Forgiving Student Debt Would Boost Economy, Economists Say

I'm often struck by how often economic discussions of "big ticket" items miss the "bigger picture", economically-speaking - universal healthcare, social security, military spending, etc. Student Loan debt and college tuition is one of those topics. I think this article, Forgiving Student Debt Would Boost Economy, Economists Say (npr), is a good place to open that discussion.

The reason debt forgiveness could have a big impact on the overall economy is that a generation of Americans is making major life decisions differently because of student loans.

Click to expand...

The burden of student debt affects many decisions we generally take for granted: family planning, housing, even car purchases and major investments like saving for retirement.

William Foster is a vice president with Moody's, which just did a report on student debt forgiveness. "There've been some estimates that U.S. real GDP could be boosted on average by $86 billion to $108 billion per year," which is "quite a bit," he says. "That's if you had total loan forgiveness." Foster says it wouldn't have to be total forgiveness to see significant results. And he says it could also help address rising income inequality.

Click to expand...

Thoughtful, detailed responses are welcome. One liners and knee jerk responses are not.

NWRatCon said:

I'm often struck by how often economic discussions of "big ticket" items miss the "bigger picture", economically-speaking - universal healthcare, social security, military spending, etc. Student Loan debt and college tuition is one of those topics. I think this article, Forgiving Student Debt Would Boost Economy, Economists Say (npr), is a good place to open that discussion. The burden of student debt affects many decisions we generally take for granted: family planning, housing, even car purchases and major investments like saving for retirement.

Thoughtful, detailed responses are welcome. One liners and knee jerk responses are not.

Click to expand...

So, how do you want to pay for this?

I know, let's put it on the credit card.

What are you going to do with tomorrow's student debt?

We need bucks on education too, and highways.

Run it up, and then let's get it paid.

You *** **** ****ing ***s-**-*****es.

NWRatCon said:

I'm often struck by how often economic discussions of "big ticket" items miss the "bigger picture", economically-speaking - universal healthcare, social security, military spending, etc. Student Loan debt and college tuition is one of those topics. I think this article, Forgiving Student Debt Would Boost Economy, Economists Say (npr), is a good place to open that discussion. The burden of student debt affects many decisions we generally take for granted: family planning, housing, even car purchases and major investments like saving for retirement.

Thoughtful, detailed responses are welcome. One liners and knee jerk responses are not.

Click to expand...

Does not seem to make sense to me. By the same token, should all debt be forgiven to improve our economy? Would not all same considerations apply?

Moreover, if a program offered to simply give every US resident $100,000, would not again all the same reasons apply for how economy would improve?

I am against debt forgiveness just simply because it's not fair to those that already made decisions to save up and pay off their debts and instead gives out money to those that decided to not worry about debts. A lot of grand/parents also chose to pay for their kids so their kids do not go into debt. How is it fair to those sacrificing their retirement who wanted their kids to be out of debt?

Instead, if politicians wanted to go that route, they should at least be paying tuition to all those that attended colleges and universities, INDEPENDENTLY of whether they already paid off their debts or not or decided to not even take out debts. Of course, even that solution would be unfair to those that decided to go to lesser schools because of lower tuition, but I'd guess that's a much smaller percentage of people, and that's much harder to "fix".

IMO, the simplest thing is to say starting year 202x, all public colleges are free. That's it.

Thanks, my friend, for a thoughtful and full-time reply.

Slavister said:

Does not seem to make sense to me. By the same token, should all debt be forgiven to improve our economy? Would not all same considerations apply?

Click to expand...

It is true many of the same considerations apply, but to keep this topic on track, I think it is important to keep three things in mind: the uniqueness of education to the health of the nation (including the economy); How the "Student debt industry" was "created" [mostly by the government]; and the impact of educating on income disparity.

Slavister said:

Moreover, if a program offered to simply give every US resident $100,000, would not again all the same reasons apply for how economy would improve?

Click to expand...

Yes, but it would be less targeted, thus less effective - I'll try to get back to that point later.

Slavister said:

I am against debt forgiveness just simply because it's not fair to those that already made decisions to save up and pay off their debts and instead gives out money to those that decided to not worry about debts. A lot of grand/parents also chose to pay for their kids so their kids do not go into debt. How is it fair to those sacrificing their retirement who wanted their kids to be out of debt?

