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supermike80

Elizabeth Warren wants to cancel a gigantic portion of student loans

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This scares me, but I can't put my finger on why it does.   What are the impacts?  Does inflation go through the roof with all this activity?

Does this end student loans completely?     

How does it get fixed going forward or does it?  Do we now just pay for secondary education somehow?

https://www.yahoo.com/finance/news/warren-student-loans-121342487.html

 

I'm not coming out immediately against it, but I'd love to hear pros and cons.

 

 

Edited by supermike80

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I read a little more- the debt cancellation is scaled based on family income. Also it addresses future students. For example if a family makes less than $100k, tuition and fees are also covered. It’s going to cost over a trillion for 10 years, her plan to cover it is a wealth tax. 2% on wealth over $50 million and 3% on wealth over a billion. 

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How it would work

Currently there are $1.5 trillion worth of student loans out there, roughly 11.5% of which are more than 90 days delinquent or in default. The average student loan borrower holds about $28,650 in debt, according to Student Loan Hero.

Collection agencies are increasingly turning towards wage garnishments —obtaining a court order to make employers set aside portions of debtor’s paycheck — to get their money back.

Warren aims to cancel $50,000 in student loan debt for every person who has a household income of below $100,000.

For those who earn between $100,000 and $250,00, she promises a “substantial debt cancellation,” and that $50,000 amount “phases out by $1 for every $3 in income above $100,000.” In other words, a person who has an income of $130,000 would get $40,000 of debt cancelled, while a person earning $160,000 would get $30,000 off.

Those earning more than $250,000 would not qualify for the program.

Warren wrote that cancellations would provide a whole host of other public benefits apart from relieving borrowers of their burden, such as reducing the wealth gap between races and boost economic growth by “providing a stimulus to millions of American families, improving credit scores, increasing home-buying rates, increasing college completion rates, and producing greater business formation.”

She also promised a whole host of other reforms like improving the Public Service Loan Forgiveness program, punishing student loan companies and servicers, offering more grants to low-income families, and keeping the cost of education low (and eventually free).

‘It’s time to make different choices’

Warren proposed a tax on the ultra wealthy to pay for the plan.

The cost would be covered by her “Ultra-Millionaire Tax,” she explained, which is an annual 2% tax on American households’ net worth that’s more than $50 million in wealth and an additional 1% tax those who have on $1 billion.

The tax plan would affect “the 75,000 wealthiest families in America and raises $2.75 trillion in revenue over ten years.”

She added: “Some people will say we can’t afford this plan. That’s nonsense. … For decades, we’ve allowed the wealthy to pay less while burying tens of millions of working Americans in education debt. It’s time to make different choices.”

 

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5 minutes ago, Ilov80s said:

I read a little more- the debt cancellation is scaled based on family income. Also it addresses future students. For example if a family makes less than $100k, tuition and fees are also covered. It’s going to cost over a trillion for 10 years, her plan to cover it is a wealth tax. 2% on wealth over $50 million and 3% on wealth over a billion. 

Browsing through it, it actually phases out up to 250K..So a family that makes 200K STILL gets student loan relief?   I suppose that's fine, no reason to only give it to the poor.

The article said it costs the gubbermint like 680 billion up front.   So a tax increase comes later?

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Yeah, i'm a big fan of a lot of Warren's policy positions and I agree that there are issues with student loan debt that need to be dealt with but I'm not sure about this proposal.  We've discussed similar proposals in other threads and there's definitely something unseemly about the government giving a bunch of money to college graduates, who are often better off financially than non-college graduates.

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Just now, supermike80 said:

Browsing through it, it actually phases out up to 250K..So a family that makes 200K STILL gets student loan relief?   I suppose that's fine, no reason to only give it to the poor.

The article said it costs the gubbermint like 680 billion up front.   So a tax increase comes later?

Tariffs should cover all of it ;)

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Little bit of a red butt thought here..

But a student would have NO Problem carrying 25K for a Ford F150, but god forbid that student has to hold 25K in loans to better themselves through education.  

 

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2 minutes ago, supermike80 said:

Little bit of a red butt thought here..

But a student would have NO Problem carrying 25K for a Ford F150, but god forbid that student has to hold 25K in loans to better themselves through education.  

 

I don't understand what this means or what a red butt thought is.

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One reason I don't like it is the inherent unfairness.  There are people that saved and sacrificed to pay for college (arguably "doing the right thing") and they get nothing.  Those that decided to borrow get rewarded.

 

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First a government giveaway, meaning taxpayers have to pay for this since the government does not have its own money, then, then she will work to fix the system she sees as broken.

I also see the system a broken.   That is not, however, a reason to have the government take on the obligation of these loans.  Nobody imposed these loans on these folks, they voluntarily assumed them.  If they made a poor bargain it is n them.  If it becomes governments obligation to subsidize us and relieve us of the consequences of poor bargains we will be bankrupt in no time.

