Cancel student loan debt?

[Emily's Cat]

Charity is great. What you're describing here is not the same as making loan forgiveness contingent on public work.

Honestly, if you think some conscription into a civil works department is a good policy idea for dealing with student debt, I'm all ears. But don't elide that this is what you're talking about under the pretense of "charity" or "gratitude". Funneling huge swaths of prime working age people into government public works smacks a bit too much of centralized economy for my tastes, but I'm always open to ideas to my left.

You're attaching massive strings to this money. Which is fine, but I hope you're reasoning for such strings is more than "these greedy kids are so ungrateful". It's perfectly normal to experience resentment for those getting a benefit that you do not, but it's probably best to maintain some perspective.

I'm curious. Are you also opposed to civil works programs like those included in the New Deal? Where people were given jobs, even though they were manual labor, so that they could get paid instead of being unemployed. Does that also strike you as a bad idea?

 

[Emily's Cat]

It's a raw deal no matter what. If you put people to work doing skilled or valuable labor, you're undercutting the private market. I imagine there would be complaints if vast hordes of student debtors started repaving roads or building rest stops and putting regular construction firms that normally get these contracts out of business.

Judging by the quality of roads in most places, I don't think that's a huge risk. There is more infrastructure work that needs to be done than there are construction firms doing it, or money to pay for it.

 

[theprestige]

By this logic, wouldn't it be beneficial to the economy generally to bail out ALL debt? Cancel all mortgages, auto loans, credit card debt, etc. Why wouldn't this be an even better idea?

Seriously. Why not abolish all speculative lending? Nationalize the lenders, convert them into gifters, and replenish their funds from the tax revenue generated by all that extra economic activity?

Take the fruit of everyone's labor, redistribute it to everyone such that they're all being maximally productive, bootstrap the economy to heights never before achieved by mere capitalism and speculative lending. What could go wrong? Even leaving aside that model for a moment, it seems this approach isn't working to well in terms of government-backed student loans. If Biden is talking about forgiving student loan debt, he's not talking about an economic boon, he's talking about an economic failure.

And then we have the beneficiaries of these loans (and of the proposed forgiveness) complaining that they're being punished for not doing something productive with the money they've been given.

 

[lomiller]

By this logic, wouldn't it be beneficial to the economy generally to bail out ALL debt? Cancel all mortgages, auto loans, credit card debt, etc. Why wouldn't this be an even better idea?

Every type of debt you mentioned can be cancelled in bankruptcy court, and the economy is better for it. You are, in fact, the one arguing that student loans be treated differently that other debt.

 

[Emily's Cat]

Every type of debt you mentioned can be cancelled in bankruptcy court, and the economy is better for it. You are, in fact, the one arguing that student loans be treated differently that other debt.

Bankruptcy really isn't the same as debt forgiveness. Nor is it particularly easy to do, nor without consequences of its own.

Now, if you want to take the stance that student loans should be counted among other debts for bankruptcy purposes, I don't really have any objection. They might lose the options for forbearance and deferment though.

 

[lomiller]

(G)You have been giving a (potentially large) sum of money to educate yourself and when you can't pay it back playing the victim card because your path out of the situation isn't frictionless is rather unreasonable.

Why should it be easier to get out of the debt incurred to buy a car then the debt incurred to get an education?

Being able to have debt waved off is proven to be a net benefit to the economy and peoples overall standard of living. In this particular case, however, some people want to break with the principles that work everywhere else in the economy and the only reason they can give is "Socialism" even though they are not quite sure what socialism is, why they should oppose it or why it would be relevant in the current discussion.

 

[theprestige]

Every type of debt you mentioned can be cancelled in bankruptcy court, and the economy is better for it. You are, in fact, the one arguing that student loans be treated differently that other debt.

If cancelling loans improves the economy, why make speculative loans legal in the first place? Why not abolish the practice, raise taxes to channel that pool of unused money, and use the revenue to hand out small business gifts, auto gifts, college tuition gifts, etc. Wouldn't that cause the economy to explode like a piñata full of productivity?

 

[theprestige]

Being able to have debt waved off is proven to be a net benefit to the economy and peoples overall standard of living.

How does waving off the debt improve the lender's overall standard of living? Now they're out both the money itself and the recouped opportunity cost of having lent it rather than saved it. It seems to me that this can only make their standard of living worse.

If a firm keeps having to write off debt, pretty soon they'll go out of business. That can't possibly improve the overall standard of living of their employees.

