In these times where it seems like people are basically either pro-democracy or some version of raving crazy, it is interesting to come upon an issue that generates significant disagreement about a policy question that realistically might end up being decided in different ways. I'm not a big fan of the so-called squad and their politics, in many respects, although I admire their boldness on some economic issues. This is one where I not only disagree but think they are working against helpful solutions.
Not sure I have all the details, but my understanding is Biden could forgive 10,000 in student loans, given various constraints about eligibility. But Democrats farther to the left find this solution inadequate for some reason, and Democrats farther to the right are not really interested in the 10,000 itself, as it seems either unnecessary or biased in favor of a specific group rather than taking into account who is in the most need generally.
So I'm wondering - am I missing some good reason that we should either want the $10,000 or, even further, should want more than this or should be upset about what seems like an incredibly generous gift that already has problems with being biased?
My feeling is that we need to tackle massive wealth inequality, and the current rules that are set up to skew the entire system of government largesse in favor of the already wealthy. So if handing out student loan forgiveness is a way of taking one big quick step in that direction, I'm not too concerned if it's an imperfect step. At least it's going in the right direction and helping people who should be able to take advantage of improved economic mobility but are being hampered by debt. We gave massive handouts to companies who made bad decisions simply because we couldn't tolerate the negative impact on the financial system. So I don't see giving out the 10K as radically different from that kind of thing, except that it helps people who make good decisions for a change and who aren't already winning in this system.
But once we get past the 10K forgiveness I fail to understand the point. At that point it really does seem like we're just trying to reward people who made the bad decisions relative to others. It also seems like it would be better to crack down hard on for-profit institutions, and invest money on the front end in financing for low income students who enter high debt programs like medical school (there are lots of these and we need all those graduates - but giving this carrot of incentive could also come along with a habdy stick like forcing those schools to admit more students! They turn down so many well qualified students and this bad practice is helping to create shortages and high demand and high cost for health care.
The point is, other solutions seem better than trying to pay off people's massive loans beyond the 10K.
Loan Forgiveness
Re: Loan Forgiveness
Agreed! And let's think beyond this decision...
10K is a very good start! Start being key. It's a start. I get those who want to cancel the whole thing but I'm fine offering relief and creating a popular decision that future presidents might want to do.
If he cancelled all debt now, he'll still probably lose the midterms, and a decade from now, people will be back having large student debt and no president will come to the rescue, knowing it did nothing to turn around Biden's prospects.
But, by cancelling 10K, that's a generous but not drastic change that will eliminate or cut-in-half the student debt of over half the current borrowers. That's nice. If it's a success they'll do it again in the future. If Biden's polls change little, then that's fine too. Let's get this ball rolling.
10K is a very good start! Start being key. It's a start. I get those who want to cancel the whole thing but I'm fine offering relief and creating a popular decision that future presidents might want to do.
If he cancelled all debt now, he'll still probably lose the midterms, and a decade from now, people will be back having large student debt and no president will come to the rescue, knowing it did nothing to turn around Biden's prospects.
But, by cancelling 10K, that's a generous but not drastic change that will eliminate or cut-in-half the student debt of over half the current borrowers. That's nice. If it's a success they'll do it again in the future. If Biden's polls change little, then that's fine too. Let's get this ball rolling.
Re: Loan Forgiveness
The whole student loan industry is an amazing racket. In the past two decades, it has ballooned out of control:
A large part of this has to do with laws put into place under Clinton and doubled down by Obama to switch student loans from the previous "Guaranteed" Student Loans to "Direct" Student Loans, which, if I understand correctly, mostly means that the student is responsible for the interest on the loan from day one instead of the government covering the interest until the student is done with school and the student only being responsible for the interest on the loan once they begin paying on the loan. This means that the amount owed by students was much more by the end of their college years than it used to be, even if they borrowed the same amount, but, of course, they DIDN'T borrow the same amount, because college costs went up far faster than any other costs over the years.
As an example, using numbers culled from the web:
Back when I went to school, a gallon of milk cost $1.16, and a year's tuition at a four-year public university costs, on average, $434. (The private school I went to cost a lot more than that, even back then!) Nowadays, a gallon of 2% milk costs $4.28, and a year's tuition at a four-year public university costs, on average, $9,349. So a gallon of milk is approximately 3.7 times the cost it was in the mid-80s and college tuition is approximately 21.5 times the cost. If milk had gone up in price the same amount it would cost $21.94 to buy a gallon of it. I think it is safe to say that nobody would be drinking milk if it cost that much, though plenty of people pay that much for smaller bottles of whiskey and much more than that for bottles of wine... but that's a different thing altogether...
I'd say a large part of this increase in tuition, though, has to do with the student loan industry.
