$10k Student Loan Forgiveness

[RiverDog]

Hell of a write up, Asea, but I’m not sure it gets it all. Someone with $50k indent that gets $10k forgiven is still $40k in debt. Even if their payment gets slightly adjusted down for the reduced principal, they’ll still be in roughly the same financial situation. They won’t be spending much more than they were previously. I also was chatting with an acquaintance on FB about this. To his credit, he paid his loans aggressively during the during pause. Retired nothing but principal for two years, so this $10k shot is a bigger deal for him. He’ll be done with his loans much sooner than before and be able to redirect his cash elsewhere. It is going to be a very uneven benefit, if it really benefits some at all.

And I’ll beat the dead horse with River on the band aid nature of this. It’s not addressing cost of education, educating students on debt and benefit of desired major, or reigning in lenders.

Good post, Mack.

As far as "reigning in the lenders", those are few and far between. Less than 1 out of 10 are private lenders, and obviously, not all of them are unscrupulous. According to Forbes, only 7.6% of all student debt comes from private loans. The rest are federal loans. The "predatory lenders" argument is a red herring.

https://www.forbes.com/advisor/student- ... tatistics/

[I-5]

What does student loan forgiveness going to do to address future problems in financing education or to improve our educational system in general? Is it going to crack down on predatory loans?

Does it have to be either or? Why can't it be both, and attack the problem from multiple directions at once? Provide relief for those that were taken advantage of (yes, it could/should be more targeted), AND make tuition itself much more accessible to those who want to pursue higher education?

I paid about $1,500 in-state tuition per quarter at the UW for a full load of 15 credits in the 90's, and I did it on credit through the UW loan program, so when I graduated, I had a minor debt to pay, but it was manageable even with my modest first job out of school. I don't know when tution started going through the roof, but I feel so lucky to have gone when I did. Most of the professors in my dept just retired a few years ago.

[MackStrongIsMyHero]

No one signs on the dotted line for a disease, either. This is like giving the same amount of help to people with a cold as people with cancer. Not really an air-tight analogy.

It’s blanket approach for political reasons that doesn’t do enough. If they actually tackle the root causes so we can avoid this situation in the future, I’ll gladly give them their due.

[RiverDog]

What does student loan forgiveness going to do to address future problems in financing education or to improve our educational system in general? Is it going to crack down on predatory loans?

Does it have to be either or? Why can't it be both, and attack the problem from multiple directions at once? Provide relief for those that were taken advantage of (yes, it could/should be more targeted), AND make tuition itself much more accessible to those who want to pursue higher education?

If you want to address to address the issue of "those that were taken advantage of", the first thing you have to do is define the issue. What constitutes "taken advantage of"? How many students fit this definition? My guess is not very many, given that less than 1 out of 10 of student loans are private and an even lower percentage were what could be considered predatory loans. Trying to solve it by making a blanket forgiveness of around half a trillion dollars makes no sense at all.

But to answer your question, yes, we can do both. But the two issues are completely unrelated and should be tackled separately.

I paid about $1,500 in-state tuition per quarter at the UW for a full load of 15 credits in the 90's, and I did it on credit through the UW loan program, so when I graduated, I had a minor debt to pay, but it was manageable even with my modest first job out of school. I don't know when tution started going through the roof, but I feel so lucky to have gone when I did. Most of the professors in my dept just retired a few years ago.

The average debt in 1993 was about $9,000 compared to around $33k today. I ran $9,000 through an inflation calculator and came up with $18K, and when you compare it to the actual amount of $33k, today's average debt is roughly 2.5 times what it was in 1993, an astounding increase. In 2003, the average debt was about $18k, and running that amount through the inflation calculator, I came up with 29K, which isn't that bad, at least not compared to the increase ten years earlier. And finally, the average student loan debt in 2013 was $29,400, and running that through the inflation calculator, I came up with $37,391, or less than what it is today when adjusted for inflation.

But run the numbers yourself and see what you come up with:

https://thecollegeinvestor.com/32031/av ... %20rows%20

https://www.usinflationcalculator.com/

So it would appear that the increase in debt was mostly a problem that started in the 90's but in the past 10 years, has been pretty much under control, with a 2013 debt, when adjusted for inflation, being higher than a 2022 debt.

So in reality, the debt problem is getting better, not worse. That doesn't mean that it isn't a problem or that it should be ignored, just that it's not on the same scale as other issues facing our society.

[tarlhawk]

An interesting question would be how many student loans actually resulted in degrees? The loans were not conditional if the individual failed to achieve their intended degree. Do our high schools really prep students for college success? Does the student loan forgiveness even target those who successfully obtained degrees or did this blanket forgiveness just include them "as well"?

[RiverDog]

An interesting question would be how many student loans actually resulted in degrees? The loans were not conditional if the individual failed to achieve their intended degree. Do our high schools really prep students for college success? Does the student loan forgiveness even target those who successfully obtained degrees or did this blanket forgiveness just include them "as well"?

The answer to that question appears to be that it includes those that did not obtain degrees:

Does it matter where I attended college or if I graduated?

No. While there was speculation that the forgiveness might be limited to students who attended public colleges, that detail was left out of the final plan. You do not need to have graduated to have your loans forgiven.

https://money.com/student-loan-forgiven ... 20forgiven.

It also includes students that are currently in school and parents that took out loans for their children so long as their individual income is $125K or less for single filers and $250k or less for married filing jointly.

[Aseahawkfan]

I appreciate your taking the time you have taken to compose that post and I understand your economic analysis, but it still doesn't answer my question: What does student loan forgiveness going to do to address future problems in financing education or to improve our educational system in general? Is it going to crack down on predatory loans? Just one example will do.

It's completely retroactive, addressing past injustices, like repatriations for slavery.

