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Soaring Student Debt Prompts Calls for Relief

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Re: Soaring Student Debt Prompts Calls for Relief

#321

Post by st3v3r »

morgante wrote: post #222
chumich1 wrote: post #220

Earlier quoted context omitted.

Should we be expecting the average 17-year old to be make sound financial decisions? Especially given how much money is involved.

Yes, we should. The average college freshman is 18 years old. If you're old enough to drive a car, join the army, or be charged as an adult, you're old enough to realize that paying tens of thousands of dollars for a degree in musical theater isn't a great idea. It's not rocket science. There are tons of resources online to help you figure out which degrees and schools are good value.

"Yes, we should. The average college freshman is 18 years old."

And how many finance courses would they have taken during high school?

Re: Soaring Student Debt Prompts Calls for Relief

#322

Post by trentmb »

gm-conspiracy wrote: post #309
trentmb wrote: post #256

Earlier quoted context omitted.

It's possible for colleges to rescind degrees, so if you wanted to be particularly evil you could go down that route.

If the debtor completed their degree.

You could prevent tranferring credits.

Re: Soaring Student Debt Prompts Calls for Relief

#323

Post by rfrey »

white-flame wrote: post #204
outside1234 wrote: post #195

Earlier quoted context omitted.

Let me know when you find the hole in the ground that is shooting money up into the air that enables us to have luxuries like this. Frankly, we have thousands of other problems, highlighted by basic health care, that we should probably prioritize first.

Note that this is literal in some cases. Norway, being one of the major neo-socialist successes, is also a major oil exporter in the region. They have holes in the ground shooting money up that help enable social programs.

Norway does have a higher per capita GDP than the US. (55k vs 52k). But there are many countries with smaller per capita GDPs -- by a much larger difference -- that have solid social programs including free health care and subsidized education.

The situation in the US is a political choice, not a consequence of some economic law.

Re: Soaring Student Debt Prompts Calls for Relief

#324

Post by dragonwriter »

zeveb wrote: post #263
morgante wrote: post #176

Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? I made the choice to go to a slightly less prestigious school so I wouldn't have to go into debt for college. I also worked all through college to pay for my expenses. Should I now be punished for that decision? Why should we make people's financial mistakes consequence-free? I think the government should get out…

> Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? Not just that: this is, ultimately, a giveaway to the academic classes, who have lucked into the business of selling things to unwise consumers spending someone else's money. When these loans are forgiven (let's not fool ourselves: they will be), the federal government will have moved $1.3 trillion into the cof…

> When these loans are forgiven (let's not fool ourselves: they will be), the federal government will have moved $1.3 trillion into the coffers of colleges, universities, professors, junior assistant vice-provosts of diversity affairs, athletic coaches and the whole panoply of 21st-century academia.

The principal on those loans already went there, and forgiving the debt won't move any additional money there except insofar as people with unpaid student loan debt overlaps with people working in academia.

Re: Soaring Student Debt Prompts Calls for Relief

#325

Post by 2bitencryption »

morgante wrote: post #316
st3v3r wrote: post #305

Earlier quoted context omitted.

"Should I now be punished for that decision?" You're not being punished, in any sense of the word.

Of course I am. I had to pay an initial cost (avoiding loans) and then am further being forced to pay for other people's decisions through taxes.

Punishment is a consequence for your actions.

You would be paying regardless of your own decisions. You are not being punished, you are being forced to contribute. If that's the way your fellow citizens vote, that is how it will be (though I doubt it will happen soon).

Re: Soaring Student Debt Prompts Calls for Relief

#326

Post by morgante »

gerbilly wrote: post #320
morgante wrote: post #307

Earlier quoted context omitted.

