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U.S. forgives 40k student loans

reuters.com

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Re: U.S. forgives 40k student loans

#461

Post by throwaway894345 »

PragmaticPulp wrote: post #160
throwaway894345 wrote: post #49

Earlier quoted context omitted.

And also reimburse the people who sacrificed to pay theirs off or avoid them in the first place. I’d donate my reimbursement if they did, but of course they won’t.

> And also reimburse the people who sacrificed to pay theirs off or avoid them in the first place. Most of the loans in this specific program were forgiven in exchange for at least 10 years of specific public sector jobs. Those jobs usually come with a reduced compensation in exchange for the loan forgiveness. I have a few friends who went this route as lawyers because they prefer helping out in the public sector ins…

I was talking about general student loan forgiveness. I don't have a problem with certain targeted forgiveness programs (especially those which amount to compensation for work, as you describe).

Re: U.S. forgives 40k student loans

#462

Post by washadjeffmad »

gruez wrote: post #447
landemva wrote: post #438

Earlier quoted context omitted.

Or repeal the Clinton-era law that made student loan debt non-dischargeable in bankruptcy. In that way, potential lenders would have incentive to determine ability to repay.

>would have incentive to determine ability to repay. It's a mixed bag. On one hand it should decrease costs and incentivize students into choosing better career plans (ie. not going to college just because), but it will also mean disadvantaged students won't be able to attend because their projected credit risk is so high.

The problem that law was meant to address was that most of the debt being discharged came from a relatively small pool of students who attended very expensive or prestigious schools.

If they had set a limit for discharge to the value of the median cost of tuition, it might have prevented the runaway train of inflated costs in the education and perhaps even medical sector, outside of what was caused by malpractice insurance rates in the 70s.

Also, individualizing risk to the students irrespective of degree choices and economics without dutifully notifying students isn't ethical behavior, especially when they are responsible for the magnitude of the risk by not controlling costs or advocating for the value of the students they graduate.

Re: U.S. forgives 40k student loans

#463

Post by caeril »

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.

Yes. Additionally, it's crazy that we're singling out this specific type of debt for forgiveness. What exactly is the criteria that makes this debt different from others?

Is it because it's taken on when you're young and unable to understand the risks? If that's the case, I gambled away a LOT of money when I was 22 on casino credit, and I made the mistake of paying off my markers - I should have waited for the "you made a poor decision when you were young" forgiveness train to arrive.

The same could be said for those parasitic $500 "Student Credit Card" offers we all received when we were young, or the kids who decide to finance that brand new Mustang they can't afford at loan shark rates due to no credit history. Why not forgive it all, if the standard is "they were young and didn't know any better"?

And why stop at youth? It's pretty ageist to assume only the young are financially illiterate. There are plenty of older people who make poorly informed financial decisions. Bail them out too? When all the 5/1 ARMs written at 1.6% a year ago for homebuyers barely on the bubble of serviceability reset, we should definitely forgive them for their idiocy as well.

Re: U.S. forgives 40k student loans

#464

Post by timssopomo »

rootusrootus wrote: post #402
timssopomo wrote: post #312

Earlier quoted context omitted.

We do, actually, at least in the US. It's called bankruptcy. We generally recognize that sometimes despite best intentions, debts become unpayable and in these cases, the debts get restructured and creditors are frequently wiped out (which is fair, since both borrower and lender take risks). Student loans can't be discharged through bankruptcy unless the borrower is permanently disabled. It's entirely possible to end…

> It's called bankruptcy. Then why is the discussion around a debt jubilee rather than reforming the bankruptcy rules for student loans?

I'm pretty sure the folks who are for a debt jubilee are also for reforming bankruptcy rules, and there are folks who are in favor of reforming bankruptcy rules that aren't for a complete jubilee.

I was pointing out that we already have a legal and moral framework for discharging debts that can't be repaid.

Re: U.S. forgives 40k student loans

#465

Post by greedo »

ch4s3 wrote: post #443
greedo wrote: post #436

Earlier quoted context omitted.

It primarily funds Social Security. How is that part of "our wacky welfare system?" If you consider it a secondary income tax, then it really shows how regressive our tax system is since the rich don't pay the same rate.

It’s a tiny portion of federal revenue, which as pointed out and cited is predominantly funded by income tax. It also doesn’t straightforwardly find Social Security. It funds a portion of pay outs to current recipients, something like ~90%, with the rest coming from general funds. That portion is decreasing as demographics shift. It’s sort of a weird cash transfer program that’s presented as some sort of lock box. We…

"tiny portion of federal revenue?" It's 36% of all Federal revenue. It used to constitute almost 80% of Federal revenue in the 40's/50's, but the cap has made its contributions drop.

https://www.cbpp.org/sites/default/files/atoms/files/PolicyB...

The Federal income tax is progressive, but only if you ignore that the payroll taxes are highly regressive income taxes. When you look at them as a whole, it's readily apparent that the overall Federal income tax system is regressive.

Re: U.S. forgives 40k student loans

#466

Post by mmcgaha »

washadjeffmad wrote: post #459
sokoloff wrote: post #311

Earlier quoted context omitted.

Just housing and feeding around 50 million borrowers while they attend school for 4-ish years ends up being a damn lot of money.

