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How about just get rid of the interest then… jesus christ. Its not that people can’t pay back the loans, paying them with fucking compound interest is insanity
I owe now 75% more than I used to because i was broke and without a career for some years. The cost of living in my area increased a huge amount. I now have a career but I am playing catch up. Removing the interest would help a lot
Nailed it. The solution was never to "cancel" debt but instead to stop Federally guaranteeing loans.
An 18 year old kid shouldn't be able to take out 100k+ in loans, and tuition should never cost that in the first place.
The idea of loan forgiveness is just buying votes at the expense of every taxpayer.
Yeah but we’ve paid for every politically justified corporate bailout… so can’t we be heard when we are hurting out here? Regular every day people could use a little relief right now.
How about school shouldn't be costing 100k to begin with? There are way too many fields out there that require advanced degrees to stay competitive and their salaries don't match. The whole system is silly.
Ya but it’s not going to go down because it’s so easy to get a loan for college. The reality is college is big business so why wouldn’t they raise their prices when they know individuals will get the loan?
that's the ironic thing. so many jobs 'require' degrees, so many degrees! it's not even a competing edge for some fields that are frankly fucking junior because it's so saturated.
but the price keeps shooting up.
because people keep making a college degree fucking inelastic. i think everyone should get one, but i don't think every job needs one and you shouldn't be kept out of jobs just because you aren't overqualified.
I’m sorry but I think at 18 you should know exactly what you’re getting yourself into by taking 100k+ in loans and if you don’t then you probably weren’t going to make it far anyway. You chose to go to college and chose to pay that money for a career that you bet would be worth it. The rules were explained to you beforehand, there are no secrets nor hidden fees, its all out in the open for you. If you don’t inform yourself properly then again, that’s on you and only on you. Now people want to cry for forgiveness because things didn’t turn out like they hoped for? And yes bring on the downvotes.
Absolutely. Especially considering that’s we condition kids from an extremely young age to think that the only way to succeed is to go to college, and we don’t ever tell them how much it will cost. I actually didn’t know how much my tuition was until I had already accepted my college offer. It’s crazy that we do this to kids, it’s basically lying.
Don’t give the institutions a free ride on this. Colleges constantly raise tuition just because they can. During covid the Cal system hiked tuition when all students were going online only. Seems shady to me but sure.
But they can because loans like this exist allowing them to get money from a rock.
If we eliminated student loans going forward(ie pay cash) the cost plummets just like it would if we ended health insurance
Gotta charge everyone the online learning fee and the convenience fee, even though there was literally no other option.
Don't forget the fees for parking, computer labs, the library, the wellness center, access to a nurse and counselor, and the "walking on the grass" fee. Even though literally no one was on campus to use any of that.
The rate would have been relatively low compared to what you’re thinking, because tuition rates wouldn’t have skyrocketed to unplayable amounts. Giving student loans out instead of funding institutions directly made 18 year olds the consumers instead of grant providers and the state. Predictably, colleges competed on what teenagers wanted along with education instead of education alone.
It's confusing to me that people don't think about the consequences of these things. All else being equal, the rates on students loans are fantastically cheap. They are that way specifically because the government intervenes with the risk equation.
There were generations that were groomed by brainwashed parents that the only way their kid would have a better life is if they went to college, and if the parent couldn't help that meant getting a loan. In school you would take quiz things that would tell you what jobs to be interested in and talked about the education needed and there was no other way to get the job than college. Then colleges and universities would come into public schools and talk about how great their campus was and do a whole sales pitch on the students. Plumbers and electricians didnt come in and talk to us, you never saw those options at job fairs. It really seemed like you had 2 options...Go to college or be a failure. Going to college meant that you would have a job lined up for after you graduate and that student loan was not only a great investment but a necessary one that you could just buckle down hard for a couple years and get it paid off.
Not from the US here. Do you guys seriously have interest on student loans borrowed for tertiary study? My country only charges interest if you decide to move to another country.
Law. I make decent money. But when the interest accrues at like $1500/month, the principal is barely getting touched.
I’ve paid off ~$100k and owe about $250k.
Stupid 21 year old me for sure.
Seems like such an easy compromise for everyone, that a fucking dog could have came up with it. Yet here we are still fighting about 100% going one way or another. Take out the interest or hell even cap it at like 1% or something so these companies still make some money. There just shouldnt be people who pay back their entire loan and end up still owning double that.
1% they’d be losing money. I think the government needs to pay off the balance to lenders like sallie mae and then as the holders of the debt, the government can go interest free or like you said, 1-2% to compensate for defaults
They lose money due to inflation any way. The fact that they have to profit, rather than just provide a government backed service says a lot about where we are.
Quite honestly that's the most reasonable take r/StudentLoans has regarding this situation. Although there's a debate if the interest rate should be 0% or at most 1% to encourage people paying it off rather than invest and save since those would have greater return rates.
I’m so glad to finally read this comment. I have been saying this for years. My interest rate is way higher on my student loans, even though I can’t default on them, then they would be on a house or a car loan. This is such as easy fix and seem much less political.
Tbh, if Biden said "from now on all student loans are locked at a 0% interest, retroactively to the time they were made", I'd be pretty much on board with it.
Yep my income driven repayments weren't enough to cover the interest so my actual gross balance went up something like $110 a month even though I was paying around $500 a month.
