There’s no need to measure anything. The problem with student loans is qualitative.
Banks are allowed to make unsecured loans and the borrowers can’t usefully declare bankruptcy. Colleges have every reason to raise prices and lenders have no skin in the game.
It isn’t any more complicated, and no amount of data analysis can possibly refute this.
If data showed that at regional state universities and community colleges the rise in tuition corresponded with the decrease in public funding per student then you wouldn’t believe it? Or that such data would mean nothing to you? Consider the linked article and keep in mind that enrollment in higher Ed has declined since 2008.
It hasn’t been “banks” for a decade: Student loans today are overwhelmingly supplied directly by the federal Department of Education. That’s why a huge jubilee is even plausible.
Of course and there's no reason to refute this. The reason we got here is that the quantatative measures a Bank would use are biased by actual societal bias. This is a situation like asking why your ML became racist.
Letting a bank choose the interest rate based on your zip code would allow banks to predict which families will remain rich and that would be a self fulfilling continuation of current class distinctions in a system where they are allowed to do that.
This is the correct answer. Personal bankruptcy is the tool developed and refined for over a century to address exactly this problem.
It should surprise nobody that the banking interests (and industry-adjacent politicians) who pushed so hard for student debtors to be uniquely deprived of their right to shed their debt through the courts are now pushing for taxpayers to repay their unsecured loans.
>But that’s because such measures exclude the very asset the person borrowed to buy—an education that increases lifetime earnings. That’s like assessing a homeowner’s wealth by counting their mortgage balance but not the value of their home.
The value of a higher education that it's sold to young people with is the income it allegedly brings in. If that's the case someone uses the product and their income goes up then we already have a means to tax that income it's called income tax. If the product fails to deliver that income but the money is still taken (and as others mention in a non dischargeable way) then I don't see how that isn't fradulent.
If you think it’s fraudulent for the federal government to give a 22yo a $120,000 loan for a Master of Fine Arts program in theater, then you have to argue that such loans should stop. Only the rich or the beneficiaries of private charity will be able to access MFA programs—or perhaps the taxpayer should make degree programs like that “free”?
I think that’s a defensible argument, but it’s regressive in a different way from the status quo.
It’s arguably more harmful to give a poor person $120K in debt to study something that almost certainly returns little, especially as those same people (statistically) may not know that some college degrees are worth significantly less than others.
This isn’t fully fleshed out, but the government could set a cap in loans based on anticipated the future earnings. Johnny gets into Med School and wants a $400K loan? Great! Iowa Central College wants to charge $200K for a dance major? Good luck finding students to enroll!
This also has the benefit of placing downward pressure on college tuition.
If you're saying maybe something should be done with the cost of education and incentivising making it a valuable product rather than a way for middlemen to skim money off both students and educators who also haven't benefited from skyrocketing costs then I'd agree 100%. If the programmes are poor then the resulting failures and bankruptcies should be thinning out poor products same as anywhere else.
If some rich people benefit with valuable education (or the ever loved MFAs in this debate), so what? That's what income tax is for. The rich having skin in the game too is a good thing.
- AFAICT, the argument that a massive loan forgiveness would not be regressive rests entirely on excluding from the analysis low-income members of the 25-40yo cohort with no student debt. Sure, that fraction may be smaller than in the past, but it’s hard to see how discounting a bunch of poor folks who would see $0 benefit from this expenditure is intellectually honest.
- It’s amusing to see a left-wing analysis complain about policy benefits being described in absolute dollar amounts when it’s a doctor making $250k having $50k of his medical school loans forgiven. As I recall, every tax cut debate of the last 20 years has featured charts in absolute amounts showing the tens of thousands of dollars the average 1%’er would save, not the relatively small fraction of income that represented.
The situation is an entire generation of kids from one point forward were systematically misled about the sure thing security of the benefits of taking a student loan investment vehicle in order to secure their education. When the financial sector was misled about the same regarding "secure" mortgage backed securities in 2008 they were completely bailed out - despite being the sophisticated investors that should have known better.
To allow the same for entire generations of students affects our society - causing declining birth rates, poorer health outcomes, poorer life quality. And why? To enforce fiscal discipline that we have not enforced even on sophisticated actors that systemically made a poor choice?
I think this is post hoc wrapping usury and massive information asymetry in 'some progressiver than thou' language.
