I'm reading the AOC quote because it's in email from the NYT (by David Leonhardt). This doesn't seem to be published in the newspaper. It's just email. I quote:
It’s a great point. Ocasio-Cortez supports ideas like free four-year college and universal debt forgiveness. Other people (including me) are more skeptical, arguing that such plans disproportionately benefit the affluent.
But much of the debate is unavoidably theoretical. No one knows exactly how a universal debt forgiveness program would really play out. Maybe it would be a big handout to future financiers, lawyers and software engineers and wouldn’t have much influence on the careers that college graduates chose.....
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136 comments:
Am I the only one whose first thoughts were about the parents of students who'd sacrificed to pay the expenses of their kids and keep them free of debt?
That was my first thought too. You're a poor family, whose son got accepted to this wonderful school. Instead of going into debt; you cleaned out your 401k.... Jokes on You!!! rotflmao!
The question I have is how in the world did a black guy amass billions in this racist, bigoted, hate filled country?
What Smith is doing is not debt cancellation. It's a transfer of wealth from him to the graduates. AOC's universal debt cancellation discussion is a debt transfer not a debt cancellation. We are talking about apples and pie in the sky.
Second question: What about next years graduates?
In a way, it's like if some entity in the fable The Ant and the Grasshopper came in and gave them both ample food to make it through the winter. Would the hard working, thinking ahead ants resent the fact that the grasshopper would now start off the winter on equal footing? Will the students who endured summer jobs and made sacrifices to keep their college debt as low as possible resent that they didn't borrow more?
If you are a billionaire, be prepared when asked to give a commencement address. What? You're not going open your checkbook? Cheapskate.
Am I the only one whose first thoughts were about the parents of students who'd sacrificed to pay the expenses of their kids and keep them free of debt?
That sort of thing is a big problem with just about anything that rewards people "in need". Thus, one of the criticisms of the College Board's "adversity score". It penalizes kids whose parents worked and succeeded in making their kid's circumstances less adverse.
Thomas Sowell had a very cynical quote, referring to AFDC, food stamps, etc., "The more you pay people to be poor, the more poor people you will get."
This underlines the real issue—how to lower the cost of higher education so that students don’t incur huge debts.
Similar situation to the discussion I'm having with my kids regarding their kids: Save/sacrifice for college, work during school year, summer jobs, and so on, or borrow and hope for Federal debt cancellation at some point. Pretty sure some of the families at Morehouse are kicking themselves now.
An Estate Planner's adage about making large gifts to 21 yr olds is to divide it into thirds. They are expected throw away the first 1/3 , but will try to keep the second 1/3 unsuccessfully, and only then know how to hold on to the last 1/3. Human nature is still the same.
I would rather do away with gov't guaranteed student loans and allow them to be discharged in bankruptcy. That would do a lot to bring down the cost of college.
Failing that, I'd rather it be free. The end result of more income inequality is hilarious to me. Imagine doctors without 250k of debt out of school...and the ability to start investing in their 20s for retirement.
Will the students who endured summer jobs and made sacrifices to keep their college debt as low as possible resent that they didn't borrow more?
could have taken summers off! Could have SPENT THAT SUMMER JOB MONEY! Suckers!
The Real hilarious joke, is the kid that could of/Should of graduated This year, but took a semester of to work to keep down his debt; and will now graduate next year. Oh! and the hilarious guy that got Extra debt, took summer school; and graduated LAST semester HAHA!
Humperdink said...
be prepared when asked to give a commencement address. What? You're not going open your checkbook?
This is Already happening!
https://www.foxnews.com/entertainment/oprah-winfrey-college-donations-instagram-paid-off-students-debt-robert-smith
Following on Marcus Carman’s comment, the natural experiment would be useful but not as useful as you might imagine at first. The money for such loan forgiveness must come from somewhere. It is unlikely that we can fund such commitments from a supply of altruistic billionaires. More likely, it will be funded through general taxation. As such, it represents a transfer from the less educated to the more educated. Besides unwanted effects on taxpayers, we will reduce incentives for colleges to contain costs - more administrators, more claiming walls, etc.
r/v said: "This underlines the real issue—how to lower the cost of higher education so that students don’t incur huge debts."
The question that is rarely asked is why has the cost of higher education risen at triple the rate of inflation?
Am I the only one whose first thoughts were about the parents of students who'd sacrificed to pay the expenses of their kids and keep them free of debt?
No, no you are not. And not just among the punditocracy. I guarantee you every responsible parent who worked and saved and sacrificed to get their child through Moorehouse without amassing massive debt is having exactly that same thought right now. And they're feeling like suckers.
I was thinking of the kids and their parents, out in the audience, who had scrimped and saved, to avoid student debt. The donor's kind gesture didn't help them even though they proved themselves to be the most responsible.
Marcus Carmen, you are mostly right. But AOC's (or anyone's) debt cancellation is most certainly always a transfer of wealth. No one is about to give their products or services, their expertise and abilities, their literal time of life for free. So of course someone will have to pay for this. And they will. Or rather, we all will, in some form or another. There really is no free lunch.
The AOCs of the world would have you be a slave to whatever is the currently favored 'right' of the day. Today it's 'free' healthcare' or 'free' education. To do that, someone is going to be asked to provide their work, services, products for free. Another name for that is slavery. Or, someone else has to pick up the tab.
And of course, those are the two things Socialists are good at. Creating slavery. Or creating poor people.
