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On January 16 2021 03:09 farvacola wrote:Show nested quote +On January 16 2021 02:20 Oukka wrote:On January 16 2021 02:00 farvacola wrote:On January 16 2021 01:41 LegalLord wrote:On January 16 2021 00:56 farvacola wrote:
I have no idea what you mean when you use the term regressive; as a policy term, it refers to the proportional, dollar for dollar benefit of a policy with reference to a target's income, which is why non-luxury sales taxes are the paradigmatic example of a regressive measure. Blanket forgiveness or cash stimulus that phases out at a higher income are progressive, not regressive, because the proportional value of those measures is inverse with reference to a target's income (a poor person realizes more proportional value from a dollar forgiven than a wealthy person does). If you're maintaining that lower income folks will suffer some kind of downstream economic effect that results from forgiveness, that's something different that isn't readily apparent without some value-based macro theorizing. It's regressive in the sense that you're helping those that are better off more than you're helping those that are worse off when you start forgiving loans at any scale. That would certainly be the result of a blanket "all loans are forgiven" strategy, and any sort of attempt to balance that out is going to be by necessity quite complex. A foolish policy to pursue without a long-term plan, to be sure. The only way this could be true is if you assume that folks on $0 income based repayment plans realize less benefit from forgiveness than folks whose incomes are higher enough to force them to pay something more than $0. In order for that assumption to hold, you need to also assume that carrying a static student loan debt while making $0 payments costs less than the <$0 payments being made by other, higher earning borrowers. That second assumption is where the adage that it's expensive to be poor needs to be addressed (along with time horizon problems), meaning you need cannot ignore all of the additional, mostly hidden costs of stuff like consumer credit for those with bottom-tier incomes and a student loan debt that won't be forgiven until 20-25 years, and that's all assuming these $0 payors remain poor enough that their payments remain anchored at the bottom. I thought the point was that there is less student debt in the poorer population simply because there is less university educated people there. Like if we assume that the tuition fees are randomly allocated (or near enough) across university attending students then whatever say decile has the highest amount of college goers has the highest debt total. Then cancelling the debt helps that segment the most. I thinks somewhat reasonable to assume that say parental income is positively correlated with likelihood to attend university. Then flat forgiveness of student debt would help those better off more as they're more likely have gone to university and accumulate some debt as a result. In that sense student debt forgiveness might be seen as regressive and indeed subsidising those who are better off. However if we only look at those who have some student debt it, then likely forgiving the debt has the biggest impact on those with lowest incomes and/or assets, meaning that it would be a progressive policy. With different framing it changes completely, and I think both are important to consider. E: But yeah as everyone in this thread have repeatedly said, any debt forgiveness really doesn't make sense anyways without a larger tuition fee reform. If you remove the debt but keep the system that generates it as it is the same problem emerges in a couple of years. Whether it is legislating hard caps on tuition fees or changing the student funding system, something has to fundamentally change. Sure, if we're defining "regressive policy" as policy that tends to help a group that is better off than the bottom, that makes sense. However, regressive as a policy term tends to be used as a function of cost rather than benefit, which is why consumption taxes, licensing fees, and court costs/bail are the three most common examples of regressive measures; all three are cost events of general applicability that are difficult or impossible for the bottom wrung to avoid. And yes, it's worth reiterating that piecemeal solutions won't work here, but that criticism applies in equal measure to cash payments as it does student loan forgiveness. Without dramatic changes to how consumer finance is regulated, much of that money will be swept up by all of the ways that the poor are charged extra for their poverty (which is related to why so many stimulus recipients have used the money to simply pay off debts).
I'm still not sure I agree about calling it progressive. Government essentially transfers money to people who are already way above median earnings. That to me sounds like regressive policy. In fact more regressive than stuff like consumption tax that you mentioned, as that is at the same absolute level regardless of one's income. The wealth transfer from student loan forgiveness increases as one's income increases. So the more money you make as labour income (wage etc), the more you also get from the government.
I'll put the more fundamental reasoning in the spoilers because it really isn't that interesting. + Show Spoiler +I'm pulling wikipedia here as a source, they at least use survey conducted by the Census Bureau, which seems as good as it gets in the US given there is no registry data beyond IRS and that is not public afaik. https://en.wikipedia.org/wiki/Personal_income_in_the_United_States#By_educational_attainment Anyways median earnings are somewhere around $30k for the whole population, any college increases that by more than 30%. More college means even higher median income. Also median is very likely be lower than the expected (mean) income, but that's not that significant. More college also presumably means more tuition fees and more time spent at college accumulating student debt. Hence there is a correlation with student debt and income. If you cancel all student debt it benefits only people who have student debt and they are likely to already have higher incomes. Therefore government gives most money to those who already are better off. Which means that it is regressive as far as I understand the word regressive.
