Statistics from: https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics/?sh=ee57fab281fe
According to Liz Warren and all her “progressive” disciples, personal responsibility matters not anymore. It is government’s role to wrap each person in the US, here legally or not, in bubble wrap and tenderly take care of them from cradle to grave.
Take her most recent proposal to just “cancel” student debt, which of course is portrayed as some “crisis” whenever you read about it, which is nonsense. Student loan debt might be a personal crisis for particular individuals, but it certainly is not some broad-based economic crisis that government has to address or the apocalypse will arrive.
Why? First, people accumulated their student debt knowingly. We put aside in this discussion the problems with for-profit schools like ITT scamming students that’s an entirely different issue. Here we’re talking about the run-of-the-mill college student at traditional non-profit educational institutions. They took on this debt, maybe even unwillingly, because it paves the road to a better tomorrow, supposedly. But they agreed to it, and they agreed to repay it. What is wrong with, in general, making them do just that?
Second, what do you say to all the millions of responsible people who worked hard after graduation and paid off, or are paying off, their student loan debt without whining about it being excessive? Even if it caused them hardship. Do we just write them all a check?
Third, what do we say to all those responsible (and irresponsible) people who never had any student debt in the first place, but who are somehow managing to take care of themselves at real jobs doing useful work. Is that a crisis? Well, it might be pretty quick if all these college students who ran up debt get a big money payday and the non-college people get nothing. Since equity is one of the cool buzzwords these days, is that equitable? Or what is the carrot that they’re going to get that we haven’t heard about yet?
Fourth, this amounts to paying off the debt of all these leftist, antifa, BLM spoiled college brats-turned-graduates who believe that free speech is the most wonderful thing in the world UNLESS you don’t agree with them, in which case you are a monster needing immediate cancellation.
Fifth, this proposal made now by Warren, with her claim that it is necessary now to provide a pandemic stimulus to the economy, is a pretty transparent and cynical attempt to capitalize on this health crisis to implement one of her pet political projects – she’s basically talking about buying votes for the Democrats with your money. She proposes:
Cancel billions of dollars in student loan debt, giving tens of millions of Americans an immediate financial boost and helping to close the racial wealth gap. This is the single most effective executive action available to provide massive consumer-driver stimulus.
https://www.washingtonpost.com/opinions/2020/11/11/elizabeth-warren-biden-harris-first-day/
Sorry, but cancelling student loan debt is NOT the “single most effective executive action available to provide massive consumer-driven stimulus.” That is just absurd, since as discussed below a huge chunk of the people affected don’t need it, and most of the people in the country won’t even be affected by it except to pay for it. They might want a handout from the government (effectively to be paid by your descendants), but they don’t need it. This is the type of elitist notion that by and large would impact people not in need, and could only be advanced by ignorant socialists like Warren and Bernie Sanders, along with their “democratic socialist” pals.
No doubt not having to pay one’s voluntarily incurred obligations would be a delight to people. But if you look at the numbers, this is just giving people a gift most of whom don’t need it. The big number everyone points to, of course, is the total student loan debt, which is running at about $1.56 trillion dollars. Yes, that’s a big number. But it is spread over 44.7 million people, so the average debt per person is $32,731. The median student debt (meaning half owe more and half owe less) is only about $17,000. That leaves, of course, about 285 million people who won’t receive anything from this wealthy upper-class boondoggle. Did they vote to forgive the debt of college kids who don’t need it? Doubtful. Of course they’re probably white supremacist racists so no one need be concerned about their view.
Now let’s think about that. Half of people with student loan debt owe less than $17,000, not even close to the average price of a new car these days. So just how is that some sort of crisis? The answer is, it isn’t. Forget about the BMW and take the bus or subway and pay your debts first, like millions of others have. Yes, there are certainly bunches of people with student debt that is a lot higher, many owe over $100,000, which are the sad heart-string-pulling stories the media and “progressives” harp on.
But the fact is that less than 2% of students have over $50,000 in debt. Almost a quarter of borrowers owe between $20,000 – $40,000 (roughly 9.5 million borrowers). Only 3 million have debt over $100,000. Remember, there are 330 million people in this country, so that is not even one percent of the US population. And dollars to donuts, a good portion of those with gigantic student debt like that got it by going to post-grad places like medical or law or MBA school, so they are much more likely to have the later income to pay it off. So how is that a crisis? Again, it isn’t.
Yes, an increasing percentage of graduates have “excessive student loan debt” and that number has roughly doubled over the past 35 or so years. “Excessive student debt” was defined as monthly payments consuming 10% or more of income, though obviously that depends on what income class you are in. Yet that still isn’t even 15% of all borrowers. So is that a crisis? No, it isn’t.
Moreover, there are all kinds of repayment plans to ameliorate the impact. There is Public Service forgiveness. There are many opportunities for extended repayment terms and income-based options, some of which may offer loan forgiveness after 20 years. Moreover, it appears that college graduates default at a relatively low rate.
Now this all puts aside the basic notion of personal responsibility, which of course is no concern of Warren or the Democrats since they jettisoned that notion decades ago. Why should people act responsibly when the federal government will cushion them from every bump and bruise life may inflict on them?
Yes, for-profit and some two-year schools are notorious for scamming students, exhorting them to take out all kinds of loans including private loans, and those people make up about 40% of all student loan borrowers. These folks also end up with much less debt since their schooling period is shorter, and/or they drop out and never finish. But sadly they often end up in dead-end jobs that make it extremely difficult to find housing, health care, food, etc., never mind repay back money that they never really benefitted from and were more or less coerced into borrowing.
If anyone needs a helping hand it is this group. And if the “progressives” were to focus on this group – the actual needy rather than the higher-income and more-likely-to-vote group – then perhaps there is something to talk about. But part of that discussion has to be to go after these schools, who really end up just being money-printing businesses for their owners. And some limited progress has been made on that front.
But the notion of some broad-based cancellation of student loans, with no consideration given to how the student got into difficulty in the first place or even needs any help, is misguided and a complete waste of money, unless of course, you’re a Democratic politician planning to run again in 2 or 4 years and want to buy some votes. There are other pressing needs.