4 ms·

Student debt is mostly held by the richer half of the US population. Serious question: would it do more good if instead of giving money to people with student d

by memish 4y ago

Student debt is mostly held by the richer half of the US population. Serious question: would it do more good if instead of giving money to people with student debt, you gave money to people without it? The first test of a potential policy is whether it's better than doing exactly the opposite. If you can't even prove that, it's probably not a good policy. https://twitter.com/paulg/status/1521112550770946048 https://twitter.com/paulg/status/1521112550770946048

deleted 4y ago
[deleted]
lapcat 4y ago
Income is not wealth. Especially when you factor in student loan debt! You can make a higher income than another person but still be poorer than them because of debt. Also, income can change a lot from year to year. My income certain has. If the economy goes to pot, suddenly a lot of people with higher income will become unemployed. And the years you spend in school are typically very low or no income, so you're not building any wealth during those years. And if you go to graduate school, it's even more years of low to no income.
- sevenf0ur 4y ago
  A college graduate will earn $900,000 more than a non-college graduate over their lifetime. > You can make a higher income than another person but still be poorer than them because of debt. Maybe we should focus our money on making college costs more affordable rather than forgiving loans and signaling to universities and students that it's safe to take on more debt?
  - lapcat 4y ago
    > A college graduate will earn $900,000 more than a non-college graduate over their lifetime. A male college graduate, on average. https://www.ssa.gov/policy/docs/research-summaries/education-earnings.html https://www.ssa.gov/policy/docs/research-summaries/education... "Men with bachelor's degrees earn approximately $900,000 more in median lifetime earnings than high school graduates. Women with bachelor's degrees earn $630,000 more. Men with graduate degrees earn $1.5 million more in median lifetime earnings than high school graduates. Women with graduate degrees earn $1.1 million more." Of course these are just averages. There's no guarantee that any given person will earn even a penny more. Not to mention that not everyone who goes to college even finishes their degree, but they accumulate the debt regardless. > Maybe we should focus our money on making college costs more affordable rather than forgiving loans Why not both? The thing is, the people who make a lot of money after college are able to pay off their debt. The real problem is the people who get stuck with debt for decades, unable to pay it off. It's a lifetime burden. Senior citizens are a very fast growing group of student loan debtors. I don't necessarily believe that you should forgive student loan debt the minute someone walks out of graduation. But what about decades later? Anyway, it's important to remember that these lifetime earnings numbers don't include college costs. You have to subtract those. Unless your parents pay for your college, in which case you have no student loan debt.
    - suture 4y ago
      A large percent of students never get a degree. Here’s the best statistics that I could find. It talks about 6 year graduation rates but I think a large percent of those who don’t graduate within 6 years never graduate. https://nces.ed.gov/FastFacts/display.asp?id=40 https://nces.ed.gov/FastFacts/display.asp?id=40
    - sevenf0ur 4y ago
      > Why not both? Because forgiving loans is a moral hazard. It signals to new college students that they can take out more debt and it signals to universities that they can raise tuition.
      - bumby 4y ago
        I'm not saying you hold this opinion, but policy-makers seem to have little issue with moral hazard when it comes to bailing out "too big to fail" corporations. I get the moral hazard argument, but if it's truly a first-principle it should probably be applied more consistently.
      - lapcat 4y ago
        Saddling people with a lifetime of student loan debt is a moral hazard that has already occurred. Moreover, college students are already taking out more debt, and universities are already raising tuition, despite the lack of forgiveness. Would a one-time forgiveness cause an increase in college costs? I don't know, maybe? And if it did, by how much? I don't know, do you? Maybe the problem needs to get worse in order to put pressure on Congress to finally address it comprehensively. And if Congress still refuses to address the problem despite its getting worse, then you can no longer argue that we need to wait for a comprehensive solution, because that's not coming. Perhaps the occasional forgiveness event is the best and only thing we can do in the face of persistent gridlock. I hope not, but...
gedy 4y ago
Yes I went to a cheap state school that I could afford. I'm from a modest background and it didn't occur to me I could borrow beyond my means and go to a nicer school. I certainly don't feel student loan forgiveness is "fair" in that circumstance!
- lapcat 4y ago
  > Yes I went to a cheap state school that I could afford. The state school prices have gone way up too. It's possible that the state school you could afford back then would no longer be affordable now. (By the way, I had to go to a state school too instead of a nicer school that accepted me, because of money. And yet, I still accumulated student loan debt! Because college is pretty expensive no matter what.)
- charwalker 4y ago
  Nowadays 'affording' a 'cheap' state school is guessing if you can walk away with 20-50k of debt vs 50-150k. My younger brother had solid scholarships and still walked out with 25k. I graduated in 3 years and luckily my parents covered the last tuition check and I still had 15k. At this point I've paid my debts and still welcome relief for students who didn't have the same opportunities as me. There is no 'cheap' 4 year school anymore. Costs can be mitigated by going to a Community College for an associates/first 2 years then bridge that into a 4 year program but if you want to go for research, engineering, or many other more dedicated programs then being at the 4 year school all 4 years leads to many more connections and opportunities that some feel are worth the cost. Borrowing beyond ones means isn't always fully understood by a group of 17-18 year olds, especially those who may be first generation college students or from school districts that have spent 2+ decades now losing resources for educating students on college options in order to focus on the kids failing out. For example, many college apps I completed in 2011 needed a letter of rec from my counselor who I had talked to once as a sophomore but spent most of his time working with students on the edge of failing or dropping out. It's archaic just like how the US college system operates as a capitalists dream and not a public service. In terms of fair, well policy hasn't been fair in a long time either. The 2017 tax bill raised my taxes and pushed a trillion plus surplus back to the wealthy - a much worse outcome for all then cancelling student debt without a deeper plan. It may not seem "fair" to you but that doesn't make it bad policy.
dragonwriter 4y ago
> Student debt is mostly held by the richer half of the US population It's mostly held by the federal government. It's mostly owed by the richer half, but that's misleading when it comes to impact. Sure, households in the bottom half of the top quintile have twice the average student loan debt of those in the bottom quintile, they also have more than 10 times the income. The average student debt in the bottom quintile ($25,030) is about the upper income limit ($27Kish as of 2020) of the bottom quintile, while the average in the bottom half of the top quintile (80-89th percentile, $51,380) is a little.more than 1/3 the lower limit ($143K in 2020) of the top quintile. (And the upper half of the top income quintile actually has a lower average student debt that the bottom half, or the whole of the next highest income quintile, not just a lower average student debt to income ratio.) The share of households with any student debt and the average household student debt-to-income ratio decreases consistently with household income. See, https://www.businessinsider.com/personal-finance/average-student-loan-debt https://www.businessinsider.com/personal-finance/average-stu... and https://www.taxpolicycenter.org/statistics/household-income-quintiles https://www.taxpolicycenter.org/statistics/household-income-... EDIT: To directly answer your question: > Serious question: would it do more good if instead of giving money to people with student debt, you gave money to people without it? Would it do more good to relieve 75% of bottom-income-quintile households (student debt relief) or 25% (anti student debt relief)? Clearly the former.

