Explaining the student loan forgiveness reasoning

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mister_coffee
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Re: Explaining the student loan forgiveness reasoning

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Just saying, Ray:

Bachelor's Degrees in 2020:

Business (Management, Finance, Marketing, &c): over 350,000
Health Care: over 200,000
Engineering: over 120,000
Philosophy: less than 7000
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Re: Explaining the student loan forgiveness reasoning

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https://www.gmercyu.edu/academics/learn ... major-jobs
#:~:text=Bachelor's%20Degree%20in%20Philosophy&text=These%20highly%20critical%2C%20analytical%2C%20and,technical%20writer%2C%20and%20a%20critic.
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Re: Explaining the student loan forgiveness reasoning

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Re: Explaining the student loan forgiveness reasoning

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While people are busy jumping up and down and pointing fingers, this may be a good time to look at how many $ are spent subsidizing the fossil fuel companies - those same companies that are posting mega profits this year while charging us over-the-top prices at the pump.

https://e360.yale.edu/digest/fossil-fue ... he%20total
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Re: Explaining the student loan forgiveness reasoning

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Apparently polling is showing that student debt relief is really popular

https://balloon-juice.com/2022/08/28/st ... s-popular/
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Re: Explaining the student loan forgiveness reasoning

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Actually, Canceling Student Debt Will Cut Inflation
Opinion by Joseph E. Stiglitz - Yesterday 4:00 AM

We want to fight inflation and we want to keep the labor market strong. One of the most important ways to achieve both goals is to forgive a portion of student-loan debt. And yesterday, President Joe Biden announced that he was doing just that—canceling up to $10,000 in student debt for those making less than $125,000 and designating an additional $10,000 in loan forgiveness for Pell Grant recipients. Yet critics are attacking the measure, even at its modest level and with its targeted exclusions and benefits, as inflationary and unfair.

Whatever your view of student-debt cancellation, the inflation argument is a red herring and should not influence policy. Taking that logic to the extreme, canceling food stamps would do far more to reduce inflation—but that would be cruel and inhumane, and fortunately, no one has suggested doing so. A closer look at the student-debt-cancellation program suggests that the new student-loan policy may even reduce inflation; at most, its inflationary impact will be minuscule, and the long-term benefits to the economy are likely to be significant.

The contention that debt cancellation will be inflationary contains a series of flaws. To start with, the value of the reduced debt repayments is so small that the cancellation’s impact will be negligible.

Although the broad estimates of the total amount of canceled debt can be big—some reach hundreds of billions of dollars—these figures derive only from budgeting practices for how credit programs like student loans are recorded. The government and budget analysts calculate a number that is known as “the present discounted value of foregone payments.” This corresponds to a current estimated value not of the lost payments this year, but of those in all future years. In other words, this calculation treats all of the losses from debt cancellation as though they occurred right now in a single year (adjusted for inflation)—a far cry from the reality. Such an accounting procedure can be an appropriate practice for thinking about the government’s long-run balance sheet, but it is a very poor guide for understanding what actually happens to people’s spending.

The inflation hawks compound this error by assuming that the indebted students will take their forgiven debt and go on a spending spree, a splurge of such magnitude that they would have to somehow find someone in the private sector willing to lend them the same amount at low interest rates to finance their extravagance. Economic theory says that these individuals will, at most, consider this an increase in their net wealth—I say “at most” because in many cases, these loans would never have been repaid at all. And economic theory also says that an increase in wealth is spent gradually over the course of a person’s life, not all in one year.

The actual amount of annual debt payments that would be reduced now, during this present inflationary episode, will probably run to tens of billions of dollars, not hundreds of billions. The lower number is likely because, again, many of those whose debt is being forgiven would not be making the payments anyway; many people with these debts simply don’t have the economic means to repay them.

The costs of cancellation are also far less than the value to be realized when student-debt payments resume after having been halted during the pandemic. Right now, because of the forbearance put into place in 2020, no payments are being made on government-owned student loans. This policy was essential to stabilize the economy during the pandemic. As part of a larger program of cancellation, the Biden administration would end forbearance; the resumption of payments in January is estimated to be worth more than $30 billion annually.

These numbers are modest relative to the size of our economy. Still, their net effect will be to reduce inflation.

