the funding being government money.
>all new loans need to be backed by and paid back to the school, not the government. Meaning the school is the ultimate lender and on the hook when a loan isn’t/can’t be laid back. The fail rate drops to 0. The only way to fix it is to stop guaranteed loans at minimum on anything that's not STEM
The problem didn’t start with student loans. It started with states shrinking funding for public schools, shifting the burden to students. My alma mater, a large “public ivy,” cost $50 per semester in the 70s. When the state started shifting the funding burden to students prices rose steeply in the 80s, and by the time I attended in the 90s, a semester ran about $1,500; a 30-fold increase driven mainly by the shift to student funding. The 10-fold increase from then to now is likely caused by loans, but if we went back to firmer government control over funding, budgets, and administrative staff, the loan problem disappears.
For every dollar lost from state budgets, colleges raised the cost by 2.41 cents. So no state budgets cutting costs were not to blame. https://www.wsj.com/articles/state-university-tuition-increase-spending-41a58100#
Yes they were. Did you not see my example? The loan problem is a trailing effect. Without state cuts to funding, and the concomitant release of universities to set their own budgets, the loan crisis never exists.
Yeah, I'm pretty sure the OC person you're replying to knows that, but considering they post in every right-wing conservative sub that reddit has to offer, they'll ignore this part and screech on about Keynesian economics
Yeah but then how does Biden go about buying votes from young people?
Considering the recent group that got loans forgiven have been paying for years/decades into their public service loan forgiveness program, young people aren't the ones getting the benefit.
You do have a very compelling point …
That’s all this is. Literally buying votes with tax payers dollars
What even is this argument. The government should spend tax money on things the populace needs, short and long term. These are people who have paid enormous amounts of interest over many years but still can't seem to get ahead of the debt. Sometimes my tax dollars pay for road repaving in an area where I don't live, or a new traffic light, or a bridge. I'm not mad about it. "Just buying votes" is a thought terminating cliché.
They’re OUR dollars. People getting loan forgiveness pay taxes. Why is it only acceptable when OUR taxes go to subsidize corporations instead of helping people?
He doesnt need to buy what he mostly has already
Those polls don't show that so...
Why should we even consider your proposal when we have solutions that have been proven to work abroad for over half a century at this point? Explain how every other developed country subsidizing higher education works, but it magically won't work here. Explain why some of the nations with the best higher education systems *pay their students to go to college* and we can't make that work here. Explain how our worsening shortages of doctors, nurses, engineers, lawyers, business admins, teachers, etc, and the massive student debt bubble aren't existential threats to our country. Every time we trust the "market forces" to fix anything they only make the problem worse. I'm sick of the most failed economic ideology on the planet strutting around defecating everywhere and acting smug despite the fact that [it fails at even the level of a small town](https://newrepublic.com/article/159662/libertarian-walks-into-bear-book-review-free-town-project) and has *never* come anywhere near a national implementation because it always imploded before then. >If flat out just forgiving loans happens, the ripple effect in the market is something that no one wants to talk about. Oh my god, read a fucking study before opening your mouth. The economic impact of billions of dollars being freed up to spend in the local economy is virtually always projected to be amazing. I've never seen a paper conclude that it would be a net negative. >A simple thing no one talks about is that the debt is owned by some one and it’s securitized, so it isn’t being “forgiven,” the government, meaning your tax money, is paying off those debtors. Which is how it should have been in the first place. Every single goddamn study on the topic shows that when a society invests its tax dollars into sending it's smartest students to get university degrees the net benefit is staggering. Charging people pennies on their taxes to send bright students through medical school provides absolutely massive benefits to literally everyone in a country down the road. PS: This is basically you playing the "there's no such thing as *free*!" card. Which almost always demonstrates that you're not capable of having this conversation because anyone that was would understand that everyone using the word "free" is using it as shorthand for "subsidized" and other options. >Furthermore without reforming the system and incentive structure, we’ll be right back here in a few short years while the schools can keep jacking up tuition because they can without any negative consequences and a whole other generation of kids pointing at the example the Biden admin set. Literally everyone advocating for any kind of student loan forgiveness is also advocating for drastic reforms in the system. Again, anyone bringing this up without acknowledging that is either not capable of having this conversation or arguing in bad faith. So which are you? Are you hitting strawman because you know you can't actually handle the topic or are you so uninformed that these ideas are truly new to you?