by memish 4y ago

deleted 4y ago

[deleted]

lapcat 4y ago

Income is not wealth. Especially when you factor in student loan debt! You can make a higher income than another person but still be poorer than them because of debt. Also, income can change a lot from year to year. My income certain has. If the economy goes to pot, suddenly a lot of people with higher income will become unemployed. And the years you spend in school are typically very low or no income, so you're not building any wealth during those years. And if you go to graduate school, it's even more years of low to no income.

sevenf0ur 4y ago
A college graduate will earn $900,000 more than a non-college graduate over their lifetime. > You can make a higher income than another person but still be poorer than them because of debt. Maybe we should focus our money on making college costs more affordable rather than forgiving loans and signaling to universities and students that it's safe to take on more debt?
- lapcat 4y ago
  > A college graduate will earn $900,000 more than a non-college graduate over their lifetime. A male college graduate, on average. https://www.ssa.gov/policy/docs/research-summaries/education-earnings.html https://www.ssa.gov/policy/docs/research-summaries/education... "Men with bachelor's degrees earn approximately $900,000 more in median lifetime earnings than high school graduates. Women with bachelor's degrees earn $630,000 more. Men with graduate degrees earn $1.5 million more in median lifetime earnings than high school graduates. Women with graduate degrees earn $1.1 million more." Of course these are just averages. There's no guarantee that any given person will earn even a penny more. Not to mention that not everyone who goes to college even finishes their degree, but they accumulate the debt regardless. > Maybe we should focus our money on making college costs more affordable rather than forgiving loans Why not both? The thing is, the people who make a lot of money after college are able to pay off their debt. The real problem is the people who get stuck with debt for decades, unable to pay it off. It's a lifetime burden. Senior citizens are a very fast growing group of student loan debtors. I don't necessarily believe that you should forgive student loan debt the minute someone walks out of graduation. But what about decades later? Anyway, it's important to remember that these lifetime earnings numbers don't include college costs. You have to subtract those. Unless your parents pay for your college, in which case you have no student loan debt.
  - suture 4y ago
    A large percent of students never get a degree. Here’s the best statistics that I could find. It talks about 6 year graduation rates but I think a large percent of those who don’t graduate within 6 years never graduate. https://nces.ed.gov/FastFacts/display.asp?id=40 https://nces.ed.gov/FastFacts/display.asp?id=40
  - sevenf0ur 4y ago
    > Why not both? Because forgiving loans is a moral hazard. It signals to new college students that they can take out more debt and it signals to universities that they can raise tuition.
    - bumby 4y ago
      I'm not saying you hold this opinion, but policy-makers seem to have little issue with moral hazard when it comes to bailing out "too big to fail" corporations. I get the moral hazard argument, but if it's truly a first-principle it should probably be applied more consistently.
    - lapcat 4y ago
      Saddling people with a lifetime of student loan debt is a moral hazard that has already occurred. Moreover, college students are already taking out more debt, and universities are already raising tuition, despite the lack of forgiveness. Would a one-time forgiveness cause an increase in college costs? I don't know, maybe? And if it did, by how much? I don't know, do you? Maybe the problem needs to get worse in order to put pressure on Congress to finally address it comprehensively. And if Congress still refuses to address the problem despite its getting worse, then you can no longer argue that we need to wait for a comprehensive solution, because that's not coming. Perhaps the occasional forgiveness event is the best and only thing we can do in the face of persistent gridlock. I hope not, but...

