Economy Case for student debt cancellation

[DivineMind]

The case against student loan cancellation and free college:

• data shows that people with college degrees earn significantly more throughout their careers. In other words, the people paying the costs receive the benefits.
  
• It’s unfair to ask folks without college educations and those who will never go to college to pay for a program that benefits people who on average will already benefit from their education
• It’s regressive. We’d be paying for something that disproportionately benefits already well off and wealthy families.
  
• Debt forgiveness and free college plans don’t actually solve the problem of high costs of education, which is primarily driven by living in a prosperous society.
  
• A better and fairer economy wouldn’t it’s citizens to require a college education for good paying middle class jobs. Job training and relocation programs come to mind but bigger, more ambitious policy can be tied in here (jobs in green energy, infrastructure, etc.).

I’ve argued for free college on here and still absolutely support free public college for those who can’t afford it and can cut it academically. But the regressive nature of it gives me pause.

I also want to emphasize this isn’t the hill I want to die on either. If President Sanders miraculously gets free college passed I won’t be that mad. I’m just trying to provide counterpoints.

On your points:

1) I really don't get the point of this claim. The point of student debt cancellation is to help the lower and middle classes - there are many reasons why we should be helping them, the most important reason being that we have record inequality in our society and drastic things need to be done. The consideration of who paid the cost initially is irrelevant.

2) Who says the folks without college educations "are going to pay for it"? What if the program were funded by taxes on the wealthy? What if people who didn't go to college received some sort of equal tax write-off?

3) The college enrollment rate in 2017 was 40%. That's a huge chunk of the population. And anyway, you keep assuming that there isn't a fair way to implement this plan. You frame it as this issue between the upper-middle and lower/lower-middle classes, and that's false. It depends on who pays for the program. My answer (and people like Bernie's answer) is that the rich should pay for it. That's how you fix inequality.

4) No, I don't agree with that framing. There are many prosperous societies without ballooning higher education costs. But I agree, something also has to be done about university costs. I disagree in that I think that free universities can be a part of the solution.

5) I agree that using college as training for the workforce is a model that needs to be done away with.

And this is ignoring the potential of a program like this to benefit the economy..

Initially the government decided against programs like these and instead opted for programs promoting stability of the banking system. Those clearly didn't work for the average middle class family, yet they stuck with them for a decade. They drastically inflated asset prices and just made rich people more well off.

Imagine a whole generation of people with student debt forgiven. They can finally look at buying houses, starting families, etc.

 

[kpt018]

On your points:

1) I really don't get the point of this claim. The point of student debt cancellation is to help the lower and middle classes - there are many reasons why we should be helping them, the most important reason being that we have record inequality in our society and drastic things need to be done. The consideration of who paid the cost initially is irrelevant.

2) Who says the folks without college educations "are going to pay for it"? What if the program were funded by taxes on the wealthy? What if people who didn't go to college received some sort of equal tax write-off?

3) The college enrollment rate in 2017 was 40%. That's a huge chunk of the population. And anyway, you keep assuming that there isn't a fair way to implement this plan. You frame it as this issue between the upper-middle and lower/lower-middle classes, and that's false. It depends on who pays for the program. My answer (and people like Bernie's answer) is that the rich should pay for it. That's how you fix inequality.

4) No, I don't agree with that framing. There are many prosperous societies without ballooning higher education costs. But I agree, something also has to be done about university costs. I disagree in that I think that free universities can be a part of the solution.

5) I agree that using college as training for the workforce is a model that needs to be done away with.

And this is ignoring the potential of a program like this to benefit the economy..

Initially the government decided against programs like these and instead opted for programs promoting stability of the banking system. Those clearly didn't work for the average middle class family, yet they stuck with them for a decade. They drastically inflated asset prices and just made rich people more well off.

Imagine a whole generation of people with student debt forgiven. They can finally look at buying houses, starting families, etc.