First, on the Evening News the student selected to be representative expressed his gratitude for having his $150,000 debt paid by this benefactor and stated that he was now ready to go out there and "change the world."
Huh?
Second, as a general thing, I think the colleges figure that on the average they can get so much, say $12,000, in annual tuition out of a student and his family. This then remains a constant in their calculations, and they look to federal and state grants and student loans for additional funds to pay for their imperial edifices, "academic research," and sumptuous salaries and perks for everybody all around.
Humperdink said...The question that is rarely asked is why has the cost of higher education risen at triple the rate of inflation?
That's because the answer is obvious. Financial aid is nothing more than a scheme to transfer the future earnings of students to the pockets of today's college administrators.
Watch these billionaires begin to hide under rocks or in caves.
"Morehouse College is a private, all-male, historically black college in Atlanta, Georgia."
Donkey Chompers not allowed in.
This underlines the real issue—how to lower the cost of higher education
Look at health care costs! Keep going up and up and up and up; right?
but wait!
then you see things like: LASIK As Low As $220/eye.
How can That be? WHY are LASIK costs going DOWN, not up?
Oh! Most insurance companies do not cover LASIK eye surgery costs
ALMOST Like there is a connection between not having to pay the costs, and the costs skyrocketing?
As long as there is someone to pay off the college debt, it would be a good idea for the college to double what they charge. Right?
gspencer said...
I was thinking of the kids and their parents, out in the audience, who had scrimped and saved, to avoid student debt. The donor's kind gesture didn't help them even though they proved themselves to be the most responsible.
Right; it's NOT that someone gave the Ant and the Grasshopper food for the winter; it's that someone gave the Grasshopper food for the winter.
@Roesch/Voltaire:This underlines the real issue—how to lower the cost of higher education so that students don’t incur huge debts.
Most college degrees are nothing more than credentialism on parade.
The hell with that, use a quarter of the college money to learn a trade.
Marcus Carman said...
What Smith is doing is not debt cancellation. It's a transfer of wealth from him to the graduates.
Is this a taxable event for either party, either as a cancellation of debt or gift above the annual $15k exclusion?
Sounds like it wasn’t paid directly to the institution as tuition.
https://withfrank.org/how-to-pay-for-college/what-are-the-types-of-aid-available/tax-benefits/gift-tax-exclusion-tuition/
IOW, college tuition charges will rise according to the amount of "aid" made available.
(Am I the only one whose first thoughts were about the parents of students who'd sacrificed to pay the expenses of their kids and keep them free of debt?)
Nope. I know it's not that simple (some parents worked hard and sacrificed but couldn't pay all the expenses). My parents paid a small fortune for me to attend an Ivy League school.
The Democrats are being pushed to include student loan debt forgiveness in their 2020 platforms. It scares me, because
a)I think even talking about it encourages people to take on more debt and
b) so many people have student loans, its easy to think "I want mine"
We put our kids through 4 years. Now they both have loans for graduate degrees. So it's not like our family would get nothing out of a debt forgiveness plan. BUT it would make me feel like we were chumps for sacrificing to pay for their college out of our own pockets. During the financial crisis!!! I mean, we aren't wealthy enough that that money makes no difference to us. And there's no getting back the stress and hours and hard work it took to make that money. Not only in those years, but in all the years leading up to those years. The choice really becomes- do we want the people who will benefit from the loans to have that stress and have to work that hard in the future? Or do we want the people who already did work that hard and have that stress to be told that sorry, that just isn't the American way anymore.
Is there any country where college is free, everyone can go to college, and people can just study whatever they want?
Asking seriously.
You'll never hear about this again.
The students at Morehouse who did not have debt to cancel understand the value of a dollar. Those who took on up to $150K in debt do not, and this episode certainly has not taught them anything except that there are no consequences to bad decision making.
Since the preferred outcome will not occur, the story will be buried.
I can add my name to those whose first thought was of the parents who sacrificed to minimize their kids' debt. They got hosed.
Family #1 scrimps and saves for years, chooses to buy smaller home and take inexpensive vacations. Family 1 accumulates sufficient savings to pay entire cost of their kid's college so the kid had no student debt at that graduation. Thus, the kid does not see any benefit from Smith's great generosity.
Family #2 spends freely, buys an big home, has a 2nd home and a boat, and pays very little to their kid's college costs. Thus the kid has $200K in student loans at that graduation and the loan balance is wiped clean by Smith.
Did Family 1 get screwed?
Hardest hit?
Spelman graduates.
But I do think Smith, in effect, threw down the gauntlet at his fellow billionaires. And I see Apple's Tim Cook responded with an inexpensive mea culpa for his generation re climate change/ global warming/ climate emergency or whatever they are calling it today.
r/v said: "This underlines the real issue—how to lower the cost of higher education so that students don’t incur huge debts."
The question that is rarely asked is why has the cost of higher education risen at triple the rate of inflation?
R/V doesn't answer because he is part of that rising cost. He wants you and me to pay for him.
Am I the only one whose first thoughts were about the parents of students who'd sacrificed to pay the expenses of their kids and keep them free of debt?
Nope.
It just reinforces the lesson that if you work hard, save, scrimp, sacrifice and "play by the rules"..... you are a fool.
People who don't play by the rules, come into the country illegally, get their debts cleared because of political correctness, take all the free benefits that you work to pay taxes for....they are the smart ones.
Why does anyone play by the rules? What is the point?