I am sensitive to the student loan issue, and had Biden lowered the threshold to something less than an individual income of $75,000, I would have been a lot more agreeable with it. But he didn't. I would also have an open mind if he were to propose legislation to regulate student loans, or to make post secondary education more affordable and accessible. But he didn't. Those are deal breakers for me.

If we don't fix what's wrong, then we'll be right back to the same dilemma a few years from now and hand out another half billion of the taxpayer's money. Where will it stop?

It doesn't. It is a modestly beneficial economic debt relief program that will not address the long-term problems with financing education.

It likely won't stop. Not in either party. Even now Republican Ron Desantis is handing out massive tax cuts from the tax surplus in Florida. All the Democrats seem to want to do with the current tax surplus is spend it. No one seems interested in paying down the debt.

Neither party seems to truly want to responsibly run the government. Not sure what to tell you about that.

[Aseahawkfan]

Hell of a write up, Asea, but I’m not sure it gets it all. Someone with $50k indent that gets $10k forgiven is still $40k in debt. Even if their payment gets slightly adjusted down for the reduced principal, they’ll still be in roughly the same financial situation. They won’t be spending much more than they were previously. I also was chatting with an acquaintance on FB about this. To his credit, he paid his loans aggressively during the during pause. Retired nothing but principal for two years, so this $10k shot is a bigger deal for him. He’ll be done with his loans much sooner than before and be able to redirect his cash elsewhere. It is going to be a very uneven benefit, if it really benefits some at all.

And I’ll beat the dead horse with River on the band aid nature of this. It’s not addressing cost of education, educating students on debt and benefit of desired major, or reigning in lenders.

It's a modestly beneficial debt relief program that doesn't address the long-term problems with education financing. It's more like a token effort to keep a promise that won't do much for future students obtaining loans based on inflated tuition rates or people with a much higher amount of debt like the example you use.

I would love to see an education crusader come in, but I'm not expecting it any time soon.

I haven't seen a Republican or Democrat want to pay down the national debt or make real effective change since Democratic President Clinton and a Republican Congress led by Newt Gingrich passed a balanced budget act and used some of the tax surplus of those good times to pay down some of the debt.

Even now I see Republicans providing more tax cuts and returning money to people in tax payments and Democrats passing spending bills with the massive tax surplus they are all taking in from this inflationary environment which has led to record tax revenues as well as record profits and such.

Responsible financial management by our government left us a long time ago and I have no faith in either party to make effective change for education or much else. I think no matter what party you support right now, you're not going to get responsible economic management whether it's the Republicans handing back money with through pro-business tax credits and incentives or Democrats spending money on building chip factories or forgiving student loan debt. So we're kind of stuck and screwed no matter which way you go right now, you'll be watching some real fly by the seat of your pants economic management.

[Aseahawkfan]

An interesting question would be how many student loans actually resulted in degrees? The loans were not conditional if the individual failed to achieve their intended degree. Do our high schools really prep students for college success? Does the student loan forgiveness even target those who successfully obtained degrees or did this blanket forgiveness just include them "as well"?

I'm not real sure to be honest with you. I think more people should focus on trade school, certifications, technical degrees, or programs like nursing, but pushing that four year degree of almost any kind has been a real push in society for some time. Hopefully it changes so that people can obtain the economic benefits of a degree or employment skill that will earn them a good living rather than wandering getting a job with yet another psychology or philosophy degree.

[Aseahawkfan]

The average debt in 1993 was about $9,000 compared to around $33k today. I ran $9,000 through an inflation calculator and came up with $18K, and when you compare it to the actual amount of $33k, today's average debt is roughly 2.5 times what it was in 1993, an astounding increase. In 2003, the average debt was about $18k, and running that amount through the inflation calculator, I came up with 29K, which isn't that bad, at least not compared to the increase ten years earlier. And finally, the average student loan debt in 2013 was $29,400, and running that through the inflation calculator, I came up with $37,391, or less than what it is today when adjusted for inflation.

But run the numbers yourself and see what you come up with:

https://thecollegeinvestor.com/32031/av ... %20rows%20

https://www.usinflationcalculator.com/

So it would appear that the increase in debt was mostly a problem that started in the 90's but in the past 10 years, has been pretty much under control, with a 2013 debt, when adjusted for inflation, being higher than a 2022 debt.

So in reality, the debt problem is getting better, not worse. That doesn't mean that it isn't a problem or that it should be ignored, just that it's not on the same scale as other issues facing our society.

That doesn't surprise me. That crazy growth in the 90s shot a bunch of wealth into the economy really driving up demand and supply. We likely had pretty high inflation, but it was offset by incredible wealth increases from the stock market the development of tech jobs from the rise of the internet.

I can see why the gap closed in 2003 after the crash of the Tech Bubble which caused the reverse effect of the 90s tech boom causing a huge loss of wealth and likely deflationary pressure.

Not sure where we're headed now, but I'm watching close. We have inflation with a technical recession in the United States. Europe is experience serious inflation with recessionary forces. And Chinese growth has stalled out along with housing crisis there as well. We have rising interest rates here which is going to hammer the housing market. Yet we have an extremely strong labor market which appears to be holding up even with all these recessionary pressures.

How this will affect student loans and tuition, I'm not sure. But the student loan debt load is definitely a concern as it will act as a drag on discretionary income over the life of the loan which leads to lower growth.

Some reports indicating we're already reaching a debt load that is reaching critical mass. If people have jobs and can service there debt, it may not matter.

On a side note, I do want to acknowledge that you have maintained a consistent position on government spending and payments at least in recent years. You were against the Trump Tax cuts as you thought they were unnecessary. You didn't like the government bailouts. You weren't a big fan of the shotgun payments during the COVID pandemic. You usually don't like the government engaging in what you view as frivolous, unnecessary, and unfocused government spending.