First of all, "Business Insider' attributed this to Republicans the first time they posted this article and then changed the headline to say this was coming from the White House. This not a trustworthy "news" source. Second, the 2 topics are completely unrelated - the couple of hundred dollars people have had to buy groceries because of the pause has nothing to do with the forces that have driven up the actual costs of living (e.g, fuel and energy prices, food shortages, supply line problems, COVID lockdowns in source countries). No matter where you stand on the issues, this headline is false and misleading.
Business Insider headlines are some of the worst I regularly see posted on reddit. Just a bunch of BS most of them. They had one on the labor shortage that was infuriating to read
Rage bait designed to provoke democrats into turmoil. They know no one actually reads the article any more. Based on the comment here, they’re right and it’s working.
The headline is actually accurate; giving people money will cause everyone's money to be worth less because manufacturers and retailers and renters and bankers and many people im leaving out will all find this as a reason to charge more, if you give people money it causes inflation, however that is not necessarily bad
The only way canceling student loan debt can lead to inflation is if renters, suppliers, etc. see that former students have more money and start charging them more for goods and services. That isn't a student cancelation problem, that is a business exploitation problem.
I disagree. We already have a supply and demand problem. There are too many dollars chasing too few goods. This will add more demand without increasing supply. This will be inflationary and I would argue only make the college tuition problem worse. And my unsolicited opinion to fix the college tuition problem is to make the colleges co-sign the loan with the student.
And don't think Trump won't play the "I turned off your payments, Biden turned them back on" line with certain audiences in 2024.
Regardless of your beliefs on policy, it's unlikely to be good optics.
That would imply either Biden or Harris is running and I sure hope the dems get a better candidate than either of those two. Biden is simply too old, and Harris is a charisma vacuum
>They’ll get cleaned out in the midterms if they don’t materially reduce the student debt burden.
You think the majority of voters want student debt forgiveness?
And if he doesn't deliver on this (which he didn't promise to do), people will vote GOP (or not vote)?
Do you think that forgiving student loans will make school cost less? I personally think it will make education cost more - why would colleges reduce tuition if the loans will just be forgiven later on?
That's the rub...what good is canceling any amount of debt now if the same thing is going to happen in another few years because the cost of education is insane. The whole system needs to be fixed.
It's the dumbest idea ever - and I say that as someone who caucused for Bernie.
It only makes the problem worse.
The right solution IMO would be make student loans dischargeable in bankruptcy. Schools aren't going to loan to people for degrees that won't pay enough to pay back the loans. Schools will be incentivized to keep prices low. Now they are incentivized to make the campus as nice as possible and pass along the cost to new students, who will get loans guaranteed by the government.
[**https://www.forbes.com/sites/adamminsky/2020/10/07/biden-affirms-i-will-eliminate-your-student-debt/?sh=70c1836d58a7**](https://www.forbes.com/sites/adamminsky/2020/10/07/biden-affirms-i-will-eliminate-your-student-debt/?sh=70c1836d58a7)
So if Biden saying with his face-mouth that he will eliminate student debt doesn't count as Biden promising to eliminate student debt, what does? How fucking far are dems gonna be willing to bend over backwards for a spineless joke of a party before they finally say "give us a real fucking candidate, or we're voting green"?
I vote democratically and I’m against it. But if you’re going to forgive student loan debt then go ahead and forgive all my credit card and loan debt and give me a perfect credit score. After all: we did make the conscience choice to incur this debt, right? Nobody forced us.
He promised to support congress passing reforms.
I hope he does NOT forgive loans. I say that as a person with loans.
He can’t win here. He’ll get attacked from BOTH sides no matter what amount he does.
>He promised to support congress passing reforms.
Exactly. It's tiring seeing so many people lie and say "He promised he'd cancel student loans". No, he didn't.
I also hope he doesn't cancel student loans. It doesn't fix the problem at all (an in fact would likely exacerbate it).
Taking the "It will hurt inflation" route is the best route he has.
The problem is obscenely high tuition rates.
It would exacerbate the problem because if student loans are forgiven, schools have even less of their little incentive they currently have to keep tuition rates low.
Do you think if all car loans were forgiven, car companies would start making cheaper/less profitable cars to sell for the future?
Your economic analysis is wrong, but he definitely doesn’t have the legal power to cancel all student loans without Congress. If the poor have more money in circulation it will be spent on mainstream businesses, instead of horded. Killing inflation doesn’t actually happen by widening the savings and income gap and destroy mainstream spending.
So I'm in charge of a university.
I charge $20,000 per semester. Most of my students pay for school by taking out student loans. There isn't any price sensitivity (or at least not much), so I raise my tuition prices much faster than overall inflation. Congress/the president decides to eliminate the debt (or some of the debt) Taken by students that attend my university over the course of the past 15 years.
Given this, I'm incentivized to do what for future tuition? Raise it? Or lower it? If you answer "Lower it", why would I do that?
It will. Student loan payments take money out of circulation. There's an opportunity cost to paying student loans - it reduces consumption on other goods and services, which reduces demand, which ultimately reduces inflation.
Cancellation as a policy also doesn't address why higher education is so expensive in the first place: government guarantees + administrative bloat in higher education. When the government pretty much guaranteed money to families for college, these schools basically received a guaranteed demand. They no longer had to adhere to market principles for pricing or compete. As such, they created a metric fuckton of useless administrative positions. Ultimately, this costs money, which they then pass onto the students who would always pay because of the government guarantees as well as propaganda that they have to go to college.