Moral of the story. Steal, cheat, whine and snivel until you get what you want and don't give a flying f*ck how you get what you want or who is suffering to give it to you.
Free stuff!
Guess she flunked experimental design.
I have no problem with this man giving the gift. I think it's beautiful.
If I were a parent who worked hard to put my kid through college, though, I would write him a letter and explain my concerns. Maybe he would create a nest egg for my child.
Follow these students & compare their life choices [with] their peers over the next 10-15 years. - Cortez
I thought you said we were all going to be dead in 12?
Some people never learn. College debt cancellation is the latest version of the housing crisis.
The overall value of housing has never decreased over any significant time, so it is safe to loan against it.
College is always more valuable than going straight into the workforce, so it is safe to loan against it.
The government backstops pretty much all housing debt, so there is no risk to the lender.
The government ensures that the student is responsible for the debt, so there is no risk to the school.
The result in both cases is sub-prime debt at prime rates, causing a bubble and an eventual popping thereof. Debt cancellation is an attempt by the debtors to make sure the residue of that bubble popping ends up the rest of us, not themselves.
I also find it interesting that Robert Smith is a billionaire, but apparently not one of the terrible billionaires we hear about all the time with his too much money and his way of stacking the system against the rest of us.
"how a universal debt forgiveness program would really play out"
Like any other prog program. Politicians use Other People's Money to buy votes. A new entitlement sucks in the would-be entitled. "Unexpectedly" higher costs strain the program, leading to a new "crisis." Bureaucracies in government and higher ed entrench the program while it spirals out of control. Meanwhile, the few families and students that paid their own way resent the blatant injustice and redistribution, but their deplorable resistance is dismissed as "divisive" and "racist."
It will be like this when they means test Social Security. All of the people who scrimped, saved, and sacrificed for a comfortable retirement will be made suckers.
I felt the same way after the 2008 bust up. I did not have a big mortgage on a big house I could not afford. So I was taxed to pay for my neighbors down the street who could no longer afford their 3000 sq ft mansion.
AOC's universal debt cancellation discussion is a debt transfer not a debt cancellation.
A transfer to taxpayers to cover the federal student loans.
The guy is a billionaire. He did not tell the school he was going to make the announcement. It surprised everybody. Tuition is 54K a year. This is Morehouse not Middlebury. The average student does not have parents making 230K per year. Most, if not all, students had some tuition debt. You're not gonna pay off a 54K tuition/ per year with a great summer job. What summer job pays 54K per year? If a student could pull in 54K per year as a 18-year-old with a part-time job in the fall and winter, and a full time summer job, why would he be in college? It's not 1960 with 1960 tuition levels.
Here's how I see it: nobody lost any money. Some parents lost a opportunity cost to otherwise invest their money. For sure, It is a unequal gift, in that it was not "fair" to each student of the class of 2019. But he's a private individual. He has no mandate to be "fair" and give a gift to each and every student. As a billionaire, he can do whatever he wants to do with him money. That's his private right. He wanted to clear out the debt of the students of "his" class, and that's what he announced.
If you’re contemplating $220 LASIK, prepare to be blinded. Off-topic but important.
I am curious to see how the taxes are handled.... is the gift amount grossed up to cover taxes? Will to college somehow be able to retroactively provide scholarships? I have one in college and one on the way. Have planned to cover most costs but thinking of taking loans in case something does pass in next couple years to wipe out college debt. Hate to be the sucker at the table that didn’t plan for all contingencies.
AJ-
The scrimpers win. Look at lottery winners. From a study in Florida:
"Big lottery winners, defined by the researchers as those awarded between $50,000 and $150,000, were half as likely as small lottery winners to go bankrupt within two years of their score but just as likely to go bankrupt three to five years after. "The results show that giving $50,000 to $150,000 to people only postpones bankruptcy," the authors concluded."
"Why Lottery Winners Go Bankrupt" Marketwatch March 2011
MayBee said...I think even talking about it encourages people to take on more debt
Yep, think of the incentive system this clown is creating. Do you struggle and sacrifice to keep your debt down and risk feeling like a chump when some rich prick swoops in and rescues all the irresponsible people? Or do you rack up all the debt you can in the hopes that some rich prick will swoop in and rescue all the irresponsible people?
I read a local story on this and they quoted men with 90 to 100k in loans. Seems pretty obvious that Morehouse isn't worth that price for most graduates. I feel like most of these young men were lied to about job opportunities when they took on the debt.
If college is made free, there will be ZERO incentives for the colleges to keep costs down. But we (or at least the people who vote Democrat) obviously haven't learned that lesson yet.
No Ann, your deplorable coffeecuck fans thought the same petty thing. Nice to see your deevolution in real time. I can't wait to see you support overturning Roe vWade, then we know the regression is finally complete.
John Lynch makes the key observation. This is a subsidy for the future 1%.
I know a woman who did not go to university because she did not want debt. She took a 1 year community college program in appliance repair and went to work immediately. So, no degree. She is in other words part of the wrong class as far as AOC and the Left are concerned. She gets a tax bill while “people like us” get a subsidy.
roesch/voltaire said...
This underlines the real issue—how to lower the cost of higher education so that students don’t incur huge debts.
My proposal: any college that wants to be part of the federal student loan program must offer at least one year's worth of their 4 year undergrad degree online, at a cost of no more than $500 per course. Within five years they must up that to two years worth of coursework.
