Forgiving Student Debt Would Boost Economy, Economists Say

[applegrove]

Forgiving Student Debt Would Boost Economy, Economists Say

Heard on Morning Edition

CHRIS ARNOLD at NPR

https://www.npr.org/2019/11/25/782070151/forgiving-student-debt-would-boost-economy?utm_source=twitter.com&utm_medium=social&utm_term=nprnews&utm_campaign=politics

"SNIP.....

But after paying for college and grad school, Greenwood owes $96,000 in student loans. And she says that's got her and her partner feeling frozen. "Yeah. It's always, we're interested in having kids, but just cost of living and all our other bills and then the student loans, it's just like the final straw." She says it makes starting a family feel impossible.

So if people like Greenwood suddenly had this millstone of debt lifted from their necks, it stands to reason that would unleash pent-up desires and spending that would be good for the economy. A lot more people would have kids, or start businesses, or buy houses.

"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 homeownership by five to seven 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."

......SNIP"

[Uncle Joe]

1. Kicked and recommended.

Thanks for the thread applegrove.

[applegrove]

3. My pleasure.

[JoeOtterbein]

2. K n R ! Thanks for posting!

[applegrove]

4. I live new and important information like that. Canada, where we have

mostly state universities, though the private ones are growing, the student pays 1/3 of the cost of university. Indigenous students pay nothing. I the university always kick started the economy but the right made a calculation that too many graduates would 1) think for themselves 2) have money and power. So they have made university a tough proposition. Tougher than it used to be. I wonder what % state university students in the US pay? What did they used to pay? What is the % of private vs. public colleges in the US? What did it used to be?

[TexasTowelie]

5. Yes, it will help the economy.

However, is it really fair to give someone that attended college the financial break over someone who didn't attend college and most likely earns less income? If we give those disadvantaged people some financial assistance it will have a bigger impact on the economy than giving money to people that may already be doing reasonably well economically.

I'm sorry, but I prefer UBI over free tuition or student loan debt forgiveness. The guy working under an automobile as a mechanic shouldn't be subsidizing the education of someone who gets a bachelors degree in psychology or divinity. The Democratic Party should not be picking winners and losers.

[applegrove]

6. Any decision picks winners and losers. Degrees pay for themselves in higher

taxes paid and more activity in the graduates life. That last thing is better for the economy. A good economy is better for poorer people. Or it used to be. Before the GOP and neoliberals took over and picked the wonners and losers for 40 years. That is the governments job these days. Used to be the majority shared in a good US economy. That doesn't happen anymore.

[TexasTowelie]

7. Okay then,

who are the losers in the UBI scheme?

There are also a lot of poor people that have not benefited from a good economy. Some of them even have college degrees like myself. Free tuition or debt forgiveness isn't going to do anything to impact my life, but UBI would make a profound difference in my life.

By the way, I paid those higher taxes too during my working career and in the end I saw very little in return.

[applegrove]

8. I have always been an advocate of a negative income tax. That is a bit

Last edited Mon Nov 25, 2019, 11:46 PM - Edit history (1)

different than UBI. It is not universal. And if you are working poor you still get some income boost till you make a reasonable income. The rich would be the loosers in a UBI. I am assuming they would be taxed to pay for it. As they would be the lossers in a negative income tax too. And it would mean poor people would not have to put up with shitty jobs or abusives bosses as much. They would have a bit more power. For sure the UBI would unleash so much dreaming and aspirations too in individuals that would be good for the economy. But i don't think it should be universal. Problem is the rich in the US have decoupled from the poor. And when they pay 8% more in taxes their lives are not really changed to a degree. So the greater good of partially government paid tuition does benefit the country greatly as a whole. Problem is the country is not whole.

Negative income tax:

https://www.google.com/search?sxsrf=ACYBGNTKj9fVhSMFgB1OEkh6CrZ0mnhBAg%3A1574739804614&ei=XJ_cXaaYJdHA7gKtpIHAAg&q=negative+income+tax+example&oq=negative+income+tax&gs_l=mobile-gws-wiz-serp.1.3.35i39j0l7.1567.2285..5148...0.1..0.225.1182.0j6j1......0....1.........0i71j0i22i30j33i160.ct42LDVmO6A

"SNIP.....