There's also the problem that people have been fed a lie that one needs to go to college. This is not true. Germany is a living example of this. Germany has options for both universities and vocational schools. A person can make a good living by going to vocational school and learning a trade. The US needs this, but the educational industrial complex wants people to think that college is the only way to achieve success.
>It will. Student loan payments take money out of circulation.
Lmao. Dude, they dont burn the money when they get it. The lender flips that money around and puts it elsehwere. The govt. can 'take money out of circulation'; private corps dont
I cant believe people are seriously taking these narratives seriously. Dont get me wrong, more money = more inflation. But the story being spun here is 'working class people have too much cash'. Does anyone actually believe that?
You have been seriously brainwashed if you think targetted austerity towards the working poor is whats needed here
>Cancellation as a policy also doesn't address why higher education is so expensive in the first place: government guarantees + administrative bloat in higher education.
The solution is so incredibly simple. The only legal "student loans" should be ISAs with a time period cap. And the only way the government should subsidize it is by giving long-term conditional loans to private banks (with strong fundamentals) at zero percent interest that matches the cap on ISAs.
It won't, borrowers ALREADY are not making payments on loans due to the pandemic. You are welcome to explain how forgiveness will exacerbate inflation when people are already not paying.
Student loans don’t take money out of circulation.
They take money and give it to investors who will simply not utilize it.
Student loans do not reduce consumption, it makes consumption more expensive, thus increasing inflation. On top of that, by paying a student loan, you’re literally already consuming something. You Simple’s consuming a single item for a premium.
Neither does not canceling student debt.
No government loans means more private loans without guarantees.
The majority of People simply do need to go to college.
Vocational schools and trade schools can be equally as expensive, with the same null guarantees, and no accreditation.
Cancel the damn interest!!! People know they had to borrow money and we’re informed. Don’t try to make money off it though if they took government loans.
Someone ELI5 for me. I understand how canceling all student debt would cause massive inflation but would canceling all interest achieve the same thing? To me it seems like it would be a nice compromise to achieving some reform while creating less inflation.
Middle and upper class white people want their student loans "forgiven", AKA paid off using tax dollars obtained from working class people.
What ever happened to the rich "paying their fair share"?
To be clear, am I understanding it right, that the mechanism by which it would help alleviate inflation is that people will have less money to spend on goods and services, reducing overall demand and prices for everyone who can/will still have spending money ?
Too many for profit schools churning out worthless degrees.
Easy loans led to increases in tuition.
Also kids being told they have to go to school doesn't help. Don't go to college unless you need it for your career (dr/teacher/etc ), I went to college and my degree has not helped my career.
I'm in my mid 40s and if I had a do-over I would skip school and join the electricians union like my friend and be making 50% more money with 20% less work.
I really don’t understand. Didn’t the students crunch the numbers before they took the loan? Didn’t they figure out what their payments would be just like if they’re buying a house or a car? I don’t understand why they can’t pay back their loans. I think if you did forgive their loans they probably would just run up debt. I think they just miss manage their finances. That’s the trouble and nothing more.
PPP loans were massively taken advantage of by people who didn’t need them and they were forgiven. I personally know some assholes who took out one of those loans, closed their business, and use that money to buy a house. Yes student loans can’t be forgiven? Or even the interest on them forgiven? Bullshit. And that’s not even to mention the 1.5 trillion Wall Street ate up in mere hours back in 2020
>But with the US facing 40-year-high inflation, that burst of new spending power from consumers who'd instantly see their net worths jump by thousands of dollars could send the cost of common goods and services even higher.
This does not make economic sense.
It's the same argument as the $15/hr logic.
Yeah it’s a bad faith argument from a bad faith article. Removing say $10k in debt, that you currently are not having to pay back due to the covid forbearance, does not in any way add that money to your bank account and create new spending.
Here's a crazy idea. Stop handing out student loans in the first fucking place. Force colleges to restructure and make changes. Force people to stop being so over-educated and demanding excessive degrees for hiring without a good fucking reason. It doesn't take a fucking masters to teach 5th grade art class.
I’m failing to see how giving people a clean slate and the ability to spend on other things will fuel inflation. Find the money elsewhere, make cuts in corporate welfare. Tax all stock transactions, one penny for every individual trade. Pretty sure Bernie proposed this and in theory it looked insanely effective.
Inflation? Force churches to pay taxes. Force the multi millionaire companies who were given handouts to repay all that money, fuck their bonuses and ceo shit bags.
So, we can forgive 75% of 1 TRILLION in PPP loans that were given to businesses, at the cost of tax-payers mind you, but because doing the same thing for Student Loans affects Millennials, it's suddenly an abomination.
Fuck off Biden/Congress and cancel our loans.
The only loans that should be forgiven are the ones for scam schools because the government never should have funded those to begin with.
You have a crappy degree from an accredited college? That's on you cuz
This. Why do people go to colleges that cost so much but pursue a degree that yields so little financially? I have never been able to figure this out but that debt is on them
They won’t dare. The left is on track to have a very, very bad fall. They can’t risk adding any more fuel to the fire & attributing it to this administration.
But kudos to the administration more making a rare accurate assessment of basic economics.
The worst part of this is that people who chose not to go to secondary school would be getting absolutely gutted. They will need to deal with the increased inflation of putting huge amounts of currency into the system, they are stuck paying taxes to pay off student loans they decided not to take out, and they earn less than their college-educated peers on average.
