A huge number of people will see debt wiped by SLF, and I'm glad they'll no longer be under that thumb.
But the action itself is a result of political calculus, and I don't pretend to treat it as anything else. It'll be nice if the turnout effect size is sufficient for team blue (though I think Dobbs will have a bigger impact). Sure, rightists are being disingenuous, pretending like it's actually going to increase marginal rates at any time in the foreseeable future. But that's the game - it's what they have to do here.
That ignores the objections from the left. Brookings wrote that forgiving student debt is regressive, a de facto wealth transfer from the less fortunate to the wealthier elements of society. When I say that this program is deeply immoral this is what I'm talking about.
If government is going to cut anybody a check it should be to the less fortunate as part of the social safety net. Transferring money from the worse off to the top 30% of the economy is monstrous.
(a) Neo-liberals have a quasi-moral attachment to usury, even when the loans have a built-in government enforcement mechanism that doesn't exist for private ones, and their issuance is devoid of concern for risk-assessment.
(b) The 70th percentile of income appears* to be ~ %107,965, and 76th is $125,823, so some small part will be sent to that slice of the top 30%. The "less fortunate" already pay very low tax rates, if at all, and have a designated tax break (EIC). The median SL debtor is not wealthy.
(c) I'm lukewarm on UBI, based on what I read in FALC by Bastani, who quoted studies showing limited effectiveness in the UK, though maybe it would work in the US. He was more in favor of UBS (S = services).
I'm really not talking about UBI so much as food stamps, housing subsidies, etc. All need based. Debt forgiveness for somebody making $120k is year is definitely not need based.
The point is that it's regressive. College grads earn more than those with only a high school diploma and the latter group is going to be footing some part of the bill. Taking money from somebody making $30k a year and giving it to somebody making $120k a year, regardless of the amount, is morally unjustifiable.
You’re overselling again by going back to the right endpoint (120k) as though it were the middle, but this exchange is indicative of the gist of my first post. I want this to help blue tribe, you’re rooting for red, and that leads to motivated reasoning.
The WaPo calls thus program regressive. Brookings calls it regressive. Regardless of the actual salaries the problem is that the underlying principle is less wealthy people subsidizing the college education of more wealthy people.
What's more the nature of the objection changes based on political orientation. Since when have conservatives cared about regressive outcomes? I pointed out that opposition to this program comes from both the right and the left. If you think that any opposition from the left must necessarily be conservative in nature that says more about you than the argument.
What do you mean? I am pretty sure it's $10k in debt relief for anybody making less than $125k a year and twice that ($20k in relief) for anybody who also has a Pell grant.
Gotcha and also I worded that poorly. I’m asking if the Charts and Graphs(TM) showing income based on education level have been adjusted to show the numbers for only those who qualify for the loan forgiveness, or if those Charts and Graphs(TM) are showing the income based on education for all graduates
Looks like you read ACX. Maybe you saw Scott Alexander's recent post about Underpopulation. There was a section about dysgenics, and birth rates by educational level. I propose to alleviate this by a Eugenics for Today: forgive up to 50k in loans for any woman who gives birth. Whaddya think?
Peter Turchin, overproduction of elites. I think it's questionable whether or not the economy can actually provide white collar jobs for all of today's college grads. And then of course all of those angry theater majors forced to hold down jobs as waiters and temps turn out to be tremendously destabilizing to the social fabric.
The US is at replacement level thanks to immigration, but for countries that are seeing precipitous drops in population why not just give money to anybody who has kids, regardless of education level? That assumes that the overwhelming issue is that you need bodies in general (rather than college educated bodies specifically).
I think you are missing the point of the centrist critique. In 2020 the economy needed stimulus, and with a government mandated shut down of businesses we were in danger of a serious recession and high unemployment. That didn’t happen, maybe in part due to PPP. So PPP made people (including people on the lower end of the economic spectrum who can’t work remotely etc) better off.
The ‘centrist’ argument here is that their is a real danger that debt cancellation will make the people we are trying to help worse off, and does nothing to address the fact that we will be in the exact same position 5 years from now (and maybe worse- moral hazard and all that). Also, the policy is generally pretty regressive, even though it does genuinely help people who need help. So the argument is that the costs may overwhelm the benefits.
Yes, there are bad faith ‘I didn’t get help so why should anyone else’ arguments, but don’t discount actual critiques people have of debt cancellation. If inflation does come back and this contributes to it, pretty much no one will think this was a good idea in retrospect.
It’s completely relevant when you are comparing PPP (loan forgiveness) with a policy that was intended to be a grant as it is a big reason that these policies are different enough where the ‘gotcha’ comparison doesn’t mean much.
In any event, 2020 was a very different world than 2022, where the economy was shut down and we desperately needed stimulus. It’s tough for me to wrap my head around the argument that a stimulus program designed to prevent mass layoffs is somehow now on its face bad. We avoided a recession during a time the government shut down a lot of businesses. Just ask the non-essential, non-remote workers that didn’t lose their job in 2020 how they feel about PPP. Yeah, money went to people who didn’t deserve it (just like loan forgiveness now), but it was a program put in place at lightning speed and it was never going to be perfect.
I don’t get the merits of the argument that ‘because you supported a government program in 2020, if you don’t support a totally different program in 2022 designed to address a completely different problem in an world where economic fundamentals of the US are different, then you’re being inconsistent’ or whatever.
The primary purpose of these loans was to forestall layoffs and business shutdowns during the government's (terrible) C19 public policy blunders.
Whether good or bad policy, PPP does strike me as being far more defensible than the odious (and likely unconstitutional) student loan "forgiveness" announcement this week, and signals what is likely the most cynical regressive wealth transfer in the history of American politics.
Rule by, and for, the Professional Managerial Class sucks, and the Democratic party will learn how deeply unpopular this notion is in November.
Hate to be the bearer of bad news, student loan forgiveness is very much a handout to people in upper income brackets - and one that will cost a third of a trillion dollars. Even better, it creates an endlessly perverse incentive for schools to keep hiring armies of overpaid administrators and forever raise costs.
Now, far be it from me to conflate "the American left" solely with the Democratic party, but if this is not the distilled essence of Professional Managerial Class politics, what is? Where does this cynical focus on Acela Corridor white collar workers at the expense of literally all others take the Democrats? Where is it taking the left in general?
If I’m not glad that Khloe Kardashian got millions, and in fact believe that the PPP forgiveness was terrible, then what comes next?
I think the disconnect here is that this wasn’t technically a post about student-loan forgiveness, but that was the implied point of the post, so people are replying to that.
I think the point that anti-forgiveness people are trying to make is that student loan forgiveness is in fact very regressive, the same way Bush and Trump tax cuts are regressive - yes, they give money to poor people, but they give a lot more money to rich people. And the poorest of the poor get almost nothing.
If you think that statement is off-topic, then that’s fair. But it’s not fair to insist the people making that point are acting bad faith.
There are millions of people whose student loan debt is less than $10k because they did not finish university, but they are being crushed by that debt no less. 63% of borrowers who default on student loans have LESS than $5000 in debt. This is because wages for those who drop out of college tend to be very, very low. This will be a massive benefit to those people and if some wealthier people benefit in some minor way, well I imagine they will use that extra few hundred dollars a month to invest in businesses either through the stock market or through consumerism, which is great for the economy.
There is a strong correlation that those with MORE college debt tend to earn more, as frequently this means they've gone to grad school. By that end, they have the least amount of default occurring and when they do it is most frequently people who got swindled by for-profit schools (there was just a massive lawsuit about this that is also going to wipe a lot of debt).
Yeah it seems to me that the best gripe against the Biden plan from the left is that the means testing is sort of isolating disadvantaged debtors from others, and that will harm this as a tool for solidarity. But it seems to be decently targeted to help the most afflicted. As a law school grad, $10k is meaningless on my balance. But I’m doing ok. But my god when I had $5k in credit card debt after a few months of unemployment at 24, it affected everything about my life including which jobs I could even consider taking. Under $10k in debt can be an enormous burden, especially if people have kids and real lives.
"student loan forgiveness is very much a handout to people in upper income brackets" is such a crock of shit when the program clearly has a cap. My brother-in-law who has about $350K in medical school loans won't qualify for this program because he makes more than the $150K for an individual right out of school.
It's ironic that when debt relief is proposed for the bottom half of income earners it's a burden to society but when the same debt relief or "job creator relief" happens at the top end, it's a benefit to society.
For me to take any money from somebody who makes less than me would be fucking terrible.
For me to take any money from somebody who is struggling to survive would make me a fucking monster.
I cannot understand why anybody who is working as an engineer, or as a developer, should get a check from somebody who is working as a waitress or a landscaper. This is fucking insane.
There's the Federalist and National Review writers, and then there's the rank and file conservatives, and many of the latter did have a problem with the PPP payouts to rich people. You just didn't hear about it because those folks don't have Twitter accounts or blogs. Trump's nomination was in many ways a rebuke to the mainstream Republicans who are perceived as being "swamp" creatures and crony capitalists. You could fault Trump voters for being duped by an obvious con man, but a fair number of them actually do hate most of the ultra-wealthy, even if their perception of the lesser of two evils sometimes leads them to vote for corporate puppets anyway.
My brother-in-law grouses about "all these handouts" but gladly took his PPP loan forgiveness. His viewpoint is that some people are worthy of help and others...well not so much.
Short of genuinely wealthy people, I can’t really fault anyone for taking free money if it’s shoved in their face by the government, especially in the context of a massive giveaway to lots of people. But there are lots of conservatives who at least try to vote for the candidates they perceive as less likely to support such programs in the first place. Might as well try to understand what actually motivates them instead of stopping at “they’re just hypocritical bootlickers for the rich”. (Not trying to put words in your mouth specifically; just addressing a general sentiment I’ve perceived in many leftists.)
As for the second part, I obviously don’t know your brother-in-law, but what lefties may perceive as “some people don’t deserve help”—which implies mindless animus against certain groups—is often actually more like “Some choices are bad and shouldn’t be subsidized.” Maybe that’s not much better in practice, but there is a meaningful moral difference there IMO.