- if it's about taxing some qualitative value of education then it should be a graduate tax applied equally to everyone with tertiary education. I'd be curious how politicans would manage policies on education and taxes on this value when they are paying it too
- if it's not about the qualitative value but about the income, then it should be an income tax.
- if it can't be discharged through normal procedures of bankruptcy and terms are rewritten by politicians then it's not 'just a loan' either.
In the absence of any of these then these are largely generation taxes in terms of how they fall.
So did I. I don't want others to have to go through with it. The lesson will be others will have money to spend on other things that will be more beneficial to me in the long run.
If everyone did that we would have negative interest rates and from my experience economists aren't ready for a world that isn't enslaved through involuntary debt.
The lesson here is some of us aren’t selfish. Ive paid all my debts, and I found it awful. I would rather a greater proportion of humans weren’t debt slaves
Mathew 20:13 “But he answered one of them, ‘I am not being unfair to you, friend. Didn’t you agree to work for a denarius? 14 Take your pay and go. I want to give the one who was hired last the same as I gave you. 15 Don’t I have the right to do what I want with my own money? Or are you envious because I am generous?’
For student loan forgiveness the government is in the role of the landowner in this parable.
Readit News
Banks are allowed to make unsecured loans and the borrowers can’t usefully declare bankruptcy. Colleges have every reason to raise prices and lenders have no skin in the game.
It isn’t any more complicated, and no amount of data analysis can possibly refute this.
https://www.cbpp.org/research/state-budget-and-tax/state-hig...
I suspect that prices could still increase even in spite of public funding decreases due to the point in my original post.
But to me, all of these side effects can be thought of as fruit from a poisonous tree, and thus unjustified.
And the government was perfectly capable of bailing out private companies at the end of Bush Jr’s second term.
Letting a bank choose the interest rate based on your zip code would allow banks to predict which families will remain rich and that would be a self fulfilling continuation of current class distinctions in a system where they are allowed to do that.
It should surprise nobody that the banking interests (and industry-adjacent politicians) who pushed so hard for student debtors to be uniquely deprived of their right to shed their debt through the courts are now pushing for taxpayers to repay their unsecured loans.
The value of a higher education that it's sold to young people with is the income it allegedly brings in. If that's the case someone uses the product and their income goes up then we already have a means to tax that income it's called income tax. If the product fails to deliver that income but the money is still taken (and as others mention in a non dischargeable way) then I don't see how that isn't fradulent.
I think that’s a defensible argument, but it’s regressive in a different way from the status quo.
This isn’t fully fleshed out, but the government could set a cap in loans based on anticipated the future earnings. Johnny gets into Med School and wants a $400K loan? Great! Iowa Central College wants to charge $200K for a dance major? Good luck finding students to enroll!
This also has the benefit of placing downward pressure on college tuition.
If some rich people benefit with valuable education (or the ever loved MFAs in this debate), so what? That's what income tax is for. The rich having skin in the game too is a good thing.
https://www.currentaffairs.org/2019/06/is-student-debt-cance...
- AFAICT, the argument that a massive loan forgiveness would not be regressive rests entirely on excluding from the analysis low-income members of the 25-40yo cohort with no student debt. Sure, that fraction may be smaller than in the past, but it’s hard to see how discounting a bunch of poor folks who would see $0 benefit from this expenditure is intellectually honest.
- It’s amusing to see a left-wing analysis complain about policy benefits being described in absolute dollar amounts when it’s a doctor making $250k having $50k of his medical school loans forgiven. As I recall, every tax cut debate of the last 20 years has featured charts in absolute amounts showing the tens of thousands of dollars the average 1%’er would save, not the relatively small fraction of income that represented.
To allow the same for entire generations of students affects our society - causing declining birth rates, poorer health outcomes, poorer life quality. And why? To enforce fiscal discipline that we have not enforced even on sophisticated actors that systemically made a poor choice?
- if it's about taxing some qualitative value of education then it should be a graduate tax applied equally to everyone with tertiary education. I'd be curious how politicans would manage policies on education and taxes on this value when they are paying it too
- if it's not about the qualitative value but about the income, then it should be an income tax.
- if it can't be discharged through normal procedures of bankruptcy and terms are rewritten by politicians then it's not 'just a loan' either.
In the absence of any of these then these are largely generation taxes in terms of how they fall.
Dead Comment
For student loan forgiveness the government is in the role of the landowner in this parable.
Dead Comment
Deleted Comment