Forgive Student Loans? Worst Idea Ever.

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There’s an argument going around right now that forgiving the country’s student loan debt would have a stimulative effect on the economy. This online petition by Signon.org, an offshoot of Moveon.org, has nearly 300,000 signatures. Its basic argument is this:

Forgiving the student loan debt of all Americans will have an immediate stimulative effect on our economy. With the stroke of the President’s pen, millions of Americans would suddenly have hundreds, or in some cases, thousands of extra dollars in their pockets each and every month with which to spend on ailing sectors of the economy. As consumer spending increases, businesses will begin to hire, jobs will be created and a new era of innovation, entrepreneurship and prosperity will be ushered in for all.

The idea is also being touted by Michigan Democratic Congressman, Rep. Hansen Clarke:

So we asked Freakonomics contributor Justin Wolfers what he thought of the idea. His response is as follows:

Let’s look at this through five separate lenses:

  1. Distribution: If we are going to give money away, why on earth would we give it to college grads? This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades.  The group who has been hurt over the past few decades is high school dropouts.
  2. Macroeconomics: This is the worst macro policy I’ve ever heard of. If you want stimulus, you get more bang-for-your-buck if you give extra dollars to folks who are most likely to spend each dollar. Imagine what would happen if you forgave $50,000 in debt. How much of that would get spent in the next month or year? Probably just a couple of grand (if that). Much of it would go into the bank. But give $1,000 to each of 50 poor people, and nearly all of it will get spent, yielding a larger stimulus. Moreover, it’s not likely that college grads are the ones who are liquidity-constrained. Most of ‘em could spend more if they wanted to; after all, they are the folks who could get a credit card or a car loan fairly easily. It’s the hand-to-mouth consumers—those who can’t get easy access to credit—who are most likely to raise their spending if they get the extra dollars.
  3. Education Policy: Perhaps folks think that forgiving educational loans will lead more people to get an education. No, it won’t. This is a proposal to forgive the debt of folks who already have an education. Want to increase access to education? Make loans more widely available, or subsidize those who are yet to choose whether to go to school. But this proposal is just a lump-sum transfer that won’t increase education attainment. So why transfer to these folks?
  4. Political Economy: This is a bunch of kids who don’t want to pay their loans back. And worse: Do this once, and what will happen in the next recession? More lobbying for free money, rather than doing something socially constructive.  Moreover, if these guys succeed, others will try, too. And we’ll just get more spending in the least socially productive part of our economy—the lobbying industry.
  5. Politics: Notice the political rhetoric?  Give free money to us, rather than “corporations, millionaires and billionaires.”  Opportunity cost is one of the key principles of economics. And that principle says to compare your choice with the next best alternative.  Instead, they’re comparing it with the worst alternative.  So my question for the proponents: Why give money to college grads rather than the 15% of the population in poverty?

Conclusion: Worst. Idea. Ever.

And I bet that the proponents can’t find a single economist to support this idiotic idea.

[HT: Diana Huynh]

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COMMENTS: 487


  1. Caleb b says:

    Between my wife and I, we have $200k in loans. Yes, we earn a higher income than my friends with just a HS diploma, but after paying $1600 a month in loan repayment, we’re about the same. Bc of the debt, we’re not planning on buying a house or having kids anytime soon. Obviously I want the loans wiped out, but I think Wolfers might be underestimating how much of the money would get spent if this were to pass.

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    • Richard says:

      So you 200K in loans and you pay 1.6K per month. This is supposed to be economic stimulus, so we’re really only concerned about the short term effect. Let’s say 24 months. That comes out to 38.4K. That means the government has spent $5.20 for every extra dollar you MAY spend over the next 24 months. There are better ways for the government to spend money.

      Well-loved. Like or Dislike: Thumb up 188 Thumb down 80
      • caleb b says:

        Oh, I agree. There are certainly better things to spend it on.

        My point is that most graduates have taken on a lot of debt. And just like the housing market is dragging down spending, so are student loans.

        I mention this later, but for-profit colleges have enrollment of more than 600,000. 90% of those students are taking out the max in federal loans for a worthless degree. This is not sustainable.

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      • Nate says:

        But people have to be held accountable for the debts they owe. If degrees are so worthless, why drop $200k on one? It’s the consumer’s own fault! Constant freebies and wealth transfers from the government is what’s unsustainable in the long run.

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      • caleb b says:

        My wife racked up $150k on a law degree (state school with residency)
        I have $50k in an undergrad in business (state school with non-resident)
        We will pay it back, eventually.

        Wolfers said that student loan people wouldn’t spend much of the money. I think he underestimates how much student loans are out there. I also think he doesn’t understand the massive influx of for-profit college students. This is a huge bubble that will burst.

        Society will have a LOT more poor people because of these for-profit colleges and the “let them eat cake” attitude is not going to fly forever.

        Well-loved. Like or Dislike: Thumb up 132 Thumb down 37
      • cwebb619 says:

        I think this economist misses the point, there is a whole generation of people (in their late 20′s and early 30′s) with established careers and families trying to pay off student loans they received in their teens and early 20′s. That is the population that will benefit the most. I would take the extra money from our loan payments and spend it immediately (or save it). Tuition is extremely high and college grads have this huge debt hanging over their heads. It will take decades (if ever) to pay off my wife and I student loans, one grueling month at a time.

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      • Nick says:

        Apparently not. The big banks got bailed out. Educated youth is more valuable than greedy corporations.

        Well-loved. Like or Dislike: Thumb up 132 Thumb down 43
      • Jon says:

        Schools inflate the cost of the degree sometimes by outright lying about employment outcomes. Some law schools have recently been sued for this practice of publishing deceptive employment statistics- 15 more will soon have lawsuits filed against them.

        The higher education industry has the entire weight of the post-WWII American mythos that more education is always the answer, no matter the cost. It is also extremely easy to get college loans since they are backed by the federal government. Obama and the Democrats are more to blame for this since they are always shouting the “more education is the answer” mantra without demanding that administrators control cost.

        The whole thing is arguably a fraud on the taxpayers.

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      • jfbow says:

        Hidden due to low comment rating. Click here to see.

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      • goober says:

        yeah, except this would have the opposite effect. Forgive people loans TO the banks. Denying banks of billions….(trillions?)

        Well-loved. Like or Dislike: Thumb up 21 Thumb down 16
      • B.E. says:

        It doesn’t work that way. The government can’t deny banks the money, the loan forgiveness would simply mean the government would pay back the loans instead of the students. It’s actually somewhat beneficial for the banks, since they’d be guaranteed 100% repayment, instead of taking the risk that some students might default. Also, it means passing on the costs of the student loans from the students to everyone else.

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      • heavy says:

        Better things to spend it on, like what? like the several trillion dollars in TARP funds spent to bail out banks and big business that took all that money and turned it directly into million dollar bonuses for all their highest level execs? Or perhaps you are referring to the two or three different wars we are involved in that have seen the deaths of hundreds of thousands of innocent civilians? Maybe your talking about the war on drugs and how mexican cartels are misleading federal agents to take out their competition? Maybe you are referring to the CIA now using their resources inside our own nation? There are at least 274 American servicemen who died in the middle east who’s bodies now inhabit the lovely and serene landfills of Virginia. Glad to see the government cut corners to save aren’t you? Education as an loss is better than almost anything else the government can waste money on, other than universal health care, which should be an embarrassment to our nation, not it’s pride and joy. Next time you see a starving child in your community, ask them how they are going to survive without any type of education.

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    • wes says:

      The difference is, once your loans are paid off, your net income will go up 1600 a month, your HS diploma friend’s will not. Also, I bet your job security is slightly better than his.

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      • Kyle R says:

        Sure 20-30 years from now, I’ll have an extra $1600 a month. OR if I want to make payments of about 20% of my paycheck (assuming I make $200K+/year), I can pay everything back in only 10 years! Woot!

        Thumb up 7 Thumb down 4
      • Jai says:

        WHY NOT, isnt education is an investment? i dont think that someone with a diploma and a doctor degree should just make the same?
        ORR
        Should I tell future kids not to go to college because you are better off staying home and eating off of others tax cuts…
        Is someone have to argue ..how come someone who barely have high school education have federal jobs and they are making more than an average american(DEF no students loans with BETTER BENEFITS and RETIREMENT).. one perfect example is a post office employee, how does a standardized test qualifies you to make as just someone who spent half of their lives in school AND now they are stuck in paying off their debt. LIVING probably miserable life.
        I am not saying to wipe out students loans, I think the idea should help students to pay them off quicker and affordable by lowering certain percentage of what they owe and by lowering interest rates.
        People would be surprised that someone whose out of college for 20 + years and still paying student loans. How is this person going to help their children to pay their college tuition.

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  2. Mike says:

    Usually I like Justin Wolfers, but his comments reveal that he is horribly uninformed.

    1) It is faulty to assume that everyone bearing student loans is a graduate. Many take on loans and still do not graduate.

    2) There is a very large number of students who are not employed in their field of study because no jobs are available. They are working the same jobs as the “poor”, but in addition to their living expenses, they are paying an extra several hundred dollars per month in loan repayments.

    3) Today’s young bear the burden of supporting the old. They are currently expected to pay for someone else’s retirement and their own education costs (which has increased nearly 5-fold over the past few decades) before they can put a cent toward purchasing a house or saving for their own retirement. I have a feeling that we will continue to see a depressed housing market largely because student loans are killing the kind of income stream necessary to make housing affordable.

    The best argument against it is that removing future obligations to pay does little to increase short-term spending. As we saw with the last round of stimulus, it’s only effective if it takes effect quickly.

    Well-loved. Like or Dislike: Thumb up 357 Thumb down 112
    • Cory says:

      Mike – your counterargument seems to be summed up as “yes, but there are a few people who don’t fit this stereotype.” Well, of course not everyone is the same. But if you’re going to apply a rule to everyone – in this case, all former students get their debt forgiven – then you need to look at the average student and the average situation. That’s why Justin’s comments are spot-on and all of the rebuttals focus on individual situations and individual stories.

      Are there poor former-students? Sure. But there are also who racked up huge loans to pay for spring break, classes they didn’t attend, fifth (and sixth) years that could have been avoided, and luxuries that weren’t needed. If you’re going to have a blanket rule of foregiveness, you basically just stuck the taxpayer with the tab for someone’s vacations, iPods, and weekend parties to help someone else who may be the victim of circumstances.

      I agree that our generation is screwed in that we have to pay for 3 generations – the baby boomers (Social Security), ourselves (401(k)s), and our children (529s). But the answer isn’t to shift student loan expenses to the government – which will only charge our generation more in taxes to defray the cost of this transfer.

      Well-loved. Like or Dislike: Thumb up 121 Thumb down 80
      • Mike says:

        My counter-argument is that the original analysis didn’t demonstrate a solid understanding of the student loan landscape, which makes the analysis not very useful. I’m not necessarily for student loan forgiveness, but I think the arguments against it weren’t very good.

        As for paying for spring break, iPods, etc., we pay for other people’s crap all the time. Economic “stimulus” policies seems to favor blanket subsidies to the middle/upper-middle class. Buying a Prius? Have $7,500. Remember cash for clunkers? Cash to those *upgrading* their cars (i.e., already had one). How about the housing “stimulus”? We gave cash to people who were already committed to buying a house.

        And if one is concerned that college students spent too much money on wasteful things, why would giving them more cash suddenly raise the concern that they are going to save it? If you agree that they’re willing to spend lots of money they don’t have, I’d think you’d agree that they’d be willing to spend lots of money they *do* have.

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      • MBD says:

        So, your argument comes down to: we’ve had bad policy before, we should do it again?

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      • vwv says:

        The first Boomers began voting in 1964. Since then they have consistently granted themselves increasingly lavish benefits while at the same time cutting their own taxes. We will be paying for it for a long time.

        What they did was wrong.

        Proposing that we forgive student loan debt strikes me as Baby Boomerish. We are better than that.

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      • T says:

        Look, this guy’s assumptions are completely flawed. Many, if not most, of those who are asking for student loan forgiveness are people like me who have a law degree (trust me there are many lawyers in this movement, including its founder) and MBAs – I have both degrees – both absolutely useless degrees. The legal market has been flooded for ages. I have over $160,000 in student loans, am in my mid 40′s (and no, again, the author’s assumption is wrong – this movement is not just about recent grads or people in their 20′s and 30′s), and will NEVER be able to pay back my student loans in my lifetime on what I make. My student loans will either get discharged when I die or discharged at the end of the 20 year Income Based Payment Plan I’m on (well, I would be on except I had to defer). My condo is now worth 30% of what I paid for it (oh wait, it’s not really my condo anymore because I had to file bankruptcy and surrendered it in bankruptcy)! I am quite simply not going to be able to pay back these student loans in my life time – now, if bankruptcy protection had not been eliminated for student loans (it was available when I took out the loans!), then I would have had those loans discharged in BK. So, basically, we either want BK protection restored to student loans or we want the debt forgiven. I think the fairer thing would be to restore BK protection to student loans and allow those of us who have already filed to amend our filings to add these loans to our discharge. The point, however is, these loans are never going to be repaid anyway – we just don’t make enough to pay them back, never have, and unfortunately, looks (for a long time now) like we will never be able to pay them back – so better to face the facts now. I know of many people who are so fed up with this that they are pretty much planning on leaving the country and never coming back.

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    • Tina says:

      I totally agree with you–I am a college graduate and a “poor person” I am more than willing to work full time, just can’t find a job. I have been working two part time jobs but I am still not making very much. NO health care, NO kids, NO car payment, NO mortgage. My disabled mother was foreclosed on and is living in my living room. I support her in addition to myself. I am not some whiny college graduate that wants my loans forgiven because I want to have my cake and eat it too, I just want the opportunity to MOVE ON WITH MY LIFE and so far that has not been possible. The truth is, if the banks have been bailed out and that didn’t improve anyone’s life, why not forgive a % of loans to those who qualify and at least make it a little easier on a few poor and struggling college grads?

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      • Vince says:

        If you are struggling to make your student loan payments, I encourage you to research Income Based Repayment plan. Please visit http://www.ibrinfo.org for more information.

        IBR was setup to assist low-income college graduates. Student Loan borrowers must qualify by meeting restrictive income requirements and IBR only covers federal student loans, but it can greatly reduce your monthly student loan payments. Added benefits include the non-capitalization of student loan interest and a maximum of a 25-year repayment period, which allows for the discharge of the remaining unpaid principal & interest after 300 consecutive payments.

        It is not loan forgiveness, but it provides an opportunity for many low-income college graduates to lessen their student loan burden.

        I hope this helps and good luck.

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    • Justina says:

      Absulutely, I could not have stated this better. THANK YOU.
      Not impressed with Wolfers at this point.

      Well-loved. Like or Dislike: Thumb up 9 Thumb down 4
  3. lns says:

    Would a more palatable approach be a program of more targetted loan forgiveness for those entering various public service fields?

    A handful of such programs currently exist, such as forgiving a certain level of loan repayment if a physician chooses to work in a primary care field and/or in a rural area for a specified number of years. While on a dollar for dollar comparison channeling financial relief to the poorest strata in society makes both good social and financial sense, indebtedness does shift the economic realities of many highly trained professionals (MDs, PhDs, JDs) etc to a narrower range of options: that is, greater need to enter arenas in the private sector which may be highly lucrative, but do not provide the social benefit of other more poorly-paying, socially minded positions.

    Even a modicum of loan forgiveness could serve a strong financial incentive to many threshold cases where the prospect of 6-figures of debt has forced a shift in professional trajectory. Would such a more nuanced initiative lead to more support for such a political movement?

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    • Peter says:

      While I sympathize with your argument you sound a bit out of touch. You seem to be largely overestimating the liquidity of those saddled with loan debt. In my middle and upper-middle class suburb we have college graduates living with their parents and unskilled labor workers (union backed of course) in their own homes with families, and with more liquidity. Loan borrowers won’t spend the money? I’m not so sure, they have other debt they need to pay, apartments they want to move in to and businesses they want to start (since no one will hire them).

      One last point – many college grads are part of the 15% of the population in poverty. Or maybe they’re not taken into account, but a college grad earning 10-20k a year or less seems to count, to me.

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      • James says:

        > One last point – many college grads are part of the 15% of the population in poverty.

        And if money is instead spent on the 15% of the population in poverty, such college grads would of course not be excluded from such spending. Of course, money would also go to people in poverty without the benefit of the college education. Or, instead of spending $50K helping people in poverty without college debt, we could help forgive my student loans. I make $150K/year. Sounds like a plan.

        The reason to look at group statistics rather than anecdotes about the worst-off members of the group is that there’s nothing stopping you from fashioning a less arbitrary program then blanket student loan forgiveness.

        Faced with a choice where the only options are blanket loan forgiveness or tax cuts for billionaires, maybe this would be a good idea. However, we aren’t (are any high-income tax cuts even being seriously discussed at this time?), and this is a terrible, terrible idea.

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      • pawnman says:

        > One last point – many college grads are part of the 15% of the population in poverty.

        I wouldn’t say many. The unemployment rate for people with a 4-year degree is about 4%, or less than half the national average.

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      • Joshua Eaton says:

        The U3 unemployment rate is 4.2%, but it doesn’t count discouraged workers and the underemployed. So, the college graduate with $40K in debt who’s working a part-time or minimum-wage job because she cannot find anything better isn’t counted in the official unemployment numbers. You’d need to look at the U6 for people with a four-year degree to get an accurate number. (And, even then, you’d need to look at the U6 for those who graduated in, say, the last 5 years, since the ROI of a college degree has declines dramatically in recent years and those who graduated before this decline will make the U6 look artificially low.)

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    • pawnman says:

      Based on the analysis, a more palatable program would be mailing a $1,000 check to people living paycheck to paycheck.

      Thumb up 6 Thumb down 7
  4. tucker says:

    A better idea would probably be providing temporary subsidies to prevent state universities from raising their tuitions this year. Well that or letting the government hire more people into Americorps/peace corps/public service that includes like a 10-20% loan writedown per year of service.

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    • Hayley says:

      Tucker,as a recent grad and a current Americorps member, Americorps definitely does not need more money. The money for education they give you at the end of one year is almost as much as you make in the same year (aka less than 15k total for the whole year including the education award)…so really requiring a college degree for most of the Americorps positions (VISTA, anyway), really only hurts because we are making LESS than the poverty level but REQUIRED to have a college degree.
      Anyway, my point is I don’t think that’s where the government should put any money they may use to help the situation.

      Well-loved. Like or Dislike: Thumb up 8 Thumb down 1
      • Nina says:

        Hayley that’s only VISTA, and not totally accurate. I did NCCC and worked with many State/National folks. Degrees were not required. I also worked with VISTA a few years later and did not have a degree. NCCC folks also get something like $150 every two weeks, since room and board are paid for.

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  5. BL1Y says:

    A good compromise position would be to make all student loan payments tax deductible.

    If you rent an office to open up an accounting firm, you get to deduct the rent as a business expense. Why don’t you also get to deduct the money spent on your accounting degree?

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    • Trev says:

      I support this idea. It also follows the precedent than borrowing to invest will yield a tax deduction on the interest. If education is to be viewed as an investment (and it is) then this tax deduction on interest should apply to student loans.

      It promotes responsibility in repaying the loans and recognition that education is an investment that requires planning and cash flow management.

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      • Irena says:

        We should reevaluate our notion of education. In 2011 it became means to survive rather then a luxury, a right rather then a service. The same as health and healthcare services.
        I understand that it’s hard to brake that wall, but if you think that firefighters’ services once required special insurance, you’ll get the idea.
        It seems to me that our house is on fire now.

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    • Kyle says:

      You do get to deduct the money you spent on your accounting degree; education expenses are tax-deductable. Unfortunately you only get to deduct it the year you incur the expense, not years down the line.

      You also get to deduct the interest on your student loans. Are you suggesting that you should get to deduct the cost of your education twice just because you had to take out loans to pay for it? If they approve that program I’m going back to school tomorrow.

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      • caleb b says:

        “You also get to deduct the interest on your student loans. ”

        Not if you can’t itemize. Which you probably can’t without a mortgage…which you probably can’t get with all that student loan debt.

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      • JB says:

        And you can only deduct up to $2500 if your modified adjusted gross income (MAGI) is less than $75,000.

        Well-loved. Like or Dislike: Thumb up 23 Thumb down 1
      • Nate says:

        it doesn’t matter if you itemize or not, you can still deduct student loan interest.

        Well-loved. Like or Dislike: Thumb up 20 Thumb down 4
      • Nathan says:

        That’s not totally accurate. You get to deduct the interest on your student loans up to $2500/year. I pay (or would pay, if I weren’t relatively poor and therefore paying on an Income Based Repayment plan) $500 in interest on my federal student loans every month. That’s $6,000 per year in interest alone. I’d be with you, if we could deduct the entirety of my interest payments, but we can’t.

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      • Neil (SM) says:

        As you said, you currently get to deduct the interest. BL1Y was suggesting that we be allowed to deduct the principal as well. If you took out $40,000 in loans to pay for college, that would be another $40,000 in deductions.

        Thumb up 5 Thumb down 2
    • That Guy says:

      Spot on with this assessment.

      Kyle, while student loan interest can be deducted, there are pretty severe limits. One can only deduct student loan interest up to $2,500 a year (in practice, that is very little). Moreover, there is a phase-out depending on how much money one make.

      While I agree that student loan repayments should not be tax deductible, student loan interest should certainly be tax deductible, in full.

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  6. Bryan says:

    “How much of that would get spent in the next month or year? Probably just a couple of grand (if that). Much of it would go into the bank. But give $1,000 to each of 50 poor people, and nearly all of it will get spent, yielding a larger stimulus”

    I’m going to be incredibly stereotypical here, but if you give me (a college grad) a loan break I am going to finish remodeling my basement, fix our guest bedroom, possibly get a new car, and go on vacation. Oh, and buy a gas powered leaf blower! Then the rest goes to retirement accounts. I have no idea what the multiplier is here.

    The poor will buy groceries, clothes, and lottery tickets (there’s the stereotype). Then possibly be less inclined to look for a job having just been given a handout (also a stereotype). Is the multiplier going to be greater in this case?

    Do you have research links supporting your claims?

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    • Steve says:

      This brings up a good point. With all due respect to Bryan and the fact that it could help the economy, I don’t want my tax money to help him get a new car, basement, or vacation (and I am a college rad). A lot of college grads have expectations of a certain style of living that tax money shouldn’t subsidize.

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      • Bryan says:

        Agreed. I don’t think your taxes should finance my vacation. I just think the analysis in the original article is off.

        I took out student loans knowing the risks and payback options.

        If you’re looking for a stimulus this isn’t the “Worst idea ever” but I’m sure the economy needs something more concrete.

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      • Enter your name... says:

        So if I oppose this, Bryan will get more exercise raking the leaves, thus marginally reducing the risk of his health problems and therefore my share of the nation’s health care expenses, *and* I’ll get to keep the current level of quiet in the neighborhood.

        If I support this, yet another noisy gas-powered leaf-blower will take up residence in my neighborhood.

        Sorry, Bryan, but keeping you in debt seems to be in my best interest.

        Well-loved. Like or Dislike: Thumb up 30 Thumb down 7
      • Bryan says:

        I love it!

        But what if I spend the time saved blowing leaves teaching the neighborhood kids how to mulitply or researching carbon fuel alternatives?

        Thumb up 6 Thumb down 3
      • Kyle says:

        The kids always figure out how to multiply on their own, and we have enough of a teen pregnancy problem without 20 & 30 year olds running around teaching them how.

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  7. Jen says:

    Well, I’m not going to tell you you’re wrong, but I am going to tell you that I live “hand to mouth,” can’t get a credit card to save my life, and pay more than $550 a month to Sallie Mae ($400 of which is just monthly interest). Just because my parents were middle class when these loans were given 10 years ago doesn’t mean that we are middle class now.

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    • JG says:

      Or allow people to refinance at a current interest rate and reduce their payments similar to a mortgage. I went to B-school during the credit crunch and will pay 6.75% until my loan balance is zero.

      If I could refi at a lower rate a large portion of the savings would be spent elsewhere.

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  8. Tom Budd says:

    You’re not looking at the bigger picture. It’s not about giving out free money. It’s about stopping the abuse of student loans by lenders. It’s also not about giving money to college grads. It’s about providing help to those who have been struggling for years to pay back a loan hit by huge interest rates and fees. The abuse is vast and extreme with no protections in place for the student. This is what needs to change. It is exactly what happened with home mortgages. You should do a bit more research on the issue before you make the ignorant comments you made above.

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    • Ray says:

      The article was concerning the stimulative effect of forgiving student loans. Whether or not forgiving student loans would ‘stop the abuse of student loans by lenders’ is not a factor.

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    • This Guy says:

      You are making certain assumptions with your comment. There is no real discussion as to how the loan forgiveness would occur. Student loans are actually held by private corporations. The loans are backed by the government. There are a couple ways forgiveness could operate:

      1. The government could tell the loan holders that they must forgive all of the debt immediately. Of course, this is not a viable option, and almost certainly unconstitutional.

      2. The government pays off all of the student loans (with all of that money it doesn’t have).

      Only one of the options is viable. What’s the end result? The schools got paid. The loan originators/lenders got paid. The US Gov’t is on the hook for another trillion dollars. That action does nothing to stop lenders. Lenders getting paid 100% + interest and fees. That’s only going to encourage them!

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      • Neil (SM) says:

        Many student loans come from the federal direct student loan program — the money is lent directly by the US Dept of Education.

        However, I’m not sure what percentage of student loans that accounts for. I know my wife’s and my student loans were mainly private federally-backed loans like you stated. Only a small percentage of that was from Direct Loans. My guess is they only account for a small portion of overall loans as well.

        So perhaps those could be forgiven outright (it’s still a stupid idea, just thinking hypothetically along with you), but I doubt that would account for much.

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      • Enter your name... says:

        The subsidized federal loans aren’t the “abusive” student loans. The problem loans are the ones issued by private groups to students too inexperienced to read the paperwork and understand what they were getting into, and, frequently, too immature to make good choices about their spending. The terms of these loans are not really very different from credit cards for people with poor credit histories.

        I can’t tell you how many people I’ve talked to with these loans who admitted later that they chose these high-rate student loans to finance lifestyle choices: a dorm room on campus rather than living for free at home, a weekly trip to a pricey pizza parlor, new clothes, the spring break trip with the rich kids, a fancy cell phone, etc. Somehow, calling it a “student loan” rather than “idiotic consumer debt so I can keep up with the Joneses” made it all seem reasonable. The “student debt” they’re paying off really has nothing to do with tuition and books. It’s all about living up to the Hollywood idea of the college student’s lifestyle.

        The solution for these loans is to ban private student loans entirely. However, doing that would mean telling a large number of students that they have to drop out of school (or at least transfer to a much, much cheaper school). It would be an incredibly unpopular decision.

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      • Vicki says:

        My combined undergrad/graduate $50,000 in student loan debt (paid-off now after ten years of slavery) was for tuition, books, lab fees, all sorts of fees, etc…. Yes, I didn’t live at home with my parents for free, but I did go to an out-of-state school (in New Mexico) where out of state tuition was less than half the in-state tuition (in Illinois) would have been if I had stayed in the same state as my parents.

        Also, living with your parents isn’t always the best option, let alone a good option. It wasn’t an option in my family—I was breaking the rules of the family by going to college at all! For many working class teenagers, 16 means that when you’re not at school, you’re working a job and turning over your paycheck to help support the family. Staying in such a situation is detrimental to studies…and if you have 6 younger brothers and sisters at home like I did, studying is impossible. You’re either asleep, working for a paycheck, or working at home.

        I did not go on Spring Break ever, I couldn’t afford it. The only people I went to college with who ever could afford to go on Spring Break were from upper middle class families and didn’t get student loans—their parents paid for everything; including spring break and all the nice things that you listed. I worked at that fancy pizza parlor for minimum wage to pay for rent, food, clothing, etc…without those student loans I, and most of my peers, would never have been able to go to college.

