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Comment by hiram112 | Hacker News Reader

> High inflation and rising wages is a great time to have lots of debt!

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.

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Soft cancellation (making X amount of dollar 0 percent interest) is probably politically tenable, and most conservatives i've spoken with feel that is fair. Avoids the moral hazard problem they bring up of "what about the people who paid back their loans?!". The continuing moratorium is effectively just making that the new policy.

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.

I follow a few progressives on Twitter, and I've been flabbergasted by just how naive a lot of younger (supposed) college grads are about gov't finances, modern monetary theory, etc. There's apparently a whole generation who really believe that "money" is just made up - that printing trillions of dollars or wiping away the same amount of debt can be done with 0 consequences, and that inflation is just some myth concocted by evil bankers or Republicans.

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.

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