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21 minutes ago, Juxtatarot said:

One reason I don't like it is the inherent unfairness.  There are people that saved and sacrificed to pay for college (arguably "doing the right thing") and they get nothing.  Those that decided to borrow get rewarded.

 

Sort of like the mortgage loan crisis, the responsible pay twice while having deferred their own gratification while the irresponsible enjoy their benefit on someone else's dime. I am confident her proposal will be popular because there are a lot of irresponsible out there. 

Edited by Ditkaless Wonders
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11 minutes ago, supermike80 said:

Little bit of a red butt thought here..

But a student would have NO Problem carrying 25K for a Ford F150, but god forbid that student has to hold 25K in loans to better themselves through education.  

 

I don't know what the first sentence means, but I agree with the second.  A $30K student loan balance is no big deal and certainly doesn't qualify as a "crisis."

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2 minutes ago, Ditkaless Wonders said:

Sort of like the mortgage loan crisis, the responsible pay twice while having deferred gratification while the irresponsible enjoy their benefit on someone else's dime. I am confident her proposal will be popular because there are a lot of irresponsible out there. 

Agreed.  I thought the same.

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I think it’s one of her better ideas. I’m in favor for a very specific reason: home buying. My FIL was the VP of a very large home building company in Southern California. Though retired he keeps up with trends. One recurrent theme is that even though young people are still coming out of college with good salaries they’re not able lto purchase homes in the same numbers their parents did because of the student loans. 

I’m one of those who believes that home ownership is essential to a stable and prosperous society. So I would structure this in the form of something like the old GI Bill. 

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I also think what someone studies and what career they get into matters. 

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Maybe they should scale it so those who have a history of making payments should be rewarded more versus those who have defaulted or worse.  Not sure about newly graduated students.

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Unsure on this, but before they try and tackle this something needs to be done to end the 'College is Necessary' for Everyone mentality. This has turned the university system into nothing but diploma mills for most students, and as a by-product made colleges change their focus from being an educational institution towards more of an amenity-filled summer camp, which has helped make costs skyrocket.

Also something that will need to be figured out, are all degrees equal and worthy of debt forgiveness/free tuition? I don't think so. Helping a student get their engineering degree, yes. Helping a student get their transgender poetry degree, umm no.

 

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34 minutes ago, Ilov80s said:

I read a little more- the debt cancellation is scaled based on family income. Also it addresses future students. For example if a family makes less than $100k, tuition and fees are also covered. It’s going to cost over a trillion for 10 years, her plan to cover it is a wealth tax. 2% on wealth over $50 million and 3% on wealth over a billion. 

Probably will take a Constitutional Amendment to get that one.  Is it 2-3% every year?  

Edited by jon_mx

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35 minutes ago, Ilov80s said:

I read a little more- the debt cancellation is scaled based on family income. Also it addresses future students. For example if a family makes less than $100k, tuition and fees are also covered. It’s going to cost over a trillion for 10 years, her plan to cover it is a wealth tax. 2% on wealth over $50 million and 3% on wealth over a billion. 

People will get creative and they should.  If your family makes 100-105K a year it would behoove families to take unpaid time off to get down to 95-99K and get "free" tuition and end up way ahead of the game.  

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The student loan program needs to be reformed.

But that reformation should not start with "canceling gigantic portions of student loans".

 

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7 minutes ago, jon_mx said:

Probably will take a Constitutional Amendment to get that one.  Is it 2-3% every year?  

Not sure, just skimmed through. I’m not totally sold on this.

5 minutes ago, Da Guru said:

People will get creative and they should.  If your family makes 100-105K a year it would behoove families to take unpaid time off to get down to 95-99K and get "free" tuition and end up way ahead of the game.  

Of course always loopholes.

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6 minutes ago, [scooter] said:

The student loan program needs to be reformed.

But that reformation should not start with "canceling gigantic portions of student loans".

 

I agree but I also had my undergrad debt forgiven so that was fortunate for me. I did pay for most of my undergrad and al my grad on my own though.

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Oh no, our young people, people who made a commitment and who no longer wish to honor that commitment won't be able to buy homes right away, at least not the McMansions their parents managed after moving up through shared apartments, starter homes, fixer uppers, and eventually their home.  Relegate these folks to the lower end, the starter end, of the housing market as they start out. Who knows, they may revitalize neighborhoods and meet interesting folks. they may actually have to experience life as have past generations.  It is a process, a journey, not a destination arrived at through entitlement.  They will be the richer for having achieved rather than having been given.

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Just now, Ilov80s said:
7 minutes ago, [scooter] said:

The student loan program needs to be reformed.

