Student Loan Forgiveness

[MultiVerse]

The Biden Student Loan Forgiveness Plan - Budgetary Costs and Distributional Impact:

- We estimate that President Biden’s proposed student loan debt cancellation alone will cost between $469 billion to $519 billion over the 10-year budget window, depending on whether existing and new students are included. About 75% of the benefit falls to households making $88,000 or less per year.

- Loan forbearance for 2022 will cost an additional $16 billion.

- Under strict “static” assumptions about student borrowing behavior and using take-up rates within existing income-based repayment programs, the proposed new IDR program will cost an additional $70 billion, increasing total package costs to $605 billion.

- However, depending on future details of the actual IDR program and concomitant behavioral changes, the IDR program could add another $450 billion or more, thereby raising total plan costs to over $1 trillion. These details require future study.

Note: "Concomitant behavioral" means when you take away Price Sensitivity costs go up.



The Distributional Effects of Student Loan Forgiveness - Forgiveness would benefit the top decile as much as the bottom three deciles combined:

We study the distributional consequences of student debt forgiveness in present value terms, accounting for differences in repayment behavior across the earnings distribution. Full or partial forgiveness is regressive because high earners took larger loans, but also because, for low earners, balances greatly overstate present values. Consequently, forgiveness would benefit the top decile as much as the bottom three deciles combined. Blacks and Hispanics would also benefit substantially less than balances suggest.


The alternative: Make it possible for the majority of students to leave school without any debt at all like Mitch Daniels has done at Purdue for more than a decade. Purdue's 11-year tuition freeze has saved Boilermaker families over a billion dollars. Sometimes it's what you don't do that matters most.

[MagnificentUnicorn]

With this EO is Biden really spending money or is it just being written off as a loss? Will there be actual money changing hands?

[skaredshtles]

I approve.

[MagnificentUnicorn]

The loggers of Maine deserve an answer

[Supermoon]

With this EO is Biden really spending money or is it just being written off as a loss? Will there be actual money changing hands?

The money has already been paid, so yeah, it's not really a "cost" as much as it's a decrease in future revenue, exactly like a tax cut.

[Core Shot]

The absence of ineluctable answers does not imply the privilege to indulge an unexamined gestalt

[MultiVerse]

The money has already been paid, so yeah, it's not really a "cost" as much as it's a decrease in future revenue, exactly like a tax cut.

What if new and existing students are included?

[Danno]

With this EO is Biden really spending money or is it just being written off as a loss? Will there be actual money changing hands?

As near as I can tell, there will be no money actually paid out anywhere.

And based on the figures posted above, the numbers that people are talking about in here as if it was the cost this year is not the case (for ex, Kevo's comparison to oil subsidies), the costs thrown about are the cost over a 10 year period. And everyone is up in arms about the specific "forgiveness" amount, which is even smaller on a per year basis, the costs of the IDR change is a big part.

[MagnificentUnicorn]

As near as I can tell, there will be no money actually paid out anywhere.

And based on the figures posted above, the numbers that people are talking about in here as if it was the cost this year is not the case (for ex, Kevo's comparison to oil subsidies), the costs thrown about are the cost over a 10 year period. And everyone is up in arms about the specific "forgiveness" amount, which is even smaller on a per year basis, the costs of the IDR change is a big part.

The loggers of Maine can rest easy now

[Supermoon]

What if new students are included?

They aren't.

[MultiVerse]

the costs of the IDR change is a big part.

True. And not just in terms of the federal budget. When colleges and universities attract more revenue they increase spending to become more selective in order to achieve higher institutional rankings, but do not increase the size or diversity of their student bodies. As a result they serve relatively small undergraduate populations with lower fractions of minority and low-income students.

[doebedoe]

As near as I can tell, there will be no money actually paid out anywhere.

....

It's probably pretty small -- but initial readings of the EO have said that any payments made on loans since the freeze in March 2020 will be eligible for a refund. That money has to come from somewhere.

[J. Barron DeJong]

https://twitter.com/mattyglesias/sta...1P0sSrbBhZ8lag

Article is paywalled, but the Twitter thread provides a brief synopsis of his argument.

[MultiVerse]

If you consider the implications of his conclusion Matthew Yglesias is arguing against the proposed Biden plan without saying it outright "The lessons learned should focus less on college reform or higher education finance and more on the need for better recession-prevention tools. " He's smart enough to know this is bad policy while at the same time not taking an overt stance against it.