        I don’t think a dorm room (a place to live) and the occasional slice of pizza is keeping up with the Jones’s. I think you need to take a step back and reconsider how you expect your fellow man to live on this earth; especially if you think living in a dorm or eating pizza as luxuries. The Hollywood idea of the college student’s lifestyle is not that—it’s much more costly, a lot nicer, and is dependent upon rich parents who provide everything for you. What you can get in student loans will never pay for much beyond your tuition, fees, labs, books, etc…there were even some semesters where my loans didn’t cover all the lab fees.

        Where I do agree with you is in the banning of private student loans entirely. They came about after I was no longer a student (Mine were a combination of Perkins and Stafford loans and did not come from banks, but instead were issued through the New Educational Assistance Foundation as I was taking these loans out in New Mexico). They were definitely part of a government program, and did not mimic credit cards in their terms.

        I believe that the government should view education as an investment in the future of society. When the baby boomers graduated high school and went to University, there was very little cost for the student and they didn’t need to take on herculean amounts of debt, just to earn a degree so that they qualify for work that will let them be middle class. Ever since that generation phased out of University, government at the Federal and State level have been investing less and less in education, switching more of the costs each year to the students–which is why the prices keep going up by catastrophic percentages. Put the focus back on investing for our future, and if loans are needed, make sure students can get federal loans, like the ones I was able to get.

        In the meantime, we as a society have failed the recent generations of students, leaving them with huge amounts of debt. The only just way to address this is to forgive the loans, and work to ensure that no other students ever get put into this sort of position again.

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      • Jamie says:

        “Unconstitutional.” It’s a word spoken with such deference by the conservative crusaders, as if we didn’t have provisions wherein a majority of the people can change such things.

        But it’s not necessary anyway. The government could just repay the loans with money that it created for the purpose; for instance, the Treasury Secretary could order the minting of fifteen platinum coins each with a $1 trillion face value, deposit these at the Federal Reserve, eliminate the entire national debt, and transfer the new surplus to pay off the private student loans.

        It sounds silly, but it is also entirely true. It really is all that easy, because the money doesn’t matter. National debt is denominated in national currency, and it’s up to the government of a nation to manage that currency. No one is promised repayment in comparable value, nor can any foreign creditor threaten the U.S. with collection by force. It’s all silly.

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    • pawnman says:

      How does this encourage lenders to stop charging outlandish interest rates? They now have a 100% chance of getting paid, from the government, instead of risking default by some student who got a BS in philosophy and is now under-qualified to get a job at McDonald’s.

      Maybe I’m cynical…I got through all four years of college without any student loans. It can be done. I have little sympathy for people who don’t read the terms, who sign on for loans they can’t afford, and now they want ME (the taxpayer) to bail them out of a bad situation. Ditto for the folks who bought McMansions because they thought their investments would only keep getting better.

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      • Cerron says:

        You bailed the banks out it was you the taxpayer and you don’t seem to mad about it but you are mad about forgiving student loan debts that makes no sense to me!

        Thumb up 10 Thumb down 7
      • Mandy says:

        Many college grads started working on their degrees before the economy plunged and were therefore working to meet requirements for well-paid positions that are no longer available. Once you’ve already put the time, money, and effort into starting a program, it seems like you might as well finish so what you’ve already done isn’t wasted.

        When I graduated high school around ten years ago most students were simply expected to go to college and told time and again how it was the only way they would make a decent living. In the town I live in the factory workers make more than most college grads, who have to move away to find jobs in their field. Those that stay are required to return for even more schooling. While I was fortunate enough to not take loans for my undergraduate schooling due to scholarships and my parents paying for four years, I did have to take loans for graduate school. Even when my husband and I were both working (both college graduates), we were making less than 50,000/yr between the two of us and combined we have 60,000 in student loans. We live with one of our parents and are still just scraping by, especially with the recent addition of twins to the family. We are both around 30-35.

        I am not saying that the loans should definitely be forgiven, but I think that many people have the wrong idea about the situations college graduates are in and how they got there.

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    • Amanda says:

      Thank you!!! People think that all of these young kids just want to irresponsibly erase their debt. I graduated from college six years ago and have never been able to consistently pay on my loans. My degree is bogus because, come to find out, the school I attended wasn’t accredited. So, now I am working in a coffee shop, which I absolutely love doing, my fiancee is working in assembly, which he loves…and we are struggling to raise our daughter who is almost two. We work our rear-ends off day-after-day and can never get ahead. Meanwhile, Sallie Mae is calling me multiple times per day, as if magically I will be able to pay them hundreds of dollars 12 hours after I just told them that every penny of my money is budgeted and if I pay them I will lose my house. THEY DON’T CARE!! These huge institutions only care if they get their money. They have no idea what I am going through. I am not irresponsible and just not paying because I don’t feel like it. I have used up all of my forbearance. And what these knuckleheads above don’t seem to get, interest based payment options are only possible on government loans. 75% of my $50,000 in student loan debt is private loans. They cannot offer me any options at all. It is horribly frustrating. While I was paying on my loans last year, I chose making the payments over my car payment…and guess what, my car was repossessed. And then about 2 months later, I wasn’t able to make my loan payments anymore. So now, because of my repossession and being delinquent on my loans and other debt incurred because of that crappy school, my credit is destroyed to the point of no return. I will never be able to get a loan on a car or on a house and I don’t really see what I can do to fix it at this point… Do you near-sighted folks above want me to resort to prostitution?!?!?! I see no other option…and that is something I would NEVER resort to! If I could just include my loans (at least the private ones) in a bankruptcy, I would run, not walk to my nearest bankruptcy attorney and get the process started so that I could have, and give my beautiful daughter some sort of future. I hate that so many people abused this option and right to make it impossible for someone like me who really needs the option. The stress of all of this is going to make me die at a young age, I fear…

      Thank you!!

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      • Tim says:

        Hidden due to low comment rating. Click here to see.

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      • Jamie says:

        People like Tim are the weakest participants in the conversation. They pose questions they think are rhetorical, as if the answers were obvious, but they are clueless about economics — specifically, that any economic system is indeed a series of choices, trade-offs, and value judgments.

        Tim thinks he’s being really clever, but he’s just showing how ignorant he is of the nature of the economy, a construct that we built and not some sort of celestial blueprint for reality. Indeed, we could change it all; we could “just give free money to everybody who wants more money in their budget,” or abrogate the current monetary system entirely. That’s all possible.

        Tim doesn’t know that; he doesn’t believe it. Thus, when he says that he “wants” these things, he actually DOESN’T want them; he isn’t lobbying for what he calls “grocery forgiveness” (food given away so people can eat? what a crazy idea! Just because there’s more food in the world than anyone can eat, why would we NOT want to devote our time to wage-slavery so we can buy food?). Tim is touting the status quo, simultaneously acknowledging that his own life is a function of wage slavery but too unimaginative to realize it could be any other way.

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  9. Marty B says:

    What are your thoughts on making student loan debt dischargable in bankruptcy?

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    • mgnti says:

      I think this suggestion sounds like an interesting compromise. Also, they should reduce loans given to schools that charge excessively high tuition.

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    • Eric says:

      “What are your thoughts on making student loan debt dischargable in bankruptcy?”

      This would be a great way to drastically increase the number of bankruptcies in the country.

      In fact, I could see law or medical students ending their long education experience with a financially cathartic bankruptcy filing.

      I think this country needs to focus more on creating more paying jobs where people can earn their living and less time thinking of creative ways of handing people money (value) in exchange for doing nothing/creating no value.

      It is sort of emblematic of our switch from a ‘buy now, pay later’ society to one that wants to ‘buy now, never pay later’ that we would even consider forgiving student loans to able bodied people and pay for this by passing on on more debt to our children. And why stop at student loans, why not all loans made as ‘investments’? I started a new business which has 4 employees, why not write off my debt also? Why would we only write off education investment debt and not small business investment debt? My debt helped 4 people (plus me) have a job and I could hire more people if the government just pays off all my debt… (BTW, I really do not want the government to pay off my debt, but my point is why cancel some legitimate debt made for ‘investment’ and not other legitimate debt made for ‘investment’?)

      We need to ask when are we going to start paying debts, not how we can forgive them? Or maybe we are hoping that all our debtors will just forgive all the US debt someday?

      Maybe we can ask for a $15 trillion mulligan?

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      • Jon says:

        You have a bizarre view of our bankruptcy system – you have to do more than fill out a form and be on your merry way. There are pretty onerous, long-term consequences to declaring bankruptcy. Not to mention that many State Bars have already indicated that they view a law graduate who is in dire financial straits to be a possible reason to refuse them a license to practice law.

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    • Rebecca says:

      That is just crazy. You may as well just say that no one should have to pay for college. If you can just file bankruptcy, then the first thing a college student would do is file as soon as they graduated.

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  10. Markus says:

    A political sticky wicket, to be sure, and we don’t want a new political arena of college grads pining for handouts. However, the issue of whether it’s better to give the money to poor people who will spend it vs. “educated” folks who will save it needs revisiting. The comments overlook the benefit to society of savings and preserving capital; that capital then reinvested into businesses that then benefit a much bigger portion of society. Give $500 to a grad and $500 to a welfare recipient – who is more likely to make that $500 grow? Is that not a better stimulus than spending it on consumables? Where does all this money come from to begin with? Since we’re just printing more and more fake money anyway, who is the end recipient is irrelevant. Just print more, and then give more to more people. Problem solved. See all you grads in the bread lines.

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    • This Guy 64 says:

      Strong point. When I “save” my money, I’m not just stuffing it in a sack. I’m stuffing it in mutual funds and stocks. That money is doing more than just sitting dormant!

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    • Eric says:

      “Give $500 to a grad and $500 to a welfare recipient – who is more likely to make that $500 grow?”

      Or another way: Give $500 to Warren Buffet and $500 to a welfare recipient – who is more likely to make that $500 grow?

      Put into a larger scope and have Warren Buffet keep his money (against his will, no doubt!) and invest in smart investments will help the economy more than taking more of his money and blowing it on whatever half-witted government ‘stimulus’ scheme we think of next.

      (BTW, I am all for raising taxes on Warren Buffet, myself and everyone, for that matter, if it means we start balancing the budget, but I would not raise anyone’s taxes one cent until we start looking at cutting all non-essential spending first.)

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  11. alyssa says:

    I agree, this is a terrible idea – DH and I have $20k in student loans left to pay and we are proud of it. We worked hard in school, we took on debt we knew we would have to pay in the future and we are doing so now. IMHO do not take on debt if you do not plan to pay it off, it is not right.

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    • Erin says:

      Sorry, but for those of us smart enough to go to college and then onto grad school, but cannot pay out of pocket the insane amount it costs for professional grad programs like law/pharmacy/medical school, you’re basically say only the rich students should enter those careers. My parents are upper middle class, but couldn’t afford to send three kids to professional programs without having to borrow.

      I plan to pay off my six-figure debt (because I am a responsible, accountable person–and note that all of which was only spent on my education. There were no lavish purchases/trips spent with that money), but if someone were to tell me that they’d wipe it all out, I’d definitely stimulate the economy by building a home and purchasing items that we are choosing not to buy.

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      • pawnman says:

        Actually, Alyssa said she’s got $20k in student loans. She didn’t say don’t go if you can’t pay cash, she said don’t sign up for a loan if you don’t intend to pay it back…very different points of view.

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    • stevenbutler says:

      I took on my student debt when I was 18. I’m 30 now. If I had known ANYTHING about life at 18 I would have made different choices. My parents had no advice to give me as neither had even been to college. To them, college just meant opportunities – so going to a great school, like NYU, was obviously only going to result in great things for their child. Fast forward, I’m now a financial advocate for low-income people in New York and an expert in student loan debt crisis stemming from the for-profit college industry (which this article totally fails to mention). My own towers in the 6 figures. Trust me, the person I am today would have laughed at that 18 year old who thought he knew everything. The thing about this article that annoys me the most is the assumption that welfare recipients don’t have and aren’t’ paying student loan debt. That’s hilarious. Please, come meet my clients!

      I agree that student loans should be dischargable in bankruptcy. If it causes the governement to stop giving giant piles of cash to dumb teenagers I’m all for it. The problem with American education isn’t that it is too expensive, it’s that we can finance it at all. THAT is the reason education is expensive. Schools would wither and die without the giant tap of life blood that is federal student loan dollars. And maybe, just maybe, they’d have to rethink their missions and lower their costs.

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  12. Mike S says:

    Instead of complete forgiveness, what about a program that would allow people to repay loans using pre-tax dollars from their paychecks? I am not – nor do I claim to be – an economist but I would think something like this would a) be much cheaper than the current proposal, b) put more dollars in the pockets of Americans, and c) not set an awful precedent.

    I’m sitting on over 100k in student right now and only get a tax break on the interest I pay.

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  13. Robin says:

    Hidden due to low comment rating. Click here to see.

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    • caleb b says:

      “Student loans are for the lazy and should definitely not be forgiven.”

      Um, or they’re for people that didn’t get all those scholarships and grants that you did.

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    • Timothy says:

      While I do not agree wholeheartedly with forgiving student loan debt. Your contention that student loans are for the lazy is well off base. I have a BS which required minimal loans on my part, thanks mostly to my parents who were able to save wisely for mine and my sisters education. I also worked part time durring most of my college years. I am now nearly through a JD program, I do work full time as does my wife, but before I got into the JD program I worked 2 jobs to cover expenses, I had to give one up in order to put the required effort in on my JD. My wife was unable to find a second job due to the poor economy and her background (no College Degree), and so I found myself in a position where I had to take out PLUS loans (aka cost of living loans) in order to make up the difference. Also Robin I’d like to know where you go to school and what your major is. Some majors could not be completed properly working full time. The biggest issue here is the cost of a college education in general. Why does it cost $100K + to go to a private college? Are the professors paid at a higher rate? Are the facilities that much better? The answer in most cases is no. So why do these Colleges and Universities charge so much? The simple answer is that in most cases there is still a stigma attached to attending a State Run University, this is ridiculous. A College degree should be treated equally, and I even mean if it came from the Ivy League, the only real difference there is that those schools are old, other than that I have seen Harvard debate teams shattered by teams from USC or UMass or SUNY, the degree should be what matters not the logo on the top.

      As far as forgiving loan debt goes, I am very much in favor of the income based repayment format we have now, and the public service exemptions. However with the current hiring freeze and budget issues most of our governments are facing, the cold hard truth is there are few if any public service jobs to be had even for those of us who want them because we want to do public service.

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    • Dante940 says:

      I’m in a similar boat as Robin. I graduated from college last year with a degree in mechanical engineering with $0 in debt as I was fortunate to be awarded scholarships and a few grants. I come from a single parent middle class family. I worked part time in retail and at school to have some extra spending money. Nothing extraordinary. What I will say was a differentiator was my choice of university. Among the schools I was accepted in, two were a good but pricey out of state university and a decent but affordable public university in my own city. I stayed in my city because I felt much more comfortable with not having massive debt at the end of my undergrad career. As my colleagues and I will tell you, it’s not very difficult at all to find a job as a mechanical engineer right now.

      So while I think it’s a bit harsh to claim that “student loans are for the lazy” I will say that we as the youth need to be more considerate and realistic of where we stand and our goals. If you find it will be difficult to pay for a prestigious school, there are literally hundreds of amazing affordable schools throughout this country. Also, don’t act surprised if it’s difficult to find a job with a liberal arts degree nowadays. I have nothing against them and have many friends with such degrees but you have to be practical in this day and age. Look at which fields are growing and seem stable and suck it up and apply to one of them. An acquaintance received a degree in Philosophy from a prestigious and expensive school. He comes from a similar financial situation as my family. How do think this economic environment is treating him?

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      • Jeff says:

        Yes. Yes, yes, 1000 times yes.

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      • Irena says:

        “An acquaintance received a degree in Philosophy from a prestigious and expensive school. He comes from a similar financial situation as my family. How do think this economic environment is treating him?”
        So, you are saying that Philosophy degree is a luxury and should be taken only by the rich?
        If everyone would follow your logic, Liberal arts will disappear all together and colleges will become fast-paced training business schools for hot practical carriers. And all brains will be imported from India.

        Hot debate. What do you think? Thumb up 23 Thumb down 23
      • Dante940 says:

        I mean, you did hit the nail on the head somewhat. A liberal arts degree of that sort IS almost like a luxury. I have nothing against those that pursue such degrees but be considerate of your finances and prospects. The claim that all the brains would be imported from India is essentially already happening and that’s a major issue we have today. Go to several engineering campuses and you’ll find that many of the lab assistants and TAs are foreign students. I have nothing against them and some of my better friends have been foreign students from India, China, and elsewhere but we as a nation have lost that competitive advantage. It’s precisely because not enough American students are taking up careers that involve mathematics and science that so much technical work is being outsourced. The lower supply of American engineers there is, the higher the cost they demand. This has unfortunately led to many companies to simply outsource because it’s cheaper since American engineers and scientists have become an expensive commodity.

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      • James says:

        “And all brains will be imported from India.”

        Well, they pretty much are now. Who do you think gets most of the degrees, especially graduate degrees, in engineering and the sciences? Foreign students, and the children of first generation immigrants.

        As for the contention that a philosophy degree, or indeed, most liberal arts degrees, requires much in the way of brains… Well, maybe they should be regarded as toys for the rich. Or perhaps as something you do later in life, after you’ve learned something that will let you earn a living.

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      • pawnman says:

        If you’re going to take out a 6-figure student loan, you should probably study something that is going to give you a good chance at employment upon graduation. It’s been a while since I’ve done a job search, but I don’t recall too many companies posting openings in their philosophy departments.

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      • Eric says:

        “So, you are saying that Philosophy degree is a luxury and should be taken only by the rich?
        If everyone would follow your logic, Liberal arts will disappear all together and colleges will become fast-paced training business schools for hot practical carriers. And all brains will be imported from India.”

        Because we import so many liberal arts students from India now?

        I have a degree from a liberal arts school and I love the study of philosophy, but the US taxpayer is under no obligation to subsidize through loan forgiveness the desire for people without means to go get a liberal arts education that may not lead to economic advantage.

        Now, if we are talking subsidizing engineering, math, hard sciences and medical fields then I may be on board. Of course, people going into those fields do not need subsidy so…

        Put another way: I love music and art, but I really do not feel like subsidizing a student that wanted to study these fields and now cannot pay for their education.

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    • Jeff says:

      I love all the vote-downs this type of comment always gets. Every time an argument comes up over loans and I bring up the fact that I went to public school and worked full-time all four years, everyone acts like I must have gotten some lucky break. No! My school just cost $3k per semester instead of $15k+! Now I make a comfortable living and have no debt. Sure, I don’t have a Columbia degree, but I had the confidence in my skills and interview savvy to land a job and, as one’s career progresses, the institution attended means less and less.

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      • Liz says:

        You went to public school? Um, why do think it’s called “public?”

        The rest of us/government funding paid for it in order to give you a break, doofus. So show a little more gratitude and stop pretending you did it all on your own.

        Hot debate. What do you think? Thumb up 35 Thumb down 37
      • Jeff says:

        Yes, and I took advantage of what was entitled to me as a state resident. Explain how that makes me a doofus. And show gratitude to whom? I pay my fair share of taxes. So thanks, my taxes! You’re right, it clearly would have been smarter to go to a name-brand private school, take the 4 years off, and graduate with $200k of debt.

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      • Dante940 says:

        Since we already pay for some part of these public schools through taxes, why spend exorbitant amounts for private schools that ultimately teach the same material with competitive quality?…

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      • Andrea says:

        Hi Jeff,
        What you did is admirable. I won’t knock your hustle. However, keep in mind that your experiences are the ones that you know best. Just because you were able to do something, doesn’t mean that others could. Situations are always different.

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      • Jeff says:

        Very true! And I hate anecdotes used as evidence as much as anyone. I just think that there’s such a focus in this country not just on a degree, but on *where* it came from. I know as a HS senior I was super-focused on what school I went to. I actually went to one for a year, realized I was never going to make it work financially, dropped out, and finished later. This need to go to a top-tier school and therefore their ability to charge what they do is a real problem.

        But I have to admit: if this were to happen, I’d be pissed. If I had known THIS would be the outcome, I would have gone to NYU, done study abroad, racked up a half million in debt, and then gotten it forgiven. It would be a pretty bad precedent to set.

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      • Irena says:

        “But I have to admit: if this were to happen, I’d be pissed. If I had known THIS would be the outcome, I would have gone to NYU, done study abroad, racked up a half million in debt, and then gotten it forgiven. It would be a pretty bad precedent to set.”
        Do you think it might effect the quality of your education? Do you think you would loose a lot if instead of working full time while studying you would be able to actually concentrate on your studies (as most European students can do)?
        I also worked full time when I studied, but I wish, I would spend more time on my education instead. Or at least to work in related field.

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    • Michelle says:

      Maybe it’s a little extreme to say student loans are for the lazy. But I think Robin makes a great point.

      I graduated 7 years ago with zero debt. I went to a local (cheap) university & worked to pay my way through – with on campus jobs, tutoring gigs, internships, and most especially working my tail off to receive & maintain an academic scholarship. I didn’t have perks like spring break, nice car, money for movies or going out to eat on the weekends, cell phone, cable/Netflix. I was the cliche Ramen-eating starving college student. I didn’t take semesters off to “discover myself” or unnecessary classes to be more “well rounded”. (That’s what free books at the public library are for.) I rushed through & graduated in 3 years instead of 4 or 5 so I could get a job & get out of self-induced poverty.

      I admit my realm of experience is small, but those I know with student loans fell into one or more of these categories:

      1. “Arts” majors: those who spend 4 or more years wading through college, barely graduate, and then end up with an “administrative assistant” position in some office building doing tasks they could have done out of high school.
      2. Year-round spring break students: I was so jealous of these people who spent their time comparing notes on road trip plans and tailgate parties. But I guess these were the ones who paid me a whopping $9/hr for tutoring help, so I’m indebted in a way.
      3. “Daddy, I really, really need to spend $40,000/year on tuition because this is my dream!” students: Be realistic. If you don’t have rich parents or a sweet scholarship, it’s irresponsible to rack up this kind of debt when there are well ranked universities in almost every state for about 10% of the cost.

      The reality is these people picked up a two sided stick. They got to breeze through college with extra un-earned money. Now they have to pay. If the rates are unreasonable, if tuition is unaffordable without a loan, if the resulting post-graduation job just doesn’t pay enough to afford a house, new car, and student loans, well, I guess you should have considered that earlier.

      Hot debate. What do you think? Thumb up 32 Thumb down 28
      • Vicki says:

        An education is so much more than taking the bare minimum of classes, at the cheapest price, with the smallest amount of time input. A University education is supposed to give you a complete education, not crank you out like a trade school with just a certain set of skills.

        I was much like you the first time around, and now I wish I could go back and do it all over again. Not work full time so I could actually gain an education, instead of just enough info to pass the classes with the needed grade and graduate. I feel sorry for you, just as I feel sorry for myself.

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    • Sarah says:

      “Student loans are for the lazy and should definitely not be forgiven.”

      While I truly don’t think that student loans need to be forgiven (or should be), I do take offense to this comment. I am currently completing my second degree. I attended an excellent, public school for my first degree and was awarded a full-ride academic scholarship. I worked full time throughout college to pay the rest of my living expenses, extra spending money, and, yes, I saved A LOT. However, although I graduated with a STEM degree, and a GPA of 3.8, I could not find a job to save my life. I ended up working in a job making around $20,000/yr. Certainly not what I went to college for.

      So, now I’m back in school. I moved back home with my parents (a big pride cut, for sure!), changed to a different FULL-TIME job, and attend school full time. However, to cover the cost of my tuition, I have had to take loans – a little less than half of the tuition, thanks to my now deflated savings account. I fully anticipate paying them back and am not looking for any government handouts. But in no way do I consider myself to be lazy. There are just some programs that are either too time-demanding or too expensive (read: graduate/professional school) to “pay-as-you-go.” So please step outside of your extremely narrow box and don’t make blanket statements.

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  14. Roger says:

    as a grad student, I feel that it would be a brilliant idea, but of course I am staring at a huge mountain of debt in the near future

    Hot debate. What do you think? Thumb up 13 Thumb down 15
  15. Ardy Cooper says:

    Calling this idea idiotic is idiotic. It might be safe to assume that groups other than graduates with student loans might spend more of what they are “receiving”, but this theory of why forgiving student loans is a bad idea has several dubious assumptions as well. It should be noted that many graduates do not have jobs and have applied for, or exhausted the right to, delaying their payments. The amount of their debt grows as interest continues to accumulate, and many have fallen behind on payments. Those who have been late for payments are putting their ability to get a job at risk due to their new poor credit. Others are underemployed, working only to meet their student loans. This group may live with their parents and are not otherwise contributing to the economy. By lifting their encumbrance they could actually spend and contribute to the economy. I could continue, but I need to go to work to pay off my $1100 a month student loan payments that keep me from spending on things outside of what is totally essential.

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    • sulfide says:

      Hidden due to low comment rating. Click here to see.

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      • Charlie says:

        We all can debate why or why not student loans should be dismissed, but the bigger picture here is the real issue. Student loans program was created in the 1960′s which gave students access to education they couldn’t afford. This created a boom in the 70′s and 80′s to go to college, which drove up prices. The government backed the loans, so university increased their tuition knowing that the loans will be re-payed. At the same time, the US dollar is losing it’s purchasing power, making the cost of living rise. So, in the 90′s and 2000′s, because of these factors, the cost of education is beyond what most students can afford, even in the recent recession, tuition still went up. The US Higher eduction system is now in a Bubble and it’s going to crash in the near future.

        Government intervention in the loan market is the problem, until this goes away, cost will rise and students will pay more, and the debt will increase. This happen in the housing, and the same outcome is coming to higher education.

        Student loans are just a tip of the iceberg in this world debt crises; watch out when the bond market crashes and the dollar gets taken to the wood shed.

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      • Alex says:

        I concur wholeheartedly. I’m in college right now. I room with my friend off-campus and cook my own food to save money. I buy lots of protein and vegetables instead of comparatively-expensive frozen dinners and I never eat out. I work part-time 25 hours a week currently and full-time on breaks, including spring and Thanksgiving. Between my income, government aid, in-state tuition and my parents’ chipping in every now and again I have managed to stay debt-free for two and a half years of my college career. While many of my peers live in kush $1500-a-month apartments, drive late-model cars and drink Grey Goose I work, save money, and live within my means. My job is very nice too, but I worked all through high school to get it and sacrificed the usual “teen party lifestyle.” My point is this – I have made fiscally responsible decisions for my entire young adult life, and I WILL BE DAMNED if a bunch of spoiled freeloaders are rewarded with forgiven debt while my frugality is punished.

        It’s as simple as this – things cost money, loans have interest. IF YOU CAN’T PAY THEM OFF, DON’T TAKE THEM. I could go home every summer, get drunk, smoke weed and take out a loan, *or* I could make money to pay the thousands in tuition that I know is coming at the end of the summer. I have little sympathy for people who don’t think farther than a few hours’ ahead when it comes to the directions of their lives.

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      • lakiesel says:

        I also worked part-time, often upwards of 20 hours, while in college. I always abstained from drinking, smoking and never took a spring break (couldn’t afford one anyway). I studied hard and got good grades. I was raised on welfare, and college to me was a way to rise above my class and get out of a neighborhood filled with drugs and gang violence. For the first two years of school, I went to a private university because I got a scholarship that paid 75% of the tuition and I wanted to be closer to my family. I also had full Pell Grants and SEOGs. When I still couldn’t afford the leftover price of room and board, I transferred to a public state university to avoid taking out loans. Yet still, after only a semester in my new school, I became very ill and had to take a semester off. My mother also got cancer at this time. When I returned to school the following summer, I realized I was no longer in the right state of health to work 25-30 hour work week while taking a full course load. It was just too much. So, I scaled back to only about 10-12 hrs a week and finally gave in and took out some loans while I let my body heal.