What is negative income tax? The negative income tax is a way to provide people below a certain income level with money. In contrast to a standard income tax, where people pay money to the government, people with low incomes would receive money back from the government.

Theoretically, this would work by giving people a percentage of the difference between their income and an income cutoff, or the level at which they start paying income tax. For instance, if the income cutoff was set at $40,000, and the negative income tax percentage was 50 percent, someone who made $20,000 would receive $10,000 from the government. If they made $35,000, they would receive $2,500 from the government. (This is different from a universal basic income in which everyone, regardless of income level, receives the same amount of money.)

This structure is designed so that people who work will always make more than people who don’t, which would ideally incentivize people to work. While someone who makes a little money — but not enough to pay income tax — will receive less from a negative income tax than someone who doesn’t make any money, overall, the person earning more will have more. The goal with a negative income tax is that no one is destitute, and earning even a small salary is always preferable to earning nothing.

The U.S. doesn’t currently have a negative income tax in place. It does, however, have the earned income tax credit, which functions similarly and benefits millions of Americans. That program generally has bipartisan support, and there is even legislation proposed to expand it.

....SNIP"

[Blue_true]

10. You make a point about the system not helping high paid middleclass people that fall on hard times.

There is help for the very poor and lots of help for the rich, but those wage earners that earn between $30,000-$120,000 per year are on their own until they become poor. It is even more difficult for those people if they are in their late forties through 62 years old, in particular if they earned at the top of the range that I listed. Their choices usually involve making money anyway they can. If they are lucky they will have family that helps them as much as possible. If they are unlucky, they sleep in their cars, I actually met people who was doing just that, holidays were hell for them because often places that they could go to sleep safely overnight closed for the holidays. It is tough to talk to those people about family gatherings that I will attend or the meals that I will eat because they may have nothing. Fortunately we have a pretty robust charity system where I live, so they can at least get a meal if they can get to the places that feed them. When I talked to them, many were pretty well paid at one time, one was an engineer like I am, he supervised people too, another was an accountant that got downsized into poverty, she has relatives in Texas, but no one here in Florida, another was a computer repair technician that got made irrelevant by cheap throwaway computers of today and by smartphones, which do everything the systems he used to repair did. Like you, I believe UBI massively help those people, allowing them to have a basic roof over their heads and halfway decent meals each day. A footnote, I don't know what happened to the engineer to get him where he is, he seem to be a civil engineer, but he doesn't talk much about how he got to where he is, he did say once that he was married at one time.

[redqueen]

11. I don't think people realize how many people are falling through the cracks

People who are working, sometimes two jobs, making minimum wage but still not poor enough to get much help.

Our current welfare system is a poverty trap. It has to change.

Link to tweet

[Blue_true]

9. Very thoughtful post.

My approach would be to work both sides. We need people reaching for higher education, but we also need to insure that we have people happily doing the more mundane jobs in society. I believe that students that ran up massive debt should not get off scot-free, they could have chosen to stay with parents as long as possible or rented cheaper apartments in the university town. People with college debt should pay off half of it on the first wave, but after that we should make less expensive housing and meals available along with tuition payment assistance, people that forego the campus housing and meal service should foot the entire bill. We should provide down payment plus 15% of the value of a home to working young people who did not go to college or trade school, prefably they would buy a home with that money. Like college students, the major help should be one time, after that we can reform our taxcode and healthcare system so laborers get more back from the system than they now do.

[redqueen]

12. I'm sure it would - but how much?

The price for higher education has skyrocketed due to ballooning administrative costs. Is it really fair to stick the taxpayers for 100% of this debt, when some people are able to handle the payments?

I can see forgiving a large portion of it, but not 100%.

I also think the Freedom Dividend would boost the economy WAY more than forgiving student debt.