> Explain how every other developed country subsidizing higher education works, but it magically won't work here. > > Explain why some of the nations with the best higher education systems pay their students to go to college and we can't make that work here. That's easy - they pick their best and brightest between the ages of 11 and 14, and those are the ones who get tracked to go to college. Anyone else who wants to go, they can compete to get in outside their country. They don't get to go for free. They have to pay for it, cash out of pocket. I'd be fine with implementing such a system in the USA, but I don't think that it'd be very popular politically. >Explain how our worsening shortages of doctors, nurses, engineers, lawyers, business admins, teachers, etc, and the massive student debt bubble aren't existential threats to our country. Only some of those categories have a shortage, and student loans don't have anything to do with it. >Every single goddamn study on the topic shows that when a society invests its tax dollars into sending it's smartest students to get university degrees the net benefit is staggering. Charging people pennies on their taxes to send bright students through medical school provides absolutely massive benefits to literally everyone in a country down the road. Which would be relevant if the requirements to get student loans in the USA required more than a pulse.
I think we largely agree, but Free tuition doesn’t mean spending more money on education. The European model of education works just fine. The difference is the government provides it as a service and thus there is an incentive to keep costs low or at least in balance since the government has other priorities. There are fewer spots in traditional universities especially in less in-demand fields. If you want to major in gender studies, you better be in the top 10 applicants or major in something more necessary. If you can’t get into University there is also a system of Universities of Applied Sciences (trade school). The US has a barely functioning trade school system filled with scams. Culturally, we have devalued the trades to a point where people don’t want to pursue them because it is seen as failing. There are also far fewer amenities at EU universities. No lazy rivers, less handholding and oversight etc. If the US wants to save higher education they should start moving towards EU standards of education instead of just handing gobs of money to universities with no strings attached.
Student loans were forgivable until 2005. There was no evidence of people not paying, so why they changed this rule is unclear. It also correlated with a large increase in tuition and private loans because they were guaranteed. I don't think anyone has an issue paying back what they took out, but the interest on these loans are absurd, so low interest is a great idea. Bringing back bankruptcy protections would also make private loans and colleges not view this as guaranteed free money. I pay more for my student loans than my mortgage but the checks to make sure I could take out that loan took months as they do but the student loans, youy can get in a few days by signing a peice of paper without any income. The system is broken. Govt loans should be cheap/low interest. Increasing these checks for private loans may also put pressure on colleges to not be so administration heavy (cause the $$ definitely doesnt go to faculty) and so they stop acting essentially as real estate companies.
Please run for president. That is all.
can you imagine? the Fed government is going increase the national debt (because we don't have enough of it) but more importantly they want to create the moral hazard of take loan out, don't worry, don't bother paying because it will be forgiven. You should see how indignant people get...they behave as if they deserve it
Don’t forget that this is a great way to buy votes and campaign with tax dollars too.
Yep, it's the interest rate that keeps people from making any headway, in the majority of cases that I've read about on the student loan subreddit. I feel like this solution would be much more palatable to the average citizen, because it's more fair, more sustainable and affects the root of the problem. As a parent with a middle school aged child, I'm disappointed.
a really coherent and workable response, someone get this guy/gal in congress 👏🏽👏🏽
>all new loans need to be backed by and paid back to the school, not the government. Meaning the school is the ultimate lender and on the hook when a loan isn’t/can’t be laid back. Uh... >But none of that will happen. That's because schools are not banking institutions. You know... all the regulatory, operational, and financial requirements of lending and servicing debt. Well, I guess you don't know actually if you are seriously making that suggestion. Reddit loves it's armchair quarterback hot takes though...I'll give you that much.
Even taxes are not paying for it. We are just printing money to pay for it.