A large part of this has to do with laws put into place under Clinton and doubled down by Obama to switch student loans from the previous "Guaranteed" Student Loans to "Direct" Student Loans, which, if I understand correctly, mostly means that the student is responsible for the interest on the loan from day one instead of the government covering the interest until the student is done with school and the student only being responsible for the interest on the loan once they begin paying on the loan. This means that the amount owed by students was much more by the end of their college years than it used to be, even if they borrowed the same amount, but, of course, they DIDN'T borrow the same amount, because college costs went up far faster than any other costs over the years.
As an example, using numbers culled from the web:
Back when I went to school, a gallon of milk cost $1.16, and a year's tuition at a four-year public university costs, on average, $434. (The private school I went to cost a lot more than that, even back then!) Nowadays, a gallon of 2% milk costs $4.28, and a year's tuition at a four-year public university costs, on average, $9,349. So a gallon of milk is approximately 3.7 times the cost it was in the mid-80s and college tuition is approximately 21.5 times the cost. If milk had gone up in price the same amount it would cost $21.94 to buy a gallon of it. I think it is safe to say that nobody would be drinking milk if it cost that much, though plenty of people pay that much for smaller bottles of whiskey and much more than that for bottles of wine... but that's a different thing altogether...
I'd say a large part of this increase in tuition, though, has to do with the student loan industry.
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bralbovsky
- Posts: 175
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Re: Loan Forgiveness
On top of that, the "rating" systems, Barrons, etc have made tuition a major factor in scoring which schools are "better." This hasn't helped either.
https://xkcd.com/2215/
https://xkcd.com/2215/
Re: Loan Forgiveness
Update:
To the extent that handing out some loan forgiveness helps to rebalance wealth inequality, I don't really care whether it's perfectly fair to everyone. Obviously there are going to be differences in how much people had to borrow or how much they did borrow, and as long as we're targeting people who are the most in need, what does this really matter?
Here is what: people I know who are my age, who have healthcare plans and nice cars and houses they own, and still have $30,000 in loans, are having them forgiven! This is a level of unfair and not particularly economically helpful that I do not understand, Democrats.
Why did people like me bust our asses to pay back our loans at ten percent and work our way through college just so people who made objectively worse economic decisions could profit to the tune of many thousands of dollars?
That's the type of thing Democrats do that pisses me off. How about helping people who are struggling on the edge of homelessness and now the student loan payback clock started? Help those people maybe, idiots.
To the extent that handing out some loan forgiveness helps to rebalance wealth inequality, I don't really care whether it's perfectly fair to everyone. Obviously there are going to be differences in how much people had to borrow or how much they did borrow, and as long as we're targeting people who are the most in need, what does this really matter?
Here is what: people I know who are my age, who have healthcare plans and nice cars and houses they own, and still have $30,000 in loans, are having them forgiven! This is a level of unfair and not particularly economically helpful that I do not understand, Democrats.
Why did people like me bust our asses to pay back our loans at ten percent and work our way through college just so people who made objectively worse economic decisions could profit to the tune of many thousands of dollars?
That's the type of thing Democrats do that pisses me off. How about helping people who are struggling on the edge of homelessness and now the student loan payback clock started? Help those people maybe, idiots.
Re: Loan Forgiveness
Some people out there see loan forgiveness as an inherently good thing and a boon to the economy, and all the things you have pointed out. These people will support loan forgiveness in most forms. They don't have to be appealed to. The largest chunk of people though will support loan forgiveness if it directly benefits them and theirs and will oppose it if it doesn't. And those who oppose it do so often because of feelings of resentment: "Hey, nobody ever helped me! Why should my tax money go to support them? I managed to figure this out, so why couldn't they?"
The Dems don't just have to pass reform, they have to appeal to enough people while doing it that they don't wind up being punished for doing the right thing.
The Dems don't just have to pass reform, they have to appeal to enough people while doing it that they don't wind up being punished for doing the right thing.
Any time the solution is "banjo rifle", I'm in 100%.
Re: Loan Forgiveness
This guy! Very satisfying analysis!
This is exactly the problem: people who aren't holding down upper middle class jobs (the kind you get with your college degree paid for with a loan), but who are struggling and have no affordable housing or health care, those are the people who should be getting the loan forgiveness!! Those are the people most likely to default and send out harmful ripple effects as well. Those are the people for whom it's going to go straight back into purchasing instead of into the stock market.
Meanwhile, the current willy-nilly forgiveness policy literally means things like this:
I drive a rusty minivan for 20 years while all my friends with the same job who make the same money and get the same benefits have little RAV4s and outbacks and all the safety features for their little kids and whatnot; they have weird things I haven't prioritized in life like normal tables and chairs and fresh paint on the walls.
