Student Loan Debt Forgiveness

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Kraken
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Re: Student Loan Debt Forgiveness

Post by Kraken »

While I think this will help a lot of young adults get a leg up, it's also stimulative at a time when the Fed is un-stimulating. How many billions are we talking about?
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Re: Student Loan Debt Forgiveness

Post by malchior »

The payments have been frozen so it's not net new stimulative. Guess you can argue some people are waiting for cancellation to go on a spending spree but that's pretty dubious.
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Re: Student Loan Debt Forgiveness

Post by LawBeefaroni »

Huge boon to Universities, once again.

University hedge funds endowments are sitting at record levels across the country while their schools sit on trillions in tax-free real estate.

But yes, let's have tax payers foot this bill also.

Shit, UT[exas] is making over $5M/day on oil and gas sales from land it owns in the Permian Basin. The state fund will probably be near $2B this year.
“As we sit right here in this fiscal year, we’ll have the highest oil production that PUF lands have ever had,” said William “Billy” Murphy, CEO of University Lands, which oversees the West Texas acreage.

He was addressing the UT Board of Regents in early May and showed a slide projecting $1.9 billion in contributions from mineral rights. As oil and gas prices continued to climb, he said, the contribution to the permanent fund was on pace to be over $2 billion.
I can only assume that zero Texas college students will need to take advantage of the loan forgiveness.
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Re: Student Loan Debt Forgiveness

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The schools are sitting on endowments to operate in perpetuity. It’s a function of highly organized fundraising to provide job security and fund empire building.
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Re: Student Loan Debt Forgiveness

Post by LawBeefaroni »

Zarathud wrote: Tue Aug 23, 2022 10:42 pm The schools are sitting on endowments to operate in perpetuity. It’s a function of highly organized fundraising to provide job security and fund empire building.
Exactly. Why subsidize them further by covering (aka "forgiving") outstanding bad debt?
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Re: Student Loan Debt Forgiveness

Post by Zarathud »

That debt is likely owed to banks. Universities aren’t making those loans directly, I recall.
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Re: Student Loan Debt Forgiveness

Post by LawBeefaroni »

Zarathud wrote: Tue Aug 23, 2022 10:51 pm That debt is likely owed to banks. Universities aren’t making those loans directly, I recall.


Banks and a bunch of quasi-govenrment agencies (Sallie Mae) or DoE contractors hold most of the loans. Note that about 90% of all student debt is government backed which is why banks are willing to buy it up. If students actually had to pay tuition or take out real loans, rather than run up free credit,

Erasing bad debt keeps student loans flowing which means more money pumped into tuitions. It amounts to a huge payout to banks and a write-off to government held debt.
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Re: Student Loan Debt Forgiveness

Post by Pyperkub »

LawBeefaroni wrote:
Zarathud wrote: Tue Aug 23, 2022 10:51 pm That debt is likely owed to banks. Universities aren’t making those loans directly, I recall.


Banks and a bunch of quasi-govenrment agencies (Sallie Mae) or DoE contractors hold most of the loans. Note that about 90% of all student debt is government backed which is why banks are willing to buy it up. If students actually had to pay tuition or take out real loans, rather than run up free credit,

Erasing bad debt keeps student loans flowing which means more money pumped into tuitions. It amounts to a huge payout to banks and a write-off to government held debt.
Also that it can't be wiped away by bankruptcy. It is there in perpetuity...
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Re: Student Loan Debt Forgiveness

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LawBeefaroni wrote:Huge boon to Universities, once again.

University hedge funds endowments are sitting at record levels across the country while their schools sit on trillions in tax-free real estate.

But yes, let's have tax payers foot this bill also.

Shit, UT[exas] is making over $5M/day on oil and gas sales from land it owns in the Permian Basin. The state fund will probably be near $2B this year.
“As we sit right here in this fiscal year, we’ll have the highest oil production that PUF lands have ever had,” said William “Billy” Murphy, CEO of University Lands, which oversees the West Texas acreage.

He was addressing the UT Board of Regents in early May and showed a slide projecting $1.9 billion in contributions from mineral rights. As oil and gas prices continued to climb, he said, the contribution to the permanent fund was on pace to be over $2 billion.
I can only assume that zero Texas college students will need to take advantage of the loan forgiveness.
*Some * universities have nice endowments.

