Biden shouldn't listen to Schumer and Warren on student loans

[brooklynite]

Washington Post

With 44 million Americans holding more than $1.6 trillion in student loan debt in an era of ever-escalating college tuition prices, action of some sort is certainly needed. But not every loan needs to be forgiven.

Yes, student loans can heavily burden those who find that their education hasn’t translated into a good job. Millions have defaulted on their loans. Many more struggle to repay, hampering their ability to financially prosper. Black, Hispanic, low-income and first-generation students are the most likely to default under crushing debt burdens.

But those experiences aren’t universal. Many student loan borrowers are advantaged, well-educated high earners. About 56 percent of student debt is owed by those with masters or professional degrees, and almost 35 percent of loan balances are owed by individuals in the top 20 percent of the income distribution. Many student-borrowers need relief, but well-off borrowers who are thriving — thanks, no doubt, to their college degrees — do not.

Consider the top five degrees responsible for the most student debt: medical and law degrees, master’s and bachelor’s degrees in business, and bachelor of science for nursing. The education financed with those loans makes the debt-holders more likely to increase their earnings.

That’s why the $50,000 across-the-board relief championed by Schumer and Warren is wildly out of synch with the traditional approach of progressive policymaking. Food stamps, for instance, serve households whose median income is about $19,000 a year, and provide $2,300 in value for the average household. Families that claim the Earned Income Tax Credit — the largest cash income support for working families — earn about $36,500; their average annual benefit is about $2,200. The median income of parents of Pell Grant recipients was about $28,800.

[Turin_C3PO]

1. Student loan debt relief

should probably look at the income/student loan debt ratio. Or cut everyone’s loan debt in half. Personally, I don’t have a problem with a general student loan amnesty for everyone but I recognize that’s expensive and many people are against it.

[empedocles]

3. Only 26% for it - Politico

[OregonBlue]

2. Good article. Actually pretty well reasoned. I read the full article last night.

Well written and well reasoned.

[wishstar]

4. Joe is for just $10000 debt relief in line with free community college & 2 yrs free state university

His rationale is that for sake of fairness if we provide free community college plus free 2 yrs in state college we should also give a $10000. debt relief for those who already borrowed to pay for their college. That makes a lot of sense and helps relieve some of the inevitable resentment over giving free college while others are stuck with roughly equivalent amount of debt or those who already owe for community college and state university while others could now get free educations.

[genxlib]

5. Yes, this is a trap

It will tee up a backlash that will hammer us for years

Student debt is a problem that needs to be addressed but I would much rather target it to need. Even better would be to find a way to link loan forgiveness to community service.

More importantly, we need to address the cost of higher education. Addressing student debt is just treating the symptom.

[PBC_Democrat]

15. 1000% Agree ...

It'll hurt us bad with:
Parents who sacrificed and saved so kids wouldn't have to borrow
Students who worked and sacrificed and saved instead of partying and borrowing
People who went straight to work because they couldn't afford college (and now they get to pay for the people that went to college)
People who will hear stories of loans being forgiven for future doctors, lawyers, engineers, and other with high income potential

My suggestion is to fix the state two-year college system and make it affordable, or free, for all students.
Make all student loans federally funded at a low interest rate.
Make the payback schedule a percentage of income and set a max number of payments.

For existing loans - the federal government buys them and refinances them at 2 or 3 % and starts the clock on the number of payments.
Give bigger breaks for public service and work in underprivileged areas.

Much like 'Defund the Police', this is tailor-made for ads against D candidates. Imagine Tyler and Tiffany reminiscing about the spring break parties with the tagline 'I'm glad the Joe Biden forgave the loans I took to go to Cabo'.

[Pobeka]

18. As a parent who sacrificed A LOT so kids wouldn't have to borrow.

I could not agree more.

If you are going to hand out $$ for unpaid loans, then also hand out the same $$ to those who sacrificed.

I like your ideas -- especially refinancing those existing loans at a lower interest rate makes a whole lot of sense.

Thanks.

[BusyBeingBest]

21. Yup. It's just a bad idea.

Many other ways to make loan repayment more feasible for people who struggle with the debt. Lower interest rates, tying repayment to income, maybe even capping repayment at a certain timeframe or amount or debt forgiveness for certain fields who do needed work. Just waving a wand so that some people basically win a lottery and other people pay for those lottery winners with their tax dollars...that's bullshit.

[The Revolution]

33. Yes, lower interest rates

We already have income based repayment plans, but I would say simplify it down to one such plan. Biden has already suggested lowering the payment down to 5% of income versus the 10-20% currently. I would also base this off the borrower's income rather than household income.

I agree on lowering the interest rates, but my suggestion would be more like 1% or less. The government doesn't really need to make money off this; having a educated population is already a benefit, so it's worth losing a little to inflation.

[LostinRed]

6. The simple solution

Is to allow for student debt relief through bankruptcy.

