Posted on 12/03/2020 9:10:32 AM PST by SeekAndFind
The question of whether the government should cancel the $1.6 trillion in student debt held by 43 million American adults drifted out of the political debate after the strongest advocates for the idea, Sens. Elizabeth Warren and Bernie Sanders, left the race for the presidential nomination.
It's back. That's because President-elect Joe Biden has endorsed canceling at least $10,000 in federally held loans per borrower as a COVID-19 relief measure (Democrats in Congress want to raise the figure to $50,000).
Biden also proposes easing payment terms for most borrowers and taking other steps to cut the financial burden for low-income college students.
"The relative burden of education debt has long been higher for families with lower net worth, and...this disparity has grown much wider in the past couple decades."
Janet Yellen, then-chair of the Federal Reserve, in 2014
Biden's proposal has also revived the arguments against canceling student debt, which tend to revolve around issues of fairness. Accordingly, it's proper to take a look at the pros and cons. Spoiler alert: Canceling student debt will yield huge benefits for individual borrowers and for the economy at large, and the more the better.
In reality, most student debt is destined to be canceled eventually, observes University of Utah economist Marshal Steinbaum, a senior fellow at the Jain Family Institute, a social science research organization.
That's the harvest of the increased popularity of income-driven repayment programs, which cap annual repayments at a percentage of a borrower's income and forgives any balance remaining after a set period — 20 years for undergraduate loans and 25 for graduate or professional study.
"Cancelation is the thing that everyone's waiting for," Steinbaum told me. "So why are we making them wait? Why don't we just recognize that these are bad loans and eat them now?"
(Excerpt) Read more at finance.yahoo.com ...
So people who don’t have degrees, or who didn’t get useless degrees that can’t pay for themselves should subsidize the morons who got degrees in gender studies, or underwater basket weaving, and what not?
I don’t think so.
I paid mine off so I get F-ed I guess.
There's that word again.
What about auto debt ?
I am all for it if it comes out of the endowments of the universities that exploited them.
Allowing universities to loan other peoples’ money with no responsibility for making sound loans is a crime in and of itself.
“held by 43 million American adults”
No, adults don’t whine to have debts that they voluntarily entered into wiped out because they didn’t think things through.
People who took loans and have already paid them off? — screwed
People who went to college and paid for it from savings and income? — screwed
People who didn’t go to college and just joined the workforce and now pay taxes? — screwed
Young people who haven’t gone to college and will miss this Jubilee? — screwed
Of course it’s a slam dunk. I don’t even need to read their rationalizations for why. Cut through the crap and the real reason leftists want to cancel student loans is because it basically subsidizes the university liberal indoctrination system.
By cancelling student loan debt, you are encouraging tuition rates to inflate even more.
What about my mortgage?
I think my mortgage is unfair.
So then the rest of us that have paid off or paid down the debt or that have saved and gone without to pay for our children’s education were fools. Lesson: your a fool to live responsibly. This is why socialist countries die in poverty.
This is complete bullshit.
I think (hope) that the backlash on this will be way bigger than they realize.
Some of these adults who knowingly applied for and received loans, used the money for non-productive uses, ie, getting a worthless college degree for which there is no career path, need to either pay back the money they borrowed, or be allowed to default on the loan through a bankruptcy process.
These folks should have to suffer the consequences of their bad decisions. There is no legitimate case for a taxpayer bailout of these people’s bad decisions without serious consequences.
Others are simply finding it inconvenient to their lifestyle to be forced to repay the money they elected to borrow and for that my response is “tough, deal with it”.
Cancel the professors paychecks.
My kids ALL paid of their recent college debts.
And they get ?????
Oh, they could pay them off because they worked hard, got GOOD degrees, and earned good careers.
They are laundered money to universities, which then plow it back to progressive candidates' pockets.
Just another scam on uncle sam.
if its an issue of fairness, it should be resolved in a way that does NOT exacerbate the unfairness. Therefore, I propose that all Universities pass the hat and donate money out of their endowment funds.
His rationalization is not that it subsidizes the liberal colleges.
READ HIS REASONS BeLOW:
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Let’s dispense with the two most common objections to student-debt forgiveness. The first is that canceling existing debt would be unfair to the millions of borrowers who met their obligations and now would have to sit by and watch deadbeats receive a windfall.
As I’ve observed in the past, it’s hard to imagine a weaker objection or a more crass formula for governmental paralysis. By its logic, we wouldn’t have Social Security or Medicare today. The argument would be: “My great-grandparents starved in old age and died in the street because they couldn’t get healthcare, so why should yours get a break?”
In truth, the sacrifices some families made to shoulder their debt burden underscores the folly of forcing families to impoverish themselves to attain higher education. Why should we want to ignore the lesson?
The second often-heard objection is that debt cancellation would be a gift to relatively affluent households and to graduates of law, business and medical schools, who complete their education with large debt balances but are entering high-paying fields.
That’s true, but not especially relevant to the problem. Graduates of professional schools account for nearly 12% of the total debt outstanding but only about 4% of borrowers. What’s important is the debt burden on the majority of borrowers, who are working-class and lower-income.
According to an analysis by the Washington Center for Equitable Growth, a progressive think tank, the debt-to-income ratio among households in the lower 50% of the income ladder that hold any student debt is about 1-to-1 — that is, their loan balances are about the same as their annual income.
What’s especially worrisome is that the ratio has more than doubled only since 2001. The ratios for higher-income households also have increased, but remain below 0.25. (in other words, their balances are less than 25% of annual income.)
Black borrowers come off as especially disadvantaged in this calculation — about 30% of them have debt-to-income ratios of more than 0.5. Fewer than 20% of white borrowers have the same burden.
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