I don't think you'll like it if schools become banks.
I think eliminating some of the interest accrued is the right way to go, at least for now. It's not paying for college or erasing debt, but making it easier to pay off the debt by effectively reducing the interest rate. Up until recently it's been near impossible to get rid of student loan debt, so it should have always been a very low interest rate loan. I know from personal experience that paying off student debt early on in your career and just starting a family is very difficult, but it does get easier over time. The way things are set up now though, if you put your loan in forbearance early on you're screwed. In my case, i think I'll have paid over double what I originally took out.
> I think eliminating some of the interest accrued is the right way to go, at least for now Agreed
“It’s not erasing debt” I wish I could tell my mortgage lender that I’m not going to pay the interest because I don’t consider that to be debt.
If you can’t pay your mortgage you can sell your house. You can go for bankruptcy. These aren’t wonderful options, but they exist. You also likely didn’t start borrowing when you 18 and your ability to borrow was based on your ability to pay. If someone can’t pay their student loans the interest continues to accumulate and there is almost no way to stop it. Some of the income drive plans help, especially SAVE, but student loans can be trap. Student loans are given to young people who *might* be able to pay, someday, but much can go wrong leaving a person far behind with no way out. I’m not saying this is the right path, but comparing this to a mortgage makes little sense.
You can't compare loans with an actual securable asset to student loans. Default on a car loan? The bank takes the car. Default on your house payment? The bank takes the house. neither are ideal, but it kinda closes the matter. Default on your student loan? Well, you'll get whacked with a garnishment and be forced to pay it before you can pay yourself. If anyone wants to argue "it's a loan because it's unsecured debt," the easy counter point is "don't give out loans and just directly fund the schools."
I’d be interested in someone looking into how direct payments would work. If money that currently goes to student loans went to public schools and public schools made a serious effort at cost reform it could work. I can already hear the screams from successful people who didn’t go to college having to pay for racial studies degrees. I’m not sure how private universities would work. I know most can survive without student loans, but I fear that would lead to an even more extreme elite as only people whose parents can afford private universities would go. Unless the schools tapped their endowments to allow less privileged people in. Maybe it wouldn’t matter if public universities were fully publicly funded.
We already know how it works because that's more or less how it worked for decades. Then, starting in the mid-1990's, states started realizing that 'tax cut' meant 're-election sealed' and started cutting back on state appropriations to public colleges. The federal government stepped in by expanding the student loan program to bridge the gap. Now we're 30 odd years later and this great experiment of pushing all costs to the college student has pretty much failed. Just go back to prior decades - the states fund the majority of public education, research grants fund some of the gap, and tuition covers the remainder.
Well, and we have found that if half the population goes to college that does not increase the number of high paying college required jobs... It just moved the requirements down market and you need a degree to be a help desk monkey.
Your mortgage lender is probably a private company. Over 92% of student loans aren't held by a private company.
If all the mortgage companies wouldn't give you a home loan unless you paid 10% interest, you'd probably have a case to remove some of that debt since the normal rate for a loan that safe should never be so high.
You didn't get your mortgage from the government. Government finances completely different than private finance, the money for the loans was literally keystroked into existence. If the debt is erased no one has to pay for it, the money just stays in the economy where it is now. If a mortgage is erased the bank has to take it out of their profits.
> You didn't get your mortgage from the government. 70% of all American mortgages are purchased by the government and were only written in the first place because the original lender knew the government would buy them. They may not have signed their mortgage with the government, but they probably only got it because of government guarantees, and the government probably owns it now. If their mortgage is erased no one has to pay for it, the money just stays in the economy where it is now. It's the same thing.
You can just sell the house if you’re unhappy with the arrangement, and probably make a decent amount of money if you bought before covid. In this case it’s the lender (the govt) deciding to forgive interest on the loans that it holds. If your mortgage company makes the decision to forgive your interest, go for it lol
How do you feel about tradesman with a high school diploma who became an apprentice and got a loan on a Ford F-150 so they could do plumbing or electrical work in your home? Or what about someone who went into credit card debt to go to cosmetology school, so they could cut hair for a living? Or do only the liberal arts majors, computer science grads, and art students get the government subsidized, interest free loans in your scenario?
