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BeyondGeography

(39,283 posts)
Mon Nov 25, 2019, 08:15 AM Nov 2019

Economists Say Forgiving Student Debt Would Boost Economy


Presidential hopefuls Elizabeth Warren and Bernie Sanders want to tear up your student loans and set you financially free. That's popular among voters – especially those struggling to pay off this debt. Other Democratic candidates have more modest plans. But economists say the dramatic proposals from Sanders and Warren to free millions of Americans from the burden of student debt could boost the economy in significant ways and help combat income inequality.

... "In the short term, it would be very positive for the housing market," says Lawrence Yun, the National Association of Realtors chief economist. He says his group's surveys show that student debt has people delaying home ownership by 5 to 7 years.

He's not endorsing any particular plan, but he estimates that broad loan forgiveness would push up the number of home sales quite a bit. "Home sales could be say 300,000 higher annually if people were not saddled with large student debt." Yun says that would be, "a boost to the housing sector as well as the economy.

The effects would go beyond the housing market. William Foster is a vice president with Moody's, which just did a report on student debt forgiveness. "There've been some estimates that U.S. real GDP could be boosted on average by $86 billion to $108 billion per year," which is "quite a bit" he says. "That's if you had total total loan forgiveness." Foster says it wouldn't have to be total forgiveness to see significant results. And he says it could also help address rising income inequality.

"Student loans are now contributing to what's perceived as lower economic prospects for younger Americans," Foster says. After all — millions of people are delaying home-ownership. And that's the most powerful way for most working and middle class people to build wealth. "A typical homeowner has net worth about $230,000, while a typical renter has only $5,000," Yun says...

https://news.wgcu.org/post/economists-say-forgiving-student-debt-would-boost-economy
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8 replies = new reply since forum marked as read
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Economists Say Forgiving Student Debt Would Boost Economy (Original Post) BeyondGeography Nov 2019 OP
Elizabeth Warren Took On Obama Over Student Debt Forgiveness. BeckyDem Nov 2019 #1
Hmm, spokesperson for the National Association of Realtors, eh? customerserviceguy Nov 2019 #2
What's your plan for building wealth, Service Guy? BeyondGeography Nov 2019 #3
Get a job customerserviceguy Nov 2019 #4
Student debtors have jobs. Rents are a potential runaway variable cost BeyondGeography Nov 2019 #5
As I said customerserviceguy Nov 2019 #8
How many economists? Two? redqueen Nov 2019 #6
Yeah, two BeyondGeography Nov 2019 #7
 

BeckyDem

(8,361 posts)
1. Elizabeth Warren Took On Obama Over Student Debt Forgiveness.
Mon Nov 25, 2019, 08:34 AM
Nov 2019

Elizabeth Warren Took On Obama Over Student Debt Forgiveness. How She Won Is Central To Her 2020 Campaign

Her theory of change is that you focus on one or two levers, and you push them hard.”


Posted on August 14, 2019, at 7:43 p.m. ET

In 2015, when she found herself on Air Force One with then-president Barack Obama, Sen. Elizabeth Warren seized the chance to pressure the most powerful man in the world about an obscure part of federal tax law.

Warren — along with activists, consumer lawyers, and a group of other Democratic senators — was in the midst of what would become a years-long fight to get loan forgiveness for tens of thousands of students who had been defrauded by Corinthian Colleges, a collapsed for-profit college chain.

Earlier, Warren and others had helped convince the Education Department to agree to cancel the loans for some of those for-profit college students, opening the door to forgiveness for hundreds of thousands of people. Now, Warren was waging a new battle against Obama’s Treasury Department, which was planning to hit students with steep tax bills on their forgiven loans.

https://www.buzzfeednews.com/article/mollyhensleyclancy/elizabeth-warren-student-debt-for-profit-colleges

If I were to vote in a presidential
primary today, I would vote for:
Joe Biden
 

customerserviceguy

(25,183 posts)
2. Hmm, spokesperson for the National Association of Realtors, eh?
Mon Nov 25, 2019, 08:51 AM
Nov 2019

If a candidate called for abolishing all mortgage debt in the same fashion, and housing lending would dry up completely, such a spokesperson would have a different view.