1. The point of this claim is to note that the people receiving the benefits are paying the costs, so why should that burden be spread to those not receiving the benefit? And given people with college degrees earn significantly more on average through out their careers it’s fair they pay those costs.

2. I agree with these but the perception will remain. That doesn’t refute your point but I’m just saying people who don’t go to college will be angry that people who do get this benefit on top of making much more throughout their careers.

3. That’s not how I’m framing it. I’m simply pointing out there is a regressive element here. The kids of millionaires can go to college for free, right? Ok fine. But I would propose we only pay for college for kids based on income levels to ensure it captures poor and middle class kids.

4. Which countries? This point wasn’t really debatable. The reason costs have risen is because we’ve prospered, more kids want to college (which is great!) and our policy is that just about every kid could get a loan for almost any amount. The last bullet can definitely be addressed.

5. Cool

I didn’t include it in my original post but in my next one I agreed with the argument that this program is very likely to help the economy.

 

[superpunch]

On your points:

1) I really don't get the point of this claim. The point of student debt cancellation is to help the lower and middle classes - there are many reasons why we should be helping them, the most important reason being that we have record inequality in our society and drastic things need to be done. The consideration of who paid the cost initially is irrelevant.

2) Who says the folks without college educations "are going to pay for it"? What if the program were funded by taxes on the wealthy? What if people who didn't go to college received some sort of equal tax write-off?

3) The college enrollment rate in 2017 was 40%. That's a huge chunk of the population. And anyway, you keep assuming that there isn't a fair way to implement this plan. You frame it as this issue between the upper-middle and lower/lower-middle classes, and that's false. It depends on who pays for the program. My answer (and people like Bernie's answer) is that the rich should pay for it. That's how you fix inequality.

4) No, I don't agree with that framing. There are many prosperous societies without ballooning higher education costs. But I agree, something also has to be done about university costs. I disagree in that I think that free universities can be a part of the solution.

5) I agree that using college as training for the workforce is a model that needs to be done away with.

And this is ignoring the potential of a program like this to benefit the economy..

Initially the government decided against programs like these and instead opted for programs promoting stability of the banking system. Those clearly didn't work for the average middle class family, yet they stuck with them for a decade. They drastically inflated asset prices and just made rich people more well off.

Imagine a whole generation of people with student debt forgiven. They can finally look at buying houses, starting families, etc.

Why do you only forgive student loan debt? What's so special about student loan debt? Why can't you forgive credit card debt, auto loan debt, etc. instead? What about lower earning, less privileged and less educated Americans -- don't they deserve debt relief more than the relatively rich and privileged college graduate economic class?

 

[IGotAHugePeckah]

Why do you only forgive student loan debt? What's so special about student loan debt? Why can't you forgive credit card debt, auto loan debt, etc. instead? What about the lower earning, less privileged and less educated Americans -- don't they deserve debt relief more than the relatively rich and privileged college graduate economic class?

This is a great point as well.

People lose sight of the fact that a lot of people in student loan debt aren't actually poor.

Doctors have some of the biggest loan debts, but they are not struggling and have the means to pay it off over time.

And there are a lot of middle to upperclass students who have debt that their parents could easily pay off for them, but want them to pay it off themselves as a lesson of sorts.

Why should tax payers foot the bill for these people as opposed to the underclass who are truly struggling and had no means of going to college in the first place?

 

[superpunch]

This is a great point as well.

People lose sight of the fact that a lot of people in student loan debt aren't actually poor.

Doctors have some of the biggest loan debts, but they are not struggling and have the means to pay it off over time.

And there are a lot of middle to upperclass students who have debt that their parents could easily pay off for them, but want them to pay it off themselves as a lesson of sorts.

Why should tax payers foot the bill for these people as opposed to the underclass who are truly struggling and had no means of going to college in the first place?

