As has long been rumored, the Biden administration will use Executive action (is there any other kind?!?) to forgive $10,000 in federal student debt to those earning less than $125,000 ($250,000 as a couple, making marriage even more attractive to many…) and they will extend the pause on repayments of that debt, which has been in place since the beginning of the pandemic, to December 31.
If this is frustrating to you, it’s probably because you either a) paid off your debt, b) picked a school that would minimize debt c) worked 3 jobs and ate ramen or d) did all of the above. That tuition has been rising at 7% per year doesn’t lead to more questions is surprising.
That providing a $100,000 loan to a student taking “the history of underwater basket weaving” takes little due diligence from the banks but getting a $10,000 loan for a business requires a lot more work should also beg questions. And finally and most puzzling is why students aren’t held accountable for their ROI decisions when we are desperately short truckers, plumbers, electricians and trades people which can offer a far higher ROI.
To me, when I think about the push for diversity and inclusion and addressing the wealth gap, I think solely on the requirements of many jobs “must have college degree” and how we have pushed so many kids that shouldn’t go to college on that track. The most competent person I’ve ever worked with didn’t have a college degree. Many of the guys in the field that we trusted with millions of dollars of spending didn’t have a college degree. And many of the people I know that have them don’t use them and are… well, politely put, idiots.
If you’re an electrician making $100,000 a year and my neighbor went to Harvard at $80,000 a year to become a teacher making $40,000 a year, wouldn’t you have questions about that person’s choice and why you are having to pay for their decision? But, these are the days of shoot first, don’t ever ask questions, and load up another $300 billion of costs on the government balance sheet.
All that said, the best argument I’ve heard in favor of this is actually quite simple: we handed Wall Street almost $800 billion in TARP forgiveness in 2008 and the bankers are back and worse than ever. At least this program benefits “the little guy.” I can’t disagree with that logic. And while I hate every bailout the government has ever done in the name of “too big to fail” and that has generated the risky behaviors of lending and speculation that gets in the first place, what’s $300 billion on the $6.5 trillion we blew in the last 2 years?
Go forward, the real challenge will be assessing how this impacts future tuition and loans and the decision for students to pay back those loans. It’s poignant as Ben considers his college future. It has been drilled into his head for years that he has to pick a degree with a positive ROI and he will go to the school that offers the highest scholarship and lowest net cost. He’s focusing on the state schools within the Western Undergraduate Exchange that enables students to get in state tuition while still going away and is overlaying that with which college golf team he has a good chance to play all four years. It’s a small list and will be an easy decision when the time comes. Walk me through why that isn’t the decision making criteria for every kid that wants to go to “Yale” to be a philosopher?
At some point, we will all pay the piper for the fast and loose spending but until then, alongside debt repayment, college’s have likely suspended teaching economics 101.
David, I have a funny feeling that the collage tuition is going to go up by 20K very shortly. My MBA was 22K back in 1988 and paid cash. scrimped and ate beans and dog food (mostly kidding) but it was worth it over the years.
I am discusted with what is happening right now. For every 770k illegals accross the boarder the demorats get another house seat. Last week the Census folks admitted that they "may have" over counted democrat and undercounted red states. Gave the Dems more seats.
Thanks as always for your views, and letting me vent for a moment before I go back to work to pay my taxes so other a holes can spend it.
Not everything has to have an ROI - to your last point, one of the most original thinkers on Energy Security and the "transition" (John Constable) has a degree in Philosophy.... we would be poorer without him.
As you point out $300bn is small relative to other handouts - but at a time of inflation, it seems to be, well, inflationary... as well as unfair to those who worked/saved/made ROI choices....