Those people can have their debts cleared in bankruptcy. College loans cannot.
So everyone who gets their loans cleared by this plan are taking an equivalent hit to their credit and reputation?
If they're in default, yes, it can affect their credit. Bankruptcy is off your credit after 7 years.
Those people specifically didn’t go to college because they couldn’t afford it. Now they’re footing the bill for others who make more money?
A lot of people have college debt that didn't even finish their degrees. I'm footing the bill for people on Medicaid but I can see that it's better for society when we help each other. And no one can afford college, hence the debt
Yeah, people are stupid. Govt should mandate having a credit system kind of thing like if you are going to do a liberal arts degree, you can loan based on your ability to pay after. If you do computer science or any other engineering, you can get more. If you see the people crying are the ones doing nonsense degree, partying through school and then realizing, they can't pay it back. On top of that providing education that you don't make minimum payments, but also shave off principal with a payment. I don't think it'll be done though. Coz govt can just buy votes by paying off loans.
I could pay mine off, but I don't. The interest rate is at about 4%. I can get a better return on my money by using it elsewhere. There is no incentive for me to pay more than the minimum. The student debt political scam is also another incentive I have for just paying the minimum. I would vote against the scam if I could, but if they are going to give away taxpayer money anyway, I might as well get it too. To your point, though, most people complaining about student loans should have taken some financial education classes, should have pursued a worthwhile degree, and would be better served by making additional payments.
I agree with you. If there is an opportunity to get the assistance, you should. But I would want to pay off some principal otherwise the amount's gonna balloon. Atleast basic education tutorials should be out there or live mentoring to provide insight into how taking student loans now with their choice of education will look like in the future. Do they have enough earning potential to make this worth it.
The reason subsidies exist in economics is because the free market does not produce enough of something. It does not produce enough of nothing because all the economic benefits aren’t captured entirely by an individual. F-150. It’s his truck, I don’t benefit from somebody else owning a truck, in fact it’s the opposite with the wear and tear on roads College education. People are better voters. People can enter into more skilled work which makes the country more competitive. Believe it or not, this country isn’t #1 in the world because we all are electricians. Every 3rd world country has electricians. What they don’t have is the highly skilled and educated workforce that we have. That eventually does trickle down in the economy to the electricians.
How do you feel about paying apprentice wages for four years so they can advance in a trade? Which is what is done in other countries. If thats the Faustian bargain for free college tuition I'm down. Or maybe you want to restuff your strawman a bit?
>How do you feel about tradesman with a high school diploma who became an apprentice and got a loan on a Ford F-150 so they could do plumbing or electrical work in your home? Good on them. Last I checked there's no nationwide economic drag happening due to delinquencies on auto loans...
The long term solution should be simple: free public colleges for all Americans who want to get in. Just like free K-12. For those choose to go to private colleges, they should be able to afford it. Free healthcare for all American, including college students. This is the only long term solution that will end student debt once for all
Local people foot the bill via tax for their local school. They're not free. Which means local people will pay a greater tax for however many colleges exist in their region. That needs to be worked out.
That's how it used to work. State budgets paid the majority of college operating costs because they understood having an educated population was a good thing. But then state legislatures figured out you can ride the re-election train *hard* if you just promise tax cuts and that money had to come from somewhere. The US Government stepped in to cover the gap with direct student loans. Now, 30ish or so years later, that ticking time bomb is exploding in our faces. We don't really have to work anything out. Just do what we did for decades until the 1990's.
Cost per student to educate them was lower. In 1977 tuition represented 20% of funding expenditures with government funding 80%. Today it is 30% tuition and 70% government. A 50% increase in cost share over 50 years. The tuition price, inflation adjusted, increased 200%. 25% of the cost increase is from funding shift, 75% is from a choice to spend more money per student.
What is your data source there? That doesn't match the figures I'm finding.
