US student loans grotesquely high

[ZiprHead]

most people, even though making good salaries, don't have to repay much, or any, or their loans.

Do you have a citation for this?

 

[lpetrich]

Student Loan Forgiveness on Hold Again. Experts Explain What's Next for Debt Relief - CNET - Oct. 4, 2024 2:45 p.m. PT

Not even a full day after the Biden administration's student loan forgiveness plan was given the green light, a Missouri judge blocked the plan again. If you have student loan debt, experts say to expect a bumpy ride while this plan is battled out in court.

Student loan forgiveness programs and repayment plans have ping-ponged through the courts all year, leaving borrowers with whiplash and uncertainty about what comes next.

 

[Derec]

Do you have a citation for this?

Straight from horse's mouth.
The Biden-Harris Administration’s Student Debt Relief Plan Explained

• Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.
• Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
• Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
• Cover the borrower’s unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.

Example: 225% of the federal poverty level for a family of 3 is $56,880. So somebody making that or less would not have to pay anything. And even if that borrower made $100k, he or she would only have to pay $180 per month^* - which would hardly put a dent in most loans.
And note that the rule also says that if your payment is less than your interest, the federal government will pick up the check for the difference.
Say our six figure earner has a $50k loan balance at 5%. Ignoring complexities of amortization, that would be ~$2.5k per year in interest and more than he or she is required to pay under the Biden rule.

I am all for the government investing more in public universities. I am opposed to college graduates, esp. those who chose to go to expensive private colleges, expecting that taxpayers making less than them should bail them out of the loans they voluntarily took on.

^* (100000-25820*2.25)*0.05/12

 

[Derec]

Student Loan Forgiveness on Hold Again. Experts Explain What's Next for Debt Relief - CNET - Oct. 4, 2024 2:45 p.m. PT

Something as significant as student loan forgiveness should be implemented via a law duly passed by Congress. Not the stoke of a president's pen. A president is not a king.

 

[ZiprHead]

Do you have a citation for this?

Straight from horse's mouth.
The Biden-Harris Administration’s Student Debt Relief Plan Explained

• Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.
• Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
• Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
• Cover the borrower’s unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.

Example: 225% of the federal poverty level for a family of 3 is $56,880. So somebody making that or less would not have to pay anything. And even if that borrower made $100k, he or she would only have to pay $180 per month^* - which would hardly put a dent in most loans.
And note that the rule also says that if your payment is less than your interest, the federal government will pick up the check for the difference.
Say our six figure earner has a $50k loan balance at 5%. Ignoring complexities of amortization, that would be ~$2.5k per year in interest and more than he or she is required to pay under the Biden rule.

You said "most people, even though making good salaries, don't have to repay much, or any, or their loans."

Do you think $56K per year is a good salary? Is it six figures?

I am all for the government investing more in public universities. I am opposed to college graduates, esp. those who chose to go to expensive private colleges, expecting that taxpayers making less than them should bail them out of the loans they voluntarily took on.

Do you have some evidence that borrowers were "expecting" loan relief from, well, anyone?

 

[Derec]

Do you think $56K per year is a good salary?

It is a good salary, especially for somebody in the first decade out of college or so.
It corresponds to ~$27/h working full time. Not bad at all!

It certainly is good enough that somebody making it should be expected to pay their own student loans.
Why should somebody making $30k or $40k subsidize this person's debts?

Is it six figures?

No, which is why I also offered an example of somebody on the cusp of six figures. Their payments are also heavily subsidized by the Biden plan.
And again, why should somebody making $30k or $40k who has no student debt subsidize this?

Some evidence that borrowers were "expecting" loan relief from, well, anyone?

They are certainly expecting it ever since certain Dems started demanding it and even more after Biden made it a part of his platform four years ago.
From 2018: The $40 trillion question Alexandria Ocasio-Cortez couldn’t answer
From 2020: How “Cancel Student Debt” Went From A Fringe Idea To Mainstream

 

[ZiprHead]

Do you think $56K per year is a good salary?

It is a good salary, especially for somebody in the first decade out of college or so.
It corresponds to ~$27/h working full time. Not bad at all!

It certainly is good enough that somebody making it should be expected to pay their own student loans.
Why should somebody making $30k or $40k subsidize this person's debts?

Is it six figures?

No, which is why I also offered an example of somebody on the cusp of six figures. Their payments are also heavily subsidized by the Biden plan.
And again, why should somebody making $30k or $40k who has no student debt subsidize this?