I thought college was expensive until I looked into historical tuition prior to the modern era. Turns out our grand parents, parents, and siblings just lived in a golden age of fair wages and massively affordable and available education.

I am younger than your grandparents but I have children that range for 14-31 and I can tell you that I could afford to go to college based on what I made as a short order cook but my kids would not have been able to earn enough to even pay for school much less have enough left over for life.

It sure feels like schools have taken advantage of the student loan programs to increase fees and tuition while at the same time lowering the admission standards to put even more asses in seats.

Re: U.S. forgives 40k student loans

#467

Post by Sohcahtoa82 »

throwaway894345 wrote: post #206
Sohcahtoa82 wrote: post #189

Earlier quoted context omitted.

Because our public school system is a propaganda machine for getting students to go to college. They tell high school students...people who are legally still children that the most important thing is to go to college. They tell them if they can't afford it, they can just get loans. And now people are surprised and blame the kids when they do as their teachers told them and rack up 5 or sometimes even 6 figures of stu…

I don't think it's as malicious as you're implying. Educators went to school at a time when people who went to college earned dramatically more than those who didn't and they were pretty much guaranteed job placements. That's still true today in aggregate, although probably to a lesser extent. They also didn't anticipate that universities would become predatory with respect to ballooning costs and stagnating or decli…

The maliciousness is on the part of the people blaming the college kids for making "bad decisions".

Re: U.S. forgives 40k student loans

#468

Post by ch4s3 »

greedo wrote: post #465
ch4s3 wrote: post #443

Earlier quoted context omitted.

It’s a tiny portion of federal revenue, which as pointed out and cited is predominantly funded by income tax. It also doesn’t straightforwardly find Social Security. It funds a portion of pay outs to current recipients, something like ~90%, with the rest coming from general funds. That portion is decreasing as demographics shift. It’s sort of a weird cash transfer program that’s presented as some sort of lock box. We…

"tiny portion of federal revenue?" It's 36% of all Federal revenue. It used to constitute almost 80% of Federal revenue in the 40's/50's, but the cap has made its contributions drop. https://www.cbpp.org/sites/default/files/atoms/files/PolicyB... The Federal income tax is progressive, but only if you ignore that the payroll taxes are highly regressive income taxes. When you look at them as a whole, it's readily appar…

You're reading that chart incorrectly, it was like 5% in the 40s and 50s not 80%. I meant historically tiny, and should have been clear, though it is larger now. Yes, payroll tax is regressive, but only 6.2% and the cap rises every year.

> it's readily apparent that the overall Federal income tax system is regressive

It clearly is not, as 57% Americans paid no income tax last year (up from ~47%), and 19% (up from 17%) paid neither income tax nor payroll tax. So somewhere in the neighborhood of 38% of Americans paid payroll tax but not income tax meaning their federal tax burden was quite low. If you roll in the payroll tax the effective federal rates are still quite progressive[1]. Even Piketty and Saez note that the tax system when everything is accounted for is still progressive in the US[2] and they're accounting for wealth accumulation and not just income. If you want to include things like Piketty and Saez, you should probably include transfers, entitlements, and welfare, which makes the system look even more progressive in total. There's a good wikipedia article on the topic [3].

I'm not sure how you can argue against the conclusions of the CBO, Saez and Piketty who are the most prominent socialist economists in the world right now, and the Brookings Institute. Basically everyone who studies the topic disagrees with you, including people who greatly disagree with one another.

[1] https://www.taxpolicycenter.org/briefing-book/are-federal-ta...

[2] https://eml.berkeley.edu/~saez/piketty-saezJEP07taxprog.pdf

[3] https://en.wikipedia.org/wiki/Progressivity_in_United_States...

Re: U.S. forgives 40k student loans

#469

Post by omegaworks »

loeg wrote: post #383
31098347 wrote: post #318

Earlier quoted context omitted.

>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. Punish how? This word keeps being used but it does not fit any definition of punish I'm familiar with. I'm not being obtuse. Some background of where I'm coming from: Worked 40+hrs/week for $7.25 to $10/hr from 2005 to 2009 t…

> If someone graduated with $100,000 debt because they partied all the time, didn't work, and tomorrow Biden just gave them a tax-free forgiveness.... > I am not punished by this. Imagine a fair and equitable spending program that distributed $100k to everyone. It's fair, and people with debt could use it to pay off their loans (you could even require it to be used to pay off student loans first). If your goal is to…

> Then, tax 100% of the distribution for people without student loan balances.

No one is proposing this.

Re: U.S. forgives 40k student loans

#470

Post by loeg »

omegaworks wrote: post #469
loeg wrote: post #383

Earlier quoted context omitted.

> If someone graduated with $100,000 debt because they partied all the time, didn't work, and tomorrow Biden just gave them a tax-free forgiveness.... > I am not punished by this. Imagine a fair and equitable spending program that distributed $100k to everyone. It's fair, and people with debt could use it to pay off their loans (you could even require it to be used to pay off student loans first). If your goal is to…

> Then, tax 100% of the distribution for people without student loan balances. No one is proposing this.

Proposals to pay off student loan debt are the equivalent of this, as I have expanded on at length in the rest of my comment.
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