 

[lomiller]

Bankruptcy really isn't the same as debt forgiveness. Nor is it particularly easy to do, nor without consequences of its own.

Now, if you want to take the stance that student loans should be counted among other debts for bankruptcy purposes, I don't really have any objection. They might lose the options for forbearance and deferment though.

It's not hard and the main consequence is that it may be difficult to borrow money for a while. If you are rich enough you even get rewarded for it with tax credits.

Now, if you want to take the stance that student loans should be counted among other debts for bankruptcy purposes, I don't really have any objection. They might lose the options for forbearance and deferment though.

Forbearance and deferment or something equivalent is easy if you can pay the money back.

 

[Garb]

How does waving off the debt improve the lender's overall standard of living? Now they're out both the money itself and the recouped opportunity cost of having lent it rather than saved it. It seems to me that this can only make their standard of living worse.

If a firm keeps having to write off debt, pretty soon they'll go out of business. That can't possibly improve the overall standard of living of their employees.

Isn't this a problem even with the whole "do community service to pay off the debt" option?

 

[theprestige]

Isn't this a problem even with the whole "do community service to pay off the debt" option?

Maybe? I admit I've never actually examined the assumption that paying off debts improves the overall economy. Maybe I should.

 

[dirtywick]

Isn't this a problem even with the whole "do community service to pay off the debt" option?

maybe the debtors could like go live on the property of the lender, and do household chores or some kind of field work, and in exchange get a roof over their head and food until the debt is paid?

 

[TurkeysGhost]

I'm curious. Are you also opposed to civil works programs like those included in the New Deal? Where people were given jobs, even though they were manual labor, so that they could get paid instead of being unemployed. Does that also strike you as a bad idea?

No. I could easily see mass public work projects being a solution to economic woes. Not sure if that's something that ought to be specifically tied to student debt or just a general policy.

I would assume that any such program would be engaged in meaningful infrastructure projects rather than make-work that exists to show civic gratitude.

 

[TurkeysGhost]

Seriously. Why not abolish all speculative lending? Nationalize the lenders, convert them into gifters, and replenish their funds from the tax revenue generated by all that extra economic activity?

Take the fruit of everyone's labor, redistribute it to everyone such that they're all being maximally productive, bootstrap the economy to heights never before achieved by mere capitalism and speculative lending. What could go wrong? Even leaving aside that model for a moment, it seems this approach isn't working to well in terms of government-backed student loans. If Biden is talking about forgiving student loan debt, he's not talking about an economic boon, he's talking about an economic failure.

And then we have the beneficiaries of these loans (and of the proposed forgiveness) complaining that they're being punished for not doing something productive with the money they've been given.

No need to be dramatic, we could start by reversing recent tax cuts for the wealthy that have been paid for by slashing social services. Cries of red scare fall a bit flat when we're talking about returning to the status quo of only a few decades ago.

 

[theprestige]

maybe the debtors could like go live on the property of the lender, and do household chores or some kind of field work, and in exchange get a roof over their head and food until the debt is paid?

I'd settle for them just getting a job and paying their debt. Ideally it would be a job made possible by the money they borrowed, but that's really up to them. I try not to judge. I just want to get paid.

So debt forgiveness, without any consequences or obligations from the borrower, is right off the table, as far as I'm concerned.

"Oh, but I can't get that high-paying lawyer job! I can't afford the agreed-upon interest payments!" That's unfortunate, but in a charitable spirit let's ease up on the payment schedule, so it's something you can manage on your current income.

"Oh, but even that is too much! Just let me have the wasted money for free!" No, sorry, I really want to uphold the basic principle of quid pro quo here. There must be something you can do in exchange for this forbearance.

"Oh, but I'm educated now! I know things! I understand foreign policy and statistical analysis and critical thinking! I'm now a net benefit to society with my dead-end minimum wage job! Why do you insist I pay you back when I'm already paying it forward?"

 

[TurkeysGhost]

I'd settle for them just getting a job and paying their debt. Ideally it would be a job made possible by the money they borrowed, but that's really up to them. I try not to judge. I just want to get paid.

So debt forgiveness, without any consequences or obligations from the borrower, is right off the table, as far as I'm concerned.

"Oh, but I can't get that high-paying lawyer job! I can't afford the agreed-upon interest payments!" That's unfortunate, but in a charitable spirit let's ease up on the payment schedule, so it's something you can manage on your current income.

"Oh, but even that is too much! Just let me have the wasted money for free!" No, sorry, I really want to uphold the basic principle of quid pro quo here. There must be something you can do in exchange for this forbearance.