That would nearly cut in half the cost, and more than cut in half the debt.
Also: This guy is a private individual. He's not a government social program. Why get upset about a private individual who gave a gift. It's no skin off anybody's nose.
No, it's not fair. Life isn't fair. Some people win the lottery. Some people do not. Some people have rich grandparents. Some people do not. You're not gonna get upset if a great-grandpa swooped in to clean out your friend's education debt, right? Or the equivalent of grandparents putting money in fund that can only be spent towards education. This guy is a honorary grandpa who swooped in to clean out his "kids" debt.
wwww The average student does not have parents making 230K per year. Most, if not all, students had some tuition debt.
I wonder why Morehouse can cost 54K a year if most of the students who attend it can't pay for it (including having their families pay).
Imagine a restaurant that charges $500 per person per meal. Would it stay in business if the people that can get to it don't have access to that kind of money?
Maybe....charge less?
I can answer roesch/voltaire regarding his question about college costs:
Abandon the federal Department of Education.
End the ridiculous data collection that employs tens of thousands of highly paid bureaucrats.
Those people contribute nothing to higher education.
Then, abolish the accreditation agencies.
Harvard Business School ignored their solicitations for a reason.
Finally, put the federal loan guarantees out of business.
Make student loans dischargeable and make the universities a partial co-signer.
You're welcome, roesch/voltaire.
If people can't afford Morehouse going in, you have to assume it costs what it does because people generally can afford it once they've graduated. Right? Which is the point of loans.
Again, I'm happy for this particular instance. I fear the AOC's of the world and the pressures to make this a government thing. The pressure to make being *against* such a thing toxic in the 2020 campaign dialogue.
I'm in favor of getting rid of the requirement for a college education. It doesn't appear to have made us smarter, and for many things graded experience will serve as well. Targeted classes, like agricultural extension classes, could replace the full four year college experience.
IF someone else pays your student loan ....as a gift....then you the person who owes the debt doesn't have to do anything.
The person who pays the debt will file a gift tax return and maybe someday have to pay gift taxes when their total lifetime gifts exceed the allowance. Which is about 11.5 million (if I remember correctly)
If the gift from the billionaire is coming from a foundation or something that he has set up, that taxation is treated differently, but the student/or parents of the is still not an issue.
This is different than "debt forgiveness" where you borrowed money to buy something or some other purpose. If the person who you owe money (bank, lender, payday loan company) to decides to forgive the debt....Then YOU are liable for the debt forgiven as being classified as income you received.
The font of now useless knowledge I accumulated in my business. You're welcome :-)
MayBee,
That is none of my business. It's the free choice of Morehouse and the students who attend the school. Would I make the same decision? I'd need to see the equivalent in-state and out-of-state costs for public Universities and other private colleges. In the USA the costs are very steep.
The rise in tuition is not simply about government funding. If it was, Canadian prices would have gone up at the same rate. McGill, an excellent University, is quite reasonable for Canadian residents. Same for University or Toronto. Yet, Canada allows students to discharge their loans after a certain number of years, where for US students, their loans are to be paid until death, despite sickness or hardship or anything else. (and maybe after death.)
(Am I the only one whose first thoughts were about the parents of students who'd sacrificed to pay the expenses of their kids and keep them free of debt?)
I was one of those parents, and I am very happy that my sons started off debt free. But, yeah, kids who graduated Morehouse in previous years got screwed, along with the Morehouse sophomores and juniors.
For a change, roesch is right.
wwww-
$150000 in debt at 5% paid back over ten years is $1590/month or $19,000/year. Is a Morehouse education worth $19K more a year than a state college (not university)? Did any of these students bother to make that calculation when deciding where to go to college?
Could any of the students?
My son is a sophomore in an excellent private Catholic high school; he said they cover no personal finance at all. He has no idea how to calculate a payment on debt...
It's the Jubilee! It's in the Bible.
Canada allows students to discharge their loans after a certain number of years, where for US students, their loans are to be paid until death, despite sickness or hardship or anything else. (and maybe after death.)
The US allows discharge after 20 years.
wwww said...
MayBee,
That is none of my business. It's the free choice of Morehouse and the students who attend the school.
And I agree with you in this case. But this post is about AOC, and her push to make this a government thing. And then it becomes everybody's business.
Per year: University of Michigan in-state tuition: Freshman/ Sophomore: 15,262 USD; Junior/Seniors: 17,188 USD; Grad students: 23,456 USD
University of Michigan, non-resident, out-of-state: 43,350 USD; 52,814 USD; 47,006.
https://finaid.umich.edu/cost-of-attendance/
vs.
University of Toronto: 6,700 CAD; 12,690 CAD . vs. International: 49,800/ 51,500 . CAD
This is CAD vs. USD. With the exchange rate, it's cheaper for American parents to send your out-of-state student to Canada then University of Michigan.
The US allows discharge after 20 years.
Canada allows after about 10 years. & the US made that change recently under Obama. Canadian students loans are much more liberal and more forgiving then the US laws. Yet Canadian tuition is MUCH lower, even for top schools like Toronto and McGill.
oh wait. I was wrong. It's not 10 years. In Canada it's 7 years of 5 years before students can discharge their loans.
"A discharge from bankruptcy releases you from your obligation to repay your student loans if you filed for bankruptcy at least seven years after the date you ceased to be a part or full-time student. (Note: The federal or provincial student loan legislation applicable to your loan governs how you determine the date on which you ceased to be a full or part-time student.)
