The Self-Serving Policy Proposal Prize

We need a prize for the most self-serving proposal. A lawyer with large student loans has assembled a large group of friends on Facebook with the proposal “Cancel Student Debt to Stimulate the Economy.”

Ignoring the fact that this might reduce rather than increase the fiscal stimulus, it would reduce the burden on people who, if they attended public universities, have already received a large subsidy from the average taxpayer in the form of tuition far below the average cost of their education.

Moreover, given the high rate of return to human capital accumulated in the form of college education, the Facebook friends are soon likely to be at least in the upper quartile of the income distribution. This is a proposal that is one of the most regressive I have ever seen.


And yet, even with this tax subsidy, the average college student graduates with 27,600 of loan-created debt, and many people from lower class backgrounds cannot even consider going to college due to cost.

Not everyone can bootstraps through college with 3 jobs and perform well academically.


I like my student debt ... keeps me on the ground and makes me appreciate the value of education.

Cancelling student debt will just degrade the value of a university education. Make them work for it!

Shaun Dakin

All policy proposals are, by definition, self-serving. That you picked this one doesn't mean that this is, in fact, self-serviing.

The impact of this proposal is much larger, than say, the continuing farm subsidies that impact massive agro-businesses.

And yet, these farm subsidies are presented as "saving the American family farm" when in reality the majority of payments go to massive corporations.


True. If anything we should be taxing the socks off those students, because they have the temerity to aspire towards the upper quartile of the income distribution.

Egalitarianism over all!


Not to mention that such a program might have the knock-on effect of reducing the size of the pool of loanable funds to prospective students, which would reduce the aggregate flow of revenue to colleges, which might reduce or eliminate salaries for economics professors at the U of Texas. ;)

Just a thought.


I proposeT. Boone Pickens' attempt to get the state of California to subsidize cars made to use his fuel but nobody else's and to get the state to install infrastructure for his delivery system.


Why not cancel the debt? I have to buy stuff to survive anyhow. It would stimulate the economy. Actually bailing out the banks is the same exact thing as canceling student debt, but the banks got "canceled bank debt." They aren't students. That's the only difference. What a joke this whole thing is. Give me, give me, give me! No longer can we work hard for a living and be able to afford the reality of it. I have a college education, 2 degrees and make good money. Buying a house is expensive. Pay off my house. I'll stimulate the economy with the $ I don't spend on my mortgage.


You are right on sir. I always get a chuckle when I see students or young people wailing of the cost of school and about how tricky student debt is to manage. Relatvie to the value you receive these are fairly small. Rather than growing up and realizing we have to be serious about fiscal policy in this country, some young people with a college education choose to pursue politics in the same way our parents and grandparents did. However, We unlike our parents and grandparents do not have the luxury of a system that will remain solvent in spite of our fiscal games until after we are dead. The joke will be on us if we give ourselves free passes like our parents and grandparents chose to by not reforming Social Security and Medicare.


People really need to think carefully about the costs of their college before deciding where to go. I went to public universities for both undergraduate and graduate school, not because these were my top choices, but because they made the most fiscal sense. I knew I'd never get a high paying job after graduation, and I didn't want to be mired in debt my whole life. I made it through with about $15K in loans.

I often see newspaper articles that do a financial makeover for people heavily in debt. In many cases, they have high student loan debt. The article NEVER suggests to readers that they could avoid such a debt by going to a public university. Of course, this piece of information is irrelevant to the person(s) getting the makeover, but if the point is to help people learn to manage their money, how about teaching them how to avoid getting into that situation in the first place?

C. Larity

That's a brilliant idea! Nothing makes a lender want to give out more money than seeing a 100% default rate on a loan product.

This man will be in Congress in a few years.


European universities are essentially free to students (of course, they pay taxes later to make up the difference). Living standards in Europe are in general higher than here - correlation? Here at home, the employed are paying taxes. Unemployment currently among those with university degrees is around 3.5%. Among those with high school only, around 12.5%. Self-serving? Perhaps on the micro scale. The invisible hand? Perhaps on the macro scale. In any case, I'd submit the benefits of having a large percentage of university educated people outweighs the cost, even if we paid the full bill from tax money.


