Student Loan Reparations (Policy Talk)

[bad_teammate 13481]

One of the (valid) critiques of student debt forgiveness is essentially this, "What about those of us who suffered under the same onerous loan system, but we focused on paying ours off? Didn't we suffer, too? Aren't we owed something?"

Yes! You are!

Providing Reparations for Victims of Unfree College (People's Policy Project)

Quote

The most coherent theory of student debt forgiveness is that it is a reparations program for victims of unfree college. The left generally believes that college tuition should be set to $0 and that students should receive additional grants for living expenses such that the out-of-pocket cost of college is low to nothing. But this is not how the college financing system has operated historically. Those who went through the old college system thus suffered a harm and are owed reparations.

But what is the precise amount of the harm they suffered? The answer is not the amount of their current student loan balance. It is not even the amount of student debt that they left college with. Rather, the precise amount of harm suffered by victims of unfree college is the amount of money that they and their family spent on unfree college in excess of what they would have spent on free college.

To understand why this is the precise calculation of harm, imagine a student who was charged $40,000 for a college education beyond what she would have been charged if college has been subsidized to the appropriate amount. The harm of this charge is that it took a $40,000 chomp out of that student’s net worth. Importantly, this $40,000 chomp took place regardless of how she financed her college and the effect of this $40,000 chomp will permanently linger on her personal balance sheet for the rest of her life, unless of course she receives reparations that make her whole.

There are a billion mitigating factors, of course, but the ultimate reality is that there are many victims of unfree college who have already, essentially, bought their way out of prison. And while those of us who bought our way out of prison (or whose parents did it for them) are sitting on $0 in student debt currently, the lost opportunity cost of all that money we DID pay has potentially influenced our current financial situation.

So, knowing that many of us are not getting the kind of benefit from Bernie's or (to a far lesser extent, Liz's) student debt plan, there are two options for moving forward:

Option A - Oppose all of it and allow the suffering to continue for 45M+ Americans out of what is, essentially, spite.
Option B - Embrace the most generous reparations and then keep pushing for more justice.

I choose Option B.

[David Dennison 19441]

Don't call them that.

['stache 22117]

I'm all for it, but it's not feasible. I would start by making all student loan interest deductible on your tax return instead of limiting it to $2500 and phasing it out at certain income level, or better still making it a refundable credit. I'd be willing to go further in allowing the same for entire amount paid for loans in total in any given year (hence incentivizing early payment). If we're giving away welfare to corporations and people whose wealth doesn't come on a W2, we can at least do this to address the student loan problem.

Edited June 25, 2019 by 'stache

[Cheeseweasel 26439]

My issue with "reparations" for Student Loans is that it doesn't address the problem. It only helps a handful of people in a certain generation. What about the kids entering college now? Can they expect their loans to be paid?

Fix the problem. The cost of education is outpacing inflation not because of normal economic conditions, but because of shitty loan practices with zero down side to the loaners. 

It's the housing bubble all over again.

[Huckleberry 34407]

Or you can support college assistance moving forward but not backpay for already paid college costs out of something other than spite, like say pragmatism.

My wife and I paid for our college during and after it. We would theoretically be getting screwed if future generations have that covered. Oh well. Suck it up and improve the world, you don't have to expect the world to go back and right every wrong.

[bad_teammate 13481]

Just now, 'stache said:

I'm all for it, but it's not feasible.

What about it is not "feasible"?

[Blotto 23975]

Keep pushing for more justice? WTF does that mean? Let's just give everyone a billion dollars and their own NFL franchise while we're at it. 

[bad_teammate 13481]

Just now, Cheeseweasel said:

My issue with "reparations" for Student Loans is that it doesn't address the problem. It only helps a handful of people in a certain generation. What about the kids entering college now? Can they expect their loans to be paid?

Sanders and Warren both want to make all public education tuition-free, so future students would only incur tuition debt if they choose to forego a free public education in favor of a private education.

Sanders's plan literally has free tuition and loan forgiveness in the same bill because you are right, they HAVE to be done together. Good point.

