Impact of forgiving student loan

Again, loan repayment has been on pause for two years. If loan payment comes back next year it will actually be disinflationary. Only a small portion of loans is forgiven.

I am sympathetic to the argument that forgiving student loans is unfair to people who didn’t go to college. But on the macro economic impact this is likely really small. We are talking about the money people save from loan payment every month. Tiny amount. Not the whole 10k going straight to people’s bank accounts.

Lol. My point was even people with those majors realize there’s no career in it. If they want to be financially successful, then they move into something else. I get not everyone prioritized financial so was, but people that don’t prioritize it shouldn’t complain about not having it.

Hey, when I get a chance to DUNK ON YO ARSE, me do it… LOL (cuz you do it enough on me!!!)

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Goldman Sachs:

We estimate that the debt forgiveness program would reduce student debt payments from roughly 0.4% to 0.3% of personal income

The aggregate effects from such an income boost would be small, however, with the level of GDP increasing by about 0.1% in 2023 with smaller effects in subsequent years. We would expect the effects on inflation to be similarly small.

However, the end of the payment pause and the resumption of monthly payments looks likely to more than fully offset the small boost to consumption from the debt relief program.

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I don’t care if the impact is a penny! It is a matter of principle that a select group should not be given a handout without something pegged to it. This is just another ill conceived policy that turns off people from the Democrats…

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I like college graduates. Farmers? Not so much. But you don’t see me have smoke coming out of my ears on farm subsidies.

Are you also against first time home buyers tax credits? What about PPP loans that are 100% forgiven?

Remember, EVERYTHING has a cost, an opportunity cost. That money that you are giving away freely could be used in way more productive ways.

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I paid off my $17k before I was making $125k+. They aren’t going to give me a refund for being responsible. Subsidizing bad choices just leads to more bad choices.

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There was no right choice in the last election…

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Those farm subsidies go to feed you and your children… They’re solely there to make your own meals cheaper.

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Given that CS has a 3% admit rate, this is pretty impressive and lower than demand.

So aspiring to be teacher is a bad choice as well? Never seen aggression for predatory high interest student loan and no option to file bankruptcy

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My understanding was that there are a number of teacher-loan forgiveness programs. I don’t entirely know the requirements (underserved community, 5-10 year teaching stint, etc.), but I knew a couple of people who intended to go into teaching and didn’t seem worried about their loans because of them.

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Someone was looking for a student loan in 2010. He was given a loan rate of @6-8%(government loans) although he had 850 FICO score, but since he was going to school full time he did not have an income. So, what you say above was my 1st reaction on hearing this, but then I tried to understand it further.

Most loans have an asset backing it, which the lender can take over to recoup their “losses” if the borrower can’t/won’t pay. Student loans are different, i.e. the degree can’t be transferred to the lender in case the student can’t pay. So, traditionally student loans have been costlier. Also, bankruptcy will lead it to be more costly, IF no institution subsidizes the bank for it’s losses(historical statistical loss data will be available).

We all want good things for people, but nothing is free. Also, whenever there is something free the so called “good” people might not be good anymore. People will willfully not pay. For e.g. in rent control, the so called renters become the owners by taking over the houses they are renting. Let’s not be wide eyed that the world is made up of nice and good people. There is a reason for carrots and sticks that has been developed.

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What about the credit card? We don’t pledge any asset right? In fact if you dispute every month on the balance and they don’t send you counter letter, balance gets erased off!

I understand your point of view. It’s just my thinking process that when retailers have 30 day free return policy, majority people are not misusing it. Just applying same logic here for student loan. I haven’t dig the data to support my hypothesis though.

Someone should Just do it and see how much credit whether that’s mortgage or student loan one gets going forward, and if by chance he/she does get a new loan at what interest rate.

It’s always nice for me when someone else pays for my bad behavior.

Credit cards charge much higher interest rates that student loans. There’s a reason credit card rates are so high.

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Generalizing everyone in that bucket as bad behavior is what I don’t agree. For sure there will be some but all.

A person who doesn’t pay his/her debts pays more. There is no generalization. That is correct policy.

Why are mortgages and car loan rates lower and not student loans? Are housing loan+auto loan giving companies less greedy than student loan companies?

Come on…