When the conservatives in my social circles (both professionally and personally) verbalize what programs they support vs. what they think shouldn't be supported, much of it does align along socio-economic and demographic lines. This is especially so here in Louisiana, but also in other states I've lived and worked. I also might add that this also applies to the conservative democrats I know as well. And I've also found that they're very much supportive of programs they can take advantage of/qualify for as they consider themselves deserving of such but programs that would generally benefit a wider swath of the general public or on lower socio-economic levels, they take issue with because in their minds, someone that doesn't deserve it, is getting something for free.
There's a prevailing mindset that the working poor either deserve to be poor or just aren't trying hard enough and any assistance is something they don't deserve. I've observed this mindset in working class all the way up to upper-middle class individuals, regardless of their political persuasion.
Fair enough. A lot of people in my social circle are delivering extremely simple-minded “Conservatives are against this because they hate young people/poor people/black people” takes, and that’s more what I’m talking about, but you’re clearly getting at something a little more nuanced than that.
3. To SAVE THE EMPLOYEES JOBS (and gain shutdown compliance) - the Congress passed a law.
if you are not able to understand:
1) Employers STILL came out of this WORSE than not shutting down - see Florida (no debate FL won). The MISTAKE was deviating from business as usual.
2. This was for EMPLOYEES- a pretty even distribution of LABOR (the guys you claim to care about) which means lots of them HAVE COLLEGE LOANS they were supposed to be able to keep paying.
Finally, and this s the worst for you Freddie- your whole thing is EDUCATION BIENG FUCKED, that MANY PEOPLE AT BOTTOM are not able to be educated to equity, it takes CASH.
1. Loan forgiveness is making EDU situation WORSE- no changes required, just rewarded, so it grows.
2. Wage subsidies - much more PPP-like is what we need to make sure the folks at bottom get more consumption than their labor is worth.
Yeah, if it’s actually enforced, which is not likely. They just extended the statute of limitations on enforcement because there’s too much employer fraud to prosecute. At this point, unless the fraud involved literal millions of dollars, the bad actors will basically get to walk.
Say what you want about student loan forgiveness, it’s not a check you can launder and that makes it fundamentally different from PPP.
I was sort of with you until here. I agree that was the intent, maybe. It absolutely helped a large number of employees when used as intended.
However, at a practical level I think we're going to look back in history and see this as the largest fraud ever perpetuated on the American people. I know it's my bubble, but every single business owner I know took those loans while having record profits. They then flipped that money directly into assets - typically real estate.
The PPP from where I'm standing was the largest grift baby millionaires ever came across. If you had a payroll to support it, you just got a free mansion from Uncle Sam.
Over a million Americans died of covid. How much worse could it have been if the government hadn't forced companies to shut down?
That said, on the far left, we argued that the government should have PAID people to stay home, rather than laundering it through their employers.
They do also need to do something about the costs of higher ed in general. I say make college free the same way high school and grade school are. There's still a concern then that colleges will keep jacking up prices and it'll just be the taxpayers paying instead of college goers themselves, but that gives us - the taxpayers - an interest in making sure schools are run efficiently and spend their resources wisely. Make for-profit colleges illegal and enact stronger controls on public schools to prevent waste.
I wouldn't want some private bank deciding which kids are good investments and which ones aren't. Education, like the military, is a public good and should be treated as such. And yes, we should also cut down on wasted military spending, and cut the military budget in general.
Over and over we hear that college grads make more money. "Go to college so that you can get a good job and make more money". Is that true or isn't it?
What's more college grads live longer. At the same time the life expectancy for people with only a high school diploma has DECLINED in the United States recently.
There is no funding provision for student loan forgiveness. It is reasonable to assume that everything will come out of the general fund. We are talking about getting people who lead poorer, shorter lives to pay off the debt of the rich.
That is absolutely grotesque. Has government produced anything more disgusting and shameful in recent years? If the knock on PPP was that it went to line the pockets of the rich how is this any different?
Disagree - if we're looking at this from a strict morals perspective, the outcomes and aims of PPP are far different than student loan forgiveness - even if both are custom made for abuse and political cynicism. Businesses were forced to shut down during the C19 years, but nobody has ever been forced to take out a loan for college - not even once.
So it's not absolutely grotesque for ordinary people to give Tom Brady's supplements company millions of dollars in the form of tax dollars? Or are you going to join Slaw in ignoring all of the specifics?
Then shouldn't the complaint be directed solely at the design of the PPP program? Why wrap in student loans? At least to me, they really have nothing to do with each other.
How we spend our tax dollars is always worthy of discussion. No argument from me. But I don't think a terrible idea two years ago justifies a terrible idea now.
I suspect the primary reason for that is the uneven application and the fact that expectations were changed after many had already paid in. Anytime you make people feel like they were had, they get upset.
PPP made sense in its design and was abused. But was passed by congress. Admittedly during a crisis, but this might explain the lack of outrage.
The student loan forgiveness is just blatant pandering, no fig leaf at all. And it wasn't passed by congress and we're not in a crisis. I'm not "outraged" by either but it makes sense to me how the loan forgiveness looks worse.
This is like complaining about welfare queens. Yeah, there’s abuse in every government program. When PPP loans were a key feature of Democrats’ CARES Act, and when all but one Democrat in the House voted to reauthorize the program, we knew that the program was designed with loose filtering in order to quickly get money into the economy. Because it was an economic and employment stabilization measure and not a welfare measure.
But student loan debt relief is a welfare program (aimed to reduce purported suffering) that by its terms seeks to help those who were smart and privileged enough to go to college in the first place.
Shut that down too. Are we really so jaded that we're just going to shrug at trillions of dollars going to line the pockets of the wealthy and powerful in a complete abuse of the system?
Freddie, IMHO, it's not really fair to demand too much engagement in specifics. There aren't links, so it takes extra time to search and investigate each assertion.
As to Brady, after 20 minutes reading articles, I don't know enough to have an opinion. All I could figure out is (1) a company Brady owns got close to $1M in loans that were ultimately forgiven and (2) Brady is very rich.
The key question, and the one I couldn't find an answer to, is whether Brady's company would have laid off people without the loan, and if so, how many people?
As I understand it, the purpose of the program was to prevent layoffs by giving companies loans, then forgiving the loans if the companies kept their payrolls up. Did Brady's company comply? I honestly don't know.
Don’t act like children aren’t manipulated into believing college is necessary for their career pursuits just to benefit university for-profit incentives while they are told nothing of how unis or the workforce actually operate, please.
That presumes that I am in favor of the PPP loans. I'm not. I think it's pretty clear that they were a disaster (I think the calculation was that taxpayer in the US could have gotten $26k directly for the same expenditure).
Once you accept that PPP was a disaster how can you use it to justify anything? One hideous example of mismanagement and waste should never justify another exercise in folly.
I don't think it's irrational for people to skip over the argument you decided to focus on and go to the merits.
I think you're correct on your point, and I don't think it's a strawman since someone is actually arguing it, but moving on to the overall merits of the program is IMHO fair.
The point about college grads making more money is true in the aggregate but not automatically so for individuals - plenty of college grads working at Starbucks and Walmart! Also, you still have to pay back the student loans you borrowed even if you didn’t finish the degree. Student loans are a working class issue because education is supposed to be the main (only?) avenue for poor people to gain admittance to a better-paying job market. Actual rich people don’t take out student loans, they (their parents) just pay out of pocket.
The degree to which college educated people will try to hide behind working class people to justify a handout that goes to them is really quite remarkable.
Child tax credits were for working class people, who have the most kids. Student loan debt relief is for the top 35% who were smart and privileged enough to go to college. It’s especially directed to the richer out of those folks, because the poor ones already qualified for low income based payments and forgiveness.
there's a lot of "hiding behind" on both sides of this coin, as a lot of ppl opposed to relief are hiding behind Yale, stubbornly oblivious to the fact that plenty of ppl in low-paying jobs have college degrees and student loan debt.
For the record, I personally will not be receiving any of this ‘handout’, although my sister who makes $38k/year and has $100k in debt will likely benefit. I’m just telling you how the world works. Seems like you are older and perhaps times have changed. 100% agree that we should reinstate the monthly child tax credit and make it permanent. I did receive those checks, but I would still strongly support them even if I made too much money to qualify, because I live in a society and other people’s well-being is important to me.
That’s weird to say bc a means-tested $10k wipes out huge numbers of full balances, but does not really touch the huge med school and law school balances that you seem so concerned about. Of course, I think it would have been good politics to wipe it all in order to build some solidarity between debt-burdened educational “winners” and debt-impoverished educational victims, but by your logic, you seem to just be hyperventilating.
I think the point was college, in and of itself, not specialty grad schools like medicine or law, puts the recipient in the privileged minority. A quick google indicates that less than 50% of Americans hold a degree from either a two-year or four-year program, so I think there is some support for that. If the majority of Americans do not hold a college degree, funneling money from them to degree holders does not create good optics. I realize this does not capture those that did not finish college, but I don't know that that is a large enough contingent to alter the overall appearance.
Although it doesn't appear that the Fed or Vox actually tested this with demographic data, they hypothesize it's because large-loan borrowers graduate with medical or legal degrees and have a ton of future earning potential, whereas small-loan borrowers have likely dropped out of school or earned associates' degrees or certificates with smaller earning potential.
Interesting. However, what this suggests to me is we need to be doing a better job of determining who can successfully complete college. I fear loan forgiveness will only exacerbate the problem, as it will likely just encourage more people who likely won't finish college to go.
I don’t agree with your characterization of college as being something that is only about the “privileged”. So many working people dream of going to college. So many try to make it work as a strategy for advancement. So many get hosed by schemes intended to play on those cultural assumptions about education being about good debt and mobility. And the government, which holds these loans, charges millions of young and struggling people fucking outrageous interest rates of 6-7% on debt that cannot realistically be discharged in bankruptcy. It is manifestly ridiculous and I think it is a mistake to reduce that social picture to “privilege” simply due to the average wage premium.
Now, I think that there are even better ways to give working people a new deal, such as Medicare for All and housing for all. But that doesn’t mean this is a PMC issue to me.
If college grads aren't considered privileged in comparison to non-college grads, I'm not sure the word has any meaning. I mean, if you think college has any value at all, this has to be your conclusion.
As for what it costs. I agree the costs are outrageous. But they didn't used to be. I went to a very good state school in the mid 90s. 4 years worth of tuition came in at a shade over $10,000 total. I could literally make enough over the summer to pay for my fall tuition. The government's involvement through student loans is precisely what drove the astronomical rise in tuition.