But that reformation should not start with "canceling gigantic portions of student loans".

I agree but I also had my undergrad debt forgiven so that was fortunate for me. I did pay for most of my undergrad and al my grad on my own though.

How was your undergrad debt forgiven?

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29 minutes ago, Juxtatarot said:

One reason I don't like it is the inherent unfairness.  There are people that saved and sacrificed to pay for college (arguably "doing the right thing") and they get nothing.  Those that decided to borrow get rewarded.

 

All government allocations of monies are inherently unfair. Yet we don’t live a libertarian society and for some reason this question of unfairness only arises when the recipient of the benefits are regular people. 

I don’t think fairness or unfairness should come into consideration for this or any other benefit. The only question should be does it benefit society? In this case I think it does. 

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6 minutes ago, [scooter] said:

How was your undergrad debt forgiven?

Teacher Forgiveness Program. If you teach for a certain number of years in areas of need and in at risk districts, you can apply for forgiveness.

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37 minutes ago, IvanKaramazov said:

I don't know what the first sentence means, but I agree with the second.  A $30K student loan balance is no big deal and certainly doesn't qualify as a "crisis."

Red butt meant red ###..you know, like a donkey..But not allowed to say that here I don't think....let me try.....  ###........

Just saying it kinda makes me angry

Edited by supermike80

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33 minutes ago, timschochet said:

I think it’s one of her better ideas. I’m in favor for a very specific reason: home buying. My FIL was the VP of a very large home building company in Southern California. Though retired he keeps up with trends. One recurrent theme is that even though young people are still coming out of college with good salaries they’re not able lto purchase homes in the same numbers their parents did because of the student loans. 

I’m one of those who believes that home ownership is essential to a stable and prosperous society. So I would structure this in the form of something like the old GI Bill. 

I'm sorry but I simply say BS to this.  I think part of it is that's what these kids are telling people.

My bro in laws kids are college educated. He's impossibly lazy and represents every stereotype of a millennial you could imagine.  He won't even cut his own grass because you see "he did that in college"  BUT....No job...He DOESN'T HAVE A JOB........And he blames a big portion of his problems on his student loans.  It's a cop out and an easy thing to blame.  This may be true in some cases, but I think there is a lot of lying out there.

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12 minutes ago, timschochet said:

I don’t think fairness or unfairness should come into consideration for this or any other benefit. 

Sometimes I just think you say stuff so that people will waste time arguing with you.

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5 minutes ago, supermike80 said:

Red butt meant red ###..you know, like a donkey..But not allowed to say that here I don't think....let me try.....  ###........

Just saying it kinda makes me angry

This is precisely why my dad used to say donkeys can’t go to school.  Nobody likes a smart ###

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7 minutes ago, Ilov80s said:
15 minutes ago, [scooter] said:

How was your undergrad debt forgiven?

Teacher Forgiveness Program. If you teach for a certain number of years in areas of need and in at risk districts, you can apply for forgiveness.

Ah. I don't think that's the same kind of "forgiveness" that Warren is talking about, though. You had to make sacrifices that other teachers didn't have to make. You had to work for it.

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38 minutes ago, IvanKaramazov said:

.  A $30K student loan balance is no big deal and certainly doesn't qualify as a "crisis."

I disagree. The total number is around 1.3 trillion. It’s a hindrance on our economy. Some debts are useful; this one isn’t. 

We need to start thinking outside the box here. Forget about it who deserves it and whether it’s fair or not. Forget about DW’s talk about “let them earn it the hard way” stuff- that’s all irrelevant. The big picture is that if we get rid of this particular debt it gives these people spending power which they infuse into the economy- yes into homes but into all sorts of other things as well. 

Think of it as a tax cut only much more effective because we don’t have to wait for it to trickle down. 

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Choice A: Study engineering and business...shut down the library on Saturday nights...graduate magna cum laude...design innovative new solar cell...put self on path to earning $250K+

Choice B: Study music...drink with your friends...study overseas for a semester...spend afternoons napping...lobby for a pass/fail grading system (and get it)...earn $60K with no debt...whine about climate change.

Thanks Liz.

 

 

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There used to be a program for public employees, but not sure if it’s still around.  10 years of service or something like that.

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Should we instead have the gubbermint fund a student loan educational program that you are REQUIRED to take before you can take a loan?  So there is no excuse later about how you're saddled with all this debt like you had no idea it was really going to have to be paid back and stuff?

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2 minutes ago, fatguyinalittlecoat said:

Sometimes I just think you say stuff so that people will waste time arguing with you.

On occasion. Not in this case. This is a fundamental belief of mine. Fairness is not a condition of government action. 

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12 minutes ago, Ilov80s said:

Teacher Forgiveness Program. If you teach for a certain number of years in areas of need and in at risk districts, you can apply for forgiveness.