Click to expand...

Good points. More to follow.

NWRatCon said:

Thanks, my friend, for a thoughtful and full-time reply. It is true many of the same considerations apply, but to keep this topic on track, I think it is important to keep three things in mind: the uniqueness of education to the health of the nation (including the economy); How the "Student debt industry" was "created" [mostly by the government]; and the impact of educating on income disparity.

Click to expand...

1st and 3rd points just highlight why education is important, with which I completely agree. 2nd bullet was an attempt to ease loans for the education - thus special terms with less interest and all from the government. However, this is not related IMO to already-existing debt forgiveness. I am all for free college/university going forward. However, as far as education expenses that already happened, that's a different story, and rewarding those that knew the game and ended up accumulating more debt than others, as if it's something to aspire to, is NOT the right approach for the reasons I stated. And again, reimbursing (perhaps even inflation-adjusted) tuition expenses, whether still in debt or not, would be far more fair and reasonable if we even wanted to do something about prior debts (I am not sure I would).

NWRatCon said:

Yes, but it would be less targeted, thus less effective - I'll try to get back to that point later.

Click to expand...

Sounds good but also please consider what "more targeted" means here. If it means easing the pains described in the OP link, then it refers specifically to financial pains of buying a house or having a kid. If so, then we could target these things even more directly by further subsidising housing (only for young people?) or giving more tax breaks for (young?) families with kids. Both of these "more targeted" approaches have already been tried and are in place to some degree :wink:

NWRatCon said:

Good points. More to follow.

Click to expand...

Sounds good

:cheers:

Its not a wrong point. If you wrote off student loan debt, people would have more money to make consumer purchases. Thats pretty much irrefutable. Credit scores would undoubtedly improve. There are a lot of upsides from the student and consumer perspective.

You wouldnt have to 'pay' for it as a new expenditure because you arent accumulating new debt...merely writing off old debt. yes...that will be tacked on to the existing debt.

As to 'paying' for the existing debt, I really think we are at a point where we might as well all just face the facts....it aint happening. In order for us to pay down the debt we would have to spend less than we bring in. Dont know if I see that happening. Im not saying its a good thing...Im just a realist.

Because you were responding to my post, I'll quote you there and expand upon my previous thoughts:

Slavister said:

1st and 3rd points just highlight why education is important, with which I completely agree. 2nd bullet was an attempt to ease loans for the education - thus special terms with less interest and all from the government. However, this is not related IMO to already-existing debt forgiveness. I am all for free college/university going forward. However, as far as education expenses that already happened, that's a different story, and rewarding those that knew the game and ended up accumulating more debt than others, as if it's something to aspire to, is NOT the right approach for the reasons I stated. And again, reimbursing (perhaps even inflation-adjusted) tuition expenses, whether still in debt or not, would be far more fair and reasonable if we even wanted to do something about prior debts (I am not sure I would).

Click to expand...

Let me start by saying I appreciate your position, although I have some disagreement it is important that you know I am not dismissing the concern, which is legitimate.


I'm traveling right now, so a detailed response is going to have to wait a little. The central point, though, is that loan forgiveness is a useful approach for two separate concerns - one is the drag on the economy the trillion dollars debt represents; the second is the roadblock it represents on an individual basis to upward mobility. There are a number of approaches that can be taken, as the different plans represent. One is scaling back future debt through tuition subsidies or reductions. A second would be a scaled reimbursement program (needs based). A third would be encouragement for certain kinds of public service, as the GI Bill currently does (which represents another public policy consideration), for needful professions - doctors, nurses, EMTs, police, teachers - that are in short supply.

There are a number of programs that have been instituted in our history to stimulate public activities/investment - e.g. homebuying, military service - and this can be one of them. I think it should be. Any new program creates a dichotomy between those who preceded it and those who have the opportunity to take advantage of it (Medicare, social security). That should never prevent the initiation of a needful program. BTW, I would not benefit, personally, as my decision have been paid and so have my children's.

NWRatCon said:

Let me start by saying I appreciate your position, although I have some disagreement it is important that you know I am not dismissing the concern, which is legitimate.

Click to expand...

Thank you I appreciate it.

NWRatCon said:

I'm traveling right now, so a detailed response is going to have to wait a little.