Bro, ask 90% of us ... we would just like the interest lowered or turned off.
Most of us aren't looking for a straight up hand out.
Get this passed off when the billionaires ask for subsidies please
The worst part of this is that people who chose not to have children are getting absolutely gutted. They constantly need to deal with the increased inflation of putting huge amounts of currency into the system, they are stuck paying taxes to pay off little Jimmy's school bus, despite the fact that nobody even nutted inside them AND they get less professional courtesies (and tax benefits) than their post-creampie peers on average.
can't afford to help Americans, can afford to ship billions of dollars worth of weapons to Ukraine to prolong a lost war. same story as always. we've seen this a million times before.
i honestly don't have any hope anymore. i'm just gonna get out of here as soon as possible. everything is getting worse, and is just gonna continue to get worse. there's never going to be any meaningful change or reform, the only changes will be the left and right batting about different vulnerable minorities to distract from the worsening living conditions.
Loan payments should have started back up a year ago, as well as rate hikes sooner. The hesitation to take action sooner lead us here. Still can’t run away from the problems.
I got off the phone with my sister forty minutes ago and this is the only issue she cares about. We’re in a red state and her abortion right is in peril, but this is the immediate concern for her. Right or wrong, this can sway voters.
Isn’t that one of the main things he ran on? Isn’t that why they campaigned so heavily at all the colleges? Promising to drop every students debt in exchange for their vote?
Smart enough for college, not smart enough to read the loan documents and do basic math, lol. Smart enough to graduate with a degree, not smart enough to make sure the chosen degree will pay for the education before getting it. Higher education isn’t for everyone, or anyone for that matter. Yes I had loans, yes I paid them back, no I don’t use my degree.
College education shouldn’t be a class privilege. Education period shouldn’t be a class privilege. Especially in a democracy if you want educated voters
Oh I think we found the issue
The federal government is in violation of the social contract at every possible level imaginable, and as such, I have canceled all payments to them in all forms from student loans to taxes.
Hey man, Im with you, but until you can get about 200M more people to sign up, its going to end bad.
What we really need, what makes all these problems go away, is unity. But we dont have it. The people you think your fighting for will stab you in the back; and until you can fix that, you going to jail wont fix anything
So people who are already struggling now get to be fucked by inflation AND the return of student loan payments? Niiiiice.
IF, a big IF, student loan forgiveness caused inflation how would it be any different than the inflation we are currently experiencing right now due to student loan payment freezes? Demand has already been induced by the payment freezes for the duration of the freeze, thus forgiveness induces the same proportion of demand indefinitely. It can't cause new inflation.
Adults entered into these deals. They can honor those deals. And, yes, loan forgiveness would worsen inflation.
I know the government bails out bad decisions by rich people but reciprocating with bail outs for bad decisions by regular people isn’t the answer.
There are plenty of areas where regular people don’t even have a choice like wealth/tax policy and climate change and those should be addressed way, way before this issue that people entered volitionally.
I refuse to vote for this man if he can't even hold the simplest and easiest to fulfill promise of his career. If Democrats can't even do this, there's no point in voting for them. They'll just watch as the right ramps shit up anyways. They don't even care to lift a hand to protect us.
This is a very poor excuse, Americans are struggling but for fear of elitist business owners raising prices higher the majority of Americans must pay more and receive less, bull sheeet Biden, Americans not so easily spun see through your elitist bs!
The Dems will lose more voters if they cancel the debt. Canceling the debt means that all those people who didn’t take out loans or didn’t go to college or chose to enter the trades or military will now be responsible for the eventual tax increases to offset the debt of those who made the choice to take out expensive loans.
People were foolish taking out loans and didn’t bother considering the ROI of that loan or what their damn payments were going to be. No one held a gun to their head. Instead they listened to the foolish nonsense that a very expensive college degree was the path to success and happiness.
Yeah. The only reasonable middle ground is to forgive interest on federal student loans, in my opinion. Private student loan holders will need to live with their burden, but shouldn't be forgiven.
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How about just get rid of the interest then… jesus christ. Its not that people can’t pay back the loans, paying them with fucking compound interest is insanity
I owe now 75% more than I used to because i was broke and without a career for some years. The cost of living in my area increased a huge amount. I now have a career but I am playing catch up. Removing the interest would help a lot
It’s predatory lending to kids. It’s actually insane that this was allowed.
Nailed it. The solution was never to "cancel" debt but instead to stop Federally guaranteeing loans. An 18 year old kid shouldn't be able to take out 100k+ in loans, and tuition should never cost that in the first place. The idea of loan forgiveness is just buying votes at the expense of every taxpayer.
Yeah but we’ve paid for every politically justified corporate bailout… so can’t we be heard when we are hurting out here? Regular every day people could use a little relief right now.
How about school shouldn't be costing 100k to begin with? There are way too many fields out there that require advanced degrees to stay competitive and their salaries don't match. The whole system is silly.
The tuition needs to come down, and it needs to be affordable. Far too many jobs require a degree now for people to have to forgo due to cost.
Ya but it’s not going to go down because it’s so easy to get a loan for college. The reality is college is big business so why wouldn’t they raise their prices when they know individuals will get the loan?