Just now, Huckleberry said:

Or you can support college assistance moving forward but not backpay for already paid college costs out of something other than spite, like say pragmatism.

My wife and I paid for our college during and after it. We would theoretically be getting screwed if future generations have that covered. Oh well. Suck it up and improve the world, you don't have to expect the world to go back and right every wrong.

You said it wasn't spite... then you were spiteful.

[bad_teammate 13481]

Just now, Blotto said:

Keep pushing for more justice? WTF does that mean? Let's just give everyone a billion dollars and their own NFL franchise while we're at it. 

No, just repay them for what they had to pay because they were not previously receiving adequate services (a tuition-free public education).

[David Dennison 19441]

1 minute ago, Blotto said:

Keep pushing for more justice? WTF does that mean? Let's just give everyone a billion dollars and their own NFL franchise while we're at it. 

It's going to be more like $10,000 a year to everyone, no questions asked.

That's not a matter of if, but when.

[Mojo Hand 4580]

It's interesting to hear the "fairness" perspective for student loan forgiveness, though I don't know that I agree.  What I find to be a compelling motivation isn't fairness per se, but rather helping people who are currently struggling.   To the extent people are currently struggling because of past student loans they already paid off, I'm all for helping them in various ways.   But "fairness" as the motivating factor for paying the past loans of wealthy people doesn't strike me as all that compelling.  And I'm pretty bleeding heart, so I can't see that getting much traction more broadly. 

[bad_teammate 13481]

Just now, David Dennison said:

It's going to be more like $10,000 a year to everyone, no questions asked.

That's not a matter of if, but when.

Hey why don't you go somewhere else if all you're going to do is troll the thread?

Thanks.

[David Dennison 19441]

Just now, bad_teammate said:

Hey why don't you go somewhere else if all you're going to do is troll the thread?

Thanks.

Who's trolling? UBI is coming.

[Huckleberry 34407]

2 minutes ago, bad_teammate said:

You said it wasn't spite... then you were spiteful.

You shouldn't use words if you don't know what they mean.

Edited June 25, 2019 by Huckleberry

[David Dennison 19441]

1 minute ago, Mojo Hand said:

It's interesting to hear the "fairness" perspective for student loan forgiveness, though I don't know that I agree.  What I find to be a compelling motivation isn't fairness per se, but rather helping people who are currently struggling.   To the extent people are currently struggling because of past student loans they already paid off, I'm all for helping them in various ways.   But "fairness" as the motivating factor for paying the past loans of wealthy people doesn't strike me as all that compelling.  And I'm pretty bleeding heart, so I can't see that getting much traction more broadly. 

If you are paying off a student loan, you aren't wealthy. You make a good salary.

[bad_teammate 13481]

Just now, Mojo Hand said:

To the extent people are currently struggling because of past student loans they already paid off, I'm all for helping them in various ways.   But "fairness" as the motivating factor for paying the past loans of wealthy people doesn't strike me as all that compelling.

I understand what you mean, but figuring out what "struggling" means for hundreds of millions of different people is extremely complicated. For many (probably millions), that might mean sticking to an undesirable job or life situation in order to afford the loan payments (and healthcare, but that's another thread), and while that might look fine from a 3rd person view, the person was trapped there because of unfree tuition.

[tx 3 putt 78474]

Anyone that wants to forgive my mba loan will have my vote for life !!! 

Make 3putt Great Again !!!!

[Mojo Hand 4580]

1 minute ago, David Dennison said:

If you are paying off a student loan, you aren't wealthy. You make a good salary.

Well, this thread is about past student loan recipients who already repaid their loans.   Lots of wealthy people once had student loans when they were young.  

[HenryJames 67124]

 

[BrickHorn 18426]

Pay for everyone’s college, retroactively?  This is starting to sound like a gift exchange where everyone gives each other cash. What’s the fucking point?

[Asithappens 978]

Not an issue of "reparations" at all. (couldn't tell if that term was supposed to be sarcasm)

The student loan debacle is a strain on the economy. But hey, let's let the "free market" take care of all this, right?