Click to expand...

No problem

NWRatCon said:

The central point, though, is that loan forgiveness is a useful approach for two separate concerns - one is the drag on the economy the trillion dollars debt represents;

Click to expand...

One could claim credit card debt is also a "drag on the economy". And so is mortgage debt. No matter how you slice it, it's a debt and if people had more money, they could spend more money. And as I mentioned before, it's even the same thing as simply giving everyone $100k and seeing all kinds of new housing and other purchases happening and magically "helping" the economy.

How do we "forgive" the "debt"? I think there are 2 options:
- either by adding it to our national debt and everyone paying it off with interest rather than just those that chose to take it on, OR
- printing more money and effectively increasing prices for everyone via inflation.

In short, I don't think economic argument holds much water here. If it were that easy to advance an economy, we'd never have recessions. We'd just give people more money. I am sure some would say we do that already - just look at our constantly rising national debt. And sometimes (esp in times of recessions) we do try to give more money out to spur growth. With rising national debt however our interest payments rise as well of course, and if nothing else stops this rise, we'll just get crushed by the interest alone, perhaps in a generation or 2 or 3.

NWRatCon said:

the second is the roadblock it represents on an individual basis to upward mobility.

Click to expand...

Ok, so here we need to talk about how to redistribute wealth in a way that helps upward mobility or buying a house or starting a family, etc. I think this is where "fairness" part comes in for me. I am all for helping out those in need, but if we do this, I want to do it in a "fair" way. How much debt someone has is a terrible metric to use for this in my opinion, and I had given examples of better ones (e.g. tuition spent).

I am thinking ...
- Those that paid for kids or grandkids from their retirement should not now ALSO pay for kids/grandkids of those who did not
- Those students that chose to pay off their debts earlier making either time or other sacrifices should not have to pay for those that did not
- Those who chose cheaper schools should not have to pay for those that chose to take on more debt in more expensive ones
- etc, etc

NWRatCon said:

There are a number of approaches that can be taken, as the different plans represent. One is scaling back future debt through tuition subsidies or reductions. A second would be a scaled reimbursement program (needs based). A third would be encouragement for certain kinds of public service, as the GI Bill currently does (which represents another public policy consideration), for needful professions - doctors, nurses, EMTs, police, teachers - that are in short supply.

Click to expand...

I have no problems with programs that require students to work off their debts over time - e.g. GI bill or public service for certain number of years by docs, teachers, etc.

I also have no problems with tuition subsidies or reductions to 0.

None of these reimburse based on debt. In the case of working off debts it could be the opposite in fact - the more debt you take on, the longer you have to work it off for example. That makes a lot more sense to me than effectively giving you MORE money for MORE debt you accumulate.

NWRatCon said:

Any new program creates a dichotomy between those who preceded it and those who have the opportunity to take advantage of it (Medicare, social security). That should never prevent the initiation of a needful program.

Click to expand...

And I have no problems with free tuition starting some year thereby future students benefiting from it while prior ones did not.

I just don't want to initiate a new program where the size of your benefit is proportional to the size of the hole you dug up for yourself.

NWRatCon said:

I'm often struck by how often economic discussions of "big ticket" items miss the "bigger picture", economically-speaking - universal healthcare, social security, military spending, etc. Student Loan debt and college tuition is one of those topics. I think this article, Forgiving Student Debt Would Boost Economy, Economists Say (npr), is a good place to open that discussion. The burden of student debt affects many decisions we generally take for granted: family planning, housing, even car purchases and major investments like saving for retirement.

Thoughtful, detailed responses are welcome. One liners and knee jerk responses are not.

Click to expand...

Current GDP is over $20 Trillion or 20,000 billion ( 1 trillion = 1000 billion), not sure how adding $108 billion to that would be a major boost.

First, I apologize for the automistakes that were not corrected in my previous posts. Sometimes my phone substitutes words for my selections because it doesn't have the same vocabulary. The type is so small, and my traveling circumstances contribute to missing them. With that out of the way, let me address two main points:

Slavister said:

One could claim credit card debt is also a "drag on the economy". And so is mortgage debt. No matter how you slice it, it's a debt and if people had more money, they could spend more money.

Click to expand...