Some of the critics demand that payments should simply resume without any cancellation. That would plunge a large number of student debtors back into immediate financial distress and further loan delinquency. According to analysis from the Federal Reserve Bank of New York, just before the pandemic, 11 percent of student debt was either in default or more than 90 days in arrears. Because of pandemic forbearance and other emergency measures, that default rate went to zero for most student debt—though researchers found that student loans excluded from forbearance continued to default, not surprisingly, at a high rate. According to the New York Fed’s survey, once payments resume, we will quickly return to that world: A large segment of people will be unable to service their payments and, in the Fed’s words, “lower-income, less educated, non-white, female and middle-aged borrowers will struggle more in making minimum payments and in remaining current.”

[Ben Sasse: How to really fix higher ed]

This level of distress is bad for the economy, both in the short run, as we strive for a robust recovery, and in the long run. Having little or no access to credit means that starting a family or a small business, moving, or otherwise building up lives is much harder for so many young people. A growing body of evidence backs up the common-sense conclusion that student-loan debt is linked to people delaying significant life events such as getting married and having children.

This has society-wide consequences. People’s well-being is obviously affected, and so is the economy. The Federal Reserve Bank of Philadelphia found that student debt is associated with weak new-business formation, in particular of new businesses with one to four employees. Given that the rapid increase in the number of small businesses—especially ones founded by Black and brown entrepreneurs—that we saw in 2021 may already be slowing down, we should be looking for ways to support that growth, not undercut it.

Studies of those student debtors who have had the good fortune to get their debt canceled by courts have found that the freedom from loan payments allows people to borrow anew and move around the country to take better jobs. Because continuing to build up our labor force and help people find jobs better matched to their skills is so important, a comprehensive student-loan debt-cancellation program will have a valuable economic upside.

Until recently, the U.S. led the world with high-quality and widely accessible college education. American prosperity and freedom have been tied to innovations such as the land-grant university, the GI Bill, and our world-class public universities. But because that education now comes at an ever-increasing price accompanied by an ever-increasing student debt for so many, our students fall behind before they even start their first jobs. The entire system of supporting and financing higher education needs an overhaul, but in the interim, we need to understand and address the immediate problem—and the Biden administration yesterday took a crucial first step by reducing the debt burden on many struggling American families.
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Re: Explaining the student loan forgiveness reasoning

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Meanwhile, the subsidies for the oil companies that are paid out of our pockets are cheered on! Can't have it both ways, complain about gas prices at the pump while protecting the oil companies making record profits.
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Re: Explaining the student loan forgiveness reasoning

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Re: Explaining the student loan forgiveness reasoning

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Like heathcare, our education system is great...for the people who can access it.
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Re: Explaining the student loan forgiveness reasoning

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Rideback wrote: Fri Aug 26, 2022 8:40 am ...
This country needs a better education system, one that is available to everyone no matter their income or status
Actually from a strict quality of education standpoint, I'd argue with a straight face that our present system is amongst the very best in the world. Our closest competition is from other english-speaking countries. If you took a look around and compared curricula you'd find that, all other things being equal, you'd get just as good an undergrad education from most any state university than you'd get from all but the very best French, German, or Japanese universities. Further, the difference in what you'd actually learn between an undergrad degree from Yale and one from Western Washington University is for all practical purposes zero.

On the other side, the current higher education system is horribly cost-inefficient and basically incapable of significant innovation. And that needs to be fixed.

One big obvious flaw in our system is that the most cost-efficient way to accumulate the credits towards a bachelor's degree is to take as many classes as possible at a community college, and transfer those credits to the four-year school that provides the bachelor's degree the student wishes to have. This is made pretty much impossible because transferring those credits efficiently just cannot be done. If we wanted to improve higher education here in WA and also improve access to higher education at a reasonable price, a good place to start would be to standardize a lot of the introductory classes so they can be easily transferred to another school without a penalty.
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Re: Explaining the student loan forgiveness reasoning

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Yes, it does seem a double standard…….

From Heather Cox Richardson’s column, yesterday….

“ Representative Marjorie Taylor Greene (R-GA) said: “For our government just to say ok your debt is completely forgiven.. it’s completely unfair.” Greene had $183,504 in PPP loans forgiven.