If you declare bankruptcy seven or more years after the date on which you ceased to be a full or part-time student, your student loan debts will be eligible for discharge, together with your other debts. (The seven-year rule applies to both new filings for bankruptcy as well as to bankruptcies that were not yet discharged as of July 7, 2008.)
However, the court can reduce this period to five years if repaying the loan will result in undue hardship."
https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02057.html
This could be the start of what’s known in Econ as a 'natural experiment.' Follow these students & compare their life choices [with] their peers over the next 10-15 years.
Who decides what is a positive outcome? Imagine the grad with high debt. He enters the private sector, works long hours, and earns the money to pay off his debts. In the process providing customers with goods or services they need, at a price they are willing to pay.
On the other hand, the debt-free grad has plenty of leisure time, so they get involved with left-wing nonprofits, advocating for bigger government while defecating on cop cars.
Which is a better outcome for society? I'm pretty sure I know. I'm pretty sure AOC would disagree...
Would be curious to see the natural experiment if Smith had said he was handling the debt of the incoming freshman class - anyone starting Fall 2019 and graduating Spring 2023.
his is CAD vs. USD. With the exchange rate, it's cheaper for American parents to send your out-of-state student to Canada then University of Michigan.
I'm not sure what this has to do with debt forgiveness, but why do you think more US parents aren't doing that?
wwww said...
That's in bankruptcy. In the US after 20 years if you haven't repaid your loans you don't have to go through bankruptcy. The loans are forgiven.
"Imagine the grad with high debt. He enters the private sector, works long hours, and earns the money to pay off his debts."
I understand there are arguments about how to pay for college. But it's not a societal good for 21 year olds to have high debt loads. Debt is slavery.
Young marrieds are the ones who buy stuff. It's a societal good to encourage them to set up households, have children, and open new companies and start new corporations. Houses, new cars, laundry machines, pots & pans, beds, baby carriages, strollers, baby bottles. They have to spend to set up a household. They get the economy going with their purchases. They have children. Expensive loans can discourage young marrieds from starting their own businesses.
"I'm not sure what this has to do with debt forgiveness, but why do you think more US parents aren't doing that?"
A couple of reasons: (1) I don't think it's commonly known to American parents or students (2) Federal loan rules might play a role (3) Parents who have enough funds to send their child to an out-of-state school might have their eye on a particular school in the US for sentimental, religious, or other reasons.
But yeah, they should look into Canadian schools if they are willing to send their kid out of state. McGill and U of Toronto are both excellent. University or Waterloo is excellent in technology & computers. I know a group at Amazon entirely made up of U of W grads.
I'm not an expert in Canadian vs. American student loans. From the little I know, Canadian student loans are much more forgiving of hardship, and much easier to discharge.
Young marrieds are the ones who buy stuff. It's a societal good to encourage them to set up households, have children, and open new companies and start new corporations. Houses, new cars, laundry machines, pots & pans, beds, baby carriages, strollers, baby bottles. They have to spend to set up a household. They get the economy going with their purchases. They have children. Expensive loans can discourage young marrieds from starting their own businesses.
But someone is going to pay for that tuition if there is a massive debt forgiveness. They are going to be paying off their loans, or they are going to be paying higher taxes. As will the young marrieds who did not go to college.
1. AOC is correct to the extent that there may be something to be learned if we track the outcomes of this gift for the members of this class. It’s a small sample size, so that has to be taken into account, but still worth doing. Compare that to a control group of 2019 graduates from a school whose students fit a similar socio-economic profile but did not get the loan forgiveness. Track them all for 15 years and compare their life choices. Interesting to see both the comparison of the two classes and the outcomes within the windfall class based on the size of each student’s windfall. I’m inclined to believe the results will not support the policies AOC is advocating, but maybe I’m wrong. I’ll wait 15 years to find out if she will.
2. Just as the impulse to take pleasure in the misfortunes of others should be resisted, so should the impulse to resent another’s windfall as representing unfairness to oneself. The scrimpers and savers got the good things they expected to get from their scrimping and saving, and I hope for their sakes they are content. Their loved ones are blessed by their examples of good values and good habits in addition to the blessing of freedom from debt. Policymakers, however, should be paying keen attention to how the anticipation of a windfall may disincentivize good values and good habits.
I understand there are arguments about how to pay for college. But it's not a societal good for 21 year olds to have high debt loads. Debt is slavery.
I agree. High debt load in order to get a college degree is not a good way to start out in life. High debt load for anything is not good.
HOWEVER, where is the discussion on whether the object of the debt load....aka College Degree...is actually worth it at all. Most college degrees seem to be useless, unnecessary and worse even detrimental to getting a "good" job. (we probably need to define what is a "good" job too)
The earning potential of some degrees as opposed to the earning potential of a vocational occupation (such as welding, CPA, mechanic, even construction) is something to be considered.
You get into 200K debt to have a degree...wooo hoooo....and then end up earning less than the guy or gal who got an 'occupation'.
The value, by and large, is just not there in a degree. Prestige...maybe. But you can't eat prestige or pay the bills with it.
Oh, about the University of Michigan. They are perpetually getting the stink eye because about half of their students are not from in-state, even though it is a state university. They accept more out of state (and international students) and then they charge $62,176/year.
Canada does not have the forced bureaucracy that the US does.
But do compare apples to Toyotas.
