It is rumored that President Joe Biden is considering a broader push to forgive federal student loan debt.
Biden discussed the issue this week with the Congressional Hispanic Caucus and lawmakers said he is exploring legal options to provide some type of wider relief, according to The New York Times.
Since taking office, the Biden administration has canceled over $17 billion in student loans for about 725,000 borrowers. But that’s just a small drop in the bucket. It has been estimated the total cost to forgive 43 million student loans could add up to more than $1.7 trillion federal dollars.
Senate Minority Whip John Thune and other fellow Republican Senators are introducing a bill to block the president from eliminating student loan debt. https://www.foxnews.com/media/media-per … orgiveness
Talk Jock MSNBC host Mehdi Hasan cheered Biden's plans, and encouraged him to "do it."
"Canceling federal student debt could be a game-changer ahead of the midterms. Activists energized, base enthused, young people turning out again. And the best part: Joe Manchin wouldn’t be able to do a single damn thing to stop Joe Biden from doing it," Hasan said.
So, what do you think?
What better way to buy a vote than to pay for it with someone else's money? Isn't that what has been done for decades?
Personally, I think it's a very good idea and hope he can implement it.
Do you have any concerns about what it could do to the fradgile economy?
Although it does tie into the economy in the end, I think the more serious problem is what this plan would do to the newest generations of young adults. It is just one more chip at the idea of personal responsibility: keeping your word and taking responsibility for your choices. One more expectation of having a right to, or to deserve, something without any obligation of effort. Kids are growing up expecting the government to take care of them: from social safety-net programs for the poor to student loan forgiveness for soon-to-be-millionaire graduating doctors.
Nope, this is an obvious political move that will have short-term gains, (elections), and long-term damage to coming generations.
The societal effects on our young could be very harmful to our society as a whole. I was concentrating on financial problems. However, yes, paying off student loans could have long-term societal effects.
This is why I dislike poorly thought-out bandaid solutions. As a rule, they make a problem balloon into an enormous mess.
Your link blurbs make sense, regarding the financial aspects, but I don't think those pushing this idea care about the 'societal' economical negatives. Their focus is on the individual economic positives.
It's an effort to buy votes.
It's an effort to take care of "his own".
Who is likely to have tens or hundreds of thousands in school debt?
Not the plumbers and electricians of the world.
Not the stiff working at Burger Barn or picking up your Trash on Tuesday.
We need, like almost all other economically advanced nations, affordable or free higher education. It's an investment in our people and the future advancement of our country.
Many high school graduates can't even afford programs at local community colleges these days let alone finance a medical, legal or tech related degree.
Government, Red and Blue, has been about Band-Aids for a very long time. Most things they do, in my opinion, are reactionary and short term. I don't know if it's because Congress is increasingly ineffective at working together toward more structural changes or The American people can't stomach larger changes or if it's just good old politicking. Throw a band-aid on the leaking balloon and toss it to the next administration. Personally, I feel the two-party system is quickly outliving It's usefulness. A third or even more is needed to encourage cooperation and bring in a wider range of ideas. Our system is becoming stagnant.
So, with our current problems with the economy, and some economists predicting a possible recession, is paying off student loans at this time a smart move? Is this just a poor decision by the Biden administration that will add to inflation, and not actually help the true problem that people face with the rising costs of college and growing student debt?
Is this a big bandaid, that makes no sense at all? As Ken and Wilderness, have hinted is this a ploy to buy your votes? If so, would such expenditure be fair politically? Could this payoff truely end up hurting more Americans than it would help. Could this just lead to a big nail in the Democrat's coffin? How will independents and Republicans view such a precarious move?
"Cancelling Student Debt Would Add to Inflation
FEB 28, 2022 OTHER SPENDING
Lawmakers and advocates have loudened their calls to cancel student loan debt before the current re-payment moratorium ends on May 1st. Given the current state of the economy, we estimate cancelling all $1.6 trillion of student debt would increase the inflation rate by between 10 and 50 basis points (0.1 to 0.5 percentage points) in the 12 months after repayment is scheduled to begin. This would represent a 4 to 20 percent increase relative to the median Federal Reserve inflation rate forecast.
Full debt cancellation would cost the federal government roughly $1.6 trillion, while improving household balance sheets by a similar amount. Consistent with our prior analysis, we estimate this would translate to an $80 billion reduction in repayments in the first year, which would in turn increase household consumption by $70 to $95 billion once the effect of higher wealth is considered.
Often, higher consumption leads to higher economic output.1 However, the economy is currently unable to meet existing demand in light of elevated disposable income, strong balance sheets, lingering supply constraints, and other factors. This disconnect helps to explain the why the inflation rate hit a 40-year high in the past year, and why further increasing demand could result in higher prices rather than higher output.