> I would rather pay their student loans and be grateful for what I have as a white western person, which puts me on a privilege level well above a large proportion of humanity. I am very aware of my privilege. In fact, that's why I donate at least 10% of my income to charities operating in the developing world. That's actually part of why loan forgiveness galls me so much. It's offering a subsidy to people who are a…

> There's also a choice aspect of this. Points taken above. I'll just point out that the focus on fairness is a strong human trait, and IMHO it is a trait that we over-express. Often our notion of fairness is very biased as well. We are most likely to recognize situations that are unfair against us, but easily gloss over all the unfair advantages we may have. An anecdote: One time I was complaining to my grandmother…

I don't think your anecdote or point is very strong unless you believe in the notion of "sin."

I think I've been appropriately rewarded and punished for my decisions in life.

Re: Soaring Student Debt Prompts Calls for Relief

#328

Post by morgante »

2bitencryption wrote: post #325
morgante wrote: post #316

Earlier quoted context omitted.

Of course I am. I had to pay an initial cost (avoiding loans) and then am further being forced to pay for other people's decisions through taxes.

Punishment is a consequence for your actions. You would be paying regardless of your own decisions. You are not being punished, you are being forced to contribute. If that's the way your fellow citizens vote, that is how it will be (though I doubt it will happen soon).

> Punishment is a consequence for your actions.

Right. That's why I said I was being punished for choosing to avoid loans. It's what makes loan forgiveness such a moral hazard: we discourage people for making the financially prudent decision to avoid crippling debt.

If I had instead borrowed money to finance my education, I could have gotten it forgiven and avoided this punishment.

Re: Soaring Student Debt Prompts Calls for Relief

#329

Post by btilly »

morgante wrote: post #176

Am I the only one who hates the notion of being forced to pay for other people's bad financial decisions? I made the choice to go to a slightly less prestigious school so I wouldn't have to go into debt for college. I also worked all through college to pay for my expenses. Should I now be punished for that decision? Why should we make people's financial mistakes consequence-free? I think the government should get out…

I think the government should get out of the student loan industry entirely: stop subsidizing them and making interest rates a political issue. Let the market signal which degrees are valuable and which aren't. But also make them dischargeable in bankruptcy. At least then there would be a consequence for people deciding to take out expensive loans for education.

In economic models, one of the biggest reasons for soaring tuition is increased ability to pay. So every move to increase how easy it is to take out student loans causes tuition to go up which causes pressure to make it easier to take out student loans.

Therefore the expected result of your policy is outrage, short term dislocation, and then greatly reduced tuition. Which will move money from academic administration to the rest of the economy.

Re: Soaring Student Debt Prompts Calls for Relief

#330

Post by nstj »

zanny wrote: post #294
nstj wrote: post #277

Earlier quoted context omitted.

What does this have to do with the velocity of money? If the students continue to pay off their debt then the money flows to their creditors, who will use put it to work in the economy. If the debt is forgiven then it won't go to their creditors and will instead go to those who had student loans who will similarly spend it. Is there another reason that forgiving student loans improves the health of an economy?

The class that lends is also the class whose marginal increases in wealth do not produce goods demand or consumption, it just goes back into lending and / or investment / and or bonds. The best way to grow an economy is to give a dollar to its poorest participant, not its richest, because the poor class will immediately spend it on goods, creating demand, where the richer you are the less of your income goes to consu…

Sure. So if you're wealthy, you invest your money. Let's say that the money which you would have received from the student loans which aren't forgiven was earmarked to invest in a new AI startup (with neural nets!). Those funds would be transferred to the startup's bank account, and then used to pay the salaries of people who work at that startup (who theoretically have a high marginal propensity to consume their income than the person who invested money in their employer). These employees then go out and spend money on stuff like Soylent and iPhone 7's and a bunch of other stuff which would be as you describe it "goods demand or consumption".

Even if these wealth hoarding lending class members had just left their money in the bank, remember that these funds have a corresponding entry on the left side of the bank's balance sheet (not much cash/reserve balances in the banking system) and would also have to be loaned out to someone else in the economy by the bank.

So I still don't see how lending money leads to guaranteed lower amounts of consumption in the economy?

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