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It's surprising that such a small proportion is reducing the balance of their loans. Cancelling debt in some ways sounds appealing, but it has the unfortunate
by downerending 7y ago
It's surprising that such a small proportion is reducing the balance of their loans.
Cancelling debt in some ways sounds appealing, but it has the unfortunate effect of punishing those who are the most financially responsible. This is both in the payments they've made that they didn't have to, and the future societal taxes that will be required to retire that cancellation debt.
Lots of moral hazard at work.
- MR4D 7y agoThe biggest moral hazard is on the front end - most loans are government guaranteed, so banks are making a risk free profit from which borrowers are legally prevented from defaulting on (i.e. you can’t escape the loans through bankruptcy). Until this is fixed, everything else almost doesn’t matter.