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Student loan forgiveness will cost US $300B

• Victerius 4y ago
  Devil's advocate: That's an extra $300B in consumer spending that will boost economic activity in every sector rather than going to lenders.
  • mikece 4y ago
    You are assuming that everyone who is having student debt forgiven/paid off by the government has or would have earned the money in question and can now put it into the economy. If that's true then the very reason for absolving the debt, that these people cannot afford to repay their loans, was a lie. More likely they really don't have the money, we're bailing out financial institutions (yet again), and the people who couldn't afford to pay their loans still won't be able to afford to generate enough economic volume to offset this.
    • typeofhuman 4y ago
      Exactly.
    • actusual 4y ago
      There's another angle here too...and that is whether the people who are having loans forgiven even received X number of dollars in value from their college experience. A LOT of these students did not, which is why students that got swindled into scam "universities" are top of the list for forgiveness.
      • mikece 4y ago
        This is an entirely different topic, but one where I'm sure we have a lot of agreement. I suspect a most people on HN could have gotten to where they are in their careers by starting at a computer trade school (with the exception of jobs where 'the piece of paper' is a requirement for some reason).
  • tahoeskibum 4y ago
    If the goal was $300B in consumer spending, then they should've just given a tax rebate to everybody below a certain income. Instead, this penalizes students who paid off their loans and non-college graduates who might've taken out loans to setup a service business like electrician or car mechanic.
    • alsaaro 4y ago
      Why does this "penalize" students who have paid off their loans? If cancer were cured, has everyone who had cancer prior been "penalized"?
      • karmelapple 4y ago
        The cancer analogy seems pretty off the mark to me. People taking out a student loan voluntarily took on that debt. Pretty much nobody is voluntarily choosing to get cancer. (Yes, some people perform behavior that increases their chances, but rarely is it a 100% chance) So if someone chose to do something knowing the negative consequences that would happen (repayment + interest), and then the rules change on them and everyone else in the middle of the contract, can you imagine someone being at least a little unhappy about that? An analogy that I think fits better: A teacher says there's an exam next Friday on chapters 1 - 5 from a textbook. You study, do your work, skip spending time with friends and family on the weekend in order to study for the exam. But then the exam rolls around the teacher says, "Nah, you know what? We're only going to test chapters 4 - 5." You might think, "But I could have seen my friends instead! I could have spent my limited amount of time in different ways over the past week. The guy who went out and partied all weekend got lucky and will get the same grade as me, ugh." I can certainly understand why someone who studied may feel unhappy about that, or think it's unfair.
        • IceMetalPunk 4y ago
          > People taking out a student loan voluntarily took on that debt. When people say this, they are implying that choosing to get a higher education that creates student loan debt is equal to some other choice that wouldn't incur that debt. But of course, this is untrue; the benefits of a quality education are not equivalent to other options. It's not just "student loans or no student loans" in isolation. To make your analogy somewhat more accurate (though probably still imperfect): it's like the teacher says "study chapters 1-5 and I'll give you a 90% guarantee in the class, and those chapters will be on the test", then the test ends up being only chapter 3. Yes, you spent the extra time studying you didn't need, but you still got the 90% guarantee in the class, so the time debt paid off even if the people who didn't study as much got to hang out with friends more, since they didn't get that 90% guarantee.
  • typeofhuman 4y ago
    This assumes a check is mailed or that everyone intends to pay back their loan. They either have 10k in new money or are "saved" from spending 10k in future money. This will not turn into consumer spending if the debt is just "erased". People who can't pay their loans don't have money to spend elsewhere.
  • changoplatanero 4y ago
    It's not free money for the economy though. that $300b will be paid for by increased inflation or additional future taxes.
    • bergenty 4y ago
      Inflation is decreasing pretty rapidly. I doubt this is going to change that trend in light of the rate increases.
      • changoplatanero 4y ago
        Note that it can both be true that the rate of inflation is going down and that the student debt relief adds to inflation
  • hackeraccount 4y ago
    What would lenders have done withe the money? Or the government? I don't think either would just hide it under a mattress. Lenders would invest it in capital projects and the Government would use it to pay off political supporters.