This is very true, but is, substantially, tangential to my central point which is this - like medical debt, educational debt is arbitrary to a great extent, and, indeed, is a greater burden on the less advantaged than other debt.

For public community colleges, the average tuition is approximately $4,811 per year for in-state students and $8,584 for out-of-state students (2019-20). For private colleges, the average yearly tuition is approximately $15,502 per year.

Click to expand...

(Community College Review). To one without means the $4500 tuition for community college is just as "out of reach" as tuition at Harvard. (As a result, that population is preyed upon by for profit "Universities" that are just loan-generating mills, abetted by Betsy DeVos and her ilk.) All debt is not "equal" from a societal standpoint, even if it may be from an economic standpoint.

To expand on that some, there is a pervasive argument made that goes something like this: "nearly 40 percent of Americans can't cover an emergency expense of $400." Although the accuracy of the argument is debated, the essence is correct. Report on the Economic Well-Being of U.S. Households in 2018 (Fed). The point really isn't the statistic so much as it is the reality that for nearly half of the U.S. population nearly any debt is catastrophic. when that is your daily reality, necessities like education and healthcare become "luxuries". For those with means, they are an afterthought.

A second factor is how money is spent within the "quintiles" of the economic diaspora. Those at the bottom spend what they make, saving almost nothing because they can't. So, reducing debt or expenses at the bottom does more for the "bottom line" of the economy than those at the top. (Don't get me started on our insane inverted tax system.) Moreover, those with an education generate more economic activity than those without. So, it is both the population affected and the particular expense that affects the economy. I.E. - lack of educational opportunity is a greater drag on the economy than credit card and other consumer debt. So, when you say, "it's even the same thing as simply giving everyone $100k and seeing all kinds of new housing and other purchases happening and magically "helping" the economy" - that is not entirely accurate. Someone with $100,000 in savings will approach that windfall quite differently than someone living hand to mouth.

Slavister said:

How do we "forgive" the "debt"? I think there are 2 options:
- either by adding it to our national debt and everyone paying it off with interest rather than just those that chose to take it on, OR
- printing more money and effectively increasing prices for everyone via inflation.

Click to expand...

I'm not sure I agree with your dichotomy. You ignored the most salient approach - taxes. It's how the government pays for almost everything. As that is a very involved discussion, I will address it more thoroughly later.

Slavister said:

Ok, so here we need to talk about how to redistribute wealth in a way that helps upward mobility or buying a house or starting a family, etc. I think this is where "fairness" part comes in for me. I am all for helping out those in need, but if we do this, I want to do it in a "fair" way. How much debt someone has is a terrible metric to use for this in my opinion, and I had given examples of better ones (e.g. tuition spent).

Click to expand...

I view "loan forgiveness" as a transitional program. I would anticipate that it would be time-restricted and limited to a ceiling of, perhaps, $50,000. I would also, personally, advocate means-testing. Another aspect to address your other concerns

Slavister said:

I am thinking ...
- Those that paid for kids or grandkids from their retirement should not now ALSO pay for kids/grandkids of those who did not
- Those students that chose to pay off their debts earlier making either time or other sacrifices should not have to pay for those that did not
- Those who chose cheaper schools should not have to pay for those that chose to take on more debt in more expensive ones
- etc, etc

Click to expand...

would be to broaden the program to make it a "tax credit" in some circumstances, as those you have mentioned.

Slavister said:

I have no problems with programs that require students to work off their debts over time - e.g. GI bill or public service for certain number of years by docs, teachers, etc.

Click to expand...

Nor do I. I strongly endorse them.

Slavister said:

I also have no problems with tuition subsidies or reductions to 0.

None of these reimburse based on debt. In the case of working off debts it could be the opposite in fact - the more debt you take on, the longer you have to work it off for example. That makes a lot more sense to me than effectively giving you MORE money for MORE debt you accumulate.

Click to expand...

I'm interested in your response to my points above with regard to these issues.

As a general rule, I share the concern of "rewarding debt accumulation". That is how we got this President. But, I view educational debt as an exception to the rule.

Why not go full Liz Warren or Bernie Sanders while we're at it and eliminate all debts? Stroke of a pen as Obama used to say.