Yeah, I don't get it. Someone with a college degree will make $900,000 more than someone without a college degree. So if your student loan debt is less than $900,000 then why do you deserve to be credited the amount of your student loan debt anymore than a high school graduates bank account deserves to be credited that much? And if you somehow have more than $900,000 of student loan debt then OK maybe we can talk I guess..

 

[DivineMind]

1. The point of this claim is to note that the people receiving the benefits are paying the costs, so why should that burden be spread to those not receiving the benefit? And given people with college degrees earn significantly more on average through out their careers it’s fair they pay those costs.

2. I agree with these but the perception will remain. That doesn’t refute your point but I’m just saying people who don’t go to college will be angry that people who do get this benefit on top of making much more throughout their careers.

3. That’s not how I’m framing it. I’m simply pointing out there is a regressive element here. The kids of millionaires can go to college for free, right? Ok fine. But I would propose we only pay for college for kids based on income levels to ensure it captures poor and middle class kids.

4. Which countries? This point wasn’t really debatable. The reason costs have risen is because we’ve prospered, more kids want to college (which is great!) and our policy is that just about every kid could get a loan for almost any amount. The last bullet can definitely be addressed.

1. I don't see how it's a burden on them. The lower class generally pay 0 net tax, while the middle class pay in. And again, I don't see why you claim that there has to be a burden on anyone but the rich. We can pay off student debt and give people who didn't go to college a tax credit. There is a fair way to implement these plans.

2. You're probably right that the rich will be effective in muddying the waters by trying to claim the poor are somehow worse off by this, but hopefully with the right politicians (Bernie) this will be addressed.

3. Rich people pay cash for college, taking out loans you can't default on is a sucker's game. While there are probably upper middle class kids with student loan debt, I don't think there are many rich kids with student loan debt. But sure, if the person is above a certain threshold in income it might make sense to not give them the benefit.

4. The reason is not just because we're prospering. Availability of student loan debt, stagnant wages, lower quality jobs, means students have a strong incentive to pay for higher education to compete for the better jobs. No one wants to be a waiter. So you take out loans and get a master's degree, or you pay extra to go to that fancy liberal arts college. This is just scratching the surface.

 

[superpunch]

nm

 

[kpt018]

1. I don't see how it's a burden on them. The lower class generally pay 0 net tax, while the middle class pay in. And again, I don't see why you claim that there has to be a burden on anyone but the rich. We can pay off student debt and give people who didn't go to college a tax credit. There is a fair way to implement these plans.

2. You're probably right that the rich will be effective in muddying the waters by trying to claim the poor are somehow worse off by this, but hopefully with the right politicians (Bernie) this will be addressed.

3. Rich people pay cash for college, taking out loans you can't default on is a sucker's game. While there are probably upper middle class kids with student loan debt, I don't think there are many rich kids with student loan debt. But sure, if the person is above a certain threshold in income it might make sense to not give them the benefit.

4. The reason is not just because we're prospering. Availability of student loan debt, stagnant wages, lower quality jobs, means students have a strong incentive to pay for higher education to compete for the better jobs. No one wants to be a waiter. So you take out loans and get a master's degree, or you pay extra to go to that fancy liberal arts college. This is just scratching the surface.

1. It’s not just the specific funding for the plan but a program that other people will get the benefits. A dude that goes to work right after high school or a stay at home mom will argue that this benefit is going to people who already benefit from their education. These people will claim it’s not fair and they have a point. I think reasonable people understand why the poor and disabled get benefits and are ok with it. But people who are already doing well? It’s a tough sell.

2. That’s not what I’m saying. I think you should reread that part.

3. What do loans have to do with it? The free college program would eliminate the need for loans or paying cash. If it’s for everyone that would include kids that are well off right?

4. I didn’t say it was the only reason.

 

[W12Ranger]

Colleges just need to lower their prices if they want to qualify for government money.

There is no justification that it cost so much more than it did 15 years ago.