"If the majority of Americans do not hold a college degree"
this is such an arbitrary standard for assessing the politics though. if you want to argue for it, go ahead, but there are countless policies that humiliate this standard to substantial cost to the U.S.
if the majority of Americans aren't farmers, do we just tell farmers to go fuck themselves, what idiot would decide to become a farmer in 20XX? no, bc we recognize that helping farmers isn't just about helping farmers per se, it's abt addressing a political problem for the country in general.
the problem in this case is the country having spent a couple decades talking 17-year-olds into financing super expensive credentials that half the country now turns around and constantly dunks on them for having bothered to get. but ppl didn't over-invest in college out of nowhere, for no reason, on a whim.
The current crop of 17 year old's is far less gullible about the risk to reward ratio of a college education. Since it doesn't look like every generation is going to have an equivalent level of financial cluelessness does that change the parameters of the discussion?
My only point was, if having a college degree means anything at all in terms of career prospects (and everyone absolutely swears that it does-that why people go in the first place!), then taking from majority non-degree holders to give to minority degree holders is incredibly regressive. That's just the facts. On a societal level, making people with high school degrees subsidize those with college degrees is ridiculous.
I wonder what the percentage of the 50% that don't hold a college degree have student loan debt because of an attempt to go to college but then didn't get their degree because life go in the way of continuing?
Imagine being this obtuse about who goes to college and what socio-economic rung of the ladder they come from that in order to go to college they have to take out loans in order to go. Plenty of working class families make too much to qualify for Pell grants but not enough to actually pay in-state tuition.
There's this idea floating about that the people taking out student loans and getting the relief are people earning high 6 figure salaries when that isn't the case. There's also this idea that the people taking out loans and going to college don't "actually" need loans.
My point is that there exists a wide swath of people from working and lower-middle class families and that the issue is more complex than the conservative talking points floating about on this.
But not the majority. That's the point. Most college grads get good paying jobs, enough so that the average wage for college graduates is much higher compared to the average for those with only a high school diploma.
If you want to argue based on outliers and exceptions how valid is your argument?
(Apologies, I misread your earlier comment in a moment of passing and thought it was directed at me. I deleted my response. I think we agree! Carry on :)
What your anger should be pointed at is not the fact that college grads ranging from 22 to 60 had to debt-wage their education in order to maybe get a few rungs up the ladder, but instead at the reality that in the U.S., we've been convinced over the decades that education isn't a right or a socio-economic leveler but that it's a privilege that only select folks should access to and if you can't afford to pay it outright, then you have the option of either 1) not going to college and working as a short order cook making minimum wage living in poverty or 2) put yourself into decades of debt with the nebulous promise that a college education might lead to better options and you may be able to make a decent salary that keeps you out of poverty.
What I am angry about is that people who live for fewer years with less resources are being asked to pay off the debt of people who live longer, more comfortable lives. That is the bottom line. It's a moral travesty.
If you're angry about that, I'd say there are other government programs and departments you could direct your ire at if it involves moral travesty. And keep in mind, not every person with student loan debt will be guaranteed a longer, more comfortable life. Some of the very people you claim to be outraged for will benefit from this program.
I think whether or not going to college makes you more money is still somewhat of an open question, since it needs to be corrected for those whose families already had money. Take away those who don't need loans and do you still have people making a lot more money and living longer than those without a college diploma? Maybe, maybe not. I honestly don't know the answer. But I don't think you can really put all college grads in the same bucket. Anecdotally, people I know who didn't have to take out loans to pay for college (because they were already well off) tend to be doing better career-wise than those I know who took out Pell grants.
But don't you see that's irrelevant. Maybe thr only reason people go to college is because they're already wealthy and can afford it--but the most salient issue is that they're wealthy!
And since we're talking about populations what matters is the median and mean numbers for income. There are always going to be outliers.
Plus if the issue is the needy why set the cap so high? $125k is twice the median household income.
What is your definition of being wealthy? Because if we knew that it'd be easier to understand why you think every person going to college is already wealthy and can afford it. Which is demonstrably not true.
Because the issue is wealthy _in comparison_ to the people who are going to be footing the bill.
The funds to pay off this debt aren't coming from a special tax on billionaires or corporations, it's coming out of the general fund. That means the pool of tax dollars that everyone pays into. If we're going to be cutting checks to anyone out of that pool of money it should be those who are less fortunate, the needy. It definitely should not be the top 30% of the economy for the obvious reason that since everybody pays into that fund it's a de facto transfer of wealthy from the less fortunate to the better off.
I don't know how many times I have to reiterate this, but the majority of the people going to college and taking out student loans are not wealthy. Full stop. You keep insisting that 100% of college loan borrowers are 1) wealthy and 2) have a college degree. 33% of college attendees drop out before finishing their degree yet still have loan debt.
"Because the issue is wealthy _in comparison_ to the people who are going to be footing the bill."
It wouldn't matter if all college degree holders are impoverished. The fundamental, underlying principle is that you don't take money away from people who are even POORER to pay off their debts. The question is relative wealth.
And those individuals who have some college but no degree make $3,300 more per year than those with only a high school diploma last time I checked.
While I hate the unfairness of Biden’s giveaway to everyone who honored their commitments (or made hard life choices driven by financial realities), what REALLY bothers me is that a supposedly liberal administration chose to go this route rather than, say, seeking to ease the debt burden on low income people by paying off $10K of their car loans and consumer debt.
PPP loans are only forgivable if they were used to pay people that would have otherwise been fired, and to pay basic operating expenses to prevent businesses from shutting down permanently due to the government-mandated lockdowns.
That’s a different issue. The PPP was expressly intended to pump cheap/free money into the economy as quickly as possible. Are you really surprised a program like that is going to be abused?
Also, the PPP was an actual law passed into being in the good old Schoolhouse Rock way. Maybe it’s a bad law and contributed to inflation but at least it ostensibly represents the will of the people.
And take the Catholic Church example you bring up. Did they take the money, fire all their employees, and then ask forgiveness? Or did they keep everyone on payroll, move to remote work, and use the PPP the way it was designed?
Seems like your beef is with the law itself but business owners and nonprofits are easier targets.
Keeping 150 people on payroll for a business that can’t operate for 1-2 years is a circumstance that most businesses cannot withstand. This is true even when the proprietor of said business is personally wealthy and famous.
I can speak for one business that I know well. It is a small social services nonprofit. This agency didn’t “just send the money to the workers” but it did use the funds to continue to pay workers salaries for over two years, during times when the activities the typically being in revenue were often interrupted or shortened due to Covid safety concerns. So, the agency was able to pay everyone normally and refrain from any layoffs, even though they would have been operating consistently in the red without those extra funds.
I worked closely with two nonprofits to understand and apply for the PPP loans. One was a fine arts org and the other a preschool. Of course the money was used to retain staff and adapt to the ongoing pandemic conditions, exactly as it was intended. Aside from the inflationary effect of printing money, the PPP facility worked pretty much as it was supposed to.
I was actually eligible for PPP money through my business but chose not to apply. And I have student loans which would be forgiven under the Biden proposal!
“PPP was a grift that allowed rich people to buy more yachts” is the left wing equivalent of “these lazy students should just pay back what they borrowed.” They’re both bad faith arguments that flatten a diverse and complex array of people and situations into an ideologically convenient stereotype.
This entire discourse is stupid. Just clarifying the misunderstandings about the PPP program (sometimes small business owners are wealthy!), how the economy works (businesses are good for the economy!), how government should function (laws that apportion blns or trlns of taxpayer $$$ should be passed in the normal way!) means somehow you're on one side or the other.
I think some student loan forgiveness is a good idea, but ONLY if it is coupled with higher ed reform targeted at reducing tuition inflation and admin bloat. For me $125k/$250k is too high an income threshold and the accompanying repayment plan adjustments don't do anything to solve the issues that caused the student debt problem in the first place. The government SHOULD be in the loan-guaranty business for certain things, but wiping out debt at the stroke of a pen is a total violation of the economic conditions we all operate under. None of these borrowers were defrauded and the cost of higher education and lessening economic value of a college degree is not a problem the government can just throw money at one time and expect anything but a repeat situation a few years hence.
Conversely, I blame the entire CARES Act for causing the inflation we're experiencing now, but I don't see any other choice we would have had (except to not lock down at all, duh) to prevent maybe the worst economic catastrophe of all time. Also it came at the end of a 15-year money printing spree... sort of like throwing magnesium on a prairie fire. All in all, it's better to have people employed for a year in ghost jobs even if it means the rich get to continue being rich, than to have 50% unemployment and the rich get to continue being rich anyway.
Agree, 100%. I’m on board with some measure of loan forgiveness, but it feels like a bandaid on a bullet hole (sorry, Taylor Swift) without accompanying reforms that regulate the terms of student loans or the cost of education. Fixing student loans at prime interest rates and ensuring that state schools are free for low income folks and very low cost for everyone else would be a good start, IMO. Passing loan forgiveness by executive order instead of through an act of congress is bound to be polarizing as all get out, and nearly everyone seems to be retreating to a place of personal grievance (Billionaires! Lazy Kids!) on a scale of outrage that often appears inversely proportional to knowledge about how economic systems actually work.
In my view governing by executive order is worse for the country than forgiving student loans. But that pandora box isn’t going to be closed anytime soon
With the legislative branch somewhere between stalled out and indifferent, we've shifted their duties to the Executive and Judicial branches, which is definitely less than ideal.
I'm all for student loan forgiveness. I've heard many stories about how the interest rates are so jacked up that even if you're diligent with your payments, the loan stretches on and on seemingly forever.
I was just listening to a story of a woman who had to quit her job to take care of her sick husband. She was lucky to be able to do that as they could live with her parents, but she couldn't pay down her loans during that time. It was a long, long time and she accrued a crazy amount of interest until her husband died. So now the worst thing ever in her life has happened and she is being crushed by medical and loan debt. But yeah, she is just a freeloader who doesn't know how to work hard and "do the right thing"... This is just a drop in the ocean for her, sadly, but she said she is thankful for any kind of help (also that she qualified for pell grants).
Yea. The frustration surrounding this is purely misunderstood and misplaced.