 

[David Dennison 19441]

1 minute ago, Mojo Hand said:

Well, this thread is about past student loan recipients who already repaid their loans.   Lots of wealthy people once had student loans when they were young.  

Point taken.

 

[Cheeseweasel 26439]

5 minutes ago, Mojo Hand said:

It's interesting to hear the "fairness" perspective for student loan forgiveness, though I don't know that I agree.  What I find to be a compelling motivation isn't fairness per se, but rather helping people who are currently struggling.   To the extent people are currently struggling because of past student loans they already paid off, I'm all for helping them in various ways.   But "fairness" as the motivating factor for paying the past loans of wealthy people doesn't strike me as all that compelling.  And I'm pretty bleeding heart, so I can't see that getting much traction more broadly. 

100%. I'm for fixing the root cause. Creating a system where reasonable accommodations can be made to pay off these debts (service? tax write-off's?). People need to have "skin in the game" or this will just create more "I got mine, fuck you" comments.

[Cheeseweasel 26439]

1 minute ago, BrickHorn said:

Pay for everyone’s college, retroactively?  This is starting to sound like a gift exchange where everyone gives each other cash. What’s the fucking point?

Did you re-gift my label maker?

[bad_teammate 13481]

2 minutes ago, David Dennison said:

Who's trolling? UBI is coming.

Very cool, go to a UBI thread your posts have been off-topic shit since the very first reply. Thanks.

2 minutes ago, Huckleberry said:

You shouldn't use words if you don't know what they mean.

Bitterness and resentment are basically the only reason you would say "pragmatic" and then make emotional arguments, especially when the first part of the argument is about your own personal situation. I didn't see a single pragmatic argument.

Just now, BrickHorn said:

Pay for everyone’s college, retroactively?  This is starting to sound like a gift exchange where everyone gives each other cash. What’s the fucking point?

No. Loans they had to pay back.

The underlying concept is that we should have been properly subsidizing education this whole time, so all we need to do now is pay back what people had to take out in loans because it wasn't subsidized properly.

[David Dennison 19441]

3 minutes ago, bad_teammate said:

Very cool, go to a UBI thread your posts have been off-topic shit since the very first reply. Thanks.

I responded to a post suggesting we give everyone a billion dollars.

And complaining about being off topic on a message board is hilarious.

And you shouldn't call this reparations. 

Edited June 25, 2019 by David Dennison

[BrickHorn 18426]

This whole Bernie Sanders liberalism is the worst kind.  It’s welfare for the bourgeoisie.   You know who needs money more than college graduates?  People who didn’t fucking go to college.  

[Huckleberry 34407]

1 minute ago, bad_teammate said:

Bitterness and resentment are basically the only reason you would say "pragmatic" and then make emotional arguments, especially when the first part of the argument is about your own personal situation. I didn't see a single pragmatic argument.

That's a pretty bad take, even for you.

What I did was specifically point out that I think recompense for already paid student costs is an unrealistic idea despite the fact that I myself would be getting the short end of that stick. So your entire terrible theory breaks down to the idea that I am spiting myself. While I'm sure plenty of people think I deserve some bad things to happen to me, I'm not one of them. If I were actually bitter and resentful I would be for the idea of getting my money back. This is pretty simple stuff, man.

And the pragmatic arguments are obvious to most people, no need to belabor them. But if you'd like to do so you can start with the fact that paying someone back for the $40,000 they spent decades ago is not nearly paid back by giving them $40,000 in 2019.

[bad_teammate 13481]

Just now, BrickHorn said:

This whole Bernie Sanders liberalism is the worst kind.  It’s welfare for the bourgeoisie.   You know who needs money more than college graduates?  People who didn’t fucking go to college.  

100% agree, we need to give them money, too. And jobs and healthcare.

Are we somehow incapable of doing that because of student loan forgiveness? If so, why? If not, why are you acting like it?