In the 1960's and 70's when my parents generation went to college they could easily pay for it with a low paying part time job. No one complains about their quality of college education, but the most recent crop of grads are woefully under prepared yet their education was many times more than mine or my parents.

There is no justification for this other than leveraging people's own hopes and dreams against them to rob them of future earnings for decades.

There will be a crash soon.
I am a recruiter/hr and just in the past few years there's been a giant paradigm shift in how employers view college degrees.
They were once 100% necessary for a job, now almost all the employers I know are scrapping the degree requirements.
Certifications are what we really look for, but at this point we just want to find talented, nice, hard working people, and that's not always easy to find especially when you put on an extra unnecessary filter like having a college degree.

Good points.

Education now seems to be more about simply getting people to pass exams rather than actually preparing them for the workplace. Add this to the growing demand for jobs and higher education I think that it is a disaster waiting to happen.

 

[Deleted member 159002]

1. I don't see how it's a burden on them. The lower class generally pay 0 net tax, while the middle class pay in. And again, I don't see why you claim that there has to be a burden on anyone but the rich. We can pay off student debt and give people who didn't go to college a tax credit. There is a fair way to implement these plans.

No there isn't. Take two hypothetical college graduates who went to school for the same major. One went to Boston University, the other went to SUNY Binghamton. The latter was accepted to Boston University, but chose not to go there because he didn't want to be paying off student loans for decades. Now they're applying for the same jobs. The person who went to Boston University gets more job offers because he went to the more prestigious school. Rewarding people who took the higher-cost-higher-reward route by getting rid of the higher cost is not fair to the people who chose the lower-cost-lower-reward route.

 

[PEB]

 

[whougonnacall]

Hows about a better solution that tackles the predatory student loan lending industry and the seemingly endless inceasing stream of utterly useless degrees universities pump out.
Make the student loan companies eat a substantial part of the debt to reduce their future appetite to approve loans they'l never see back

Instead of approving every tom dick and harry for a loan to study 18th century lbgt poetry or social history of amish etc the big loan companies would be more wary of what career oppertunities they throw cash after therefore universities would be forced to cut down on b.s courses and focus on the real subjects like the hard sciences ,computing etc again !!

Think of the angry millions of minimum wage slaves flipping burgers who wouldnt be firing off part of their paycheck to student loan inc , the disapearance of bullshit extreme left campus movements fueled by womens studies majors etc with nowt else to do but find 'injustices' to fight like metoo

 

[Sensei Student]

Significantly higher taxes

https://www.google.com/amp/s/turbotax.intuit.ca/tips/an-overview-of-federal-tax-rates-286/amp

This is Canada's tax bracket
15%-33%. Not much different than America's of 10%-37%. I'd much prefer to pay a bit higher tax for much better benefits. Look how many people go bankrupt due to Medicare or stays poor due to student loans.

 

[cincymma79]

https://www.google.com/amp/s/turbotax.intuit.ca/tips/an-overview-of-federal-tax-rates-286/amp

This is Canada's tax bracket
15%-33%. Not much different than America's of 10%-37%. I'd much prefer to pay a bit higher tax for much better benefits. Look how many people go bankrupt due to Medicare or stays poor due to student loans.

You’re missing some taxes in there

off the top 5% higher for me though, which is more than I spend in healthcare

off to a bad start

Province tax
https://turbotax.intuit.ca/tips/ontario-provincial-taxes-and-credits-574

11.6% for me up from 6 in Kentucky

now I’m paying 10% more in Ontario which is the closest province to me

Then we get to value added tax and the like

it’s higher
A lot higher

so just know that when you’re picking

 

[AGGAMEMNON66]

I think the more people understand these numbers the greater the chances it happens. Especially in the Midwestern states were little if any economic growth has happened.

These educational options also spur entrepreneurship. People with education are more likely to start businesses.

How do they want to get rid of the debt? Thru taxes?


If so, fuck them.