        When I graduated, I worked (in child care and education) but always for not as much as I hoped my B.A. in English would get me and I always lived hand to mouth. I decided to go back to school to study a science, which I thought would lead to better job security and pay. You don’t qualify for grants the second time around, so taking out loans was the only way to afford it (after one semester of f/t study, went part-time so I didn’t have to pay as much and could work more. Again I went to a public university to defray costs). I then went on to grad school, and though I got a full-ride–that is, a full tuition waiver and half-time assistantship that paid, the pay was $15K/year was not enough to cover my living expenses, medical expenses, car expenses, or vet bills for my cats. So, I again buckled and took out some loans. Oh yeah, and I don’t have credit cards,

        In my experience as an undergrad, the people who partied hard in college were not taking out loans to subsidize their education, but had their parents paying their way. The kids who took out loans were ones who, like me, came from the inner city (I am from NYC) and whose parents couldn’t afford to pay for them, and yet couldn’t get a scholarship because of the paltry public school system. Here’s the truth: in the past 16 years, college tuition rates have more than doubled, while Pell Grants have remained stagnant. The ubiquity of loans has allowed universities to raise their prices to the point where the only way to afford them is to take out a loan. So, it’s okay to bail out Wall St? To have corporations like Exxon, not pay taxes, or the wealthiest 2% of individuals not pay their fair share, but forgiving student loan debt so the next generation can actually survive, is somehow obscene? Please…take a look at your righteousness and stop stereotyping. If we want people not to take out loans, we have to instill measures that ensure and affordable and accessible education for everyone.

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      • Alex says:

        I am sorry for your situation, and being sick is very unfortunate, but two wrongs do not make a right. Bailing out Wall Street was a horrendous idea as well, and using that as reason to forgive student loans is logically unsound. Economic systems, like any others, must come to a comfortable operating equilibrium through some means or another, and artificially bolstering them so that they don’t fail does not count. Forgiving student loans is just as silly. Oh, and Exxon and other companies have a right to pay their CEOs whatever they want – it’s called *capitalism*. If you don’t like the way that they do business, then you don’t give them your money.

        And I’m not stereotyping. Unless you are trying to tell me that the simple majority of students who take out loans come from socioeconomically-unfavorable backgrounds and have had to fight serious health issues during their educational careers what you are saying should not apply to anybody but special cases like yourself (funny that… there are special government programs that renegotiate student loan repayment in cases of crises. Perhaps you should look into them).

        And the vet bills for your cats are a perfect example of what I am talking about. Know why I don’t have a cat, dog, hamster, squirrel, or any children? Because I can’t afford them. I won’t go back to school for a while, if at all, because I know that my salary and lifestyle won’t be able to afford it. That’s YOUR mistake – it’s not as though you had to go back to school.

        The way things work in a free-market economy mean that things cost money. Sometimes things are out of our reach, but the good thing is this – assuming the government isn’t running around doing things like forgiving debts and bailing companies out, it will all stabilize eventually. If you don’t like how much college costs, don’t buy it, and make sure that everyone else does the same. Something is only worth what somebody will pay for it. People continue to buy into the system and make it work, otherwise none of these evil entities could continue what they are doing.

        Thumb up 7 Thumb down 5
  16. caleb b says:

    For-Profit colleges have an enrollment well over 600,000 students. Approximately 90% of all of them are maxing out their federal student loans to obtain a degree that wouldn’t get them into the mailroom at my business. I know for a FACT that my company won’t even look at a someone with the University of Phoenix on their application.

    Take the top six for-profit schools by attendance (623,244 – fall ’09) and assume 90% take out the maximum student loans. For 8 semesters, at the max loans ($88,500) that is ~$50 BILLION in debt. That’s right. $50 BILLION in loans to obtain worthless degrees. Loans that can never be forgiven until death.

    We have a MAJOR problem in the US and someone needs to get on it right away.

    http://nces.ed.gov/programs/digest/d10/tables/dt10_246.asp?referrer=listBased on ONE MILLION students.

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    • kdh says:

      If their degree is “worthless”, then wouldn’t they be as useless in the workforce as well? If their debt is forgiven for choosing a “worthless” career path, .

      Also, using your “facts”, if all student loans only amounted to $50 Billion, it is but a minute portion of our government’s debt. And just as Wolfers writes: “Opportunity cost is one of the key principles of economics. And that principle says to compare your choice with the next best alternative”, and there ARE better alternatives for spending this money elsewhere that would make a bigger difference in our economy.

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      • caleb b says:

        “if all student loans only amounted to $50 Billion, it is but a minute portion of our government’s debt”

        I never said that ALL student loan debt totaled $50 billion. I said that the 600k+ students currently in pursuit of an online, for-profit degree can be reasonably estimated to acquire $50 billion in debt to acheive that degree.

        Thumb up 2 Thumb down 1
      • Kelly says:

        Silly, silly, silly. Their degrees are worthless because they didn’t receive the proper training from unaccredited private ‘universities,’ which I’m not sure how they can even deem themselves that. These career/vocational/private schools promoting education in green jobs, nursing, medical coding and billing, etc. don’t teach practical skills, and they target the lower, uneducated class.
        These schools buy lists, target individuals, and cold call (they actually refer to prospective students as ‘leads’, and sales reps close the deals or are fired. They face very high quotas). Because they target the less educated, these people think they are bettering themselves.
        I know this because I worked at a marketing company that got ‘leads’ for these career schools, one huge one on the West Coast is tanking. They offer beautiful images of various ethnicity becoming nurses, technicians, etc, but when all is said and done, they hardly even participate in clinicals (as in, real world training). Nursing homes that run off of LPNs and LNAs wouldn’t look at these grads twice. So what are people, who thought they were bettering their lives (ie, first int he family to go to ‘college’), to do? How were they to know these schools were just factories?

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      • Chloe says:

        “These career/vocational/private schools promoting education in green jobs, nursing, medical coding and billing, etc. don’t teach practical skills, and they target the lower, uneducated class.”

        I dare you to come say that to me and any nurse who takes care of you during your next possible hospital stay.

        I went to a university for 4 1/2 years, had to take an exam for my license, and I have to do continuing education credits to hold my license. I would like to think I’m educated in my field; but according to you, I am part of the lower, uneducated class.

        Thumb up 3 Thumb down 0
      • Chloe says:

        To add on… I know you are talking about for-profits/vocational schools, but an issue with nursing schools right now is there are years-long waiting lists for the public schools, whereas some private/for profit take students right away. Those going to those schools have learned the same skills I have, and I wouldn’t assume them to be of the uneducated sort before attending.

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    • Jake says:

      Who is forcing these 623k people to attend the For-Profit colleges? No one is making them choose the most expensive and highly questionable route for getting a college education.

      If anyone needs to take action, its those 623k people.

      Hot debate. What do you think? Thumb up 10 Thumb down 12
      • caleb b says:

        @Jake

        More than half a million people, racking up thousands of dollars worth of pointless and irrevocable debt every year. Yep, I am so SURE that those people won’t end up being YOUR problem in any way.

        There’s no chance that you will be affected by that. Nope, you rest your pretty little head at night and dream sweet dreams.

        Thumb up 5 Thumb down 2
      • kelly says:

        Please read the above. And no, I am not that which I describe above. I graduated from a private university, because in my state it was the only school that offered the program I wanted. And no it’s not liberal arts, physch, or any of the other ‘useless’ degrees people are assuming with their comments.
        However, I felt for the quality of my education I was over charged. Can’t get a refund though, can I?

        Thumb up 3 Thumb down 0
    • Melissa says:

      THey aren’t forgiven at death if your parents cosigned.

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    • caleb b says:
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  17. Kevin P. says:

    Student loans have become a big racket, with the biggest beneficiaries being the nation’s colleges and universities. This helps push the never ending inflation in tuition.

    Here are three simple reforms for student loans that will restore common sense to this area:

    1) Make them dischargeable in bankruptcy like almost all other loans.

    2) At loan origination time, make the lender and the university provide full faith and realistic disclosures about the income expected after graduation for the proposed course of study, and these disclosures should be subject to standard fraud protections

    3) Restrict federal government loan guarantees and subsidies to only a few fields of study such as STEM (Science, Technology, Engineering and Math). I would be OK with ending federal government loans altogether, and letting the states subsidize higher education if they want to.

    For some reason, we have accepted, as an article of faith, that any and every type of college education is the only ticket to success in the future. This is often the case, but often not.

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  18. Howard says:

    “Conclusion: Worst. Idea. Ever.”

    Hmm. I can think of ton of ideas that are much more worse than this. That kind of rhetoric makes me think there is something more behind your comments than just pure economics.

    My solution to the massive student loan debt in this country: Set up a program such as the peace corps that would allow those with student loans to donate their time to improving the country in exchange to forgiving student loans. If I had to give up 10 hours a week tutoring inner city school kids in exchange for forgiving some of my loans, I would surely do it.

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  19. Hugo says:

    Hidden due to low comment rating. Click here to see.

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  20. slm says:

    Why would we give money to HS dropouts and unproductive members of society who end up costing us more money in the long run (Link, WIC, other free services)? I say forgive it.

    I personally don’t think it’s fair that forgiveness now is selective – math, science and sped teachers have big chunks of their loans forgiven but they can go anywhere and find a job easier than english or history teachers who get no forgiveness. Not fair! I’ve worked in poor neighborhood schools my entire 16 year teaching career and have received no breaks other than forebearance when I was unemployed. Forgive the damn loans or at least part of it! Give SOMETHING to the middle class for a change!!!

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  21. Steve says:

    Are we a nation with no sense of personal responsibility? You took out a loan, you could have gone to a cheaper state school but instead went to a private one, you lived beyond your means in college (unless you never bought beer in your 4 years there), and you may have chosen a major with little realistic return on your investment. While I’m sure some grads are truly struggling despite making reasonable choices, the idea of bailing out those that made poor decisions is disgusting. If there were a way to separate the truly needy from those that just think they deserve a euro-trash car, college loan forgiveness would sound more reasonable.

    Hot debate. What do you think? Thumb up 29 Thumb down 28
    • Vicki says:

      Dear Steve,

      For American students, loans are still necessary to get a degree from “a cheaper state school”. It’s only the upper middle class families and the rich who can afford to pay for the “cheaper state schools” outright.

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      • Enter your name... says:

        Funny, but when I consider myself and my three sisters, three of us graduated debt-free—no debt of any kind, “student loan” or otherwise, and the fourth paid off her student loans twice as fast as the government expected her to.

        None of us worked more than 15 hours/week during college. None of us received even $100 in financial support from our parents over the entire course of the entire degree. (In fact, in the course of our college experiences, our mother died and our father declared bankruptcy twice, once from her medical expenses and once from his business failing.)

        If our dirt-poor blue-collar family can do it, then so can middle-class families. They just have to make the same kinds of choices that we did: Do you live at home for free, or do you rent an expensive apartment? Do you make do with a hand-me-down computer from the neighbor, or do you buy a pricey new one? Do you figure out how to send e-mail for free, or buy a cell phone? Do you drive a car, or decide that if you can’t get there on your own two feet, you didn’t need to get there at all?

        Hot debate. What do you think? Thumb up 11 Thumb down 10
      • Vicki says:

        I wish you had entered your name, so that I could actually reply to “Enter your name…”,

        These are the choices I made/experiences I had.

        I graduated from Bloom Trail High School in 1990. I’m sure you know it, as it was the high school in the Freakonomics movie, and the neighborhood that they showed in the movie was mine.

        Living at home for free is financial support from your parents (every bite of food, every night under the roof, every “luxury” that you partake of while there they are subsidizing you and your college education! Guess what “Enter your name…” your parents subsidized a lot of your education!)…which may explain why you and your sisters could put all your earnings towards getting a degree.

        That was not an option for me, in my “dirt-poor-blue-collar” family. If I were to have stayed in my parents house, the only option would have been to work multiple jobs and turn the money over to them to help support the household. Living at home, going to college, and not handing over any money earned to help support the household was not an option. It really isn’t an option for most working class families; they can’t afford for it to be an option.

        I scored very well on the ACT. I got accepted into every University that applied to: University of Illinois (both Champaign-Urbana and Chicago campuses), Illinois State University, etc…) There was going to be no help whatsoever from my parents if I went to college; housing included. There were even fights about getting the tax info that I needed from them each year so that I could even apply for financial aid (as if you are not married or don’t have a child/dependent you have to include your parents info on the Financial Aid form if you aren’t 24 years old or older). I applied to lots of different places and decided to attend Eastern New Mexico University as out-of-state tuition there was less then tuition even at Prairie State College (the local community college where my parents lived) was at the time.

        I lived as cheaply as I could, with roommates to help deter the costs. It was always the cheapest housing we could find—there really weren’t any expensive apartments to even choose to rent. Since I was self-supporting it took all of my minimum wage job earnings (both Work-study and at a pizza place) to pay for the basic survival stuff. As several other posters have commented, it depends on what type of degree you’re getting, whether or not you can have the time outside of your studies to work full time. I could not, but I always worked as much as I could. There were no trips. Nothing uber-nice. Yes, I had a cheap alarm clock radio and a TV, they were not new when I got them, but things others who were moving did not think were worth the cost of moving them.

        A computer was not an option–though one was needed for my coursework. There was no hand-me-down one from any neighbor to have. I was constantly in and out of the various University computer labs on a daily basis, because I couldn’t afford a computer to do the work at home. Most times, my roommates and I didn’t even have a phone—and back then cell phones were expensive to get and cell phone service hadn’t really come to Eastern New Mexico to even be an option. Email is always free for University students, off of University computers. Walked everywhere because even if I could buy a junker—there was no way to pay for gas or insurance; let alone oil changes or car repairs.

        The only way to pay for my University were the Perkins and Stafford loans that I took out. The amount of the Pell Grants wouldn’t even cover lab fees, let alone actual tuition or books. When I went to graduate school, I took out more loans as the only income I had was from my TA/RA positions, which didn’t cover it. Again, if you’re in a professional program, there’s no way to do it properly and work full-time. It’s one or the other. By the time I finished with Graduate school in December 1996, I had $50,000 in Student Loan debt which was unavoidable. It took me 10 years of slaving away to pay-off that debt.

        So, “Enter your name…” any other questions???

        People can only make the choices/have the outcome that you did if:
        1. They are lucky enough that they can live like parasites off of their parents while attending college (thus not having to support themselves)
        2. They are lucky enough to happen to live in an area/state with low tuition at the state schools (and therefore don’t have to move out-of-state to attend one)
        3. They are lucky enough to be in a situation where all the money that they earn can be applied towards their education (follow-up to item #1)
        4. They have the good luck of the amount of tuition and fee increases from year to year not being unduly high, yet necessary for their degree.

        If we as a society would invest in education, like we successfully did for the baby boomer generation, then it would not be necessary for students to accumulate student loan debt just to get the education necessary to gain entry to a career that after many years will help them get into the middle class (and therefore be able to give back to society through their taxes).

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  22. Andrew says:

    This would be a high risk ordeal. There are plenty of people who can pay off their student loans with the jobs they receive afterwards and there are those who can’t do that because they don’t have the job to easily pay it off.

    People who have these student loans that they can’t pay will probably want the loans forgiven and you really can’t blame them.

    I think it would relieve many college graduates who can’t pay their loans, of course, but as for making a benefit out of it? You can’t be entirely sure what they will do with the money. Some will spend it, some will save it, and some will use it to pay off other debts.

    I think it is too risky.

    Thumb up 6 Thumb down 3
    • Corrado says:

      If the target is to help those students that, even doing everything right, are unable to repay their loan wouldn’t be better to give subsidies to enterprises? More jobs and lower chances for those former students to be in their present “bad” situation, the bad side is that it probably takes too long to work.
      On the other side if the idea is just to push consumptions I agree giving 1.000 dollars to poorer people is more fair.

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  23. MDC says:

    Yes, programs that transfer money to poorer folks, who are most likely to quickly spend it, would be the best form of stimulus. That doesn’t make student loan forgiveness the “worst idea ever.” It just makes it not as good from a stimulus point of view. Dumb hyperbole doesn’t help your argument.

    How about a limited student loan forgiveness program AND stimulus that helps those without a college education? Is that freakonomical enough for you?

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    • James says:

      It’s not just terrible from a stimulus standpoint; it’s terrible from a distributional fairness and education policy standpoint.

      I make $150K/year and have $50K in loans outstanding. Even if you are already doing a stimulus that helps those without a college education, there is simply no sane reason to give me $50K instead of spending that $50K on a slightly larger such stimulus (or on people in poverty with or without a college education, etc.).

      Further, this does absolutely nothing to address rising costs of education but it is presumably a one shot deal (or at least not likely to be repeated for a long time), so recent graduates are helped a lot while graduates in the near future are still screwed.

      Thumb up 5 Thumb down 2
  24. Vicki says:

    First I want to say that my student loans are all paid-off, and it took me ten years to do it. I think it’s shameful that in the richest country in the world, students have to get themselves into debt just to get a degree so that they can earn a decent standard of living. Of course, even under the best of circumstances, they don’t get to actually live a decent standard of living until after they’ve slaved away for a decade to pay-off those student loans!

    Secondly, there are flawed assumptions in the logic used by Justin. Starting with: “If we are going to give money away, why on earth would we give it to college grads? This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades. The group who has been hurt over the past few decades is high school dropouts.” All groups have been hurt by this recession. Even college grads with advance degrees and work experience on their resume cannot find work. I know of many, many college graduates who cannot find work. I also know of many who are underemployed because the jobs just aren’t across the spectrum, regardless of education level. Even those with degrees in fields where they say “the jobs are”, such as engineering, are currently facing the situation where there are literally thousands of others with the same degree trying to get the same handful of jobs.

    Another flawed assumption is: “Moreover, it’s not likely that college grads are the ones who are liquidity-constrained. Most of ‘em could spend more if they wanted to; after all, they are the folks who could get a credit card or a car loan fairly easily. It’s the hand-to-mouth consumers—those who can’t get easy access to credit—who are most likely to raise their spending if they get the extra dollars.” The middle class is disappearing because almost all of us are liquidity-constrained. Most of us cannot afford to save and cannot buy what we want. Banks are not giving out credit cards and car loans like they used to, regardless of income and credit history. That is why, even though interest rates are so low, almost no-one can buy a house—the banks won’t loan money! I guarantee you, that if someone can’t afford to buy the things that they need and want, that if their student loan payment disappeared, the money would go towards purchases to improve their quality of life each and every month.

    The next obvious flawed assumption is: “Want to increase access to education? Make loans more widely available, or subsidize those who are yet to choose whether to go to school. But this proposal is just a lump-sum transfer that won’t increase education attainment. So why transfer to these folks?” Expanding student debt does not make education more accessible. Since government and society as a whole benefit from people becoming middle class and spending their earnings, education should be seen as an investment by society, for the good of society. Government used to subsidy education in a manner which meant that students did not have to take on herculean amounts of debt in order to be middle class. Ask any baby boomer who went to University if they had to get into debt to get an education and hold off on actually being middle class for a decade after they start their career, just to pay off that debt. That is what we can do for current and future students. Since we haven’t done right by students over the last few decades, all that we can do to make it right is to forgive their student loans, so that they can have the money that they earn to buy the middle class lifestyle that they’ve worked so hard to attain.

    The next flawed assumption: “This is a bunch of kids who don’t want to pay their loans back. And worse: Do this once, and what will happen in the next recession? More lobbying for free money, rather than doing something socially constructive. ” Relieving them of a burden that they shouldn’t have to carry is the just and proper thing to do. These “kids” who range from 18-70 years old (maybe some even older as many have had to go to school and take out loans to qualify for benefits after job losses due to inept policies over the last few decades), contribute to society on a daily basis. By making the money that they earn available for them to use in this economy is one of the most socially constructive things that we can do. As Americans funds are freed up for them to consume, more service level jobs are created for those lacking a college education.

    And finally, the worst flawed assumption: “This is a bunch of kids who don’t want to pay their loans back. And worse: Do this once, and what will happen in the next recession? More lobbying for free money, rather than doing something socially constructive. ” Obviously, no one wants to pay bills. Those who can’t have already or are in the process of going into default on these student loans. Why not let normal people lobby for money? If it’s a good thing when billionaires and corporations do it, why is it suddenly a bad thing when the citizen populace of this nation does it? Why shouldn’t government be asked to serve the people? Why should government solely be there to serve corporations and the ultra-wealthy? When the populace is forced to take on debt due to the privatization of social services (such as education and healthcare) that the government should be providing for it’s people (so that they, in turn, can contribute to the nation as a whole), then it is only just to forgive that debt. Too many forget that it’s “We The People”, not “We The Most Affluent”.

    Worst. Political Rhetoric touted as economics. Ever

    Well-loved. Like or Dislike: Thumb up 42 Thumb down 20
    • nancym says:

      @Vicki
      “Worst. Political Rhetoric touted as economics. Ever” Best reply to the totally flawed assumptions in this article yet! I was shocked at the naivete of this article’s writer.

      I admit that when the discussion of loan forgiveness first got national attention, I was a bit skeptical about how it could be done without a big fat moral hazard, even though I still have student loans myself, and I’m a senior now on Social Security, facing decreasing chances of increasing yearly incomes. I am also familiar with some students who take on excessive student loans out of sheer lack of understanding of the consequences. On the other hand I am very familiar, having worked at such institutions, with the tactics of private colleges trapping unaware students into excessive debt with outright lies about their future employment expectations, using the government’s loan guarantees as yet more incentive to logging big commissions for student enrollment.

      But when I read the proposed legislation that was introduced in March of 2012, months after this article and all these responses to it–that is HR4170– this approach made sense to me. The proposed bill is not a simple wholesale giveaway of government funds, but a measured response to help those who have made a good faith effort to pay back a certain percentage of their loans over ten years, based on a percentage of their actual income or periods of unemployment, which certainly addresses the situation of many who have suffered through the years since 2007. (The bill would start the clock on loans in repayment since ten years prior to enactment.)

      But the legislation would also put a cap on the amount of forgiveness for any future loans, limiting the degree that any future borrowers would simply take advantage of that aspect in calculating their future debt when starting school. The bill does other things like limiting interest and provides more incentive for public service forgiveness, among other provisions. If anyone wants to view the text of the bill or comment on it, you can read it at OpenCongress.org here: http://www.opencongress.org/bill/112-h4170/show

      One more note, it has been argued here that this movement would result in just rewarding the banks with payments from the government, but the last thing a bank wants is a loan that is paid off early. Banks and other creditors want the interest they earn to go on forever without touching the principal, so in the long run we would be taking some of that interest and investing it in our citizens, those most likely to start small businesses, instead of further enriching the banks, who are not lending to small businesses!

      The economy is slowly getting better, though it may never catch up in my lifetime to the levels it was before. But we have an entire swath of the population, not just 20-30 year-olds, that was seriously harmed during the last few years, punished by circumstances rather than anything they did wrong, all while others (bankers, etc.) reaped huge benefits from financially raping the rest of the population. This bill is not a complete fix for that injustice, but it may be a step in the right direction.

      Thumb up 0 Thumb down 0
  25. Ben Stansberry says:

    I’ll echo Caleb. I’m 100% sure that if my wife and I didn’t have to pay $1000 dollars in student loan debt each month that our spending would increase on things like…a house, appliances for said house, a new car, a new computer. In short, my wife an I avoid any large purchases because our household income of 75k a year for a family of 4 can’t cover the 150k of student loan debt we’re paying on.

    Hot debate. What do you think? Thumb up 12 Thumb down 8
    • Maddy says:

      This probably seems obvious, but… maybe you should have waited to have kids until after you paid off your debt? Family of debt? Why would you think it’s a good idea to create children when you’re ALREADY IN DEBT?

      This seems like biblical stuff if you’ve actually read the ‘Freakonomic’ book.

      Thumb up 5 Thumb down 7
      • Zelda says:

        Paying off $150k in debt can take many years, or even decades, even in good economic times. People who put off starting families until all their financial ducks are in a row risk facing fertility problems that may lead to costly infertility treatments, or missing out on the chance to have children altogether. Worst. Advice. Ever.

        Thumb up 5 Thumb down 4
      • Sharon says:

        I am 37, if I waited to start a family until my student loan debt was paid, I wouldn’t have a family. I will be lucky if my student loans are paid off in time for my 5 yr old to start college.

        Thumb up 4 Thumb down 1
  26. Drew Izzo says:

    I have a better idea. Forgive all mortgages! Hell, car payments too!

    Well-loved. Like or Dislike: Thumb up 15 Thumb down 7
    • caleb b says:

      I know what you are saying, people should pay their debts. I agree. But that is not what this question is about.

      As a society, we’ve decided it is “good” to allow people to have access to college to improve themselves. The problem is this, now EVERYONE goes to college. Since universities keep raising their prices, loans become even more necessary to attend. At some point, something has to give.

      What will end up happening is that the people WITH debt will outnumber the people without it and elect officials that will wipe it out. Much like how people who don’t pay taxes like to vote for people that tend to raise taxes.

      Well-loved. Like or Dislike: Thumb up 12 Thumb down 6
  27. Doug says:

    Can’t find a single economist to support this idea? Have you not heard of Paul Krugman?

    Well-loved. Like or Dislike: Thumb up 18 Thumb down 9
  28. iluvmint says:

    CAUTION: My comment is likely to be disliked. I dislike it myself. This is not an argument for or against forgiving loans.

    I want to pay back my student loans because I knowingly took on the responsibility of repayment. I know that it’s against my personal best interests to pay them. I have high monthly payments that will take another 25 years pay off. Without these monthly payments I could easily afford to buy a home, go on more vacations etc.

    That being stated, morality is not guiding my poisition. Guilt is. I’m also a hypocrit because I’d take full advantage of loan forgiveness if offered it.

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 1
  29. andy says:

    I think this analysis is half right. I dissagree that “giving monie to the poor” would have agreater stimulative effect. These college grads with student loans would be more likely to buy a high ticket item like a new car or a house. Poor people paying their electric bill or food bill would not have as great a stimulative effect. (Not to say that poor people shouldn’t get help for humanitarian reasons anyway). However, this is a bad idea because who holds those loans that are forgiven? What is the dampening effect of that? What would be the impact on the availability of future student loans?

    Thumb up 3 Thumb down 2
  30. Jen S says:

    I understand that a lot of college graduates are not necessarily financially successful, as an artist (with a degree) I fall into the category of working poor, but I did not sign that petition. Even though I would love for my student loans to disappear I agree with Wolfers. The income based repayment system that they put into place already provides relief for student loans (in fact my monthly payments are $0) and after a designated amount of time results in loan forgiveness. Because we live “hand to mouth”, every cent is spent.

    Thumb up 9 Thumb down 6
    • KC says:

      I am on the income based repayment plan as well and pay $0 on my federal loans. However, I had to take out private loans because, according to FAFSA, my father made too much money despite actually contributing $0 towards my tuition. I have no problem fully paying back my loans, the original amount I borrowed. Original amount borrowed is $33,000. By the time I pay it off, I will have paid more than $99,500. I will be paying $360 each month until I am 50 (24 more years). If I could pay more, I will, but just getting by is tough. I consider going to college one of the biggest mistakes of my life.

      Well-loved. Like or Dislike: Thumb up 12 Thumb down 0
  31. Martin says:

    I was smart and paid off my loan early, what are you going to do for me?

    If the goal is to simulate the economy, allow refinancing at lower rates, or perhaps postpone making any payments for a year or two.

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 3
  32. BL1Y says:

    I understand the objection that college graduates are more likely to save some of the money, rather than putting it right back into the economy. But why is this such a bad thing?

    In terms of immediate stimulus, saving doesn’t help the economy much. But what about in the medium and long term?

    People often save money in the form of mutual funds and other investments, so “saving” means there is more capital available for businesses.

    Saving also tends to be in the form of ‘saving for’ something. Saving for a house, saving for a car, saving for a vacation, saving to open a business. Saving for retirement means the money doesn’t come back for decades, but saving for a car? That money might be spent within a year.

    Also, in the medium and long term, isn’t the economy better off if people have a bit of a rainy day fund saved? Having some money in the bank means that if the economy slips, the impact is mitigated. People can continue spending because they have that money saved up. You won’t immediately default on your mortgage if you lose your job. If more people have some money saved, there would be greater economic stability and a healthier economy.