Representative Vern Buchanan (R-FL) said: “Biden’s reckless, unilateral student loan giveaway is unfair to the 87 percent of Americans without student loan debt and those who played by the rules.” Buchanan had more than $2.3 million in PPP loans forgiven.

Representative Markwayne Mullin (R-OK) said: “We do not need farmers and ranchers, small business owners, and teachers in Oklahoma paying the debts of Ivy League lawyers and doctors across the U.S.” Mullin had more than $1.4 million in PPP loans forgiven.

Representative Kevin Hern (R-OK) said: “To recap, in the last two weeks, the ‘Party of the People’ has supercharged the IRS to go after working-class Americans, raised their taxes, and forced them to pay for other people's college degrees.” Hern had more than $1 million in PPP loans forgiven.

Representative Mike Kelly (R-PA) said: “Asking plumbers and carpenters to pay off the loans of Wall Street advisors and lawyers isn’t just unfair. It’s also bad policy.” Kelly had $987,237 in PPP loans forgiven.

Representative Matt Gaetz (R-FL) said: Everyone knows that in a $60 Billion+ European land war, it's always the last $3 Billion that kicks in the door….” Gaetz had $482,321 in PPP loans forgiven. “

$10,000 is chump change.
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Re: Explaining the student loan forgiveness reasoning

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The history of education in this country is an interesting one. Thomas Jefferson founded the Univ of Virginia, a 100% tuition free college. Abraham Lincoln carried on that premise, see article in link. It wasn't until Reagan upended the college tuition history that the country began to see what is now distinctive from the advanced countries in the world that do not charge tuition.

https://www.dailykos.com/stories/2022/8 ... Our-Nation

This country needs a better education system, one that is available to everyone no matter their income or status
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Re: Explaining the student loan forgiveness reasoning

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The definition of an "educated" population can get very sticky... Especially as to how it relates to the well being and productivity of our country.
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Re: Explaining the student loan forgiveness reasoning

Post by just-jim »

I never claimed one case of subsidy was ‘wrong’, or better or worse than another, Ray.
It is just ‘IS’….the way we do things in this country, depending on who has the votes.

As Rideback points out….an educated population is a desirable end. My dad was the first in the family to attend college, and did so under the GI bill, which saw millions do likewise. My siblings and I benefitted enormously from that. As did most of us old white guys who are still breathing (the GI bill did NOT apply to non-whites, originally).

We can quibble about means testing and qualifying amounts all day, I guess…
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Re: Explaining the student loan forgiveness reasoning

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I think One Big Thing that is missed in this discussion is that many folks struggling with student load debt never were able to finish college and get their union card.

How higher education institutions channel a lot of people into student loans is pretty corrupt. My observation is that people who have a lower probability of graduating or of graduating with marketable skills are much more likely to end up with student loans they can't pay back. You could of course argue that the onus here would be on those who are taking out the loans, but remember that we are talking about uneducated young people who are mostly getting those loans -- and I think all of us can think of some poor to awful decisions we made at that time in our lives. Fortunately for most of us they usually weren't that awful.

There is also a privilege component here. The people most likely to be saddled with onerous student loans are people from poorer backgrounds without family members who have experience navigating this stuff, and are again likely to be counseled out of more lucrative careers in the first place. So they have the decks stacked against them from the very start.
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Re: Explaining the student loan forgiveness reasoning

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What happens in the arguments is that it becomes a person against person, middle class working people of the trades (who, btw, likely have gone to community college to learn that trade) vs people who go to a 4 year college and earn a different kind of education.

That perspective is so busy firing up the people against each other and the govt that showed 'favoritism' that the larger policies get lost in the mix. This country needs educated people. We need apprenticeships that are available to every income level, we need more teachers, we need more doctors (I'll leave out lawyers), we need more scientists, we need more forestry management trained people who work alongside well trained firefighters, we need more pilots who don't just fly jumbo jets but pilot firefighting equipment that protects across the country against wildfires, we need statisticians, we need more nurses...WE NEED EDUCATION and not every family can pay the hundreds of thousands that an education can cost.

This goes back to the understanding that the best and brightest aren't just the rich people, in fact the rich people often just buy their education. No, there are plenty of working class people that are amazingly talented but can't afford the education we need them to get so that we can benefit from their talents.

