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What is the rationale behind forgiving $250 billion in student debt?

What is the rationale behind forgiving around $320 billion in student debt?


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JohnfrmClevelan

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Isn't America great? There are citizens who believe we are so rich that we can willy-nilly forgive all manor of personal debt and the economy will be just fine with that.
Have you ever worked in a for-profit organization?
Yes, I have. But the government is not a for-profit organization.

That's why I often harp on people to explain why they think federal debt and/or deficits are harmful. And to date, nobody has been able to come up with any evidence that they are harmful (because they are not). And it skews sooooo many threads about government debt and economics, this big, wrong assumption sitting like a turd in the middle of the discussion.

In 2008, when commercial banks were failing, the government and the central bank stepped in to bail everybody out. And they didn't break a sweat doing so; that's just one of the powers a government has, especially the government of a big, rich economy such as ours. People need to recognize that before arguing that the government can't afford to do this or that, or the taxpayers will be on the hook for every dollar spent, or other such nonsense.
 

Doppelgangirl

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You mean the people whose Social Security and Medicare the rest of society pays?
Technically, yes.
They're reaping benefits they never paid for.
They don't seem to care the kids here are going to get nothing.
They're a drain, in a sense. And waaaayyyy more "entitled" mentally than any Millennial or GenX or GenZ that I've encountered.
 

Eriech

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I wish. But the same people who are struggling with paying their student debt are likely the ones who struggle in general making good life decisions. And I fear they are starting to outnumber the rest.
The children of those who paid their debts are getting bailed out. The parents have been making excuses and demanding participation trophies hoping the kids will move out from the basement, so your probably right.
 

Artymoon

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The children of those who paid their debts are getting bailed out. The parents have been making excuses and demanding participation trophies hoping the kids will move out from the basement, so your probably right.
No doubt. My generation of parenting has failed miserably IMO.
 

mrjurrs

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You should reword the title of your thread because you are not asking for a rationale.

The rationale is that it is in the nations interest to have an educated workforce (thus college loans). Unfortunately when created, it also created an incentive for private institutions to profit from those loans, even though there was no risk to the lending institution because they were guaranteed by the federal govt.

So by paying them off, they release the future economic growth of the younger recently graduated future taxpayers.
 

Indlib

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How about underwater photography.?
People like doing that too.
Anyone who wants a degree in underwater photography has my full support, however I don't think tax dollars should subsidize it and I don't think colleges should make obscene profits providing it either.
 

Fearandloathing

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Loan forgiveness = hand-out to the educational institutions and their high tuition bills. I do not support debt cancellation that doesn't also include a mechanism for schools to have some skin in the game. Looking at this issue, everybody but the schools come out on the losing end of this topic. Taxpayers? Writing checks. Students whose debt was forgiven? They missed out on an important life lesson. Students who paid off their debt? They're bitter. The schools? Oh, they get paid either way, and they are not incentivized in the slightest to contribute to a solution.

Indeed, if I'm a university, why not hike tuition even more? I mean, the taxpayer will pay for it!


Well idiocy aside, Norway, Sweden and a host of other countries have totally free education through to PHD, and in the case of Norway up to as many a 3 Phd's if qualified.

Canada has a two tier system along with grants and a generous loan program while 'foreign students' make up the bulk of the cost of recovery. Americans would rather spend $1.5 million for new toilets aboard Air Force One and throw in $100 million in "research costs".

The pentagon spends more than Canada's entire economy on testing new defense systems that never see the light of day, especially 'stealth'
anything.

Maybe if the US heeded the warning from the last 'great president' Dwight Eisenhower about the "Military Industrial Complex" you'd have better educated voters.

I ask, who benefits most with dumbed-down voters?
 

Fearandloathing

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You should reword the title of your thread because you are not asking for a rationale.

The rationale is that it is in the nations interest to have an educated workforce (thus college loans). Unfortunately when created, it also created an incentive for private institutions to profit from those loans, even though there was no risk to the lending institution because they were guaranteed by the federal govt.

So by paying them off, they release the future economic growth of the younger recently graduated future taxpayers.


Simply put, we are talking about the difference of net income and the tax ratio as high earners they will more than compensate down the road, and/or add business for self who create jobs!

When you stop seeing it through the narrow vision of 'me & mine' and see it as a tool in economics, it more than makes sense.

Simple compare the standard of living of countries which pay a large portion for post secondary with your own system; the difference is staggering
 

jaypatriot

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You should reword the title of your thread because you are not asking for a rationale.

The rationale is that it is in the nations interest to have an educated workforce (thus college loans). Unfortunately when created, it also created an incentive for private institutions to profit from those loans, even though there was no risk to the lending institution because they were guaranteed by the federal govt.

