I hear the complaints:
"Why should people who never had college loans, or who have paid off their loans, give their tax money to people who still have student loans?"
The reason to do it is that an educated workforce and citizenry benefits all Americans. College is expensive and comes when most students are young, before they have started earning money to pay for it. So they borrow. The debt becomes a debilitating burden that creates downstream problems involving job mobility and delayed childrearing and home-buying.
The reason not to do it is that it is inevitably haphazard and unequal in its benefits. It is unfair.
Bailouts and rescues create moral hazard. Every insurance company understands moral hazard. People feel more free to do risky things. As a County Commissioner 40 years ago I confronted the problem. Jackson County, Oregon was spending hundreds of thousands of dollars a year doing Search and Rescue missions to imprudent hikers who got lost. Frantic relatives would call 911. Out would go planes and search crews. The county had created a moral hazard. We commissioners asked: Why should local taxpayers pay to rescue hikers lost in the forest? We should charge relatives who called 911 the full cost of the rescue. Bankrupt them. Take their homes. We considered it. Wouldn't a few bankruptcies or lost-hiker deaths every year send a "tough love" message to hikers? The sheriff's Search and Rescue team strongly opposed that. They argued that it was an obligation to save people in distress. Everyone deserves being rescued, they said. We continued the program, but I felt conflicted. Why should I and other taxpayers pay for other people's foolishness?
Oregon taxpayers paid to assist New Orleans when it flooded after Hurricane Katrina, even though parts of the city are below the level of the Mississippi--a long-predicted accident waiting to happen. Oregon taxpayers funded FEMA operations in wealthy neighborhoods of Houston when heavy rainfall overwhelmed their storm drain system. Houston allowed building in low-lying areas. How unfair to us.
But then FEMA came to the aid of people in my own community. A fire swept from house to house in a fifteen mile corridor along a dense tangle of parkland and mobile homes. Over 2,000 homes burned. County and city governments had allowed the dense brush. FEMA brought emergency housing. The payback was uncertain in time and amount, but after a hot, windy summer day in 2020 it was our turn.
The home mortgage interest deduction is a transfer of wealth from people without home mortgages to people with them. It is a huge subsidy, many times greater than student loan forgiveness. The subsidy is haphazard and unfair, but people with home mortgages like it and think it is fair. After all, the country is better off if more Americans are homeowners. Widespread home ownership stabilizes communities.
People paying that subsidy to home owners include people who cannot afford any house--poor people. The subsidy is also paid by people like me, who long ago paid off a small mortgage debt. The tax deduction for interest on a $750,000 mortgage at 5% interest is $37,500, a net after-tax cash benefit of about $14,000. Why should taxpayers without a mortgage loan subsidize people who have mortgages? It is like people who paid off student debt, or who never had any, paying to bail out people with student debt. It is unequal. It is unfair.
Politicians and Fox news hosts who oppose student loan forgiveness complain that some college students take classes they think are useless. How unfair to people without college loans to be forced to pay to bail out people who took ridiculous and wasteful sociology classes.
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13 comments:
In other words, because there is some good, we have to accept some bad.
Unfortunately there is both "good" bad, as well as "bad" bad.
With estimates of $300B-$700B to pay for this forgiveness, let's all hope that the country gets more for this investment.
And by more, I don't mean more debt delinquency!
This is certainly a slippery slope, too.
One of the purposes of government, according to the Constitution, is to promote the general welfare. It would seem axiomatic that affordable education and healthcare would be an important part of that role, but now it’s become partisan. Promoting greed has supplanted the general welfare. When I went to college, states supported state colleges, which enabled me to pay most of my tuition with summer jobs and work-study programs. Not anymore.
Providing affordable education is an investment in the nation’s future. We’re acting like a nation that doesn’t expect to have one. Debt forgiveness falls far short of what is needed, but it’s the least we can do.
Deftly targeted at a key Democratic constituency, 2 months before the midterm elections. Clever use of $500,000,000 in federal funds for D voter turnout.
Might not work, though. The R ads write themselves:
Video of a coal miner (hard hat, smudged face, tired) who got taxed to pay off loans for a PhD in Woke Studies (blue hair, nose rings, screaming angrily about the latest microaggression she “suffered“).
It’s going to be an interesting 2 months…
Long overdue program, because it's seen as "too liberal" and moderate Democrats blocked it.
Why now?
Republicans have seduced the working class with lies and pandering to prejudice, Democrats need minorities and the youth vote more than ever so the student loan crises will now get addressed.
Yea...
Of course, the real problem lies with a system that has been escalating unchecked for decades. There are many reasons contributing, not the least of which is how schools are managed, including compensation for administrators and increases in government aid programs. Apologists maintain the status quo which is higher education is only for the wealthy. They say college is unnecessary for success in life, which is frankly a Victorian point of view. This is 2022, not 1822.
Many students don't go because of the cost, and many take on the debt mistakenly believing there will be a reward. This is dragging the society down and it's the uneducated who are swerving right. They literally don't know any better.
It's not unlike the US health care system.
Of course, the usual D vs R retort.
Try to consider the situation where our education system is in trouble, and the issue is a political football.
We are in this mess for several reasons.