[I-5]

Meanwhile, republicans are shooting themselves in the foot, now threatening to sue Biden to reverse the loan forgiveness program. This is almost as dumb as reversing Roe vs Wade before the midterm elections. Yet another unforced error.

[Aseahawkfan]

Meanwhile, republicans are shooting themselves in the foot, now threatening to sue Biden to reverse the loan forgiveness program. This is almost as dumb as reversing Roe vs Wade before the midterm elections. Yet another unforced error.

I have to admit I don't see an advantage in it considering both Democrat and Republican voters use student loans as do independents.

[I-5]

I have to admit I don't see an advantage in it considering both Democrat and Republican voters use student loans as do independents.

Not only that. Did the republicans who celebrated the reversal of Roe vs Wade think that only democrat women want to have access to legal abortions? Think again. That's a pretty large voting constituency. This will haunt republicans if not already.

[RiverDog]

On a side note, I do want to acknowledge that you have maintained a consistent position on government spending and payments at least in recent years. You were against the Trump Tax cuts as you thought they were unnecessary. You didn't like the government bailouts. You weren't a big fan of the shotgun payments during the COVID pandemic. You usually don't like the government engaging in what you view as frivolous, unnecessary, and unfocused government spending.

I guess that was intended as a compliment, so I'll say thanks.

I consider myself a fiscal conservative and social moderate. I don't mind government spending if there's a definite need, such as the first economic stimulus payment in the spring of 2020, and I didn't even mind the fact that it wasn't targeted because to do so would have required many months of negotiating to get it right, and people needed the money promptly to pay the bills as there are a lot of people that live paycheck to paycheck.

There are just too many things wrong with this initiative for me to support it. It's not targeted to those that need it. Giving $10,000 to a family making a quarter million dollars a year is absurd. It does nothing to address future borrowing, to make education more affordable and accessible to the poor and minorities, nor does it improve the quality of education. It's not fair to those that bit the bullet and made the hard sacrifices to finance their education without going into major debt or for those that made sacrifices in paying it off. It rewards those that went to college simply to chase skirts then bailed out after a couple of years without completing their studies. And as I showed above, the student debt crisis isn't as bad as some are making it out as the average debt load per student, adjusted for inflation, has actually been going down in recent years.

All of those objections don't take into consideration the eloquent economic argument that you made, of which I don't completely agree with but that is at least a rational attempt at a justification, a much stronger attempt than contrasting it with other government initiatives viewed by some to be unnecessary or unfair, ie tax cuts for the rich, bailing out the airlines, etc.

[Aseahawkfan]

I guess that was intended as a compliment, so I'll say thanks.

I consider myself a fiscal conservative and social moderate. I don't mind government spending if there's a definite need, such as the first economic stimulus payment in the spring of 2020, and I didn't even mind the fact that it wasn't targeted because to do so would have required many months of negotiating to get it right, and people needed the money promptly to pay the bills as there are a lot of people that live paycheck to paycheck.

There are just too many things wrong with this initiative for me to support it. It's not targeted to those that need it. Giving $10,000 to a family making a quarter million dollars a year is absurd. It does nothing to address future borrowing, to make education more affordable and accessible to the poor and minorities, nor does it improve the quality of education. It's not fair to those that bit the bullet and made the hard sacrifices to finance their education without going into major debt or for those that made sacrifices in paying it off. It rewards those that went to college simply to chase skirts then bailed out after a couple of years without completing their studies. And as I showed above, the student debt crisis isn't as bad as some are making it out as the average debt load per student, adjusted for inflation, has actually been going down in recent years.

All of those objections don't take into consideration the eloquent economic argument that you made, of which I don't completely agree with but that is at least a rational attempt at a justification, a much stronger attempt than contrasting it with other government initiatives viewed by some to be unnecessary or unfair, ie tax cuts for the rich, bailing out the airlines, etc.

I wasn't justifying the move. I was illustrating how the math works within an economy. The ethics are a different discussion based on personal value systems which can't be measured mathematically.

People in general have real odd viewpoints of money and debt that are not shared by the wealthy for good reason: they don't work like people think they work. The person who can free himself from the idea that money and debt are static or finite or a zero sum game can do a much better job of managing their economic situation and not getting caught up in arguments that aren't meaningful. I try to teach this to people, mostly younger folk as they can take advantage of this, but they don't much listen as it seems too complicated to understand.

When you spend time reading on some of the huge debt loads that entrepreneurs and huge investors took out to risk on building companies and making moves, you really see that the wealthy are wealthy because to them debt and money are merely tools to accumulate and manage assets. It is completely different from what middle and working class people are taught about debt and money.

[RiverDog]

People in general have real odd viewpoints of money and debt that are not shared by the wealthy for good reason: they don't work like people think they work. The person who can free himself from the idea that money and debt are static or finite or a zero sum game can do a much better job of managing their economic situation and not getting caught up in arguments that aren't meaningful. I try to teach this to people, mostly younger folk as they can take advantage of this, but they don't much listen as it seems too complicated to understand.

When you spend time reading on some of the huge debt loads that entrepreneurs and huge investors took out to risk on building companies and making moves, you really see that the wealthy are wealthy because to them debt and money are merely tools to accumulate and manage assets. It is completely different from what middle and working class people are taught about debt and money.

The entire country works off debt. Very few companies have cash reserves that they can use to finance capital improvements and R&D to keep them competitive and viable. They attain their funds through either borrowing or the sale of stock, which is essentially borrowing other people's money to be returned when they sell the stock. That's what many, if not most, people don't get about Wall Street, that a healthy stock market is essential for life as we know it in this country. Many also don't realize that they, too, have skin in the market, in the form of mutual funds, IRA's/401K, pension funds, etc. They think that Wall Street is essentially a rich man's playground.

