3 ms·
> 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
by 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 agoIt 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 agoWhich, 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.
- xg15 4y agoThat's sort of the point of the whole exercise though. If you take issue with that, then by the same logic you could also argue that any attempt to help a person pay off debt is encouraging frivolous spending - after all, once the debt is repaid, the person has additional income available which they can spend on things.
- belltaco 4y agoImagine your car payment is $600/month. The govt pays off your car, you have an extra $600 per month in the bank to spend on other things or to save.
- kodyo 4y agoWhy isn't the government paying off my car, then?
- agitator 4y agoBecause your car loan was approved based on your credit history. A student loan was approved on a gamble. Now the lenders are trying to find a way to guarantee their returns by making everyone else pay.
- mikece 4y agoThe precedent has been established with student loans: why not car loans? Why not mortgages? Why not vacations or clothes or food.... or MEDICAL costs?
- quickthrowman 4y agoAll of those debts are dischargeable in bankruptcy, those loans were written based on the credit history of the borrower (excl. medical), and some of those loans (mortgages and car loans) are secured with collateral that can be repossessed and liquidated. None of those things are true for student loans.
- mikece 4y agoStudent loans can be discharged in bankruptcy: https://www.investopedia.com/how-to-file-student-loan-bankruptcy-4772237 https://www.investopedia.com/how-to-file-student-loan-bankru...
- WarOnPrivacy 4y ago
- tablespoon 4y ago> False. The government isn't holding the note for student loans: banks are. Huh? I thought private student loads were pretty rare nowadays, and most loans are now through the federal government. Also, according to https://finance.yahoo.com/news/student-loans-not-eligible-forgiveness-162100557.html https://finance.yahoo.com/news/student-loans-not-eligible-fo..., this loan forgiveness doesn't apply to private student loans: > Private student loans, by definition, are private and are not eligible to be forgiven. These are loans the borrower owes to student loan providers and not the federal government. Mr. Biden's announcement won't change how these are repaid and borrowers should expect to continue to repay them as they have to date.