"Oh, but I'm educated now! I know things! I understand foreign policy and statistical analysis and critical thinking! I'm now a net benefit to society with my dead-end minimum wage job! Why do you insist I pay you back when I'm already paying it forward?"

Yes, from an individual level it seems unfair.

I just don't want to hear any crying when people saddled with this debt make reasonable decisions in their position. Say by not having children, or not buying homes, or massively curtailing consumer spending.

These people will service this debt if we insist on it, and our broader economy will pay the price.

This is what I mean by needless moralizing of this issue. People are willing to ignore broader economic slumping if it means sticking it to irresponsible borrowers. Seems like a bad way to run a country.

Curious that similar levels of unwavering personal responsibility never seems to apply to financial institutions that crash the economy through irresponsibility that is arguably criminal fraud, but that's par for the course. There was probably a good case to be made, from a strictly pragmatic lens, to bail out the banks. It's distasteful, and there was certainly way more room for accountability while still bailing out the economy, but the good of the country required it.

Seems there no room for such nuance when it comes to student borrowers.

 

[theprestige]

No need to be dramatic, we could start by reversing recent tax cuts for the wealthy that have been paid for by slashing social services. Cries of red scare fall a bit flat when we're talking about returning to the status quo of only a few decades ago.

Nah, lets' keep talking about the implications of student loan forgiveness as an engine of economic productivity. Since student loan forgiveness is actually the topic of the thread. If your argument is that forgiving these loans is good for the economy, I expect you to defend it in terms of forgiving loans, not in terms of reversing some other unrelated policy that you also have a bee in your bonnet about.

About which you also have a bee in your bonnet.

 

[TurkeysGhost]

Nah, lets' keep talking about the implications of student loan forgiveness as an engine of economic productivity. Since student loan forgiveness is actually the topic of the thread. If your argument is that forgiving these loans is good for the economy, I expect you to defend it in terms of forgiving loans, not in terms of reversing some other unrelated policy that you also have a bee in your bonnet about.

About which you also have a bee in your bonnet.

Sure. In addition to dealing with the current load of student debt, proactive action should be taken to ensure that future students need not borrow so much to receive higher education.

That likely means, among other measures, reducing how much of higher education is paid by tuition. A return to prior eras where state run institutions rely much more heavily on state support, paid by higher taxes, is probably the best bet. A return to the era when students could pay their tuition working part time and summer jobs, or quickly upon graduation, even at minimum or near minimum wage.

There's no way out prestige. It's socialism all the way down.

 

[Emily's Cat]

No. I could easily see mass public work projects being a solution to economic woes. Not sure if that's something that ought to be specifically tied to student debt or just a general policy.

I would assume that any such program would be engaged in meaningful infrastructure projects rather than make-work that exists to show civic gratitude.

Despite TM's "clean up litter" quip, I rather thought useful public works was the point. There are a lot of things that need doing that could be done. Sure, people are overqualified for them... but they're overqualified for what they're doing now too. This provides a means by which to alleviate that debt, earn an income, and fix our failing infrastructure etc. Seems like a win-win-win.


ETA: I don't like the "just wipe the slate clean" view of it. Financial bailouts aren't really solutions, they end up just shifting the problem onto the backs of other citizens. That includes bailouts of companies and banks. Some exceptions made for small businesses when the government forces them to not operate because of quarantines, of course.

 

[Emily's Cat]

Say by not having children, or not buying homes, or massively curtailing consumer spending.

I'm okay with that. We don't really need population growth, and fewer children would help bolster our immigration backlog, as well as reducing welfare burdens. And imo, we should be curtailing consumer spending anyway. A lot of it is spending for the sake of spending so we keep the economy going. It's stupid, and most of the stuff we spend money on is stuff we really don't need, and is enormously wasteful.

I'd really prefer home-ownership to be more available... but that's a messy problem with entirely different underlying issues. That requires a discussion of changing to a distributed, remote-work and satellite office paradigm, as well as addressing the abysmal impacts of gentrificiation.

Curious that similar levels of unwavering personal responsibility never seems to apply to financial institutions that crash the economy through irresponsibility that is arguably criminal fraud, but that's par for the course. There was probably a good case to be made, from a strictly pragmatic lens, to bail out the banks. It's distasteful, and there was certainly way more room for accountability while still bailing out the economy, but the good of the country required it.

FWIW, I thought we should let them fail in the first place. I'm still displeased with using taxpayer money to bail out private companies... which then continue to make poor decisions and stick it to the citizens.