    I don’t think loan forgiveness is a great idea, but Wolfers arguments aren’t particularly strong either.

    Personally, I owe $660 a month to Citibank (and that’s with my federal loans in deferment), and if I didn’t have to spend that money on student loans, I’d be spending most of it on rent to get out of my parents’ house, and saving some to replace my 11 year old car.

    Well-loved. Like or Dislike: Thumb up 13 Thumb down 6
  33. Dori Zinn says:

    Hi there,

    Thank you for this post. I was actually intrigued since I am a (fairly) recent college grad in the workforce. If I may (which I will, since it’s a comment box), I’d like to respond to each of your points. But first, a little history.

    I graduated in December, 2008 and was quite thankful to get a job a week after graduation in a dying industry (Journalism. Don’t judge). It was part-time and was like that for two and a half years until I went full-time this past July. I’m thankful to still have a job while my Grandmother and brother were laid off more than three years ago and have yet to hold a steady job in this economy.

    1.) “This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades.”

    Part-time for two and a half years and now going full-time and I’m barely making enough to support myself. After college I lived with my family FOR YEARS because I wasn’t making enough to live on my own, and also to support my family with their living issues (most who didn’t graduate college, but also make as much as me. Go figure). What sort of ‘high income’ are you suggesting we make and how can I get in on it without selling my body on the streets of South Florida?

    2.) Yes, if my loan was wiped away, I WOULD put money away. It wouldn’t immediately get spent because eventually I DO want to buy a house, start a family, etc. The immediate effects wouldn’t happen, but is that wrong? Should people be spending money immediately, only to get themselves into MORE debt? Shouldn’t we be saving so we can help boost the economy in the long run?

    “…after all, they are the folks who could get a credit card or a car loan fairly easily.”

    Since I couldn’t afford to pay my loan back immediately upon request (part-time media job, remember?), my credit score tanked. What sort of credit card can I obtain ‘fairly easily’ since I’m such an upstanding citizen of student loan society?

    3.) True that this is forgiving those who already have loans. But does it negate people from furthering education? Can I not go back to school to get a master’s or doctorate? What’s stopping me is the money I have to pay from the school I already completed. But these horror stories of kids not being able to pay money back stops kids from going to school because they don’t want to end up like us. They’d rather not even bother. Far too many rely on parents or other means than doing it themselves. And rightfully so — parents are there to support. But what about those like me who had parents who had nothing? Are we all expected to be college athletes on full rides? All we want to do is be better than those that came before us and this just makes it pretty hard.

    4.) “This is a bunch of kids who don’t want to pay their loans back.”

    Do I want to pay it back? Obviously not. But who wants to pay anything? We want to be rich, greedy assholes. Do I know I have to pay it back? Yes. Do I? Yes. I am an adult who accepted personal responsibility, even though some nights I may not be able to feed myself. Am I lobbying for free money? Absolutely not. But think about it: Who DOESN’T want government cash?

    5.) “Why give money to college grads rather than the 15% of the population in poverty?”

    What makes you think we aren’t in that statistic?

    Well-loved. Like or Dislike: Thumb up 21 Thumb down 11
    • Ray says:

      While some college grads are in the 15% poverty statistic, not all are. Most are not. If you think you are, why are you opposed to a stimulus plan that targets the poor instead of college grads? After all, if you are in the 15% you’ll get something to help either way. And helping the poor helps the country more (i.e. has a better stimulating effect on the economy). So what exactly are you complaining about?

      Well-loved. Like or Dislike: Thumb up 13 Thumb down 7
      • Kelly says:

        “If you think you are, why are you opposed to a stimulus plan that targets the poor instead of college grads? ”

        What is a stimulus credit typically? Between $250-$2,000k depending on income? What is that going to due to spur the economy? You know what I would do with 2k? I would PAY OFF MY CREDIT CARD DEBT. As would most Americans. Didn’t we just have a stimulus a few years ago? How did that work out?

        Could I buy I home with 2k? Nope.

        A car? Maybe the down payment, but then there’s still rent, student loans, bills, etc-oh yeah the COST OF LIVING, so the monthly payment would probably deter me, that and the higher cost of insurance for a new car.

        Thumb up 5 Thumb down 2
  34. Ben says:

    Conclusion: You. Are. An. Idiot.

    Student loans are breaking the backs of the young middle class. Education is the path to greater income, entrepreneurship and local/global economy stimulation. This generation of income-earners pay substantially more for their education than any generation prior.

    This generation is now also entering the workforce or attempting to grow in their career saddled with massive debts incurred from getting an overpriced education AND having a threadbare job market, jobs being outsourced, massive layoffs and a crappy housing market to boot. These are all of our collective problems. The solution to which begins with helping relieve some of the financial pressure on the young, educated citizens of this country. These men and women will be the next major stimulus to our overall economy by starting new businesses, buying homes that they surely cannot afford right now, and generally just spending more. I’ve said it a thousand times – if you don’t help the small business owner or the new spender, you won’t have either one to count in the future.

    Finally, I have to take this to task…

    “Imagine what would happen if you forgave $50,000 in debt. How much of that would get spent in the next month or year? Probably just a couple of grand (if that).”
    Nice assumption. You’re just so smug that you know what would happen with that money. People need housing, cars, want to start families – much of which is being delayed due to lack of funds. Do you predict the weather for a living?

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 14
    • pawnman says:

      The point is, forgiving that debt doesn’t put $50,000 on the table to spend today the way mailing checks to lower income folks would. The whole point of stimulating the economy NOW is to get people back to work NOW.

      I’m not a Keynesian…I don’t think we should be doing another stimulus of any kind. But Justin is absolutely right that this is pretty much the WORST stimulus package you could put together.

      Thumb up 2 Thumb down 1
  35. HistoryChick says:

    Freakonomics totally missed the boat on this one. Clearly Freakonomics did not look more closely at the demographics of the people the forgiveness program is aimed to save. These are not well-off rich people who “don’t want to pay their loans” …they are people whose earning potential was theoretically supposed to increase and took out student loans under that premise but instead the tuition costs increased at such an astounding rate that they are losing the most promising decades of their lives to paying off mortgage-sized payments while living at home or well under the means that their parents were able to.

    I would go on and on…but I think Freakonomics needs to take a better, more careful, and more serious look at the actual economics here because they just glossed over a very serious issue.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 7
  36. Chris Jex says:

    Relieving the over burden of debt from student loans that are required to pay for exorbitant tuition costs which seem to have no cost ceiling or connection to true costs any more i.e. tuition bills that seem to add more 0′s to their bills faster than Bill Gates bank account would seem like a justifiable cause. I understand the economic argument and principles being touted by Mr.(Dr?) Wolfers but in a “I Got Mine” Capitalist system I am not going to give up my cause to convince myself that debt relief would not only better my situation but would in fact help everyone. On that Cognitive dissonance-stic note, Why does the debt relief idea have to be a forgiveness of the entire debt, could it not be just a short term relief on minimum payments for a period of time rather than considering it analogous to a $50,000 check cut by Obama to indebted college grads? How about Giving those struggling college grads entering one of the worst Job markets in Modern American history a few hundred extra dollars a month for a short period of time keeping most of the debt but allowing for some cash infused stimulus. I know that drastically increasing Bon Iver vinyl or Kambucha sales cannot save the economic mess(created by people who surely didn’t borrow a dime for college) but I’d like to think that this would be a much better and more equitable stimulus for the middle class and productive class who seem to be going the way of the buffalo at present.

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 2
  37. Joshua Northey. says:

    1. Good argument
    2. Bad argument. Blind faith in consumption is what broke the economy in the first place. You want to spend money on good things. Investments. Giving it to the poor just wastes it because they spend it on consumables. Then the consumables are gone and we are right back where we started.
    3. Good point. We don’t need more college education in this country anyway, we need more vocational education. Too many people getting history degrees instead of Microsoft Office degrees. The latter will be a lot more beneficial then the former.

    Full disclosure: My wife and I carry $15,000 in SL debt. We had nearly $50,000 in SL debt 5 years ago, but we have jobs and live frugally.

    Thumb up 5 Thumb down 7
  38. kate says:

    As someone who has close to 100k in school loans and is not in a profession with a high salary yield, I would appreciate just a little bit of help. I pay my debt, I work, but I could use a push – as I think most of middle (and not so middle America) could. The rocketing price of higher education is a joke playeIvy League education by working for a summer (so say my Ivy League educated professors). I understand that how thing sometimes work, but a little bit of help would be nice. Low, locked interest rates, a fixed amount stimulus package so as not to be crushed by interest. I’ll take a compromise

    Well-loved. Like or Dislike: Thumb up 9 Thumb down 4
    • Enter your name... says:

      So why did you choose to incur so much debt, and—having freely chosen to incur that big debt—why did you choose to go into a low-salary field? Did you not realize that big debt + small salary = voluntarily chosen difficult financial life?

      And why should I, who did not have any say at all in your choice, have to pay anything at all to help you recover from your bad financial choices?

      Thumb up 6 Thumb down 7
      • meh says:

        All of us in debt wholeheartedly chose, willingly, to incur exorbitant amounts of debt as well as low-salary fields. Yep. It’s not like we were told that graduates make a million more in a lifetime than those without a degree. Or that the average salary of someone in a particular field makes, say, upwards of $50k a year. Nope. Recruiters warned us there wouldn’t be jobs in our fields when we graduated. Sure.

        Thumb up 6 Thumb down 2
  39. Mara says:

    “This is a bunch of kids who don’t want to pay their loans back.”

    I have a hard time swallowing this as I am 31, have been paying back my loans for 10 years (never missed a payment) and will continue to pay for at least 10 more. That’s assuming I don’t face another financial catastrophe along the way (i.e. medical bills).

    You don’t think that people with student debt would be likely to put that money back into the economy? Again, I disagree. I spend 25% of my take-home pay solely on my student debt. I spend almost nothing on discretionary items. I don’t buy clothes. I don’t go out to restaurants or to the movies. I don’t travel. I drive a 12-year-old car. I can’t afford to save for my future. I can’t even imagine a world where I would have a few extra hundred dollars at my disposal each and every month. It would absolutely change my life! I know I’m not the only one who feels that way.

    This legislation is the first hope I have had for my future in a long time. I’m not overly optimistic about its chances, but for the first time in a decade I have allowed myself to dream about a life without student debt.

    Well-loved. Like or Dislike: Thumb up 18 Thumb down 5
  40. Aseem Rambani says:

    There are 2 crucial points which are to be considered-
    1. On whom, should be spent the money?
    2. How much returns in terms of rise in demand, will we get after spending?

    I think waiving the student loans will not help much, as it won’t give rise to demands rather liquidity would be soaked by those college grads or kids by investing that money to buy houses and cars.

    Spending that money on poor will raise the demand quite dramatically, as all the money would go into the consumer market which actually is worst affected by recession. That will help the consumer market to grown once again.

    This money will be best utilized if it is used for purchasing consumer goods, rather than repaying the loans. Repaying the loans will only help the banks and financial institutions to ease out a bit, leaving the consumer goods market reeling in recession.

    Thumb up 2 Thumb down 3
  41. Vanessa says:

    If only people weren’t so worried about racing through college. I stopped going full-time, started taking part-time classes and worked my butt off to pay for them. It’s very do able and may even set you apart from your non-working classmates. I took out loans for my first few years and even managed to pay on the interest when I had birthday money or something.

    It’s not “free money!”

    Well-loved. Like or Dislike: Thumb up 12 Thumb down 5
    • Vicki says:

      Going part-time may work if you’re not going for a professional degree, or only doing your general ed credits before joining any professional program, or doing a liberal arts degree. In professional degrees you are expected to take certain courses together in certain semesters, attend full-time, and progress forward with your class.

      Part-time may work for some, but not possible if you’re going for a professional degree.

      Well-loved. Like or Dislike: Thumb up 7 Thumb down 2
  42. Martin says:

    Nobody forced any of you to take out $100k loans for an art degree. Why should I help you pay it off?

    Hot debate. What do you think? Thumb up 17 Thumb down 14
  43. Swintah says:

    I spent the last year living in a rented hovel and being epically frugal in order to pay off my student loan debt. I expect to make my last payment in a month or two (depends on how much tires for my car cost.) I would really resent all that time and effort paying down loans if something like this goes through right after I pay off my loans.

    Just give money to poor people, or better yet, increase spending on needed infrastructure upgrades. That way people who don’t have jobs (esp. construction labor) can get money for working.

    Thumb up 10 Thumb down 8
  44. John Regan says:

    I’m afraid you are not thinking this through at all. And it doesn’t make any difference what “economists” think any more than anyone else, does it? Have economists been elected to some special office we don’t know about? Debts are the province of lawyers and courts, not “economists”.

    http://strikelawyer.wordpress.com/2011/01/15/amending-the-constitution-the-jubilee-amendment/

    There are a number of posts after that. Read them all and maybe you can comment intelligently. I’d be interested.

    Thumb up 3 Thumb down 1
  45. Josh S says:

    While I agree with Mr. Wolfers’ philosophical argument, his macro analysis has to be off. I wrote a response on my blog, I hope some of you will read and enjoy it:

    http://blawgconomics.blogspot.com/2011/09/wolfers-on-loan-forgiveness-analytical.html

    JS

    Thumb up 1 Thumb down 1
  46. Jim in NC says:

    Maybe we are all missing the point.

    The mortgage/ housing industry has gone through a decline, because people started paying more for a house than it was worth.

    The same is now occuring in education. We are paying more for a College Education than it is worth, and as a result unable to pay the debts. College Tuition consistently rises at a rate of 3% more than inflation. For what? Are any of the jobs available via an undergrad degree increasing entry level salaries by the same amount?

    Engineer, Nurse, Teacher, Accountant, etc… Between outsourcing, layoffs, etc… we need to question if the college degrees in these areas are still offering a positive ROI.

    Well-loved. Like or Dislike: Thumb up 28 Thumb down 0
  47. Jason says:

    While there may be better ways to stimulate the economy, this argument has some serious holes.

    “The group who has been hurt over the past few decades is high school dropouts.” While probably true, if you’re dropping out of high school when it’s free, barring extenuating circumstances, isn’t that your own fault? Not to be insensitive, but implying that HS dropouts should receive special treatment is rewarding failure, and will breed continuing failure.

    If you forgive student loan debt to recent grads and save them several hundred a month in payments, I imagine that for many, it could immediately result in buying a first (or bigger) home. True, you’ll never see a dollar-saved-dollar-spent return, but when college grads see lots of extra income freed up, they’ll definitely raise their standard of living.

    College costs a lot, and there is a great divide between the haves and have nots. Those that can afford the school of their choice debt-free are lucky, while the rest of us have to decide whether to borrow for our education to get a competitive advantage over our peers, or simply not go to college.

    The bigger issue is helping college costs be more manageable overall, but in lieu of handing billions to struggling car companies, banks and mortgage companies, helping the “average American” achieve their academic dreams seems much, much more palatable.

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    • Enter your name... says:

      Basically all high school dropouts are faced with what seems to them to be extenuating circumstances.

      Nobody drops out of high school because their lives are going well. They drop out because of family problems, a lack of child care (for their child or for younger siblings), mental illness (theirs or a parent’s), to get a minimum-wage job so they can eat every day, to get away from a violent parent, and other problems that most middle-class adults are grateful that we have never needed to face. Additionally, they drop out of high school because they are doing poorly in school and become convinced (perhaps with the help of school administrators, who want failing students off the books) that they will never learn enough to earn a diploma.

      The average 16 year old is not capable of handling these difficult situations.

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      • Jason says:

        You bring up a good point. I don’t mean to downplay the severity of their situations. I guess my point was to emphasize that by subsidizing those who do dropout, I think it sends a message that it’s probably easier to quit and get a handout than to work hard, suffer through it and try to overcome. It seems that if one were on the fence with the decision to drop out or not, knowing that there’d be a bailout waiting for them would certainly seal their fate. It seems that many federal programs that intend to help out those who are down end up only being abused by many who could be doing much more, and working much harder. There are people I know who struggle and could qualify for programs like welfare or WIC but choose not to. I just worry that the structures we’ve set up make it appear easier to receive a handout than work hard.

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      • Dody says:

        I dropped out for a lot of the reasons you stated, but what stops them from getting a GED and going to college? A weak mentality. I support forgiveness of student loans, because I went to college after a nightmare teen life.

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  48. S Sibley says:

    ME: If I am not mistaken we did give a COUPLE of THOUSAND dollars to people a few years ago by BUSH to try to stimulate the economy so that we did not fall in the the recession we are currently in? That worked out real well now didn’t it?

    YOU: “Most of ‘em could spend more if they wanted to; after all, they are the folks who could get a credit card or a car loan fairly easily. It’s the hand-to-mouth consumers—those who can’t get easy access to credit—who are most likely to raise their spending if they get the extra dollars.”

    ME…People that are signing the signon.org petition are COLLEGE GRADs that ARE LIVING hand to mouth that are trying to get SL forgiven b/c the degree(s) they earning that were supposed to prevent them from living hand to mouth are no causing them to be broke before payday.

    YOU: “If we are going to give money away, why on earth would we give it to college grads? This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades. ”

    ME: So giving it to the companies and banks that got us into the financial mess that is affecting people across the country way a great idea? The bank certainly didn’t want to work to help me and my family stay in our home. IF they get relief then I SHOULD TOO….

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  49. John B says:

    Most of the people with large student loan debt are not bad people. They are people who have been pushed into getting a college degree and who have been taken advantage of by the colleges which have overpriced their education enormously.

    Nothing has gone up faster than the cost of a college degree over the last several years–at increases 4 or 5 times that of inflation.

    That being said, complete forgiveness would not work. But, payback of the loans–without interest–would give these people a fighting chance to have a future.

    The loans should be re-written with gradually increasing payments over time, with no interest. In that way the borrower will pay back a loan, the government or other backers of the loans will get money back and a degree of fairness will be met.

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  50. Geoff says:

    Am I really the first person to note in these comments that all these “stimulus” programs are a) straight out of the Keynesian economic playbook, which b) has been thoroughly discredited by now?

    The idea of forgiving college loans needs to be met with the Broken-Window Fallacy. Those proposing it have not accounted for the fact that the loans are primarily owed to the government, and the government is the taxpayer. So the taxpayer gets stiffed so that those who already have educations – and therefore a leg up in getting a job – will benefit. This redirects money the taxpayer would have spent on “stuff”…to college graduates.

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    • Kelly says:

      Actually most of the people petitioning are fighting for their private loans, which are Sallie Mae. With principal balances that have tripled over the course of a few years due to random fees, double digit compounding interest rates, and now deferment due to the inability to find jobs (because either the school did not properly prepare them for the workforce, or because jobs aren’t available), these people are left feeling hopeless.

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    • ibr says:

      What do you think about the income based repayment option for federal loans?

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  51. Erin James says:

    ‘Why give money to college grads rather than the 15% of the population in poverty?’

    Because we’re the ones paying to support those collecting welfare!! No one is helping me pay for anything, yet the govt keeps taking more and more out of my pocket. Why? Because I’m educate and have a job. So, I must have money coming out of my ears, right?

    I can’t even deduct my student loan interest from my taxes. Why you ask? Because the govt says I make too much money and I don’t deserve that kind of break. You’re not rewarded in life my working hard. You’re rewarded in life my trying to get as much as you can from someone else–hence your argument to give more money to the people already taking it to begin with!

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  52. Kelly says:

    All of your ‘lenses’ are assumptive, and not backed by any facts.
    “Make loans more widely available, or subsidize those who are yet to choose whether to go to school.” Make them MORE available? That’s WHY the national default rate is currently nearing double digit percentages. TOO many people were given money.

    “This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades. ” Where are the stats on this? Stats show that grads are employed, but no where do they claim what type of employment they have. I waitressed for 5 years, 2 of which were AFTER I graduated as my ONLY means of income as that is how long it took to secure a job, which paid less than my weekly take home in tips.

    “If you want stimulus, you get more bang-for-your-buck if you give extra dollars to folks who are most likely to spend each dollar.” Like the highly educated that know investing ina home is a GOOD investment, but can’t because their debt to income ratio is too high to be approved for a loan? Oh, no you meant to the people that would use the stimulus money to…pay off debt. Yes, that spurs the economy.

    “Do this once, and what will happen in the next recession? ” Hopefully, this creates the reform they are seeking-like more stringent lending practices (so that every Tom Dick and Harry CAN’T get an 80k loan to go to school), lowering the cost of tuition, stricter curricula, eliminating the private schools that don’t teach any real world job skills, etc.

    Did you actually take time to research the cause before writing the.worst.post.ever?

    So you based your 5 arguments on a single paragraph of a move petition? Nice.

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  53. Hassan Eltorie says:

    As a grad i pay 8% interest on my loans. why? when it is government backed and funded loan, the government borrows at near 0%, and if they want to make a spread to cover costs and make a profit, why not 4%? 8% just doesn’t make any sense especially with the push towards making education a priority for this country.

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  54. Edward says:

    Europe already tried it. Didn’t work. Students were too incentivized to get crappy jobs out of college so they can have their student debt forgiven.

    It’s the worse idea ever. If you are gonna get $100k in student loans or more, don’t major in basket weaving (or equivalents like English, Classics, Philosophy, Communications, etc.).

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  55. John Hewitt says:

    “This is a bunch of kids who don’t want to pay their loans back. ”

    Hello, I’m 44 years old and owe $58,000 in student loan debt.

    This is just one way in which you assumptions are off. I pay whenever I can, but with this economy, I’ve had to do deferments and forbearances just so I can pay rent and eat. Don’t lump everyone together and assume you know their circumstances. It makes you look foolish.

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  56. Andrew Cole says:

    Hidden due to low comment rating. Click here to see.

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  57. Dante940 says:

    I think this is an important issue in that the value of a college education needs to be redefined. Many claim to be over $100k in debt to student loans. As a recent college grad myself, with no $0 in school related debt, I have to ask, how and why? I was faced with a difficult decision when I graduated high school back in 2006. Should I attend that prestigious university and finish with several $100k in debt or stay in state and attend a public university where the state subsidizes your education. While I didn’t face this additional question as I knew I wanted to study engineering, several friends had to choose whether they wanted to chase their somewhat unrealistic dream jobs or study a much more practical field. 5 years later, it has shown that those that attended less expensive schools and thus accumulated much less debt, if any, are much more financially secured than those that attended expensive Ivy league schools. In addition, those that obtained degrees in engineering, healthcare, science have not have difficulty in finding jobs, regardless of which school they attended and despite what a lot of fear mongers claim about the job market. Yes, the economic situation sucks right now, no doubt about that. I think a better educational “stimulus” though would be placed in improving public schools substantially. Not just in materials and faculty but culture. When I attended grade school, I witnessed a mindset among many educators that one MUST attend that dream school and career no matter what to achieve happiness. This is however a fanciful and impractical ideal, and therefore a great disservice to students. If you can appropriately afford an expensive education, by all means, go for it. If you come from a middle class family, such as I myself though, be considerate of your financial situation. $100k debt is never a good thing. In addition, science and mathematics must be encouraged and emphasized in schools much more. The jobs in demand right now require it. It is depressing when I see so little of the younger youth interested in these subjects and related careers. While I see the economic and intrinsic value of some liberal arts degrees, they’re not what this economy needs right now, particularly from a global standpoint. There’s little reason to take up so much debt for a degree when the deciding factor for a job is what you studied, not the school you attended.

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  58. LSTB says:

    “This is a bunch of kids who don’t want to pay their loans back.”

    It appears along with his Antoinettean attitude, Wolfers believes that this debt will be repaid once the economy recovers. There’re a couple problems with this assumption.

    (1) The government’s Guaranteed Loans and Direct Loans are evaluated based on accrual accounting rather than fair-value accounting. The CBO states:

    “Although the FCRA [Fair Credit Reporting Act of 1990] methodology accounts for the average losses from defaults on loans, it does not include the cost of all of the risks that loans and loan guarantees impose on taxpayers. In particular, it does not include the cost of market risk—the risk that losses from defaults will be higher during periods of market stress, when resources are scarce and hence most valuable. The cost of market risk is excluded from estimates under FCRA because the law dictates that expected future cash flows be discounted at Treasury borrowing rates rather than at the higher rates that private investors would require to make the loans or guarantees.” (Page 3)

    Alarmingly, when the CBO rescored the President’s plan to kill the guaranteed loan program and switch to Federal Direct Loans exclusively according to fair-value accounting, the program was still projected to lose $118 billion over ten years (page 6).

    Thus the government is going to lose money on student loans, irrespective of whether the kids want to repay them.

    (2) Government-held nonrevolving debt is the only kind of consumer debt that is increasing during a time of excess private sector debt and low GDP growth. Credit card debt? Dropping. Mortgage debt? Dropping. Other nonrevolving debt? Dropping. Student debt? Growing.

    When debt grows faster than GDP, it’s a pretty good indicator of a debt bubble.

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  59. Theman008 says:

    I graduated from college five years ago. I spend $250 a month on student loan payments. If that was forgiven tomorrow, the first thing i would do is save more money to own a home (as opposed to renting). The second thing I would do is start one or more buinesses. Fastfood, CellPhones, Residential Construction.

    Stimulating me by forgiving my student loans allows me to stimulate the country faster. My college cost more than it was worth because of the Sallie Mae loan system which actually sets the tuition colleges can charge.

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  60. Loan Borrower says:

    Wow is this guy for real? where did he get his so called facts from? For your information, not every person that borrowed money for student loans finishes school. Some had to stop in the midlle of, or almost at the end of their education because they simply could not afford to take out any more loans to have to repay. Stop assuming you know what course of study the loan borrower took in school. some of these students and I’m not saying all, got duped by these so called private colleges into taking out bundles of loans and not actually graduating from the courses they signed up for. I know a lot of my friends that went to these online oclleges and private institutions and got stuck with their debt and did not graduate. And stop saying that the majority of the student loans that are owed are a “bunch of kids” that just don’t want to repay their loans! This debt spans every age. Don’t presume to speak for the innocent people that are truly struggling wih this repayment every month. I’m sure there are a few that are able to repay and some that just don’t want to , but the majority just can’t!

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  61. Gabe says:

    Regarding #2:
    If poor people are more likely to spend more of the free money they get, what does that say about the spending habits of those people? Wouldn’t it just be throwing good money after bad?

    Regarding #3:
    “Perhaps folks think that forgiving educational loans will lead more people to get an education.” Or perhaps you think no one will notice that you’re beating down a straw man?

    Regarding #4:
    “This is a bunch of kids who don’t want to pay their loans back.” Compared to what… a bunch of poor people who want more free money than the current entitlement system already gives them? How is one giveaway really more justifiable than the other?

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  62. Me says:

    Worst post ever.

    Many people graduate from college and cannot get high-income paying jobs. In case you haven’t noticed, we’re in an economic crisis with unemployment at an all-time high. Do you really think someone fresh out of college is going to get a job at Morgan Stanley making six figures?

    Get real.

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  63. cb says:

    I don’t really care about the economics or the morals of such a proposal. This would be extremely stimulative for me. It would save me substantially, and I would spend 80% of the savings at least. I’d probably buy a new furnace and a car and I’d hire some serious child care.

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  64. Liz G says:

    While I understand your points. I do disagree with this article. You make the assumption that college grads simply do not want to pay their loans back. You are assuming that all college grads are high earners. And you are also ignoring the fact that there are many college dropouts who still have loans to pay on but not a degree. In truth the situation is much more complicated then that.

    In the three years since finishing graduate school, I have not earned enough money to both pay on my loans and pay my rent. Having tried to negotiate something affordable with the banks has been nearly impossible. I would like to be able to pay. I would also like to have enough work that allows me to pay. In general, I feel as if I have very little control over the situation and few people to turn to for any real advice or help.
    What about college grads that are living below the poverty level as I have for several years? In truth we would like to pay. As borrowers we have absolutely no protections, banks can raise interest rates, demand money when we are not making enough to pay and add on fees while graduates try to find jobs.
    People are signing this petition not because they are “a bunch of kids who do not want to pay their loans back.” They are signing it because the social contract between the people, the government, and businesses is broken. They are signing because they are tired of having no options, no control. They are tired of being taken advantage of by banks and being made to feel guilty for it. (Trust me, I tried very hard to find a job that would pay enough to make the required loan payments.)
    While it may not make economic sense, the author should understand they frustration and hopelessness young people feel. And instead of criticizing, please suggest what would be a better option for the educated poor?

