Thwarted by the conservative-leaning court, Biden told reporters that his administration would pursue student loan relief through a different avenue, the Higher Education Act.
I have a hard time seeing how this program is not unfair (not American so might be missing something).
My understanding is that there are 2 programs. One that helps reduce loans by 1k a year, and another one that forgives loans with less than 12k left after 10 years.
The first one seems to be ok as a measure for new students taking out loans because then it would work as a tool to encourage higher education. But as a blanket help it seems unfair as the benefitting people already made their choice and got (or are getting) their education. For the special case of people who are struggling financially I think a program that is specific to them and helps them relative to their struggle would be more appropriate, and it would surprise me if it doesn’t already exist.
As for the second program it seems to just be a gift to people who have already made their choice and completed their education, and is not fair at all to people who have consciously chosen to not pursue this because they couldn’t afford the debt. If someone is financially struggling see my previous point about more appropriate tools to help them, otherwise if they’re not struggling then what is the point of this?
Furthermore the second program also seems to be a one-off? I’m not sure here so please correct me if I’m wrong. If that is the case then it doesn’t even encourage people to pursue higher education.
Why does it need to be fair? By that logic, we should never change a ton of things, such as tax codes, simply because they’re not retroactive (“how dare the government offer a rebate on solar panels after I’ve already paid full price!”). There isn’t really a good way to make something like student loan forgiveness retroactive and to try and do so would make it excessively expensive.
Why should we hold back on doing a good thing just because it doesn’t help 100% of people ever?
I do agree with you about the core of what you’re saying, that in the end it’s a good thing to help people. For sure. But when talking about public funds you have to keep in mind priorities. In this case I can see how this doesn’t seem like a priority to some people, money is not unlimited and these funds could be used for something else. I would personally be more on board if this program targeted students who are about to get loans, I just think it would have more value to society in general than helping someone who is 10 years into their loan and not struggling financially.
Now as I said I’m not an expert on US public finance so if you tell me that these funds couldn’t be used somewhere else anyway and would be wasted in less important projects then sure I’d revise my opinion.
The argument against your argument is that often the admin costs of means testing exceed any dollars saved. I don’t know the metrics for this, but that certainly is a factor.
The student loan problem (and general debt problem) in the US is such a huge issue that any long term thinking politician would want to take drastic measured to reduce it, whether it’s fair or not. The US put a lot of effort putting it’s population into debt with each side of the political aisle having two very different mindsets:
1: Giving people money now will help them leverage themselves out of poverty. Their good investments will help them repay the loan and then make more than they previously could have.
2: Putting people in debt will make them unable to retaliate against anything that would inhibit their ability to make money to pay off debt (as in, no striking or protesting or anything like that because were all too financially insecure to get away with it). Those who do act out due to poverty can go to prison and be cheap labor there instead.
Not only was the second mindset more correct, the ultra wealthy also won out because, as people defaulted on their debt and markets collapsed, the ultra wealthy with extra liquid cash during recessions scooped up all the cheapened assets.
However, with a financial crisis based around student debt, there’s no asset to even scoop up. You can’t just take peoples degrees as they refuse to pay their student loans. This ones going to cause a global recession (because the global currency is realistically the dollar) for no real gain for even the ultra wealthy. People will have no money to spend on their products and there will be no assets to scoop. Anyone thinking ahead at all would really want to prevent this one from occurring no matter what.
We own a home because of the student loan pause. They sure as hell can take that. There is plenty left for the rich to scoop up. The student loan pause allowed me and many others to move forward in life.
Sure, they can try to come after your assets. My point is:
Having student loan debt doesnt guarantee you have assets like having a home loan does. You have a home. Many with student loans do not.
Because the debt is not linked to an asset, the failure of people to pay back student loans en masse will not inherently lower the demand and thus value of an asset.
Cheap homes have already been taken by cooperations. people with student loans selling their house probably won’t degrade the housing market. Something else will probably tho cos that’s also a shit show right now.
Since you are not from the US, it might be shocking to you how much the rest of the world considers higher education to be a public good that is subsidized. In the US, the cost is born by students and their families, leaving all but the very wealthy in debt. This is a political choice, just like tax cuts for the wealthy.