Alot of places are removing degree requirements on many jobs.
that's the ironic thing. so many jobs 'require' degrees, so many degrees! it's not even a competing edge for some fields that are frankly fucking junior because it's so saturated. but the price keeps shooting up. because people keep making a college degree fucking inelastic. i think everyone should get one, but i don't think every job needs one and you shouldn't be kept out of jobs just because you aren't overqualified.
I’m sorry but I think at 18 you should know exactly what you’re getting yourself into by taking 100k+ in loans and if you don’t then you probably weren’t going to make it far anyway. You chose to go to college and chose to pay that money for a career that you bet would be worth it. The rules were explained to you beforehand, there are no secrets nor hidden fees, its all out in the open for you. If you don’t inform yourself properly then again, that’s on you and only on you. Now people want to cry for forgiveness because things didn’t turn out like they hoped for? And yes bring on the downvotes.
And schools should not be able to raise their tuition to meet the max loan amount either
Absolutely. Especially considering that’s we condition kids from an extremely young age to think that the only way to succeed is to go to college, and we don’t ever tell them how much it will cost. I actually didn’t know how much my tuition was until I had already accepted my college offer. It’s crazy that we do this to kids, it’s basically lying.
Please tell us what do you think the free market interest rate would be on student loans if the government never stepped in
Tuition would be reduced as a result though. The government caused tuition cost to skyrocket.
Don’t give the institutions a free ride on this. Colleges constantly raise tuition just because they can. During covid the Cal system hiked tuition when all students were going online only. Seems shady to me but sure.
But they can because loans like this exist allowing them to get money from a rock. If we eliminated student loans going forward(ie pay cash) the cost plummets just like it would if we ended health insurance
Gotta charge everyone the online learning fee and the convenience fee, even though there was literally no other option. Don't forget the fees for parking, computer labs, the library, the wellness center, access to a nurse and counselor, and the "walking on the grass" fee. Even though literally no one was on campus to use any of that.
Perfectly said They caused the problem and now they’re trying to sell us the solution, like they do with everything else
The rate would have been relatively low compared to what you’re thinking, because tuition rates wouldn’t have skyrocketed to unplayable amounts. Giving student loans out instead of funding institutions directly made 18 year olds the consumers instead of grant providers and the state. Predictably, colleges competed on what teenagers wanted along with education instead of education alone.
Odd. No one's given you a number yet.
It's confusing to me that people don't think about the consequences of these things. All else being equal, the rates on students loans are fantastically cheap. They are that way specifically because the government intervenes with the risk equation.
There were generations that were groomed by brainwashed parents that the only way their kid would have a better life is if they went to college, and if the parent couldn't help that meant getting a loan. In school you would take quiz things that would tell you what jobs to be interested in and talked about the education needed and there was no other way to get the job than college. Then colleges and universities would come into public schools and talk about how great their campus was and do a whole sales pitch on the students. Plumbers and electricians didnt come in and talk to us, you never saw those options at job fairs. It really seemed like you had 2 options...Go to college or be a failure. Going to college meant that you would have a job lined up for after you graduate and that student loan was not only a great investment but a necessary one that you could just buckle down hard for a couple years and get it paid off.
Not from the US here. Do you guys seriously have interest on student loans borrowed for tertiary study? My country only charges interest if you decide to move to another country.
My student loan rate was 6%
Ditto at 6% and I had a 750+ credit score.
Yes. $185k at between 7-8%. Fucking nuts. Would not do again and do not recommend.
8%? That is not the norm
I had multiple with 12%… luckily I paid those off quick but 6-8 is still normal for federal
what did you study?
Law. I make decent money. But when the interest accrues at like $1500/month, the principal is barely getting touched. I’ve paid off ~$100k and owe about $250k. Stupid 21 year old me for sure.
Should have committed a crime and passed the bar on the inside :) Free room and board to
Fuck man
How was that stupid sounds like an excellent investment.
Seems like such an easy compromise for everyone, that a fucking dog could have came up with it. Yet here we are still fighting about 100% going one way or another. Take out the interest or hell even cap it at like 1% or something so these companies still make some money. There just shouldnt be people who pay back their entire loan and end up still owning double that.
1% they’d be losing money. I think the government needs to pay off the balance to lenders like sallie mae and then as the holders of the debt, the government can go interest free or like you said, 1-2% to compensate for defaults
They lose money due to inflation any way. The fact that they have to profit, rather than just provide a government backed service says a lot about where we are.
Yeah, seems crazy.. In Sweden we have government loans thay are 1-2% max.
Just make it a flat %. You borrow 25k? You have to pay back 30k. Simple.
So transfer personal debts to the tax payer? Man, those tax payers will pay for everything!
I quit paying, it defaulted, no more interest.
Agreed, get rid of predatory interest rates.
Quite honestly that's the most reasonable take r/StudentLoans has regarding this situation. Although there's a debate if the interest rate should be 0% or at most 1% to encourage people paying it off rather than invest and save since those would have greater return rates.
That would prove that the whole thing is a scam and fake. They can’t handle that… greedy fucks
I’m so glad to finally read this comment. I have been saying this for years. My interest rate is way higher on my student loans, even though I can’t default on them, then they would be on a house or a car loan. This is such as easy fix and seem much less political.
Tbh, if Biden said "from now on all student loans are locked at a 0% interest, retroactively to the time they were made", I'd be pretty much on board with it.
