High inflation and rising wages is a great time to have lots of debt! Certainly much better than the past two decades of debt-saddled college graduations.
Yes I know there are a lot of progressives / young people who were hopeful the current administration would "cancel" their student debt. While the idea that the executive can simply erase a few trillion of gov't owned debt with an executive order was and is legally dubious, I think a lot of folks aren't aware that the administration is, in fact, wiping out almost 10% of their existing student loans per year via inflation.
Meanwhile, the admin has continued to extend the moratorium on student loan payments and interest accumulation, so they are, in fact, fulfilling that campaign promise, at least partially. Though I'm not sure they want to advertise that, lol.
But the only real reason it feels like the moratorium got continued is because Build Back Better failed and the Biden administration didnt want to compound that political failure with also breaking a major campaign promise. Though continuing student loans during election season also seems politically non viable as well. Especially if an astute Republican hits the drum of "make them zero interest!" to combat the issue.
The real problem is that I had heard (https://thehill.com/opinion/columnists/dick-morris/302247-lo...) that provisions of Obamacare actually use student loan interest payments as source of paying for that program. So a major democratic program is reliant on Student loans. This makes it even mnore of a political vulnerability because Republicans attacking student loans also weakens Obamacare.
To put the cherry on top. The Federal Reserve probably really wants student loans to continue. People paying those again is a powerful deflationary measure and puts less liquid capital in the market. It feels like the current admin from a policy perspective REALLY wants to start them back up, but know its politically damaging to do so.
Interesting about the Obamacare funds. Obviously all debt payments to the gov't are subsidies to some other group, but I did not know that these indebted students were literally funding another program that they themselves advocate for (though they assume it can be paid for if they just tax the "billionaires" a bit more). Their heads would explode if someone told them that we could have Medicare for all (another huge line item they want) if we just bumped up the interest rates on their own student debt.
Funny how none of the progressive politicians (e.g. AOC) who claim to want Biden to cancel the debt have not come clean with their Twitter fans - that in order to cancel the debt, it'd come at the expense of Obamacare subsidies for people much poorer than most of the indebted grads who want the debt wiped away.
I wonder how much wage growth is actual a shift in the average from the lowest wage people losing their jobs. There has been a marked increase in hidden unemployment / non-participation.
There seems to be a hope that inflation will act as a debt forgiveness, or a gateway into MMT to support progressive spending. My point is inflation will exacerbate wealth inequality which is worse than the gain from the 'debt forgiveness' of student loans and MMT requires high taxes to avoid inflation. Which is fine until you're the one paying those taxes.
0. https://www.zerohedge.com/personal-finance/us-consumer-price...