[Asithappens 978]

3 minutes ago, bad_teammate said:

The underlying concept is that we should have been properly subsidizing education this whole time, so all we need to do now is pay back what people had to take out in loans because it wasn't subsidized properly.

Not following this. 

Just because some students had to take out student loans doesn't mean higher education wasn't funded properly.

Repaying loans for some guy becoming a brain surgeon? Fuck that. 

Repaying loans for some idiot who took out $100k in loans to major in Radio/TV/Film? Again, fuck that.

Repaying loans for the scads of morons who went to a crappy graduate program who now can't find a job? Yeah, fuck that.

 

[Cheeseweasel 26439]

1 minute ago, BrickHorn said:

This whole Bernie Sanders liberalism is the worst kind.  It’s welfare for the bourgeoisie.   You know who needs money more than college graduates?  People who didn’t fucking go to college.  

Yeah, this is a legit point. Seem like he's pandering for votes for a large block of normally moderate voters.

[Cheeseweasel 26439]

1 minute ago, Asithappens said:

Just because some students had to take out student loans doesn't mean higher education wasn't funded properly.

I know no one gives a shit, but I got thru school with work/co-op/scholarships and borrowing from my parents (who I repaid). My shit won't be on the radar.

[Asithappens 978]

1 minute ago, Huckleberry said:

But if you'd like to do so you can start with the fact that paying someone back for the $40,000 they spent decades ago is not nearly paid back by giving them $40,000 in 2019.

Except it is. Or at least it's closer to being paid back than you think. Anything else is awarding a double return.

The "return" on the original $40k "investment" (yeah, I know) is from a higher earning potential. If the person didn't get paid more then that's on them. Why pay them according to a time value of money scenario? 

But here's another approach: don't pay them squat.

But do wipe out the current crop of student loan debt, or at least set a limit.

[Mdhorn 6153]

NM

Edited June 25, 2019 by Mdhorn

[Asithappens 978]

Our society places far more emphasis on prisons than on education.

And we are reaping what we are sewing. [sic]

 

Edited June 25, 2019 by Asithappens

[Cheeseweasel 26439]

1 minute ago, Mdhorn said:

I wish we had affordable education along with a healthy trade school/community college system option but this may actually be a state issue.

Trade school/community college is legit. However, the Boomers who fucked their kids over by telling them this wasn't a viable option are a big part of the problem.

[FondrenRoad 4378]

10 minutes ago, BrickHorn said:

Pay for everyone’s college, retroactively?  This is starting to sound like a gift exchange where everyone gives each other cash. What’s the fucking point?

Yep. The other problem is that there are plenty of people out there that haven't been making much money, but still buckled down, lived with roommates, didn't go out, ate cheaply, and paid down or off their student loans. Those people will be getting fucked by loan forgiveness more than anyone else. Corporate lawyers and investment bankers aren't the only ones who have paid off their loans. 

The equitable approach is to pay for school with public money going forward, remove interest for all current student loans, and pay down people's loans on an income based phase out system.  You pay what you can pay based on income, and if you actually can pay, you do. 

[Huckleberry 34407]

2 minutes ago, Asithappens said:

Except it is. Or at least it's closer to being paid back than you think. Anything else is awarding a double return.

The "return" on the original $40k "investment" (yeah, I know) is from a higher earning potential. If the person didn't get paid more then that's on them. Why pay them according to a time value of money scenario? 

But here's another approach: don't pay them squat.

But do wipe out the current crop of student loan debt, or at least set a limit.

I'm not even talking investment return like assuming 5% or anything like that. Just simple inflation and spending power. If I had $40,000 to spend 25 years ago and you assume worst case scenario that I just spent it on stuff, I'd have to have something like $70,000 to buy the same stuff now.

[Mdhorn 6153]

3 minutes ago, Cheeseweasel said:

Trade school/community college is legit. However, the Boomers who fucked their kids over by telling them this wasn't a viable option are a big part of the problem.

I erased my post because this thread is going to be a large rabbit hole. 