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  65. Michael says:

    OK, fair enough analysis. Switching gears a little — what about refinancing federal student loans at current rates? That could result in extra money in each student’s pocket each month, which means there would be some stimulant effect and even better, the stimulus won’t disappear after 12 months, but would continue much longer.

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  66. Irena says:

    “Most of ‘em could spend more if they wanted to; after all, they are the folks who could get a credit card or a car loan fairly easily.”
    So, you are proposing to get even more loans? Why? Because education prices are unregulated and don’t correlate with economic realities. Education doesn’t pay off as much as it costs. Graduates don’t have money to spend. But they’ve got the taste of paying off %% of their loans and probably won’t take any more chances until they pay off the burden.
    I doubt that anyone would be willing to pile their loans and become a slave to the banks to the rest of their life.

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  67. TTT3 says:

    I apologize if I come off crass, but falling for that article is a sucker move. Read it again, it doesn’t even attempt to provide support for any of the positions. Just conjecture. Really, this article on its face barely warrants addressing, but since it was offered for discussion, let’s just address each of the 5 separate lenses.

    1. Distribution. ?!? Not sure how the assumption that the group typically having high incomes carries weight, even it it were comprehensive. First, income does not equate to wealth and/or purchasing power. In fact, debt is a major factor in determining who within similar income strata has wealth and purchasing power. The argument that high school dropouts are those hurt most during the recession is not supported, and irrelevant. Case in point, if I am unemployed and receiving unemployment but have no student loan debt, I am likely better off than someone who is also unemployed but has greater debt obligations. Additionally, who cares if high school dropouts are hurt more…they are freakin’ high school dropouts! They should be hurt more. I know I didn’t go to college to fare the same as high school dropouts, and neither did either of you or the author of the article. This point is just dumb.

    2. Macroeconomics. If you believe all the arguments for cutting taxes to spur the economy, then you have to believe an argument that goes one step closer to the consumer by putting money directly into would-be consumer’s pockets instead of corporations. The statement that “most of em could spend more if they wanted to; after all, they are the folks who could get a credit card or a car loan fairly easily” is absurd. Where in the world was this guy the last 4 years that he missed the mortgage crises and the phenomena of giving freshman credit cards so long as they could walk and chew gum at the same time? This one you can answer for yourself, virtual show of hands if you would spend more if you didn’t have student loans?

    3. Education Policy. Irrelevant. No one is offering this idea to increase education. It’s being offered to boost the economy. Stay on task, Mr. Wolfers. This position here really tips the hand of the writer that he doesn’t respect the readers and believes you/we are idiots.

    4. Political Economy. Where was this position during the big corporate bailouts? Also, I know I’m not a kid who doesn’t want to pay my loans back. I’m an adult who doesn’t want to pay my loans back, just like GM and AIG. This argument definitely holds true, but it’s too late to bring it out since it was applicable during TARPs.

    5. Politics. Simple answer to the question “why give to college grads rather than the 15% pop in poverty,” because college grads owing student loans are likely representative of individuals working themselves out of poverty through discipline, sacrifice and determination. They clearly aren’t silver spoons because they borrowed to go to school. Yet they did go to college. Not saying that those in poverty deserve to be there, but the likelihood that you are giving money to deserving people by paying off student loans is pretty sound. Kicker, we vote. The 15% in poverty don’t. Yes, I said it, it is politically expedient. How about that, an idea that works, seems to reward those who deserve it and is politically expedient.

    This article…worst idea ever. Or maybe not because it just may distract some of us.

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  68. fallingspider says:

    I’m not familier with this site, so I don’t know the writing styles of the authors. However I feel it needs to be stated that unless this is satirical it is completely inaccurate.

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  69. Julia says:

    My two cents:
    The most important thing I learned in grad school: “Begin with the end in mind.” I believe that is one of the seven habits of highly effective people. The book was less than $25! College freshman (and their parents) would do well to remember and make choices according to that rule. When taking out the freshman college loan, and multiplying by 4 years, could the student/parent borrower not estimate what the payment would be. If the payment is not sustainable by the LOWest expected salary in the field, the borrower might be wiser to find a school that was not so costly.

    The borrower is the SLAVE to the lender. That is a proverb that will ring true til eternity. It should be posted in 72 point font, just above the signature/co-signature line, on every promissory note to borrow money.

    The items below in quotes are extractions from various posts. What follows immediately behind that quote is my own observation.

    “What would be the impact on the availability of future student loans?” If the original principals and interests are not paid back, how then is there money in the “lending funds” for the next round of students? (and will they be more wise borrowers? Or never get the chance?)

    “Education is the path to greater income, entrepreneurship and local/global economy stimulation.” That is not really the truth, but a wish. Education is no guarantee of success, especially if the person getting the education is over borrowing.

    “They are people whose earning potential was theoretically supposed to increase and took out student loans under that premise.” I’d say that PREMISE was quite theoretical, probably incorrect and quite risky. Is it possible that betting on pork futures in the stock market might have a better return?

    “The mortgage/ housing industry has gone through a decline, because people started paying more for a house than it was worth.” True. And that is why the housing industry collapsed. To everyone’s great unhappiness.

    “That’s WHY the national default rate is currently nearing double digit percentages. TOO many people were given money.” Yes. Borrowing for higher-education became too easy. Borrowers did not have realistic goals and plans, nor was the money lent on any such premise. And now those borrowers are tremendously burdened.

    “Why don’t we give money to the 15% of people in poverty AND forgive student loan debt?” Who is this ‘WE’ you speak of, but the people who have invested wisely in a reasonable plan for their future? The ‘WE’ should be looking for strong investments, not stupid bailouts.

    “Those that attended less expensive schools and thus accumulated much less debt, if any, are much more financially secured than those that attended expensive Ivy league schools.” Tremendous wisdom in that sort of planning, even if it is not prestigious.

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  70. Shaka McGlotten says:

    I’m not sure how much of Wolfer’s response is based on data or a knee-jerk feeling that it’s just not fair for people not to pay back their debts (um, like in the 2008 financial crisis?)

    I think he overestimates the income of college grads and the ability of college grads to get good jobs. Even professionals like lawyers and academics are often debilitated by their loan payments. And recent analyses show that this is the worst market for college grads in a long, long while. Highly qualified members of my PhD cohort, as well as many friends with degrees in business or law, are still looking for regular gigs five years out of grad school.

    The idea that this is simply a matter of whiny well-off kids who don’t want to pay money back is wrong headed too. Well-off kids don’t have debt. Their parents paid for school or assumed the debt themselves. And these kids are, like the fantasy “job creating” millionaires Republicans are trying to “protect,” already guaranteed jobs, if not as a result of the branding of their elite schooling, then because their getting jobs never depended on schooling in the first instance (i.e., Bush and other recipients of the least discussed form of affirmative action–legacies), but on the same professional and personal networks their parents used to get jobs.

    The argument that people shouldn’t have taken loans out in the first place, while superficially true, misrecognizes the catch 22 middle class Americans find themselves in–either they take out loans to improve their social opportunities or they opt out of higher ed. The assaults on public higher ed and the outrageous costs of private schools means that to get an education means going into debt, often for decades. This is not an equal playing field.

    So, my story? I came from a working class military family, got an undergraduate degree at a very prestigious school on full scholarship, then had to take out tens of thousands in loans to complete my PhD in a social science. I have a steady job and live as modestly as I can in a relatively inexpensive neighborhood in NYC. I don’t have a car, a TV, or cable. I eat a lot of fresh fruit and veggies and legumes. And my $374 a month student loan payment really screws me. If I had that money, I’d put some of it away, but I’d also be spending a good chunk of it in order to enjoy the modest perks of 10 years of higher education and an otherwise good career.

    And I’m not alone.

    Readers of this post and of my comment should note there is already a student loan forgiveness program that forgives loans after ten years if you work for certain sorts of non-profit institutions and pay a certain percentage of your income. I can’t do this without living with people in a tenement, but you should look into it, and Wolfers should have mentioned it.

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  71. Zek J Evets says:

    I signed the petition.

    Why? Because I am a working student. Because I, like the majority of college students, cannot afford an education, but need one; because I do not receive grants and scholarships galore; because I chose to attend a public school, which should be cheap but is actually quite expensive, and getting more so every year (in California); because I, like the majority of students, will not find a job in our field, or be paid consummate to our level of education.

    We will be underemployed at part-time jobs even though we work full-time (because 39 hours a week isn’t good enough), paying off debts for decades, and finding a combination of inflation, a double-dip recession, and rising taxes for lower-classes killing our already starved paycheck.

    I’m sorry that so many people here are so upset at the idea of forgiving student loan debt. I’m sorry because there comments reveal themselves to be the lucky people, people who don’t have to experience the crushing weight of being paycheck to paycheck while still a full-time student, sitting in the career-center hearing your counselor tell you there are no jobs for you.

    And no, I’m not the only one. I go to a commuter school, a working-class school. I live in one of the most expensive cities in the nation. I am a textbook case college student who will ultimately live a life of moderate to severe poverty, all because I thought getting a college degree would actually help me, like it did for previous generations.

    And I’m fine with that, as I sit in my anthropology class learning about global cultures, knowing that it will not help me at my low-paying office assistant job.

    I know I’ll never have the luxury of working in my field or profession of choice for a long time, if ever. I’ve accepted that.

    But I’m not fine with being blamed for getting an education and then finding out everything it was supposedly worth to be worthless. Please don’t marry your ignorance with intolerance, and tell me that those of us who didn’t know any better should suffer for crushing debt that isn’t supposed to be. Education was supposed to be affordable. Education is supposed to be accessible.

    Student debt is crushing the next generation of the middle-class, and frankly speaking, it is a big reason why our country is slowly revolving down the toilet-bowl.

    Forgive student debt! We’re not 20-something shallow-consumers. We’re people — with families, careers, real debt, responsibilities, and no way out of going broke by inches at a time.

    Trust me, this plan would actually revive faith in not just the political system, in the economy, and provide a real boost to consumer spending, but it would actually *do* something positive for ordinary Americans.

    But what am I talking about? It’ll never pass.

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    • Spekkio says:

      Wow. You remind me of…well, me. You are spot-on.

      I will add this…in the original article and many of the comments that follow, there’s a lot of judgment going on. “Why did you take on this debt? Were you that dumb?” (Etc, etc.)

      Were we dumb? Yes! Yes, we were! We were naïve seventeen- and eighteen-year-olds who grew up before everything went to hell. And we were lied to…A LOT.

      We were taught that, among other things:
      A. Education is the only sure path to a happy, successful future.
      B. Education is an end unto itself, not a means to an end.
      C. We could do whatever we wanted if we worked hard enough and played by the rules.
      D. We should aim high and take risks.
      E. We should “follow our bliss” and pursue our dreams.

      What we generally were not taught:
      A. There is dignity and honor to be had in work and in manual labor.
      B. Not everyone has to own a house and two cars.
      C. The world works based on networking, bribery, nepotism, and luck – not so much merit.
      D. People will step on you to get what they want.
      E. For the most part, nobody cares.

      We were filled with years and years of false hope, lies, myths, and fairy tales. Now we’ve grown up and we feel like we were cheated…betrayed.

      Look at the world we’re in now. Those precious undergraduate degrees – even the STEM ones – are declining in value. Graduate degrees are worse. (Look at the law school scam blogs if you haven’t already.) The government is little help now…in truth, the partisanship is so bad that I sometimes fear we’re headed for a civil war. Unemployment (U3) is a little over 9% and unemployment + underemployment (U6) is over 16%. Poverty is at record highs. In short, it increasingly looks like the American Dream™ is *dead.*

      So yes, now a large number of people seek radical change. Imagine that.

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  72. David Havyatt says:

    While actually having a short run bursary program to fund more people to start further education now would not fail on any of the five criteria. Slightly better than giving it directly to the people in poverty. You increase the economic activity of the additional students, and by taking them out of the workforce create more employment opportunities for the unemployed poor.

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  73. Stephanie says:

    I’ve been paying down my student loans as fast as I can. I pay extra so that I’ll pay less interest over the long term. Which means that, had I had the opportunity to have my loans forgiven, I wouldn’t have paid that extra amount. Would the loan forgiveness come with pay for the extra money many people have contributed beyond minimum payments?

    I understand the reasoning behind forgiveness programs. Often times if you are working in the public sector, teaching, healthcare, etc., you are not making a lot of money, but you have student loans. That seems a little bit more understandable. However, there is also a program that will forgive the remainder of your loans if you pay the minimum for a certain number of years. I haven’t run the numbers, but I wonder what the difference in money paid by the former student would be if they paid it faster and owed less interest overall.

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  74. Mike says:

    His reasoning is total crap. College grads have been absolutely MASSACRED in this recession and financial mess. The high paying jobs he points to that any college grad can get are the ones that have disappeared and probably for good.

    You give $50k back to people who have degrees, you get people who can’t afford homes INTO homes that are currently sitting in foreclosure. You get people making those big purchases. You give $1000 to 50 poor people, you get them into the grocery store and paying the electric bill and other necessities.

    Freeing up that debt also allows those brilliant minds the freedom to potentially open new businesses and therefore encourage hiring, entrepreneurship, innovation, all the things this country needs to advance and continue to lead.

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    • Bradley C. says:

      This is going to come out mean but…how brilliant can those minds be if they racked up huge student loans for worthless degrees? I know an english lit. major sounds like a good idea but do you mean to tell me that you never thought “hmmm, what kind of a career will that get me?” or “what sort of a business will I open after I know this stuff inside out?”

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      • sam says:

        How come you let them rack up that debt smarty pants? Yes you are part of the problem. I don’t recall anyone screaming “Whoa this kid is able to get $100k at 6.8%? I can’t even get a $20k line of credit at 10%!” Why weren’t you demanding your congressman or other political representatives to stop giving away debt on nothing but a signature and being 18 years old? Take some social responsibility.

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  75. Ulysses says:

    Credit ratings are based largely on debt:assets. With, like, 80% of Gen Y’s total debt being wiped out (probably…I’m just pulling a number out of my toukas), our buying power goes way up. For purely selfish reasons, I say yes without thinking twice. But overall, it’s certainly not unjust for some form of relief to come our way given what we were promised and what we paid in/got out, which the whole thing has been pretty disingenuous to criminal. Considering what we had to pay compared with previous generations, the amount most of us have paid back is probably just about fair. (haha)

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  76. Nick says:

    The conversation misses the big point: forgiving student loan debt will stimulate the economy because it frees graduates from the burden of having to find a high paying job. How many business school kids want to start their own company, but can’t because they owe so much? How many medical students are interested in serving rural communities, but can’t do so financially?

    Without student debt, we’d see a huge boom in innovation – and from that undoubtedly job creation. Worst idea in the world? Far from it.

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  77. Tom says:

    Spot on, especially point 2 – marginal propensity to consume needs greater weight in stimulus spending, in my opinion.

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  78. Michael says:

    1) Income growth for college grads? You mean the college grads starting life tens of thousands of dolalrs in debt and record un/underemployment? THOSE college grads?

    2) If you forgave $50k in debt maybe those people could actually START their lives and take borrow other money to buy things like, I don’t know, a house. Then they can start paying more property tax and contribute to their communities, which will have a positive impact on that poverty card you’re playing.

    3) YOU were the one who created this argument to pad your list. Don’t force your speculation onto others.

    4) This is a bunch of kids who have tens of thousands in loan debt, a burden their parents did NOT have to take on in their generation. And this is debt that CANNOT be discharged under nearly any circumstances but death.

    5) Really? You’re going with the argument that proponents think college graduates might be better recipients than Wall Street bankers and hedge fund managers? You think that’s a problem? Where’s your substance?

    Thanks, Random Guy on the Internet, but your arguments are fluff and you’re hiding behind the name of this site as if it means something.

    Well-loved. Like or Dislike: Thumb up 17 Thumb down 2
  79. dboy says:

    It’s not as bad an idea as the Bush tax cuts.

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    • Dan says:

      If a country has a government that allows financial contracts to be abrogated (and assists with this process)… Then, the fiat currency of that country will eventually drop significantly in value and may end up being rejected.

      Furthermore, many foreign governments, companies and various businesses and especially investors will take their money (and job creating opportunities) elsewhere.

      Who in their right mind would want to invest in a business or conduct business in a country where government interferes and abrogates financial contracts?! You CAN’T conduct business or invest with any expectation of returns under these circumstances!

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  80. ecafyelims says:

    I like the idea of eliminating student debt — primarily because I still have student debt.
    I agree the idea that the money may be better suited in other areas, however, I can’t agree that it’s the “worst idea ever.” or that “This is a bunch of kids who don’t want to pay their loans back”
    While I’m sure that many college grads are in their early twenties, I wouldn’t call many of them “kids.” Not everyone goes to starts college at 18 and graduates four years later and never goes back. I’m 30 and I still have loans to pay.
    He also says that the money saved will probably be saved in the bank (rather than spent back into the economy). You can’t on one hand call the group “kids” and then on the other assume they’re so responsible to save the cash in the bank.
    Yes, the money could be better elsewhere, but no, it wouldn’t be a horrible idea. I will still support

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  81. Dorothy Roberts Arvizu says:

    1)Distribution: The overwhelming number of ‘jobs created’ in this countryhave been low-level service jobs. High school dropouts have been hurt by lack of funding to remediate their dropout status because schools are having to make enormous cuts inprograms and staff (college grads).

    2)Student loan borrowers often cannot get credit cards, new cars, houses or health insurance because their income goes to grossly inflated student loan payments.They can’t get jobs because their credit score has tanked or the state has yanked their licenses. Wolfers has done no homework on this.

    3)Education policy: Publicly fund state colleges. Lower tuition. Period.

    4) Political economy: Half of all students today are adults, non-traditionals, parents, working, with medical bills, children and all the attendant expenses. Tuition for the traditional full timers has exploded while public funding has shrunk. The paternalistic idiocy of ‘these are a bunch of kids’ is appallingly ignorant. And, btw, there MIGHT be one or two ‘paid’ lobbyists in the bunch, and I can name ‘em, and neither one is getting rich on this deal. There are, on the other hand, literally millions of adults in this country struggling with student loans.

    5)One of the biggest ‘drags’ on the economy is the level of personal debt – no one has anything left over to spend. Student loan debt has surpassed credit card debt, and many ALSO have mortgages. Student loans, however, CANNOT be bankrupted whereas businesses, homes, credit cards, cars, gambling losses, commercial property, or ANY other kind of debt CAN be … In the meantime, we have bailed out banks, the biggest corporations, the wealthiest hedge hogs, and the Pentagon with tax dollars ALSO paid by student loan borrowers who have gotten NOTHING but a life-time sentence with NO chance of reprieve.

    The SYSTEM is broken and must change. A one-time jubilee would allow millions of borrowers to fund their educations, buy health insurance, pay on their cars and mortgages, pay the bills, feed the kids, help Mom on SS, pay off credit cards, and buy some new clothes to go look for a job now that they have their license and credit back.

    But the SYSTEM must change… bankruptcy protections MUST be restored; limits on interest; change the rules so that when students pay, a guaranteed portion of that payment goes to PRINCIPAL; fully publically fund state colleges, universities, vo-techs, and community college so they can lower tuition. There are a LOT of options – but allowing lenders to call the shots and write the legislation is NOT one of them.

    This opinion was ill-informed, poorly constructed, and just plain mean-spirited.

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  82. Mike says:

    All I know is I graduated college with 70k in student loans and I’m currently working at a 30k job in the not-for-profit industry. I currently use around 1/3 of my monthly income in paying back loans, and have already payed around 18,000 into them. Combined that with cost of living and my plans of buying a house and raising a family are being pushed back further and further into the future. From a personal standpoint if this were to pass, or if a bill reducing the money owed were to pass, then the money currently going toward sallie mae would instead be used to save for a down payment on a house and would allow me to have more disposable income.

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    • Bradley C. says:

      Where do you think the money came from to loan to you in the first place, thin air? Seriously people, we can’t REALLY think that forgiving these loans isn’t going to cost anything? Where are all the selfless big thinking liberals that purport to care about everyone else? We’re just trying to shuffle this mess on down the road by forcing our grandchildren to pay for your obscure education in. I for one am 100% against it.

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  83. mike newman says:

    mr wolfers,
    anyone with a brain can easily see that you clearly don’t have your facts straight. your rebuttal = the worst ever.

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  84. Collin says:

    There is both an endogenous and exogenous effect playing within Rob’s plan. Neither of which will have a straight 1:1 multiplier (economics is 5% simple accounting, 20% higher math, 75% human behavior). Within the simple supply and demand theory, freeing up a vast amount of potential income within the most productive and participatory working class (college graduates) will greatly improve demand for everyday items we all need and use. But more importantly it will create higher demand in sectors that have historically been a savior for a limping economy (housing market). The exogenous effect will consist of an important shift in preferences. Not only will middle salary earners buy more, they will buy more quality and luxury goods. No, not talking about gold plated faucets, I’m talking about things you wouldn’t intelligently buy if you knew you only had a couple hundred dollars left over after paying the loan sharks (if you are lucky). Think of all the money that is spent when one buys a home. Now think of the money to fix/upgrade/etc this new home. Need a plumber? How about an electrician? Considering contracting an architect for that addition? What about a Landscaper for the yards? Looks like you could use a new porch or overhang. Or those gutters rusted? Its funny to me that these supposedly prestigious economists are talking very little economics…

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    • Bradley C. says:

      Your fancy economic terms mean nothing when you continue to take from one hand and put it in another Collin. There is still a bubble in the housing market that the government is not allowing to clear. As painful as it sounds EVERYONE is not meant to own a house, especially not right out of college. Renters and bankers are not the devil incarnate. If you didn’t read the terms of the loan or do your research before choosing a major why is that my fault or worse yet my grandchildren’s?

      This is not to mention the HUGE debt bubble that goes hand in hand with the housing bubble, both of which are government created, easy money messes just waiting for a place to explode.

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  85. Milton Recht says:

    The government should at least forgive the interest on student loans.

    The government shares, through taxes, in the extra income of college graduates. Government student loans, loan guarantees and lender subsidies make the government the equivalent of an equity investor in a college graduate’s earnings.

    The payment of interest to the lender on the government part of student loans, guarantees or subsidies, is an unnecessary double payment.

    Equity investors, like the US, who participate in the profit, through increased taxes on the extra earnings, need not also get interest on their investment.

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  86. Dan says:

    If a country has a government that allows financial contracts to be abrogated (and assists with this process)… Then, the fiat currency of that country will eventually drop significantly in value and may end up being rejected.

    Furthermore, many foreign governments, companies and various businesses and especially investors will take their money (and job creating opportunities) elsewhere.

    Who in their right mind would want to invest in a business or conduct business in a country where government interferes and abrogates financial contracts?! You CAN’T conduct business or invest with any expectation of returns under these circumstances!

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  87. Lynn says:

    Mr. Wolfers, your reasoning seems VERY out of touch with reality. I am a recent law school grad with six figures of student loan debt, and recent job interviews show I will be lucky to maybe start in the $35K range, in a city where the average rent of a one bedroom apartment is over $1200. With a student loan payment equal to a mortgage payment, I beg to differ that if my student loan debt was waived, I would not stimulate the economy! You argue that someone with less education and no debt would spend every dollar they receive. That may be true, but that is also part of the reason this country is in a mess. We need people to spend AND save. You also fail to see the long term solution of assisting citizens with student loan debt. With higher education (doctors, lawyers, MBA’s etc), we are in a position to grow businesses and create jobs, however many of us are in a situation where we can barely afford to eat, so the thought of taking risks to start companies is unrealistic. There is a huge talent pool of people out there that could be creating jobs and stimulating the economy but they can’t make any investments in society when they can hardly take care of themselves. So, while I may save as well as spend, those savings are an investment in not just my future but in building a future business, providing job, paying taxes, etc. Sure, there is always the argument that we brought this upon ourselves. What a sad commentary on our society though. Education should only be for the wealthy? Our country has the highest (by far) cost of education in the developed world. That is the true problem.

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  88. Adam Jones says:

    The funny thing is that forgiving student loan debt is in my and my family’s best interests. There is no compelling reason given for why I should go against my own interests on this issue. I added my name to the petition. (Thanks for the link.)

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  89. Stan says:

    I’m sorry but I disagree. I don’t know where you’re pulling your statistics from but college grads have had the worst income during this recession. No experience, no way to get it, forcing them to work for trash pay. Just looking at many job sites you can see how much they expect people to know for little to no pay.

    This is a great idea. Hardly “a bunch of kids that don’t want to pay their loans”. Maybe we should give it to the corporations that give millions of bonuses to their executives. I bet money in their pockets would help a lot more right? Because they will TOTALLY hire more people as we have clearly seen. At least these “kids” aren’t nearly as corrupt as your average executive. If my tax money will go into someones pockets at least it will be in the pockets that need it. Not to build some golden parachute.

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  90. Dody says:

    obviously no clue how bad it is out here for college grads…..

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    • pawnman says:

      Not as bad as for the rest of us. College grads have less than half the unemployment rate of the national average.

      Thumb up 1 Thumb down 1
  91. Meghan McCallum says:

    Hidden due to low comment rating. Click here to see.

    Disliked! Like or Dislike: Thumb up 4 Thumb down 11
    • Bradley C. says:

      Here here Meghan! Although I suspect it’ll be only a matter of time before the cry babies will give your comment enough thumbs down for it to be hidden.

      Well said!

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  92. Nathan says:

    I think I’ve figured out the problem I have with this analysis. It’s an anti-middle class analysis. It starts with the presumption that there is an upper class and a lower class with nothing in the middle. The vast majority of college graduates aren’t upper class, because the vast majority of people aren’t upper class. I have no knowledge of the divide between middle and lower class college graduates, so I can’t really make any guesses in that regard, but here is what I can guess.

    There are basically three types of people in America. Those who did not go to college (likely because they are poor). Those who did go to college and didn’t take out loans (likely because they are wealthy, beginning around 1996-2002 [prior to that time, college was at least theoretically affordable if paid for through a part time job]). And, finally, those who did go to college and did take out incredible loans. This group, almost certainly, consists entirely of lower class, lower-middle class, and middle class individuals.

    For a moment, let’s pretend there’s absolutely no monetary value in a college education (if you want to use the word “pretend”). What would you call a program that, by definition, is designed to adversely affect middle class and lower middle class individuals more than any other class? I’d call it an incredibly terrible program, particularly in an era when the middle class is shrinking dramatically in comparison to the other classes.

    Just a thought.

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  93. C.J. says:

    First off, I really would like to know who these recent college graduates are who have these “high incomes”. Even those who are lucky enough to get a job in today’s economy are not making as much as you think they are. They are barely making enough money to pay off their loans and living expenses. I especially like the comment where you said that they “have enjoyed income growth over the past four decades.” You sir, must be living in an alternate reality if you believe that. Have you ever considered that it’s possible there are college graduates who live in poverty because of school loans?

    Secondly, why would we give money to those who dropped out of high school and quit instead of the hard working students who work their way through college and do more with their lives? “The group who has been hurt over the past few decades is high school dropouts.” Maybe that’s because, I don’t know…they dropped out of high school? Good observation, John Madden.

    Remind me to never seek your advice for economic issues.

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  94. steve from virginia says:

    I don’t know about worst idea EVER! Building a bunch of nuclear reactors on a fault next to the ocean is probably the worst, right at this moment.

    The issues w/ student loans here orbits around ‘stimulus’. Better to focus on ‘deleveraging’. As events proceed, the likelihood is that students will repudiate their debts and enter the underground economy. This process will have two effects: public liabilities will be stranded (as private assets cannot be retrieved) and a smart cadre of ‘super-criminals’ will emerge.