NWRatCon said:

This is very true, but is, substantially, tangential to my central point which is this - like medical debt, educational debt is arbitrary to a great extent, and, indeed, is a greater burden on the less advantaged than other debt. ... All debt is not "equal" from a societal standpoint, even if it may be from an economic standpoint.
...
The point really isn't the statistic so much as it is the reality that for nearly half of the U.S. population nearly any debt is catastrophic. when that is your daily reality, necessities like education and healthcare become "luxuries". For those with means, they are an afterthought.

Click to expand...

While I get your first argument, I would suggest that if you replace the word "debt" here with "expenses", it would not change your argument. My main point is that it's all about expenses. Some people pay those educational expenses with debt, others with more sweat and tears, others by working hard to get more scholarships, yet others are helped by someone else's retirement accounts, etc, etc. Highlighting "debt" as the one and only "right" way to be reimbursed or to even to stand out from others as a "good" thing that deserves special reimbursement is the part where I have an issue.

NWRatCon said:

... So, reducing debt or expenses at the bottom does more for the "bottom line" of the economy than those at the top. ...

Click to expand...

Agreed.

As a side note, I imagine 95%-99% of students or those recently graduated would be in the lowest quintile. I am not sure I agree that parents of college graduates are still assumed to be responsible for paying their kids way.

NWRatCon said:

So, when you say, "it's even the same thing as simply giving everyone $100k and seeing all kinds of new housing and other purchases happening and magically "helping" the economy" - that is not entirely accurate. Someone with $100,000 in savings will approach that windfall quite differently than someone living hand to mouth.

Click to expand...

I see your point here. So, let me correct my statement to "simply giving everyone in 5th quintile $100k", or even "simply giving everyone in 5th quintile $100k if they have at least a BS degree"... Heck, we could go wild here and even restrict it to only "useful-for-economy" degree? Such as STEM? After all, if you get an expensive degree in liberal arts that does not have many jobs, should not you bear some responsibility for your choice? But I know, it's a whole other topic, so maybe it's best to disregard this tangent...

NWRatCon said:

I'm not sure I agree with your dichotomy. You ignored the most salient approach - taxes. It's how the government pays for almost everything. As that is a very involved discussion, I will address it more thoroughly later.

Click to expand...

Oops. You got me there. You are right of course. I don't think it changes either of our arguments - I was just trying to say it's not "free", but I know you already knew that.

NWRatCon said:

I view "loan forgiveness" as a transitional program. I would anticipate that it would be time-restricted and limited to a ceiling of, perhaps, $50,000. I would also, personally, advocate means-testing. Another aspect to address your other concerns would be to broaden the program to make it a "tax credit" in some circumstances, as those you have mentioned.

Click to expand...

I'd have to see it to comment on it. I made 2 proposals so far on this thread.

(1) Simply make college free going forward. No debt forgiveness.

(2) In addition to (1), reimburse everyone's tuition (in CPI adjusted way), no matter whether they already paid for it or not. Importantly, this would be completely independent on whether some or all "debt" is still outstanding. I don't mind additional conditions - means testing and/or phasing out reimbursement if it's been more than N and less than M years since you graduated, etc. The main point - it's based on your actual expenses, not based on how you chose to pay for them.

Both approaches let us move forward based on principles we agree on and both approaches do not reward debt accumulation.

Exquisitor said:

So, how do you want to pay for this?
I know, let's put it on the credit card.
What are you going to do with tomorrow's student debt?
We need bucks on education too, and highways.
Run it up, and then let's get it paid.
You *** **** ****ing ***s-**-*****es.

Click to expand...

I think it's supposed to work kinda like trickle down economics — adding money into the system (i.e. removing debt) lets people buy and support businesses which stimulates the economy.
So, perhaps, like tax cuts, the debt forgiveness will pay for itself.

Simon W. Moon said:

I think it's supposed to work kinda like trickle down economics — adding money into the system (i.e. removing debt) lets people buy and support businesses which stimulates the economy.
So, perhaps, like tax cuts, the debt forgiveness will pay for itself.

Click to expand...

I doubt either will take care of themselves.

We're going to have to re-structure at one point of another, let's get it done before we're maxed out.

Slavister said:

While I get your first argument, I would suggest that if you replace the word "debt" here with "expenses", it would not change your argument. My main point is that it's all about expenses. Some people pay those educational expenses with debt, others with more sweat and tears, others by working hard to get more scholarships, yet others are helped by someone else's retirement accounts, etc, etc. Highlighting "debt" as the one and only "right" way to be reimbursed or to even to stand out from others as a "good" thing that deserves special reimbursement is the part where I have an issue.



