If we do nothing to change the system, what are new college applicants going to think? Either they'll have to pay back their loans and, compared to those who wend before, get totally screwed. Or borrow with the belief that the debt will eventually be forgiven. Neither are good.
And, FWIW, I have a boat load of student-loan debt that I would absolutely love to have forgiven. But it's a bad idea unless the White House and congress are able to address the root of the problem.
EDIT: I misread your comment. Please disregard.
They got screwed when they took the loan out, not when they pay it back. The terms never changed, people just realize they made a bad decision. Sometimes people argue they cant actually consent to the loan in which case we should just cease the loans immediately.
Part of the puzzle is rebuking this sort of logic: "Education is important. Having a bachelors degree is practically required. Therefor a loan is worth it." Without any qualifiers. This suggests the degree job prospects and loan amount don't matter. They do. If education is expensive enough, it's just not worth it.
The first test of a potential policy is whether it's better than doing exactly the opposite. If you can't even prove that, it's probably not a good policy.
Also, income can change a lot from year to year. My income certain has. If the economy goes to pot, suddenly a lot of people with higher income will become unemployed. And the years you spend in school are typically very low or no income, so you're not building any wealth during those years. And if you go to graduate school, it's even more years of low to no income.
> You can make a higher income than another person but still be poorer than them because of debt.
Maybe we should focus our money on making college costs more affordable rather than forgiving loans and signaling to universities and students that it's safe to take on more debt?
A male college graduate, on average. https://www.ssa.gov/policy/docs/research-summaries/education...
"Men with bachelor's degrees earn approximately $900,000 more in median lifetime earnings than high school graduates. Women with bachelor's degrees earn $630,000 more. Men with graduate degrees earn $1.5 million more in median lifetime earnings than high school graduates. Women with graduate degrees earn $1.1 million more."
Of course these are just averages. There's no guarantee that any given person will earn even a penny more. Not to mention that not everyone who goes to college even finishes their degree, but they accumulate the debt regardless.
> Maybe we should focus our money on making college costs more affordable rather than forgiving loans
Why not both?
The thing is, the people who make a lot of money after college are able to pay off their debt. The real problem is the people who get stuck with debt for decades, unable to pay it off. It's a lifetime burden. Senior citizens are a very fast growing group of student loan debtors.
I don't necessarily believe that you should forgive student loan debt the minute someone walks out of graduation. But what about decades later?
Anyway, it's important to remember that these lifetime earnings numbers don't include college costs. You have to subtract those. Unless your parents pay for your college, in which case you have no student loan debt.
Because forgiving loans is a moral hazard. It signals to new college students that they can take out more debt and it signals to universities that they can raise tuition.
Would a one-time forgiveness cause an increase in college costs? I don't know, maybe? And if it did, by how much? I don't know, do you? Maybe the problem needs to get worse in order to put pressure on Congress to finally address it comprehensively. And if Congress still refuses to address the problem despite its getting worse, then you can no longer argue that we need to wait for a comprehensive solution, because that's not coming. Perhaps the occasional forgiveness event is the best and only thing we can do in the face of persistent gridlock. I hope not, but...
I certainly don't feel student loan forgiveness is "fair" in that circumstance!
The state school prices have gone way up too. It's possible that the state school you could afford back then would no longer be affordable now.
(By the way, I had to go to a state school too instead of a nicer school that accepted me, because of money. And yet, I still accumulated student loan debt! Because college is pretty expensive no matter what.)
At this point I've paid my debts and still welcome relief for students who didn't have the same opportunities as me.
There is no 'cheap' 4 year school anymore. Costs can be mitigated by going to a Community College for an associates/first 2 years then bridge that into a 4 year program but if you want to go for research, engineering, or many other more dedicated programs then being at the 4 year school all 4 years leads to many more connections and opportunities that some feel are worth the cost.
Borrowing beyond ones means isn't always fully understood by a group of 17-18 year olds, especially those who may be first generation college students or from school districts that have spent 2+ decades now losing resources for educating students on college options in order to focus on the kids failing out. For example, many college apps I completed in 2011 needed a letter of rec from my counselor who I had talked to once as a sophomore but spent most of his time working with students on the edge of failing or dropping out. It's archaic just like how the US college system operates as a capitalists dream and not a public service.
In terms of fair, well policy hasn't been fair in a long time either. The 2017 tax bill raised my taxes and pushed a trillion plus surplus back to the wealthy - a much worse outcome for all then cancelling student debt without a deeper plan. It may not seem "fair" to you but that doesn't make it bad policy.
Colleges will still be just as expensive. The next round of student signing up now still has all the same burdens and obligations, the same disadvantages understanding the borrowing they're doing.
Nothing is getting fixed. You're just handing a one-time stimulus to recent college grads. And don't take me wrong - I would also have preferred a stimulus for recent college grads instead of the insanity that was Trump's tax cuts for the wealthy. But that's like picking between two wormy apples.
I really don't want a payout for EITHER of those groups! - I want the systemic issues around pricing for education to be addressed.
So if "debt forgiveness" also includes plans for something like universal access to college, or a standardized loan process through the federal government, or (perhaps most useful of all) the simple ability to discharge education debt through bankruptcy.... then sign me up.
