Maxwell, you touch upon precisely why it is poor policy.
As I wrote at Risk & Progress, the balance of data suggests that government student loan subsidies facilitated the rapid growth intuition price that we have seen 1965.
Student loan forgiveness merely papers the problem over and amps up the implied subsidies.
It doesn't solve the problem, it exasperates the understanying causes.
Great article. Fairly and persuasively made arguments.
One thought I had - when thinking of who is being taxed and who is getting the benefit - is I suspect the money is coming from an older demographic and going to a younger demographic.
Older Americans have so much political power, and wield it so often to the harm of younger generations, that a small part of me is sympathetic to a transfer of money from the old to the young.
You are assuming that college debt is only held by graduates. According to the Federal Reserve Bank 2022 Survey of Consumer Finances, 35.9 percent of Black families held student debt, vs 19.8 percent of White families, 15.3 percent of Latino families, and 23.5 percent of all other races. Median debt is roughly the same for all groups around $25k except Latinos only $13k, while mean is substantially higher for Blacks and all other and lower again for Latinos. So your conclusions about racial equity are wrong.
A thought - since these arguments come from such radically different directions, many of them mutually contradictory, if you find them all individually persuasive (and - disclaimer time - I kind of do!), then you're probably falling prey to confirmation bias, appreciating an argument purely because it favours your preferred conclusion.
I am not going to comment on November election-related reasons, but here are my thoughts: I am all for helping to some extent as many bottom 50% income families, but with a clause that they should complete majors that help them pay back their loans:
1. Student loan forgiveness treats the symptoms but not the disease. The disease has two parts: the high cost of education and, as you mentioned in the post, some majors do not pay enough for students to pay back. I am not saying no one should take these non-well-paying majors, but only people who will not take the loans or have collateral to pay the loans.
2. Do not equally reward people, like you said, who did not go to college, have already paid their loans, or never took the loans in the first place by prudently saving money to pay loans.
3. Creates precedence that it may happen again in the future and may lead more people to take loans to get the potential future benefits.
4. Does not teach people that you are supposed to pay back your debt.
5. What is stopping that next time there won’t be an expectation to have other loans such as credit cards, cars, and mortgages forgiven?
6. As you said, this moves the pain to future generations as, eventually, we will have to pay back the money in some form, either higher taxes or lower benefits in other areas.
The better solution is to address the disease simultaneously. Still, as we all know, that is much harder than giving money to the people, and most people, especially almost all politicians, are looking for the easy way out in the short run, and the long term is someone else problem.
“There aren’t enough people who care about the future. They are too busy worrying about today and what they can grab now.” — Berry Gordy
They should make a student debt dischargeable in bankruptcy.
And they should make colleges partially responsible for that debt. That is so discharged
Maxwell, you touch upon precisely why it is poor policy.
As I wrote at Risk & Progress, the balance of data suggests that government student loan subsidies facilitated the rapid growth intuition price that we have seen 1965.
Student loan forgiveness merely papers the problem over and amps up the implied subsidies.
It doesn't solve the problem, it exasperates the understanying causes.
Can you do a longer post on private income sharing agreements to replace student loans?
Yep, cancellation of student debt is terrible policy no matter how you look at it.
Sharing with my family DL - keep up the great work! BTW, i referenced your fine article on Claude v. GPT in my shitpost about ChatGPT:
https://undergrounddesigns.substack.com/p/why-cant-chatgpt-draw-a-centaur
Great article. Fairly and persuasively made arguments.
One thought I had - when thinking of who is being taxed and who is getting the benefit - is I suspect the money is coming from an older demographic and going to a younger demographic.
Older Americans have so much political power, and wield it so often to the harm of younger generations, that a small part of me is sympathetic to a transfer of money from the old to the young.
But yeah, overall I agree with you.
You are assuming that college debt is only held by graduates. According to the Federal Reserve Bank 2022 Survey of Consumer Finances, 35.9 percent of Black families held student debt, vs 19.8 percent of White families, 15.3 percent of Latino families, and 23.5 percent of all other races. Median debt is roughly the same for all groups around $25k except Latinos only $13k, while mean is substantially higher for Blacks and all other and lower again for Latinos. So your conclusions about racial equity are wrong.
A thought - since these arguments come from such radically different directions, many of them mutually contradictory, if you find them all individually persuasive (and - disclaimer time - I kind of do!), then you're probably falling prey to confirmation bias, appreciating an argument purely because it favours your preferred conclusion.
Excellent article!
I am not going to comment on November election-related reasons, but here are my thoughts: I am all for helping to some extent as many bottom 50% income families, but with a clause that they should complete majors that help them pay back their loans:
1. Student loan forgiveness treats the symptoms but not the disease. The disease has two parts: the high cost of education and, as you mentioned in the post, some majors do not pay enough for students to pay back. I am not saying no one should take these non-well-paying majors, but only people who will not take the loans or have collateral to pay the loans.
2. Do not equally reward people, like you said, who did not go to college, have already paid their loans, or never took the loans in the first place by prudently saving money to pay loans.
3. Creates precedence that it may happen again in the future and may lead more people to take loans to get the potential future benefits.
4. Does not teach people that you are supposed to pay back your debt.
5. What is stopping that next time there won’t be an expectation to have other loans such as credit cards, cars, and mortgages forgiven?
6. As you said, this moves the pain to future generations as, eventually, we will have to pay back the money in some form, either higher taxes or lower benefits in other areas.
The better solution is to address the disease simultaneously. Still, as we all know, that is much harder than giving money to the people, and most people, especially almost all politicians, are looking for the easy way out in the short run, and the long term is someone else problem.
“There aren’t enough people who care about the future. They are too busy worrying about today and what they can grab now.” — Berry Gordy