I have a hard time seeing how this program is not unfair (not American so might be missing something).
My understanding is that there are 2 programs. One that helps reduce loans by 1k a year, and another one that forgives loans with less than 12k left after 10 years.
The first one seems to be ok as a measure for new students taking out loans because then it would work as a tool to encourage higher education. But as a blanket help it seems unfair as the benefitting people already made their choice and got (or are getting) their education. For the special case of people who are struggling financially I think a program that is specific to them and helps them relative to their struggle would be more appropriate, and it would surprise me if it doesn’t already exist.
As for the second program it seems to just be a gift to people who have already made their choice and completed their education, and is not fair at all to people who have consciously chosen to not pursue this because they couldn’t afford the debt. If someone is financially struggling see my previous point about more appropriate tools to help them, otherwise if they’re not struggling then what is the point of this?
Furthermore the second program also seems to be a one-off? I’m not sure here so please correct me if I’m wrong. If that is the case then it doesn’t even encourage people to pursue higher education.
Why does it need to be fair? By that logic, we should never change a ton of things, such as tax codes, simply because they’re not retroactive (“how dare the government offer a rebate on solar panels after I’ve already paid full price!”). There isn’t really a good way to make something like student loan forgiveness retroactive and to try and do so would make it excessively expensive.
Why should we hold back on doing a good thing just because it doesn’t help 100% of people ever?
I do agree with you about the core of what you’re saying, that in the end it’s a good thing to help people. For sure. But when talking about public funds you have to keep in mind priorities. In this case I can see how this doesn’t seem like a priority to some people, money is not unlimited and these funds could be used for something else. I would personally be more on board if this program targeted students who are about to get loans, I just think it would have more value to society in general than helping someone who is 10 years into their loan and not struggling financially.
Now as I said I’m not an expert on US public finance so if you tell me that these funds couldn’t be used somewhere else anyway and would be wasted in less important projects then sure I’d revise my opinion.
The argument against your argument is that often the admin costs of means testing exceed any dollars saved. I don’t know the metrics for this, but that certainly is a factor.
The student loan problem (and general debt problem) in the US is such a huge issue that any long term thinking politician would want to take drastic measured to reduce it, whether it’s fair or not. The US put a lot of effort putting it’s population into debt with each side of the political aisle having two very different mindsets:
1: Giving people money now will help them leverage themselves out of poverty. Their good investments will help them repay the loan and then make more than they previously could have.
2: Putting people in debt will make them unable to retaliate against anything that would inhibit their ability to make money to pay off debt (as in, no striking or protesting or anything like that because were all too financially insecure to get away with it). Those who do act out due to poverty can go to prison and be cheap labor there instead.
Not only was the second mindset more correct, the ultra wealthy also won out because, as people defaulted on their debt and markets collapsed, the ultra wealthy with extra liquid cash during recessions scooped up all the cheapened assets.
However, with a financial crisis based around student debt, there’s no asset to even scoop up. You can’t just take peoples degrees as they refuse to pay their student loans. This ones going to cause a global recession (because the global currency is realistically the dollar) for no real gain for even the ultra wealthy. People will have no money to spend on their products and there will be no assets to scoop. Anyone thinking ahead at all would really want to prevent this one from occurring no matter what.
We own a home because of the student loan pause. They sure as hell can take that. There is plenty left for the rich to scoop up. The student loan pause allowed me and many others to move forward in life.
Sure, they can try to come after your assets. My point is:
Having student loan debt doesnt guarantee you have assets like having a home loan does. You have a home. Many with student loans do not.
Because the debt is not linked to an asset, the failure of people to pay back student loans en masse will not inherently lower the demand and thus value of an asset.
Cheap homes have already been taken by cooperations. people with student loans selling their house probably won’t degrade the housing market. Something else will probably tho cos that’s also a shit show right now.
Since you are not from the US, it might be shocking to you how much the rest of the world considers higher education to be a public good that is subsidized. In the US, the cost is born by students and their families, leaving all but the very wealthy in debt. This is a political choice, just like tax cuts for the wealthy.
https://www.insider.com/cost-of-college-countries-around-the-world-2018-6#austria-914-2