So, please stop thinking of this as unfair because it singles out just the kids who go to college and accrue debt. Instead, think of this as just one of what needs to be many adjustments to govt policy on how we use our budget to build a strong middle class, lift families out of poverty and stop paying through the nose to pork projects for the right or throwing trillions of taxpayer dollars into the pockets of Exxon each year while the company is making record profits.

The student loan forgiveness should be the first of many govt policies that see a C Change, that recognize the peoples' needs and put the money there. Simply put, as long as the govt chooses to subsidize the Big's (BigOil, BigPharma) over the people the people lose. And every moment people argue amongst themselves about the money going to the other guy, not me, they are really just fueling the status quo of feeding their tax dollars into the Big's coffers. Instead, how about asking for more apprenticeships being offered with tuition paid for?
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Re: Explaining the student loan forgiveness reasoning

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Other "wrongs" do not make this right... A single person making $125,000 or married making $250,000 can certainly afford to pay off their student loans. I believe these levels should be lower to qualify. ...and too bad for those students that properly budgeted and paid off their loans.
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Re: Explaining the student loan forgiveness reasoning

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$10,000 student loan forgiveness is horrible?

Yawn….

- Billions to wheat, rice, sugar, cotton farmers etc every year.
- Cattle ranchers pay $1.35/month for USFS/BLM grass - that hadn’t changed in over 35 years.
- How much did the 2008-2010 Bank bail-out cost?
- Loan payments to businesses and individuals during Covid are forgiven…Billions of $$.
- SBA loans forgiven, regularly, including one here into 6 figures.
- guilty little donnie’s tax cuts to the top 1% - 7 Trillion $$!
- I have extremely wealthy farmer friends who get $150K, every year, for 30 years, for not farming land they don’t need to - and won’t ever - farm again.

A small illustration of ONE source of subsidies: $150 Million to Okanogan County - just from the USDA - in the last 25 years.
https://farm.ewg.org/region.php?fips=53047.
Main beneficiaries?….click around and look, some of the wealthiest in this County.

$150Million - for 25 yrs- is $6 Million/yr.
For a population of 40,000 in the County = $150 per person, per year. JUST for Agriculture subsidies.

I’m not normally in favor of rewarding those who make poor life decisions.
But, it DOES depend on who’s ox is getting gored, isn’t it?
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Re: Explaining the student loan forgiveness reasoning

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Another viewpoint...
Mike Rowe