So by paying them off, they release the future economic growth of the younger recently graduated future taxpayers.
So Imagine if the government would forgive them of all of their loans, think of all the future economic growth we could enjoy.
You want to dump the responsibility of those government loans on the backs of citizens who never cared about going to college? Does that make sense? Burden current taxpayers with the loans of those students who entered into a legal contract and now do not wish to live up to their responsibilities.

Somehow that does not make logical or financial sense to those who feel a contract to borrow is an obligation to pay it off.
Do Progressives believe there is always a free government lunch?
 

JohnfrmClevelan

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So Imagine if the government would forgive them of all of their loans, think of all the future economic growth we could enjoy.
You want to dump the responsibility of those government loans on the backs of citizens who never cared about going to college? Does that make sense? Burden current taxpayers with the loans of those students who entered into a legal contract and now do not wish to live up to their responsibilities.

Taxpayers don't pay for deficit spending. That's why they call it "deficit spending."
Somehow that does not make logical or financial sense to those who feel a contract to borrow is an obligation to pay it off.

You are thinking of the federal budget in the same way as you think of a household budget, but the two are not comparable. The government can create its own money and spend it as it sees fit. In this case, it would serve to unburden a generation of debtors and boost the economy. Everybody wins.
Do Progressives believe there is always a free government lunch?
It's not free. People and businesses work to earn that money. That's where the cost is, but like any investment, the cost is smaller than the payoff.
 

Napoleon

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Biden is considering cancelling $321 billion in federal student loans.
That's a lot more than the estimated reduction in federal debt projected as a result of the recently signed Inflation Reduction Act. And no one can figure out if the cancellation of that debt is inflationary or not.
Keep in mind these are college students getting a higher education so they can become responsible adults.
Full disclosure: I am biased because a few years ago I paid off a $64,000 student loan debt for a doctoral program. And it hurt.
Federal student lending is predatory. Setting aside all the could have, should have, would haves and the fact that people squandered this money on worthless and unmarketable degrees - it doesn’t make economic sense to allow defaults on this scale. The US economy is built upon debt and its health is dependent on the creditworthiness of the consumer.

You can’t have a wallet full of credit cards, and a car loan, and a mortgage etc if your credit score was flushed down the tubes by a student loan debt default. So this student loan debt is an economic disaster in waiting. If not for the economic considerations, I’d say they signed a contract so they should have to pay up. But if we’re gonna do forgiveness it should only be for STEM degrees because at least there’s still a return on the investment.
 

mrjurrs

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So Imagine if the government would forgive them of all of their loans, think of all the future economic growth we could enjoy.
You want to dump the responsibility of those government loans on the backs of citizens who never cared about going to college? Does that make sense? Burden current taxpayers with the loans of those students who entered into a legal contract and now do not wish to live up to their responsibilities.

Somehow that does not make logical or financial sense to those who feel a contract to borrow is an obligation to pay it off.
Do Progressives believe there is always a free government lunch?
You want to deny those taxpayers you worry about the benefits of all the taxes that these younger well educated taxpayers will generate?

It is clear to me that your understanding of how tax revenues are created and spent is a little hazy...
 

mrjurrs

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Federal student lending is predatory. Setting aside all the could have, should have, would haves and the fact that people squandered this money on worthless and unmarketable degrees - it doesn’t make economic sense to allow defaults on this scale. The US economy is built upon debt and its health is dependent on the creditworthiness of the consumer.

You can’t have a wallet full of credit cards, and a car loan, and a mortgage etc if your credit score was flushed down the tubes by a student loan debt default. So this student loan debt is an economic disaster in waiting. If not for the economic considerations, I’d say they signed a contract so they should have to pay up. But if we’re gonna do forgiveness it should only be for STEM degrees because at least there’s still a return on the investment.
Don't you think the college making the claims to attract students that need student loans should be forced to live up to their side of the contract first?
"In a shocking investigation, the U.S. Senate declared the federal student loan program "plagued by fraud and abuse." Its report heaped scorn on for-profit trade schools for serving 22% of federal student loan borrowers but accounting for 44% of defaults."

 

Jredbaron96

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I am worried that millions of young people, who want a college education, would knowingly and willingly enter into a legal contract with a school or the federal government and then choose to not pay back that student loan.

Blaming young people for doing what they were told to do since Kindergarten is stupid.
 

The flaming lib

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What is the rationale behind forgiving $250 billion in student debt?​


Maybe they all went to Trump U.
He’s like an itch you just have to scratch isn’t he?
ADFD0FE7-F750-4757-9793-3A922F068149.jpeg
 

Ethel2

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I could accept guaranteeing two years of community college for everyone, but after that you should be expected to pay for what you get like most everything else in this country.
As far as forgiving existing debt does, not buying it. It’s expensive and it’s unfair to those students who have been paying or have paid back their loans.
There’s no such thing as a free lunch, as the saying goes.
 