Most don't.
Black Lives definitely Matter Lorini!

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Re: Student Loan Debt Forgiveness

Post by LawBeefaroni »

I went to a small Midwestern university and it is sitting on $750M. It's peanuts at around only around 4x annual budget. It probably passes for a poor endowment. It's still $750M.
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Re: Student Loan Debt Forgiveness

Post by Zarathud »

The financial purpose of a large endowment is to build up and take 6-7% out in perpetuity for operations. A prudently managed investment should sustain that spend. I don't have a problem with a multi-billion dollar endowment if the funds are spent, rather then hoarded. That leads to a perpetual advantage of universities able to cultivate wealthy alumni. If the university or college invests in scholarship students who gratefully return the investment later, that's fine.

With $10,000 forgiveness to those earning under $125,000, we're talking about those who weren't able to maximize their opportunities from attending college. Or believed that just showing up would punch their meal ticket. Or just missed the opportunity to fully use their education. It'll help some of those who were too lazy or stupid, but nothing is perfect and there are systemic problems with college costs anyway. The goal isn't really to help students, it's to avoid a generational debt burden that's become a drag on the economy -- lower home ownership, financial stability, and even inability to afford children.

The best advice I received from an economics professor was to attend graduate school somewhere they wanted me to attend, or even better were willing to put money on the table, then work with the professors to get a strong starting referral in my chosen field after finishing. Without developing good relationships with a few people in college and at the law school, I wouldn't have developed an interest in my field or been able to work at a "big law" firm. If I had spent more time developing those relationships beyond that initial referral, I would have a much bigger book of business.
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Re: Student Loan Debt Forgiveness

Post by Pyperkub »

In the Texas endowment news, they apparently have (received?) Oil/Gas rights in the Permian Basin.

It *coukd* be worth that much.....
Black Lives definitely Matter Lorini!

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Re: Student Loan Debt Forgiveness

Post by Defiant »

So it looks like there will e $10K cancellation for individuals with annual incomes of 125K or less (or married couples with 250K or less), and those with Pell grants (by my estimate, around 29% of those with student loan debt) would get $20K cancellation.

It's also proposing:
The Department is also proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers. The proposed rule would protect more income from loan payments. It would cut in half—from 10% to 5% of discretionary income—the amount that borrowers have to pay each month on their undergraduate loans, while borrowers with both undergraduate and graduate loans will pay a weighted average rate. It would also raise the amount of income that is considered nondiscretionary income and therefore protected from repayment. The rule would also forgive loan balances after 10 years of payments, instead of the current 20 years under many income-driven repayment plans, for borrowers with original loan balances of $12,000 or less. Additionally, the proposed rule would fully cover the borrower’s unpaid monthly interest, so that—unlike with current income-driven repayment plans—a borrower’s loan balance will not grow so long as they are making their required monthly payments. The plan would also simplify borrowers’ choices among loan repayment plans. The proposed regulations will be published in the coming days on the Federal Register and the public is invited to comment on the draft rule for 30 days
.

https://www.ed.gov/news/press-releases/ ... -repayment
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Re: Student Loan Debt Forgiveness

Post by gilraen »

Zarathud wrote: Wed Aug 24, 2022 1:04 am With $10,000 forgiveness to those earning under $125,000, we're talking about those who weren't able to maximize their opportunities from attending college.
You seem to have a very skewed perception of what actual salaries are for many professions that do require college degrees.
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Re: Student Loan Debt Forgiveness

Post by Smoove_B »

If only students were businesses and we could somehow declare those loans equivalent to the paycheck protection program. I saw Bernie mentioning it yesterday and when you're right...
You seem to have a very skewed perception of what actual salaries are for many professions that do require college degrees.
I have a Masters degree and a professional license to practice; people would not believe what my salary was in the public sector; it's embarrassing. If I had loans I'm confident I'd still be paying them off.
Maybe next year, maybe no go
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Re: Student Loan Debt Forgiveness

Post by em2nought »