    • Auracle 4y ago
      >the Government would use it to pay off political supporters Heh.
• didgetmaster 4y ago
  Money is fungible. Forgiving someone of a $10K or $20K loan is the exact same thing as sending them a check for the same amount. At least some of them will go out and buy a car, boat, RV, or something else that has the same payment as their student loan and feel (rightly) like the government just bought them a new toy. You can pretend that it won't have any effect on inflation, but it will.
  • mikece 4y ago
    > Forgiving someone of a $10K or $20K loan is the exact same thing as sending them a check for the same amount. False. The government isn't holding the note for student loans: banks are. Paying off these student loans goes to a bank's balance sheet whereas checks sent to people get spent on any number of consumer goods (or invested into Wall Street Bets stonks if that's your thing).
    • karmelapple 4y ago
      It does indeed go to a bank's balance sheet, and it also eliminates a monthly source of income expenditure from a household. If the interest amount is more than 0%, it may give more income over the course of the loan term for the person with debt than it wipes out at the bank. The money someone was spending on the loan and interest may very well go to any number of consumer goods, investments, or other items, though.
      • ahahahahah 4y ago
        > it also eliminates a monthly source of income expenditure from a household > The money someone was spending on the loan and interest may ... Not in this case. Federal student loan payments have been paused for over 2 years now, people have not been making monthly payments for these loans.
        • Auracle 4y ago
          Which, for the past year or so, has been a completely insane policy. The economy is fine other than inflation and the pause is only causing more of it.
• mikece 4y ago
  Why should people who can't (or won't) pay their student loans be considered worthy of having money spent on them? Invest in the people who know how to handle financial responsibility: they are far more likely to create economic growth and provide jobs for the people who otherwise couldn't pay their loan obligations.
  • IceMetalPunk 4y ago
    Because despite your assumptions, there are many reasons someone might be in debt beyond "not knowing how to handle financial responsibility", especially when it comes to student loans. Why do you think financial numbers are a good metric for whether someone "deserves" to survive without excessive struggle/pain? Don't buy into the contrapositive of the American Dream; the Dream isn't true, and so neither is its contrapositive.
    • docmechanic 4y ago
      Well put. Plus, I learned a new word: contrapositive. Always a good day in a writer's life ...
      • docmechanic 4y ago
        Oh, and less we forget, the cost of higher education has increased substantially, so it's easy for someone who got through a four year college with < $10,000 - I myself graduated in '91 with <$8000 debt - to blithely attribute to financial acuity what in reality is the simple luck of growing up at a time when higher learning was more easily obtained.
        • mikece 4y ago
          Why has the cost of higher education skyrocketed? One theory is that government-guaranteed loans created too much demand for college education, a problem many colleges "solved" by jacking up tuition. But did the quality of what was learned go up accordingly? I can't help of think of the line from Good Will Hunting: "You wasted $150,000 on an education you coulda got for $1.50 in late fees at the public library."
• motoboi 4y ago
  Can't understand why the American government wants more inflation and everyone is just calmly watching they increasing it?
  • notmelgibson 4y ago
  • Auracle 4y ago
    Because most people can't put two and two together and most of the media isn't helping them out on that front.
  • emerged 4y ago
• IceMetalPunk 4y ago
  $300 billion / 144.3 million taxpayers = about $2,080 per taxpayer. When I did the math in another comment, I was under the impression that was the per-year cost. If it's over 10 years, that means it's only $208 per taxpayer per year. The cost of public tuition near me is about $2,000/year, the average yearly tuition in the US is $8,000/year. So basically: this cost to the individual is nothing compared to the cost of tuition to the individual that created the debt. As for it being used elsewhere, sure, it could be used elsewhere... but it's not. It's currently money that's just sitting around being debt accumulating interest for banks and the DoE. So it may as well be used to help people out.
• akagusu 4y ago
  One interesting thing I noticed here is that people don't have see any problem when government give large subsidies to big corps full of money or forgive their debts or use public money to "save" them during economic crashes, but when government give money to people whatever the reason, there is all kind of comments about how this is a bad thing and why government should not be doing it. Why people are so merciful to big rich companies but so ruthless to other people?