ALiberalModerate

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I think that we should remove the paywall between students and higher education.
Why should someone who went to a state school foot the bill for someone that borrowed 10 times as much so they could go to a “prestigious” private school?
 

The Mark

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Biden is considering cancelling $321 billion in federal student loans.
That's a lot more than the estimated reduction in federal debt projected as a result of the recently signed Inflation Reduction Act. And no one can figure out if the cancellation of that debt is inflationary or not.
Keep in mind these are college students getting a higher education so they can become responsible adults.
Full disclosure: I am biased because a few years ago I paid off a $64,000 student loan debt for a doctoral program. And it hurt.

How do people worried about our financial future feel about all of that?


Student loan forgiveness decision will come ‘before Aug. 31,’ Biden administration confirms: What you need to know​

Published Thu, Aug 11 202212:42 PM EDTUpdated 3 Hours Ago

Aug. 31 is an important date for millions of Americans with federal student loans — it’s not just the day the pause on payments is set to expire, but also the deadline by which President Joe Biden will decide on broader federal student loan forgiveness.
CNBC has reported that White House officials are zeroing in on canceling $10,000 for all borrowers who earn less than $150,000 per year, but the administration has yet to confirm such plans.
More than 40 million Americans carry student loan debt. A wide-scale student loan cancellation of $10,000 per borrower would forgive a total of $321 billion of federal student loans and eliminate the entire balance for about 11.8 million borrowers, according to the Federal Reserve. The average borrower would receive $8,478 in student loan forgiveness.

The rational is that if money is tied up in making loan payments, it won't be available to enter the economy by being used to consume.

Canceling existing loans helps, but it doesn't address the source of the problem - the price of higher education being outside the reach of most people without loans.

I personally think that at minimum, community college should be 100% subsidized - as in, there is no need for loans because you do not pay for it, the government does.

Which of course means the taxpayers.

But in my view, a better educated population will result in a better overall result for everyone, making it worth the investment.
 

Fearandloathing

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Damn it, students need to pay their own way! The US government needs that money for more wars!


An uneducated electorate is the objective of tyrants and goons. Shit, you can't maintain control if you let people think!
 

JohnfrmClevelan

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Why should someone who went to a state school foot the bill for someone that borrowed 10 times as much so they could go to a “prestigious” private school?
They aren't footing the bill. The government is, via deficit spending, which doesn't cost taxpayers a dime.
 

JohnfrmClevelan

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The rational is that if money is tied up in making loan payments, it won't be available to enter the economy by being used to consume.

Canceling existing loans helps, but it doesn't address the source of the problem - the price of higher education being outside the reach of most people without loans.

I personally think that at minimum, community college should be 100% subsidized - as in, there is no need for loans because you do not pay for it, the government does.

Which of course means the taxpayers.

But in my view, a better educated population will result in a better overall result for everyone, making it worth the investment.

Taxpayers don't foot the bill, the government does via deficit spending, which doesn't cost taxpayers a dime.
 

Tlrmln

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Biden is considering cancelling $321 billion in federal student loans.
That's a lot more than the estimated reduction in federal debt projected as a result of the recently signed Inflation Reduction Act. And no one can figure out if the cancellation of that debt is inflationary or not.
Keep in mind these are college students getting a higher education so they can become responsible adults.
Full disclosure: I am biased because a few years ago I paid off a $64,000 student loan debt for a doctoral program. And it hurt.

How do people worried about our financial future feel about all of that?


Student loan forgiveness decision will come ‘before Aug. 31,’ Biden administration confirms: What you need to know​

Published Thu, Aug 11 202212:42 PM EDTUpdated 3 Hours Ago

Aug. 31 is an important date for millions of Americans with federal student loans — it’s not just the day the pause on payments is set to expire, but also the deadline by which President Joe Biden will decide on broader federal student loan forgiveness.
CNBC has reported that White House officials are zeroing in on canceling $10,000 for all borrowers who earn less than $150,000 per year, but the administration has yet to confirm such plans.
More than 40 million Americans carry student loan debt. A wide-scale student loan cancellation of $10,000 per borrower would forgive a total of $321 billion of federal student loans and eliminate the entire balance for about 11.8 million borrowers, according to the Federal Reserve. The average borrower would receive $8,478 in student loan forgiveness.


To buy votes. Full stop.
 

ALiberalModerate

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They aren't footing the bill. The government is, via deficit spending, which doesn't cost taxpayers a dime.
Of course it costs taxpayers. Every cent of debt service is less money going to services.
 
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