We're probably taking the thread off topic, so I'll stop there.

[Aseahawkfan]

The entire country works off debt. Very few companies have cash reserves that they can use to finance capital improvements and R&D to keep them competitive and viable. They attain their funds through either borrowing or the sale of stock, which is essentially borrowing other people's money to be returned when they sell the stock. That's what many, if not most, people don't get about Wall Street, that a healthy stock market is essential for life as we know it in this country. Many also don't realize that they, too, have skin in the market, in the form of mutual funds, IRA's/401K, pension funds, etc. They think that Wall Street is essentially a rich man's playground.

We're probably taking the thread off topic, so I'll stop there.

Stock market is tied to a lot of wealth in the economy. The retail mom and pop investor drove the last few years of market insanity while sitting at home with extra money from government payments and nothing to spend it on.

Even a portion of the student loan forgiveness will be invested in the markets.

[RiverDog]

Stock market is tied to a lot of wealth in the economy. The retail mom and pop investor drove the last few years of market insanity while sitting at home with extra money from government payments and nothing to spend it on.

Even a portion of the student loan forgiveness will be invested in the markets.

There won't be much of this handout invested in the stock market. According to the White House, 85% of the handout will go to those with incomes pf $75,000 or less, which means one of two things: They'll use it to defer living expenses or other legitimate needs...or they'll blow it on a new car or boat. They won't invest it.

[Aseahawkfan]

There won't be much of this handout invested in the stock market. According to the White House, 85% of the handout will go to those with incomes pf $75,000 or less, which means one of two things: They'll use it to defer living expenses or other legitimate needs...or they'll blow it on a new car or boat. They won't invest it.

I wish I could argue this point, but this seems to be the case almost regardless of income level. I've never made a ton at an hourly wage, but through saving and investing even after a major bust I've built up a substantial amount of assets that I operate from a cash flow positive position. But my buddies, even the guys making a ton more than me just blow that money. I have met so many people who could save, could invest, and could do more, but they are so busy living beyond their means and blowing every dollar on discretionary spending that they don't invest much more than what they might put in their 401ks or IRAs if they even bother to get an IRA. The sad part is then I gotta listen to them tell me how they're getting screwed by the 1%, but when you audit their expenditures and lifestyle they're screwing themselves 99% of the time or more. Life isn't as expensive as people make it. They just love having an excuse for their actions and situation other than themselves.

[RiverDog]

There won't be much of this handout invested in the stock market. According to the White House, 85% of the handout will go to those with incomes pf $75,000 or less, which means one of two things: They'll use it to defer living expenses or other legitimate needs...or they'll blow it on a new car or boat. They won't invest it.

I wish I could argue this point, but this seems to be the case almost regardless of income level. I've never made a ton at an hourly wage, but through saving and investing even after a major bust I've built up a substantial amount of assets that I operate from a cash flow positive position. But my buddies, even the guys making a ton more than me just blow that money. I have met so many people who could save, could invest, and could do more, but they are so busy living beyond their means and blowing every dollar on discretionary spending that they don't invest much more than what they might put in their 401ks or IRAs if they even bother to get an IRA. The sad part is then I gotta listen to them tell me how they're getting screwed by the 1%, but when you audit their expenditures and lifestyle they're screwing themselves 99% of the time or more. Life isn't as expensive as people make it. They just love having an excuse for their actions and situation other than themselves.

I don't want to generalize because I know from living and working with low-income folks that there are lots of them that are hardworking, honest people that spend what money they have wisely, are able to put their kids through college, and so on. But there are A LOT of people that are poor for a reason, and those folks will spend money as soon as they get it, immediate self-gratification, and are poor due to their own stupid decisions. My stepson fit into this category.

The vast majority of this money isn't going to be saved or invested. For better or worse, it will get plowed right back into the economy.

[Aseahawkfan]

I don't want to generalize because I know from living and working with low-income folks that there are lots of them that are hardworking, honest people that spend what money they have wisely, are able to put their kids through college, and so on. But there are A LOT of people that are poor for a reason, and those folks will spend money as soon as they get it, immediate self-gratification, and are poor due to their own stupid decisions. My stepson fit into this category.

The vast majority of this money isn't going to be saved or invested. For better or worse, it will get plowed right back into the economy.

My friends are hardworking and don't really know how to be dishonest if by that you mean engaging in criminal activity. My grandparents were hardworking and honest. We just don't teach Americans to manage money well or take advantage of the opportunities to grow their wealth. Although my friends don't complain about the 1% since they aren't Democrats, but they blow their money often just the same.

It's the liberal Democrat supporters constantly buying into the 1% garbage while they aren't even bothering to manage their money intelligently, save, or invest much that I have had to listen to at times that just annoys living hell out of me. They just blow through money like it's water, get older with nothing saved, then buy into the narrative that makes it seem like someone else's fault.

The behavior you're talking about above I see mostly from immigrants who come here and bust their ass. They often can't even believe how easy it is to make money and build wealth in America. The Afghan guys I worked with are an example. Every one of them bought a house or condo as fast as they could, got into school. worked full time while also ubering, and busted their ass to build up wealth. A few got into stock trading and a couple own their own store now. They started with nothing. I literally watched them start with no savings, while taking care of their families, and grind their way up. It grinds on your nerves to see these folks doing this while these fat, lazy Americans are stuffing their faces with fast food while buying into every fool theory about the 1% while they're playing on their Apple phones and wasting all their time playing video games or spending their weekends drunk or high.

Maybe you're more tolerant of this than I am, but it makes me self-isolate more and more. I don't want to be around that ignorance. It's just irritating.