    All of this damage so that colleges can have new athletic facilities and pay over-educated numbskulls six-figure salaries (not to mention the administrators and their seven-figure salaries).

    Frankly, the student loans are ‘dead money’. The West is deleveraging, the various balance sheets are shrinking. There will be ‘forgiveness’, a good idea or bad, whether it is purposefully entered into or not.

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  95. dumbcollegegrad says:

    Sorry Justin, but it sounds like a severe under-estimation to say so little will be spent if student loans are forgiven. Letting people who are currently spending their white-collar paychecks on repaying loans off the hook means they can buy things like houses, cars that work or take vacations that don’t involve hiking and camping. They may even choose to start a family.

    I also think you are forgetting those college grads that are competing with last years grads, those still unemployed from massive layoffs, and the financially-strapped retirees that are all applying for the same job.

    TL;DR Forgiving all student loans is definitely not the answer, but it’s a good step in the right direction. A compromise like, forgiving a portion of student loans, would be a better idea.

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  96. Wismomrocks40 says:

    DISCLAIMER … this is not a position seeped in economic theory. First, loans should be forgiven for graduates willing to do public service for a certain amount of time. Great life experience, good for community, win/win. Second, somehow in Europe they have figured out a way to have decent universities that are affordable. Of course, no jobs there either but still. Third, to those who have not yet accumulated debt … do … not … go … to … private … schools … on … loans. While I may be a product of public schools and therefore missed the “extra” learning at a private school, I paid off all of my loans and had an awesome educational experience. Ultimately, just because you get into a private school does not mean you should go there. I turned one down, people thought I was nuts, and looking back, it was one of the best decisions I have made. Frame the acceptance letter in a cheap frame from Target and MOVE ON. For those who went to in-state public school and are still debt-laden, my sympathy is with you.

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  97. AMClark says:

    Wow, I had to Google to make sure that this Wolfers was actually a current economist when reading through his “five separate lenses” for the Freakonomics reaction to the interesting, controversial, bold idea of student loan forgiveness. Loaded with facile speculation about ” a greedy bunch of kids who don’t want to pay their loans back” , the author seems spiteful and clueless about the stark reality of the current state of affairs in which hundreds of thousands of people of all ages are caught in the swirling eddy of non-dischargeable student loans that are as large or larger than house payments in this tanked economy, without the salaries to match and with high interest compounding daily. And meanwhile colleges, universities and banks not accountable for or made to pay for any of the problem as the cost of education spirals out of control.

    Dismissively, Wolfers speaks of college grads as if it were 1955 and the world was your oyster because you obtained a B.A. Really? Not liquidity constrained? A credit card or a car loan fairly easily? A job? Making loans more widely available? Not even close. Instead of bashing on this out of touch Wharton/Princeton elitist anymore, let me just ask Freakonomics to revisit the issue of crushing student loan debt paralyzing the economy with some actual cogent analysis from someone else who is aware of the facts.

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  98. Blorf says:

    Back to work, debt peons! Your Keynesian central planners have determined that people who are poor because they took on loans to get an education are a lousy investment.

    Perhaps we could have a conversation about not having student loan subsidies in the first instance? Because perhaps this encourages an epic malinvestment in people spending years studying topics for which there is no market demand?

    Whatever the stupidity of previous subsidies, I submit that it is inherently unstable for a society to have a permanent class of debt slaves. Student loans should be dis-chargeable in bankruptcy like all other debts. Perhaps then Sallie Mae would think twice before investing in someone studying English literature at bum-f-ck college.

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  99. Joshua Cooper says:

    I’m not convinced, although I have to say that the idea does sound somewhat less appealing now.

    Distribution: Way off. “This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades.” Oh yeah? Take a look at:

    http://www.nytimes.com/2011/05/19/business/economy/19grads.html?_r=4&smid=tw-nytimes&seid=auto

    Median income for US college grads starting out: $27K. Not exactly Scrooge McDuck money.

    Macroeconomics: Yes, giving the money to the poorest *might* give a bigger bang-per-buck. Do you think this is going to happen in our lifetimes? Right now US politics are in screw-the-poor mode. I think this petition has a slight positive chance of catching a few legislative eyeballs. And, as the NYT article referenced above argues (along with a whole lot of other data out there), college grads are increasingly living hand-to-mouth.

    Education Policy: No, I don’t think this will increase college enrollment, nor do I think that would even be desirable given the current state of higher education.

    Political Economy: Ridiculous. See NYT article again. If you’re concerned with the moral hazards of giving out free money, how about stopping giving it to the bloodsucking financial speculators of the world, who arguably are socially destructive (i.e., negatively productive). I’d much rather the subsidies go to people who need a break in order to make their house/car/childcare payments; if you’re concerned about the money just going to bankers in the end anyway, reinstate Glass-Steagall and put a firewall between the avaricious investor class and the banks who issue actually useful loans to humans.

    Politics: “Why give money to college grads rather than the 15% of the population in poverty?” That would be great. Call your congressional representative and see what they think of it.

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  100. areid says:

    Sweet. Doesn’t matter if they forgive student loans or give money too unemployed poor, I’ll benefit either way.

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  101. Do Ho says:

    Oh, it’s better to reward the dropouts. I get it.

    Thumb up 1 Thumb down 1
  102. Dirk says:

    Forgiving student loans is the second worst idea ever. The worst idea ever, was giving the government backed loans in the first place. All they did was drive up the cost of college and lower the quality of the product.

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 1
  103. kenih says:

    While we are at it the government should pay for everyones:

    1) home mortgage
    2) car loans
    3) credit card debts
    4) pool loan
    5) oh what the heck, everything!

    All we need to do is tax the rich and buisnesses more and the government would have plenty of money to pay for all this. Wait, the more I think about it the more I think this is about as stupid as paying for everyones educational loans…

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  104. Jeff says:

    And how about the fact that this essentially makes student loans the same type of toxic assets that brought down the market in 2008, just on a smaller scale? If you chose to go to school, you thereby accept the responsibility to pay back what you borrowed.

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  105. dandevine says:

    Discussing whether students should pay their loans back is sort of like discussing whether Greece will default. Of course the students will default, as anybody knows the circumstances of the loans. Only academics and economists believe these loans can ever be paid back. You’ve got a 23-year-old woman who runs up $50,000 in student loan debt so she can get a job making $9 an hour — she is never going to pay that back. … We’re all broke, just haven’t figured it out yet.

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  106. Logan says:

    I think it’s obvious that the person writing this had a silver spoon in their hand growing up, doesn’t talk with middle class Americans and doesn’t understand what it’s like to be told their whole life: “Go to college, take out student loans, their easy to pay back.”

    You see; many, many good middle-class American families sent their kids off to college believing it was for the best. They helped them secure student loans because the kid HAS to have a college degree. What they didn’t know at the time was that the corporations (banks), millionaires and billionaires had been quietly stacking the game against the borrowers. They engaged in promiscuous loan approving because, hey, it’s on the borrower if they don’t know they’re getting bent over.

    Ultimately, MoveOn.org knows full well they’ll never get all, or any, student loans forgiven. What they are doing is bringing this issue to the forefront of our country’s mind. We can’t keep ignoring this problem as a people. We need to find a way to bring down the soaring costs (unrealistic costs) for college, which means people can borrow responsibly without being put in a position where they are “all in.” And by “all in,” I mean, they’ve borrowed for the first two years, they can’t stop now without the degree and half the debt.

    So, I’d like to thank this out-of-touch writer, Justin Wolfers, for proving that there are very smart people who can’t see the obvious.

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    • Bradley C. says:

      No silver spoon here…both my parents worked their butts off in blue collar jobs. Yes I got loans and even a couple of small grants but I had also had a ton of money saved up.

      What the heck ever happened to saving for college so you weren’t saddled with a huge debt load after the fact?

      Forgiving student loans is just another way of pandering to a class of voters that is currently disenfranchised with the president’s lack of attention toward them. Give me a break! What about all the responsible people that have 1 or 2 or 10 payments left on their loans and now the guy with 120 payments left is going to get his entire loan forgiven???

      Once again, let’s reward sloth and punish productivity…why not, this is Amerika after all.

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      • Nathan says:

        If you were able to save up enough money to go to college by working at McDonalds for two years in high school prior to entering college, then I salute you sir.

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  107. Richardsson says:

    I’m retired now and I paid off my very modest college loans long ago. I would not favor a blanket forgiveness, but what I think is equally indefensible as a matter of justice, is to not provide some kind of bankruptcy process. In all too many cases, these loans were sold in a way that was not legally different from zero down mortgages to people with no income. The difference is the beneficiaries of the “liar loans” could walk away from the houses. In this case, the students have been in all too many cases stuck paying six figure debt for what amounts to a worthless piece of paper. The real beneficiaries of these loans were the bloated bureaucracies and the tenured blabberers who oversold the value of those worthless pieces of paper. We are all in the process of learning an expensive lesson. Just as you wouldn’t lend $500,000 with no money down on a house to a 20 year old gardener with a $12. an hour job, so you wouldn’t lend a six figure student loan to a 20 year old college student with no work history. In both cases, we need a process to reduce the burden of our past stupidities.

    As for economists, well Mr. Bernanke has proposed this afternoon to pump more debt into a debt soaked economy in hopes that we will spend our way back to prosperity. Meanwhile, savers can’t earn enough on their savings to buy coffee. This is like trying to cure an alcoholic with a little more “hair of the dog.”

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  108. Stanley says:

    I think you need to read this article so you can stop pulling garbage numbers out of nowhere.
    http://www.cbsnews.com/stories/2011/09/22/national/main20110000.shtml

    Just to quote you some reality “Nationwide, employment among young adults 16-29 stood at 55.3 percent, down from 67.3 percent in 2000 and the lowest since the end of World War II.”

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  109. Bradley C. says:

    I think we all may be missing the point…Why are we paying so much for college in the first place? Many comments point to the ever-growing fact that college degrees are becoming the defacto HS diploma’s in the workplace.

    I believe this is yet again evidence of a horrible third party payer system. The colleges (for the most part I’m speaking of the public state run institutions) keep jacking up their rates because they know that students can get a loan for whatever they charge. Meanwhile they’re also back-dooring the states with their hands out for more money to support them. What ever happened to state colleges and university’s that are affordable? If you think the price of gas has gone up in past 20 years check out the rate of college tuition, it’s despicable.

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  110. Brandon says:

    1.)Assuming most student loan debt is held by grads may be an error. Assuming most grads are financially secure enough to not be constrained by their loans could be a graver one.
    2.)Forgiving $50,000 of a person’s loans is not equivalent to writing them a big fat check. Monthly loan payments of $50-$1000 a month for most people is what is being forgiven. Not to mention the enormous boost in credit scores from eliminating debt.
    3-5.). I agree without reservation. These are the reasons that I fear this deal, even though my personal benefit would be about $80,000 in forgiven debt. I am opposed because I think it is irresponsible.

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    • Ambrosia Danu says:

      Thank you Brandon! These assumptions are pretty ridiculous…I believe most logicians would call it a “hasty generalization”.

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  111. Gary says:

    And who repays the lenders of all this forgiven debt? All of us, of course, in devalued currency or higher taxation or decreased productivity. In a closed system there is no free lunch. But the highest cost of all may be a confirmation of the idea that you will always get bailed out for any costly decision.

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  112. ECH says:

    I’m not sure that blanket student loan forgiveness is the best approach either. However, the author should probably cite some data about the financial picture of relatively recent college grads. I’m not sure his assumptions about us -that ‘most of [us] could spend more if [we] wanted to’, that we have easy access to credit, etc.- will be borne out.

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  113. A says:

    Ok, I’m going to make this clear only because I’ve seen it far too much in all the comments. Most former students don’t want a hand out, most former students just want the problem to go away. Now the problem I’m talking about is making Ten dollars an hour because you can’t get a better job and owing $1,700 a month in student loan debt. Trying to call these privet lenders to try to get lower payment plans so that you don’t default. Then are told that you can’t because you’re loan doesn’t have that option. Then you make payments to the best of your ability and still default because you cant pay that $1,700 every month because you’re lucky if you take home $1,400 and you still need to pay health insurance. Then getting phone calls at all hours of the day while at work. Also all of my loans went to the school, I didn’t buy pizza or clothing, I took out enough for tuition and that was it. Stop thinking that people who are in student loan debt all want hand outs, because we don’t, we want the system fixed so we can pay and/or make sure no one ever gets stuck like that again.

    As for this article (I feel like I need to comment on this too.) I can’t say if it will work, I didn’t go for school for Economics. I think the idea is a valid idea and does make sense, however, at the same time some of the arguments against make sense as well. I feel I need to know more about how this cycle known as the economy works before I can make a true guess.

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  114. Sandra says:

    I was a single mother when I got my BA and MA in English, and used my loans to pay tuition and books, but also to pay for rent and food for my child. We lived in a little one bedroom apartment, where my daughter had the bedroom and I slept on the couch. I have never been on a vacation, have never had a car that cost more than $10,000 (one of which I drove for 11 years), have always rented the smallest possible apartment, don’t buy new clothes or things for myself, and don’t have credit card debt.

    I worked for 13 years as a part time college instructor (at 3 different colleges at once) to pay my student loans, and had nothing left over for anything extra. Being a part time instructor, even though I was working the equivalent of 1 1/2 jobs, I was paid by the class and I couldn’t get insurance or extra perks that full timers get, so I went back to school.

    I just got my degree in Elementary Education and am fully employed, but yes I had to get more student loans to finance that degree. My daughter is now a senior in high school and I still owe $70,000 even though I paid on my loans for several years. Most of what I paid went to interest. I will never be able to buy a house because no one will consider me for a mortgage with my student loan debt.

    My daughter will be going off to college next year, and unless she gets a tremendous amount of scholarship money, I will be taking out more loans to get her through college. The government and society look down on those that don’t have college educations but we get saddled with so much debt that is almost impossible to pay off.

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    • Ambrosia Danu says:

      Thank you for your response! You are like most people who sought an education and are now burdened with debt for life. This cycle has to end, this “only being able to pay the interest to keep afloat” game has grown ridiculous, wouldn’t you agree?!

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  115. Eric Gallager says:

    You’re right, I am supporting this purely out of my own self-interest. I’ll admit it, I’m a kid who doesn’t want to pay my loans back. Even though that’s my only reason, I’m still going to support it.

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  116. Ambrosia Danu says:

    These arguments are pretty weak!
    1)Not everyone with student loan debt is a graduate. There are NUMEROUS college dropouts that are in a far worse financial state than high school dropouts.
    2) Even if half of my debt were reimbursed to me, I’d have around 15 grand to put back into the economy. There’s no way I’d put money into the back with what I know about this capitalist financial system. Do you know where our money goes and how it’s created from debt?
    3)As I stated before, it’s not only college graduates who have debt. Some of us would decide to return to school if we weren’t so financially burdened.
    4) This is a slippery slope fallacy. Simply because we make an exception to a rule, doesn’t mean we have to continue to do so. Find a better argument!
    5) It’s okay for corporations to get bailed out, but not individuals? Sounds more like an oligarchic system as opposed to the democracy we’re supposed to be a part of.

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  117. Sue She says:

    This guy obviously is not a recent college graduate. we’re not a bunch of kids who don’t want to pay our loans back, we are a bunch of kids who can’t pay our loans back. I would love to be making enough to pay my loans and stimulate the economy through spending.
    Turns out though, I have a masters degree and can’t qualify for a car loan or any other loan. we are the group of people who got burned trying to do the right thing, and this guy wants to pay the lazy poor people who never even tried to better themselves? This must be because he is one of them….

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  118. Douglas Karr says:

    What kind of lesson is this to a student entering the next phase of their lives? Contracts don’t matter? Just whine and complain with enough people and you can get what you want? I wish you had included morality as a reason. If you make a promise, keep it.

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  119. Gell says:

    Education in the USA and many other places has become elitist and exclusive. Education should be free up to at least primary graduate level. If this occurs, a competent workforce is created, not based on old boys clubs but on ability. The corporatisation and profit motive of education is antithetical to what education is meant to achieve – to enable people to achieve their maximum potential in an ideal society. Instead education has become an entry point for naive learners to become enmeshed into a perverse economic system that does nothing more than take from the poor.

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  120. Jonathan says:

    Great argument–except it is completely wrong and devoid of fact. Obviously Dr. Wolfers did not read the petition and obviously has absiolutely no knowledge of the way student loans work or the job prospects for recent college grads. People would not recieve a check for $50,000 (further, if they did, it would be to pay off the loan, not to “put in the bank”) instead, they would be excusedfrom making payments of about $300 to $1,200 per month. So, $300 to $1200 more per month and $50,000 to $100,000 off the credit report would most likely allow some people to buy houses and since that is what drives the economy, I think it would be a great stimulus.

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  121. Josh says:

    If you want to fix the student loan problem, limit how much students can borrow from the government and make private student loans dischargeable in bankrupcy (They won’t lend anymore). More money transfers from Washington isn’t going to fix the underlying problem.

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  122. Anna says:

    One point of argument is that this idea is retroactive (forgiving loans people already have, thus not benefiting those that will obtain student loans in the future). Why not create something more proactive?
    Forgive student loan INTEREST to those that already have the loans, and to those that graduate in the future. It’s an incentive for students to finish the degree, theoretically earning more (and paying more in taxes). It would still free up cash for those paying loans now, and create a ‘light at the end of the tunnel’ of student loan debt. The gov and banks are not totally losing out, as the principle will still be repaid.

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  123. Steve says:

    I’m confident there are a number of economists who have recently graduated who are smart enough to craft an argument in support of this idea. I just hope that I can get my student loan payments back, along with 25+ years of interest.

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  124. Struggling young worker says:

    As a college grad in NJ who cannot find a teaching position, I have anwhole heartedly disagree with your assessment of this proposal. The promise of college is failing my generation. I live in in a state where the governor hates those in my profession and because of his actions, all my peers are without full time work or benefits. Typically over 150 applicants try for each job available making an generally tough job search nearly impossible. The way I see it, the government created this situation where there is now a job vacuum and my 40 thousand dollar debt isn’t going away. My only alternative at this point is to persue out of state certification and move far from everyone I know and love.

    This crushing debt is enough to put college grads like myself into that bottom poverty striken potion of the population. Even bankruptcy can’t save us as student debt is not discharged. Maybe you should consider that it isn’t that we don wan to repay the debt, it’s that wencannot and will not be able to as long as this job market remains so poor. Shame on you for judging us as some group of lazy hipsters.

    I apologize for spelling/grammar errors caused by auto correct on my phone.

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  125. Lily says:

    I can agree and disagree with your views.

    I agree that people who ALREADY have the education could pay it back and that high school drop outs would use the money.

    However, high school drop outs, many times, are drop outs because they made BAD decisions. So what makes you think these drop outs, who most are ALREADY getting “free money” by getting welfare, etc. would benefit from it?

    Now for the people who HAVE the degrees. Where is the job market for that? For example; If I went to school for teaching or library science degree, I just got screwed out of a job before I even got to it because of layoffs and budget cuts. I now have a degree for a position that has virtually disappeared, but the high school drop outs get the fast food jobs, where I am OVER QUALIFIED, but because I have not worked fast food, my schooling makes me UNDER-QUALIFIED to be a manager because I don’t have the experience. So where is the job that would enable me to pay back the loans?

    Lets have a look at our Class System. Our lower class is composed of people who made poor choices; thieves, drug addicts, alcoholics, people who wrote bad checks, are too lazy to bother cleaning their “own” home, gamblers, etc. These people would rather spend their money on alcohol, drugs, or other vices (child pornography, illegal drugs) rather than spend it on, say, bills.

    Our middle class is composed of all the workers, the people who deliver your paper, mow your lawn, clean your house, answer the business phone, seat you at the restaurant, ect. ( Hey, it may even be you!) At least, that’s how it should be. Instead, those are a second form of lower class, the people who get screwed out of a decent paycheck. Minimum wage used to be the amount you paid to the kid to mow your lawn or rake leaves, now it is the basis for what most people are paid. And you have jobs where there is NO CHANCE of a pay raise, because they have that tricky little catch called “tips” of which, many people forget, are what “tipped” employees ARE SUPPOSED TO MAKE THEIR LIVING OFF OF! Instead, people labeled it “gratuity” and many servers, hostesses, bartenders, etc. don’t even MAKE minimum wage.

    Now, our Upper Class can be composed of many different things; the people whose parents are “old money” and invested wisely over the years and were able to do well for themselves, the people who are inventors and came up with great ideas that they are still paid for even after their work is over, and your politicians, etc. I will not argue how they became our upper class, they obviously did something right, same as lower class obviously did something wrong.

    Now, you may have wondered where I went to get to the point of the loans, and as with any study, you need BACKGROUND TO GET THE FULL PICTURE.

    What is it, exactly, that we are supposed to buy to help our economy? Since most of our products are made OUT OF COUNTRY, how is that helping us?

    Is the stimulus of buying anything and everything the jump we are looking for? If that’s the case, I would love my own place to live that isn’t 550 a month for a building that should be condemned because of frequent pipe leaks the landlord “patches” or a bad foundation that even when reported, nothing is done. I would like to have my student loans relieved so I could buy my inhalers that I am LIFE DEPENDENT on, thanks to asthma and an extreme allergy to mold and mildew.

    I would love to get my dad the flat screen TV he wants, my niece and nephew the bikes they want and the love of my life his game console back that, that he saved up to buy, that some high school drop out stole, the same high school drop out, poverty level, who you want to give the break to, yet the same high school drop out that, by using the system, can go out drinking enough to almost hit one of YOUR kids while drunk driving.

    Think twice, maybe even sleep on it, before you decide who should be given money when you think it would help the poor. Lets see about giving them free GED’s instead of looking for someone to hand the beggars another beer.

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  126. Fran says:

    I have a better policy. College grads pay 15% of their income for 20 years, or until they reach the age of 55, whichever happens first. If they don’t have a job, they don’t pay. If they make minimum wage, they don’t pay. Call it a post-college education tax instead of a loan.

    I can see your point about opportunity cost, but the problem is that the cost far outweighs the opportunity and it is having a very real impact on our economy. When you consider my student loan payments, I make less money now than I did before college. My actual take home income puts me only just above the poverty line. I only buy necessities these days. Saving up for a home or my retirement seem impossible, much less starting a family. Many of my friends are in the same situation and I don’t think I’m in the minority.

    What is the alternative? We all become very wise about economics at the age of 18 and stop going to college because the benefit doesn’t justify the cost? Then what–work at Arby’s for the rest of our lives? We have rhetoric in this country that anyone can make it if they work hard, and that is simply not true. We are becoming a plutocracy.

    Saying that these are just a bunch of kids wanting free money really takes attention away from the fact that we have a real issue with the rising cost of education, the growing college debt bubble, and the diminishing possibility of social mobility. Are you saying that these things are not contributing in a major way to the recession? What do you think is going to happen when the college loan bubble bursts? And what about the risk-takers that got us in this mess that were able to walk away scot-free? What about the people that walked away from their home mortgages? Why do they get to walk away and not us?

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  127. Jim says:

    How is this for economic sense: the intent of student loan forgiveness is not economic. It’s intent is to help serve those impoverished people everyone is saying we should just send a check to. No one wants to work on an Indian Reservation because it pays about 50 cents on the dollar. When you just got a college degree and a 300-1000 dollar bill for the next 30 years, it is kinda hard to justify. Besides, it is hard to work your way out of poverty when you can’t get treatment for your treatable disease because you are poor. The stimulus is to help serve the poor and help them receive the services they cannot afford but can help them not be poor.

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  128. Ben says:

    Honestyly, what he has to say is irrelevant from the get-go.

    There are far too many studies to cite that show that the following statement was made out of sheer “it sounds true” thinking, rather than reality. Most notably, this very blog has cited research that shows the patent falsity of the statement. He’s lazy at best, and a hack at worst.

    “This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades.”

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  129. Dana says:

    Not that I am trying to take away from what high school drop outs do and how hard they work to earn money but, HELLO…they made that decision. People that are in college also, made a decision to get a higher education and eventually use that education to Innovate and make society better in the future. So yes, we should be held accountable for our debts but, at the same time we shouldn’t have to pay out of our rear ends for an education. If poor, uneducated people get money it’s not like they are doing some note worthy with it…heck, we don’t know how any of us spends our money but what I’m trying to get to is that this isn’t a charity case and you can’t pick and choose who gets free handouts and who doesn’t. this economy has seen it’s share of free handouts but all in the wrong places obviously.

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  130. Thomas B. says:

    Ok, shift to mortgages (more central to this recession), and avoid outright forgiveness.

    Eliminate re-appraisal requirements for refinancing with Fannie, Freddie, FHA, and other federal loan groups. (See http://www.cringely.com/2011/09/be-a-hero-barry/)

    Federal stimulus is often discussed in terms of a short term jolt. In contrast, this would lower monthly payments over the long term. It could improve loan fulfillment rates while driving a _sustainable_ increase in consumption.

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  131. Sean E says:

    “But give $1,000 to each of 50 poor people, and nearly all of it will get spent, yielding a larger stimulus.”

    Oops. Logic fail. Net gain less than zero. The US government does not create wealth. The US government consumes a portion of the money that it coerces from people who create wealth, then hands that money out to other people, resulting in no gain for the economy.
    Remember, when they move the cups around *real* fast and ask you where the pea is, there is no magic and the odds are *always* in the house’s favor.

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  132. Nicole C. says:

    Loan forgiveness shouldn’t be across the board, it should be selective. It should only apply to any household with student loans earning under $100,000; educators, nurses, artists, etc. And if a household has declared a bankruptcy in the last decade, they should be forgiven their student loans.

    I never got to finish college; I dropped out of college in 2003 because I was afraid to go deeper into debt after my grant money dried up when I married. I have $50,000 in loans and interest for an education I didn’t officially get. In 2004, my husband lost gainful employment after the terrible hurricane season shut down businesses in the tourist industry. My husband and I are artists; we’re both actors and I’m also a writer. I slaved away in food service as he worked temp jobs and still we were forced to live off of our credit cards during the years it took for the entertainment industry to rebound from the 2004 storm season. Our needs are meager, however gas, groceries and utilities sent us into bankruptcy by 2007.

    Bankruptcy saved us from having to pay the $18,000 in credit card debt and interest that we owed, but all it did to protect us from our federally guaranteed student loans was allow me to defer the loans for two years. Now we’re doing a little better now; between the two of us we earn $30,000 a year so we’re able to live within our means without having to work menial jobs to get by. But the interest rates on the loans have made it so that we’re unable to make the minimum monthly payment and they are now in collections. Our income tax returns are now garnished in order to repay the loans and our credit is shot.

    We’re living in a tiny apartment and we’re a one car family. That car is sixteen years old and it has 225,000 miles on it. If my student loans were forgiven and our credit were to be repaired, the first thing we would do is buy a car. The second thing we would do is find a decent sized duplex or condominium. Third, we would take a modest vacation. The last time we took a vacation was in 2003. We would invest in America immediately.

    Forgiveness of student loans for certain individuals would be a wonderful way for them to achieve financial security and it would be a stimulus to the economy. I fear those opposed to loan forgiveness will make generalizations about the loan holders, as Justin Wolfers has in this article. I only hope that someone will speak out for my husband and I. We work very hard and we deserve some financial security.

    Thank you.

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  133. John says:

    I’m really sick of the argument “well college grads have high incomes anyway.” I’m sure they do, too bad they can’t get a job in the first place. This bill would be for the bartenders and waitresses facing over $50,000 in debt and can’t find a position in their field.

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  134. Alana says:

    I am 23 years old and have $150,000 in student loans to pay off. I only make $1400 a month and the loan companies want a monthly repayment that would take the majority of my paycheck each month, leaving me with only about $200-$300 left to pay rent/bills/bus fair/groceries/and whatever else. I am at the poverty level! Because of this, I can do nothing to help stimulate the economy because I have nothing left to spend! I went to a for-profit school, couldn’t get a co-signer and am stuck with the higher interest rate. Having a student loan forgiveness program would help me and about 700 of my classmates in my same situation be able to contribute to the economy and get out of this mess.