The core problem is the foundation of the student loan program itself (which Biden legislated to be non-bankruptable back in the day, if anyone isn’t aware), which incentivizes universities to crank up tuition costs for government money on the backs of students.
Not sure why there’s already such assumption that only rich Ivy Leaguers took out student loans. I’m willing to bet that many, if not a majority of these debtors are the poors who got convinced they needed postsecondary education to be competitive in the workforce and were never told how universities or the workforce actually work, and are now saddled with tens of thousands of debt dollars on $0 annual IBR plans.
Plus, this won’t really affect inflation! Banks will take a hit on their profit margins and the government will take a hit on interest profits. Universities’ for-profit incentives have not budged and the most the public will likely see out of this is a marginal tax hike (this is not the same as what controls inflation).
This debt relief act is broadly something that will gently help those who are worse off economically the most, but it will still not eradicate their debt (and sure, while the wealthier students may also receive a break, they fair better in this situation for other reasons than have nothing to do with helping poorer students).
It's not inflationary because that $10K is not suddenly a lump sum that appears in your bank account. It's a monthly expense that would then be put towards other expenses. Say that $10K represents $150/month a family can use towards paying off other bills. That $150 was already going to be spent on paying a bill.
People getting night sweats about the national debt do so for no real reason.
What I'm trying to point out is that the nominal monthly gain from the student debt relief is not going to result in a huge surplus of cash for those individuals. Sure some may result in higher economic demand but not necessarily discretionary spending. In other words, they're putting it towards paying off a credit card, an existing car loan, rent, but not an addition to the house.
If I put the extra cash towards paying off a credit card balance is that inflationary?
Exactly this. I was a Pell Grant recipient and this will not wipe all my debt, but with my interest rates I will end up paying almost exactly what I took out in loans.
Thanks for that. I may need the ammo here behind the Orange Curtain (LoCali people will know where). The debt relief is a manifest blessing. My wife and I long ago committed to paying our kids’ loan costs. We’re comfortable middle class but not wealthy and have always tried to be smart about expenses. As a 30-year teacher I will collect a liveable pension in a couple years.
My 3 children all went to state schools, and two spent half their undergrad time in jr. college. Those 2 finished in Cal St. schools while the other was all 4 years at a UC.
When my wife and I went to the same places in the 70s & 80s a semester’s tuition for a full course load at a typical CSU campus cost about $120. My wife graduated debt free; I went from CSU to a UC and finished w/about $3k to pay off.
9 years ago we started tackling our kids’ payments. The CSU attendees would eventually accumulate $35k+ and the UC student about $42k+. So, there’s your measure of what’s happened to college costs over a generation. Suffice it to say the new debt-relief is most welcome.
Tim, my wife and I are around your age, and we lived and went to school in California in 70s/80s, then our kids did the same in the 2000s. Yes, the cost of even Cal state went up big time, plus all the living expenses. But, the guaranteed fed loans is what caused the problem. The school will always charge as much as absolutely possible. They will squeeze as much as they can out of every family, including running up as high as possible loan balances. Why? Because they can.
Anyway, I think the point of Freddie's post is that PPP was in no small part simply handing money to people who did not need/deserve it. So, it is a fair comparison with this student loan forgiveness. I agree with him on this topic.
Sure, there are differences, but a whole lot of PPP money was doled out to entities not forced to shut down.
There is a lot of pressure on people to attend college who do not belong in college, at least not in an expensive one. The loans may not have been mandatory, but I consider them another form of government entrapment to benefit the colleges and banks, to the detriment of everyone else involved.
Now you’re approaching the root of the problem: the extensive de-regulation of ‘high finance’ since the advent of the ‘Reagan Revolution’. It has certainly been bipartisan - do the words ‘Glass-Steagall’ ring a bell?
The loan guarantee certainly played its part. But Cali used to underwrite its system costs much more extensively and that has steadily eroded since then. I got an MA at a local CSU in the 90s - it took years b/c of the necessitty of going at it part-time while working and being a husband and father. But I managed to stagger through debt-free to the finish line.
I know my right-wing relations (mostly in-laws) will b-&-m about the forgiveness. So reminding them of the PPP ‘loans’ will be a nice rejoinder.
Thanks for weighing in. Glad we're basically on the same page on this, as I've enjoyed previous friendly exchanges w/you before. I understand and appreciate the effect of the federally guaranteed student loan program. It does seem clearly legit to connect the dots from it to the inflated costs of tuition nationwide. As a denizen of Cali, though, I imagine you're also aware of the old 'master plan' for higher ed. in the state, which is now little more than a warm and fuzzy relic from days of yore. (You know, that era everyone seems to reminisce about and pine for w/acute nostalgia? Of course, those low CSU tuition fees were part of that picture.) But that was a different era, and, from what I can tell, it eventually ran aground w/the final demise of New Deal liberalism in Nov. '80. I have to check myself here, lest I go off on a tangent in a sr. moment (happens more & more lately, haha), but it seems to me we're living through the consequences of the 'Reagan Revolution' that swung us back in a rightward direction economically. Whether that was worth it or not is an issue for another time, but given the complaints that have been coming in for a while now - certainly pre-covid - it seems like a revival of sorts (of at least a stronger, old-school level of state higher ed. funding) would be a good thing. As you may also know, the increase in college costs is also attributable to the unnecessary expansion of bureaucracy in that sector, b/c they're hiring more management types, not more professors.) And, on the national level, in anticipation of objections from right-wingers and neo-lib/con globalists alike, we could deploy a 'peace dividend' argument - if only the good 'ol military industrial complex will agree to downsize. Then again, we all know what the odds are on that. Anyway, I gotta go - have to get busy with the loan forgiveness paperwork and hope for the best!
Well, it's not like California has low taxes or anything. My wife was a public school teacher in California. We moved out of the state about one week after her retirement in 2018. I'd had a picture of Jerry Brown in my office for several years before that, to remind me of why we were moving.
Enjoy the paperwork. We had plenty of that to secure our PPP sinecure.
When PPP was passed, the economy was understimulated, and no one expected it to be overstimulated any time soon. If it were still understimulated, student loan forgiveness would make a lot more sense.
The question, "Knowing what we know now, would it have been better to do student loan forgiveness rather than PPP?" is an interesting one, but I don't think it's super relevant to the question of whether we should do student loan forgiveness now, given that PPP happened and we can't go back and change that.
Student loan forgiveness wasn't done to simply to stimulate the economy, it was done to give relief to those who are being crushed by the burden of their debt. Does it mean some people who aren't being *crushed* specifically will see some benefit, yeah. But when 63% of student loan borrowers who default are holding less than $5k in debt and there are millions of them... Yeah, I'm okay with some more well-off people being able to benefit from this as well (for me, it just means that with interest I'll end up paying almost exactly what I took out, so that seems fair).
I don’t get this angle about PPP loans at all. They were in Democrats’ CARES Act, and every Democrat except AOC voted to re-up them in the standalone bill.
Because Marxists kinda see the right wing of both parties as routinely aiming the money cannon at the rich, so it really isn’t an exercise in partisan gotcha but in class gotcha.
Freddie, you are correct. There isn't much difference. Both are or were bad. I was a member of two golf clubs that benefitted from PPP loans. Thank you, taxpayers, for our new grill and locker room. Also involved with a private entity that was able to continue paying its mostly well off owners with PPP "loans". Thank you again, taxpayers.
A huge number of people will see debt wiped by SLF, and I'm glad they'll no longer be under that thumb.
But the action itself is a result of political calculus, and I don't pretend to treat it as anything else. It'll be nice if the turnout effect size is sufficient for team blue (though I think Dobbs will have a bigger impact). Sure, rightists are being disingenuous, pretending like it's actually going to increase marginal rates at any time in the foreseeable future. But that's the game - it's what they have to do here.
That ignores the objections from the left. Brookings wrote that forgiving student debt is regressive, a de facto wealth transfer from the less fortunate to the wealthier elements of society. When I say that this program is deeply immoral this is what I'm talking about.
If government is going to cut anybody a check it should be to the less fortunate as part of the social safety net. Transferring money from the worse off to the top 30% of the economy is monstrous.
(a) Neo-liberals have a quasi-moral attachment to usury, even when the loans have a built-in government enforcement mechanism that doesn't exist for private ones, and their issuance is devoid of concern for risk-assessment.
(b) The 70th percentile of income appears* to be ~ %107,965, and 76th is $125,823, so some small part will be sent to that slice of the top 30%. The "less fortunate" already pay very low tax rates, if at all, and have a designated tax break (EIC). The median SL debtor is not wealthy.
(c) I'm lukewarm on UBI, based on what I read in FALC by Bastani, who quoted studies showing limited effectiveness in the UK, though maybe it would work in the US. He was more in favor of UBS (S = services).
*https://bit.ly/3e24rKx
I'm really not talking about UBI so much as food stamps, housing subsidies, etc. All need based. Debt forgiveness for somebody making $120k is year is definitely not need based.
The point is that it's regressive. College grads earn more than those with only a high school diploma and the latter group is going to be footing some part of the bill. Taking money from somebody making $30k a year and giving it to somebody making $120k a year, regardless of the amount, is morally unjustifiable.
You’re overselling again by going back to the right endpoint (120k) as though it were the middle, but this exchange is indicative of the gist of my first post. I want this to help blue tribe, you’re rooting for red, and that leads to motivated reasoning.
The WaPo calls thus program regressive. Brookings calls it regressive. Regardless of the actual salaries the problem is that the underlying principle is less wealthy people subsidizing the college education of more wealthy people.
What's more the nature of the objection changes based on political orientation. Since when have conservatives cared about regressive outcomes? I pointed out that opposition to this program comes from both the right and the left. If you think that any opposition from the left must necessarily be conservative in nature that says more about you than the argument.
Did this factor in the fact that only people who took out loans and *also received Pell grants* qualify?
What do you mean? I am pretty sure it's $10k in debt relief for anybody making less than $125k a year and twice that ($20k in relief) for anybody who also has a Pell grant.
Gotcha and also I worded that poorly. I’m asking if the Charts and Graphs(TM) showing income based on education level have been adjusted to show the numbers for only those who qualify for the loan forgiveness, or if those Charts and Graphs(TM) are showing the income based on education for all graduates
Looks like you read ACX. Maybe you saw Scott Alexander's recent post about Underpopulation. There was a section about dysgenics, and birth rates by educational level. I propose to alleviate this by a Eugenics for Today: forgive up to 50k in loans for any woman who gives birth. Whaddya think?