I had to give up several years of my life in exchange for a two year degree, I guess I'm not getting handed $10,000 by our benevolent vote buying leader? :lol: I wonder what the amount would be adjusted for inflation since 1985? :lol: Heck, $10,000 isn't worth what $8,000 was since just last year. :lol:
Technically, he shouldn't be here.
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Re: Student Loan Debt Forgiveness

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em2nought wrote: Wed Aug 24, 2022 2:07 pm I guess I'm not getting handed $10,000 by our benevolent vote buying leader?
Trump isn't our leader anymore. :?
Covfefe!
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Re: Student Loan Debt Forgiveness

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hepcat wrote: Wed Aug 24, 2022 2:08 pm
em2nought wrote: Wed Aug 24, 2022 2:07 pm I guess I'm not getting handed $10,000 by our benevolent vote buying leader?
Trump isn't our leader anymore. :?
for now :wink:
Technically, he shouldn't be here.
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Re: Student Loan Debt Forgiveness

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Yeah, he'll probably try to buy his way back in again. I agree.

Remember: Republicans can't lose....as long as they cater to low IQ people who don't need proof they won. :mrgreen:
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Re: Student Loan Debt Forgiveness

Post by malchior »

Smoove_B wrote: Wed Aug 24, 2022 1:48 pmI have a Masters degree and a professional license to practice; people would not believe what my salary was in the public sector; it's embarrassing. If I had loans I'm confident I'd still be paying them off.
I have an acquaintance who is a social worker in NYC. They require a MSW for a job with an average $60K salary in one of the world's highest cost of living regions. It's nuts.
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Re: Student Loan Debt Forgiveness

Post by YellowKing »

Regardless of which side of the politics you fall in with this issue, my brother is still paying off student loans at age 44, which is fucking ridiculous.
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Re: Student Loan Debt Forgiveness

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:shock:
Last edited by Hamlet3145 on Fri Aug 26, 2022 7:16 am, edited 1 time in total.
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Re: Student Loan Debt Forgiveness

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Re: Student Loan Debt Forgiveness

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The Washington Post editorial board hates this! Hates it! I'm not a super fan of the whole concept but it amazes me how the elite hate when young people get helped. I have a feeling it wouldn't be hard to juxtapose this to their fawning over subsidies to corporations (the infrastructure bill for instance).

Their rationale is also surprisingly thin on context. They argue that college educated people don't need help because they have low unemployment rates. So what? It's like we don't have tons of evidence that we have all sorts of signs that post-college Americans have delayed forming households, buying homes, and having children. But according to these moneyed elites they don't need help - they've got a job!

They also claim it'll be inflationary without even an ounce of explanation how it would be. As I understand it this isn't even an actual injection of cash into the economy. Even if it was it'd be to lenders and would be a fraction of the money supply. Krugman had a thread on Twitter talking through how that was dubious FWIW.
After weeks of anticipation, Mr. Biden announced he will extend the pause on student loan payments until the end of the year. He will also forgive up to $10,000 for those making less than $125,000 a year — and up to $20,000 for Pell Grant recipients under that income threshold. Both measures are ill-conceived and misdirected.

The loan pause, which President Donald Trump instituted in March 2020, was an emergency measure at a time when people were struggling to find jobs or had to remain home due to the pandemic. Thankfully, the situation is very different today: The unemployment rate for people with bachelor’s degrees and higher is just 2 percent. It’s hard to make the case that college graduates are still facing an unprecedented crisis.

...

The loan-forgiveness decision is even worse. Widely canceling student loan debt is regressive. It takes money from the broader tax base, mostly made up of workers who did not go to college, to subsidize the education debt of people with valuable degrees. Though Mr. Biden’s plan includes an income cap, the threshold does not reflect need or earnings potential, meaning white-collar professionals with high future salaries stand to benefit. Student loans, moreover, are a poor proxy for household income: An analysis by policy researcher Jason D. Delisle found that, in 2016, students from high-income and low-income families were just as likely to take on debt for their first year in an undergraduate program — and students from high-income families borrowed the largest amounts.