Edited June 25, 2019 by Mdhorn

[bad_teammate 13481]

Just now, Huckleberry said:

What I did was specifically point out that I think recompense for already paid student costs is an unrealistic idea despite the fact that I myself would be getting the short end of that stick

In what sense is it "unrealistic"?

Quote

So your entire terrible theory breaks down to the idea that I am spiting myself.

"Oh well, suck it up..." - Yes, that's exactly what you're doing.

Quote

And the pragmatic arguments are obvious to most people, no need to belabor them. But if you'd like to do so you can start with the fact that paying someone back for the $40,000 they spent decades ago is not nearly paid back by giving them $40,000 in 2019.

Reparations are, by nature, imperfect. But I would be interested to hear a better way to address that issue.

1 minute ago, Asithappens said:

Not following this. 

Just because some students had to take out student loans doesn't mean higher education wasn't funded properly.

The obvious one is that anyone who had to take out loans to pay tuition/fees at a public university shouldn't have had to do that.

Now...

- Think about the inflationary effects of the entire loan scheme that was created to cover unsubsidized university costs.

- Think about price competition and posturing between universities. If UT is more expensive, then my elite private school can be X% more expensive. And if private school is that expensive, then we can raise UT's prices a little more... up and up and up and up...

Just now, Asithappens said:

But here's another approach: don't pay them squat.

But do wipe out the current crop of student loan debt, or at least set a limit.

Let's say...

Warren (Up to $50k for those who make under $100k): $700B (campaign estimate)
Sanders (All of it): $1.6T
Full Reparations (All of it + past loan payments: $3T

Is the difference between these programs in terms of government cost really all that significant when the upshot is that basically every single dollar will be immediately reinvested back into the economy? (Versus other schemes where the trillions go sit overseas or in stagnant accounts?)

1 minute ago, Cheeseweasel said:

Trade school/community college is legit. However, the Boomers who fucked their kids over by telling them this wasn't a viable option are a big part of the problem.

Bernie's and Warren's plans make both of those tuition-free.

1 minute ago, FondrenRoad said:

The equitable approach is to pay for school with public money going forward, remove interest for all current student loans, and pay down people's loans on an income based phase out system.  You pay what you can pay based on income, and if you actually can pay, you do. 

Why should people have to pay massive banks loan money for having gone to public universities? 

[LonghornJudas 1137]

4 minutes ago, BrickHorn said:

Pay for everyone’s college, retroactively?  This is starting to sound like a gift exchange where everyone gives each other cash. What’s the fucking point?

Teddy KGB : Fine. It's a fucking joke anyway. After all, I am paying you with your money.

As for the topic. I'd prefer something more focused. For example, reparations for current students and continued free tuition for those majoring in STEM subjects OR seeking education in trade schools.

[Asithappens 978]

1 minute ago, Cheeseweasel said:

Trade school/community college is legit. However, the Boomers who fucked their kids over by telling them this wasn't a viable option are a big part of the problem.

Those are usually the same parents who told their precious snowflakes that they can be anything they want.

Money is no object. Education is a noble and worthy goal. Inherently valuable no matter what.

Because of this we have kids owing $100k's with nothing but a psychology degree from NYU, or not graduating from Northwest Ohio State College (or whatever) majoring in Radio owing a similar amount.

The parents and the students (and the school) all play a role in this stupidity. The biggest idiots are the parents and the students.

[bonnieblue 542]

How about just retroactive "reparations" for the interest paid on the loans. If you took out loans in the early 2010s, the I/R was sitting around 6.7/7.8%.

[tx 3 putt 78474]

24 minutes ago, David Dennison said:

If you are paying off a student loan, you aren't wealthy. You make a good salary.

I’m too lazy to pay it off / waiting for AOC to become president and wipe it all out 

[Asithappens 978]

The obvious one is that anyone who had to take out loans to pay tuition/fees at a public university shouldn't have had to do that.

That's just absolute bullshit.

Back when one could go to university for $6,000/year there were still loans. Low-cost gubmint loans.

To say that one should never have to take out a loan just b/c they went to a public university is absurd.

Make the loans a reasonable amount (which will entail much more public funding) and a reasonable i rate.