Peter Turchin, overproduction of elites. I think it's questionable whether or not the economy can actually provide white collar jobs for all of today's college grads. And then of course all of those angry theater majors forced to hold down jobs as waiters and temps turn out to be tremendously destabilizing to the social fabric.
The US is at replacement level thanks to immigration, but for countries that are seeing precipitous drops in population why not just give money to anybody who has kids, regardless of education level? That assumes that the overwhelming issue is that you need bodies in general (rather than college educated bodies specifically).
I think you are missing the point of the centrist critique. In 2020 the economy needed stimulus, and with a government mandated shut down of businesses we were in danger of a serious recession and high unemployment. That didn’t happen, maybe in part due to PPP. So PPP made people (including people on the lower end of the economic spectrum who can’t work remotely etc) better off.
The ‘centrist’ argument here is that their is a real danger that debt cancellation will make the people we are trying to help worse off, and does nothing to address the fact that we will be in the exact same position 5 years from now (and maybe worse- moral hazard and all that). Also, the policy is generally pretty regressive, even though it does genuinely help people who need help. So the argument is that the costs may overwhelm the benefits.
Yes, there are bad faith ‘I didn’t get help so why should anyone else’ arguments, but don’t discount actual critiques people have of debt cancellation. If inflation does come back and this contributes to it, pretty much no one will think this was a good idea in retrospect.
But these were always intended to be grants, not loans. Doing them through banks as loans was just the quickest way to administer this.
It’s completely relevant when you are comparing PPP (loan forgiveness) with a policy that was intended to be a grant as it is a big reason that these policies are different enough where the ‘gotcha’ comparison doesn’t mean much.
In any event, 2020 was a very different world than 2022, where the economy was shut down and we desperately needed stimulus. It’s tough for me to wrap my head around the argument that a stimulus program designed to prevent mass layoffs is somehow now on its face bad. We avoided a recession during a time the government shut down a lot of businesses. Just ask the non-essential, non-remote workers that didn’t lose their job in 2020 how they feel about PPP. Yeah, money went to people who didn’t deserve it (just like loan forgiveness now), but it was a program put in place at lightning speed and it was never going to be perfect.
I don’t get the merits of the argument that ‘because you supported a government program in 2020, if you don’t support a totally different program in 2022 designed to address a completely different problem in an world where economic fundamentals of the US are different, then you’re being inconsistent’ or whatever.
And to be fair I may be arguing against a point you aren’t making and reading in others points as subtext.
The primary purpose of these loans was to forestall layoffs and business shutdowns during the government's (terrible) C19 public policy blunders.
Whether good or bad policy, PPP does strike me as being far more defensible than the odious (and likely unconstitutional) student loan "forgiveness" announcement this week, and signals what is likely the most cynical regressive wealth transfer in the history of American politics.
Rule by, and for, the Professional Managerial Class sucks, and the Democratic party will learn how deeply unpopular this notion is in November.
It's true - there's always a reason, for conservatives, why the already-wealthy should deserve more.
Hate to be the bearer of bad news, student loan forgiveness is very much a handout to people in upper income brackets - and one that will cost a third of a trillion dollars. Even better, it creates an endlessly perverse incentive for schools to keep hiring armies of overpaid administrators and forever raise costs.
Now, far be it from me to conflate "the American left" solely with the Democratic party, but if this is not the distilled essence of Professional Managerial Class politics, what is? Where does this cynical focus on Acela Corridor white collar workers at the expense of literally all others take the Democrats? Where is it taking the left in general?
The distribution of the debt and the distribution of the debtors are not the same, so saying "forgiveness only helps the poor/rich" is always wrong.
I'll ask again: why are you glad Khloe Kardashian got millions in taxpayer money?
If I’m not glad that Khloe Kardashian got millions, and in fact believe that the PPP forgiveness was terrible, then what comes next?
I think the disconnect here is that this wasn’t technically a post about student-loan forgiveness, but that was the implied point of the post, so people are replying to that.
I think the point that anti-forgiveness people are trying to make is that student loan forgiveness is in fact very regressive, the same way Bush and Trump tax cuts are regressive - yes, they give money to poor people, but they give a lot more money to rich people. And the poorest of the poor get almost nothing.
If you think that statement is off-topic, then that’s fair. But it’s not fair to insist the people making that point are acting bad faith.
University for-profit incentives would remain intact for reasons other than debt relief
There are millions of people whose student loan debt is less than $10k because they did not finish university, but they are being crushed by that debt no less. 63% of borrowers who default on student loans have LESS than $5000 in debt. This is because wages for those who drop out of college tend to be very, very low. This will be a massive benefit to those people and if some wealthier people benefit in some minor way, well I imagine they will use that extra few hundred dollars a month to invest in businesses either through the stock market or through consumerism, which is great for the economy.
There is a strong correlation that those with MORE college debt tend to earn more, as frequently this means they've gone to grad school. By that end, they have the least amount of default occurring and when they do it is most frequently people who got swindled by for-profit schools (there was just a massive lawsuit about this that is also going to wipe a lot of debt).
Yeah it seems to me that the best gripe against the Biden plan from the left is that the means testing is sort of isolating disadvantaged debtors from others, and that will harm this as a tool for solidarity. But it seems to be decently targeted to help the most afflicted. As a law school grad, $10k is meaningless on my balance. But I’m doing ok. But my god when I had $5k in credit card debt after a few months of unemployment at 24, it affected everything about my life including which jobs I could even consider taking. Under $10k in debt can be an enormous burden, especially if people have kids and real lives.
Imagine going to grad school for music performance 🤦♂️
Wages for those who have some college but no degree are about $3300 more per year than those with only a high school diploma.
https://nces.ed.gov/programs/coe/indicator/cba/annual-earnings
"student loan forgiveness is very much a handout to people in upper income brackets" is such a crock of shit when the program clearly has a cap. My brother-in-law who has about $350K in medical school loans won't qualify for this program because he makes more than the $150K for an individual right out of school.
It's ironic that when debt relief is proposed for the bottom half of income earners it's a burden to society but when the same debt relief or "job creator relief" happens at the top end, it's a benefit to society.
The cap is $125k, which is twice the median household income for the US. A cap that high is barely a cap. Why not set it at the actual median?
How much do I make?
For me to take any money from somebody who makes less than me would be fucking terrible.
For me to take any money from somebody who is struggling to survive would make me a fucking monster.
I cannot understand why anybody who is working as an engineer, or as a developer, should get a check from somebody who is working as a waitress or a landscaper. This is fucking insane.
There's the Federalist and National Review writers, and then there's the rank and file conservatives, and many of the latter did have a problem with the PPP payouts to rich people. You just didn't hear about it because those folks don't have Twitter accounts or blogs. Trump's nomination was in many ways a rebuke to the mainstream Republicans who are perceived as being "swamp" creatures and crony capitalists. You could fault Trump voters for being duped by an obvious con man, but a fair number of them actually do hate most of the ultra-wealthy, even if their perception of the lesser of two evils sometimes leads them to vote for corporate puppets anyway.
My brother-in-law grouses about "all these handouts" but gladly took his PPP loan forgiveness. His viewpoint is that some people are worthy of help and others...well not so much.
Short of genuinely wealthy people, I can’t really fault anyone for taking free money if it’s shoved in their face by the government, especially in the context of a massive giveaway to lots of people. But there are lots of conservatives who at least try to vote for the candidates they perceive as less likely to support such programs in the first place. Might as well try to understand what actually motivates them instead of stopping at “they’re just hypocritical bootlickers for the rich”. (Not trying to put words in your mouth specifically; just addressing a general sentiment I’ve perceived in many leftists.)
As for the second part, I obviously don’t know your brother-in-law, but what lefties may perceive as “some people don’t deserve help”—which implies mindless animus against certain groups—is often actually more like “Some choices are bad and shouldn’t be subsidized.” Maybe that’s not much better in practice, but there is a meaningful moral difference there IMO.
When the conservatives in my social circles (both professionally and personally) verbalize what programs they support vs. what they think shouldn't be supported, much of it does align along socio-economic and demographic lines. This is especially so here in Louisiana, but also in other states I've lived and worked. I also might add that this also applies to the conservative democrats I know as well. And I've also found that they're very much supportive of programs they can take advantage of/qualify for as they consider themselves deserving of such but programs that would generally benefit a wider swath of the general public or on lower socio-economic levels, they take issue with because in their minds, someone that doesn't deserve it, is getting something for free.
There's a prevailing mindset that the working poor either deserve to be poor or just aren't trying hard enough and any assistance is something they don't deserve. I've observed this mindset in working class all the way up to upper-middle class individuals, regardless of their political persuasion.
Fair enough. A lot of people in my social circle are delivering extremely simple-minded “Conservatives are against this because they hate young people/poor people/black people” takes, and that’s more what I’m talking about, but you’re clearly getting at something a little more nuanced than that.
How does this not represent a wealth transfer from those who have less to those who have more?
Sorry I'm on a trip and wrote this from a phone, hence the typos
But that makes it short and sweet -- and much more effective!
Dude, forget the typos!
1. The govt FORCED companies to shut down.
2. Companies that shut down FIRE PEOPLE
3. To SAVE THE EMPLOYEES JOBS (and gain shutdown compliance) - the Congress passed a law.
if you are not able to understand:
1) Employers STILL came out of this WORSE than not shutting down - see Florida (no debate FL won). The MISTAKE was deviating from business as usual.
2. This was for EMPLOYEES- a pretty even distribution of LABOR (the guys you claim to care about) which means lots of them HAVE COLLEGE LOANS they were supposed to be able to keep paying.
Finally, and this s the worst for you Freddie- your whole thing is EDUCATION BIENG FUCKED, that MANY PEOPLE AT BOTTOM are not able to be educated to equity, it takes CASH.
1. Loan forgiveness is making EDU situation WORSE- no changes required, just rewarded, so it grows.
2. Wage subsidies - much more PPP-like is what we need to make sure the folks at bottom get more consumption than their labor is worth.
If they didn't maintain their staffing level, they'd have to repay the PPP loan.