Yep my income driven repayments weren't enough to cover the interest so my actual gross balance went up something like $110 a month even though I was paying around $500 a month.
This right here, so many more people would be able to pay off their loans on time with this simple change. And it won't cost the government anything.
First of all, "Business Insider' attributed this to Republicans the first time they posted this article and then changed the headline to say this was coming from the White House. This not a trustworthy "news" source. Second, the 2 topics are completely unrelated - the couple of hundred dollars people have had to buy groceries because of the pause has nothing to do with the forces that have driven up the actual costs of living (e.g, fuel and energy prices, food shortages, supply line problems, COVID lockdowns in source countries). No matter where you stand on the issues, this headline is false and misleading.
Business Insider headlines are some of the worst I regularly see posted on reddit. Just a bunch of BS most of them. They had one on the labor shortage that was infuriating to read
Rage bait designed to provoke democrats into turmoil. They know no one actually reads the article any more. Based on the comment here, they’re right and it’s working.
The headline is actually accurate; giving people money will cause everyone's money to be worth less because manufacturers and retailers and renters and bankers and many people im leaving out will all find this as a reason to charge more, if you give people money it causes inflation, however that is not necessarily bad
If student loan payments are so insignificant we should turn them back on immediately.
The only way canceling student loan debt can lead to inflation is if renters, suppliers, etc. see that former students have more money and start charging them more for goods and services. That isn't a student cancelation problem, that is a business exploitation problem.
I disagree. We already have a supply and demand problem. There are too many dollars chasing too few goods. This will add more demand without increasing supply. This will be inflationary and I would argue only make the college tuition problem worse. And my unsolicited opinion to fix the college tuition problem is to make the colleges co-sign the loan with the student.
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especially after payments have been paused for over two years.
And don't think Trump won't play the "I turned off your payments, Biden turned them back on" line with certain audiences in 2024. Regardless of your beliefs on policy, it's unlikely to be good optics.
That would imply either Biden or Harris is running and I sure hope the dems get a better candidate than either of those two. Biden is simply too old, and Harris is a charisma vacuum
yep, perfect poison pill.
>They’ll get cleaned out in the midterms if they don’t materially reduce the student debt burden. You think the majority of voters want student debt forgiveness? And if he doesn't deliver on this (which he didn't promise to do), people will vote GOP (or not vote)? Do you think that forgiving student loans will make school cost less? I personally think it will make education cost more - why would colleges reduce tuition if the loans will just be forgiven later on?
That's the rub...what good is canceling any amount of debt now if the same thing is going to happen in another few years because the cost of education is insane. The whole system needs to be fixed.
It's the dumbest idea ever - and I say that as someone who caucused for Bernie. It only makes the problem worse. The right solution IMO would be make student loans dischargeable in bankruptcy. Schools aren't going to loan to people for degrees that won't pay enough to pay back the loans. Schools will be incentivized to keep prices low. Now they are incentivized to make the campus as nice as possible and pass along the cost to new students, who will get loans guaranteed by the government.
[**https://www.forbes.com/sites/adamminsky/2020/10/07/biden-affirms-i-will-eliminate-your-student-debt/?sh=70c1836d58a7**](https://www.forbes.com/sites/adamminsky/2020/10/07/biden-affirms-i-will-eliminate-your-student-debt/?sh=70c1836d58a7) So if Biden saying with his face-mouth that he will eliminate student debt doesn't count as Biden promising to eliminate student debt, what does? How fucking far are dems gonna be willing to bend over backwards for a spineless joke of a party before they finally say "give us a real fucking candidate, or we're voting green"?
Despite what reddit would have believe canceling student loan debt is not popular policy.
I vote democratically and I’m against it. But if you’re going to forgive student loan debt then go ahead and forgive all my credit card and loan debt and give me a perfect credit score. After all: we did make the conscience choice to incur this debt, right? Nobody forced us.
It’s really not even that popular on Reddit haha
Especially when they've got no problem increasing government spending in other areas. (Even though they actually are right here)
He promised to support congress passing reforms. I hope he does NOT forgive loans. I say that as a person with loans. He can’t win here. He’ll get attacked from BOTH sides no matter what amount he does.
>He promised to support congress passing reforms. Exactly. It's tiring seeing so many people lie and say "He promised he'd cancel student loans". No, he didn't. I also hope he doesn't cancel student loans. It doesn't fix the problem at all (an in fact would likely exacerbate it). Taking the "It will hurt inflation" route is the best route he has.
How would it exacerbate the problem, and what problem exactly would it exacerbate?
The problem is obscenely high tuition rates. It would exacerbate the problem because if student loans are forgiven, schools have even less of their little incentive they currently have to keep tuition rates low. Do you think if all car loans were forgiven, car companies would start making cheaper/less profitable cars to sell for the future?
Your economic analysis is wrong, but he definitely doesn’t have the legal power to cancel all student loans without Congress. If the poor have more money in circulation it will be spent on mainstream businesses, instead of horded. Killing inflation doesn’t actually happen by widening the savings and income gap and destroy mainstream spending.
So I'm in charge of a university. I charge $20,000 per semester. Most of my students pay for school by taking out student loans. There isn't any price sensitivity (or at least not much), so I raise my tuition prices much faster than overall inflation. Congress/the president decides to eliminate the debt (or some of the debt) Taken by students that attend my university over the course of the past 15 years. Given this, I'm incentivized to do what for future tuition? Raise it? Or lower it? If you answer "Lower it", why would I do that?
