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Student loan debt forgiveness is a stupid idea. All it will do is encourage more borrowing in the hope that there will be another future round of forgiveness.

by btilly 4y ago

Student loan debt forgiveness is a stupid idea. All it will do is encourage more borrowing in the hope that there will be another future round of forgiveness. And lenders will have every incentive to offer those loans in the hope that the government pays for it. This money will enable colleges to raise tuitions more, and we get the same problem we've had, just grown more. Instead allow student loans to be disengaged in bankruptcy. Just like other debts, and just like student loans could before George "W" Bush changed the laws. Now students aren't incentivized to hope for another forgiveness round, lenders aren't either, and we aren't pouring fuel on rising tuition. Plus we'd offer ongoing assistance to those who got in the worst binds. (Unpleasant assistance to be sure. But not a one time bandaid, and very precisely targeted at those who need it most.)

blowski 4y ago
In the UK, tuition was free for all UK students from 1962 - 1998. That period also saw steady economic growth. I'd cite that as evidence the relationship between tuition fees and the broader economy is complex.
- hacym 4y ago
  Post WWII, the United States has seen massive economic growth. Tuition was not free. It’s tough to connect the two.
  - blowski 4y ago
    I agree with you there. My disagreement is with the OP's very confident predictions of what would happen, when those predictions have not come true anywhere else free tuition fees have been (or are) in place.
    - btilly 4y ago
      Student loan debt forgiveness is nothing like free tuition, and has very different economic effects. Countries that offer free tuition tend to pay universities directly and cap payments. That provides a strong incentive for universities to control costs. Similarly students who take advantage of the prospect of free tuition do not themselves go into debt. By contrast student loan forgiveness involves forgiving loans to students who have already gone into debt. This makes their private loans easier to pay for them. The prospect of this makes people more willing to go into debt. Nothing about this program gives universities an incentive to control costs. Rather than compare this to free tuition, it is better to compare this to other programs that make it easier for students to borrow to pay high tuition. The USA has had a lot of these programs, and the result is one of the factors driving tuition to rise faster than inflation for a half-century now. I'm just predicting that the result of this program will be the same result that we've seen for the last half-century.
bandyaboot 4y ago
I agree forgiving student loan debt then just continuing on with the current system wouldn’t be great. There could be an argument that it would still represent an economic boost that would benefit many. But especially at this particular moment, I don’t find that argument outweighs the negatives.

by btilly 4y ago

blowski 4y ago

In the UK, tuition was free for all UK students from 1962 - 1998. That period also saw steady economic growth. I'd cite that as evidence the relationship between tuition fees and the broader economy is complex.

hacym 4y ago
Post WWII, the United States has seen massive economic growth. Tuition was not free. It’s tough to connect the two.
- blowski 4y ago
  I agree with you there. My disagreement is with the OP's very confident predictions of what would happen, when those predictions have not come true anywhere else free tuition fees have been (or are) in place.
  - btilly 4y ago
    Student loan debt forgiveness is nothing like free tuition, and has very different economic effects. Countries that offer free tuition tend to pay universities directly and cap payments. That provides a strong incentive for universities to control costs. Similarly students who take advantage of the prospect of free tuition do not themselves go into debt. By contrast student loan forgiveness involves forgiving loans to students who have already gone into debt. This makes their private loans easier to pay for them. The prospect of this makes people more willing to go into debt. Nothing about this program gives universities an incentive to control costs. Rather than compare this to free tuition, it is better to compare this to other programs that make it easier for students to borrow to pay high tuition. The USA has had a lot of these programs, and the result is one of the factors driving tuition to rise faster than inflation for a half-century now. I'm just predicting that the result of this program will be the same result that we've seen for the last half-century.

bandyaboot 4y ago

I agree forgiving student loan debt then just continuing on with the current system wouldn’t be great. There could be an argument that it would still represent an economic boost that would benefit many. But especially at this particular moment, I don’t find that argument outweighs the negatives.