    Yeah, sure, the government forgiving everybody’s school loans might force the government itself into more debt as well, but it’s already there and getting worse without this argument. If I had the money to spend, I would spend it. I would love to be able to have a savings account and a car, and be able to start a retirement fund, and a savings fund for my future kids so they wouldn’t have to be in the same mess that so many of us are in right now, but I can’t. I’m too busy paying for the costs of going after my first dream.

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  135. Yaqub Baiani says:

    I’m sorry, but you sir are not informed of current statistics. Take a look at people now a days who are in school, they are promised jobs that pay x amount of dollars, but the reality is that college graduates are being paid the same as someone who didnt go to college.

    You have no basis of facts to support your claims within your article and it actually amuses me of the claims that you have made.

    If you were to say to a person right out of college making 30k a year that you dont have to pay for any of your student loans, the first thing that person would do is buy whatever they wanted, go out and celebrate, spend that hard earned money not being paid to banks/Sallie Mae for there loan payments.

    Now I do think that the people who have paid their loans prior to this wont receive the benefits of this if it is paid off, so why not do something for them? Here is my plan below:

    1) forgive all student debt to remove the burden of payments, and remove any potential bankruptcy or penalty fees that would cause more havoc
    2) for everyone else in the US past and present who have paid their debts, reward them by refinancing all home loans in the US to the current interest rate.

    you have here a strategy that is not only “outside the box” thinking, but will in fact cause a great change in our nation. students will spend what money they have, families with homes will have more money per month to spend.

    Remember, for each dollar you spend, it get cycled through about 5-7 times so this is what is needed to save our economy.

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  136. Bill D says:

    Agreed. I think I would personally promise to spend every single dollar that I currently spend on student loans on discretionary items.

    How about…instead of forgiving your student loans in full, have the government offer a refundable federal income tax credit equal to the amount of interest paid to your lender, but only to the extent that you pay interest on a newly purchased home or car? That way you allow a student loan holder to divert the interest portion of his/her student loan payment to something that is economically beneficial….like a home or a car?

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  137. Ash Wynn says:

    This guy is just a jerk-off Wharton professor, unwilling to realize that school adds little value.
    The biggest effect of making loans dischargeable or forgiving them would be to decrease available loans and increase the cost of borrowing for future students and perhaps a huge drop in enrollment. Of course he would think it’s a bad idea. It would expose the whole “higher education” scam and this douchebag’s paycheck would disappear.

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  138. Drew C. says:

    As a holder of a ridiculous amount of school debt I generally agree it would not be a good idea. A more fair arrangement would be to significantly increase the paltry student loan interest deduction you can claim on your taxes, then crack down on schools (such as the blog poster’s own) who are ripping off an entire generation of Americans. Limit federal school loans to a specific amount; if school tuition goes over that, then the students (and more importantly the schools) are out of luck.

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  139. Harry C. says:

    I believe that in my specific case, you are wrong, Justin Wolfers. Though I am sure you are not wrong for every case. For me however, I know I would be spending my money if I did not have debt. I would be giving my money to organizations like the Citizens Trade Campaign, the Environmental Defense Fund, and Citizens for Middle East Peace. But what is the Bank spending my money on?? Why does the Bank need to reap MORE interest from my loans, when they have been reaping the interest of middle and working class citizens for years? I don’t mind for ONE SECOND paying back the student loans I have. I know that I had a good college education and I don’t mind paying for it. BUT, my interest rates are so exorbitant that I will end up paying THE BANK TWICE what my loans were originally. The Banks DO NOT need the money that I could be spending on grass-roots movements that simply wish to keep our Earth clean and safe for all citizens. Why not just forgive interest on Loans?? THAT, I would agree with whole-heartedly.

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  140. NC says:

    You are forgetting that most of the current college grads are not finding jobs and having their loan repayment kick in while they are unemployed or working minimum wage jobs. And in Michigan if they do find a job they are earning starting salaries under 32K. The student loan repayments are so high it is hard for them to pay rent, car payments, medical bills, insurance and other essentials. On the flip side you can’t find employment without the degree either.

    These are your car buying, house buying, goods buying generation that can’t afford to buy anything therefore are not contributing to the growth of the economy just repaying loans and interest back to the government and private institutions.

    Will someone explain why the governement grants such as the Pell is not divided equally among all US citizens? Why should one student recieve a free education when my daughter recieved the exact same education but accumulated 50K+ in loans just because she has parents who both work but are barely making their own payments? Explain that please Mr. Clarke to my daughter who can’t find a job in the State of Michigan. Is that fair to anyone that some students recieve more than their tution in grant money and get to use it as a refund into their pockets. Divide the money equally and everyone will be benefit. Our government needs a complete overhaul.

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  141. Fran says:

    “Moreover, it’s not likely that college grads are the ones who are liquidity-constrained. Most of ‘em could spend more if they wanted to; after all, they are the folks who could get a credit card or a car loan fairly easily.”

    “This is a bunch of kids who don’t want to pay their loans back.”

    Read this and tell me if you still believe your own words:
    http://wearethe99percent.tumblr.com/

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  142. Jon says:

    College costs need to get under control, period. The government needs to start seriously limiting student loan guarantees for private colleges or publics that are charging obscene tuition. Federal loans for for-profits should be shut off. College advertising and marketing should be regulated by the new Consumer Financial Protection Bureau. Tuition has tripled relative to inflation over the last two decades and the value of a college or grad school degree has not gone up commensurately.

    Some of the comments here are surprising. People act like college is just another industry and the deans and administrators are not expected to act any better than used car salesmen, so students shouldn’t be surprised when they invest in an education that turns out to be a lemon. I’m sorry, that’s not the tune that parents, teachers, relatives, neighbors, counselors, and politicians were singing while I was growing up. Not even the American auto industry has that kind of cultural and social support. It’s time we took control of the education and training of workers in this country and stopped leaving it up to overpaid and bloated administrators and professors.

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  143. Scott says:

    You’re an idiot. You probably think its better to forgive the debt of over-extended auto manufacturers or to give billions of dollars to banks, but rather you believe its wrong when it comes to forgiving the student loans for educated Americans who are breaking their backs/bank accounts to pull the economy out of the slums by re-inventing the US economy, correcting the errors of the banks and are working their way out of debts–trying to avoid bankruptcy? How messed up is that? Do you have a student loan? Do you know what its like to make a decision between keeping on the electricity and heat in your home or to make a student loan payment?

    The purchasing power, earning power, and entrepreneurial of the college graduate is the most powerful aspect of our economy. Small business, if unleashed, will be America’s hope for turnaround. Giving power to government and big business, is not the answer. The last 4 years have showed us the proof.
    Forgiving student loans is giving the money to the taxpayers to pour into the economy. Has anyone considered how many bankruptcies would be avoided if people had an extra $500 to pay off other debts with? C’mon, let’s not be so obtuse!

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  144. achilles3 says:

    worst idea ever…really wolfers?

    REALLY?

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  145. Glenda says:

    I think helping students is a great idea. I had to get student loans whenI first went to college over20 years ago. I went into education so I could help kids. During this time, I not only taught, but I worked 2-3 other part time jobs just to make ends meet. I am a single mom with no help from child support because the “government” couldn’t find her father even though I gave them work places and addresses…..So I had to put all my student loans in forbearance because I didn’t make enough money to make ends meet much less repay a student loan. There still are no “frills” in my life, understand that. I have moved several times to increase my income that ONLY made ends meet and barely at that! I finally quit teaching and went back to school to see if I could get a better job, which involves more student loans…I know I have a better paying job than my friends that only have HS diplomas but after 20 years, I was finally able to buy a house that would fit into my budget so I could have a perminate home to raise my daughter. She is in high school now and is happy we have a “home” at last. I don’t have as much student debt as some people do but my job enables me to FINALLY make ends meet and buy some extras like cheap internet access and tv. This past year was the first time we actually had tv(cable or satellite) or internet access in our home and are able to subscribe to the local newspaper. These are the “frills” I am able to afford. I would love to have these loans wiped out even if they are only $50,000. My house isn’t even that much. I agree we should all be responsible for our debt but when some of us bust our butts just to keep on top of simple things and the government is bailing out banks like Sallie Mae who turn around and charge higher interest rates, give themselves raises when most people haven’t received a raise, vote for things like full retirement and healthcare for themselves after one term in office, waste our tax money sending it to all these foreign countries who hate us but are willing to take our money, then by God the least they can do is help Americans and forgive student loans. Not everyone who takes out student loans are dead-beats like some people are implying. I, for one, work hard, pay my bills on time, and have made it possible for my daughter to enjoy some comforts….I guess if I didn’t have so many bad habits like eating, living indoors, and having heat, I could afford to pay my student loans but as it stands right now, my student loan payments are higher than my house payments and I can’t do both!

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  146. debbie s says:

    I am not a kid. I am 40 years old and have been paying my loan to the US dept. of Ed for 10 years. I financed 3 degrees on loans. I teach in a poor school district on long island. I have 2 kids and I live in a teenie tiny house. I am not eligible for the forgiveness program b/c I am on the “graduated payment plan”. My student loan is costing me $400 per month and rising. In my opinion, most decent jobs now require a minimum of 2 years of college. I have 8 years and I am not even considered middle class where I live. So I disagree with this article. Forgiving loans here on long island would change things for the better. If the educated folks have more money to spend, we can create more jobs and opportunities for everyone else. If we are strapped, everyone else is as well.

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  147. James says:

    Basically, all these student loans seem to do is help eliminate the middle class. Creating hard working Americans with a good education, who cant buy a home, buy a car or even get a credit card because their student loans have ruined their credit. A good education can cost $50-100k just for the undergrad, maybe another $50k for a grad, that’s $100-150k just for the education, not the job. What? no jobs? If the person is lucky enough to find a job paying enough to cover at least the minimum payment on their loans, and allow them to purchase a home and a car, they’ll still be paying these loans (with interest) for the next 10-15 years. That’s 10-15 years of cash that will go back into the economy. I don’t see it as an immediate end to this economic crisis, but it will definitely boost it. Giving money away more to poor people or people that already take enough free money from the government, with no intention of contributing, is ludicrous. Student loans with the extra perk of having a crappy job market, is creating poverty in a group of people that want a better life and are doing their best to contribute to society.

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  148. John says:

    This is a very strange position to take. Clearly his position has nothing to do with economics, and everything to do with liberalism.

    First – if you forgive $50,000 in student loans that IS NOT a windfall – it means hundreds or thousands of extra dollars available in each paycheck.

    Second – I don’t know very many college graduates making 6 figures. Maybe he’s too busy in his ivory tower to see what real people are doing.

    Third – No one is saying the poor/lower/working class couldn’t use money. What they ARE saying is that forgiving these dollars would be BETTER than corporate loopholes etc.

    Fourth – The problem MOST ECONOMISTS notice is the evaporation of the middle class. HELLO!!! This would HELP THE MIDDLE CLASS.

    Mr. Professor Dr. Wolfers should get a haircut then get in touch with middle america.

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  149. Rantly McTirade says:

    Not getting a single economist to support their idea would be a strong endorsement of this, or
    most any, proposal today given the embarrassingly bad-and oft simply corrupt-performance
    of the economics ‘profession’ over the past decade, a few ‘Austrians’ excepted. Wohlers gives us a fine example of the disgrace the ‘discipline’ is in by yammering about ‘stimulus’ and ‘spending’-wrong. Poindexter,money in the bank-or savings in a general sense -is exactly what the nation needs to providefunding for real, useful investment projects that improve productivity and create real wealth.Eliminating debt that fueled malinvestment-and saidmalinvestment itself-is critical to rapidly, repeat, rapidly, regenerating organic growth.
    Wohlers does us a great service, though, by demonstrating what malinvestment truly is: borrowing large sums of money to pay to sit in rooms being hectored by highly accredited nitwits who have no practical thoughts to offer.

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  150. Katie says:

    I am a college grad. And I have not enjoyed this huge money that you speak of. Because of the recession, I have yet to find a job in my field and currently work retail. I struggle to pay my debts and am considered to be within the poverty range for my income. So, Mr. Wolfers, you obviously have no idea what you are talking about. This article borders on idiocy. I have over $80,000 in loans that I have been paying on for almost 6 years. If that were to go away tomorrow the money that I pay towards that debt I could buy a car with, or fix up my rental house, or go shopping, take a holiday etc. I would be injecting money into the emaciated economy that we endure every day.

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  151. Cody says:

    I’d love to know what constitutes you as an expert in this field. This is a free market. Why should student loans be granted protection when no other form of debt aside from taxes has such a protection? The market should dictate the situation, not the law. Not being able to discharge student loans in bankruptcy does increase the cost of education. If I were a private college and knew you couldn’t discharge my loans, yeah, I’d charge you what ever I pleased and I would continue to jack up the price. Your so blind you can’t even see what a terrible cycle the government has created here. The housing industry will bounce back because there aren’t any ridiculous laws preventing the market from correcting itself. Yes, if student loans could be discharged there would be less of them available. That’s common sense, if you can’t afford something you don’t get it. There will always be cheap community colleges available to those who can’t afford Harvard. It’s also right to say these private companies would be killed if student loans could be discharged. Well you know what, that’s by design. If you give out bad loans to people who can’t afford them the market should put you out of business, that’s how it works. That’s how it works, a company makes numerous bad investments and they go out of business. I am not a fan of bailouts. If a company fails to conduct and manage its business well too bad, you’ll be replaced by someone who can manage their assets.

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  152. Dguest` says:

    here is a forbes article that surveyed the occupy wall street folks, and sure enough – they all want loans forgiven
    http://www.forbes.com/sites/matthewherper/2011/10/07/some-say-occupy-wall-street-protesters-aimless-facts-say-otherwise/

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  153. Melanie says:

    Wow, Justin Wolfers is severely misguided. The opening paragraph immediately told me Mr. Walters is not well researched in this area and is clearly venting unfounded opinions. I’m not even going to waste my time critiquing this pointless commentary.

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  154. Ryan says:

    Distribution: this is about being proactive instead of reactive for once. student loan debt is an emerging problem due to the rapid increase of college when compared to inflation and wages. It’s no longer feasible to work and “pay-as-you-go” without some assistance.

    Macroeconomics: Yes the poor people with $1000 will run out and spend it. But on what? Mostly goods made in foreign countries perpetuating the trade deficit. This approach will stimulate China further and inflate corporate profits. Forgiving student loan debt frees up revolving capital which allows the purchase of durable goods such as homes, autos, and appliances. This money will go to the banks allowing them to increase lending while first benefiting consumers.

    Education: I agree. But if we don’t do something to mitigate this student loan debt it will become or perceived to be a bubble resulting in a constriction in amount that lenders are willing to lend. Even though numerous layers of protection exist to make sure the banks and the Feds still get their money from students, who wants to go through that hassle when you can just stop lending to a particular group?

    Political Economy: Worried about socially constructive activity? Why not try linking it to part-time labor activities that the federal government wouldn’t otherwise invest in, or community activities. You don’t have to grant the free money, just tell the kids they have to mow the lawn for it (metaphorically).

    Politics: Isn’t it inherent in our system we all look out for #1 first off? Can you really fault a group for that? You mention opportunity cost, but for what purpose? What about the opportunity cost of being able to keep potentially thousands off welfare, keep them able to move forward and purchase durable goods. The real opportunity cost is that student loan debt is forcing the educated population into a corporate cubicle to do mandated tasks. No longer are they able to invest time in high risk, potentially innovative investment. That is lost opportunity in terms of America’s international competitiveness. That is lost opportunity for advancing the quality of life for everybody. None of this is meant to advocate for the blanket payoff of all student loan debt, but it is meant to be a response to your cockiness. Rather than dismissing this idea altogether you can at least act like there is some merit.

    Repsonse: Most. Condescending. Blog. Ever.

    Also, apparently you’ve never heard the phrase: ask 5 economists a question, get 6 opinions.

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  155. Theresa says:

    I think he is very wrong. I would bet he doesn’t have student debt. Lets look at giving it to the poverty level as opposed to giving it to the working class. They can’t substain it. They will be rich one day and the next we are right back where we were. The need is too great, most are so far behind. It will go into the pocket of the banks and be gone. College educated with student debt will continue to generate more income and more expenses therefore it continues long term. Most people spend what they earn. If they have more of their earnings they will spend it. So $5000 in a day and gone or $1700/month for years. Which would you say would support more jobs? How about if they just knock off the interest, or even down to what they are giving the banks? Still an improvement. But then the wealthy wouldn’t benefit and thats just not the way we do things.

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  156. Mira says:

    I have been paying on my student loan since 1989. There are no jobs in my chosen profession. I am 55, have no job prospects, savings and retirement funds gone, unemployment benefits are exhausted. I bought the American dream and went to college. I wanted to be able to make a contribution to my family and community. I have paid off the original loan amount almost three times over. Sallie Mae will not work with me to reduce the payment, defer or discharge. Sallie Mae is a vampire. To accuse me of not wanting to pay back the loan is ludicrous. Buying into the american dream has put me in the poor house. Why should my taxes subsidize big corporation bail outs when I am being sucked dry with no way out.

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  157. Publius says:

    Whatever Justin Wolfers thinks about the idea, the fact is that most outstanding student loans will not be paid back. Due to the ongoing collapse of our economy and the permanent end of growth in the Peak Oil era, the ex-students will not have the income to pay them back. What does Mr. Wolfers suggest as a solution to this? Debtors prisons? Give me a break.
    The only question remains: Should the debt cancellation be done in an orderly way, or a disordely way (civil unrest and the collapse of banks).

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  158. James Clark says:

    Why don’t they forgive the loans of vast numbers of Americans who are consistently making contribution to society -the educated. They were able to bail-out (with bonus’s) the corporate elite. This is a smart way to payback some of the many people whose taxes paid for that bailout. Margaret Mead advocated paying people to go to college. By virtue of my education I am making society better.

    My questions to Freakonomics is this: Were you paid to play counterpoint to a very smart idea? Were you paid to blow holes is sensible thought? Were you paid to help people look so closely at the tress you enable them avoid looking at the forest? Were you paid to say this? By who?

    Portland , Oregon

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  159. Mike says:

    Thank you for linking to the Signon.org website. You helped me find and sign their petition!

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  160. Wes says:

    “Moreover, if these guys succeed, others will try, too. And we’ll just get more spending in the least socially productive part of our economy—the lobbying industry.” : Slippery-slope fallacy.

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  161. hank shaw says:

    Wow. What a poorly thought out, onesided, pro-”The Man” article.

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  162. Sandra says:

    The cost of education is artificially inflated by the existence of loans. The loans are unjust. Loans have turned us all into slaves.

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  163. Johnny says:

    What the hell, Wolfers, are you living in a cave or something?? It’s not about stimulating the economy. It’s about saving the middle class and the poor. It’s about helping the 99%. It’s about preventing a revolution! Can you not see that your whole analysis is embedded in a catastrophically failing economic model? –The same economic model that said the banks should be bailed out before the American people. –The same economic model that says Wall Street execs can make more in a single hour than a teacher can make in an entire lifetime! —The same economic model that, with cruel, coldblooded and calculated consistency, puts profits above people. Why would you even stop to entertain the idea of whether or not forgiving student loans is the ideal economic stimulus? Are you so absorbed with your own economic “intelligence” that you are incapable of stepping back to see the bigger picture? You say “typically,” but what the hell does “typically” have to do with the situation we’re in now?? Open your eyes, man. People like you need to stop trying to divorce economics from social justice. We need to figure out some quick ways to curb the violently extreme economic inequalities in this country before it’s too late. Forgiving student loans is one great way to begin moving in the right direction. Your challenge is to think of others.

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  164. Jonathan says:

    Wolfers, I’m sure you mean well, but the truth for me and my fellow graduates and colleagues what has cost us to gain a great education has now impeded our opportunities to gain the reward(s) of grasping the golden ring of affording a home, starting a family and making investments in nest eggs that would keep us comfortable during our retirement years. Although I earn a lot more post graduation then before and during my college years, my monthly payment on my debt of $125,000 (principle only) has a choke hold on me where I have to account for every cent that I earn. The general sentiment with us under the same circumstance: this is not what we had anticipated. We would love the enjoyment of moving into our new homes and furnish every room, plan with excitement on having a baby, taking vacations and the ownership of a new car. Unfortunately, all of this is on hold until the shackle of our loans are paid off; by the time we are able to pay off our loans we will be ready to join our parents and grandparents in the retirement sunbelt of Florida. In short Wolfers, your opinion does not jive with us.

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  165. Ryan says:

    1. Distribution. College loans are not dischargable in bankruptcy thus they are a continual drag on consumption. It prevents those who are unable to find a job after college from participating in the economy just as much as the high school drop out. Even worse, the debt multiplies and can prevent people from receiving social security. Last I checked, most Americans want to encourage their children to get an education. Loan forgiveness can act as an incentive to have a more educated population.

    2. Marcoeconomics. If this is the worst macro policy Mr. Wolfers has ever heard of? The top income tax rate during the Eisenhower Adminsitration (R)was 91-92% between 1953 to 1961. Compare to today. And, this is just one of many “worse” macro policies. But, to the point. Your assumption here is that college graduates are not living paycheck to paycheck (the ones that actually find jobs). You know what they say about assumptions? Mr. Wolfers is correct to say giving money to poor people will help stimulate the economy. But, it is a false dichotomy to say one stimulative effect precludes another. Loan forgiveness will also stimulate the economy. Therefore, both should be done.

    3. Education Policy. Actually, loan forgiveness will lead to more people getting an education. First, if the loan forgiveness is permanent for all people after a specified period of time, as opposed to a one time event, people will know they can get an education and if things don’t work out as expected, i.e. a good paying job, they will be able to have their loans forgiven. But, even it it were a one time event, people tend to believe they will have the same opportunity again. In actuality, it is better public policy to provide either bankruptcy or loan forgiveness after a period of time for student loans.

    4. Political Economy. I guess this is just another term for an ad hominem attack on young people. First, it is not the “kids” fault that the supposed “adults” let 1) Banks profit off of education of the next generation, 2) have failed to regulate banks to the point they have created a real estate bubble that just burst and an education bubble that is unsustainable, 3) made the education of the People of the United States of America a commodity rather than a right based on most Americans’ family values. Second, if you look at handing out free money to “kids” for an education and free money to banks to bail them out after they wrecked the US economy, I’d say education is at least as worthy a cause as bank greed when it comes to handing out money. (Yes, sarcasm intended.) Mr. Wolfers, do you disagree?

    5. Politics. I’ll answer Mr. Wolfers’ question, but recognize his fatal problem. Money is not going to the 15% in poverty or to the college gradutes. But, it is going to the largest banks, corporations, and millionaires. Can you say TARP? So here is the answer, money should be going to people…college grads are people…poor people are people. Our government should be trying to pump up demand in the most sustainable way. That is 1) Jobs, 2) Jobs, 3) getting moeny into the hands of poor people to spend it in the economy and 4) getting money in the hands of college grads to spend it in the economy, 5) Regulating banks and the financial industry.

    Mr. Wolfers, I know you cannot truely be so myopic. Please try to answer the question as an economist and teacher. Would forgiving student loans have a stimulative effect on the economy? The correct answer is: Yes, but we don’t necessarily know the extent of the effect. If one assumes college graduates are living paycheck to paycheck the stimulus would be greater. If one assumes college graduates already have excess cash, the effect would be less. Over the long term, there is likely to be a positive effect on consumption as those who have defaulted on their student loans would not have their wages and social security garnished.

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  166. Jane says:

    Would the debt forgiveness include private student loans from blood-sucking companies like JP Morgan Chase? What about the thousands of first generation college students who didn’t qualify for federal aid and took out HORRENDOUS private student loans that they should have never qualified for? Loans that were strategically advertised to them? These loans should be looked at as predatory lending but are overlooked in the conversations on bad mortgages and student loans.

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  167. Matt says:

    Worst comprehension of fallacies ever.

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  168. swampwiz says:

    The best system would be one in which the loan is amortized over a 30 year period, and the government would make a subsidy payment on the loan based on the income that the debtor had – and in such a way as to set up an imputed tax rate such that as the debtor has more income, the government pays less of the loan for that year. (This would be very similar to the the health care subsidies that will be disbursed when Obamacare is up and running in 2014.) Also, if the student were ever to have a very good income year, the amount of extra high income in that year would be considered as money that could be used to pay off the debt in subsequent years, so no subsidy there.

    This would have the effect of being as compassionate as possible to folks that really are up the creek without a paddle (e.g., unemployed lawyers,optometrists, etc.), while still not allowing folks to get off scott free. And in 30 years, one way or another, the debt would be paid off.

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  169. robert says:

    this is ridiculous,
    you think just because someone graduated from college they just have extra money to toss around? Even with undergrad or grad degrees these days it can be extremely difficult to make a living. I know many people (myself included) who have graduated with science and humanities degrees who still have not had a job with more than 10$ hour pay since then and who primarily resort to seasonal labor work to scrap a living. My girlfriend and i both work full-time yet we are months behind payments because we simply cannot afford them anymore. This article its totally unrealistic. “Moreover, it’s not likely that college grads are the ones who are liquidity-constrained. Most of ‘em could spend more if they wanted to; after all, they are the folks who could get a credit card or a car loan fairly easily”….i mean do you live in the same world i do Justin?

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    • Shawn E says:

      I feel your pain man, but I’m not sure that it justifies other Americans paying for our student loans. This is a zero sum game. If our loans are forgiven, that means someone else is paying for them. I knew going into law school that I was going to come out six-figures in debt. Maybe it wasn’t the best idea. But if I have my loans forgiven, what incentive do I or others have to really weigh the consequences of taking on this much debt?

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  170. JDanger says:

    You just gave me 5 reasons why we *should* forgive student loan debt.

    Nice job, Wolfie.

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  171. Keith says:

    The idiocy from the group crying for their free college education is deafening.

    Here’s an idea. Instead of going to your fancy, schmancy private college try going to a public one?

    Here is an example from NYC.

    Pace University, a private university, can cost up to $50,000 a year. Any of the perfectly fine SUNY campuses cost op to $30,000 a year.

    Wow. Look at that. An immediate savings of $80,000 dollars.

    And to think, I was able to come up with that solution without a college degree.

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  172. Kieran says:

    Wake up, pal. College graduates ARE among the 15% of the population living in poverty. This isn’t 1982. But let’s bail out the corporations so they can make even bigger profits rather than people who could actually benefit from the help.

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  173. Mike says:

    When did it become some kind of obvious expectation that you seek higher education only for the sake of getting a job? I find that ridiculous. What happened to education for the sake of education? I went to college to hone my intellect and gain knowledge about the world around me and my place in it -not to get a job. Jobs come to smart people (well, not in this economy but still…) My major was English literature and I think it has been invaluable. I could have studied marketing I guess but is that really more important? I just get a little irritated when I hear people talk about “worthless degrees” just because something might not directly correlate to a specific job discipline. Aren’t smarter more well rounded intelligent people more suited for the job market in general than narrowly focused job robots? Education is about more than jobs.

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    • Shawn E says:

      Nost people seek eeduction for the sake of getting a job because employment is such a large part of people’s lives. It is how many people identify themselves and how they find their lives fulfilling. I think that people should be able to study whatever you want in school for whatever reasons they want to. But employers aren’t obligated to hire them nor should other Americans be expeccted to pay for their tuition.

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  174. Jessica says:

    I have 80,000 in student loan debt. I pay 400 a month until I am 60. My take home money each month is 1600. I have 0 dollars in savings and live very frugally. I would have been better off without my degrees. I think that this economist must make a great salary, since he still buys into the whole “more education more salary myth”.

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  175. Liz says:

    If student loan debt is refunded, I want to be refunded for the money I paid out of pocket for tuition, books, and living expenses.

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  176. Shawn E says:

    I don’t understand why some commenters are asserting that because banks were bailed out, that student loan debt should be forgiven. Other than both being bad ideas, I am struggling to find a connection.

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  177. Southern Man says:

    Student loan forgiveness will earn the undying wrath of all of us who (a) took out student loans and (b) worked our asses off to pay them. Not to mention those of us who (c) also worked our way through college so we could take smaller student loans. Count on it.