Assuming the economy remains hot and 90 percent of new consumption leads to price increases as opposed to increases in output, we estimate cancellation of all outstanding student debt would boost personal consumption expenditure (PCE) inflation by 37 to 50 basis points (0.37 to 0.5 percentage points) in the year after debt repayments are scheduled to resume. Even if only one-third of new consumption feeds into prices and the Fed responds with further tightening, we estimate student debt cancellation would increase inflation by 10 to 14 basis points.2
Importantly, none of these estimates incorporate the possible effect that broad student debt cancellation could have on tuition prices. Prospective students may expect future rounds of debt cancellation, which could increase their willingness to take on more debt, thus decreasing their sensitivity to the prices that schools charge and ultimately making it easier for schools to increase prices even faster than they already do.
The inflation effect of cancelling $1.6 trillion in student debt would be small relative to the enormous amount involved, since repayments are spread out over time and the benefits of debt cancellation accrue mainly to higher earners, who tend to save more of their money.3 However, the increase is significant relative to the underlying inflation rate. It would represent a 4 to 20 percent increase relative to the Fed’s latest inflation forecast and a 5 to 25 percent increase above its target.
Moreover, even a modest increase in inflationary pressures could feed into current inflation dynamics, increasing the risk of a wage-price spiral and making it harder for the Federal Reserve to re-anchor inflation expectations around its current target. Much of this increase would also occur if the Biden administration continued the student loan payment moratorium for another year, since it would result in the same increase in cash flow to individuals.
Besides adding $1.6 trillion to the national debt and disproportionately benefiting higher-income individuals, we find student debt cancellation would cause prices to increase faster than they already are, exacerbating inflationary pressures."
https://www.crfb.org/blogs/cancelling-s … -inflation
I also think this loan forgiveness stuff is simply vote-buying, and I think folks that are cheering for it are the ones that are short-sighted.
What about folks incurring student loan obligations now, or in the coming year, will they get a voucher to forgive their student loans? And what about the $10,000 number, if the loans are in the $60,000 to $150,000 range that $10 grand is also only a bandaid.
And what about the concept of contractual choices? Why should the government interfere in a voluntary above-board legal agreement? No one is forced to incur massive student loans, there are other path choices.
Advanced nations do need an educated populace, and in the U.S. we have tons of programs that help folks get a higher education. The fact that students can create their own student debt is proof of those program efforts. And the fact that all students can't take advantage of those programs is not proof of a failed program.
An argument for loan forgives for doctors, (as a type of education path), should be a lot different than one for a Liberal Arts education.
Something that is free is almost never valued as much as something that has a cost to get.
This is just one more example of a populace that wants the government to be responsible for something that should be a personal responsibility. Everyone thinks they deserve a Cadilac for the price of a Volkswagon, (or bicycle).
As a snarky analogy . . . good clothes are also necessary for a higher-education career, so maybe that loan forgiveness should also cover a wardrobe stipend.
Thank you for sharing your insightful view. Spot on in my opinion.
I agree... play stupid games, win stupid prizes.
'I'm Drowning': Those Hit Hardest By Student Loan Debt Never Finished College.
https://www.npr.org/2019/07/18/73945116 … ed-college
Students with useless degrees explain why they decided to go deep into debt and think its worth it.
https://thefinancialdiet.com/2-students … deep-debt/
There is no easy fix, but one fix would be allowing student debt to be included in bankruptcy.
Why is it, that you can free yourself from credit card debt, mortgage, car loan, personal loan, etc. debt... but not student loans?
Isn't that in itself one of the problems?
Another is that they are willing to give almost anyone a student loan for the most ignorant of majors that have absolutely no hope of landing the person a good paying job... shouldn't these student loans be geared towards NEEDED positions like Doctors, Nurses, Engineers, and STEM fields where good paying jobs reside?
They don't give you a $500,000 mortgage if you are a part time waitress that plays the violin (your true passion) wherever you can get a gig... why the heck do they offer a student loan for a field with no chance of earning the student a six figure salary?
These schools and the government that supports this criminal system prey on weak minded and foolish young people helping them make horrible decisions that will impact the rest of their lives.
I think it should be the schools first and foremost that feel the brunt of the cost if these debts are forgiven, they have become more of a disease to our society than a blessing.
Your closing thought sounds like a good start.
Qualifying majors also sounds worth considering. I bet there is enough historical data available to quantify the future potential of various majors. Data that would point to future job needs, and the values of those jobs.
It is tempting to say almost all Liberal Arts degrees should be on the lower end of the government's scale of involvement. But I don't know enough to support the thought.
Yes with a bit more pondering of the idea, this is exactly what is needed.
STEM fields... you can get a student loan.
Non-technical majors--the arts (11.6%), humanities and liberal arts (9.7%), social sciences (9.3%) --generally have much higher unemployment rates. Conversely, health care, business, and the STEM fields (science, technology, engineering and math) have been more stable and higher paying for recent college graduates. A nursing grad, for instance, faces a below-average unemployment rate of less than 2% and a median starting salary of $54,000.
If you want to a degree in Renaissance Study or Feminist Theory get your own money for it.
