How about giving back money to people who paid back their loans, possibly going through even greater difficulties to do that.
On the plus side I ended up graduating with $20 and no debt.
I worked full time thru college for bad pay and still needed 30k in student loans to make it out with my degree. I went to a state school, nothing fancy.
I hardly ever had fun in college, it was awful. The working world is waaaaaaay better for me.
Not everyone who has loan debt just partied away on borrowed cash.
Same for me, working seems so easy by comparison.
You're absolutely correct. The people in my life who are the most vocal about loan forgiveness treated their time at university like a party, but that is not a representative sample.
Federal student loan debts are getting cheaper by the minute, why pay more now?
The credit score is a number based on you being able to reliably make payments.
People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible. Very different.
You're missing the point, either deliberately or on accident.
(Prefacing this with: we should keep and honor the terms of the existing PSLF program that students relied on when taking on debt.) There's no particular reason people with current loan debt, but ineligible for PSLF, should get a wealth transfer from other taxpayers with similar income, net worth, and expenses -- but no current student loan debt.
> People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible.
In fact, a hypothetical student debt forgiveness event like GP was discussing would punish those who responsibly paid off their student debts relative to similar-earning classmates who did not.
Punish how? This word keeps being used but it does not fit any definition of punish I'm familiar with. I'm not being obtuse.
Some background of where I'm coming from: Worked 40+hrs/week for $7.25 to $10/hr from 2005 to 2009 to get a four year degree from a state school. Graduated with $35,000 in student loan debt myself and about $20,000 in debt through Parent Plus loans. My parents sent me some money for rent on occasion, but overall -- that's how I di it.
I also paid off all my student loans, and my parent plus loans.
If someone graduated with $100,000 debt because they partied all the time, didn't work, and tomorrow Biden just gave them a tax-free forgiveness....
I am not punished by this. At all. It has no impact on my life whatsoever. I made the best choice I could make with my circumstances, and I paid off my loans because at the time that was the best way to secure my future. The day before the party-guy got his $100k write-off and the day after, I wake up in the same house, with the same car, with the same job, with the same spouse. My life doesn't change at all.
> I am not punished by this.
Imagine a fair and equitable spending program that distributed $100k to everyone. It's fair, and people with debt could use it to pay off their loans (you could even require it to be used to pay off student loans first). If your goal is to help people with loans pay off their debts, it is an effective program. It's also obviously fair.
Then, tax 100% of the distribution for people without student loan balances. This is the step that imposes a punitive expense, relative to a fair program, on people without student loans.
That's what these proposals look like. There's no particular reason recent college students as a group should be the sole recipients of a wealth transfer.
No one is proposing this.
This is an entirely made up claim. A hypothetical strawman useful to only those that seek to victimize themselves when this topic comes up. Student debt is a contractual arrangement between the government and the borrower. It can simply be ended. The government has the power to do that without imposing a tax on everyone else.
I don’t know you could possibly reach that conclusion.
I paid off my loan and lost 1000 hours of work.
You didn’t have to work 1000 hours to pay off your loan.
We’re not in exactly the same situation. I don’t know how else I can put this without ELI5’ing
The government can simply write off the student debt, with no impact on taxpayers. It has the power to do so.
It may choose not to, because it may choose to make the people that invested in student-loan backed financial instruments whole using a tax.
This can also be accomplished without a tax.
And now those people have 1.75 trillion dollars more to spend on the economy instead of paying debts which creates inflation which is effectively a tax on everyone with cash and bonds. There is no free lunch with the economy, just distortions.
We need to grapple with that truth instead of perpetuating this suffering.
Banks deemed you creditworthy because you make enough to pay these loans off. We're currently discussing the people that don't make enough to pay their student loans off.
Do you think they should be forever renters? Carless in public transportation deserts?
A functional economy allows people to thrive by participating in it. It is not dependent on an artificially created underclass of people in debt to purchase no asset.
If we are only discussing just those people, then I think it is a different story. I could get behind a x% of income over y% of years and if it not paid off in the end it is cancelled deal.
However, usually when I see people talking about cancelling student debt they mean wiping the slate clean for everyone even those who just graduated that can pay.
What type of student loan cancellation program are you thinking we should implement?