Mr. Biden’s plan is also expensive — and likely inflationary. The Committee for a Responsible Federal Budget estimates that extending the loan pause to the end of the year would cost $20 billion, while forgiving $10,000 for households making less than $300,000 would cost $230 billion. Together, these policies would nullify nearly a decade’s worth of deficit reduction from the Inflation Reduction Act. Moreover, it is unclear that the 1965 Higher Education Act even grants the president the legal authority to take such a sweeping step, given that it was historically understood to permit only more targeted relief.
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Re: Student Loan Debt Forgiveness

Post by Alefroth »

Have the numbers in the tweet been sourced?
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Re: Student Loan Debt Forgiveness

Post by malchior »

Alefroth wrote: Wed Aug 24, 2022 5:51 pm Have the numbers in the tweet been sourced?
It's probably accurate, all of this is public information, and more importantly it's mostly just snark. PPP loans were designed to be forgiven after all.
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Re: Student Loan Debt Forgiveness

Post by Isgrimnur »

Not seeing any distinction between undergraduate and graduate loans. I will certainly take a 10k windfall against my remaining 50k unsecured debt.
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Re: Student Loan Debt Forgiveness

Post by Zenn7 »

This do anything for students currently in college?

Kid has government loans from last year as well as a small-ish Sallie Mae loan (originally 2k minus maybe a couple $100 - set up a monthly payment plan and paying for him to get a lower interest rate).

This will be his Junior year, and already took out the max fed loans for semester 1, probably getting more Sallie Mae loans in a month or so (on installment payment plan).
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Re: Student Loan Debt Forgiveness

Post by Defiant »

Zenn7 wrote: Wed Aug 24, 2022 7:04 pm This do anything for students currently in college?
Students currently in school with loans also qualify for forgiveness. If they are dependents, the Department of Education will use their parents’ income to judge eligibility. Loans must have been originated before July 1, 2022, to qualify.
https://fortune.com/2022/08/24/biden-to ... qualifies/

Also, if the new income-driven payment plan happens, that should help future students.
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Re: Student Loan Debt Forgiveness

Post by Zenn7 »

Defiant wrote: Wed Aug 24, 2022 7:12 pm
Zenn7 wrote: Wed Aug 24, 2022 7:04 pm This do anything for students currently in college?
Students currently in school with loans also qualify for forgiveness. If they are dependents, the Department of Education will use their parents’ income to judge eligibility. Loans must have been originated before July 1, 2022, to qualify.
https://fortune.com/2022/08/24/biden-to ... qualifies/

Also, if the new income-driven payment plan happens, that should help future students.
Thanks for the link Defiant. :)
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Re: Student Loan Debt Forgiveness

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malchior wrote: Wed Aug 24, 2022 5:43 pm The Washington Post editorial board hates this! Hates it! I'm not a super fan of the whole concept but it amazes me how the elite hate when young people get helped. I have a feeling it wouldn't be hard to juxtapose this to their fawning over subsidies to corporations (the infrastructure bill for instance).

Their rationale is also surprisingly thin on context. They argue that college educated people don't need help because they have low unemployment rates. So what? It's like we don't have tons of evidence that we have all sorts of signs that post-college Americans have delayed forming households, buying homes, and having children. But according to these moneyed elites they don't need help - they've got a job!

You have to admit it is very class selective. It's going mostly to people whose major complaint is that they can't buy a house.

The whole "going to those who need most" really means going to some college graduates with unsecured loan debt.


Don't get me wrong, it's not absolutely terrible. It's also not great bang for buck. Maybe good vote for buck and I'll take that in the current environment.
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Re: Student Loan Debt Forgiveness

Post by Little Raven »

This is absolutely a give away to a preferred class of voters. I suppose it makes sense, given who votes for Democrats now, but this kills any notion that Democrats are the party of the working class.
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Re: Student Loan Debt Forgiveness

Post by malchior »

This captures my concerns well.

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Re: Student Loan Debt Forgiveness

Post by malchior »

LawBeefaroni wrote: Wed Aug 24, 2022 7:37 pm
malchior wrote: Wed Aug 24, 2022 5:43 pm The Washington Post editorial board hates this! Hates it! I'm not a super fan of the whole concept but it amazes me how the elite hate when young people get helped. I have a feeling it wouldn't be hard to juxtapose this to their fawning over subsidies to corporations (the infrastructure bill for instance).