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Yeah I don't disagree that total forgiveness would not be progressive because, as you say, that would include a ton of the top-heavy debts of folks who have pursued advanced degrees, which does predispose an individual towards higher incomes. When I said blanket, I meant to refer to Biden's floated policy proposal of a blanket 10k forgiven for all borrowers, which is a measure that more properly implicates the relative earnings of individuals (10k forgiven for a failed cc student is worth a helluva lot more to them than 10k forgiven for a doctor with 100k in debt following them around).
That all said, I think it certainly makes more sense to use the progressive/regressive terminology with reference to costs (especially taxes), so your point is well taken. There are specific holes that render use of those terms tricky, such as acknowledging that, although a smaller group, folks working min wage jobs with student loan debts are worse off than their never been to college counterparts (and also tend to be minorities iirc).
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On January 16 2021 04:14 farvacola wrote:
Yeah I don't disagree that total forgiveness would not be progressive because, as you say, that would include a ton of the top-heavy debts of folks who have pursued advanced degrees, which does predispose an individual towards higher incomes. When I said blanket, I meant to refer to Biden's floated policy proposal of a blanket 10k forgiven for all borrowers, which is a measure that more properly implicates the relative earnings of individuals (10k forgiven for a failed cc student is worth a helluva lot more to them than 10k forgiven for a doctor with 100k in debt following them around).
That all said, I think it certainly makes more sense to use the progressive/regressive terminology with reference to costs (especially taxes), so your point is well taken. There are specific holes that render use of those terms tricky, such as acknowledging that, although a smaller group, folks working min wage jobs with student loan debts are worse off than their never been to college counterparts.
I don’t think the structure should be questioned so long as the benefits from a economic stimulation are verified. I think that even if you essentially give more money to richer people, those people are still spending a lot of it in other ways. So long as there is enough for those making less money, there shouldn’t be a problem with giving more to richer so long as the effect is still present.
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On January 16 2021 04:43 Mohdoo wrote:Show nested quote +On January 16 2021 04:14 farvacola wrote:
Yeah I don't disagree that total forgiveness would not be progressive because, as you say, that would include a ton of the top-heavy debts of folks who have pursued advanced degrees, which does predispose an individual towards higher incomes. When I said blanket, I meant to refer to Biden's floated policy proposal of a blanket 10k forgiven for all borrowers, which is a measure that more properly implicates the relative earnings of individuals (10k forgiven for a failed cc student is worth a helluva lot more to them than 10k forgiven for a doctor with 100k in debt following them around).
That all said, I think it certainly makes more sense to use the progressive/regressive terminology with reference to costs (especially taxes), so your point is well taken. There are specific holes that render use of those terms tricky, such as acknowledging that, although a smaller group, folks working min wage jobs with student loan debts are worse off than their never been to college counterparts. I don’t think the structure should be questioned so long as the benefits from a economic stimulation are verified. I think that even if you essentially give more money to richer people, those people are still spending a lot of it in other ways. So long as there is enough for those making less money, there shouldn’t be a problem with giving more to richer so long as the effect is still present.
I agree for reasons closely tied to a project of mine, which can be summarized as a functional and moral critique of means testing and other "show of entitlement" mechanisms that first became popular in the 70s. By putting the burden on individuals to continuously show that they deserve help, many of the people that need it most are process disqualified, and though on paper that can be construed as savings, when actually netted out, the overall costs are far far greater than they seem. That dovetails with your point, which is a sort of order of operations that prioritizes helping those that need it over making sure the undeserving don't get stuff they don't need.
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Norway28561 Posts
In Norway we've been very conscious to make our social benefits not be means-tested. This elevates these social benefits to being rights for all people, rather than handouts to leeches.
The same principle makes us comfortable with VAT (everyone should contribute) even if it's regressive. Then have more equitable salary levels so the initial distribution is so even that there's not much need for redistribution.
Not saying that works to fix a very uneven society (and to be fair, inequality is growing here too, especially due to having had a right wing government for the past 7 years) - but imo it's what you wanna aim for as a long term goal. From this point of departure, I think capping debt forgiveness at 10k and spending more energy on fixing what is broken makes more sense than aiming for complete debt forgiveness - but 10k across the board sounds very good.
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The problem with only 10k of debt forgiveness is that for many people these are predatory loans. You can not allow that to continue with rents of up to 10%. For comparison, in the Netherlands student debt rent has been below inflation for its entire existence. It was at zero for ages. If you make less money you have to pay less per month (it’s a small portion of your monthly income), and at any point you are legally allowed to pause payment for a total of five years. I don’t know know anyone who has been really burdened by student debt.