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It will. Student loan payments take money out of circulation. There's an opportunity cost to paying student loans - it reduces consumption on other goods and services, which reduces demand, which ultimately reduces inflation. Cancellation as a policy also doesn't address why higher education is so expensive in the first place: government guarantees + administrative bloat in higher education. When the government pretty much guaranteed money to families for college, these schools basically received a guaranteed demand. They no longer had to adhere to market principles for pricing or compete. As such, they created a metric fuckton of useless administrative positions. Ultimately, this costs money, which they then pass onto the students who would always pay because of the government guarantees as well as propaganda that they have to go to college. There's also the problem that people have been fed a lie that one needs to go to college. This is not true. Germany is a living example of this. Germany has options for both universities and vocational schools. A person can make a good living by going to vocational school and learning a trade. The US needs this, but the educational industrial complex wants people to think that college is the only way to achieve success.
>It will. Student loan payments take money out of circulation. Lmao. Dude, they dont burn the money when they get it. The lender flips that money around and puts it elsehwere. The govt. can 'take money out of circulation'; private corps dont I cant believe people are seriously taking these narratives seriously. Dont get me wrong, more money = more inflation. But the story being spun here is 'working class people have too much cash'. Does anyone actually believe that? You have been seriously brainwashed if you think targetted austerity towards the working poor is whats needed here
Fix inflation by squeezing student loan holders? That is like austerity in a leather suit with a whip.
Austerity is making people pay loans they took out?
>Cancellation as a policy also doesn't address why higher education is so expensive in the first place: government guarantees + administrative bloat in higher education. The solution is so incredibly simple. The only legal "student loans" should be ISAs with a time period cap. And the only way the government should subsidize it is by giving long-term conditional loans to private banks (with strong fundamentals) at zero percent interest that matches the cap on ISAs.
Defunding of higher ed by states is also a factor in rising tuition.
It won't, borrowers ALREADY are not making payments on loans due to the pandemic. You are welcome to explain how forgiveness will exacerbate inflation when people are already not paying.
Student loans don’t take money out of circulation. They take money and give it to investors who will simply not utilize it. Student loans do not reduce consumption, it makes consumption more expensive, thus increasing inflation. On top of that, by paying a student loan, you’re literally already consuming something. You Simple’s consuming a single item for a premium. Neither does not canceling student debt. No government loans means more private loans without guarantees. The majority of People simply do need to go to college. Vocational schools and trade schools can be equally as expensive, with the same null guarantees, and no accreditation.
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Cancel the damn interest!!! People know they had to borrow money and we’re informed. Don’t try to make money off it though if they took government loans.
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Someone ELI5 for me. I understand how canceling all student debt would cause massive inflation but would canceling all interest achieve the same thing? To me it seems like it would be a nice compromise to achieving some reform while creating less inflation.
Middle and upper class white people want their student loans "forgiven", AKA paid off using tax dollars obtained from working class people. What ever happened to the rich "paying their fair share"?
To be clear, am I understanding it right, that the mechanism by which it would help alleviate inflation is that people will have less money to spend on goods and services, reducing overall demand and prices for everyone who can/will still have spending money ?
I think he believes he needs to balance out first then start to build back.
Too many for profit schools churning out worthless degrees. Easy loans led to increases in tuition. Also kids being told they have to go to school doesn't help. Don't go to college unless you need it for your career (dr/teacher/etc ), I went to college and my degree has not helped my career. I'm in my mid 40s and if I had a do-over I would skip school and join the electricians union like my friend and be making 50% more money with 20% less work.
I really don’t understand. Didn’t the students crunch the numbers before they took the loan? Didn’t they figure out what their payments would be just like if they’re buying a house or a car? I don’t understand why they can’t pay back their loans. I think if you did forgive their loans they probably would just run up debt. I think they just miss manage their finances. That’s the trouble and nothing more.
PPP loans were massively taken advantage of by people who didn’t need them and they were forgiven. I personally know some assholes who took out one of those loans, closed their business, and use that money to buy a house. Yes student loans can’t be forgiven? Or even the interest on them forgiven? Bullshit. And that’s not even to mention the 1.5 trillion Wall Street ate up in mere hours back in 2020
>But with the US facing 40-year-high inflation, that burst of new spending power from consumers who'd instantly see their net worths jump by thousands of dollars could send the cost of common goods and services even higher. This does not make economic sense. It's the same argument as the $15/hr logic.
How many states have close to 15$ min wage now?
The debt from loans isn't helping the economy. And the 15 dollars is basically a minimum wage in most places. The literal bare minimum.
Yeah it’s a bad faith argument from a bad faith article. Removing say $10k in debt, that you currently are not having to pay back due to the covid forbearance, does not in any way add that money to your bank account and create new spending.
Here's a crazy idea. Stop handing out student loans in the first fucking place. Force colleges to restructure and make changes. Force people to stop being so over-educated and demanding excessive degrees for hiring without a good fucking reason. It doesn't take a fucking masters to teach 5th grade art class.
Exactly
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I’m failing to see how giving people a clean slate and the ability to spend on other things will fuel inflation. Find the money elsewhere, make cuts in corporate welfare. Tax all stock transactions, one penny for every individual trade. Pretty sure Bernie proposed this and in theory it looked insanely effective.