Their rationale is also surprisingly thin on context. They argue that college educated people don't need help because they have low unemployment rates. So what? It's like we don't have tons of evidence that we have all sorts of signs that post-college Americans have delayed forming households, buying homes, and having children. But according to these moneyed elites they don't need help - they've got a job!

You have to admit it is very class selective. It's going mostly to people whose major complaint is that they can't buy a house.
Is it though? It's not just about buying houses. The indicators are that there is an entire generation is far behind their older siblings and parents. This is why there is so much political pressure. Maybe this is targeting a segment but this begs a discussion about the bigger problem. Somewhere along the line we created an advanced economy and didn't build the capacity to train new people into it.

We have a desperate need for college trained workforces. Especially certain degrees. There simply aren't enough workers replacing the boomers as they unquiet quit or join the excess death statistics. And our economy keeps creating jobs that need advanced education. We absolutely should be figuring out a way to invest in people (or fix immigration - hah!). We actually did a reasonably good job defining from a policy standpoint the type of economy we want in the next ten years. We want to onshore parts of our supply chain, we want to manufacture more silicon, more batteries, more EVs, etc. Unfortunately we can't fix the human capital side and it has gotten way out of hand. It got too big for the current system to face so the easy, lazy fix (hat tip to Melissa Kearny) is was what we got.
Don't get me wrong, it's not absolutely terrible. It's also not great bang for buck. Maybe good vote for buck and I'll take that in the current environment.
I think they absolutely screwed the pooch on value here. From from a policy standpoint this was really not well formulated. Let's be honest, from the accounts it sounds like they ran out of time with the deadline approaching for payments to resume. That led to the Biden administration committing to another poorly formulated, desperate last minute thing. It is what happens when the pressure builds since he couldn't make a decision and they convinced him that hey it might help with the fact that he's insanely unpopular. Ironically, I think this feeds into why he is a deeply unpopular President in many ways. He is a bungler. Still for every person he helped he probably pissed off an old white guy. We'll see if that matters since they probably were going to vote for some GOP nihilist anyway.
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Re: Student Loan Debt Forgiveness

Post by Zarathud »

The old white guys were going to get pissed off. Biden didn’t market this as much as sent up constant test balloons. Someone with more salesmanship could have smoothed over the outrage.
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Re: Student Loan Debt Forgiveness

Post by Kraken »

Politically speaking it fulfills a campaign promise and cements the votes of young educated people who are already inclined to prefer Democrats. It also cheeses off just about everyone who hates to see someone else get ahead.

Economically, it puts a nice windfall into a lot of people's monthly budgets, contradicting the Fed's attempt to reduce job and wage growth in the name of combating inflation. But since this cash infusion will happen gradually it won't have a measurable effect before the elections.

Ethically, I'm fine with any effort to give people a boost into the middle class -- even young people who won't get off my lawn.

Strategically, we need to reform in education financing. The more we subsidize it the more expensive it gets, so shoveling more money isn't helping.

Realistically, that's going to require legislation, so LOL.
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Re: Student Loan Debt Forgiveness

Post by LordMortis »

LawBeefaroni wrote: Wed Aug 24, 2022 7:37 pm Maybe good vote for buck and I'll take that in the current environment.
I don't know about that. I'd love to see how it affects the vote. This comes right in the middle of all of these inflation complaints. How many people who see this a give away for a vote who vote the other way vs how many who see this a windfall and give vote a thank you. The political pushback and messaging will be huge. I see more political damage than good coming from this. The question, then is it worth it the fallout?

I've never been a fan but that fight is dead. In different times, this could have informed my vote and not for progressive liberalism and now I'm going to have to hear the next round of giveaway complaints as if this giveaway is drastically different for than the last one or the one before or the one before, the PPM or checks for everyone, or bank bailouts, building federal "balance sheets" or home buyer credits and subsidized home loans or...
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Re: Student Loan Debt Forgiveness

Post by malchior »

From a high level policy point of view - this WaPo OpEd compares it to another boondoggle from the past - the Medicare cost control elements in the 90s era Balanced Budget Act that led to the series of 'Doc fixes' (talk about callbacks). The analysis is spot on. Biden has potentially caused a huge headache. She then goes on to describe how they've just made the tuition problem worse long-term.