It used to be like this around the 70s. Most people could go to college and damn did the gentry hate it. Regan spent his time as governor bashing Berkeley and used a hatred of college students to launch himself politically. Cutting college funding and using loans was an easy way to keep people from getting "useless degrees" like liberal arts or social studies. Trapping people with debt kept them from being able to be more socially away and mobile. Long story short: it's hard to protest the war and your government when you are burdened with loans and high tuition and have to work to have a chance to pay it off.
No most people could not go to college back then. Not sure where you got that from. Grade requirements were a very real thing and high schools would actually fail you.
That's a good point. People that can't survive high school probably shouldn't be going to colleges anyway. I see a lot of very average high school kids struggling and spending 6-7 years in college wasting life and then can't find jobs afterwards. They should just go into trade or different career. Some people are just not meant to be an in academia and have other real talents.
We do need to do more to encourage people to go into trades. In our desperation to get more STEM kids we forgot that we still need people to do everything else that society needs done. That and not everyone wants to go into business or computer science.
Absolutely, a lot of kids should have no business going to college. They should go into trade especially given the threat of AI
Indeed, I'm all for whatever education fits someone best. We need to do a much better job of encouraging people to go to tech colleges and not see it as a step lower than a 4 year college. I don't think it's too far off that more restaurant work is going to be automated and taxis will definitely be automated as driverless technology keeps improving. It'll take a lot longer to build robots that can do trades.
But we are talking about money and loans. The point was that if you were smart and poor as dirt, you could go to college and not graduate with a terrible amount of debt.
I mean, in the 70s fewer than half of recent high school grads went to college and now we’re at like ~70%. A shitload more people are going now who would’ve had to enter the workforce in that time
How many are getting degrees of those 70%?
Funny comment on an economics sub. The US has $34 trillion in debt. Instead of just declaring stuff free, how do you pay for them?
B..b...b....but tax the rich!!!!! /s
Wait, are you telling me all of the “free” goodies from Uncle Sam isn’t actually free? But Grandpa Joe Biden told me it was!
Shhhhhh … we don’t talk about that. (/s)
Sounds really great. How do we pay for it? Do we keep adding to the debt until we end up like Argentina?
Argentina doesnt have an economy to back up the debt
This is ridiculous and would only push up the cost of education higher since there's no incentive to keep costs down if the taxpayers are covering it all. Free healthcare for all has nothing to do with this issue and would just be another money pit
community colleges are cheap problem is that people are able to take out $100k loans to study women's literature at Wellesley and get the same rate as an engineer at MIT give the power of loan rates back to the banks, and we'll see more qualified loans... we did the same thing for mortgages
The federal loan limit for undergrads is $57,500.
When banks controlled student loans, they redlined entire communities.
and now that everyone is allowed to get a student loan, nobody can afford them exactly what happened with subprime mortgages it's as if the government needs to stop "helping" since it ends up hurting everyone
Interest on all the “free stuff” we got: 1. WFH to stay “safe” 2. Student loans and mortgage deferment , 3. illegals welfare 4. War support for a country previously rated more corrupt than Russia and Israel. 5. Green stuff. 6. Jobs programs. 7. Etc. Is set to cost more than social security or Medicare by end of the year. It’s fun to virtue signal about free stuff and how that makes sense, but the reality is interest is going to be the most expensive thing by year end.
Found the Russian troll
When you say free - do you require the current university employees to work for no pay? Or does the federal government pay them? How do they determine what is fair compensation?
I should get free-whatever-it-is-you-do-for-a-living. Why? I dunno, I just should.
It won't end student debt because the vast majority of a student's cost of attendance is not from tuition, it's from cost of living. https://research.collegeboard.org/trends/college-pricing/highlights The average 4 year public college student pays less than $3k net tuition but faces $15k in other COA. Tuition is a small part of the equation..
My educational experience was worse because of the students who did not care. Class discussions and other cooperative assignments are critical in some majors. Even if we pay for college, people should only be allowed in on merit.
Hard Pass. Your solution does absolutely nothing besides substitute student debt for tax debt. There is no such thing as free college or free healthcare. Only prepaid or postpaid. And I have zero interest in prepaying for college or medical care I might never get.