I work hard on this page, (not as hard as I could, perhaps, but pretty hard), to avoid the politics of the moment, and comment only on topics that impact the foundation I’m proud to run – a foundation that awards work-ethic scholarships to individuals who choose to forego an expensive, four-year education in favor of a skilled trade. When I do weigh in, I try to acknowledge both sides of the argument, and make my points with as much respect as I can muster. Today, however, I can see only one side. Today, I can find nothing to respect in the President’s decision to transfer billions of dollars in outstanding student loans onto the backs of those people my foundation tries to assist - the same people I’ve spent the last twenty years profiling on Dirty Jobs.
With that in mind, I’m not going to write the piece I just sat down to write. Instead, I’m going to share the attached article from Charlie Cooke, who writes better than I do, and shares my disdain for what just happened. If you share our disdain, then please, share this post as well. This decision is without question, the biggest pre-Labor Day slap in the face to working people I've ever seen.
----
BIDEN'S STUDENT-DEBT BONFIRE IS A CLASSIST MESSAGE TO THE UNCREDENTIALED: SCREW 'EM
By Charlie Cooke
A few moments before I sat down to write this piece, I opened the door to six guys in blue shirts who had come to my house to replace our air-conditioning units. The Florida weather being what it is, I’ve seen some of these guys work on our air conditioners before, and they’re as skilled and knowledgeable and conscientious and hard-working as you might expect. The company they work for, which is local to North Florida, was started by a guy who chose to forgo college in favor of taking out a small-business loan to strike out on his own. Most of the technicians who work for him didn’t go to college, either. They took a different path. And, well . . . what absolute chumps the president has just made of them for that!
Squirm if you like, but that’s the truth of the matter: As of today, the six air-conditioning technicians in my house are on the hook for college loans that were signed for, spent, and enjoyed by other people. Confirming the measure today, President Biden announced that any American who has both college debt they vowed to repay and an individual yearly income under $125,000 (or a family yearly income under $250,000) will be given up to $20,000 by the Treasury — which means by you, and by me, and by everyone else who pays taxes in America.
Why? Well, that’s the question.
The answer can’t be, “because that’s what the relevant law anticipates or requires.” As of yet, Congress has provided no authorization for the executive branch to arbitrarily write off some of the money that borrowers owe to taxpayers. As of yet, Congress has passed no rules that allow down-on-their-luck presidents to throw money at people for political gain. As of yet, Congress has given no instruction that if the president’s friends might like a little more cash, he can raid the Treasury to give it to them. Certainly, Congress has set up a loan program. But the deal there is rather simple, all told: First you borrow, and then you pay back what you borrowed. There is no mention of “forgiveness” days or of “help” or of rolling Chekhovian jubilees, and by pretending otherwise, President Biden is making a mockery of his oath to uphold the Constitution.
Another answer that won’t fly is, “To lower the cost of education.” As President Biden made clear today, this is a one-time deal, a lottery, a lightning strike. People who paid off their loans last week aren’t covered. People who will take out new loans after the policy has run its course aren’t covered. The problems in the system aren’t addressed. The colleges, and their endowments, are left unmolested. American culture’s increasingly credentialist presumptions aren’t altered. Within four years, overall debt will return to its present level. With the stroke of a pen, the already-fake deficit savings within the Inflation Reduction Act will be wiped out. This isn’t a reform. It’s not even pretending to be reform. It’s a contemptuous, abusive, unbelievably expensive shot in the dark — the net effect of which will be that fewer people correctly calibrate whether college is worth it, fewer colleges change their offerings to meet market demand, and, because this sort of executive giveaway will now loom large as a possibility, fewer people feel the need to save for college.
It seems so arbitrary. Why does Biden not want to do the same thing for loans on trucks owned by plumbers? Why not for mortgages — which, given how heavily it subsidizes them, the federal government clearly thinks are worthwhile? Why not for credit cards or auto payments or mom-and-pop credit lines? The answer, I’m afraid to say, is disgustingly classist: Because Joe Biden and his party believe that college students are better than everyone else. Because Joe Biden and his party believe that college students are of a finer cut. Because Joe Biden and his party prefer college students to you, and they think that those students ought to be rewarded for that by being handed enormous gobs of your money.
Electricians, store managers, deli workers, landscapers, waitresses, mechanics, entrepreneurs? Screw ’em. Sure, college graduates make more money than non-graduates, and their unemployment rate is lower, too. But non-graduates don’t have access to the president, so they don’t matter. They’re tradesmen, the riff-raff, the great unwashed. They’re background noise, dirty-handed types, second-classers. They don’t deserve $10,000 in debt reduction. What would they even do with it? Go hunting? Give it to their church? Their role is to subsidize the superior people, and the superior people go to college.
Why did Joe Biden do all this? That’s why. Why was this what Joe Biden chose to break his oath to achieve? That’s why. When it came down to it, good ol’ Scranton Joe sent cash from the sort of people he cynically pretends to care about to the sort of people he actually cares about: the privileged, accredited, self-dealing clerisy that his ever-dwindling political party now calls its base.
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Re: Explaining the student loan forgiveness reasoning

Post by Rideback »

Or if you're still pissed off about spending the money:

'If you’re upset about loan forgiveness you didn’t get, just pretend it’s a tax cut for the 1% you didn’t get.”
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Explaining the student loan forgiveness reasoning

Post by Rideback »

'Stolen from a friend:

'Someone recently asked me how student debt cancellation helps those who already paid off their debt.
I've said it before and I'll say it again: Not every program has to be for everybody. People with apartments pay for first time homeowner benefits. Young people pay for Medicare for our seniors. People who take public transit pay for car infrastructure.
Maybe student load forgiveness doesn't impact you. That doesn't make it bad. I am sure there are certainly other things that student loan borrowers' taxes pay for. We can do good things and reject the scarcity mindset that says doing something good for someone else comes at the cost of something for ourselves.
An example: If a person is blessed enough to be in a position to have paid off their loans, maybe they have a home now and benefitted from first time homeowners programs that people crushed by student loans help subsidize when they aren't about to buy a home because of student debt. It all comes around. It's okay. We can support things we won't directly benefit from.'
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