Instead of debt forgiveness to a small/elite population, why did they not cap/lower interest rates on all student debt, benefiting all borrowers?
Not sensational enough?
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The majority of college students go to state colleges and donāt come from the elite population. I know on CC thatās not true, but IRL it is. Most donāt make 100K coming out of college either. Many donāt make 100K even at the top of their career.
And even if they took out the max student loans of 27K, no one is getting all of that amount forgiven.
No one chose Playboy/girl U costing 250K for four years over Sensible Priced U and is getting their large loans forgiven.
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And there are many with student debt from decades ago who still make under $125,000.
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I donāt understand the comment about this policy benefiting a small/elite population as many of the beneficiaries will be those who attended a two year college and have debt even if they only attended for a semester or two and didnāt get a degree.
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My recent college graduate has quite a few friends (most of her closest friends went into high income potential majors) who are already making high 5 figure to low 6 figure salaries from her high school (feeds a lot of kids into GT and UGA), with most having low to no debt from college due to the Zell Miller Scholarship which picks up tuition in GA state schools. But she also knows kids from her HBCU (About 2/3ās of all HBCU students overall are eligible for Pell Grants) and her high school where this loan forgiveness could cut a decade or more off of paying student loan debt. My question is what is next for lowering higher ed costs because we still have a major problem. The easiest way to cut costs would be to go to an European based educational model where a undergrad degree is 3 years long (and community college is 3 semesters). Lowering interest rates (or even freezing for a 5 year period after completing schooling) could give borrowers a chance to pay down their loans without some of the explosive interest charges that cause loans to become a ālifetime shackleā. But since most educational loan debt is from graduate and professional degrees, we may need even more solutions.
There are other ideas out there, but my biggest worry is that Colleges and Universities do not have enough incentives to keep costs as low as possible because we as consumers āneedā all of the ābells and whistlesā that a well-funded school can provide and that schools have a ābottomless money pitā to pay for those upgrades. My nephew may decide to attend college in 14 years and the projected cost of attendance (at current rate of inflation over last 50 years) for a state school education (45-50K at his state school) and a private school one (most expensive should be around 120K) may become untenable for all but the most well off schools and families without a course correction.
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One good point that Susan Dynarski, a higher Ed expert at Harvard, keeps making is that folks shouldnāt have to apply - perhaps through a complicated process- for this program as the federal government already has all the relevant data to send out the money automatically.
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I follow Prof Dynarski on Twitter. She also links to data showing that a majority (59%) of student loan borrowers do not have a BA. There are plenty of colleges out there, especially ones that are struggling financially, that recruit students even though they know a large chunk of them will never graduate. Admittedly this forgiveness plan does nothing to fix that underlying problem, but I think that we need to keep in mind who is being helped here.
Iām skeptical of the parade of horribles being touted by those opposed to forgiveness, such as the investment banker who will get debt cancelled or the Ivy League lawyer who gets debt cancelled. It reminds me a bit of Reaganās āwelfare queenā trope. Personally I probably wouldāve limited the plan to Pell Grant recipients or used a lower income limit but I think itās not accurate that this plan targets elites as suggested by a lot of politicians right now.
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Many colleges already spend more per student than they charge, so I donāt see college costs falling below what students are currently paying anytime soon (or ever really).
I agree there is a great deal of room here in the US for the European model of 3 years. Of course, some students in the US currently do that using AP and CLEP credits, while others in effect do it (in terms of cost) by attending CC for 1-2 years.
There is a new start up college called NewU, in DC, that is offering 3 year degrees. I did an info session for counselors and was impressed by the people leading it, their thought process, and what they have created. It will be a while before it appeals to a typical high school senior though (IMO). https://newu.university/
I donāt have a sense to what degree these debts are a problem for the people who have taken them out. I see it in primarily two groupsā¦the professional degrees (MD, DO, MBA, Law) where many wonāt have a problem paying the debt back, vs other degrees where there might be problems (eg. some humanities type degrees where many grads end up in low paying jobs).