From a top view, the Democrats have likely taken a shot (below the water line?) on the notion that they are the good shepherd/governors of our nation. I still don't wholesale buy the regression and inflation arguments. I think they are easy/lazy talking points for a lazy unserious country. Still this action shows how unserious we are. Biden had to declare a 'National Emergency' using some language in a 9/11 bill to do this. It's flimsy at best.

Fundamentally the issue is action needed to happen in Congress as Kraken pointed out and that is truly LOL. We desperately needed to pair this with some long-term fix at a minimum to not cause future problems. They've likely start a chain of consequences we don't know the end of here. They may have accelerated yet another problem with our nation. But hey they checked a campaign promise box, right?
There are so many things wrong with President Biden’s newly unveiled policy on student loans that one hardly knows where to begin. So I might as well start with … the Medicare doc fix.

In 1997, Congress became alarmed by the rising cost of health care, which was particularly concerning because it was amping up the cost of Medicare. So when Congress passed the Balanced Budget Act, it created something called the Sustainable Growth Rate (SGR), which was supposed to keep physician reimbursements from growing faster than gross domestic product.

That was all well and good until 2003, when the federal government realized it would need to actually impose significant cuts on those reimbursements. Physicians squealed, and a wincing Congress passed the first “doc fix,” temporarily suspending the caps. Freed from the constraints of the SGR, physician reimbursements continued to grow faster than GDP — which meant that every year, the cost of actually imposing the SGR got bigger.

The “doc fix” became a regular ritual in Washington, because the alternative became increasingly unthinkable: By January 2013, doctors were facing a potential pay cut of 26.5 percent. Unwilling to anger doctors, or to anger seniors whose doctors stopped taking Medicare, Congress kept granting reprieves, until the Obama administration finally bit the bullet and pushed through a (now very expensive) reform in 2015.

...

The student loan program itself represents an attempt to solve the problem of rising college costs, and the theory seems sound enough. After all, kids who went to college would eventually earn a lot more money than they would have otherwise, and loans let them monetize some of that future income to pay their tuition.

But, of course, tuition prices were already partially based on the expectation of higher future incomes, and all that future income shifted backward in time meant colleges could charge even more. One study suggests that when Congress raised the caps on subsidized federal loans, as much as 60 cents of every extra dollar lent got eaten up by tuition increases. Which in turn ballooned loan balances, and in turn created political pressure to make student loan programs more generous to borrowers — as the government has over the years, undoubtedly putting further upward pressure on tuition.

Trying to fix these problems by making it even more attractive to borrow money is like trying to quit smoking by switching to unfiltered cigarettes. When you’re doing something destructive, your best bet is to stop. But if you can’t manage that, you should at least refrain from making the problem worse.
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em2nought
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Re: Student Loan Debt Forgiveness

Post by em2nought »

Kraken wrote: Thu Aug 25, 2022 2:00 am It also cheeses off just about everyone who hates to see someone else get ahead.
It also cheeses off just about everyone who hates to see someone else "unfairly" get ahead. Fixed that for you. :wink:

When this happens I hope they just give the money to the debtor without and other stipulations, and we'll see if they choose to pay off their loan or not. :lol:
Technically, he shouldn't be here.
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El Guapo
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Re: Student Loan Debt Forgiveness

Post by El Guapo »

malchior wrote: Thu Aug 25, 2022 7:28 am
Fundamentally the issue is action needed to happen in Congress as Kraken pointed out and that is truly LOL. We desperately needed to pair this with some long-term fix at a minimum to not cause future problems. They've likely start a chain of consequences we don't know the end of here. They may have accelerated yet another problem with our nation. But hey they checked a campaign promise box, right?
Yeah, I mean at the end of the day it seems to me like the Biden administration made a reasonable choice given their options. As you say this is a patch on a broken system. But does anyone think that the Biden administration could get significant reforms of education funding through a 50-50 Congress (including Manchin and Sinema)?

And once that's off the table, Biden was facing the choice of something like this, or nothing. Doing this has significant political risk, but then so does doing nothing (a *lot* of Democratic advocacy groups have been pushing hard on this). Plus you'd be letting people you can help suffer, and telling them "hey, it wouldn't make sense to help you without also pushing for significant reforms that aren't going to happen anytime soon" is not a great answer.
Black Lives Matter.
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