The obvious issue is --
Isn't this unfair to those students who put the work in to:
-work part-time jobs, co-op work terms, and summer internships
-go to cheaper universities
-manage their non-tuition expenses

and etcetera? It rewards those who mismanaged and accumulated vast sums of debt -- those who bought cars, ate expensive food, lived in nice apartments -- and hurts those who did manage well, who made those sacrifices of time and money. And I'm certainly not one of those who did the best managing -- I'm just pointing this out.

* Of course, those who had their education and other expenses subsidized by their parents will always have a HUGE advantage, but I'm just saying...


As a teacher I could not disagree more, I am not and probably will never be in the upper quartile of the income distribution.
Cancelling all or part of my student loans would free up several hundred dollars a month that I would either invest of spend, just like the millions of others with student loans would do.
Would this solve the problems in the economy? Not likely, but it would help, the government has done precious little for anyone but large banks and corporations.


* Of course, those who had their education and other expenses subsidized by their parents will always have a HUGE advantage, but I'm just saying...

Yeah, OK. My folks worked hard and planned well and paid for three kids to go to college. We didn't apply for need based scholarships, government grants (drain public dollars), etc... because they had saved up what we would need. I feel so guilty and underappreciate the education they so blithely gave me that my husband and I are working our tails off (using our degrees) to save for our kids to go to college. I just hope I can give them the enormous, life-changing gift my parents gave me.


I could not disagree more... Many people in the their mid-twenties and thirties are saddled with debt that keeps them from participating fully in the economy. In my opinion, wiping out significant amounts of student would be the equivalent of reducing payroll taxes. The extra income would allow people to buy cars, houses and other goods.

The way education is paid for needs to be restructured. Debt should be significantly reduced and a new funding mechanism should be put in place. Perhaps, we should have a system where people opt in to a system where they agree to give up a % of their income for say twenty years in exchange for their education. This would allow people who think they are better off with loans to choose loans. If you have no job, you don't pay until you do.

There is a real long-term issue with education being too expensive. As it stands now, if I save $100/month (I am) since birth for my son, it will pay for about two years of education at a mid-level state school. That is not healthy for our economy. We need a highly skilled work force for our economy to continue to grow and be competitive. Furthermore, I firmly believe that the cost of education has been driven by too much easy money, much like the housing market.


Bobby G

If you can't afford college and/or can't pay off your loans don't go to college?

I'm sorry, I'm a recent graduate and am blessed to have had my parents pay for my school completely. That said, I don't feel guilty about that at all: I will work hard throughout my life to pay for my children to attend college as well, and hopefully I raise them right.

Even so, I have many friends from school who weren't as fortunate as me and who relied on student loans to pay tuition. They didn't complain about it, though. That's because they understand that the value of their education far exceeds the thousands they must repay later. My dad needed loans and scholarships to pay for school, and then ended up paying for my school. That's how it works, it's called an investment, and investments can be very profitable.

Cancelling any sort of debt will just make it so that such debt will not be able to be accrued later... either the interest rate will be extremely high (in case there is another cancellation), or there will be no loans offered at all.

a_c's comment (#4) is the perfect example of someone who does not understand the financial elements at play. Students are VERY lightly taxed as it is, with many tax credits and refunds given to people paying for school (I would know, I just got a huge tax refund for my last year of being a student). Rejecting a proposal to eliminate debt is not an automatic hike in taxation.

Sounds like the people in this Facebook group are just feeding into the problem: a hotfix for today's taxpayers while screwing over tomorrow's. Students today are not the ONLY inheritors of our economy. My children will be, and so will my grandchildren. Student loans are some of the most forgiving in our country... if you can't uphold your responsibility to them, then you should not have taken them in the first place.



Obvious fact:
The money you spend on your mortgage will also stimulate the economy.



Is this prize for 'Most Self Serving Policy Proposal' the same as 'We don't want to hear policy proposals from people actually dealing with policy problems on a day to day basis'?

And, if so, does the the 'Prize for most self-serving policy proposal' actually qualify for itself?



How about "Social Security". Ignoring the trust fund illusion, why should working people subsidize the lifestyles of retired people who no longer contribute to society?

Or are only inane, meaningless proposals eligible for this award?


"Self-Serving Policy Proposal Prize"? Hmm. I know, how about all the people without health insurance who want government-sponsored health insurance? Oh, even better, how about all the military personnel who want better veterans benefits? Of course, we mustn't dream about awarding the prize to academics who prefer tenure to merit-based employment policies. That's not self-serving at all.