When talking about relieving grad debt, I have less overall tolerance for relieving that than I do for undergrad, for a number of reasons including an undergrad degree being relatively more necessary to access higher paying jobs, whereas the grad degrees are more of a choice, where the borrower should know exactly what they are getting into.
IMO we are already there with private schools being only affordable for relatively affluent families, which seems apparent by the proportion of full pay (or close to it) students at many of the private schools. The private schools with large endowments can meet full need for less affluent students and enroll a not insignificant proportion of those students that way, but most schools canāt do that.
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Yes, this is definitely an āinformative threadā, not a thread for people to spread (and like) obvious misinformation and vent about a policy they donāt like.
Imagine attempting to frame universal, income-capped student loan forgiveness as benefitting a āsmall/elite populationā in an era when Google exists.
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By definition, people attending higher education have some eliteness compared to those who were unable to do so and pursued a route of vocational or manual labor. They have higher incomes, and higher income potential, compared to the general population. Every economist appears to acknowledge this, and thus correctly labels the proposal as āregressiveā in nature.
Compounding this regression is setting means testing thresholds at the 93 and 89th percentile, respectively, for individuals and households. Establishing thresholds at the 50th, or even 75th percentile, would have reduced the regressive nature.
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By definition, the recipient group is neither āeliteā nor āsmallā, and āhigher incomeā and āregressiveā are different arguments than āelite/smallā.
75% of people attend college now. Thatās not a group people would label as āeliteā or āsmallā based on how the English language works, and you know that.
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I agree it is not small-about 13% of American adults have student loans, so 87% do not. I think we can just disagree about whether the group is āeliteā or āprivilegedā or whatever term you wish to use to differentiate those with higher income and higher income potential than others.
Regardless of your terminology, those at the top 10% of income levels, as some recipients are, would be considered elite no matter that they consider themselves middle class. Almost everyone in the US, even those in the top 1%, often label themselves as middle class.
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You are talking about a different point than the statement I quoted. He made what I and others interpreted as a general comment about student loan forgiveness, not one directed at people who make $124,999, specifically.
I also donāt accede to your ā13% of American adultsā framing. I care about what percentage of young people have student loans, and that percentage is high. That young people have student loans their 90-year-old grandmothers never had a chance to be burdened with doesnāt make the former āeliteā. Letās at least make useful population comparisons.
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Blockquote My bad, on the stimulus $$ - in my world, most everyone I know received it.
Do you know this or are you assuming everyone received? Many have congratulated my D and she has not received it and does not want to tell anyone she didnāt. Sadly we took our loan from our house equity.
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That 90 year old grandma may be living on social security and barely getting by in an inflationary economy, with no outside source of income (like work) available. There is a reason programs like Meals on Wheels exist.
I understand your perspective on young adults ( are you one?), but the population as a whole must be considered by our representatives
Weāve lost the thread. The point was not about the plight of grandmothers in an inflationary economy. And yes, the population as a whole has to be considered but numbers also have to be placed into context.
āOnlyā 13% of people have loans ā but when those loans are mostly concentrated in a single generation, that concentration has massive societal implications. Roughly two-thirds of Juneās high school grads are now attending college and many will end up with student debt. They have parents and grandparents, employers and employees, and partners whose lives and businesses are also impacted by the student debt crisis. Itās a huge segment of the population, not a āsmallā or āeliteā one. Thatās one reason why 50-60% of Americans support limited student loan forgiveness.
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Could we focus on the question asked?
Why not cap/lower the interest rate on student debt instead of outright forgiveness?
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Cutting the interest rate on student loans to zero would have done far more to help young adults than this proposal. And capping tuition increases at public schools or providing free community college would have helped the next generation of young adults more.
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This debt forgiveness isnāt targeted at the group that just graduated in June and will be potentially taking on new student debt.
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Yes, I am aware. My point is that 66% of young people now attend college, and that has to be considered alongside the fact that āonlyā 13% of the total population has student debt. If you have a statistic on what percentage attended college in 2018, feel free to use that number instead.