Elizabeth Warren Is Right About Student Debt Relief

[BlueMTexpat]

The government missed an opportunity to modify mortgages during the housing crisis. It shouldn’t repeat its mistake.

https://www.bloomberg.com/opinion/articles/2020-01-22/elizabeth-warren-is-right-about-student-debt-relief

Good op-ed from Joe Nocera, who among other things, is a business commentator for NPR's Weekend Edition.

...
Today, having struggled to pay off my loan, I would be well within my rights to demand that the current crop of student debtors do the same thing I did: suck it up and pay off their loans, no matter what. From reading Twitter, I can see many baby boomers feel the same way.

One boomer who does not, however, is Democratic presidential candidate Senator Elizabeth Warren. She — as well as rival Senator Bernie Sanders — is proposing a substantial student-loan-forgiveness program. Hers would eliminate “$50,000 worth of student loan debt for 42 million Americans,” according to her issues website. Total student loan debt is now more than $1.5 trillion, according to estimates, higher than any other category of debt after home mortgages. Warren’s plan would erase $1 trillion of that. 1 (Sanders’s plan would go much further and simply wipe all student debt off the nation’s books.)

This being Warren, she ladles her student loan plan with a heaping of progressive rhetoric: “State governments and the federal government decided that instead of treating higher education like our public school system — free and accessible to all Americans — they’d rather cut taxes for billionaires…” and so forth.

But — this also being Warren — she lays out a concrete, practical reason for her loan-relief plan: Student debt, she says, is acting “as an anchor on our economy.” She continues: “It’s reducing home ownership rates. It’s leading fewer people to start businesses. It’s forcing students to drop out of school before getting a degree. It is a problem for all of us.”

She is right on all counts, which is why, however unfair it may seem to those who struggled to pay their student loans, relieving some of that debt burden would benefit the country enormously.
...

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Much more at the link. Worth a read if you still have free articles from Bloomberg. This was my last one.

[Recursion]

1. The poorer half of the country subsidizing the richest third of the country just seems weird

Student loan payments are still smaller than the wage premium that comes with a college degree.

[flying_wahini]

2. If you can find a job that pays....

[Recursion]

6. And they do

https://www.hamiltonproject.org/charts/the_education_wage_premium_contributes_to_wage_inequality

The college wage premium has been growing (it is itself a big source of national inequality). For the fraction of college graduates who do not, that's why income-based repayment exists.

[Hav]

5. That's an interesting perspective and I think a fair point

It's a matter of what's beneficial for a country (I'm sure most would agree that affordable education belongs in that group) vs what is beneficial for me on an individual level. Such a system can only be fair if the solidarity is reciprocated.

[Gore1FL]

7. You mean fresh entry-level employees subsidizing bankers? nt

[Recursion]

16. That too (nt)

[My Pet Orangutan]

3. It is called an investment.

The unintended consequence of huge student debt is that graduates seek out the highest paying jobs, rather than their vocations. This is particularly a problem with teachers.

Warrens plan - up to $50,000 relief for those earning less than $100K, tapering off thereafter, is more realistic ($650b) than Sanders' forgive all debt to everyone ($1.5 trillion)

Warren's plan is paid for by the wealth tax - it is not asking the less well off to subsidize the other half. One can go onto debate the constitutionality of a wealth tax, but the fact is, it is fair, as pitched.

[squirecam]

4. I think

Free college/Debt forgiveness in exchange for public or military service is fine. Or for certain professions like teachers.

I do not believe in simply eliminating all college debt. An “investment” should see a return. Like it or not, when the economy crashed and banks got $, that money was paid back. The government invested, and made $ on that deal. When you get a loan, the expectation is that economically you will pay that loan back with the degree.

https://www.thebalance.com/tarp-bailout-program-3305895

Refinancing at lower rates is also something to do as well.

[Gore1FL]

8. The return is an educated society that establishes and maintains the market edge.

When we were going to the moon, we were the only ones who could build the stuff. We had the edge. In the 1980s, Reagan said, we need rest on our laurels and not invest in what makes us great anymore. Not doing that has cost us far more than the investments; our jobs have shipped overseas.

We need them back and the best way to do that is to recreate what worked before--affordable education. Education was affordable before Reagan. This isn't radical. It's 1970s.

[squirecam]

9. If you obtain a degree in rocket science

Then you should have sufficient income to pay the loans back. Same with lawyers and doctors and other professions.

Any degree that provides a “market edge” should not be a problem, because that degree should be economically in demand.

[Gore1FL]

11. Why can;t this generation have it as good as I did in the 80's?

Or my siblings in the 70's?

Why do the poor have to subsidize the rich? Why do kids need to shovel their earnings into the hands of private bankers? Why not have the rich bankers subsidize the education of their future workers?

[squirecam]

12. Well

I don’t believe that the poor should subsidize the rich. That’s why I don’t think everyone should get free college. Why should Barron Trump get it when the Don can afford it.

I don’t think kids need to shovel earnings into the hands of bankers. That’s why I think we should expand Pell Grants so that more kids can attend college or technical school. As Amy says, we need more plumbers.

If you want to join the military or perform public service or join certain professions (like teachers), your education should be free, subsidized or loans eventually forgiven.

Now. If One wants to obtain a degree in 17th century French poetry, there is nothing wrong with that. And if you want to take those classes at a local community college, well....ok.

If you want to attend out-of-state U for that degree, at $26,000 a year, and want the taxpayers to pay for it.....that’s where you lose me. You are certainly free to get a loan to get that degree. But we have too many things to pay for already.

[Gore1FL]

13. The same reason Barron can go to a public school if so desired

There is no reason to exclude people because they are rich. The issue is making that children have opportunity regardless of the wealth of their parents.

High-interest loan payments by people who would otherwise be buying houses, cars, and appliances simply hurts the economy and enriches bankers.

There is no reason to militarize the populace to ensure college or trade school tuition; we just need to educate our youth. The model worked for a long time until Reagan broke it. Affordable education is not a long-term cost. It fuels the economic engine.

[squirecam]

14. You said earlier

That you don’t want the poor to subsidize the rich.....

[Gore1FL]

15. But I believe in social systems that everyone can access.

Presumably, the rich are paying more than enough to support their own children in such a scenario.

Regardless, I want everyone to have an opportunity regardless of who their parents are, and what opportunities where afforded to them.

And yes, I want rich people to have access to the public parks, zoos, fire departments, streets, and everything else we all can enjoy, too. That's not a contradiction.

[BlueMTexpat]

10. Did you read the article?

Please do.