gedy 4y ago

Yes I went to a cheap state school that I could afford. I'm from a modest background and it didn't occur to me I could borrow beyond my means and go to a nicer school. I certainly don't feel student loan forgiveness is "fair" in that circumstance!

lapcat 4y ago
> Yes I went to a cheap state school that I could afford. The state school prices have gone way up too. It's possible that the state school you could afford back then would no longer be affordable now. (By the way, I had to go to a state school too instead of a nicer school that accepted me, because of money. And yet, I still accumulated student loan debt! Because college is pretty expensive no matter what.)
charwalker 4y ago
Nowadays 'affording' a 'cheap' state school is guessing if you can walk away with 20-50k of debt vs 50-150k. My younger brother had solid scholarships and still walked out with 25k. I graduated in 3 years and luckily my parents covered the last tuition check and I still had 15k. At this point I've paid my debts and still welcome relief for students who didn't have the same opportunities as me. There is no 'cheap' 4 year school anymore. Costs can be mitigated by going to a Community College for an associates/first 2 years then bridge that into a 4 year program but if you want to go for research, engineering, or many other more dedicated programs then being at the 4 year school all 4 years leads to many more connections and opportunities that some feel are worth the cost. Borrowing beyond ones means isn't always fully understood by a group of 17-18 year olds, especially those who may be first generation college students or from school districts that have spent 2+ decades now losing resources for educating students on college options in order to focus on the kids failing out. For example, many college apps I completed in 2011 needed a letter of rec from my counselor who I had talked to once as a sophomore but spent most of his time working with students on the edge of failing or dropping out. It's archaic just like how the US college system operates as a capitalists dream and not a public service. In terms of fair, well policy hasn't been fair in a long time either. The 2017 tax bill raised my taxes and pushed a trillion plus surplus back to the wealthy - a much worse outcome for all then cancelling student debt without a deeper plan. It may not seem "fair" to you but that doesn't make it bad policy.

dragonwriter 4y ago

> Student debt is mostly held by the richer half of the US population It's mostly held by the federal government. It's mostly owed by the richer half, but that's misleading when it comes to impact. Sure, households in the bottom half of the top quintile have twice the average student loan debt of those in the bottom quintile, they also have more than 10 times the income. The average student debt in the bottom quintile ($25,030) is about the upper income limit ($27Kish as of 2020) of the bottom quintile, while the average in the bottom half of the top quintile (80-89th percentile, $51,380) is a little.more than 1/3 the lower limit ($143K in 2020) of the top quintile. (And the upper half of the top income quintile actually has a lower average student debt that the bottom half, or the whole of the next highest income quintile, not just a lower average student debt to income ratio.) The share of households with any student debt and the average household student debt-to-income ratio decreases consistently with household income. See, https://www.businessinsider.com/personal-finance/average-student-loan-debt https://www.businessinsider.com/personal-finance/average-stu... and https://www.taxpolicycenter.org/statistics/household-income-quintiles https://www.taxpolicycenter.org/statistics/household-income-... EDIT: To directly answer your question: > Serious question: would it do more good if instead of giving money to people with student debt, you gave money to people without it? Would it do more good to relieve 75% of bottom-income-quintile households (student debt relief) or 25% (anti student debt relief)? Clearly the former.