But mostly it's because I worry about the unintended consequences -- for example, if lenders worry about debts being wiped out again, they'll charge much higher rates to account for that risk, making education even less affordable. Similarly, if people implicitly factor in the chance of having debt wiped out, they'll be willing to take on more of it, which puts upward pressure on college costs.
So, here's my pet idea, in lieu of that:
The government agrees to pay off however much student debt you'd like them to pay off, but in exchange you get a PERMANENT increase in all your tax rates of 0.1 point (income, estate, and capital gains), for each $1,000 of debt the government assumes.
So, say you graduate with $50,000 in student debt at 10yrs/5% terms, but you can only find work paying $30,000 per year. And so that $6,364 per year in loan payments is just killing you. You can wipe it all out, and in exchange your tax rates go up 5 points. Based on a $12,550 standard deduction, you would have been on the hook for $1,895 in taxes, but after the increase you'd be on the hook for $2,270. So, year one, you're relieved of $6,364 in payments, in exchange for $375 in extra taxes. Great deal. And even across a lifetime of earning, you are likely to come out ahead with that deal, unless you wind up making a lot more money down the road. So, you'd probably be smart to take the deal.
Now say that, instead, you're a freshly minted lawyer with a job offer from a big firm to earn $200,000. Well, now, if you take that same offer to wipe out $50k in debt for a permanent 5 point hike in tax rates, then year one you get the same $6,364 off your loan liability, but it's in exchange for a year one increase in taxes of $14,169. So, right out of the gate, it's a garbage deal, and you won't take it. You'll just pay what you owe.
Where it gets a bit tougher is in the middle. Like same deal, but your job pays $60k/year. Taking the deal helps you out in the early years: $6,365/year of debt payment relief in exchange for $3,498 more in taxes. But ten years down the road, that loan would be going away, anyway, whereas that tax increase persists. So, if you're really hurting right now, maybe it's worth paying more in the long haul in exchange for relief when you really need it. But if you're honest with yourself, you may admit the current pain isn't really that bad, so just bite bullet, tighten your belt, and pay what you owe.
You can tweak this idea by adjusting what dollar amounts equate with what tax change. Like if it's 0.1 point of hike for every $2,000, instead of every $1,000, it's friendlier to debtors..... it still wouldn't be attractive the lawyer in the second example, but will look like a better deal for the guy making $60k in the third.
The advantage of this system is that it gives people an incentive to be honest with the government, and themselves, about future earning prospects. If you're genuinely desperate, you'll jump at this, but if you know you're just temporarily strapped and will soon have plenty of money, you won't offload that debt onto the taxpayer when you know it'll mean higher taxes on a lifetime of high earnings. And it preserve the incentive to keep school costs low, since you pay at least some of it in some form, regardless.
It used to like that until the republicans cut it out of the budget and opted for tax cuts for the rich.I say stop federal loans. Frankly those loans push up the price of colleges and they are a huge benefit to the companies that administer them.
Instead heavily subsidize public colleges and universities so that the cost is free or very very low.
Unlike most liberals, I don't like the idea of generalized elimination of student debt.
Partly that's because I dislike the idea of a net transfer of wealth to people like young doctors and lawyers who will end up making a killing in their lifetimes.
Partly it's that I don't like the injustice of it in a situation where you compare someone who spent years making sacrifices to pay down what she owes, and a peer who lived the high life while making only minimum payments and taking every deferment opportunity, and now they're both put in the same situation.
But mostly it's because I worry about the unintended consequences -- for example, if lenders worry about debts being wiped out again, they'll charge much higher rates to account for that risk, making education even less affordable. Similarly, if people implicitly factor in the chance of having debt wiped out, they'll be willing to take on more of it, which puts upward pressure on college costs.
So, here's my pet idea, in lieu of that:
The government agrees to pay off however much student debt you'd like them to pay off, but in exchange you get a PERMANENT increase in all your tax rates of 0.1 point (income, estate, and capital gains), for each $1,000 of debt the government assumes.
[shortened for character limitation]
Here's another idea: A Life Lesson in Making Poor Decisions.