Meanwhile, I'm paying off my loans because the interest rate on them is so goddamn high, and I'd much prefer to be debt free even if it means I have a s***** car and s***** furniture.
So now the Democrats come into power and say, bad choice Phoebe, you should have just sat on those loans, spent all your cash, and then we would have paid off your debt.
I mean could we get like a electric car program or something for those of us who paid our loans, lol?!
This is the type of thing that in another world, where democracy isn't under direct threat and half of us are not suddenly second-class citizens, would make you vote against Democrats. What frustrates me the most is that even the progressive wing isn't trying to target the people that are in the greatest financial need, for whom loan forgiveness would have a major immediate impact. Why not? Isn't that the progressive not to mention financially sensible thing to do?
Democrats are a mystery to me. I'm also pretty annoyed with Democrats these days because there are some specific local issues where it's all talk and no action and now once more we get to live under Republican rules because Democrats won't step up and do the most basic things to have civic participation. Meanwhile you have these nuts at the school board meeting all day long. The squeaky hinge is definitely getting the oil around here.
This is exactly the problem: people who aren't holding down upper middle class jobs (the kind you get with your college degree paid for with a loan), but who are struggling and have no affordable housing or health care, those are the people who should be getting the loan forgiveness!! Those are the people most likely to default and send out harmful ripple effects as well. Those are the people for whom it's going to go straight back into purchasing instead of into the stock market.
Meanwhile, the current willy-nilly forgiveness policy literally means things like this:
I drive a rusty minivan for 20 years while all my friends with the same job who make the same money and get the same benefits have little RAV4s and outbacks and all the safety features for their little kids and whatnot; they have weird things I haven't prioritized in life like normal tables and chairs and fresh paint on the walls.
Meanwhile, I'm paying off my loans because the interest rate on them is so goddamn high, and I'd much prefer to be debt free even if it means I have a s***** car and s***** furniture.
So now the Democrats come into power and say, bad choice Phoebe, you should have just sat on those loans, spent all your cash, and then we would have paid off your debt.
I mean could we get like a electric car program or something for those of us who paid our loans, lol?!
This is the type of thing that in another world, where democracy isn't under direct threat and half of us are not suddenly second-class citizens, would make you vote against Democrats. What frustrates me the most is that even the progressive wing isn't trying to target the people that are in the greatest financial need, for whom loan forgiveness would have a major immediate impact. Why not? Isn't that the progressive not to mention financially sensible thing to do?
Democrats are a mystery to me. I'm also pretty annoyed with Democrats these days because there are some specific local issues where it's all talk and no action and now once more we get to live under Republican rules because Democrats won't step up and do the most basic things to have civic participation. Meanwhile you have these nuts at the school board meeting all day long. The squeaky hinge is definitely getting the oil around here.
Re: Loan Forgiveness
I'm still paying back student loans 24 years later. I've paid back 150% of what I originally borrowed. I owe 20% more than I originally borrowed. The system is broken.
Re: Loan Forgiveness
That is seriously messed up!
Re: Loan Forgiveness
I'm not clear on whether this is behind a paywall, but the gist anyway is we might soon see across the board loan forgiveness with an income limitation attached. For me this is yet another example that the Biden admin is doing functional things and both the progressives and moderates in the party are thwarting the march of useful progress, whether through inaction or demanding unhelpful nutty things. Meanwhile, it seems Biden is targeting the loan forgiveness where it is actually needed and will help both the economy and the students who were not able to translate college progress into financial progress.
This also makes a lot more sense to me than the ongoing process whereby people I know or work with, who earn at least as much money as I do and live far more luxurious lives on that coin, somehow qualify for tens of thousands in freebies from the government that the rest of us don't, thanks to making frugal decisions. I don't begrudge my friends the money but I do think it's a radically unfair policy. Stuff like this needs to be attached to financial need or to some kind of policy good, and when it's not, it's just weirdly unfair.
https://www.forbes.com/sites/adamminsky ... y-day/amp/
This also makes a lot more sense to me than the ongoing process whereby people I know or work with, who earn at least as much money as I do and live far more luxurious lives on that coin, somehow qualify for tens of thousands in freebies from the government that the rest of us don't, thanks to making frugal decisions. I don't begrudge my friends the money but I do think it's a radically unfair policy. Stuff like this needs to be attached to financial need or to some kind of policy good, and when it's not, it's just weirdly unfair.
https://www.forbes.com/sites/adamminsky ... y-day/amp/
Re: Loan Forgiveness
FYI they DID have all kinds of electric car rebates and other pro-energy-savings rebates for everyone who can participate. So fear not, have the loan forgiveness and I'll get a solar panel with what I saved. We are all good.