 

[PEB]

https://www.google.com/amp/s/turbotax.intuit.ca/tips/an-overview-of-federal-tax-rates-286/amp

This is Canada's tax bracket
15%-33%. Not much different than America's of 10%-37%. I'd much prefer to pay a bit higher tax for much better benefits. Look how many people go bankrupt due to Medicare or stays poor due to student loans.

The college benefits are realistically about 2 to 3 dollars per hundred in taxes. It really is not that expensive when compared to healthcare and defense spending.

The defense budget was raised by the yearly amount it would cost to eliminate student debt . Bank bailouts costs over 2 to 4 trillion way above the spending bill. There economic benefits for the US economy could be far greater then almost anything by freeing up money.

 

[Deleted member 159002]

The college benefits are realistically about 2 to 3 dollars per hundred in taxes. It really is not that expensive when compared to healthcare and defense spending.

The defense budget was raised by the yearly amount it would cost to eliminate student debt . Bank bailouts costs over 2 to 4 trillion way above the spending bill. There economic benefits for the US economy could be far greater then almost anything by freeing up money.

Again, the bailouts had significant positive impacts for millions of people from all walks of life, not just members of a faction. The comparison is ridiculous.

 

[DivineMind]

@sabretruth

No there isn't. Take two hypothetical college graduates who went to school for the same major. One went to Boston University, the other went to SUNY Binghamton. The latter was accepted to Boston University, but chose not to go there because he didn't want to be paying off student loans for decades. Now they're applying for the same jobs. The person who went to Boston University gets more job offers because he went to the more prestigious school. Rewarding people who took the higher-cost-higher-reward route by getting rid of the higher cost is not fair to the people who chose the lower-cost-lower-reward route.

This unfairness you're talking about is PEANUTS compared to the disparity between the ultra-rich and everyone else.

Do you realize that the government rewarded banks and insurance companies for taking excessive risk by bailing them out? Sure they solved a liquidity crisis in the short term, but they didn't just stop there...

They continued easy money policies for a decade, inflating asset prices to a tremendous degree, making all the rich people whole on their losses from 2008 and then some. Meanwhile, the government did very little for everyone else. Imagine that, they helped the people who played a major role in causing the financial crisis much more than everyone else!

This disparity is like the one you pointed out, but on steroids. Yet the government still did it.

Sometimes it's ok to implement a policy that is slightly unfair in one way (like the way you pointed out) to correct a much larger injustice (the disparity between the ultra-rich and the poor/middle class).

You can even ameliorate the minor unfairness by giving the people who chose not to go to college a tax credit so they get something too!

 

[Deleted member 159002]

@sabretruth


This unfairness you're talking about is PEANUTS compared to the disparity between the ultra-rich and everyone else.

Do you realize that the government rewarded banks and insurance companies for taking excessive risk by bailing them out? They even continued easy money policies for a decade, inflating asset prices to a tremendous degree, making all the rich people whole on their losses from 2008 and then some. Meanwhile, the government did very little for everyone else. Imagine that, they helped the people who played a major role in causing the financial crisis much more than everyone else!

This disparity is like the one you pointed out, but on steroids. Yet the government still did it.

Sometimes it's ok to implement a policy that is slightly unfair in one way (like the way you pointed out) to correct a much larger injustice (the disparity between the ultra-rich and the poor).

You can even ameliorate the minor unfairness by giving the people who chose not to go to college a tax credit so they get something too!

Most people who went to cheap state universities like me aren't competing with billionaire bankers for fulfilling careers. We're competing with people who went to expensive universities that cost tens of thousands of dollars a semester.

 

[DivineMind]

Again, the bailouts had significant positive impacts for millions of people from all walks of life, not just members of a faction. The comparison is ridiculous.

@sabretruth

The same sort of argument can be made in favor of student loan forgiveness. It would have positive impacts on the economy that would also help people from all walks of life. And, if done in the right way, could help address inequality in this country between the working class and the ultra-rich.