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Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

nytimes.com

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Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#71

Post by fooqux »

errantmind wrote: post #38
viraptor wrote: post #33

Earlier quoted context omitted.

The frugal little wouldn't lose anything. They'd gain less, which is not the same. Every single day there are people taking really stupid risks and winning due to luck. Do you feel penalised because you took less risks? If cancelling student debt solves real problems for the population on average, but makes a few idiots multimillionaires by accident... I'm all for it.

Where do you think the money comes from to pay off this debt? The debt doesn't just disappear into thin air

I'm out of my depth here; if I'm wrong I would love to be educated.

My assumption is that the debt holders would be the ones losing. I don't know about you, but I don't hold any person's medical or education debt. In my estimation, these are ultimately all held by the rich and powerful fat cats- owners of banks, etc.

Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#72

Post by iNane9000 »

floor2 wrote: post #13

The terminology of "cancelling" the debt is the most dishonest, twisted abuse of the English language. There is no "cancelling" debt. There's only forcing other people to pay. The incentives here are entirely backwards. All the people who made good decisions around cost-benefit of their education, all the people who made frugal choices, all the people who worked hard for the delayed gratification of their long-term p…

Yes, we do both and yes honest working poor people think about it often. All debt cancellation is regressive. Only wealthy people and children (who are still used to having wealthy parents) support corporate and other “million dollar” bailouts.

If it’s not “million dollar”, just $10-20k or something it wouldn’t require a bailout.

Bailouts are for rich people.

Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#73

Post by digianarchist »

_fat_santa wrote: post #11

Right now we have around 1.5T in outstanding student debt. If all of this debt were to be cancelled, who would be left holding the bag? What would that do to the economy? IMO if we cancel all student debt, this would seriously rock our economy because we suddenly decided to take 1.5T in debt assets out of the economy.

It wouldn't be quite 1.5T though right? You're simply shifting money around the economy because 1.5T is freed up for borrowers to spend/invest elsewhere.

Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#74

Post by EvanAnderson »

fooqux wrote: post #71
errantmind wrote: post #38

Earlier quoted context omitted.

Where do you think the money comes from to pay off this debt? The debt doesn't just disappear into thin air

I'm out of my depth here; if I'm wrong I would love to be educated. My assumption is that the debt holders would be the ones losing. I don't know about you, but I don't hold any person's medical or education debt. In my estimation, these are ultimately all held by the rich and powerful fat cats- owners of banks, etc.

The vast majority of student loan debt in the US is owned by the federal government. The "fat cats" who will be stuck holding the bag are the taxpayers.

Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#75

Post by viraptor »

errantmind wrote: post #38
viraptor wrote: post #33

Earlier quoted context omitted.

The frugal little wouldn't lose anything. They'd gain less, which is not the same. Every single day there are people taking really stupid risks and winning due to luck. Do you feel penalised because you took less risks? If cancelling student debt solves real problems for the population on average, but makes a few idiots multimillionaires by accident... I'm all for it.

Where do you think the money comes from to pay off this debt? The debt doesn't just disappear into thin air

Indirectly from taxes. However the context here / the premise of the article is that the one off payment is worth it in exchange for long-term boost in the economy and freeing people from obligations holding them back.

Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#76

Post by diab0lic »

jvanderbot wrote: post #45
tsjq wrote: post #28

Earlier quoted context omitted.

you'd get a bigger tax bill.

Not necessarily. I don't think USA has to cut a check to cancel these, I think they just have to stop asking for repayment.

I think you’re right that they just have to stop asking for payment but I assume those payments were included in the budget. The shortfall will need to be made up somewhere. Either higher taxes or fewer services.

Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#77

Post by satellite2 »

While I can appreciate where this is coming from, I can only help but thinking that this is a very poor short term solution.

By debt cancelling I expect he means the government / the central bank will pay the lenders. (If not then we will have a massive homeless retirees problem as they are generally the lenders).

As an economist, the issue with that is that it will continue incentivize the function of the underlying economic system and the problem will re-appear even faster.

In the economic area mentioned by the author, housing, eduction, utilities, justice, it seems clear that if people need to get over-indebted to get basic services, there is a pricing issue.

The problem come mostly because usual market arbitration forces are not applying in those areas because of asymetric needs of buyers and sellers. The average renter generally cannot avoid paying or use a subtitute and is generally forced to bear a price augmentation.

If the government simply pays the sellers of those services, they have no incentive to provide them at a lower cost.

So I believe it's really a pricing issue and only its resolution will allow to resolve the symptoms, debt and poverty, that it creates.

Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#78

Post by dragonwriter »

floor2 wrote: post #13

The terminology of "cancelling" the debt is the most dishonest, twisted abuse of the English language. There is no "cancelling" debt. There's only forcing other people to pay. The incentives here are entirely backwards. All the people who made good decisions around cost-benefit of their education, all the people who made frugal choices, all the people who worked hard for the delayed gratification of their long-term p…

> There is no "cancelling" debt. There's only forcing other people to pay.

No, there is actually cancelling debt.

There is also forcing someone else to pay, but that’s a different thing.

Its probably the case that only some (such as government-held portion) of the debt at issue could Constitutionally be cancelled, in the strict sense, though.

> The incentives here are entirely backwards.

Because its not (unlike, say, bankruptcy), an ongoing thing available to people in the future, it has negligible incentive effect. Even as precedent, the expectation “if a set of debts across society becomes sufficiently onerous, they may be cancelled for everyone” creates very little incentive for anyone.

Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#79

Post by valeness »

EvanAnderson wrote: post #32
faitswulff wrote: post #17

Student debt is the epitome of rent-seeking. You can't even discharge it with bankruptcy. Cancel it.

The terms and conditions of the debt obligation are known up-front. If the terms of the loan were onerous the borrowers shouldn't have accepted them and declined the loan. Why is poor financial literacy and wishful thinking about future job prospects on borrowers' parts my problem to be left holding the bag for?

Are we expecting full financial literacy from people who can't legally decide if taking a shot of whiskey is in their best interest or not? Or from the same people who often cannot even rent a car? Or people with no credit history? An entire forum of what I consider to be some of the smartest adults in the world (myself excluded lol), can't even agree on what this "debt oligation" means; and we're supposed to place this burden of understanding on people who have to raise their hand to ask to go to the bathroom?

We have controls on taking on debt for the other 99% of credit line applications, why is this one so significantly different?

Re: Student Loans. Medical Debt. Criminal Justice Fees. Cancel It All.

#80

Post by adamsvystun »

viraptor wrote: post #57
adamsvystun wrote: post #22

Earlier quoted context omitted.

I think you are misunderstanding what people mean by "cancelling debt". They don't mean they will force lenders to suffer a loss, they mean that government will cover the debt.

If the gov actually decided that the current situation is not sustainable and it's better for everyone to cut the losses and cover everything... why would it guarantee another loan like that the next day? The companies themselves could be interested in that loans of course, but without the previous guarantee the risk would be too high.

What you say makes sense, but the people proposing student loan cancellation do not talk about rolling back government guarantees on student loans. If they did, that would be totally different discussion.
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