Some decisions cost money and will take a while to pay off. Choose wisely in the future.
You don't have to worry about doctors and lawyers, it's the people who ****ed off for 4 years and got a degree in some stupid liberal arts subject that has zero marketable job openings and pays zilch. They're "experts" in being broke and unemployed, and they're too self-important to go out and get a job that involves labor.
Pay your debts.
Party! An advanced degree at many high priced universities with a career path to making 50 thousands.Here's another idea: A Life Lesson in Making Poor Decisions.
Some decisions cost money and will take a while to pay off. Choose wisely in the future.
You don't have to worry about doctors and lawyers, it's the people who ****ed off for 4 years and got a degree in some stupid liberal arts subject that has zero marketable job openings and pays zilch. They're "experts" in being broke and unemployed, and they're too self-important to go out and get a job that involves labor.
Pay your debts.
Considering over half the Federal income tax filers pay no tax the scheme simply provides another incentive for them not to work if they have student loans. Who makes up the difference if the debtor cannot cover the loan under these generous terms? Why the taxpayer of course.
I disagree, AZRWinger. It's not a bunch of poorly-informed 18 year-olds faults that the government lent them our money which they could never reasonably pay back, or that these supposedly public institutions started over-charging for worthless degrees. We should not have elected politicians who gave away the taxpayer's money to kids who knew nothing better than being propagandized to (by the government oftentimes) that a college degree was key to success and then blame the kids and keep them indebted to the government.
We don't do it for government-backed mortgages. You can file bankruptcy on those and leave the taxpayer holding the bill. We don't do it for Social Security overpayments. You can file for bankruptcy on that and leave the taxpayers holding the bill. Hell, we don't do even do it for income taxes if they are over three years old. You can file bankruptcy and get rid of your personal income taxes, leaving other taxpayers to make up for the deficit. Yet private and government-backed student loans are supposed to be sacred and non-dischargeable in bankruptcy. It makes no sense.
It is an interesting thought, Mina, but it seems rather regressive and ends up putting the greatest tax burden upon the poor and middle class.
What? You're under the illusion that the lenders are at risk? Seriously? Nothing could be further from the truth. A government-backed student loan is very attractive to banks primarily because the bank is never at risk if the borrower defaults. The government guarantees payment.Unlike most liberals, I don't like the idea of generalized elimination of student debt.
Partly that's because I dislike the idea of a net transfer of wealth to people like young doctors and lawyers who will end up making a killing in their lifetimes.
Partly it's that I don't like the injustice of it in a situation where you compare someone who spent years making sacrifices to pay down what she owes, and a peer who lived the high life while making only minimum payments and taking every deferment opportunity, and now they're both put in the same situation.
But mostly it's because I worry about the unintended consequences -- for example, if lenders worry about debts being wiped out again, they'll charge much higher rates to account for that risk, making education even less affordable. Similarly, if people implicitly factor in the chance of having debt wiped out, they'll be willing to take on more of it, which puts upward pressure on college costs.
So, here's my pet idea, in lieu of that:
The government agrees to pay off however much student debt you'd like them to pay off, but in exchange you get a PERMANENT increase in all your tax rates of 0.1 point (income, estate, and capital gains), for each $1,000 of debt the government assumes.
So, say you graduate with $50,000 in student debt at 10yrs/5% terms, but you can only find work paying $30,000 per year. And so that $6,364 per year in loan payments is just killing you. You can wipe it all out, and in exchange your tax rates go up 5 points. Based on a $12,550 standard deduction, you would have been on the hook for $1,895 in taxes, but after the increase you'd be on the hook for $2,270. So, year one, you're relieved of $6,364 in payments, in exchange for $375 in extra taxes. Great deal. And even across a lifetime of earning, you are likely to come out ahead with that deal, unless you wind up making a lot more money down the road. So, you'd probably be smart to take the deal.
Now say that, instead, you're a freshly minted lawyer with a job offer from a big firm to earn $200,000. Well, now, if you take that same offer to wipe out $50k in debt for a permanent 5 point hike in tax rates, then year one you get the same $6,364 off your loan liability, but it's in exchange for a year one increase in taxes of $14,169. So, right out of the gate, it's a garbage deal, and you won't take it. You'll just pay what you owe.