That's why I don't think social security or debt forgiveness or other types of handouts are ever going away and will likely become more commonplace. People don't want to do the things that you have to do to build wealth and manage money well to prepare for retirement or just manage their daily lives well enough and we don't prioritize that type of education to encourage them to do so young anyway. If your parents don't teach you, you often just do the bare minimum and tie up most of your wealth in your property hoping social security never goes bankrupt. As far as politically, you have Republicans blaming immigrants for their economic woes and Democrats blaming the 1%. And no one looking in the mirror and taking self-corrective action.

[RiverDog]

My friends are hardworking and don't really know how to be dishonest if by that you mean engaging in criminal activity. My grandparents were hardworking and honest. We just don't teach Americans to manage money well or take advantage of the opportunities to grow their wealth. Although my friends don't complain about the 1% since they aren't Democrats, but they blow their money often just the same.

Yeah, I know a lot of people that fit that profile, and I agree about our educational priorities. It was a pet peeve of mine at work, but it always fell on deaf ears. My last boss I had at work, of whom I've remained close friends with, begs me at every opportunity to un-retire. I finally told him if he wanted to create a position of financial/benefits advisor for our employees, that I'd consider it. It's the one thing that I had a passion for.

It's the liberal Democrat supporters constantly buying into the 1% garbage while they aren't even bothering to manage their money intelligently, save, or invest much that I have had to listen to at times that just annoys living hell out of me. They just blow through money like it's water, get older with nothing saved, then buy into the narrative that makes it seem like someone else's fault.

Yup. There always has to be a villain somewhere that's responsible.

The behavior you're talking about above I see mostly from immigrants who come here and bust their ass. They often can't even believe how easy it is to make money and build wealth in America. The Afghan guys I worked with are an example. Every one of them bought a house or condo as fast as they could, got into school. worked full time while also ubering, and busted their ass to build up wealth. A few got into stock trading and a couple own their own store now. They started with nothing. I literally watched them start with no savings, while taking care of their families, and grind their way up. It grinds on your nerves to see these folks doing this while these fat, lazy Americans are stuffing their faces with fast food while buying into every fool theory about the 1% while they're playing on their Apple phones and wasting all their time playing video games or spending their weekends drunk or high.

Very true. I've seen a ton of success stories. I had a truck driver that worked for me who came here with literally nothing but the shirt on his back, didn't know the language, no education, dirt foot poor. But he got his CDL, worked 2 jobs as did his wife, and they put 3 kids through college, including one that got her PhD in physics, another that's a lawyer. And the really fun thing about it is that if you show them some support, stick up for them when they need defending, they are eternally grateful, as loyal and dedicated as one can imagine. Plus most are A LOT more respectful of older folks than their native-born counterparts.

As far as politically, you have Republicans blaming immigrants for their economic woes and Democrats blaming the 1%. And no one looking in the mirror and taking self-corrective action.

Boy, if that ain't the truth!

[I-5]

If choosing between immigrants and the 1%, is that even a difficult choice? Btw take a look at the number of founders and CEO’s of Fortune 500 companies in the tech sector; without immigrants, some of these companies wouldn’t exist.

But to answer your question, yes, we can do both. But the two issues are completely unrelated and should be tackled separately.

Not sure who you’re referring to, but I never said the two issues weren’t different and didn’t see anyone make such a claim. They are different for sure, and both can be worked on. Loan forgiveness is not taking money from taxpayers, it’s cancelling part of the ridiculous interest on the original loan. It does represent lost revenue, but it so are massive tax cuts to the 1% and corporations like Amazon.

[RiverDog]

If choosing between immigrants and the 1%, is that even a difficult choice? Btw take a look at the number of founders and CEO’s of Fortune 500 companies in the tech sector; without immigrants, some of these companies wouldn’t exist.

But to answer your question, yes, we can do both. But the two issues are completely unrelated and should be tackled separately.

Not sure who you’re referring to, but I never said the two issues weren’t different and didn’t see anyone make such a claim. They are different for sure, and both can be worked on. Loan forgiveness is not taking money from taxpayers, it’s cancelling part of the ridiculous interest on the original loan. It does represent lost revenue, but it so are massive tax cuts to the 1% and corporations like Amazon.

Ridiculous interest rates on student loans? In 2021, the average interest rate was 2.75%:

The office of Federal Student Aid announced lower interest rates for the 2020-21 school year for federal education loan borrowers. For undergraduate students, the interest rate is currently 2.75%. Keep in mind that Federal Student Loans also charge an origination fee.

https://collegefinance.com/student-loan ... s-for-2021

That rate has obviously gone up with rising interest rates everywhere, but it does illustrate that interest rates on federal student loans are very reasonable when contrasted to other types of loans.

I'm not sure where you came up with the idea that loan forgiveness isn't going to cost the taxpayers anything, but I linked an article earlier that had this in it:

Biden’s student debt forgiveness plan may cost taxpayers an average of $2,000, some policy experts say

The average burden per U.S. taxpayer will be $2,503.22, according to new estimates from the National Taxpayers Union that are based on the plan released this week.

Notably, the costs would not be spread evenly across the income spectrum, according to the National Taxpayers Union’s estimates. Low-income taxpayers earning between $1 to $50,000 would have an average additional cost per taxpayer of $190. That would increase to about $1,040 for those with adjusted gross incomes between $50,000 and $75,000; $1,774 for those between $75,000 and $100,000; $3,791 for incomes of $100,000 to $200,000.

https://www.cnbc.com/2022/08/24/bidens- ... ation.html

[Aseahawkfan]

Ridiculous interest rates on student loans? In 2021, the average interest rate was 2.75%:

The office of Federal Student Aid announced lower interest rates for the 2020-21 school year for federal education loan borrowers. For undergraduate students, the interest rate is currently 2.75%. Keep in mind that Federal Student Loans also charge an origination fee.

https://collegefinance.com/student-loan ... s-for-2021

That rate has obviously gone up with rising interest rates everywhere, but it does illustrate that interest rates on federal student loans are very reasonable when contrasted to other types of loans.