I would call that paying your loan, but through barter rather than dollars.

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4 minutes ago, supermike80 said:

I'm sorry but I simply say BS to this.  I think part of it is that's what these kids are telling people.

My bro in laws kids are college educated. He's impossibly lazy and represents every stereotype of a millennial you could imagine.  He won't even cut his own grass because you see "he did that in college"  BUT....No job...He DOESN'T HAVE A JOB........And he blames a big portion of his problems on his student loans.  It's a cop out and an easy thing to blame.  This may be true in some cases, but I think there is a lot of lying out there.

Your anecdote about a lazy nephew, though I believe totally genuine, should not influence a decision that is going to affect millions of people. 

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1 minute ago, timschochet said:

I disagree. The total number is around 1.3 trillion. It’s a hindrance on our economy. Some debts are useful; this one isn’t. 

We need to start thinking outside the box here. Forget about it who deserves it and whether it’s fair or not. Forget about DW’s talk about “let them earn it the hard way” stuff- that’s all irrelevant. The big picture is that if we get rid of this particular debt it gives these people spending power which they infuse into the economy- yes into homes but into all sorts of other things as well. 

Think of it as a tax cut only much more effective because we don’t have to wait for it to trickle down. 

Why don't we just give all Americans $$ then?   can't we do it that way?  Same thing right?  I'd like a check from the feds.  Why does some student that is stupid enough to take loans he cant afford or for an education that he or she failed out of, or one that had no real job opportunities get free $$?  

What about ALL the parents who scraped and sacrificed to fund their kid's educations, so they didn't have student loans..Do they get free money too?  That's hugely unfair

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2 minutes ago, timschochet said:

On occasion. Not in this case. This is a fundamental belief of mine. Fairness is not a condition of government action. 

But it is absolutely why, in some cases, the gubbermint should NOT act. 

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6 minutes ago, [scooter] said:

Ah. I don't think that's the same kind of "forgiveness" that Warren is talking about, though. You had to make sacrifices that other teachers didn't have to make. You had to work for it.

Oh I know it’s not quite the same. The program was called teacher loan forgiveness and to me it wasn’t a sacrifice. I studied the subjects I did because I knew I could get a job in them. If it was up to me, I would have just been a history teacher but 15 years ago I realized how competitive that market was and that if I got a special ed. major I would never have to worry about having a job. Then in terms of where I work, I really like it even if it is pretty rough around the edges. So to me it’s not a sacrifice and I don’t see it that way. However, I can see how it appears on paper to be a big sacrifice teaching special ed kids and kids at high risk in a low SES area.

Edited by Ilov80s

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2 minutes ago, timschochet said:

Your anecdote about a lazy nephew, though I believe totally genuine, should not influence a decision that is going to affect millions of people. 

Nor should your story about some VP of a building company.  It's hearsay and most likely not nearly as true as you might believe. THAT was my point......Sheesh.  

Edited by supermike80

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Just now, supermike80 said:

Why don't we just give all Americans $$ then?   can't we do it that way?  Same thing right?  I'd like a check from the feds.  Why does some student that is stupid enough to take loans he cant afford or for an education that he or she failed out of, or one that had no real job opportunities get free $$?  

What about ALL the parents who scraped and sacrificed to fund their kid's educations, so they didn't have student loans..Do they get free money too?  That's hugely unfair

Are you in favor of eliminating all corporate subsides right now? How about tax write offs for big companies? Are those fair? Did you start a thread complaining about the money that big oil receives? 

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3 minutes ago, supermike80 said:

Why don't we just give all Americans $$ then?   can't we do it that way?  Same thing right?  I'd like a check from the feds.  Why does some student that is stupid enough to take loans he cant afford or for an education that he or she failed out of, or one that had no real job opportunities get free $$?  

What about ALL the parents who scraped and sacrificed to fund their kid's educations, so they didn't have student loans..Do they get free money too?  That's hugely unfair

I tend to agree that a basic income like policy is more fair. That way it’s rewarding certain ages or decisions. It’s like a dividends check for the success of our overall economy. Although there’s plenty of issues there.

Edited by Ilov80s

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Just now, timschochet said:

Are you in favor of eliminating all corporate subsides right now? How about tax write offs for big companies? Are those fair? Did you start a thread complaining about the money that big oil receives? 

I did not start a thread about those topics no.  I only started this thread.  But you knew that already right?  Why are you asking me?

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1 minute ago, supermike80 said:

Nor should your story about some VP of a building company.  It's hearsay and most likely not nearly as true as you might believe. THAT was my point......Sheesh.  

Hearsay is a legal term. But my in laws story wasn’t about him, it was about the industry. You’re welcome to look at the facts on that. 

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