Where it gets a bit tougher is in the middle. Like same deal, but your job pays $60k/year. Taking the deal helps you out in the early years: $6,365/year of debt payment relief in exchange for $3,498 more in taxes. But ten years down the road, that loan would be going away, anyway, whereas that tax increase persists. So, if you're really hurting right now, maybe it's worth paying more in the long haul in exchange for relief when you really need it. But if you're honest with yourself, you may admit the current pain isn't really that bad, so just bite bullet, tighten your belt, and pay what you owe.
You can tweak this idea by adjusting what dollar amounts equate with what tax change. Like if it's 0.1 point of hike for every $2,000, instead of every $1,000, it's friendlier to debtors..... it still wouldn't be attractive the lawyer in the second example, but will look like a better deal for the guy making $60k in the third.
The advantage of this system is that it gives people an incentive to be honest with the government, and themselves, about future earning prospects. If you're genuinely desperate, you'll jump at this, but if you know you're just temporarily strapped and will soon have plenty of money, you won't offload that debt onto the taxpayer when you know it'll mean higher taxes on a lifetime of high earnings. And it preserve the incentive to keep school costs low, since you pay at least some of it in some form, regardless.
I know that's a really popular idea on the right, where education is seen as nothing but a job-training program. But I think society is better off if we have a population with a broad array of educations, rather than just Stem majors. So, I'd go with a modified approach, where the government provides scholarships and loans on a tiered system.IMO it makes more sense to get rid of the program altogether.
Replace it with one-of scholarships, but only for STEM and perhaps Education and Vocational Training courses.
That is true of some of the loans. I'm talking about a program that would be available for all the student loans, not just federal guaranteed ones.What? You're under the illusion that the lenders are at risk? Seriously? Nothing could be further from the truth. A government-backed student loan is very attractive to banks primarily because the bank is never at risk if the borrower defaults. The government guarantees payment.
Which problem, specifically, do you think that fixes? The problem I'm trying to tackle is the problem of how to provide some student debt relief for people who desperately, without allowing people to game the system by offloading debt that could, in fact, afford to pay without undue suffering.It is a fairly easy fix. Colleges and universities who received the funds borrowed should be on the hook for defaults.
There is no way the system you describe doesn't become politicized. No way a Hunter Biden doesn't end up in the elite tier. No way a Donald Trump Jr doesn't get pushed down to the bottom. Then there is the inevitable imposition of racial equity to tier assignments and graduation.I know that's a really popular idea on the right, where education is seen as nothing but a job-training program. But I think society is better off if we have a population with a broad array of educations, rather than just Stem majors. So, I'd go with a modified approach, where the government provides scholarships and loans on a tiered system.
Just to illustrate the concept I'm going for, picture if you could come up with a simple "student quality index" that was some combination of your SAT's and GPA. It would divide kids into three tiers.
For the bottom 50% or so of students, the government would provide assistance to pay for further education, but only in those fields where, statistically, there's evidence that most people who go into those fields, regardless of academic qualifications, wind up having their future earnings boosted enough to more than cover the education costs (maybe two-year programs to learn in-demand technical skills). That would be tier one.
Tier two would be the next 40%, of somewhat-more-academically-accomplished kids, who'd have access to assistance for any four-year programs that tend to produce people with good employment prospects -- STEM, but also things like accounting. The level of assistance would be enhanced for any positions that are seen as being significantly short-staffed (or likely to be that way within a generation) -- so, people pursuing educations in fields like teaching and nursing would get the most generous help.
Tier three would be for the academically elite kids -- the top 10% types. They'd get assistance regardless of what they want to study. This would ensure that we continue to produce a broadly-educated populace, including in subjects that may benefit the society in too dispersed a way for it to be readily commoditized by the individual workers. Sure, that may mean we wind up with people at Walmart who are also experts in medieval art, but I think it's a good thing for society if you sprinkle that kind of knowledge and perspective broadly throughout the society.