Yeah, if it’s actually enforced, which is not likely. They just extended the statute of limitations on enforcement because there’s too much employer fraud to prosecute. At this point, unless the fraud involved literal millions of dollars, the bad actors will basically get to walk.
Say what you want about student loan forgiveness, it’s not a check you can launder and that makes it fundamentally different from PPP.
> This was for EMPLOYEES
I was sort of with you until here. I agree that was the intent, maybe. It absolutely helped a large number of employees when used as intended.
However, at a practical level I think we're going to look back in history and see this as the largest fraud ever perpetuated on the American people. I know it's my bubble, but every single business owner I know took those loans while having record profits. They then flipped that money directly into assets - typically real estate.
The PPP from where I'm standing was the largest grift baby millionaires ever came across. If you had a payroll to support it, you just got a free mansion from Uncle Sam.
Over a million Americans died of covid. How much worse could it have been if the government hadn't forced companies to shut down?
That said, on the far left, we argued that the government should have PAID people to stay home, rather than laundering it through their employers.
They do also need to do something about the costs of higher ed in general. I say make college free the same way high school and grade school are. There's still a concern then that colleges will keep jacking up prices and it'll just be the taxpayers paying instead of college goers themselves, but that gives us - the taxpayers - an interest in making sure schools are run efficiently and spend their resources wisely. Make for-profit colleges illegal and enact stronger controls on public schools to prevent waste.
I wouldn't want some private bank deciding which kids are good investments and which ones aren't. Education, like the military, is a public good and should be treated as such. And yes, we should also cut down on wasted military spending, and cut the military budget in general.
I really don't agree that's the purpose of education. But it probably isn't worth arguing about.
Freddie deBoer is a self-described Marxist, so it's just his schtick. Great writer, bad with math and economics.
Over and over we hear that college grads make more money. "Go to college so that you can get a good job and make more money". Is that true or isn't it?
What's more college grads live longer. At the same time the life expectancy for people with only a high school diploma has DECLINED in the United States recently.
There is no funding provision for student loan forgiveness. It is reasonable to assume that everything will come out of the general fund. We are talking about getting people who lead poorer, shorter lives to pay off the debt of the rich.
That is absolutely grotesque. Has government produced anything more disgusting and shameful in recent years? If the knock on PPP was that it went to line the pockets of the rich how is this any different?
So we're two for two on commenters utterly ignoring the point of this post
Disagree - if we're looking at this from a strict morals perspective, the outcomes and aims of PPP are far different than student loan forgiveness - even if both are custom made for abuse and political cynicism. Businesses were forced to shut down during the C19 years, but nobody has ever been forced to take out a loan for college - not even once.
So it's not absolutely grotesque for ordinary people to give Tom Brady's supplements company millions of dollars in the form of tax dollars? Or are you going to join Slaw in ignoring all of the specifics?
Then shouldn't the complaint be directed solely at the design of the PPP program? Why wrap in student loans? At least to me, they really have nothing to do with each other.
It's a question of how we spend federal dollars, and thus PPP is relevant, despite right-wing whining.
How we spend our tax dollars is always worthy of discussion. No argument from me. But I don't think a terrible idea two years ago justifies a terrible idea now.
Yes, that is grotesque too. Two wrongs don't make a right.
And yet only one has generated outrage, I wonder why....
I suspect the primary reason for that is the uneven application and the fact that expectations were changed after many had already paid in. Anytime you make people feel like they were had, they get upset.
PPP made sense in its design and was abused. But was passed by congress. Admittedly during a crisis, but this might explain the lack of outrage.
The student loan forgiveness is just blatant pandering, no fig leaf at all. And it wasn't passed by congress and we're not in a crisis. I'm not "outraged" by either but it makes sense to me how the loan forgiveness looks worse.
Outrage is a poor basis for public policy
I would disagree. There was plenty of outrage directed at PPP I think but the media was far less wiling to publicize the dissent.
Plus there is an element of "the straw that broke the camel's back" here with respect to the issues of inflation and government debt.
This is like complaining about welfare queens. Yeah, there’s abuse in every government program. When PPP loans were a key feature of Democrats’ CARES Act, and when all but one Democrat in the House voted to reauthorize the program, we knew that the program was designed with loose filtering in order to quickly get money into the economy. Because it was an economic and employment stabilization measure and not a welfare measure.
But student loan debt relief is a welfare program (aimed to reduce purported suffering) that by its terms seeks to help those who were smart and privileged enough to go to college in the first place.
Shut that down too. Are we really so jaded that we're just going to shrug at trillions of dollars going to line the pockets of the wealthy and powerful in a complete abuse of the system?
Freddie, IMHO, it's not really fair to demand too much engagement in specifics. There aren't links, so it takes extra time to search and investigate each assertion.
As to Brady, after 20 minutes reading articles, I don't know enough to have an opinion. All I could figure out is (1) a company Brady owns got close to $1M in loans that were ultimately forgiven and (2) Brady is very rich.
The key question, and the one I couldn't find an answer to, is whether Brady's company would have laid off people without the loan, and if so, how many people?
As I understand it, the purpose of the program was to prevent layoffs by giving companies loans, then forgiving the loans if the companies kept their payrolls up. Did Brady's company comply? I honestly don't know.
Don’t act like children aren’t manipulated into believing college is necessary for their career pursuits just to benefit university for-profit incentives while they are told nothing of how unis or the workforce actually operate, please.
That presumes that I am in favor of the PPP loans. I'm not. I think it's pretty clear that they were a disaster (I think the calculation was that taxpayer in the US could have gotten $26k directly for the same expenditure).
Once you accept that PPP was a disaster how can you use it to justify anything? One hideous example of mismanagement and waste should never justify another exercise in folly.
I don't think it's irrational for people to skip over the argument you decided to focus on and go to the merits.
I think you're correct on your point, and I don't think it's a strawman since someone is actually arguing it, but moving on to the overall merits of the program is IMHO fair.
The point about college grads making more money is true in the aggregate but not automatically so for individuals - plenty of college grads working at Starbucks and Walmart! Also, you still have to pay back the student loans you borrowed even if you didn’t finish the degree. Student loans are a working class issue because education is supposed to be the main (only?) avenue for poor people to gain admittance to a better-paying job market. Actual rich people don’t take out student loans, they (their parents) just pay out of pocket.
The degree to which college educated people will try to hide behind working class people to justify a handout that goes to them is really quite remarkable.
Child tax credits were for working class people, who have the most kids. Student loan debt relief is for the top 35% who were smart and privileged enough to go to college. It’s especially directed to the richer out of those folks, because the poor ones already qualified for low income based payments and forgiveness.
there's a lot of "hiding behind" on both sides of this coin, as a lot of ppl opposed to relief are hiding behind Yale, stubbornly oblivious to the fact that plenty of ppl in low-paying jobs have college degrees and student loan debt.
For the record, I personally will not be receiving any of this ‘handout’, although my sister who makes $38k/year and has $100k in debt will likely benefit. I’m just telling you how the world works. Seems like you are older and perhaps times have changed. 100% agree that we should reinstate the monthly child tax credit and make it permanent. I did receive those checks, but I would still strongly support them even if I made too much money to qualify, because I live in a society and other people’s well-being is important to me.
That’s weird to say bc a means-tested $10k wipes out huge numbers of full balances, but does not really touch the huge med school and law school balances that you seem so concerned about. Of course, I think it would have been good politics to wipe it all in order to build some solidarity between debt-burdened educational “winners” and debt-impoverished educational victims, but by your logic, you seem to just be hyperventilating.
I think the point was college, in and of itself, not specialty grad schools like medicine or law, puts the recipient in the privileged minority. A quick google indicates that less than 50% of Americans hold a degree from either a two-year or four-year program, so I think there is some support for that. If the majority of Americans do not hold a college degree, funneling money from them to degree holders does not create good optics. I realize this does not capture those that did not finish college, but I don't know that that is a large enough contingent to alter the overall appearance.
If this Voxplainer has any accuracy to it it's a fairly substantial part. (https://www.vox.com/2022/8/24/23319967/student-loan-payments-debt-forgiveness-biden) The highest rate of default among student loan holders is, paradoxically, from the people who had the smallest debt upon leaving college. (Here's the source: https://libertystreeteconomics.newyorkfed.org/2015/02/looking_at_student_loan_defaults_through_a_larger_window/).
Although it doesn't appear that the Fed or Vox actually tested this with demographic data, they hypothesize it's because large-loan borrowers graduate with medical or legal degrees and have a ton of future earning potential, whereas small-loan borrowers have likely dropped out of school or earned associates' degrees or certificates with smaller earning potential.
Interesting. However, what this suggests to me is we need to be doing a better job of determining who can successfully complete college. I fear loan forgiveness will only exacerbate the problem, as it will likely just encourage more people who likely won't finish college to go.
I don’t agree with your characterization of college as being something that is only about the “privileged”. So many working people dream of going to college. So many try to make it work as a strategy for advancement. So many get hosed by schemes intended to play on those cultural assumptions about education being about good debt and mobility. And the government, which holds these loans, charges millions of young and struggling people fucking outrageous interest rates of 6-7% on debt that cannot realistically be discharged in bankruptcy. It is manifestly ridiculous and I think it is a mistake to reduce that social picture to “privilege” simply due to the average wage premium.
Now, I think that there are even better ways to give working people a new deal, such as Medicare for All and housing for all. But that doesn’t mean this is a PMC issue to me.
If college grads aren't considered privileged in comparison to non-college grads, I'm not sure the word has any meaning. I mean, if you think college has any value at all, this has to be your conclusion.
As for what it costs. I agree the costs are outrageous. But they didn't used to be. I went to a very good state school in the mid 90s. 4 years worth of tuition came in at a shade over $10,000 total. I could literally make enough over the summer to pay for my fall tuition. The government's involvement through student loans is precisely what drove the astronomical rise in tuition.
"If the majority of Americans do not hold a college degree"
this is such an arbitrary standard for assessing the politics though. if you want to argue for it, go ahead, but there are countless policies that humiliate this standard to substantial cost to the U.S.
if the majority of Americans aren't farmers, do we just tell farmers to go fuck themselves, what idiot would decide to become a farmer in 20XX? no, bc we recognize that helping farmers isn't just about helping farmers per se, it's abt addressing a political problem for the country in general.
the problem in this case is the country having spent a couple decades talking 17-year-olds into financing super expensive credentials that half the country now turns around and constantly dunks on them for having bothered to get. but ppl didn't over-invest in college out of nowhere, for no reason, on a whim.