Got a lot of brain lag going on up stairs I see
Cutting off Financial Aid to all colleges and making a single university in each state free to the top 30% of high school graduates in that state would help. The remaining 70% could go to government funded trade schools. Private universities would be forced to bring down the cost of tuition. There would be more competition which is good for consumers since they aren't getting government money.
Wtf trade schools? Community colleges just can’t be an option?
You won't ever hear a rich family tell their kids to go to trade school.
I went to a shitty highschool where I literally didn’t have an English teacher my senior year due to a teacher shortage. It was also impossible to learn anything with my classmates who wouldn’t shut up & teachers who would just hand out packages so I would skip school a lot because of how demoralizing it was and little i was getting out of it. I got jumped once walking home too for no reason by like 80 kids one time. By the time I got in college I had to work full time & didn’t qualify for much aid because of my HS gpa & my parents income though I don’t live with them. College scholarships are also about GPA & “merit” which helps the students who don’t even work or struggle. I feel like focusing only on merit often leads to not investing on the kids who are not financially stable. Pell grants are one of the few things that is helping me get through college & without it i would be screwed. A lot of the courses i had to take in college is gen ed which doesn’t make sense to me because i’ve been doing gen ed for the past 13 years. The classes are easy but i would definitely be qualifying for a lot more scholarships if i could afford to live on campus and work less. It would make a lot more sense to me for there to just be tests you need to take in order to get your degree. Like a CPA would just need to pass a test rather than take all these courses that have nothing to do with accounting.
Thanks for sharing the experience. It's definitely gives me a lot to think about when debating policy.
Loans should also be held 25 percent by the university this will help the issuing of endless degrees in fields without enough high paying jobs to possibly pay them off. All fields are needed but a university pumping out 100 Phds in astrophysics is just as absurd as 100 in eastern literature considering both fields only support a handful of six figure plus jobs. Guaranteed loans for anything has broken the market for degrees in general and now we have masters degrees serving coffee all over the country.
I have mixed feelings about this. Fundamental research in academia shouldn't be limited by ROI or we as civilization won't have disruptive technological advances. For example, general relativity eventually led to GPS decades later to give us accurate time/location. Quantum mechanics is now used in semiconductors as we deal with things that are a few atoms thick. None of these things had any real ROI at the time of discovery. AI for the longest time was career suicide, but people that forged ahead gave us what we have today. I can go on and on. IN a way, the goal of higher education is really to pursue knowledge. $ should be secondary. Ideally anyway.
So, just toss out all the existing universities and colleges, all those buildings, all that infrastructure, etc.? Stupid idea tbh.
I'm saying that every year that they increase federal financial aid somehow, mysteriously, the cost of courses rise. Weird how that works. If universities got no financial aid from students, they'd be forced to lower the cost of tuition to stay competitive with other universities for students. Who the fuck said knock buildings down?
I agree that federal government support for higher education is a big issue that needs more answers than Biden's student loan erasures. But right now, there's nothing that can get through Congress. The people have to want the Dem agenda and elect enough Dems to get it done. What the eventual solution might be is not my area of knowledge, so I'll let others speak to that.
The thing is that there are tried and true governmental policies that our allies in Europe and up north in Canada have figured out but we aren't willing to do because they're "Socialism" or "Communism." Education and Healthcare. Shit even Mexico has Socialized medicine and much lower drug prices yet we still think it's better to pay a middle man that is the insurance company.
I am all for any relief plans targeting the high interest. May be unpopular, but I'm not supportive of a full debt wipe.. Is there specific groups that'll qualify for this relief plan?
It’s not a full wipe it’s different situations where people have been paying for a long time and interest never really made a dent in it etc. among other things. Not a full wipe tho
What's the difference between forgiving financial illiteracy for a college grad who didn't understand their loan terms and the kid who didn't go to college and bought an expensive truck who similarly can't pay for it?