Agreed.

As a side note, I imagine 95%-99% of students or those recently graduated would be in the lowest quintile. I am not sure I agree that parents of college graduates are still assumed to be responsible for paying their kids way.



I see your point here. So, let me correct my statement to "simply giving everyone in 5th quintile $100k", or even "simply giving everyone in 5th quintile $100k if they have at least a BS degree"... Heck, we could go wild here and even restrict it to only "useful-for-economy" degree? Such as STEM? After all, if you get an expensive degree in liberal arts that does not have many jobs, should not you bear some responsibility for your choice? But I know, it's a whole other topic, so maybe it's best to disregard this tangent...



Oops. You got me there. You are right of course. I don't think it changes either of our arguments - I was just trying to say it's not "free", but I know you already knew that.



I'd have to see it to comment on it. I made 2 proposals so far on this thread.

(1) Simply make college free going forward. No debt forgiveness.

(2) In addition to (1), reimburse everyone's tuition (in CPI adjusted way), no matter whether they already paid for it or not. Importantly, this would be completely independent on whether some or all "debt" is still outstanding. I don't mind additional conditions - means testing and/or phasing out reimbursement if it's been more than N and less than M years since you graduated, etc. The main point - it's based on your actual expenses, not based on how you chose to pay for them.

Both approaches let us move forward based on principles we agree on and both approaches do not reward debt accumulation.

Click to expand...

I like the reimbursement proposal. A lot. Better than mucking up the tax code.

Slavister said:

While I get your first argument, I would suggest that if you replace the word "debt" here with "expenses", it would not change your argument. My main point is that it's all about expenses. Some people pay those educational expenses with debt, others with more sweat and tears, others by working hard to get more scholarships, yet others are helped by someone else's retirement accounts, etc, etc. Highlighting "debt" as the one and only "right" way to be reimbursed or to even to stand out from others as a "good" thing that deserves special reimbursement is the part where I have an issue.

Click to expand...

I think we have agreement on this. Debt is NOT a good stand-in for expenses, and I strongly prefer your formulation.

Slavister said:

As a side note, I imagine 95%-99% of students or those recently graduated would be in the lowest quintile. I am not sure I agree that parents of college graduates are still assumed to be responsible for paying their kids way.

Click to expand...

Would that this were so. When applying for financial assistance, parents are still required to provide financial information, with certain exceptions.

Slavister said:

So, let me correct my statement to "simply giving everyone in 5th quintile $100k", or even "simply giving everyone in 5th quintile $100k if they have at least a BS degree"... Heck, we could go wild here and even restrict it to only "useful-for-economy" degree? Such as STEM? After all, if you get an expensive degree in liberal arts that does not have many jobs, should not you bear some responsibility for your choice? But I know, it's a whole other topic, so maybe it's best to disregard this tangent...

Click to expand...

Economically-speaking, you are entirely correct. This is the conceit behind the Universal Basic Income, but that would also be a tangent.

Slavister said:

I'd have to see it to comment on it. I made 2 proposals so far on this thread.

(1) Simply make college free going forward. No debt forgiveness.

(2) In addition to (1), reimburse everyone's tuition (in CPI adjusted way), no matter whether they already paid for it or not. Importantly, this would be completely independent on whether some or all "debt" is still outstanding. I don't mind additional conditions - means testing and/or phasing out reimbursement if it's been more than N and less than M years since you graduated, etc. The main point - it's based on your actual expenses, not based on how you chose to pay for them.

Both approaches let us move forward based on principles we agree on and both approaches do not reward debt accumulation.

Click to expand...

I think we're in accord on this.

NWRatCon said:

I think we have agreement on this. Debt is NOT a good stand-in for expenses, and I strongly prefer your formulation.

Would that this were so. When applying for financial assistance, parents are still required to provide financial information, with certain exceptions.

Economically-speaking, you are entirely correct. This is the conceit behind the Universal Basic Income, but that would also be a tangent.

I think we're in accord on this.

Click to expand...

:cheers:

Exquisitor said:

So, how do you want to pay for this? I know, let's put it on the credit card.