The current crop of 17 year old's is far less gullible about the risk to reward ratio of a college education. Since it doesn't look like every generation is going to have an equivalent level of financial cluelessness does that change the parameters of the discussion?
My only point was, if having a college degree means anything at all in terms of career prospects (and everyone absolutely swears that it does-that why people go in the first place!), then taking from majority non-degree holders to give to minority degree holders is incredibly regressive. That's just the facts. On a societal level, making people with high school degrees subsidize those with college degrees is ridiculous.
I wonder what the percentage of the 50% that don't hold a college degree have student loan debt because of an attempt to go to college but then didn't get their degree because life go in the way of continuing?
$125k is twice the media household income, so you need to put quotes around "means-tested".
Oh you again. I had a long enough exchange with you for a lifetime on another thread. Fool me once! Bye forever.
I have no idea who are you but here's a little advice: if you're not going to say anything you don't actually have to post anything.
Imagine being this obtuse about who goes to college and what socio-economic rung of the ladder they come from that in order to go to college they have to take out loans in order to go. Plenty of working class families make too much to qualify for Pell grants but not enough to actually pay in-state tuition.
There's this idea floating about that the people taking out student loans and getting the relief are people earning high 6 figure salaries when that isn't the case. There's also this idea that the people taking out loans and going to college don't "actually" need loans.
My point is that there exists a wide swath of people from working and lower-middle class families and that the issue is more complex than the conservative talking points floating about on this.
But not the majority. That's the point. Most college grads get good paying jobs, enough so that the average wage for college graduates is much higher compared to the average for those with only a high school diploma.
If you want to argue based on outliers and exceptions how valid is your argument?
(Apologies, I misread your earlier comment in a moment of passing and thought it was directed at me. I deleted my response. I think we agree! Carry on :)
What your anger should be pointed at is not the fact that college grads ranging from 22 to 60 had to debt-wage their education in order to maybe get a few rungs up the ladder, but instead at the reality that in the U.S., we've been convinced over the decades that education isn't a right or a socio-economic leveler but that it's a privilege that only select folks should access to and if you can't afford to pay it outright, then you have the option of either 1) not going to college and working as a short order cook making minimum wage living in poverty or 2) put yourself into decades of debt with the nebulous promise that a college education might lead to better options and you may be able to make a decent salary that keeps you out of poverty.
What I am angry about is that people who live for fewer years with less resources are being asked to pay off the debt of people who live longer, more comfortable lives. That is the bottom line. It's a moral travesty.
If you're angry about that, I'd say there are other government programs and departments you could direct your ire at if it involves moral travesty. And keep in mind, not every person with student loan debt will be guaranteed a longer, more comfortable life. Some of the very people you claim to be outraged for will benefit from this program.
I've decided that today college educated leftists are so insulated that they think their college buddies are the bottom rung of the economic ladder.
I also think that is why you've seen a move in Marxist thought from class-based to race-based.
I have college educated friends whose incomes vary widely and political persuasions vary too. None consider themselves the bottom rung of the ladder.
Some are over-educated and underpaid but they're not shaking a tin cup.
I think whether or not going to college makes you more money is still somewhat of an open question, since it needs to be corrected for those whose families already had money. Take away those who don't need loans and do you still have people making a lot more money and living longer than those without a college diploma? Maybe, maybe not. I honestly don't know the answer. But I don't think you can really put all college grads in the same bucket. Anecdotally, people I know who didn't have to take out loans to pay for college (because they were already well off) tend to be doing better career-wise than those I know who took out Pell grants.
But don't you see that's irrelevant. Maybe thr only reason people go to college is because they're already wealthy and can afford it--but the most salient issue is that they're wealthy!
And since we're talking about populations what matters is the median and mean numbers for income. There are always going to be outliers.
Plus if the issue is the needy why set the cap so high? $125k is twice the median household income.
What is your definition of being wealthy? Because if we knew that it'd be easier to understand why you think every person going to college is already wealthy and can afford it. Which is demonstrably not true.
Because the issue is wealthy _in comparison_ to the people who are going to be footing the bill.
The funds to pay off this debt aren't coming from a special tax on billionaires or corporations, it's coming out of the general fund. That means the pool of tax dollars that everyone pays into. If we're going to be cutting checks to anyone out of that pool of money it should be those who are less fortunate, the needy. It definitely should not be the top 30% of the economy for the obvious reason that since everybody pays into that fund it's a de facto transfer of wealthy from the less fortunate to the better off.
I don't know how many times I have to reiterate this, but the majority of the people going to college and taking out student loans are not wealthy. Full stop. You keep insisting that 100% of college loan borrowers are 1) wealthy and 2) have a college degree. 33% of college attendees drop out before finishing their degree yet still have loan debt.
Did you miss this part?
"Because the issue is wealthy _in comparison_ to the people who are going to be footing the bill."
It wouldn't matter if all college degree holders are impoverished. The fundamental, underlying principle is that you don't take money away from people who are even POORER to pay off their debts. The question is relative wealth.
And those individuals who have some college but no degree make $3,300 more per year than those with only a high school diploma last time I checked.
While I hate the unfairness of Biden’s giveaway to everyone who honored their commitments (or made hard life choices driven by financial realities), what REALLY bothers me is that a supposedly liberal administration chose to go this route rather than, say, seeking to ease the debt burden on low income people by paying off $10K of their car loans and consumer debt.
The federal government isn't the holder of that debt.
Freddie, are you making the argument that the feds should get out of the student debt business?
Money is fungible.
True, Freddie, but wouldn’t it be worth a debate in Congress?
If you want a debate to go nowhere, then sure.
The advantage of this plan, to Biden, is that it's something he could actually accomplish.
It wasn't "Pay off college debts or pay off consumer loans," it was "pay off college debts or do absolutely nothing at all."
If you think no low income people have student loan debt, you maybe had an unusual college experience.
Of course low-income people have student loan debt. Lots of them do. But:
1. More high-income people have even more student loan debt, so if you forgive it all, you’re giving these people a lot more money than anyone else.
2. Most low-income people don’t have student loan debt (far more than do). These people get nothing when you forgive all debt.
PPP loans are only forgivable if they were used to pay people that would have otherwise been fired, and to pay basic operating expenses to prevent businesses from shutting down permanently due to the government-mandated lockdowns.
The Federalist argument is 100% correct.
lol you appear to not be aware about the actual enforcement of the program
Another reason it was so bad.
That’s a different issue. The PPP was expressly intended to pump cheap/free money into the economy as quickly as possible. Are you really surprised a program like that is going to be abused?
Imagine thinking that taking out student loans to go to college is a grift.
Also, the PPP was an actual law passed into being in the good old Schoolhouse Rock way. Maybe it’s a bad law and contributed to inflation but at least it ostensibly represents the will of the people.
And take the Catholic Church example you bring up. Did they take the money, fire all their employees, and then ask forgiveness? Or did they keep everyone on payroll, move to remote work, and use the PPP the way it was designed?
Seems like your beef is with the law itself but business owners and nonprofits are easier targets.
But this student loan forgiveness program will be properly administered? Its the same misguided government in charge of this one.
If only that money actually went to paying worker salaries, instead of being used for stock buybacks.
That is, after all, why the money wasn't just sent to the workers.
No it was a small business program. Public companies had other facilities but not PPP.
sMalL bUsiNesSeS:
Jared Kushner
Kanye West
Jay-Z
Diddy
Paul Pelosi
Khloe Kardashian
Jeff Koons
Tom Brady
https://www.dailymail.co.uk/news/article-11113221/Wealthy-Khloe-Kardashian-Reese-Witherspoon-got-millions-PPP-loans-didnt-pay-back.html
Dude the article says the funds went to pay employees. That’s what the law was designed to do. It was stimulus.
Sorry, which of these were small businesses?
Keep licking those boots.
They’re all small businesses. Oh wait you think the owner IS the business? Do you know what an entity is?
Keeping 150 people on payroll for a business that can’t operate for 1-2 years is a circumstance that most businesses cannot withstand. This is true even when the proprietor of said business is personally wealthy and famous.
I can speak for one business that I know well. It is a small social services nonprofit. This agency didn’t “just send the money to the workers” but it did use the funds to continue to pay workers salaries for over two years, during times when the activities the typically being in revenue were often interrupted or shortened due to Covid safety concerns. So, the agency was able to pay everyone normally and refrain from any layoffs, even though they would have been operating consistently in the red without those extra funds.
I worked closely with two nonprofits to understand and apply for the PPP loans. One was a fine arts org and the other a preschool. Of course the money was used to retain staff and adapt to the ongoing pandemic conditions, exactly as it was intended. Aside from the inflationary effect of printing money, the PPP facility worked pretty much as it was supposed to.
I was actually eligible for PPP money through my business but chose not to apply. And I have student loans which would be forgiven under the Biden proposal!
“PPP was a grift that allowed rich people to buy more yachts” is the left wing equivalent of “these lazy students should just pay back what they borrowed.” They’re both bad faith arguments that flatten a diverse and complex array of people and situations into an ideologically convenient stereotype.
This entire discourse is stupid. Just clarifying the misunderstandings about the PPP program (sometimes small business owners are wealthy!), how the economy works (businesses are good for the economy!), how government should function (laws that apportion blns or trlns of taxpayer $$$ should be passed in the normal way!) means somehow you're on one side or the other.
I think some student loan forgiveness is a good idea, but ONLY if it is coupled with higher ed reform targeted at reducing tuition inflation and admin bloat. For me $125k/$250k is too high an income threshold and the accompanying repayment plan adjustments don't do anything to solve the issues that caused the student debt problem in the first place. The government SHOULD be in the loan-guaranty business for certain things, but wiping out debt at the stroke of a pen is a total violation of the economic conditions we all operate under. None of these borrowers were defrauded and the cost of higher education and lessening economic value of a college degree is not a problem the government can just throw money at one time and expect anything but a repeat situation a few years hence.