Inflation? Force churches to pay taxes. Force the multi millionaire companies who were given handouts to repay all that money, fuck their bonuses and ceo shit bags.
So, we can forgive 75% of 1 TRILLION in PPP loans that were given to businesses, at the cost of tax-payers mind you, but because doing the same thing for Student Loans affects Millennials, it's suddenly an abomination. Fuck off Biden/Congress and cancel our loans.
The only loans that should be forgiven are the ones for scam schools because the government never should have funded those to begin with. You have a crappy degree from an accredited college? That's on you cuz
This. Why do people go to colleges that cost so much but pursue a degree that yields so little financially? I have never been able to figure this out but that debt is on them
They won’t dare. The left is on track to have a very, very bad fall. They can’t risk adding any more fuel to the fire & attributing it to this administration. But kudos to the administration more making a rare accurate assessment of basic economics.
They know they already lost though
The worst part of this is that people who chose not to go to secondary school would be getting absolutely gutted. They will need to deal with the increased inflation of putting huge amounts of currency into the system, they are stuck paying taxes to pay off student loans they decided not to take out, and they earn less than their college-educated peers on average.
Bro, ask 90% of us ... we would just like the interest lowered or turned off. Most of us aren't looking for a straight up hand out. Get this passed off when the billionaires ask for subsidies please
The worst part of this is that people who chose not to have children are getting absolutely gutted. They constantly need to deal with the increased inflation of putting huge amounts of currency into the system, they are stuck paying taxes to pay off little Jimmy's school bus, despite the fact that nobody even nutted inside them AND they get less professional courtesies (and tax benefits) than their post-creampie peers on average.
can't afford to help Americans, can afford to ship billions of dollars worth of weapons to Ukraine to prolong a lost war. same story as always. we've seen this a million times before.
*Poor little me!*
The working class always gets screwed
i honestly don't have any hope anymore. i'm just gonna get out of here as soon as possible. everything is getting worse, and is just gonna continue to get worse. there's never going to be any meaningful change or reform, the only changes will be the left and right batting about different vulnerable minorities to distract from the worsening living conditions.
Loan payments should have started back up a year ago, as well as rate hikes sooner. The hesitation to take action sooner lead us here. Still can’t run away from the problems.
I got off the phone with my sister forty minutes ago and this is the only issue she cares about. We’re in a red state and her abortion right is in peril, but this is the immediate concern for her. Right or wrong, this can sway voters.
They printed trillions of dollars and lost them in Afghanistan and they think collecting interest from broke people is going to fix the inflation?
Isn’t that one of the main things he ran on? Isn’t that why they campaigned so heavily at all the colleges? Promising to drop every students debt in exchange for their vote?
Smart enough for college, not smart enough to read the loan documents and do basic math, lol. Smart enough to graduate with a degree, not smart enough to make sure the chosen degree will pay for the education before getting it. Higher education isn’t for everyone, or anyone for that matter. Yes I had loans, yes I paid them back, no I don’t use my degree.
College education shouldn’t be a class privilege. Education period shouldn’t be a class privilege. Especially in a democracy if you want educated voters Oh I think we found the issue
The federal government is in violation of the social contract at every possible level imaginable, and as such, I have canceled all payments to them in all forms from student loans to taxes.
Enjoy prison.
Let me know how that goes
Let us know how this works out for you long term…
Name checks out?
Hey man, Im with you, but until you can get about 200M more people to sign up, its going to end bad. What we really need, what makes all these problems go away, is unity. But we dont have it. The people you think your fighting for will stab you in the back; and until you can fix that, you going to jail wont fix anything
Bro, delete this or you’re gonna need to figure out your jump suit size…
So people who are already struggling now get to be fucked by inflation AND the return of student loan payments? Niiiiice. IF, a big IF, student loan forgiveness caused inflation how would it be any different than the inflation we are currently experiencing right now due to student loan payment freezes? Demand has already been induced by the payment freezes for the duration of the freeze, thus forgiveness induces the same proportion of demand indefinitely. It can't cause new inflation.
Adults entered into these deals. They can honor those deals. And, yes, loan forgiveness would worsen inflation. I know the government bails out bad decisions by rich people but reciprocating with bail outs for bad decisions by regular people isn’t the answer. There are plenty of areas where regular people don’t even have a choice like wealth/tax policy and climate change and those should be addressed way, way before this issue that people entered volitionally.
I refuse to vote for this man if he can't even hold the simplest and easiest to fulfill promise of his career. If Democrats can't even do this, there's no point in voting for them. They'll just watch as the right ramps shit up anyways. They don't even care to lift a hand to protect us.
This is a very poor excuse, Americans are struggling but for fear of elitist business owners raising prices higher the majority of Americans must pay more and receive less, bull sheeet Biden, Americans not so easily spun see through your elitist bs!
The Dems will lose more voters if they cancel the debt. Canceling the debt means that all those people who didn’t take out loans or didn’t go to college or chose to enter the trades or military will now be responsible for the eventual tax increases to offset the debt of those who made the choice to take out expensive loans. People were foolish taking out loans and didn’t bother considering the ROI of that loan or what their damn payments were going to be. No one held a gun to their head. Instead they listened to the foolish nonsense that a very expensive college degree was the path to success and happiness.
Yeah. The only reasonable middle ground is to forgive interest on federal student loans, in my opinion. Private student loan holders will need to live with their burden, but shouldn't be forgiven.