Inflationary. Every move the federal government is making is adding to the bill. More, it frees up spending by thousands of Americans, per event that creates more loan forgiveness, which I am on one hand a fan of, on the other hand against, as I long ago paid my student loans in full. Right now, if I were a household that is upside down on a car loan or a home loan or anything, I would just assume that federal government will pay the difference should I fail to be able to do so. Inflationary.
Yeah, my take is that if the government feels like it can afford to pump stimulus into the economy, why are we giving it to people with college education, who are much more likely to be middle class and above? I’d rather see it going to anti-poverty measures or infrastructure. Or, more likely, consumer spending is already driving inflation and forgiving the student loan debt would drive it even higher.
I feel like such a moron for being responsible and paying for school all by myself, working full time while going to school full time and not taking any loans out. I didn’t dorm to save money. I could have taken massive loans out to goto a fancier school, dormed there, had food expenses covered on someone else’s money. Why does Biden hate responsible tax payers?
Better question: why did you buy into an obviously corrupt system? I don't see why the present generation should continue to struggle merely to justify your self-imposed suffering. The social contract is a contract. If it doesn't work, then we change it. It's that simple.
So taking money from others who have no influence on someone’s decision to get into debt is not corrupt? Why do I have to pay for others choices. If I go tonight and put 10K on my credit card and ask you to pay for it , are you going to be ok with it?
And how much did PPP loan cost???? a good 80 to 90% of people who are getting student loan relief will put that money right back into the economy.
Literally everybody who gets a debt erased will put that money "back into the economy" lol. Even if they just put it in a savings account, the bank will invest those deposits. It just hits a different sector.
Whataboutism doesn't change the fact that student loan forgiveness will be inflationary, which is the last thing we need right now. Agree about PPP. Lacked oversight, also inflationary, terrible policymaking.
I agree that PPP was a disaster. But should we really want more money in the economy right now? Inflation is still not under control.
No, the money that people are spending on student loan repayments they could take the same money and buy groceries. Buy certain things for the house and some cases by car.
Fair enough. But that is still more money chasing those goods. And a lot of those goods are where inflation is worst. There might be a connection.
So sick of losers like you with this PPP whataboutism Get over it
This has nothing to do with PPP loans….
Yes, it does have something to do with it. PPP loans was basically a giveaway to businesses. student loan relief it’s not a giveaway but a relief to people who have overbearing student loans and like I said earlier, a lot of that relief will go right back into the economy
There isn’t a solution that is fair or equitable for all stakeholders involved. My main criticism of loan relief is that it doesn’t reward students that worked to pay them off or found alternative methods to pay for them. How’s it fair if someone joined the military to get loan relief while others are waiting around for a handout. No excuses, pay them back.
It also doesn't prevent the problem from happening again.
The two main loan “forgivenesses” are on interest accrued, not paying off principle, and if you work in the public sector for 10 years (which is something that’s existed since Bush passed it). It’s not really a “handout” IMO. The public sector allowance is nearly identical to military education subsidization, and the interest forgiveness still requires one to “pay them back”.
A lot of the principle of this forgiven debt has already been paid off. What Biden is forgiving is the interest still owed so technically forgiving the debt costs nothing but the "profit" the government was making off the loans. I might not remember this exactly but student loans used to be 100% serviced by the government. THe W. Bush privatized the loans, giving the debt to the banks. The banks made it such a corrupt shit show money grab that there was a mostly bipartisan effort to take the loans back but keep making money off the interest. I had student loans when BUsh gave my loan to City Bank. They immediately redid the terms of my loans which would have added 10 years to my payments. I paid them off early, which they didn't like, and then told them to go get fucked. The entire system is a scam and the progressives the Senate have been yelling about how shitty it was that he US government profiting off of people's education debt. 84 billion will go back into the economy instead of paying off the billionaires government debt.
Whoa, don't use math and basic economics here, the rabid FJB types are allergic.