2021 Tuition: $49,024. State: NY. Acceptance: 6.66%. For the M.A. in Medieval and Renaissance Studies, students must take a combination of courses in art history, religion, history, philosophy, literature
Apr 05, 2022 · Ph.D. in Women Studies is a 2-year Doctoral degree course that discusses the various cultural approaches of the theory of feminism, social issues, applications, and related..
I bet there would be significantly less people with student loan debt if we focused on only giving loans to those fields with proven needs and high salaries.
Ah yes, definitely more focus on how institutions can have more power in a person's life. So would the government be forcing the lenders to adopt these restrictions?
Republicans once called government the problem, now it seems they want to run your life.
Better than the Democrats that want to bail out all the brilliant individuals that took out hundreds of thousands of dollars in debt so they could devote their time to learning what might have caused the lint in their belly buttons to settle there.
If you are asking an institution to lend/give you money then I think it is appropriate for that institution to have realistic parameters. That is not more power, that is the reality of lending, it requires the ability to repay.
That should be true for government and private lending. I would go for Ken's plan as a qualifier for government or government-guaranteed loans. And those loans would be non-dischargeable. On the private side simply make student loans dischargeable through a mechanism like bankruptcy. If the private lenders face the same defaults as other lenders they will be more cautious with their lending. $100k might get approved for a medical degree, but not for a "Renaissance Study" degree.
For the government side, stick with the umbrella of Pell grants for all, but tie additional government lending to the probability of repayment, (like private lenders do). No protected funding just because you want it. Don't lend money for a Cadilac when the recipient can be predicted to only afford to pay for a bicycle. That's just common sense.
How would that amount to running one's life? It wouldn't stop private lenders from making good loans, but it would make them consider the probable loss from bad loans that are now dischargeable. And it wouldn't stop the availability of government lending, it would only set standards of probable career success and repayment.
While I agree with this concept, I also approach it with trepidation. The idea that we give loans for degree programs that will benefit the nation (STEM, for instance) but not those that we think don't smacks of censorship. In a way, anyway.
How many people disdain the space program as wasteful and without returns? Same for Fusion research. What about the millions (billions?) spent on the Hadron Collider in Europe, that will help us understand the formation of the universe? Is Anthropology a wasted education? Astronomy?
Others will insist that a "Renaissance Study" or "Feminist Theory" is absolutely necessary to understand our culture and its people. Lack of such knowledge is why we are so divided today.
To leave that decision - what would be effectively funded - to a governmental, politically biased committee somewhere gives me the shudders.
Yes, amen and hallelujah.
People can study whatever they want, but not at the expense of others.
If you want to take out a million dollars in student debt and be a student until you are 30, that's great, but don't expect a bailout afterwards.
There IS another solution, one I caught that is being explored.
Let those that made good decisions on their education, both financial and in terms of job availability, pay their own debts and let the people (including those that made good decisions on their own debt) pay for those that made bad decisions. Those that chose "careers" that don't exist, those that played through their education, those that don't or can't find work in their "field" - those people will get the debt resulting from bad decisions paid for by someone else.
Damn. Your sarcasm is getting better, that one was well-worded. ;-)
Where is the argument and advocacy for lowering higher education costs? Which is an actual real life issue. Who is okay with the idea of continuing to import our medical and tech people? Why are we always lead to divide on party lines on "issues" that don't even address the reality of a situation? The discussion of student debt is meaningless. It should be more affordable for kids to pursue medical, legal, tech degrees as well as community college certificate degrees. Seems like this would have bipartisan support as well as support from citizens but where Is Congress on this? I think people should get out of their partisan politics and start advocating for things that actually make sense to our society.
I don't think you would agree with the only valid direction for that argument and advocacy to go.
I think the root cause, (not the tangents of that root cause), is a simple problem of supply and demand. To reduce a price in that equation you either have to increase supply or reduce demand.
Students or professors, which should be increased or decreased to get the most change to price?
Here's a Wilderness-inspired thought: On the other hand, the root of the problem can be ignored and we can just fight the human greed that comes into play when there is free money to be had. We can argue for more government regulation, salary caps, minimums that aren't, quota stuff, etc.
Price-cap those institutions to a mean tuition cost, and then provide that cost to students. Get rid of elite and Ivy-league institutions that won't accept a mean-tuition standard. A win-win, right?
Quite simply, public education should be extended at least through 2 years of college as is in most other advanced countries. I have no problem with private, elite colleges and universities continuing to exist. They will always have students.
Another stupid thing for Biden to do.
He could use some $ for completing the border wall.
Yes, build that wall. Dig the moat and put alligators and piranhas in it
It was almost done. Now the abounded parts sit rusting. It's enough to make one cry, not, scoff.
... and the illegals come on in.
But thats okay for those who have misplaced compassion.
Yes, it's a shame that it wasn't finished and filled with flesh eating predators. God knows all illegals are horrible aren't they?
Apparently, you have a good imagination.
Even to the point that you imagine we can stand was a nation with no borders.
Please elucidate, What makes the people on the other side of the border different?
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