And further, selling the tired idea that homeownership is investment is bogus.

If I were to vote in a presidential
primary today, I would vote for:
Joe Biden
 

BeyondGeography

(39,283 posts)
3. What's your plan for building wealth, Service Guy?
Mon Nov 25, 2019, 09:09 AM
Nov 2019

CD’s? And your vision for retirement security? Nothing beats owning and paying off a home.

If I were to vote in a presidential
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Undecided
 

customerserviceguy

(25,183 posts)
4. Get a job
Mon Nov 25, 2019, 09:12 AM
Nov 2019

spend less than you earn, and save the rest. It also helps greatly to avoid my mistakes, like marrying the wrong person.

The biggest reason that homeowners have more money on hand than renters is that the skills needed to save up for a downpayment are the same skills needed to save up for retirement.

Edited to add: I don't see anything wrong with buying a home and paying it off for the long term, but when a realtor pushes the idea that buying a house is some sort of get rich quick scheme, I have to challenge that. Millions of people get sucked into buying at the wrong time (I know, I did it myself) when prices are at a peak, and it takes a decade or more for them to build any meaningful equity.

If I were to vote in a presidential
primary today, I would vote for:
Joe Biden
 

BeyondGeography

(39,283 posts)
5. Student debtors have jobs. Rents are a potential runaway variable cost
Mon Nov 25, 2019, 09:24 AM
Nov 2019

That’s why Blackstone and private equity love them so and are waiting for the next downturn to take as many homes off the market as possible like they did in 2012.

The best form of self-defense in an economy where real income growth is hard to come by and corporate consolidation puts upwards pressure on the cost of necessities is keeping overheads as low as possible. Owning a home puts you in a position to do that over the long term and leaves you in a much more secure position when you’re older.

If I were to vote in a presidential
primary today, I would vote for:
Undecided
 

customerserviceguy

(25,183 posts)
8. As I said
Mon Nov 25, 2019, 09:54 AM
Nov 2019

I believe in home ownership, but I will call out a self-serving statement by an "expert" when I see one.

And if students had to go through the same process to get a school loan as buyers have to in getting a home loan, there wouldn't be so much student debt. A higher education is the only thing you can borrow massive sums of money for without credit, or a solid plan on how to pay back the loan.

If I were to vote in a presidential
primary today, I would vote for:
Joe Biden
 

redqueen

(115,096 posts)
6. How many economists? Two?
Mon Nov 25, 2019, 09:27 AM
Nov 2019

I'm for forgiving some student debt. Not all of it.

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primary today, I would vote for:
Undecided
 

BeyondGeography

(39,283 posts)
7. Yeah, two
Mon Nov 25, 2019, 09:50 AM
Nov 2019


It’s pretty sad when a Republican is way ahead of you on an issue of economic fairness and common sense:

'The fabric of America is being destroyed.' Why this ex-Trump official says student debt needs to be canceled

MACON, Georgia — As the head of student loan debt at the U.S. Education Department, Wayne Johnson discovered some people had balances of more than $1.5 million.

"I'll never forget it," Johnson, 67, said, during an interview with CNBC on Sunday night at a gated retirement community he owns here. "There were lots of folks in the $500,000 range, and $250,000 is not an uncommon number."

He saw a lot of other things that disturbed him.

More than 40% of student loan borrowers — or more — might never repay their debt, Johnson said. And the current $1.6 trillion portfolio of outstanding debt could swell to $5 trillion.

"The system is designed with no checks," Johnson said. "The fabric of America is being destroyed through this process."

https://www.google.com/amp/s/www.cnbc.com/amp/2019/11/03/why-this-ex-trump-official-says-student-debt-needs-to-be-cancelled.html

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