If it just means handing money to the children of already mostly well-off folks, as a one-time political courtship to win the next presidential election... Then count me out. I think it's a bad idea.
It's mostly held by the federal government.
It's mostly owed by the richer half, but that's misleading when it comes to impact.
Sure, households in the bottom half of the top quintile have twice the average student loan debt of those in the bottom quintile, they also have more than 10 times the income. The average student debt in the bottom quintile ($25,030) is about the upper income limit ($27Kish as of 2020) of the bottom quintile, while the average in the bottom half of the top quintile (80-89th percentile, $51,380) is a little.more than 1/3 the lower limit ($143K in 2020) of the top quintile. (And the upper half of the top income quintile actually has a lower average student debt that the bottom half, or the whole of the next highest income quintile, not just a lower average student debt to income ratio.)
The share of households with any student debt and the average household student debt-to-income ratio decreases consistently with household income.
See, https://www.businessinsider.com/personal-finance/average-stu... and https://www.taxpolicycenter.org/statistics/household-income-...
EDIT:
To directly answer your question:
> Serious question: would it do more good if instead of giving money to people with student debt, you gave money to people without it?
Would it do more good to relieve 75% of bottom-income-quintile households (student debt relief) or 25% (anti student debt relief)? Clearly the former.
This is a false dichotomy. The root core of the issue should be addressed. However, that would require an act of Congress, whereas federal student loan forgiveness can be accomplished immediately via executive action. This is why people are calling for it now, because it can be done right now. Also, the President promised to do so multiple times during his campaign.
> Universities can charge more, and students can continue to take out larger loans
Universities are already charging more, and students are continuing to take out larger loans despite the lack of forgiveness.
I can't be the only one who feels like this is simply 'buying votes' in an attempt to try and salvage some seats for the upcoming midterms. And, of course the people with debt want the debt forgiven unilaterally and post-haste, so it makes sense they're clamoring for it. In a democracy, who turns down free money?
Votes are already bought by wealthy campaign contributors.
Anyway, aren't politicians supposed to help the public financially? If a politician campaigns on tax cuts, tax credits, and tax incentives, isn't that also "buying votes"? Which politician is not buying votes with their stated economic policies?
I’m not an economist but I suspect that in a society with a strong welfare system, universal healthcare, and free higher education then wages wouldn’t have to be as high as they are in the U.S. for certain industries. I don’t claim that student debt forgiveness is the efficacious or even that it should be done. I do claim that it’s best to ‘buy’ votes by creating a society with strong social programs.
The fact of the matter is that these loans are unsustainable. They saddle people with life-long debt that they can never get rid of, dooming them to a life of poverty because of a choice they made when they were young, which everybody at the time told them was the right choice.
That particular debt forgiveness is simply the right thing to do. It will free a lot of people from poverty.
But clearly there are also measures necessary to prevent this from happening again, like a reasonable maximum to how much can be lend.
I would prefer that the change be that loans can be discharged in bankruptcy instead of this one off forgiveness.
That said, I agree with you on bankruptcy being a better idea. From what I understand, these loans are harder if not impossible to get rid of through bankruptcy than other loans, despite being far more crippling.
In general, I'd like a rule that all interest-carrying loans must be able to be eliminated through bankruptcy. Only interest-free loans should be exempt. Also: a cap on student loans to discourage excessive tuition. Tuition is just insane (and where is that money going? I hear plenty of younger professors are struggling too).
My first pass on fixing education is that we should remove the non-discharge of student loan debt. Gen-Z could boycott this system by declaring bankruptcy immediately after graduation which would have relatively minimal affects on their lives relative to the debt and schools would be forced to lower costs
It's actually quite popular: https://www.forbes.com/sites/zackfriedman/2022/04/18/student...
I might support 0% interest rates so I guess that might be considered canceling some student loans for all?
So most people support.
It's not a false dichotomy because he's saying the root cause would get worse if student loans were forgiven.
You can argue whether or not that's true, but the claim he's making is not a false dichotomy.
Forgiving debt incentivizes debt though. It's impossible to address the root cause and forgive the debt.
For example, make student load debt dischargeable in bankruptcy like any other debt, and at the same time impose tuition caps at state universities to make them affordable again.
I mean, it should be an unpopular opinion that a claim that both misrepresents the basic processes and incentives involved and requires effect to precede cause by more than a decade is perceived as “exactly why we should“ do or not do anything, but unfortunately it's actually a very popular opinion in this case.
(To the extent there is a real argument—and this one is not it—for federal student lending being a cost driver for education, that would be a good reason why debt forgiveness, if done, should be accompanied by lending reform to correct the problem going forward; of course, even without it being a cost driver, any argument for debt forgiveness is itself an argument for lending reform preventing the problem addressed by forgiveness from recurring.)
We can apply similar tactics to these school financial injuries. We don't need to choose one or the other.
And the core problem with people taking on debt to pay for college in the US is individual people having to pay for college, unlike many other countries. How much it costs is a secondary issue. If it can cost anything, market forces will boost the price until it passes a fairness threshold.
Well... no. Obviously stopping the shooter is the top priority.
Beyond that, it depends on how many people are there to solve the problem and how many victims there are. Everything beyond whats required to stop the shooter would attend to the wounded.