Click to expand...

Stimulus, by definition, requires deficit spending.

What are you going to do with tomorrow's student debt?

Click to expand...

A ton of changes will have to accompany any debt forgiveness plan. The best back of the napkin idea, IMO, is to forgive all public student debt, and give a lifetime tax credit to people who paid off all of their student debts, dollar for dollar.

It would cause a temporary rise in deficits, but the stimulative effect would more than pay for itself in the long run.

NWRatCon said:

I'm often struck by how often economic discussions of "big ticket" items miss the "bigger picture", economically-speaking - universal healthcare, social security, military spending, etc. Student Loan debt and college tuition is one of those topics. I think this article, Forgiving Student Debt Would Boost Economy, Economists Say (npr), is a good place to open that discussion. The burden of student debt affects many decisions we generally take for granted: family planning, housing, even car purchases and major investments like saving for retirement.

Thoughtful, detailed responses are welcome. One liners and knee jerk responses are not.

Click to expand...

Even better, how about forgiving my mortgage? Well, yeah, I took it on willingly, and lived in the home for 20 years. And how about credit cards? I personally have no CC debt. But that shouldn't matter.

Student loans are an agreed to debt. In no way forced. It's up to you to decide whether it's worth it to you. Once you decide, you own it.

jimbo said:

Even better, how about forgiving my mortgage? Well, yeah, I took it on willingly, and lived in the home for 20 years. And how about credit cards? I personally have no CC debt. But that shouldn't matter.

Student loans are an agreed to debt. In no way forced. It's up to you to decide whether it's worth it to you. Once you decide, you own it.

Click to expand...

Yeah, I think society will really benefit from the education you received from the loan officer.

NWRatCon said:

Yeah, I think society will really benefit from the education you received from the loan officer.

Click to expand...

Even though this is a fair point, it does not address the concern expressed by jimbo. The whole point he is making is that people who benefited from education are now asking people who did not to pick up the tab. You can make a point about positive externalities, though that point cannot be made about everyone. Moreover, many dubious majors in the social sciences and humanities do not focus on science, but on activism. Many of those jobless, indebted students are busy all day calling the guy out of whose paycheck you want to take the money to pay down part of those loans. It's clearly not everyone, but you can see there is also a sort of cultural problem of "us" and "them."

How about we think about a slightly different aspect of the problem?

Well, maybe you might be able to sell a small compromise on the right using a slightly different argument. Jordan Peterson once joked that we should tripple the pay of all sociology professors, that if there was not such a large difference between their ego and their economic status, most of them would cease to be radicals. There might be some merit to this idea. As far as I am concerned, if you lure someone into an elite university to major in ethnic studies (which is basically to say, to sell them a 4 years pass to an activism bootcamp) and sell them the idea they can just borrow their way through it, you're engaged in what I call a scam. What if you could make more of those people feel like there is opportunity in the United States by turning at least some of those problems into more manageable problems?

The point I am trying to make is that in an ideal world, it might be true that the right thing to do for students is to swallow that pill, learn their lesson and pay off their debt over the next two or three decades. But back on Earth, people who feel like they've been royally screwed over might start questionning the legitimacy of the entire system. It might be smarter and certainly easier for them to try to throw everything out of the window if the consequences of their mistake is too large. As I see it, all options are bad in one way or another. One approach is to do nothing, but I think radicals fuel on despair. Another approach is to craft a way out of the sh**storm. You don't need to pay for everything and you would have to do something to make sure this is not a reccurent theme, but at least it would be harder for radicals to buy the sympathy of people by promising them extreme solutions they no longer need to see a future for themselves.

Of course, I based this on a conjecture. I might be wrong and it's not the complete story, but I have a hunch it's part of what is going on. Moreover, my experience is that you won't get through to many moderates and conservatives if you try to sell them a story based solely on care. They won't buy the idea of education being useful to society for everyone either.

NWRatCon said:

The burden of student debt affects many decisions.

Click to expand...

The burden of any debt affects many decisions the most important of which is to make us careful about spending money in a way that does not waste precious resources and thus impoverish us all. Debt forgiveness is welfare and just one of 1000 forms of welfare the libcommies want to hand out because they lack the IQ to understand what capitalism and freedom work and why libcommieism fails.