Conversely, I blame the entire CARES Act for causing the inflation we're experiencing now, but I don't see any other choice we would have had (except to not lock down at all, duh) to prevent maybe the worst economic catastrophe of all time. Also it came at the end of a 15-year money printing spree... sort of like throwing magnesium on a prairie fire. All in all, it's better to have people employed for a year in ghost jobs even if it means the rich get to continue being rich, than to have 50% unemployment and the rich get to continue being rich anyway.
Agree, 100%. I’m on board with some measure of loan forgiveness, but it feels like a bandaid on a bullet hole (sorry, Taylor Swift) without accompanying reforms that regulate the terms of student loans or the cost of education. Fixing student loans at prime interest rates and ensuring that state schools are free for low income folks and very low cost for everyone else would be a good start, IMO. Passing loan forgiveness by executive order instead of through an act of congress is bound to be polarizing as all get out, and nearly everyone seems to be retreating to a place of personal grievance (Billionaires! Lazy Kids!) on a scale of outrage that often appears inversely proportional to knowledge about how economic systems actually work.
In my view governing by executive order is worse for the country than forgiving student loans. But that pandora box isn’t going to be closed anytime soon
With the legislative branch somewhere between stalled out and indifferent, we've shifted their duties to the Executive and Judicial branches, which is definitely less than ideal.
I'm all for student loan forgiveness. I've heard many stories about how the interest rates are so jacked up that even if you're diligent with your payments, the loan stretches on and on seemingly forever.
The thing that annoys me most is the "DURRRRRRR the Left got too Woke so I changed all my opinions on Literally Everything and became a conservative and wont admit it" crowd. For example: https://mobile.twitter.com/RealKeriSmith/status/1562506708332982272
Imagine being saddled with interest collection on a $0 IBR plan because you’re just too poor to pay but needed the education for your field of work.
Might as well just act like it’s not even there and let it default in 20 years, or when you die (unless it’s one of those transferable debts lol).
Completely based
I was just listening to a story of a woman who had to quit her job to take care of her sick husband. She was lucky to be able to do that as they could live with her parents, but she couldn't pay down her loans during that time. It was a long, long time and she accrued a crazy amount of interest until her husband died. So now the worst thing ever in her life has happened and she is being crushed by medical and loan debt. But yeah, she is just a freeloader who doesn't know how to work hard and "do the right thing"... This is just a drop in the ocean for her, sadly, but she said she is thankful for any kind of help (also that she qualified for pell grants).
Yea. The frustration surrounding this is purely misunderstood and misplaced.
The core problem is the foundation of the student loan program itself (which Biden legislated to be non-bankruptable back in the day, if anyone isn’t aware), which incentivizes universities to crank up tuition costs for government money on the backs of students.
To answer your last question: it's because they are the job creators. Do you even rich, bro?
Sarcasm aside, thanks for the part about the Catholic church. I had no idea about that, that's some god-tier b.s. right there.
Not sure why there’s already such assumption that only rich Ivy Leaguers took out student loans. I’m willing to bet that many, if not a majority of these debtors are the poors who got convinced they needed postsecondary education to be competitive in the workforce and were never told how universities or the workforce actually work, and are now saddled with tens of thousands of debt dollars on $0 annual IBR plans.
Plus, this won’t really affect inflation! Banks will take a hit on their profit margins and the government will take a hit on interest profits. Universities’ for-profit incentives have not budged and the most the public will likely see out of this is a marginal tax hike (this is not the same as what controls inflation).
This debt relief act is broadly something that will gently help those who are worse off economically the most, but it will still not eradicate their debt (and sure, while the wealthier students may also receive a break, they fair better in this situation for other reasons than have nothing to do with helping poorer students).
No
https://news.yahoo.com/student-loan-forgiveness-larry-summers-205503786.html
It's not inflationary because that $10K is not suddenly a lump sum that appears in your bank account. It's a monthly expense that would then be put towards other expenses. Say that $10K represents $150/month a family can use towards paying off other bills. That $150 was already going to be spent on paying a bill.
People getting night sweats about the national debt do so for no real reason.
What I'm trying to point out is that the nominal monthly gain from the student debt relief is not going to result in a huge surplus of cash for those individuals. Sure some may result in higher economic demand but not necessarily discretionary spending. In other words, they're putting it towards paying off a credit card, an existing car loan, rent, but not an addition to the house.
If I put the extra cash towards paying off a credit card balance is that inflationary?
Paying down debt is deflationary.
Exactly this. I was a Pell Grant recipient and this will not wipe all my debt, but with my interest rates I will end up paying almost exactly what I took out in loans.
It’s an assumption because it’s a fact. The top 20% of income earners hold 30% of student loan debt. The bottom 20% hold only 8%.
https://www.brookings.edu/wp-content/uploads/2022/01/WP75-Looney_updated_1.pdf
Thanks for that. I may need the ammo here behind the Orange Curtain (LoCali people will know where). The debt relief is a manifest blessing. My wife and I long ago committed to paying our kids’ loan costs. We’re comfortable middle class but not wealthy and have always tried to be smart about expenses. As a 30-year teacher I will collect a liveable pension in a couple years.
My 3 children all went to state schools, and two spent half their undergrad time in jr. college. Those 2 finished in Cal St. schools while the other was all 4 years at a UC.
When my wife and I went to the same places in the 70s & 80s a semester’s tuition for a full course load at a typical CSU campus cost about $120. My wife graduated debt free; I went from CSU to a UC and finished w/about $3k to pay off.
9 years ago we started tackling our kids’ payments. The CSU attendees would eventually accumulate $35k+ and the UC student about $42k+. So, there’s your measure of what’s happened to college costs over a generation. Suffice it to say the new debt-relief is most welcome.
Tim, my wife and I are around your age, and we lived and went to school in California in 70s/80s, then our kids did the same in the 2000s. Yes, the cost of even Cal state went up big time, plus all the living expenses. But, the guaranteed fed loans is what caused the problem. The school will always charge as much as absolutely possible. They will squeeze as much as they can out of every family, including running up as high as possible loan balances. Why? Because they can.
Anyway, I think the point of Freddie's post is that PPP was in no small part simply handing money to people who did not need/deserve it. So, it is a fair comparison with this student loan forgiveness. I agree with him on this topic.
Sure, there are differences, but a whole lot of PPP money was doled out to entities not forced to shut down.
There is a lot of pressure on people to attend college who do not belong in college, at least not in an expensive one. The loans may not have been mandatory, but I consider them another form of government entrapment to benefit the colleges and banks, to the detriment of everyone else involved.
Now you’re approaching the root of the problem: the extensive de-regulation of ‘high finance’ since the advent of the ‘Reagan Revolution’. It has certainly been bipartisan - do the words ‘Glass-Steagall’ ring a bell?
The loan guarantee certainly played its part. But Cali used to underwrite its system costs much more extensively and that has steadily eroded since then. I got an MA at a local CSU in the 90s - it took years b/c of the necessitty of going at it part-time while working and being a husband and father. But I managed to stagger through debt-free to the finish line.
I know my right-wing relations (mostly in-laws) will b-&-m about the forgiveness. So reminding them of the PPP ‘loans’ will be a nice rejoinder.
Hey, Sir RP-a-L:
Thanks for weighing in. Glad we're basically on the same page on this, as I've enjoyed previous friendly exchanges w/you before. I understand and appreciate the effect of the federally guaranteed student loan program. It does seem clearly legit to connect the dots from it to the inflated costs of tuition nationwide. As a denizen of Cali, though, I imagine you're also aware of the old 'master plan' for higher ed. in the state, which is now little more than a warm and fuzzy relic from days of yore. (You know, that era everyone seems to reminisce about and pine for w/acute nostalgia? Of course, those low CSU tuition fees were part of that picture.) But that was a different era, and, from what I can tell, it eventually ran aground w/the final demise of New Deal liberalism in Nov. '80. I have to check myself here, lest I go off on a tangent in a sr. moment (happens more & more lately, haha), but it seems to me we're living through the consequences of the 'Reagan Revolution' that swung us back in a rightward direction economically. Whether that was worth it or not is an issue for another time, but given the complaints that have been coming in for a while now - certainly pre-covid - it seems like a revival of sorts (of at least a stronger, old-school level of state higher ed. funding) would be a good thing. As you may also know, the increase in college costs is also attributable to the unnecessary expansion of bureaucracy in that sector, b/c they're hiring more management types, not more professors.) And, on the national level, in anticipation of objections from right-wingers and neo-lib/con globalists alike, we could deploy a 'peace dividend' argument - if only the good 'ol military industrial complex will agree to downsize. Then again, we all know what the odds are on that. Anyway, I gotta go - have to get busy with the loan forgiveness paperwork and hope for the best!
Well, it's not like California has low taxes or anything. My wife was a public school teacher in California. We moved out of the state about one week after her retirement in 2018. I'd had a picture of Jerry Brown in my office for several years before that, to remind me of why we were moving.
Enjoy the paperwork. We had plenty of that to secure our PPP sinecure.
When PPP was passed, the economy was understimulated, and no one expected it to be overstimulated any time soon. If it were still understimulated, student loan forgiveness would make a lot more sense.
The question, "Knowing what we know now, would it have been better to do student loan forgiveness rather than PPP?" is an interesting one, but I don't think it's super relevant to the question of whether we should do student loan forgiveness now, given that PPP happened and we can't go back and change that.
Student loan forgiveness wasn't done to simply to stimulate the economy, it was done to give relief to those who are being crushed by the burden of their debt. Does it mean some people who aren't being *crushed* specifically will see some benefit, yeah. But when 63% of student loan borrowers who default are holding less than $5k in debt and there are millions of them... Yeah, I'm okay with some more well-off people being able to benefit from this as well (for me, it just means that with interest I'll end up paying almost exactly what I took out, so that seems fair).
But if we spend money on educating people, how will we have money to fund our bloated military gravy train?
I don’t get this angle about PPP loans at all. They were in Democrats’ CARES Act, and every Democrat except AOC voted to re-up them in the standalone bill.
Because Marxists kinda see the right wing of both parties as routinely aiming the money cannon at the rich, so it really isn’t an exercise in partisan gotcha but in class gotcha.
Freddie, you are correct. There isn't much difference. Both are or were bad. I was a member of two golf clubs that benefitted from PPP loans. Thank you, taxpayers, for our new grill and locker room. Also involved with a private entity that was able to continue paying its mostly well off owners with PPP "loans". Thank you again, taxpayers.