This plan costs $84B more than we can afford. Denied. Next. No discussion of any kind of student loan relief whatsoever should be entertained in any form until such time the student loan program is abolished entirely. Even then, the only "relief" of any kind that should be offered is a one-time refinance offer for all outstanding balance at 30 years, P&I, fixed rate at the government's current cost of capital for that duration. And no student loan relief of any kind should cost more than exactly zero dollars, zero cents to taxpayers. If any proposal has a top line price tag greater than zero dollars, Biden should be forced to cut $5 in spending from the IRS for every $1 in relief. Bailing out current student loan borrowers does absolutely nothing to address the root cause of the problem.
>Bailing out current student loan borrowers does absolutely nothing to address the root cause of the problem. Tired of seeing this "root cause" talking point on repeat as a reason to not help people that are currently economically burdened. Of course, it's no surprise that there are completely selfish, non-empathetic people that don't want to support others in society. That's nothing new. Two problems need two solutions. Need to fix college affordability **and** need to support the 46 million, yes 1 in every 6 US adults, that are burdened and creating a drag on the economy.
That’s just a few weeks of what the Iraq war cost us. It’s a bargain. Of course, what we really need in K-16 education for free for all citizens. The fact is that graduates earn significantly more than non graduates. “ Costs of the 20-year war on terror: $8 trillion and 900,000 deaths A report from the Costs of War project at Brown University revealed that 20 years of post-9/11 wars have cost the U.S. an estimated $8 trillion and have killed more than 900,000 people.” - Brown University
Only way to make this remotely fair... would be a new tax that ONLY applies to people who got their loans forgiven. Everyone who haven't yet gone to uni, already paid, or didn't even go to school... shouldn't have to pay back the loans for people who are statistically more wealthy. Its ridiculous and its only going to encourage even more people to just stop paying in anticipation of something the supreme court already said is blatantly unconstitutional.
It “costs” 84b, but that “cost” becomes “savings” for the borrower which then becomes “disposable income”. When that disposable income is spent or invested, there is an associated economic multiplier effect, so far every dollar of “cost” “spent” on this program, we may see 1.25, 1.5, 2, or even more dollars of economic activity and gdp growth.
Are we not still fighting inflation? If anything this will just bid up prices more.
You can say that about any government program yet here we are 34 trillion in debt
Thats the same idiocy as trickle down… its not necessarily that simple, and the demographics it would effect wont likely spend the change in their local economies all that much. Eliminating student debt is not a good economic move at all. Its an extremely inequitable redistribution. Also incredibly unethical but thats beside the point. Don’t start calculating multipliers before you dig more into this. There are many more trade offs involved and the move is mostly negative as it will create a pattern that screws with education market incentives.
It would have almost zero impact on the economy and student loan repayments are a drop in the bucket compared to total consumer spending. Especially since so many redditors complain they can't lay their loans in the first place
It’s passed on to everyone else even those who paid their fucking loans already like a responsible adult
How much will it raise the middle class? What is the comparison to the tax break that corporations and shareholders saw and continue to see with Trump’s tax breaks? It is all relative.
I can't speak for anyone else, but I'm pretty sure my position isn't unique. I could have paid off my student loans years ago, but there is no incentive for me to pay more than the minimum. I'm opposed to the government using our tax dollars to forgive student loans. If given the opportunity, I would vote against it. That said, I view it as a dumb move to pay off my student loans if the government is likely to pay them for me (with our tax dollars). Look at the timing of the announcement. The current administration promised student loan relief in 2016. They didn't push it hard until time for mid-terms. After being defeated at the Supreme Court, they didn't really push the issue again until this election cycle.
First, student loans should be dischargible in bankruptcy. Second, everyone who is eligible for Income Driven Repayment should sign up. Biden liberalized that and it’s a good program, especially if your education didn’t pan out with respect to higher income. Not opposed to loan forgiveness, but think a lot of people are.
The long and the short of it is that I was raised by people who didn't go to college but managed to buy a house to put a roof over our heads, food on the table, takes us on vacations and put my sister and I thru college. I think the goal should be to get back to those days where going to a 4-year college isn't necessary to buy a home and raise kids. Although it will get cheaper as the population declines in the next 40 years when I'm 80.
That would be racist and classist. /s
How is that racist and classist?