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Post By
Late Great Donald Blake 
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Member Since: Sat May 17, 2008
Posts: 7,563
In Reply To
zvelf

Member Since: Sat May 17, 2008
Subj: Re: So how do we feel about Biden's student debt forgiveness?
Posted: Fri Aug 26, 2022 at 06:55:34 pm EDT (Viewed 160 times)
Reply Subj: Re: So how do we feel about Biden's student debt forgiveness?
Posted: Fri Aug 26, 2022 at 02:36:40 pm EDT (Viewed 165 times)

Previous Post


    Quote:
    And the idea that this will encourage the schools to raise their prices misunderstands the economic levers in place. The schools are already off the hook in the vast vast vast majority of cases. Whether the fed gov collects all the debt, forgives it, or sits on it, doesn't affect their balance sheet. And what determines their prices isn't generally speaking whether the government will forgive thee debt once the government owns it; it's whether or not the government will continue to guarantee those loans no matter how high prices rise or onerous the interest rates. This was a fantastically crooked and foolish way to finance public education in the first place, and it was essentially designed by and for banks and lenders.


This dramatically simplifies the scenario and doesn't differentiate between state colleges (that already get large government subsidies) and private non-profits (that get smaller government subsidies), and for-profit schools, this last one being by far the most predatory. All of these types of schools price differently. Also, how much in loans the government is willing to take on is impacted by how much it forgives as the government has finite resources and you can't act as if one doesn't affect the other.


    Quote:
    P.S. yes of the dozens of beneficial things that Biden could do but hasn't, this and Afghanistan are the two that I didn't predict correctly. I'm okay with that average lol To be fair though, I also said IF he did this it would be a half loaf, and low and behold.


Well, even before this, Biden had stopped interest from accruing on loans and deferred having to pay back the principle on loans during the entire time he's been in office. That's already huge for those people who have loans.


"dramatically simplifies the scenario and doesn't differentiate between state colleges (that already get large government subsidies) and private non-profits (that get smaller government subsidies), and for-profit schools, this last one being by far the most predatory. All of these types of schools price differently. Also, how much in loans the government is willing to take on is impacted by how much it forgives as the government has finite resources and you can't act as if one doesn't affect the other."


LGDB: this is a distinction without a difference. Nothing I'm saying here hinges on their being a difference between private, state, ivy league, etc. colleges. They DO price differently and they do get different level of subsidies and they have various other economoc considerations as with endowments. Those differences have nothing to do with whether the government not collecting debt it owns will incentive schools to increase their prices. Not to mention that the government if it was so inclined could actually put price caps on colleges who accepted subsidized tuition. That's a radical solution no one should expect, but the idea that debt forgiveness correlating to increased tuition costs automatically is specious.

Also this doesn't dramatically simplify anything just because I didn't include details or divisions you find interesting. They don't run counter to the point I'm making. And I'm not saying doing this won't affect what else the government does in terms of future loan guarantees. I hope it does. What I'm saying that whether the government forgives these loans doesn't have an inflationary effect on college prices. This doesn't in anyway incentivize them to raise their prices anymore than or as an add on to the original lending or guaranteeing did.


Well, even before this, Biden had stopped interest from accruing on loans and deferred having to pay back the principle on loans during the entire time he's been in office. That's already huge for those people who have loans.


LGDB: yes that's helpful. You'll always be able to find marginal boons or relatively beneficial things especially from the liberal party. The question is how do you determine the difference between whether it's enough? And it's not enough how to create the kinds of political pressure to get to enough. That's how this happened. This debt wasn't forgiven out of the beneficence of our esteemed POTUS. It happened as a response to political pressure.



cheers,
---the late great Donald Blake





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