If someone has like a hundred thousand or more in student debt, then they’re the victim of some sort of predatory scheme, even if they did get an Ivy League education out of it. It’s simply ridiculous they should have had to pay such a sum. Private universities should be threatened to be nationalized until they cut down on tuition significantly and then existing loans should be recalculated based on the reduced tuition.
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On January 16 2021 05:37 Grumbels wrote:
The problem with only 10k of debt forgiveness is that for many people these are predatory loans. You can not allow that to continue with rents of up to 10%. For comparison, in the Netherlands student debt rent has been below inflation for its entire existence. It was at zero for ages. If you make less money you have to pay less per month (it’s a small portion of your monthly income), and at any point you are legally allowed to pause payment for a total of five years. I don’t know know anyone who has been really burdened by student debt.
If someone has like a hundred thousand or more in student debt, then they’re the victim of some sort of predatory scheme, even if they did get an Ivy League education out of it. It’s simply ridiculous they should have had to pay such a sum. Private universities should be threatened to be nationalized until they cut down on tuition significantly and then existing loans should be recalculated based on the reduced tuition.
Yeah the US has serious issues with debt and higher education, its quite predatory. Unfortunately its not likely to see any real attention this administration, Biden doesnt believe he has the power to forgive student debt, and I imagine we're going to have to deal with the pandemic til the midterms and once the midterms hit theres a very fair chance no further legislation will be passed for up to six years.
I imagine post-pandemic we'll see education reform be a bigger thing, and the push for the President to forgive loans regardless of the status of Congress to get even more traction the more people learn you don't need Congress to do it.
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United Kingdom13775 Posts
On January 16 2021 05:00 Liquid`Drone wrote:
In Norway we've been very conscious to make our social benefits not be means-tested. This elevates these social benefits to being rights for all people, rather than handouts to leeches.
The same principle makes us comfortable with VAT (everyone should contribute) even if it's regressive. Then have more equitable salary levels so the initial distribution is so even that there's not much need for redistribution.
Not saying that works to fix a very uneven society (and to be fair, inequality is growing here too, especially due to having had a right wing government for the past 7 years) - but imo it's what you wanna aim for as a long term goal. From this point of departure, I think capping debt forgiveness at 10k and spending more energy on fixing what is broken makes more sense than aiming for complete debt forgiveness - but 10k across the board sounds very good.
I'd say that it would make sense that, were there a major education inform that included forgiveness of student debt and a reform that makes higher education either free or highly subsidized, that it would make sense to roll in a blanket forgiveness of all student debt as a matter of principle. The well-off will make up the difference in increased taxes. Those who went above and beyond in paying off their debt would be short-changed, but you can't avoid winners and losers in policy-making.
Forgiveness without reform just benefits the wrong people.
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On January 16 2021 06:25 LegalLord wrote:Show nested quote +On January 16 2021 05:00 Liquid`Drone wrote:
In Norway we've been very conscious to make our social benefits not be means-tested. This elevates these social benefits to being rights for all people, rather than handouts to leeches.
The same principle makes us comfortable with VAT (everyone should contribute) even if it's regressive. Then have more equitable salary levels so the initial distribution is so even that there's not much need for redistribution.
Not saying that works to fix a very uneven society (and to be fair, inequality is growing here too, especially due to having had a right wing government for the past 7 years) - but imo it's what you wanna aim for as a long term goal. From this point of departure, I think capping debt forgiveness at 10k and spending more energy on fixing what is broken makes more sense than aiming for complete debt forgiveness - but 10k across the board sounds very good. I'd say that it would make sense that, were there a major education inform that included forgiveness of student debt and a reform that makes higher education either free or highly subsidized, that it would make sense to roll in a blanket forgiveness of all student debt as a matter of principle. The well-off will make up the difference in increased taxes. Those who went above and beyond in paying off their debt would be short-changed, but you can't avoid winners and losers in policy-making. Forgiveness without reform just benefits the wrong people.
Also, forgiveness without reform doesn't help in the slightest. It just means that there will be more predatory loans for the next year of students, and the basic problem remains. It is a very strange half-assed bandaid measure that avoids talking about the real problems and the much harder to do actual solutions for a few years. And the fact that loan forgiveness is needed is a pretty clear indicator that the system needs reforms so we don't end up in the exact same situation again in a few years.
It is kind of as if your house is on fire and the proposed solution is to build a few additional rooms. It solves the immediate problem that you currently don't have any rooms, but it doesn't solve the core problem that your house is on fire.
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Get rid of compound interest for student loans, that's just predatory behavior.
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I'd like to see massively reduced interest rates for student loans alongside solid forgiveness plans, that might be a solid way to get some help without outright forgiveness.
Like, make under 70K a year? Pay on your .5% interest loans for twenty years and its forgiven, voila!
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United States42004 Posts
Not all student debt is a smart investment and not all costs are equal. Either the gov let’s people borrow unlimited amounts for classes that are unlikely to lead to a well paying job or students will want to take out non gov loans. Non gov loans would be at higher rates to justify the risk.