But much of the debate is unavoidably theoretical. No one knows exactly how a universal debt forgiveness program would really play out
Sure we do.
We, The People become even more broke.
Have you actually thinking about the demographic collapse of all this non-breeding of invaders and parasites?
Do you know any young people who are racking up debt to be teachers? What would you advise them to do since this will really start biting in 6-7 years?
No butts, no desks needed.
You’re putting part of your profession out of business.
The market always finds a way.
r/v said: "This underlines the real issue—how to lower the cost of higher education so that students don’t incur huge debts."
Humperdink said: "The question that is rarely asked is why has the cost of higher education risen at triple the rate of inflation?"
Sometimes we miss the forest for the trees. The entire purpose of the vast increase in "easy money" student loans was to raise the cost of tuition at institutions of higher education. It was colleges and universities - that is to say, their administrators - who have fought to make loans ever easier to get. Do you think this was so they could make life better for their students? Absolutely not - it was to make life better for themselves. Think of the armies of administrators, bureaucrats, number-crunchers, parasites, hangers-on, diversity administrators, equity and inclusion specialists, and other assorted pools of uselessness who are now living quite well by producing absolutely nothing of any educational value. They are paid handsomely, thanks to the transfer of students' future earnings to their present-day pockets. It is sinful, disgusting beyond measure.
Is there any country where college is free, everyone can go to college, and people can just study whatever they want?
Asking seriously.
If I recall correctly, Costa Rica has free college.
A former girlfriend had a condo outside San Jose. The building concierge had a BA in Mechanical Engineering. She could not find a job as an engineer.
BTW since we are dead in 12 years, what difference, at this point, does it make?
Upon rereading the headline, the funniest part is “what’s known in Econ.” Like, “Lemme splain you how we Econs talk,” as if a non-economist wouldn’t be able to make sense of “natural experiment.”
IF you wNt college to be affordable, get the USG out of the big business of it. Obama grabbed a lot more than he should have.
The risk goes back to where it belongs. IF you want to spend big money on what might be a useless degree to some, you shouldn’t stick the US Taxpayer with the bill, you dilletante.
Dilettante.
It will be like this when they means test Social Security. All of the people who scrimped, saved, and sacrificed for a comfortable retirement will be made suckers.
I figured that out after the mortgage meltdown.
The Vile Progs do not want responsibility.
"This could be the start of what’s known in Econ as a 'natural experiment.'" Good point. But I think that in a real natural experiment, you need to wait for the results before you proclaim them.
My first thought too! Same with mortgage bailouts, car company bailouts, bank bailouts.
"Is there any country where college is free, everyone can go to college, and people can just study whatever they want?"
Of course not. That country would end up spending an absurd portion of its national income on college, to the point of bankruptcy.
College is (mostly) free in France, but very difficult to get into. That's the way I would arrange it, if I were dictator.
Blogger AJ Lynch said...
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Did Family 1 get screwed?
Good and hard. With no lube.
The result of this natural experiment will be far fewer billionaire commencement speakers.
The question I have is how in the world did a black guy amass billions in this racist, bigoted, hate filled country?
AOC's spokesperson said every billionaire is a policy-failure. Irony?
I thought you said we were all going to be dead in 12?
She said she was kidding. Seriously.
Someone should follow her Twitter feed and ask her if she's kidding every time she posts.
Robert Smith: A successful man decides to give his own money to Morehouse to the great benefit of about 400 students in the Class of 2019. Every other class before and after would have to find their own benefactor. Robert Smith has done a good thing for 400 people without regard to merit, personality, or individual achievement. He is John Beresford Tipton* for these people.
AOC: political novice suggests US Treasury raid to the extent of trillions of dollars. It is not her money. It is a transparent and irresponsible scheme to attract votes from everyone, past or future, with college debt.
Yeah. These are just alike.
*classical reference
hawkeyedjb said...
thanks. That's what I thought.
What are the no debt/free college people picturing for here?
While AOC has a certain glamour and animal cunning, her policy prescriptions are juvenile. But she is young and irresponsible. What is Bernie's excuse?
By the way, government at every level in this country, including the education empire, is bloated and could use a series of reductions in force.
Unfortunately, we cannot take the failure of this stuff and these people for granted. They must be defeated.
There’s a difference, isn’t there, between a billionaire using his money to pay off somebody’s student loans and a Democrat politician confiscating my money to pay off somebody’s student loans?
I paid off my son’s student loans out of my retirement funds. That probably would not have happened if he had majored in Genitalia Studies or “White Men Bad.”
“Will the students who endured summer jobs and made sacrifices to keep their college debt as low as possible resent that they didn't borrow more?”
“Summer jobs?” In the Democrat minimum wage era?
Lots of commenters are pointing out that it's a natural experiment but not the one AOC says it is.
The natural experiment REALLY is, what if loan cancellation comes as a surprise to people who aren't expecting it? Good luck writing surprise cancellation into Federal budgets.
College is a boutique experience. My oldest starts this fall at a public school a couple states over and we have been to the orientations and the tours. Everywhere you turn there is someone there to cater to the kid. Counselors, tutors, liaisons, advisors. Beautiful campus: new buildings, gourmet dining, residence halls wired to the hilt, state of the art gyms, manicured landscaping. Everything is designed for the comfort and success of the student. No possible problem or wrinkle that the student might experience goes without someone getting paid to address it. These young people as a group (American college students in Current Year) are literally the most pampered in the history of the planet.