Some evidence that borrowers were "expecting" loan relief from, well, anyone?

They are certainly expecting it ever since certain Dems started demanding it and even more after Biden made it a part of his platform four years ago.
From 2018: The $40 trillion question Alexandria Ocasio-Cortez couldn’t answer
From 2020: How “Cancel Student Debt” Went From A Fringe Idea To Mainstream

It's a huge drain on the enire economy.

The Student Loan Debt Crisis: Its Impact on the Economy May Be More Than You Think

High levels of student loan debt relative to income might impact how you make financial decisions. Learn how student loan debt can affect the economy.

www.investopedia.com

The Economic Impact of Student Debt
As of Q3 2024, more than 42 million Americans held outstanding federal loan debt totaling more than $1.6 trillion.
1
The amount of debt has led to concerns about potential economic impacts.

On a personal level, student loan debt can impact your finances when it limits other activities like buying a home, starting a business, or simply spending money on goods and services. When a significant number of people carry either federal or private student loans, the effect on the economy is generally negative because of reduced spending and other factors.

Here are several ways student loan debt can restrict your financial plans and impact the economy.

Fewer New Businesses
An increase in student debt has been found to correlate with fewer new small businesses, which are often cited as the backbone of the economy, per data from the Federal Reserve Bank of Philadelphia.
2
In fact, the rise in student loan debt in recent years has indeed contributed to a decline in the number of new entrepreneurs aged 20 to 34, according to a study by the Ewing Marion Kauffman Foundation.
3
New businesses add to economic growth in many ways, including by providing jobs.

Reduction in Consumer Spending​

Student loan debt can reduce people's ability to spend money, lowering consumer spending, which is a cornerstone of economic growth.7 Essentially, student loan debt lowers your disposable income, so you can't spend as much on discretionary items. In turn, businesses that sell these goods and services don't turn a profit. Student loan debt can also cause borrowers to delay important life milestones such as marriage, having children, and retirement, all of which require money.

The state of Pennsylvania analyzed the potential impact on the state economy when student loan payments resumed in the fall of 2023, and a decline in tax revenue was expected as a result, including a drop of $125 million in state income from sales and use taxes.8 Meanwhile, the New York Federal Reserve estimated that student loan repayments resuming in 2023 would lead to a $1.6 billion monthly drop in U.S. consumer spending.

Much more in the article.

 

[Derec]

It's a huge drain on the enire economy.

Note that you did not even attempt to address any of the points I made about how even those making good money are being bailed out by Grandpa Biden.

As to the entirely new point you were trying to make, sure, it is pretty obvious that if you give people money that they will have more money for consumer spending. Duh!

That does not mean that it is good policy to give money to those making - on average - more than the average American anyway just to bail them out from loans they took on. Especially when they chose to go to a fancy expensive private college with a loan balance to match.

Again: why should taxpayer who make $30k or $40k who does not have student loans bail out people making $50k or even $100k?

And what about the moral hazard? When student loan forgiveness becomes a thing, there is a huge incentive to take up as much student debt as possible since Aunt Kamala and Uncle Knucklehead will bail them out anyway.

 

[ZiprHead]

It's a huge drain on the enire economy.

Note that you did not even attempt to address any of the points I made about how even those making good money are being bailed out by Grandpa Biden.

It can still be a burden for those making "good money", especially in the very expensive parts of the nation to live in.

As to the entirely new point you were trying to make, sure, it is pretty obvious that if you give people money that they will have more money for consumer spending. Duh!

That does not mean that it is good policy to give money to those making - on average - more than the average American anyway just to bail them out from loans they took on. Especially when they chose to go to a fancy expensive private college with a loan balance to match.

What percentage of borrowers went to a "fancy expensive private college with a loan balance to match."

Again: why should taxpayer who make $30k or $40k who does not have student loans bail out people making $50k or even $100k?

The student loan relief is a pittance compared to other subsidies and tax breaks the rich and corporation get.

And what about the moral hazard? When student loan forgiveness becomes a thing, there is a huge incentive to take up as much student debt as possible since Aunt Kamala and Uncle Knucklehead will bail them out anyway.

No one said this was a permanent program although I think public college education should be quite heavily subsidized as it used to be. Student loans was the answer right wingers came up with when they reduced higher learning susidies to lower taxes on the rich. The rich get the tax breaks, then they make shit tons of money on student loans.