[Dr. Strange]

34. Bingo.

[thinkingagain]

7. Why can't some of that loan forgiveness

Free college be tied to those that receive it give back by working in underserved areas for a time. Low income people often need lawyers for something as simple as a will but can’t afford it. Rural areas need doctors etc.
the list could go on. I always think if your givin something you should pay it forward.

[Arazi]

19. I know people who have worked with non-profits post-graduation

But don't anymore because they're student loans were too onerous and they had to make more $$.

Do they get relief? Susie and Sam worked for 5 years administering work release programs with their graduate level social work degree but couldn't afford to move out of their parent's house so they finally jumped to the lucrative Goldman Sachs gig.

How are you going to measure some of these things? Cause I know plenty of real life examples of folks who desperately wanted to work non-profit gigs but they had to quit for greener pastures because of their student loans

[GaYellowDawg]

28. It already is supposed to be.

Look up the Public Service Forgiveness program. In return for working in an area of need, student loans are cancelled after 120 consecutive, on-time payments. The problem is, DeVos’s Education Department has rejected about 99% of applicants to that program.

[beachbumbob]

8. without a democratic senate, nothing will happen, period

[Fiendish Thingy]

16. Actually, Biden can enact debt relief by executive order

The bankruptcy part would require a new law.

[forthemiddle]

29. How?

I keep seeing that he can use executive order, but I haven’t seen under what authority?

We are talking real money here, no President can wave a magic wand and say, you are now debt fee.

I’m honestly curious as too what the executive order would say?

[Fiendish Thingy]

30. It is related to the regulations for federally secured loans. Nt

[Klaralven]

9. Biden's actual plan seems a lot more nuanced

Student loans for most private colleges and for most graduate degrees would not be forgiven and there are reasonably low limits on the amounts.

Joe Biden’s Student Loan Plan: How It Could Affect Your Financial Future
https://www.nerdwallet.com/article/loans/student-loans/joe-biden-student-loans

Buffy is not going to be forgiven the $220,000 for that PhD in Art History at Bucolic University.

[Voltaire2]

12. it is amazing how quickly rightwing talking points are adopted.

[Johnny2X2X]

13. 5% of discretionary income would be fantastic

You owe $100K, you make $50K in "discretionary" income, you pay $2500 a year, or just over $200 a month. And he wants it all forgiven after 20 years of payments.

This would be life changing for millions of borrowers. And I hope they include loans for graduate degrees in them eventually. Some of the graduate students owe the most and are in the most trouble. It must be income based and be reasonable. 10% of gross income is not reasonable for most people, that's a mortgage payment.

[LanternWaste]

31. 'Seems' is rather the subjective and convenient qualifer

Any objective analysis you can allow us? Or simply more allegations regarding Buffy the Imaginary Tide Pod?

[dsc]

10. It really is a bad idea

There are thee major problems with college debt as it now stands. 1) there is a considerable amount run up by students going to fraudulent 'universities' that provide no educational value. Those debts, regardless of amount, should be forgiven. 2) college debt is highly disadvantaged under bk laws. That should be revised. 3) students have been locked into interest rates that are entirely too high and an ability to refinance should be offered.

[Klaralven]

14. Discharge in bankruptcy would be a good thing.

It would force lenders to be more careful in evaluating whether the abilities of the student borrower in conjunction with the course of study will result in earnings to pay back the loan.

[AmericanCanuck]

11. Excellent article

K&R

[Doremus]

17. No. For the same reason we don't means test SS

Once you start predicating student loan relief/tuition on financial need, the rightwing starts foaming about the welfare state, cradle-to-grave BS and the usual thinly veiled racist dog whistles.

We need tuition and loan relief because it’s the right thing to do for our citizens and the country. Period. That’s a pretty good defense against the coming barrage which will be coming whether we do it or not.

[mtnsnake]

20. I think the most Biden will do is acknowledge their concerns,

but I highly doubt he will do anything of the sort when it comes to that idea.

[Arazi]

22. @Econ_Marshall has a superb multi-thread post on Twitter debunking this

I recommend a follow over there

[Yeehah]

23. When banks needed bailed out, somehow we found trillons to pay for it

Now that regular people need help, not so much.

[Maven]

24. Leave it to "think tank" technocrats to invent justifications for not helping people

Great way to sap enthusiasm from young voters. Next up: A balanced energy portfolio must include "clean" coal!

[KG]

25. word.

[Doremus]

32. Truth.

Record numbers of new people voted in 2020, trying to take back the government and make it work in their favor for once.

How many of them will EVER come back if they see zero effort being put forth to help them? I know and so do you.

[Evergreen Emerald]

26. Please. Go after the multimillionaires. Take taxes from 1%

The students need help.

I do not understand the complaints about student loan forgiveness. Are these people complaining about the tax cut for the corporations?

[DFW]

27. I see it as a "tuition after the fact," would apply the same standards as a scholarship application

If you're in a secure job and making $300K a year, you can pay it back over time. If you can't find a job and live on $30,000 a year, you can't. The first category shouldn't even apply for relief. The second category should get it without even asking.