I'm not sure where you came up with the idea that loan forgiveness isn't going to cost the taxpayers anything, but I linked an article earlier that had this in it:

Biden’s student debt forgiveness plan may cost taxpayers an average of $2,000, some policy experts say

The average burden per U.S. taxpayer will be $2,503.22, according to new estimates from the National Taxpayers Union that are based on the plan released this week.

Notably, the costs would not be spread evenly across the income spectrum, according to the National Taxpayers Union’s estimates. Low-income taxpayers earning between $1 to $50,000 would have an average additional cost per taxpayer of $190. That would increase to about $1,040 for those with adjusted gross incomes between $50,000 and $75,000; $1,774 for those between $75,000 and $100,000; $3,791 for incomes of $100,000 to $200,000.

https://www.cnbc.com/2022/08/24/bidens- ... ation.html

I read it was around 5%. I'll have to look more into it. If it is 2.75%, then there is an even bigger gain to be had from forgiving it.

[RiverDog]

Ridiculous interest rates on student loans? In 2021, the average interest rate was 2.75%:

The office of Federal Student Aid announced lower interest rates for the 2020-21 school year for federal education loan borrowers. For undergraduate students, the interest rate is currently 2.75%. Keep in mind that Federal Student Loans also charge an origination fee.

https://collegefinance.com/student-loan ... s-for-2021

That rate has obviously gone up with rising interest rates everywhere, but it does illustrate that interest rates on federal student loans are very reasonable when contrasted to other types of loans.

I'm not sure where you came up with the idea that loan forgiveness isn't going to cost the taxpayers anything, but I linked an article earlier that had this in it:

Biden’s student debt forgiveness plan may cost taxpayers an average of $2,000, some policy experts say

The average burden per U.S. taxpayer will be $2,503.22, according to new estimates from the National Taxpayers Union that are based on the plan released this week.

Notably, the costs would not be spread evenly across the income spectrum, according to the National Taxpayers Union’s estimates. Low-income taxpayers earning between $1 to $50,000 would have an average additional cost per taxpayer of $190. That would increase to about $1,040 for those with adjusted gross incomes between $50,000 and $75,000; $1,774 for those between $75,000 and $100,000; $3,791 for incomes of $100,000 to $200,000.

https://www.cnbc.com/2022/08/24/bidens- ... ation.html

I read it was around 5%. I'll have to look more into it. If it is 2.75%, then there is an even bigger gain to be had from forgiving it.

Keep in mind that the average I posted was FEDERAL student loans, which makes up the vast majority of debt, and that it did not include the 2021-22 school year, which I suspect would be higher as all interest rates have climbed.

Point is that it is far from the outrageous, predatory type loans as was being portrayed.

[Aseahawkfan]

Keep in mind that the average I posted was FEDERAL student loans, which makes up the vast majority of debt, and that it did not include the 2021-22 school year, which I suspect would be higher as all interest rates have climbed.

Point is that it is far from the outrageous, predatory type loans as was being portrayed.

I think it is predatory in terms of what is being offered for the price at some schools. I think someone stated they forgave some of the loans to schools like University of Phoenix and ITT Tech. I think most universities are fairly reasonable if you choose a quality degree with most of the issues being bad K1 to K12 preparation.

I'm more indifferent to this move. If it occurs, I don't care. If it didn't, I wouldn't care. It's a drop in the bucket that will lead to higher tax revenues and money into the system and operates more like an education tax credit based on future revenue generated from the students who will be employed at a higher wage rate leading to higher tax revenue and more consumption which will allow the government to inflate it's way out of the extreme debt load it built up during the pandemic.

I knew the government was going to do everything it could to inflate it's way out and lie to our faces that they cared about inflation. But people who understand economics, especially the big trading houses ran up the stock market and hammered the stock market because they knew the government was lying out of their ass and the inflation was coming. The entire 2020 market rise after the huge crash was based on the thesis that extreme inflation was coming from all the money pushed into the economy and that it would be sustained because the government had no other choice but to inflate their way out of the debt as they usually do after wars like the insane inflation following World War 2 to pay the World War 2 debt or after Vietnam that drove 70s inflation. They gotta have that inflation when the debt load is too high. Only way to escape the debt generated to pay their way through the events like wars and pandemics.

[RiverDog]

Keep in mind that the average I posted was FEDERAL student loans, which makes up the vast majority of debt, and that it did not include the 2021-22 school year, which I suspect would be higher as all interest rates have climbed.

Point is that it is far from the outrageous, predatory type loans as was being portrayed.

I think it is predatory in terms of what is being offered for the price at some schools. I think someone stated they forgave some of the loans to schools like University of Phoenix and ITT Tech. I think most universities are fairly reasonable if you choose a quality degree with most of the issues being bad K1 to K12 preparation.

The cost/benefit might be considered predatory depending on the quality of education that is involved. But the terms can't be considered predatory, which is how I interpreted I-5's objection.

I'm more indifferent to this move. If it occurs, I don't care. If it didn't, I wouldn't care. It's a drop in the bucket that will lead to higher tax revenues and money into the system and operates more like an education tax credit based on future revenue generated from the students who will be employed at a higher wage rate leading to higher tax revenue and more consumption which will allow the government to inflate it's way out of the extreme debt load it built up during the pandemic.