Each state controls most of their own K-12 education system. State and local taxes pay for the public school funding, and tuition pays for private school education. Each state sets standards for school outcomes, but the trend has been for some states to set the bar a little too low, resulting in "graduates" who are ill prepared for post K-12 adult life. High schools supposedly have guidance counselors to help HS students determine possible post HS careers and/or education.
Some schools prepare their students well, while others do not. Some schools help with personal finance classes in addition to career and education choices for grads. Many don't.
Add to that the pressure to attend college rather than alternatives.
This K-12 education system in many cases have failed to prepare students for college. Additionally, the pressure to eliminate testing has led to many college bound students who simply aren't ready. They (and their parents) may not understand those financial aid offers, and willingly take those future obligations that weren't dischargeable.
Those that weren't college ready may have never finished, nor graduated. Some may have had to drop out.
A side note, I had a merit scholarship for my college years, but lost it my sophomore year. I marched over to the financial aid office asking what I could do to stay in school. With a National Defense Loan, a job washing mess hall dishes, and a small monthly stipend from Army ROTC, I not only stayed in school, but I also won back that merit scholarship. There was no way my parents could pay my way.
College today is way too expensive, but there are options! Yes, there are still scholarships. There are service academies. There is the GI Bill. And there are low cost college options. All require personal initiative as well as sacrifices.
But we are now in a mess due to many bad decisions by some.
Unfortunately, the loan forgiveness does not correct any of these problems. It's simply a pause, and the problems persist.
My disappointment is that some will get forgiveness who don't deserve it, while others who truly deserve it, won't get enough help.
Why isn't there any effort to fix the problems? Why will some get the forgiveness who don't really need it? Why is college so expensive, and what is being done to make it more affordable.
Finally, why, oh why, to people sign these loan agreements without truly understanding the future obligation to pay?
The distinction between official assistance for housing and shelter versus assistance for higher education is, in my view, analogous to the distinction between urgent or emergency surgery as opposed to elective surgery.
Half of the population, by definition, has an IQ below 100. There needs to be good jobs and opportunities for that half.
“Learn to code“ won’t work for them. Bread and circuses (i.e. universal basic income) didn’t work out that well for the Romans.
We need more vocational training and apprenticeships, and less emphasis on having everyone go to four-year liberal arts college.
And we need to stop lowering standards in the name of “equity.”
Indeed, it's going to be interesting. Democrats are focused on infrastructure, climate change, healthcare and education among others, while Republicans are busy banning abortions, fretting over "woke studies" (don't ask) and their cult leader demands to be reinstated as president.
Ya gotta love it!
Nuclear War is My White Pill. "We'll meet again, don't know where, don't know when, but I know..................."
D’s tend not to see the populist working class rage against the globalist urban elites who have been destroying their livelihoods for decades. Or, if they do deign to notice it, all they see is “deplorables” being “racist,” which worked out so well for Hillary.
Now let’s add insult to injury and tax those working class stiffs to pay for the “education” of those woke elites (gender studies, critical race theory, pronoun taxonomy, etc). Quite the pretty picture. Likely to generate even more outrage and voter turnout than the feminist reaction to the Dobbs case.
You could say that Biden just shot himself in the foot, except he’s too opposed to guns for it to be an appropriate metaphor.
I think one question I haven’t seen being asked is “what is college education for?”
Is it vocational? Intellectual formation and critical thinking? Moral reasoning? Social skills? To make people more literate and if so, how does that make a better society?
I mentor and coach interns and young college graduates at my work. 99% have no idea why they went or majored in what they did. They just knew they were “supposed to” – the path to adulthood. The fact that many companies hire only 4-year graduates as a matter of policy even if the jobs don’t require that level of education reinforces their point.
Many of these young people have degrees in general business, political science, psychology, sociology, and anthropology, but cannot recall much of what they studied. Many who excel in STEM disciplines often have underdeveloped interpersonal skills and struggle with abstract reasoning.
The main difference I’ve seen between young college grads and non-grads is that grads are better at following instructions, meeting deadlines and expect numerical rewards for meeting specific goals. In short, they know how to thrive in institutions. Maybe that’s why companies hire them. They reduce risk of an unpredictable workforce. Or do they?
I’m also seeing a lot of millenials walking away from their jobs 4-5 years in, after their student debt is paid off, to figure out what they really want to do besides be a drone for the company.
Maybe the debt relief will cause more to leave earlier. Why not?
Many young people avoid the community college route to gain a skill because completing an AA degree will land them in a $15,000 plus hole. When I went to a Jr college (so called in 1957} tuition thanks to Gov. Pat Brown was $20 something for books. I had zero debt and worked a part time job. Even UCLA was virtually free. The states have opted out of education, leaving the banks to rape the young, The rich hang on to their wealth and turn the student population into indentured servants. This has nothing to do with woke,
This is usury very similar to pay loans. I could never afford to send my step son to Berkeley in the 80’s and on to his further education as a doctor. His is still eating the debt. “I am so proud of those who worked their way through college!” Nowadays you can work your way through and then even with your expensive degree you get to work at more part time jobs to pay back your wonderful education. Go be a plumber, apprentices pay plenty for that privilege also since unions have fallen on hard times.
All public education is in a state of collapse because it is under funded. Go ask the teacher who buys his own supplies for his wonderful students.
One way to make college cheaper: take a sharp paring knife to the unconscionable administrative bloat in higher education. Look at the money that goes to administration versus the money that goes to faculty and you will see a disease process akin to cancer.
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