The issue can’t be fixed with interest rate caps. The high interest rates are the market’s way of saying “you’re statistically pretty likely to fail”.
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Uhh you don't have interest rate caps in America??? Like, none at all?
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Most states set the usury cap at 25%, but there are loopholes, a big one being sham tribal lending companies that rent an office in reservation territory and get exempted from most consumer protection laws. There are student loan companies that do that. It should be noted that loans originated by and/or guaranteed by the federal government are governed by a different set of rules, but interest can still vary wildly depending on the age of the loan and its servicing/payment history.
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United Kingdom13775 Posts
On January 16 2021 08:14 Sent. wrote:
Uhh you don't have interest rate caps in America??? Like, none at all?
Some have them, but they're all pretty terrible. Upon a quick search there was a budgetary recommendation to remove them, which incidentally provides a nice list of the various forms of predatory loans the US govt offers.
You also have private student loans which are even sketchier.
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On January 16 2021 08:12 KwarK wrote:
Not all student debt is a smart investment and not all costs are equal. Either the gov let’s people borrow unlimited amounts for classes that are unlikely to lead to a well paying job or students will want to take out non gov loans. Non gov loans would be at higher rates to justify the risk.
The issue can’t be fixed with interest rate caps. The high interest rates are the market’s way of saying “you’re statistically pretty likely to fail”.
But a well paying job is not really the best indicator for use to society, and the government’s interests are therefore different from that of a private lender making an investment into e.g. a future lawyer.
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United States42004 Posts
On January 16 2021 08:41 Grumbels wrote:Show nested quote +On January 16 2021 08:12 KwarK wrote:
Not all student debt is a smart investment and not all costs are equal. Either the gov let’s people borrow unlimited amounts for classes that are unlikely to lead to a well paying job or students will want to take out non gov loans. Non gov loans would be at higher rates to justify the risk.
The issue can’t be fixed with interest rate caps. The high interest rates are the market’s way of saying “you’re statistically pretty likely to fail”. But a well paying job is not really the best indicator for use to society, and the government’s interests are therefore different from that of a private lender making an investment into e.g. a future lawyer.
From the perspective of whether it’s a good idea to loan someone money the only valid criteria is whether they can pay it back. If you want to make it easier for people to get into socially positive careers then the government should subsidize tuition and offer grants.
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On January 16 2021 08:55 KwarK wrote:Show nested quote +On January 16 2021 08:41 Grumbels wrote:On January 16 2021 08:12 KwarK wrote:
Not all student debt is a smart investment and not all costs are equal. Either the gov let’s people borrow unlimited amounts for classes that are unlikely to lead to a well paying job or students will want to take out non gov loans. Non gov loans would be at higher rates to justify the risk.
The issue can’t be fixed with interest rate caps. The high interest rates are the market’s way of saying “you’re statistically pretty likely to fail”. But a well paying job is not really the best indicator for use to society, and the government’s interests are therefore different from that of a private lender making an investment into e.g. a future lawyer. From the perspective of whether it’s a good idea to loan someone money the only valid criteria is whether they can pay it back. If you want to make it easier for people to get into socially positive careers then the government should subsidize tuition and offer grants.
I am absolutely of the opinion that college should be either government-financed or so inexpensive that everybody can afford it. That would be one avenue of reforming the US education system.
The government should not be in the business of lending money to people to gain interest. The government is not, and should not be, a bank. If the government wants to lend money to people, that should be on the way towards some other goal. Like making education more affordable if the government does not want to finance it.
I'd agree that interest rate caps are probably not what you want, because if that is the only thing you do, that simply means that some people no longer get the money they need to study. You want either a publicly financed education system or at least government loans at very low interest rates for people to get their education. I'll be honest and say that the more i find out about the US systems, the more utterly broken they appear to be.
I made some bad decisions during my studies at university, and if i were to live in the US i would spend the rest of my live paying off bad loans while working some shit-ass low-skilled job. Here in Germany i am about to start being a teacher in February. I prefer Germany.
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Northern Ireland23897 Posts
Where has the money in increase after increase to tuition fees actually going?
The mother of minibat is an academic now, my best friend is a physics researcher and it sure as fuck isn’t going to their salaries.
Both my local universities have cut teaching time in many degrees and got rid of whole departments so it certainly isn’t going to teaching.
I’m sure there is a huge amount of variance across countries but fees have been rising against the backdrop of degrees simultaneously being a gateway to many basic jobs, but less of an income boost when considered as an investment. In addition costs have been rising as the internet and access to learning resources and devices is basically ubiquitous.
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To my understanding most of the inflated cost of tuition have gone to management types, according to what Ive heard from my professors when I was at school.
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EPT