Great if you can afford it. If you can't, well, the Army recruiter and HVAC tech program at the junior college are right over there. No one deserves to get their ass bailed out from choosing to indulge in an unnecessary boutique experience.
I think what he did was good. He gave his own money to whom he pleased. It was not the bank forgiving the debt. it was not the college erasing it. He did not forgive their debts. He ransomed them! And they know it.
In doing so, he has bought them, as a pearl of great price. And they will know what they owe their elders in terms of duty, and their children and their grandchildren in terms of expectations.
Look at the average net worth of black families in the US. Look at the stories of 3,4,5 family members cosigning loans. These students had already had their families make every sacrifice within their means. It was a great gift to them, not just the students, that a possible default wouldn't ruin their own financial lives.
It is the human piece that matters. Free college? Institutional charity? Governmental erasing of balance sheets? None of that ia the same as a man in front of you showing what he thinks of your value as a human. He thinks you are worth it, and that is true love.
Well I agree with AOC on this one, it's an interesting Econ experiment, and it would indeed be interesting to see how this year's debt forgiven class turns out against last year's burdened with debt class.
My guess is ..... not much different on average. But let's run the experiment.
R/V asked:
"This underlines the real issue—how to lower the cost of higher education so that students don’t incur huge debts."
The answer is to get the government out of the loan guarantee business. It is no accident that the cost of higher education has skyrocketed along with the amount of money borrowed to attend such institutions. This is always the problem with borrowing- it makes things look cheap to the buyer at the point of purchase, so they are willing to vastly overspend.
Someone above may have already pointed this out, but Morehouse is all-male. I wonder what the students graduating at Spelman were thinking? Or did Johnson extend that to the sister college? I looked, but it seems it is only the class of 2019 at Morehouse.
Not taking on student debt was the best decision I ever made. I don't know what would have happened had I taken on $100K and had it forgiven before I ever made a single payment. It would be interesting to compare the class of 2019 to the class of 2018 at Morehouse, but will anyone actually do it? I suspect that the class of 2018 will actually turn out to be more successful than the one following.
A friend who went to Morehouse says the motto of the place should be, “You can always tell a Morehouse man...but you can’t tell him much.”
(Am I the only one whose first thoughts were about the parents of students who'd sacrificed to pay the expenses of their kids and keep them free of debt?)
There's another word for these people in today's world- Suckers. The more liberals get their way, the more the system sets up to reward those who make bad choices. The one that really gets to me is that in order to be a drug and alcohol counselor- you have to be a recovering druggie or alcoholic. Those of us who haven't screwed up our lives apparently can't tell people- USING ILLEGAL DRUGS OR GETTING DRUNK ALL THE TIME IS BAD!.
Someone above may have already pointed this out, but Morehouse is all-male. I wonder what the students graduating at Spelman were thinking? Or did Johnson extend that to the sister college? I looked, but it seems it is only the class of 2019 at Morehouse.
Toxically masculine money? Billionaire propping up the patriarchy?
There is a parallel with those patiently pursuing legal immigration vs illegal immigrants/migrants/refugees/undocumented/dreamers/overstayers.
Note how entrenched is the notion of college education when many trades are experiencing labor shortages. Those who can forego college (often for cost reasons) for that path may make so much money they don't care about the inequity of various aid they are paying for folks who have no accountability for the majors they pursue.
But in the arena of "fair", it certainly isn't.
If only we could develop the technology to make information access and learning apart from bloated brick and mortar institutions.
Hmm...
Credit to AOC of putting the focus on the wrong side. It is not what these people, free of debt may do. We already know that answer as was noted earlier about lottery winners.
The real study would be the decisions made if college was free? If you didn't pay, what major would you take? If you only had to pay for a second degree do over might you choose a more risky degree field? Would you go to college, when you could have spent the 4 to 5 years learning a trade and earning income? How many years would you stay in college? Stay as long as it is free? Stay as long as the major requires? Does free college mean free room and board?
That's a lot of decisions to make when you know in advance that college is free. The solution in some places is to make college free, but to limit your option based on your scholarship. And thanks to Lori Loughlin, we know that ones scholarship can be purchased, if you are wealthy and well connected.
If a student could pull in 54K per year as a 18-year-old with a part-time job in the fall and winter, and a full time summer job, why would he be in college?
Ahh, but his parents don't have to start paying for college until the kid actually goes. Last I heard there were no babies in college.
$450/month for 18 years invested at 8% will get you the $216k you need. Plan early!
With 529's it's even tax free! (for now).
Leland,
The experiment has existed for many years as Pell grants.
A friend of mine switched his majors multiple times and essentially dragged out his undergraduate years to a ridiculous err..degree...since it was basically free.
Re: the sacrificing parents: Sometimes some benefactor gives the happy-go-lucky grasshopper a huge gift at the end, and the ant and Aesop are both “WTF?!”
invested at 8%
Nice job. What did you invest in for your returns?
"Ahh, but his parents don't have to start paying for college until the kid actually goes. Last I heard there were no babies in college."
I'm a little unclear why this refers to the section I quoted. I'm a big promoted of educational funds. It's great for the kids who have parents who will invest.
But some people seem to think a 18 year old student can make 54K a year all on their own, and pay, in full, for their own educations, through a summer job and part-time work. Can't think of a job that pays that much. How much is it on Alaska fishing boats for the summer? They get you a nice chunk of change, but i don't think it's 54K per summer.