I wouldn't characterize $240B-$1T over 10 years as a 'drop in the bucket', but it's not going to rival our defense budget, if that's the comparison.

My biggest complaint is the unfairness of it. Giving a couple that hauls in a quarter million dollars a year a $10K handout while I busted my arse saving for my daughter's education so she didn't have to go into debt is absurd.

[c_hawkbob]

I don't know where you get your numbers Riv but my google says:

The current federal student loan interest rate for undergraduates is 4.99%. Unsubsidized and direct PLUS loans for graduate and professional students have fixed interest rates of 6.54% and 7.54%, respectively. Private student loan fixed interest rates are typically around 3.7-14%.Jul 18, 2022

My SIL's is 12 something so your 2-whatever percent seemed awful rare to me.

[RiverDog]

I don't know where you get your numbers Riv but my google says:

The current federal student loan interest rate for undergraduates is 4.99%. Unsubsidized and direct PLUS loans for graduate and professional students have fixed interest rates of 6.54% and 7.54%, respectively. Private student loan fixed interest rates are typically around 3.7-14%.Jul 18, 2022

My SIL's is 12 something so your 2-whatever percent seemed awful rare to me.

First of all, I did say for 2020-21 and noted that it may be higher for the current school year as interest rates in general have gone up.

Is your SIL's loan federal or private? It also makes a difference if they are for undergraduate or graduate/professional degrees.

Here's some more information from Forbes, that has the 2022-23 school year incorporated:

Federal student loan interest rates are tied to the 10-year Treasury note and determined using a formula set by federal law. After Wednesday’s 10-year Treasury note auction, interest rates are set to rise for the 2022-23 academic year.

The new fixed interest rates will be:

4.99% for direct subsidized and unsubsidized undergraduate loans
6.54% for unsubsidized graduate loans
7.54% for grad and parent PLUS loans

The most recent rates, which only apply to new loans taken out for the specified school year, will take effect on July 1, 2022.

https://www.forbes.com/advisor/student- ... e-in-july/

It's important to note that the interest rates are set by law, and that what I've been referring to is FEDERAL loans, by far the most popular. Again, from Forbes:

Federal student loans make up the vast majority of American education debt—about 92% of all outstanding student loans is federal debt.

https://www.forbes.com/advisor/student- ... tatistics/

It's also important to note that this information is for NEW loans taken out during the current school year. Obviously, the vast majority of debt was incurred prior to this year and has significantly lower interest rates.

[c_hawkbob]

If you are aware of all that why are you using the 2.75% as your example to tell us we're out of line talking about predatory lending? Seems to 2.75% is the absolute lowest number you could find.

[RiverDog]

If you are aware of all that why are you using the 2.75% as your example to tell us we're out of line talking about predatory lending? Seems to 2.75% is the absolute lowest number you could find.

Because the vast majority of debt has been incurred under the lower interest rates. Only recently have interest rates increased. After all, we're forgiving previous debt, not that which is about to be incurred.

[RiverDog]

And by the way, if you want to talk about increasing the federal subsidy for future student loans, I'd be all for it. Interest rates, like everything else tied to inflation, are increasing with no relief in sight and can be a significant impediment to a person trying to get an education/training. It's the retroactive nature of the loan forgiveness, along with the financial threshold that Biden set, that has my briefs in a wad.

[c_hawkbob]

Because the vast majority of debt has been incurred under the lower interest rates

Doesn't seem likely to me. Seems to me that virtually all the debt was whatever the rate was at the time of the loan being taken out. A student isn't going to wait a couple years for the rate to come down before they start school.

[Aseahawkfan]

I wouldn't characterize $240B-$1T over 10 years as a 'drop in the bucket', but it's not going to rival our defense budget, if that's the comparison.

My biggest complaint is the unfairness of it. Giving a couple that hauls in a quarter million dollars a year a $10K handout while I busted my arse saving for my daughter's education so she didn't have to go into debt is absurd.

It will have no effect on the overall government budget or economy is what I mean by a drop in the bucket. Our national debt is 30 trillion. Which means we have handed out and overspent far more than this tiny student debt forgiveness and will likely continue to hand out or spend while the government inflates its way out of the 30 trillion debt load it has built up.

To me the government has been doing absurd financial handouts for ages and I specifically took note during the 2008 Financial Crisis when we're bailing out millionaires and billionaires because the government and financial community had developed the term "Too big to fail." This is not justification for the new spending, just an acknowledgment it doesn't appear that you and I Mr. Citizen have any way of stopping this regardless of which party we vote for.

Seems like at this point the government has developed a handout system that revolves around handing out direct payments, tax cuts, bailouts, or the like for reasons it seems to manufacture and they don't care that you or anyone else busted their ass to give them that tax money or pay off a loan or manage their business responsibly or anything of the kind. The idea of responsible, accountable, and intelligently managed government left the building a while ago. Now we have what we have. Your choices are Republican fiscal management with lots of tax cuts and tax breaks for the wealthy which leads to a deficit or the Democratic method with lots of handout programs as well as tax incentives and cuts for the wealthy which leads to a deficit. Main difference seems to be that the Democrats throw some bones to lower income people up to the middle income and the Republicans usually give a little bit more to small business and upper middle income people.

So pick your poison, but the poison's coming which is why we have 30 trillion in debt we need to inflate our way to a more serviceable ratio of GDP to debt so we can make the interest payments a smaller percentage of the government budget. How do you like having a government that manages its budget in a fashion that would bankrupt most households?

[RiverDog]

Because the vast majority of debt has been incurred under the lower interest rates

Doesn't seem likely to me. Seems to me that virtually all the debt was whatever the rate was at the time of the loan being taken out. A student isn't going to wait a couple years for the rate to come down before they start school.

