Banks are allowed to make unsecured loans and the borrowers can’t usefully declare bankruptcy. Colleges have every reason to raise prices and lenders have no skin in the game.
It isn’t any more complicated, and no amount of data analysis can possibly refute this.
https://www.cbpp.org/research/state-budget-and-tax/state-hig...
I suspect that prices could still increase even in spite of public funding decreases due to the point in my original post.
But to me, all of these side effects can be thought of as fruit from a poisonous tree, and thus unjustified.
And the government was perfectly capable of bailing out private companies at the end of Bush Jr’s second term.
Letting a bank choose the interest rate based on your zip code would allow banks to predict which families will remain rich and that would be a self fulfilling continuation of current class distinctions in a system where they are allowed to do that.
It should surprise nobody that the banking interests (and industry-adjacent politicians) who pushed so hard for student debtors to be uniquely deprived of their right to shed their debt through the courts are now pushing for taxpayers to repay their unsecured loans.
The value of a higher education that it's sold to young people with is the income it allegedly brings in. If that's the case someone uses the product and their income goes up then we already have a means to tax that income it's called income tax. If the product fails to deliver that income but the money is still taken (and as others mention in a non dischargeable way) then I don't see how that isn't fradulent.
I think that’s a defensible argument, but it’s regressive in a different way from the status quo.
This isn’t fully fleshed out, but the government could set a cap in loans based on anticipated the future earnings. Johnny gets into Med School and wants a $400K loan? Great! Iowa Central College wants to charge $200K for a dance major? Good luck finding students to enroll!
This also has the benefit of placing downward pressure on college tuition.
If some rich people benefit with valuable education (or the ever loved MFAs in this debate), so what? That's what income tax is for. The rich having skin in the game too is a good thing.
https://www.currentaffairs.org/2019/06/is-student-debt-cance...
- AFAICT, the argument that a massive loan forgiveness would not be regressive rests entirely on excluding from the analysis low-income members of the 25-40yo cohort with no student debt. Sure, that fraction may be smaller than in the past, but it’s hard to see how discounting a bunch of poor folks who would see $0 benefit from this expenditure is intellectually honest.
- It’s amusing to see a left-wing analysis complain about policy benefits being described in absolute dollar amounts when it’s a doctor making $250k having $50k of his medical school loans forgiven. As I recall, every tax cut debate of the last 20 years has featured charts in absolute amounts showing the tens of thousands of dollars the average 1%’er would save, not the relatively small fraction of income that represented.
To allow the same for entire generations of students affects our society - causing declining birth rates, poorer health outcomes, poorer life quality. And why? To enforce fiscal discipline that we have not enforced even on sophisticated actors that systemically made a poor choice?
- if it's about taxing some qualitative value of education then it should be a graduate tax applied equally to everyone with tertiary education. I'd be curious how politicans would manage policies on education and taxes on this value when they are paying it too
- if it's not about the qualitative value but about the income, then it should be an income tax.
- if it can't be discharged through normal procedures of bankruptcy and terms are rewritten by politicians then it's not 'just a loan' either.
In the absence of any of these then these are largely generation taxes in terms of how they fall.
For student loan forgiveness the government is in the role of the landowner in this parable.