The whole premise is based on expecting people who made poor financial decisions to suddenly become financially savvy.Unlike most liberals, I don't like the idea of generalized elimination of student debt.
Partly that's because I dislike the idea of a net transfer of wealth to people like young doctors and lawyers who will end up making a killing in their lifetimes.
Partly it's that I don't like the injustice of it in a situation where you compare someone who spent years making sacrifices to pay down what she owes, and a peer who lived the high life while making only minimum payments and taking every deferment opportunity, and now they're both put in the same situation.
But mostly it's because I worry about the unintended consequences -- for example, if lenders worry about debts being wiped out again, they'll charge much higher rates to account for that risk, making education even less affordable. Similarly, if people implicitly factor in the chance of having debt wiped out, they'll be willing to take on more of it, which puts upward pressure on college costs.
So, here's my pet idea, in lieu of that:
The government agrees to pay off however much student debt you'd like them to pay off, but in exchange you get a PERMANENT increase in all your tax rates of 0.1 point (income, estate, and capital gains), for each $1,000 of debt the government assumes.
So, say you graduate with $50,000 in student debt at 10yrs/5% terms, but you can only find work paying $30,000 per year. And so that $6,364 per year in loan payments is just killing you. You can wipe it all out, and in exchange your tax rates go up 5 points. Based on a $12,550 standard deduction, you would have been on the hook for $1,895 in taxes, but after the increase you'd be on the hook for $2,270. So, year one, you're relieved of $6,364 in payments, in exchange for $375 in extra taxes. Great deal. And even across a lifetime of earning, you are likely to come out ahead with that deal, unless you wind up making a lot more money down the road. So, you'd probably be smart to take the deal.
Now say that, instead, you're a freshly minted lawyer with a job offer from a big firm to earn $200,000. Well, now, if you take that same offer to wipe out $50k in debt for a permanent 5 point hike in tax rates, then year one you get the same $6,364 off your loan liability, but it's in exchange for a year one increase in taxes of $14,169. So, right out of the gate, it's a garbage deal, and you won't take it. You'll just pay what you owe.
Where it gets a bit tougher is in the middle. Like same deal, but your job pays $60k/year. Taking the deal helps you out in the early years: $6,365/year of debt payment relief in exchange for $3,498 more in taxes. But ten years down the road, that loan would be going away, anyway, whereas that tax increase persists. So, if you're really hurting right now, maybe it's worth paying more in the long haul in exchange for relief when you really need it. But if you're honest with yourself, you may admit the current pain isn't really that bad, so just bite bullet, tighten your belt, and pay what you owe.
You can tweak this idea by adjusting what dollar amounts equate with what tax change. Like if it's 0.1 point of hike for every $2,000, instead of every $1,000, it's friendlier to debtors..... it still wouldn't be attractive the lawyer in the second example, but will look like a better deal for the guy making $60k in the third.
The advantage of this system is that it gives people an incentive to be honest with the government, and themselves, about future earning prospects. If you're genuinely desperate, you'll jump at this, but if you know you're just temporarily strapped and will soon have plenty of money, you won't offload that debt onto the taxpayer when you know it'll mean higher taxes on a lifetime of high earnings. And it preserve the incentive to keep school costs low, since you pay at least some of it in some form, regardless.
It would put pressure on schools to deliver marketable skills. Given that we have Biden as president why not retroactively hold them accountable for defaults. These schools benefited from the money borrowed. Based on the borrowers inability to pay society aka taxpayers as a whole did not benefit and should not be on the hook.Which problem, specifically, do you think that fixes? The problem I'm trying to tackle is the problem of how to provide some student debt relief for people who desperately, without allowing people to game the system by offloading debt that could, in fact, afford to pay without undue suffering.
Well, from a market perspective, the schools delivered what they promised. They're not the ones in default.It would put pressure on schools to deliver marketable skills. Given that we have Biden as president why not retroactively hold them accountable for defaults. These schools benefited from the money borrowed. Based on the borrowers inability to pay society aka taxpayers as a whole did not benefit and should not be on the hook.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?