OK, I did some more looking into the interest rate issue. From the US Department of Education website covering the past 15 years. You're going to have to give me a gold star for my homework as it took quite a bit of fanangling to get it into a readable format:

Fixed Interest Rates for Direct Subsidized Loans and Subsidized Federal Stafford Loans* - Undergraduate Borrowers

First Disbursement Date Fixed Interest Rate

7/1/21–6/30/22 3.73%

7/1/20–6/30/2 2.75%

7/1/19–6/30/20 4.53%

7/1/18–6/30/19 5.05%

7/1/17–6/30/18 4.45%

7/1/16–6/30/17 3.76%

7/1/15–6/30/16 4.29%

7/1/14–6/30/15 4.66%

7/1/13–6/30/14 3.86%

7/1/11–6/30/13 3.4%

7/1/10–6/30/11 4.5%

7/1/09–6/30/10 5.6%

7/1/08–6/30/09 6.0%

7/1/06–6/30/08 6.8%

https://studentaid.gov/understand-aid/t ... rest-rates

If your SIL is paying 12%+, it's not a federal loan, at least not an undergraduate loan.

[c_hawkbob]

1- So indeed 2.75% was the very lowest number you could have used in this conversation.

2- No my SIL's loan is not a federal loan, how did that become the only type of loan in consideration in this conversation? When I used the term "predatory lending practices" wrt student loans those were not the type of loans I was talking about anyway. There are a whole lot of for profit colleges out there catering to working dads wanting to get their degree and they'll happily hook you up with a loan that could keep you in debt for a very long time.

From the link below:

66% of graduates from public colleges had loans (borrowing an average of $26,900), according to 2016 data from an April 2019 report — the latest available.

68% of graduates from private, nonprofit colleges had loans in 2016 (borrowing an average of $31,450).

83% of graduates from for-profit colleges had loans in 2016 (borrowing an average of $39,900).

Students and parents borrowed an estimated $95.9 billion in the 2020-2021 academic year, and 13% of that were private and other nonfederal loans.

48% of borrowers who attended for-profit colleges default within 12 years, compared with 12% of public college attendees and 14% of nonprofit college attendees.

https://studentloanhero.com/student-loa ... tatistics/

[RiverDog]

1- So indeed 2.75% was the very lowest number you could have used in this conversation.

You are accusing me of cherry picking, and you're dead wrong! I had no prior knowledge of the past 15 year interest rates until I did some research in response to some of your comments. The reason I used the 2.75% number was because it was the most recent other than the current year, which had increased sharply this year due to the Fed's rate hikes over the past 8-10 months that are aimed at reducing inflation. I thought that my honesty and diligence in presenting this info would be appreciated, but apparently not.

The only reason why I even brought up the subject of interest rates was to counter I-5's assertation that these are predatory loans, which the information I posted clearly shows that the vast majority are not. They are closely regulated and set by law.

2- No my SIL's loan is not a federal loan, how did that become the only type of loan in consideration in this conversation? When I used the term "predatory lending practices" wrt student loans those were not the type of loans I was talking about anyway. There are a whole lot of for profit colleges out there catering to working dads wanting to get their degree and they'll happily hook you up with a loan that could keep you in debt for a very long time.

From the link below:

[i]66% of graduates from public colleges had loans (borrowing an average of $26,900), according to 2016 data from an April 2019 report — the latest available.

68% of graduates from private, nonprofit colleges had loans in 2016 (borrowing an average of $31,450).

83% of graduates from for-profit colleges had loans in 2016 (borrowing an average of $39,900).

Students and parents borrowed an estimated $95.9 billion in the 2020-2021 academic year, and 13% of that were private and other nonfederal loans.

48% of borrowers who attended for-profit colleges default within 12 years, compared with 12% of public college attendees and 14% of nonprofit college attendees.


https://studentloanhero.com/student-loa ... tatistics/

The reason why federal loans "become the only type of loan in consideration in this conversation?" is because they are by far the most common type of student loan, accounting for 92% of them. There are obviously going to be exceptions and I'm not saying that they should be ignored, but as an old wise man once told me, you don't manage to the exception. Perhaps some legislation regulating the 8% private loans, making federal loans more accessible, and/or to address the situation you cite is in order, but it is not a justification for giving every Tom, Dick, and Harry a $10K handout. Biden's loan forgiveness does nothing to fix what you're talking about.

BTW, did your SIL ever consider re-financing her loan when rates were lower? Surely, she could have done a lot better than 12+%.

[c_hawkbob]

No, I not accusing you of anything beyond using the most advantageous to your position stat available, if you tell me that was just the first stat you encountered I can accept that.

Not sure where you get 92% of student loans are government backed loans (the article I linked is frankly the only one I've read in it's entirety) but I have that 16% of student loans for the class of 2019 were private. That is the only stat the article I read gives in that regard.

16, even 8% is enough for consideration in this discussion IMO.

[RiverDog]

No, I not accusing you of anything beyond using the most advantageous to your position stat available, if you tell me that was just the first stat you encountered I can accept that.

Not sure where you get 92% of student loans are government backed loans (the article I linked is frankly the only one I've read in it's entirety) but I have that 16% of student loans for the class of 2019 were private. That is the only stat the article I read gives in that regard.

16, even 8% is enough for consideration in this discussion IMO.

It's from Forbes, and it was updated on June 9, 2022. From one of my comments posted above:

About 92% of all student debt are federal student loans; the remaining amount is private student loans

https://www.forbes.com/advisor/student- ... tatistics/

As far as it being relevant to the discussion, it certainly illustrates how much debt there is and how it was acquired, but as I keep saying, simply forgiving the loans does not fix the problem, nor does it provide more than a trivial amount to those that have some serious debt like my nephew's $360k.