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U.S. forgives 40k student loans

reuters.com

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Re: U.S. forgives 40k student loans

#101

Post by gruez »

lifeisstillgood wrote: post #26

I know every European seems to ask this of every American but what is the resistance to a welfare state? if you look at a government as investing in its citizens like a VC fund, then providing education and medical care is sensible, and some will turn out fine and others will be Bezos and then you can get your investment back via tax. I am honestly trying to avoid the flame war here - but I do it know how else to fra…

>if you look at a government as investing in its citizens like a VC fund, then providing education and medical care is sensible

Be careful what you wish for. if the US was a VC fund, they'll have to not invest in every company they come across and perform due diligence, which probably means excluding disadvantaged people with poor academic records.

Re: U.S. forgives 40k student loans

#102

Post by throwawayboise »

sharker8 wrote: post #61
mc32 wrote: post #13

Earlier quoted context omitted.

Just stop guaranteeing them, let students default on them. All these guaranteed loans that can't be discharged allows academic institutions to ratchet up the price. Let them calculate risk and price them accordingly.

This create market driven dynamics in which degrees basically are tailor made for industry. This approach disincentivizes pure research for scientific purposes.

Pure research for scientific purposes is done by Ph.D. students and is already funded by research grants. Student loans are not part of the equation here.

Re: U.S. forgives 40k student loans

#103

Post by bee_rider »

abnry wrote: post #80
sharker8 wrote: post #61

Earlier quoted context omitted.

This create market driven dynamics in which degrees basically are tailor made for industry. This approach disincentivizes pure research for scientific purposes.

There is a tension between the two purposes universities have: To train students and to do research. I want both, but I have a hard time disapproving of more focus on training students, as they are the true customers of universities.

A future where universities looked more like community colleges situated next to research institutes, rather than weirdly blending the two, could be neat.

Have people really interested in teaching rather than research teach the 100/200-level courses. The scientists next door can teach seniors and juniors, and show up for guest lectures.

Re: U.S. forgives 40k student loans

#104

Post by buu700 »

loourr wrote: post #12

It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.

Exactly. Plug the hole first (or concurrently), and then worry about bailing water. Additionally, as others have mentioned, it needs to be done in such a way that we aren't punishing those who have been responsible and made sacrifices to pay off their loans.

I'm not opposed to student loan forgiveness, but I don't think it's nearly as popular as many progressives would like to believe as a standalone proposal. Come up with some qualifications and limitations for reimbursing past loan payments, as well as a systemic fix for the future, and I'd be all for it.

All that being said, is it still wise to forgive student loans at this particular time? Originally, the pitch was that it would help act as a stimulus during the pandemic downturn. Now that we're dealing with the opposite situation, I don't see the rush. Maybe a bill could be passed that had a delayed or gradual effect.

Re: U.S. forgives 40k student loans

#105

Post by loeg »

31098347 wrote: post #84
fortran77 wrote: post #36

Earlier quoted context omitted.

People in the US are always punished for being financially responsible.

People who have paid their student loan debt are in exactly the same situation they were after this forgiveness than they were before: that is, they have no student loan debt. People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible. Very different.

> People who have paid their student loan debt are in exactly the same situation they were after this forgiveness than they were before: that is, they have no student loan debt.

You're missing the point, either deliberately or on accident.

(Prefacing this with: we should keep and honor the terms of the existing PSLF program that students relied on when taking on debt.) There's no particular reason people with current loan debt, but ineligible for PSLF, should get a wealth transfer from other taxpayers with similar income, net worth, and expenses -- but no current student loan debt.

> People in the US are not punished for being financially responsible. They are rewarded for taking risks, but not punished for being responsible.

In fact, a hypothetical student debt forgiveness event like GP was discussing would punish those who responsibly paid off their student debts relative to similar-earning classmates who did not.

Re: U.S. forgives 40k student loans

#106

Post by skizm »

Why is the government so afraid of allowing new student loans being issued to go into bankruptcy? Wouldn't this solve most issues going forward?

Separate note: instead of loan forgiveness programs, just pay for people's school up front if they go into these public sector jobs. Then if they quit before the end of their contract, they're on the hook for whatever. Same as the military academies system. Free college, 5 years of service, and you're done. I'm guessing they don't because they can weasel their way out of paying the forgiveness later through technicalities / miring the candidates with red tape, and the program is actually in bad faith.

Re: U.S. forgives 40k student loans

#107

Post by loeg »

dehrmann wrote: post #32
mc32 wrote: post #13

Earlier quoted context omitted.

Just stop guaranteeing them, let students default on them. All these guaranteed loans that can't be discharged allows academic institutions to ratchet up the price. Let them calculate risk and price them accordingly.

The guarantee is the only reason the loans are made. Otherwise, you're lending a lot of money to someone with no income and no assets, and no one will want to make that loan.

They'd actually have to underwrite on the basis of the value of a degree -- yeah, no one is going to lend money to the same people who wouldn't be able to repay their loans after graduation. That's good!

Re: U.S. forgives 40k student loans

#108

Post by elpool2 »

loourr wrote: post #12

It's crazy to cancel student loans and still keep issuing the exact same loans. If we believe the loans are unjust then the government should stop handing them out as the very first step.

I see this as basically just making amends for the failures of the PSLF program. This is for the folks who made years of payments expecting to get loan forgiveness after 10 years as promised, only to then be told none of the payments counted because they didn’t read the fine print or simply because of the loan servicer’s incompetence.

Re: U.S. forgives 40k student loans

#109

Post by bombcar »

mrep wrote: post #92
fortran77 wrote: post #41

Earlier quoted context omitted.

No. Tuitions will drop like a rock.

Maybe for the bottom schools but there are enough rich parents to pay/cosign a loan for like the top 50 schools and I highly doubt they would reduce tuition/spending and risk hurting their rankings.

No matter how many loans or funding you get, it'll always be impossible for everyone to go to the top 50 schools, unless you simply outlaw all schools outside of the top 50.

Re: U.S. forgives 40k student loans

#110

Post by dcolkitt »

lifeisstillgood wrote: post #26

I know every European seems to ask this of every American but what is the resistance to a welfare state? if you look at a government as investing in its citizens like a VC fund, then providing education and medical care is sensible, and some will turn out fine and others will be Bezos and then you can get your investment back via tax. I am honestly trying to avoid the flame war here - but I do it know how else to fra…

The biggest misconception is that America could have a European welfare state if we just taxed the rich. The reality is the rich in America only pay slightly lower taxes than their European counterparts.

In Germany top income tax rate is 50%. In the US, it's 37% if you live in Texas and 56% if you live in California. In Germany long-term capital gains is 25%. In the US, it's 24%. In the US the corporate tax rate is 21%. In Germany it's actually lower at 16%.

The primary difference between Germany and the US is not taxes on the wealthy. It's that the German middle class pays significantly more than the American middle class. A couple with two children, each earning $65k/year will pay 28% of their income in taxes. Then on top of that they'll pay 19% in VAT tax on nearly every purchase. Effectively for every Euro earned, they're left with post-tax purchasing power of 59 cents.

In contrast, the same family in America will only pay 11% of their income in taxes. Depending on state sales tax comes in at 7%, and unlike VAT at most applies to maybe half their budget. For every $1 of income, this American household is left with 85 cents of post-tax purchasing power.

And that's the main difference right there. European welfare states are powered by taxes on the middle and upper-middle that are simply unacceptable to the average American voter. Imagine a politician running on a policy of tripling middle class taxes. It doesn't matter how much single-payer healthcare, free university education, and expanded public transit they promised. Americans would simply never vote for that.

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