"People who have paid their student loan debt are in exactly the same situation they were after this forgiveness than they were before"
Not:
"People who have paid their student loan debt are in exactly the same situation as those whose loans were forgiven"
You may have a valid point about why it's bad that the two people are in different situations (if you elaborate), but the parent did not say that the two people are in the same situation.
But Person A, who paid their $30k loan in full, now has $30k less to spend on a home, a car, savings, etc. Person B, who did not pay their $30k, now has effectively $30k more in buying power either immediately or spread across what would otherwise have been their repayment timeline.
Person A's responsibility for their obligation has set them back $30k, while Person B's lack of responsibility for making payments has put them ahead $30k. Maybe we shouldn't call it a direct punishment, but they're certainly coming out of the scenario worse off than their counterpart.
It's hard for me not to sound flippant when I say this, but -- this is life. As far as I'm concerned, anyone who has the means to pay off their student loans themselves practically won the lottery and they should be thankful they're not totally fucked like those who need the forgiveness.
There's an ugly, underlying impression I get from this discussion that is oddly reminiscent of the "welfare queen" stereotype.
Let me share my personal experience with you so I can try to shed some light on our varying interpretations of what "won the lottery" means. I went to college full-time, four days a week, and was a commuter. I was responsible for my entire car payment, my parking pass, my books/material, and for taking out a loan for tuition. I took it upon myself to get a part-time job while continuing to study and go to class for four and a half years. I then got a full-time job upon graduating and lived very frugally for two years with a huge chunk of my paychecks going towards paying off my car and student loans. The thought of paying interest killed me, and I did everything in my power to put every penny I could afford towards paying down my debt. I didn't go on vacations, didn't spend money frivolously on a new iPhone every year, didn't buy anything that wasn't necessary until my obligations were fulfilled.
Now let's revisit Person B (and to be clear, I personally know a Person B who's a close friend of mine who fits this description). They did not consistently work in college, but partied, went to festivals, took vacations, had a much easier schedule not having to factor in a job. They then graduate just like me. They have a few hundred dollars more every month that can go towards more vacations than I had the option to take, a more expensive car that I could not afford to buy, and more discretionary spending power than I had during that time. They work a job now, but have yet to begin repaying their loans yet (I understand the pandemic was a once-in-a-lifetime situation, but even so, there's a grace period after graduating where you aren't forced to pay). And even when payments resume, they will likely pay the bare minimum each month because they now have the prospect of having that debt potentially forgiven in its entirety.
How do you tell me with a straight face that I won the lottery, and that Person B is actually the one who is "fucked" (as you so eloquently put it) and needs the forgiveness?
It is: "At the time, these were the rules, I ran the numbers, was responsible and ended up limiting my opportunities. Others, who were not responsible, now not only have more opportunities thanks to their degree but will also end up not paying for it".
I'm sorry, but to me it feels extremely unfair that people who frivolously took loans will now end up being ahead of people who - at the same time - decided to be more financially responsible. You can't retroactively change the rules and expect people to take it quietly.
The problem is made even worse because in the case of student loans, there is nothing to repossess.
This has nothing to do with changing the rules now.
So much for making the world a better place. The course that you took in life failed to teach you a fundamental truth about how a society grows.
I definitely do want the system to be fixed for future generations to not go through this. I do not want past generations to get a free pass. Loan forgiveness does nothing for future generations of students.
Loan forgiveness unlocks the spending potential of an entire generation. People have been holding off on buying their first home or having their first child because of the burden of their loans.
It is literally stymying our future generations.
No one was forced to do this.
> So much for making the world a better place. The course that you took in life failed to teach you a fundamental truth about how a society grows.
Idealism is great for virtue signaling. The reality is that rewarding bad behavior and punishing good behavior does not lead to a healthy society.
You are confusing a societal failure with a moral one: we have failed as a society by forcing those that pursue higher education to bear the entire cost of that education and we have failed to guarantee a role for those people in our society that pays well enough to pay off an inflated loan for that cost.
These are not individual moral failures. Everyone that is not able to pay off their student loans is not a bad person. Student loans are a bad system for educating people. They were introduced when higher education was desegregated and opened to women. When the white men at the reigns of the government no longer saw fit to fund public higher education for people that were not white men.