[SumJongGuy]

What's better for the national economic climate if only one or the other is possible? A capital infusion of 100 billion dollars in tax cuts to the wealthiest 20% or a subsidy infusion of 100 billion to the other 80% of Americans? Hint, the 80% will be paying the majority of the costs for either option..

[XavierD]

With this EO is Biden really spending money or is it just being written off as a loss? Will there be actual money changing hands?

They are the same thing when you’re in debt and running an annual deficit.

This is just reganomics for my generation. Provides $10k-$40k in stimulus to those with higher earning potential at the cost of those who don’t. Does nothing to address future cost of higher education. Turns out the Bernie bros like trickledown economics when they’re the ones at the top.

Many of the ‘households’ represented in the under $75k majority are young single professionals at their entry level jobs who will be making mid six figures in five years.

A college degree remains the single best investment in the United States. Even those with some college but no diploma have a >10% increase in lifetime earnings. Those with a diploma have a 60%.

[MultiVerse]

What's better for the national economic climate if only one or the other is possible? A capital infusion of 100 billion dollars in tax cuts to the wealthiest 20% or a subsidy infusion of 100 billion to the other 80% of Americans? Hint, the 80% will be paying the majority of the costs for either option..

What if the subsidy infusion goes to colleges and universities (and not 80% of Americans) so that they can raise prices thereby inflating already inflated costs?

[XavierD]

What's better for the national economic climate if only one or the other is possible? A capital infusion of 100 billion dollars in tax cuts to the wealthiest 20% or a subsidy infusion of 100 billion to the other 80% of Americans? Hint, the 80% will be paying the majority of the costs for either option..

This doesn’t benefit 80% of Americans. High estimates are around 12%, most of whom are going to end up in the top 20% and a good chunk are already there.

[SumJongGuy]

This doesn’t benefit 80% of Americans. High estimates are around 12%, most of whom are going to end up in the top 20% and a good chunk are already there.

I get that.. but the point is giving money to people who are way more likely to spend it locally is almost always the better option.. and by income definition they are in that income bracket at the time it's getting paid out...

[Cisco Kid]

Can someone who graduated 20 years ago still owe forgivable debt? Blows my mind.

[XavierD]

I get that.. but the point is giving money to people who are way more likely to spend it locally is almost always the better option.. and by income definition they are in that income bracket at the time it's getting paid out...

If the goal is to further drive up the cost of living in urban areas forcing the working class to spend more time, money and pollution commuting further, sure.

Not really sure why it was an either/or choice. Could have spent that half a trillion paying teachers and unfucking our public education system rather than undercutting one of the key recruiting tools of Teach for America. Or on improving infrastructure that would both employ predominantly bottom 80% workers while improving their ability to get to work and housing. Or just you know, paid down the deficit and not contributed to further inflation.

[simple]

Can someone who graduated 20 years ago still owe forgivable debt? Blows my mind.

My sister, brother in law and my best friend come to mind. Both used forbearances and both continued getting masters degrees for years.

If they only worked in the public sector they would have been forgiven with 10 years of payment.

[ex-powderbroker]

My sister, brother in law and my best friend come to mind. Both used forbearances and both continued getting masters degrees for years.

If they only worked in the public sector they would have been forgiven with 10 years of payment.

Sure, when they don't try to fuck you out of the option.

https://www.cnbc.com/2018/12/18/borr...-lawsuits.html

[MagnificentUnicorn]

They are the same thing when you’re in debt and running an annual deficit.

This is just reganomics for my generation. Provides $10k-$40k in stimulus to those with higher earning potential at the cost of those who don’t. Does nothing to address future cost of higher education. Turns out the Bernie bros like trickledown economics when they’re the ones at the top.

Many of the ‘households’ represented in the under $75k majority are young single professionals at their entry level jobs who will be making mid six figures in five years.

A college degree remains the single best investment in the United States. Even those with some college but no diploma have a >10% increase in lifetime earnings. Those with a diploma have a 60%.

How is this going to cost money to people with no degree and less earning potential? Most of those people aren’t paying much or any income tax

[fatnslow]

Que half the MD, PHD, JD as well as people with masters degrees that are kind of worthless. School is fucking expensive and if you didn't win the parent lottery or they didn't manage their money well you're going into debt for school, cost of in-state tuition/room/food is about $25K yr now.