$450/month for 18 years invested at 8% will get you the $216k you need. Plan early!
Parents need to save more to fully cover it. 54K is the tuition. That's not the cost for housing, food, books and travel to the school. Gotta calculate in those costs X 4 years, if you want your kid to come out of it debt free.
Morehouse costs $48K a year in tuition, room and board, books and other expenses. The average student pays, after aid, $30K a year.
I saw a quote from an econ grad, 22 years old, who said he owed $200k. He apparently got no help from family, no federal aid, no scholarships and had no summer jobs. How did he plan to pay that off?
We are Sandy's "Natural Experiment" in communism.
She wants everyone in college because this its now the social justice warrior factory.
Blacks don't want to go to college, they want vocations.
If only there were some book of ancient wisdom to guide us on the question of whether the students with less debt to cancel got "screwed." Like, I dunno, the Gospel of Mathew. Chapter 20, as it were.
It may have been mentioned already, but this is no different than rewarding illegal aliens.
Play by the rules and go through the process? That's for suckers.
I wonder if anyone dropped out to not go into debt who feels like a sucker now.
what's known in econ as...
Students call it "econ." Econ is verbal short-hand for the subject you might study at college.
Adults out in the real world call it "economics".
So can a white billionaire pay off the student debt at a white college?
Or would that be racist?
A miracle for those limited few who got this handout, but a net negative for everyone else and maybe even some of the recipients. Negative effect on higher education through higher costs and lower perceived value, increase in the net level of dissatisfaction and envy, increased distrust of the fairness of the system. Why would someone do such a thing? He's clearly not a stupid man, so?
As I've become more able to fund charity, I've grown less fond of the traditional approved forms. Handouts not based on merit are from inefficient to counterproductive. Better is to find methods that "teach a man to fish". Hiring people, buying products created with quality, skill and dedication, tipping big for quality service. Giving low cost loans to people taking intelligent risks, but which must be paid back. Supporting the work of small business people through appreciation of good work by paying for it, and insisting on it. These things all cost money, but relatively little compared to results, especially when compared to most tax deductible charity. Its lack of tax deductibility is unfortunately where the only real waste is.
Nice job. What did you invest in for your returns?
S&P 500 index has a 8% average return over the life of the index.
Will it always? No. Have there been 20 year periods where it doesn't return that? Of course.
Does $216k cover everything? No. As you mention there are books, living expenses, etc.
But some people seem to think a 18 year old student can make 54K a year all on their own, and pay, in full, for their own educations
You are right. They can't. The number is just too big.
But you are paying those fees over some 20 year period. Either before you go to the school or after. There is no free lunch (except if a billionaire decides to be magnanimous at his commencement speech).
And with a student loan you are paying more than the $216k (plus fees/books/living expenses) after 20 years with the average 5% student loan interest rate.
The total value of $216k over 20 years of interest is $342k! Is Morehouse worth that for a bachelors degree? Is any college?
You are either paying for that before or after, but somebody has to get paid. And until the schools aren't getting paid their prices won't stabilize.
If school prices rise at twice the rate of inflation, at some point the product is not worth it anymore.
wwww says: "54K is the tuition. That's not the cost for housing, food, books and travel to the school. Gotta calculate in those costs X 4 years, if you want your kid to come out of it debt free."
Okay, here's the crazy thing. YOU DON'T HAVE TO GO TO A COLLEGE THAT COSTS $54K A YEAR.
Back up there, someone quoted the current in-state price for U Michigan undergrads at about $17K a year. Apparently something like 15,000 out-of-state students think paying $50K a year to go there makes sense, so it's not like it's a sub-standard education.
I don't understand how trying to choose a school you can actually afford seems to have just vanished from the conversation. I got into the Michigan Honors program, so I'm fairly certain I would have been accepted into at least one Ivy if I'd tried. I asked Dad about applying to MIT, just to see if I could get in. He said something along the lines of, we cannot afford to send you out-of-state, but if you want to waste $200 checking to see if you could have gotten in, feel free to spend the money. I didn't.
My best friends from my high school certainly could have gotten into Michigan. But their families were relatively less well-to-do. They went to less expensive in-state colleges. One of them ended up in a less expensive school and a ROTC program. I'd be stunned to learn any of them ended up with even $20,000 in student debt -- about $35,000 in today's dollars.
Unless your education somehow guarantees you a $200K a year job at graduation, I don't see how you could possibly justify taking on $200K in college debt.
I find it impossible to take literally that your "first thought" was of all the parents who paid for their kids' Morehouse educations.
That strikes me as an incredibly small-minded first thought to have on hearing about such an act of personal generosity. I would be surprised if even one of the paying parents responded as you claim to have. And if one of those parents actually did feel seriously abused, I'll bet if they contacted Mr. Smith and let him know they felt slighted, he probably would ignore their selfish presumptuousness, and respond charitably by reimbursing them.
I really don't believe you are serious. Very few people are that ungenerous. Many of those few who are comment here regularly, though. I think it's probably that you've become accustomed to thinking in terms that might appeal to them...chumming them, so to speak. If it's really come to that for you, I would advise you to consider retiring, for your own good.
bbkingfish, nice use of the old Obama "some say" strawman insult in your comment.
"Many of those few" is a wonderful variant that makes your insult sound fresh, despite its overuse, again and again, during the 8 years of the Obama presidency.
Your advice is noted as being worth exactly less than was paid to receive it.
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