  • spoils19 4y ago
    Big companies with that money can hire more employees, offering the community more jobs and furthering our economy. It's very rare for a large company to take a subsidy and hoard it, or not use it for public goodwill.
    • etrautmann 4y ago
      Really? I don’t typically think of companies as magnanimously providing public goodwill, and you could argue that hoarding cash is what plenty of companies have been doing for the last 15 years.
    • threatofrain 4y ago
      To what degree does that money convert to salary for employees that aren't managerial level? And if a company is in bad shape, shouldn't cuts happen despite a cash infusion?
    • agitator 4y ago
      Big companies top priorities are investor returns, not employing the masses. The result you describe is dependent on many more variables, like product demand actually necessitating hiring.
    • xg15 4y ago
      And pay those employees less than minimum wage if they can get away with it. > It's very rare for a large company to take a subsidy and hoard it, or not use it for public goodwill. Citation needed.
• neilv 4y ago
  I have somewhat complicated feelings about student loan forgiveness. Oppressive tuition costs shouldn't have happened in the first place. Nor should university cliques and gatekeeping to education and opportunity happen. I'd like that corrected. On the other hand, I know people who've suffered a lot because they couldn't afford to take on student loans, or because they paid off every predatory dollar. One of them even died at ~30 from the stress pretty directly attributable to that. Others I know continue to suffer. Tuition forgiveness won't help them, and it decreases their relative wealth. Can we also support these other people?
  • the_only_law 4y ago
    If you ask me, the entire post second education system needs reworked, but I won’t hold my breath.
  • foogazi 4y ago
    > On the other hand, I know people who've suffered a lot because they couldn't afford to take on student loans, or because they paid off every predatory dollar. So you understand the pain Would they have accepted loan forgiveness for them ? What do you think of tax cuts for business or home owners ?
    • neilv 4y ago
      How I feel about that: > Can we also support these other people? Go ahead and improve this one situation, but don't forget to also help the other people (who might otherwise suffer even more).
• hackeraccount 4y ago
  If you think the price tag is $300B then I got a bridge to sell you. Moves like this only beget more moves like this. At heart this is a price distortion and it generates a reasonable expectation of more of the same down the line.
• lcall 4y ago
  It's a bribe, for votes. IMO, it's much better, and more effective, to let individuals and families decide for themselves how their charitable donations will be allocated. Local decision-making yields less fraud & waste, and it's just ... right to have charititable donations be unforced. .
  • RhysU 4y ago
    This. It didn't need to be governmental. Establish a non-profit and encourage people to contribute. Pull Obama off the bench. Use AI to resurrect Jerry Lewis. Put pleas on Tiktok or Wikipedia or wherever.
    • lcall 4y ago
      I like how you put it. I guess I'd also say the same for any time the federal government is giving people a hand up, helping them out. And that it's not just less wasteful but more effective, locally.
• foogazi 4y ago
  > To me, that $300 billion could have made more impact elsewhere, for more important and time-sensitive issues. The current admin chose loan forgiveness- What do you propose ?
  • heartbreak 4y ago
    We could give all 11 million kids in poverty $27,000 this year for the amount we just spent on a student loan bailout. Wouldn’t fix poverty, but this doesn’t fix student loans either.
    • notch656a 4y ago
      Starving children don't vote, and parents seeking to maximize their welfare income already vote for the "right" party already, so that would be a waste of political opportunity.
• kbos87 4y ago
  I have a really hard time understanding how we justify spending money on debt relief for an otherwise capable population when 1 in 8 Americans is food insecure, 9% of seniors have overdue medical debt. It feels like the squeaky, social media savvy, politically mobilized wheel got the grease.
• joshka 4y ago
  >To me, that $300 billion could have made more impact elsewhere, for more important and time-sensitive issues. Perhaps it could be spent making education free.
• sershe 4y ago
  Why hasn't a simple solution of allowing people to discharge these loans in bankruptcy been considered? E.g. retroactively for borrowers before a certain time? I still don't like it, but at least it helps people with $100k in loans who cannot get out instead of giving them a tiny insignificant boost, and doesn't give free money to people who don't really need it?
• deleted 4y ago
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