But to say to they should never have to take out a loan at all? Ever?

 

[TwiceHorn 31994]

Why do so many of b_t's ideas propose some form of collective self-flagellation?

 

[Onboard 2.0 9083]

Don't forgive, but reduce interest. AOC was spot on about people not being able to begin their lives because of some fairly heavy debt loads right out of the gate.  I do have little sympathy for anyone getting a degree that has a low payback potential however.

 

I think carrots should be damaged out there. Becomee a teacher for 5 years, and get a reduced loan amount or grants for future schooling, things like that.

[Blotto 23975]

29 minutes ago, bad_teammate said:

No. Loans they had to pay back.

The underlying concept is that we should have been properly subsidizing education this whole time, so all we need to do now is pay back what people had to take out in loans because it wasn't subsidized properly

Why does it matter if you paid for college out of pocket or took out loans. In both scenarios, education wasn't properly subsidized. If we are talking fairness, why should a person be punished because they and their family had the foresight to ensure they could pay for an education. Why does the opportunity cost of the exaggerated expense of education not apply to people that paid out of pocket? We want to be fair after all.

Edited June 25, 2019 by Blotto

[Onboard 2.0 9083]

2 minutes ago, TwiceHorn said:

Why do so many of b_t's ideas propose some form of collective self-flagellation?

 

Communistas want everyone to share in the pain of their miserable lives.

[Fozzz 152]

27 minutes ago, Huckleberry said:

Or you can support college assistance moving forward but not backpay for already paid college costs out of something other than spite, like say pragmatism.

My wife and I paid for our college during and after it. We would theoretically be getting screwed if future generations have that covered. Oh well. Suck it up and improve the world, you don't have to expect the world to go back and right every wrong.

Or you can support wiping out student debt as the pragmatic choice given how such a policy would positively impact the economy.

Quote

A one-time policy of student debt cancellation, in which the federal government cancels the loans it holds directly and takes over the financing of privately owned loans on behalf of borrowers, results in the following macroeconomic effects (all dollar values are in real, inflation-adjusted terms, using 2016 as the base year):

The policy of debt cancellation could boost real GDP by an average of $86 billion to $108 billion per year. Over the 10-year forecast, the policy generates between $861 billion and $1,083 billion in real GDP (2016 dollars).

Eliminating student debt reduces the average unemployment rate by 0.22 to 0.36 percentage points over the 10-year forecast.

Peak job creation in the first few years following the elimination of student loan debt adds roughly 1.2 million to 1.5 million new jobs per year.

The inflationary effects of cancelling the debt are macroeconomically insignificant. In the Fair model simulations, additional inflation peaks at about 0.3 percentage points and turns negative in later years. In the Moody’s model, the effect is even smaller, with the pickup in inflation peaking at a trivial 0.09 percentage points.

Nominal interest rates rise modestly. In the early years, the Federal Reserve raises target rates 0.3 to 0.5 percentage points; in later years, the increase falls to just 0.2 percentage points.  The effect on nominal longer-term interest rates peaks at 0.25 to 0.5 percentage points and declines thereafter, settling at 0.21 to 0.35 percentage points. 

The net budgetary effect for the federal government is modest, with a likely increase in the deficit-to-GDP ratio of 0.65 to 0.75 percentage points per year. Depending on the federal government’s budget position overall, the deficit ratio could rise more modestly, ranging between 0.59 and 0.61 percentage points. However, given that the costs of funding the Department of Education’s student loans have already been incurred (discussed in detail in Section 2), the more relevant estimates for the impacts on the government’s budget position relative to current levels are an annual increase in the deficit ratio of between 0.29 and 0.37 percentage points. 

Research suggests many other positive spillover effects that are not accounted for in these simulations, including increases in small business formation, degree attainment, and household formation, as well as improved access to credit and reduced household vulnerability to business cycle downturns. Thus, our results provide a conservative estimate of the macro effects of student debt liberation.

 

 http://www.levyinstitute.org/pubs/rpr_2_6.pdf