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  178. LC says:

    Mr. Wolf are you getting kickbacks from Sallie Mae to post this? It doesn’t take an economist to know what good can be done forgiving student loans for the overall benefit for the U.S. economy. Pull yourself together, rather yet vote for a bailout for student loans on the website link. We would be better off if approved. Come on, we know you want to vote for it deep Dow. inside.

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  179. LC says:

    Mr. Wolf are you getting kickbacks from the lenders to post this flawed articled? Get your facts straight. If you support bailout like I do. Please vote for a bailout. $270k in household student loan debt; accrued about about $20k in interest alone last year….barely scraping it by with coupon clipping and cup o noodles.

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  180. ConcernedOne says:

    I am considering separating the military once my contract is up to pick up an 1-2 extra jobs on the side to pay for huge, close to $200k in student loan debt. How can one concentrate being shipped out to warzone with this much debt. Hopefully bailout bill passes. A dream come true if it does! **crossing fingers, rabbit foot on me, four leaf clover on me** : )

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  181. Colin says:

    There is both an endogenous and exogenous effect playing within Rob’s plan. Neither of which will have a straight 1:1 multiplier (economics is 5% simple accounting, 20% higher math, 75% human behavior). Within the simple supply and demand theory, freeing up a vast amount of potential income within the most productive and participatory working class (college graduates) will greatly improve demand for everyday items we all need and use. But more importantly it will create higher demand in sectors that have historically been a savior for a limping economy (housing market). The exogenous effect will consist of an important shift in preferences. Not only will middle salary earners buy more, they will buy more quality and luxury goods. No, not talking about gold plated faucets, I’m talking about things you wouldn’t intelligently buy if you knew you only had a couple hundred dollars left over after paying the loan sharks (if you are lucky). Think of all the money that is spent when one buys a home. Now think of the money to fix/upgrade/etc this new home. Need a plumber? How about an electrician? Considering contracting an architect for that addition? What about a Landscaper for the yards? Looks like you could use a new porch or overhang. Are those gutters rusted? I think Mr. Wolfers is forgetting that college graduates with heavy loan burdens, in all likelihood, have a greater or equal marginal propensity to consume than those at or below the poverty line. Its funny to me that these supposedly prestigious economists are talking very little economics…

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  182. ConcernedOne says:

    Either Mr. Wolf has rich folks that paid this tuition and living expenses, or got a full ride scholarship, or took out student loan debt back when tuition cost was more reasonable…. And now don’t have to worry about this huge debt (we are talking about up to $$$K loans) that is encompassing the masses. It seems he cannot relate to what modern day borrowers go through. Mr. Wolf please be open minded! One does not need a background in economics to figure this one out. It is a no brainer. Please vote and support this bailout bill. The middle class must prosper. “We must speak out against the wrong and refuse to be silent.” I ponder again if Mr. Wolf is receiving kickbacks from these lenders to write this article. Who knows.

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  183. ConcernedOne says:

    With over 600,000 votes and counting on the petition here:

    Vote for student loan bailout:

    http://signon.org/sign/want-a-real-economic.fb1?source=s.fb&r_by=1282072

    If passed we will take a giant leap forward to bring back the middle class.

    The masses has spoken. Not talking about you wolfie.

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  184. Jeremy says:

    Just FYI (and I’m not trying to play the martyr here, just telling the truth) I’m gonna have a bit north of 100k in loans and I’m getting a Masters in Fine Art in Photography. I am NOT going to make a ton of money doing this when I graduate, despite your claims to the contrary. Now obviously I chose to do this and therefore the burden pretty solidly lays with me. Nonetheless, I don’t think it’s fair to lump in everyone with a college education as “high-income earners” when some of us chose to pursue fields that don’t necessarily have a high return on investment.

    I think the larger issue is this: There is clearly something wrong when artists, writers, historians, hell, ANYONE in the liberal arts is faced with an unsurmountable mountain of debt because their passions don’t happen to be congruent with the fields in which your “high-income earners” studied. The issue is not whether this is good economic policy, it’s whether it is good social policy to funnel our best and most educated young people into science/technology/(shudder)business programs simply bevause those are the only fields where you can ever possibly pay off your debt.

    To make a long story short:

    The problem is that we have monetized our system of higher education and certain fields (broadly Arts and Humanities) that have been critical to the cultural development of society for hundreds of years will be either 1) marginalized because they don’t pay well or 2) compromised to MAKE them pay well. This is not ok.

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    • Steve J says:

      So let me be honest, too. You spent 100,00 dollars of someone else’s money to get a Master’s degree in a field that does not require it, and now you have to pay it back.

      My brother-in-law is a fine art photographer. He does incredible work. He is sometimes paid modestly, and sometimes paid well. He barters his work for dentist appointments and groceries. His work hangs in museums, restaurants, office buildings, and hotels around the world. He is a college drop-out. I’m sure if I asked him, he would laugh at me if I suggested lacking a Master’s Degree in Fine Arts held back his career.

      If having that MFA is worth 100,000 dollars to you, so be it. But there’s no way our (yes, taxes are paid by real, working people!) tax money should pay for it.

      There are lots of things I wanted to study when I was 20-something, but I chose to spend my time learning things that would get me a job. Dreams are rarely funded by other people. I have to say, earning a living has enabled me to pursue other interests at little or no risk. I wish your parents had explained that to you.

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  185. ak says:

    If Wallstreet can be bailed out, surely someone like me who is not in the higher income brackett can get a lil help. I’m a college grad but i’m definitely not in the higher income bracket. Forgiving my student loans would help save my life. I’m sorry but i have to be honest.

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  186. ak says:

    Perhaps Mr. Wolf is a republican and we know what their objective is. Hmmm

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  187. sara says:

    I agree completely! Very horrible idea not only ethically, but econimically as well. My husband when to med school and we are very far in debt. we plan to pay off every penny of his loans from income he is earning as a result of the PRIVELAGE we have in this country to even borrow for such a cause to begin with. I wrote more about my thoughts on the matter at

    http://stayathomeworker.com/2011/10/20/new-stimulus-idea-forgive-student-loan-debt-no-way/

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  188. Blufox1950 says:

    I have two sons, unemployed, college graduates, one with a masters in urban and regional planning. One spent 2 1/2 years in the Peace Corps and has been unemployed for 18 months. Did they take out loans voluntarily? Sure. Did they expect to pay them back? Sure. The loans are due, the interest accrues and they have no jobs. Mister Worst Idea Ever, what’s your plan?

    Oh, by the way I’m 61(college degree, middle manager for 30 years) and have been unemployed for 4 years. I won’t live long enough to help them with the loans.

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  189. Timtim says:

    all student loans must be forgiven!!!

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    • Blufox1950 says:

      To Sara, whose husband is an MD, I can appreciate her determination to pay off his med school bills. However most students will come no where close to his income during their life-times. As for it being a “privilege” to borrow this money, I would classify it more as a financial trap. You need a college education to get a good job and they only way for most is to borrow the money. Gambling that there will REALLY be a job when you finish.

      Everyday we keep these young people spending most (all?) of their income on student loans, is another day that they can’t afford to buy a car, house, clothes, medical care etc. and our economy continues to bounce along the bottom

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    • Steve J says:

      Sure we can forgive the loans, but we shouldn’t forget them.

      Pay your bills. If you can’t afford the college you want, go to a cheaper college. Community colleges for the first two years. Apply for scholarships.

      Anyone who borrows more than they can pay back (and you knew you couldn’t pay it back — didn’t you?) gets what they asked for.

      It would make more sense to limit the amount of student loans to $5,000 a year — maybe force the universities to lower their tuition. How come no one is pressuring colleges to lower cost?

      I am against rewarding bad behavior, whether it is governments, schools, or students acting badly.

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  190. Josh says:

    “This is a bunch of kids who don’t want to pay their loans back.”

    Be respectful. I’m an adult and I’ve got loads of student debt waiting to be repaid, and while I DON’T think we should be forgiving student loan debt, I do think we need to keep perspective on the fact that a lot of people feel like they’re drowning right now and might sign these sort of petitions feeling desperate. Unlike some economist bloggers, we didn’t all get free rides or graduate from school back in the days when a necessary education was reasonably priced. So slough them off if you like, but be human about it.

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  191. Katie says:

    Wouldn’t mind not having loan forgiveness if I as a holder of a Master’s degree could get paid more than 30K a year. So from where I sit, until we can get paid decent wages, there’s not incentive to not take these petitions seriously.

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    • Steve J says:

      What is your Master’s Degree in?

      Engineering? Medicine? MBA? 16th Century French Poetry?

      Having a “Master’s Degree” is meaningless. If you are educated in a field that is not in demand, then it won’t help. There is no right to work. You have to learn how to do something useful.

      For example, driving 18 wheelers will get you the 30K/year job you talk about, but most 20 somethings would never do it.

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  192. Steve J says:

    How can supposedly educated people fall into six-figure debt just to go to school? No one forced these people to take on that debt, why on earth should my tax money bail them out?

    I went to an affordable state university, got an average job (salary wise), and was debt free in two years. Oh, I also joined the military and had them pay for most of everything.

    Sure, I was accepted at very expensive private colleges, and I’m sure that a degree would impress some people, but I also knew that life doesn’t end at college, and most employers don’t give a rat’s behind where you went to school anyway.

    Even if I didn’t use the military’s money, my ENTIRE college education cost less than my first year’s salary.

    I’m sick of people who make poor financial decisions demanding my tax money to bail them out. First the mortgages, now the student loans… what’s next: Car Leases? Cable Television?

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  193. Greg says:

    Unbelievably, this guy doesn’t really address the fact that these recent college grads got loans from banks, who get their money from DEPOSITORS. If you forgive these loans, all of sudden people’s savings will be gone because of all of the defaulted loans. When you deposit your money in a bank, they lend it, to people like college students because generally speaking, these loans will be paid back by people who got an education is something useful… This as a stimulus is just idiotic. You’re just taking money from depositors, who earned the right to that money to use it as they wish…and giving it to liberal arts college graduates to use it as they wish. Just moving money around and not creating wealth. These people are economic morons who believe this.

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  194. Martha N. Copenhaver says:

    .

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  195. anth says:

    Since so much of this money is being paid back to the feds, I wish it could come out of our incomes – pre-tax, like 401k, fsa, health insurance etc. Employers recruiting graduates could subsidize some of these payments (say 10% of loans). There are obviously some issues here – employers may lower base salaries to cover cost to them of paying off loans, may seek employees who are less likely to need assistance with paying back, decrease other benefits available.

    However, if you forgave my loans – I would pay my credit card bills off, be able to put the downpayment on a house, and be a little looser with my day to day spending. It may not be the best stimulus for the economy, but it would be A stimulus.

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  196. Julianne says:

    I understand what he is saying “Much of it would go into the bank. But give $1,000 to each of 50 poor people, and nearly all of it will get spent, yielding a larger stimulus.

    But lets remember this… They gave banks how much? and how much of that got lended out…. so how did that really work out. Even if everyone saved instead of spent that would just increased the supply of loanable funds for others to invest which will help the economy. We aren’t in a recession any more but till people are optimistic about the economy we will be in a “fake” one. Forgiving someones loan of $200K and giving them an extra $1000+ in their pocket a month you can’t think that not $1 will be spent.

    No one wants to pay back loans but the rate that college tuition has increased compare to other things is ridiculous. Yes college grads tend to make more money and pay more taxes than people who don’t just so when they have kids, their kids won’t qualify for Pell Grant or any need base scholarship not because they aren’t smart but just because you chose to pick a trade or get a degree or start your own business, etc. What should be down is that my loan money I would pay and put it to my retirement or college fun for my kids cuz we know tuition probably will be $250K for 4yrs 20+ yrs down the road.

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  197. frustratedmiddleamerica says:

    Worst. Article. Ever.

    To the author:
    Idk what planet you are living on…but the one I’m living on and the country I’m living in treats it’s backbone, the middle class, as the fall guy for everything. Student loan forgiveness is our bite at the redemption apple, and maybe if you stopped wearing pink shirts and got a haircut more people would take you seriously.

    1. Distribution: College grads don’t make enough money to pay for all their expenses right out of school. Depending on the degree, it could take DECADES for them to afford a fancy pink shirt. A typical college grad is going to graduate at 21-22 years of age and they will be in their early 40s before they become affluent.

    2. Macroeconomics: Giving 50 poor people a $1000 each for no reason is an awesome idea. Let’s do that too…after we give the people that have struggled in a corrupt educational system trying to make something of themselves $50k each to pay off the ridiculous cost of “education”. If you give $50k to a recent college grad, they are not going to put it in bank. They are going to go out and trade in their beat up hyundai for a nice new chevy and INVEST in their future by buying a home, or a business, or a bunch of pink shirts…that is what college grads do.

    3. Education Policy: Thinking that making loans more “accessible” will increase college education is a ridiculous notion. People that don’t go to college don’t go because they do not want to commit. They are not motivated. To make college more appealing to that population, the answer isn’t more loans. The answer is cheaper tuition and more applicable curriculums! Our society puts such a premium on 4 year degrees, it’s absurd! Obviously, some proffessions require lengthy education. But go tell the “communications” major she will only use 5% of what she is paying for in her actual job and see how she feels. Go tell the engineer that the $200k you just paid for is really only going to go to the 5 equations you covered that 1 week back in fluid mechanics class. Go tell the microbiologist that those 2 years of advanced math classes were just for show because you work in a lab and a computer does all the math you need to do. This whole country needs to get their act together and stop all the nonsense!!

    Political Ecomony: Without the taxes that middle america pays to the government, this country would be nothing. Absolutely nothing. After we just endured the ugliest, most selfish display of capitolistic bigotry, you are going to write that giving back to the people, the REAL people that make this country tick, would be a bad idea because it would set precedence in future ecomonic hardships? The only bad idea I see here is the pink shirt. Get your priorities straight. The american middle class are not just numbers in a census. We are not just college grads that save our money. We are the people that make this country survive, and some of us can’t feed our children…not because we don’t have a job, not because we spend money on coke and whores and pink shirts, but because taxes and prices on neccessary commodoties are through the roof! I love how economists like you sit around a round table made of gold and make ill informed decisions that influence the real people in this country.

    5. Politics: In true bi-partisanship, see number #2. What’s good for the goose is good for the gander. Wall street got theirs, the banks got theirs, hell even the science sector got theirs. The middle class AND the poor people need relief from this spectacle that educated dimwits like yourself call an economy!!

    Conclusion: Cut your hair, get a new shirt, grow some bullocks, and go talk to the regular people. Go talk to the people in the struggle. Ask them why the house is gone. Ask them why the boys can’t go to summer camp anymore. Ask them why their college degrees aren’t earning them enough money to survive and pay pack their loans. Get real, then write another column about this subject.

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  198. Doug N; Seatttle says:

    I could not agree more – dumber than dumb for al the reasons stated and then some.
    There is a glaring omission, however. No comment on how any of those with excessive debt were so ill informed when taking on these obligations. It’s a bit like drunk drivers who get caught. Worse what did our protesting debtors learn as they borrowed their way to a degree – not much about econimics or freakonomics. This general lack of knowlege is to be feared and corrected.

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  199. knowitall says:

    The problem is this. Dept of Ed is too big to fail and too big to care. We need more activist that will voice out. Guys like Robert Appbleum with forgivestudentloandebt.com or the mysterious Rogue Student Loan Collector with http://www.freestudentloanstuff.com. We need more supporters and more people know the problem.

    I have over $120K in student loan that grew from $37K in 4 years. This is a epidemic.

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  200. chris says:

    simpler fix: just amend the bankruptcy code to allow student loans to be discharged. this would screw banks over instead of taxpayers, and assure that only those with truly crushing student loan debt get assistance.

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  201. HLF says:

    I worked in my chosen profession for about seven years, starting at the bottom of the barrel, before I finally hit what I call the “uneducated professional ceiling”. I was told on numerous occasions, “We’d love to promote you, but you don’t have .” Why do I need a degree to continue doing the work that I’m doing already, but at a higher pay grade, with a little bit more responsibility and a new title? So I bit the bullet and went out to get said education. The majority of this “education” was literal rehashing of EVERYTHING I’d learned to do already, but they gave me a grade and wrote down on a piece of paper “She can now do this, officially.”

    Long story short, after three years of busting my as to make the grades WHILE still working, I now have this degree, B.S. in Culinary Management. This essentially amounts to a fancy combination of college basics, solid foundation of culinary skills, and an associate’s level understanding of the business world and its practices as it pertains to the culinary industry. The vast majority of this education that I paid for wouldn’t have prepared me for all of the work that I was currently doing and frankly, wasn’t anywhere near what I should have been taught. But that’s what you get when a curriculum is designed by a board room full of bureaucrats that have zero concept of the industry and what it actually takes on a day to day basis to perform the tasks you must in order to serve food safely to the population AND keep the business bottom line in line.

    Shortly after receiving the most expensive sheet of copy paper ever to grace my hands, I had an accident. I haven’t had medical insurance since I was in high school. Couldn’t afford it if I wanted to as adult-onset asthma keeps me squarely in the High-risk/pre-existing category that makes premiums unpayable IF I am even passed through the application process to begin with. Already dealing with medical difficulty, I am now officially disabled. That great education that I was sent into debt to get even though I didn’t need it is now irrecoverably lost. Worthless. I will never be able to utilize that education, simply because an irresponsible high schooler and her friends were too busy worrying about texting and makeup to keep their eyes on the red light they ran.

    I would kill to be able to pay back my loans. In spite of all of this, and though I can no longer utilize the education I gained, I WANT to pay it back. Why? Because it’s what responsible people do. I don’t take handouts. I can do plenty of things. I may be wheelchair bound in a few years, but I can still do plenty right now. Yet, no one will hire someone disabled. I’m too high of a risk. I was told two days ago, that because I chose THE WRONG DEGREE and am a liability… I can’t be hired for $7/hourly part time.

    I’m 30. But for the good grace of a woman’s shelter (which I cook for to help earn my keep and make what pittance I can to save up for medical treatment when I can afford it.) and the library, would be officially homeless. I am well educated, intelligent, diligent and my skills do extend well beyond the degree that I hold, yet none of that counts because it isn’t on paper bizarrely enough. I would like for you, Justin Wolfers, to tell me exactly what category I fit into.

    Am I one of your wealthy, high-income college grads? Or maybe I could spend that money if I really wanted to, instead of getting treatment to keep walking for another couple years. Hey, I should run out and buy a car I can’t afford with a loan I can’t get and live in it instead. God forbid allowing me to go back to school and reshuffle my credits to get a degree in business and finance. Because then I’d actually have a chance at being able to pay back some small degree of the money I owe before I’m confined to sit-down earning. I haven’t been a “kid” since I was a five, Mister Wolfers. Don’t you dare condescend to me. Have some respect and take a step outside of your little glass house for a minute. You’ll see the world is significantly bigger than your meager sphere of influence.

    While we’re at it, where, exactly do you pick up your figures? Setting up financial outlooks is a tricky business with economic fluctuation as skewed as ours. You have to have consistent sources with a historically low margin of error. Might I suggest you double-check yours and get back to us when yours are a little more sound.

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  202. Rose says:

    This is a bad idea! I took over $100,000 in student loans out to complete my undergrad and law school degrees. Worked 2 jobs thru each level and never lived large. However, my parents couldn’t help financially. For 15 years I have paid $450 per month on time every month. Has it been hard? Yes. I work for a state agency that has been hammered by furloughs (up to 45 next fiscal year), my husband also had $200 per month student loan payments, and my income has actually dropped $20,000 in the last 5 years. Having said all this I am a believer that education is an opportunity not a right. I chose my career and the risk that comes with every such decision in life. I appreciate the lower interest rates offered on my loans and think that is all the help anyone should get from the government. Why should my kids or my parents pay for MY education? It’s my asset and I will gladly pay for it. These ” kids” complaining about loans and schooling costs should be reminded that there are a number of jobs that do not require college degrees. Each no less important than any other. It is by choice that they seek a college education — so the loans are theirs to pay!! As I sit in my perfectly conditioned office everyday, I gladly sign my student loan payment checks.

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    • Nick says:

      If you don’t mind me asking, how is your student loan payment so small? I would kill to have mine that low. Mine are about $1400 per month. Zero exageration

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  203. jesus h fartmeister says:

    giving away money that you actually have is precisely the same thing as cancelling a gigantic debt that you will never actually be paid because the people who owe it to you do not have the means to do so!!!!! btw everyone who reads this comment owes me a kajillion dollars!!!! btbtw economists are really fuggin smart and totally proper scientists

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  204. GNixon says:

    Forgiving the student loan debt of all Americans will have an immediate stimulative effect on our economy. With the stroke of the President’s pen, millions of Americans would suddenly have hundreds, or in some cases, thousands of extra dollars in their pockets each and every month with which to spend on ailing sectors of the economy.
    ———————————————————

    The money would be in the pockets of the former borrowers to spend as they wish, yes. However, there is a lack of fairness in the manner that the forgiveness of debt would be enacted.

    Why stop with student loan debt? Extend the forgiveness to back income tax. From there, what else could be forgiven?

    The notion that the economy would be helped immediately is based on faulty premise, which is that any money spent would occur in sectors that would yield the biggest benefit. Given that people spend money on what they value, it is likely that any extra money that is available for spending would be spent to satisfy pent up wants, such as vacations or paying off credit card debt. Long term responsible use of the extra money cannot be, and should not be, counted on.

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  205. Nick says:

    I am a college graduate who owes around 150k (not including interest) and my monthly payments are around $1400. Do I make more than a non graduate? Sure. But only because I work TWO full time jobs as well as a part time job. I do this JUST TO SURVIVE with my loans. Do I have money to go eat out or see a movie? No. Do I have enough money to buy my family Christmas gifts? No. Do I have enough money to even travel home for Christmas to see my family? No.

    To say that this is “just a bunch of kids who don’t want to pay back their loans” is both irresponsible and ignorant. There are a bunch of us out there who are doing everything we can to make these loan payments but we just can’t do it. My parents cosigned on my loans and, therefore, they have had to sell the home and cars just to help out. Is this the reward for pursuing higher education?

    Something needs to be done about this. But this article is so short-sighted that it is ridiculous! Due to my loans, I cannot afford to buy a home, get married or have kids. Should I just deal with this for the next 25 years??? Something needs to be done to help us out here. Sure, there are some punks out there who make a bad name for all college grads. But to say that we are all like that is irresponsible writing. Also, factor in my student loan payments and I make far less than my high school grad counterpart…..and that INCLUDES all my jobs.

    Something needs to be done here

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    • Yan says:

      How did you accumilate so much debt in 4 years? Were there no alternate schools that had lower tuition?

      Something should be done, but the “victims” should not be absolved of all guilt. After all, no one forced you to go to an institution that is 40K+ a year. I’d propose the following.

      1) Allow for refinancing on all student loans
      2) Enact laws that require colleges/universities to give students a reasonable picture of what they’ll be paying every month before they take any classes relative to the entry level post tax earnings of a graduate(schools also need to be held accountable for the accuracy of the information)
      3) Phase out federally backed student loans for all but the lowest income bracket(bottom 15%). The amount of money an 18 year old can borrow for their education is insane. Schools take advantage of this.

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  206. MICHAEL says:

    Mr justin wolfer was right about what he said,but i need to point out a few things for him.
    first what he said could be regarded as a valid statement if he said that in about 10 or 8yrs ago before the advent of the global crisis,because he s talking about college grds earning much money.now that things are really bad with the economy most employers are really cutting costs and trying in every way to keep a low budget so how does his argument about distribution works in the society
    second,as an economist he has forgotten that the the american economy is credit run type which literally makes people that don’t even owe debts to really have much of a saving when u have situations like mortgages and so on to contend with.because i felt he belong to the set of people that have payed their loans back and so dont see reasons why others should be exempted but he has forgotten that if our fore father’s didn’t make some sacrifices we will not be where we are today, and a gain in the world to day that tech is really thriving getting jobs for even the so called grd is difficult cause before like 20 people could be involved in a process of getting something done but now with the advent of people all u need are just a fewer folks that can operate such machines so what do the antagonist of such an idea want the remaining people to do nd even those that have jobs are not been paid well and they still have this burden of the so called loans,so looking at a scenario like that when do they want people to free from death/ is it when they are old or maybe when they are dead cause it will seems difficult for people to really have enough to take care of them selves..let alone care for their family or people that are looking up to them for help thinking they are grads and they are making much not knowing they end up using the so called huge income to pay off debts.
    and it ironic cause people are complaining bt this when a real issue like the wars our nations are fighting all around the world just to show off their might and make people fear them which is costing our nation s billions of dollars a day to manage.
    Bottom line is i think if our govt could help us pay this debts it will be our own share of the economy and so it will reduce the hatred we have towards them for wasting money on wars and the defense industry. i finally rest my case.

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  207. TruthHurts says:

    There is always, always the same false argument in any discussion amongst those holding student loan debt they can’t repay. The Banks were bailed out so why shouldn’t students be. This is inaccurate because the Occupy/Student Loan Forgiveness Groups are equating TARP, which is the temporary asset relief program, which provided capital to the banks with terms that required them to “REPAY” the money the Federal Government floated to them with The Occupy/Student Loan Forgiveness viewpoint of just making their loans go away with no repayment of any sort. I guess college has taught some people that they are not responsible for their own actions.

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  208. T.J. says:

    Worst. idea. Ever? Pretty glib about an issue you’re so uniformed about.

    You assume a monolithic group of selfish kids wants free money. You say nothing about a banking system that has taken advantage and reaped HUGE profits on the backs of working people, who’ve tried to put themselves through higher education. As Elizabeth Warren says “student loan debt collectors have power that would make a mobster envious.”

    I and at least two of my friends (all over the age 50) have been paying more than $1000 a month (combined) on students loans for more than 10 years—when we have been lucky enough to be employed. But due to periods of unemployment, none of us has seen our total amount owed diminish by much, if at all. I have been unemployed for over a year and now pay a reduced rate of $350, almost 1/4 of my unemployment benefits. You can bet I’d be putting that $350 or $500 into the economy if I did not have to pay it. I can absolutely attest that this loan burden has kept me from buying a house.

    Please read more stories here: http://www.businessinsider.com/x-student-loan-horror-stories-2011-12#michael-speck-passing-on-a-generation-of-debt-4

    and here: https://www.facebook.com/DefaultMovie
    and here: OccupyStudentDebt.com

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  209. Mary Russell says:

    You are clearly out of touch with the plight of many Americans who have graduated college but are struggling to make ends meet due to student loan debt. I am unable to qualify for a home loan due to the debt to earning ratio resulting from my student loan balance, as result my children cannot live with me. I am a teacher of five years with a master’s degree in educational administration. Starting next week, I will be working a second job on top of teaching. Why would you propose handing money to high school drop-outs over individuals like me who put their heart and soul into trying to improve themselves and our country?

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  210. robert thompson says:

    Sorry I disagree with on most of your points. Here’s why;
    .This isn’t about giving away “free” money. If a grad is in a position to repay the loan then he should, but if the economic environment changes to where over the span of 10, 15, or 20 years that “grad” is unlikely to be able to pay back the loan, then tailor a plan to those that at show a decent effort trying to do the right thing.
    I myself graduated with $60000. in the health field, thinking I would have no trouble paying it back, but at that time HMO’s were wreaking havoc to the point where I had to live at home to try this debt. Now, over 20 years later I am on the minimum payment schedule, but it doesn’t touch the principal, so the interest keeps the debt going up to where I own over $100,000. I have very little in savings and at 58, will probably work until I drop.
    We were always told that higher education was the way to improve on yourself, on your earning potential, and so your life. If I had a crystal ball and could have seen this as my future, I would have stayed working as a waiter, anything that wouldn’t leave me with this burden.
    You make it seem that putting money in the bank is a bad thing, but banks loan money for projects (homes, business, etc. Instead of the government getting this, the money would filter into the system on a large scale from the multitude of banks.
    Aspiring students that do not have the economic means to pay for college are seeking a way to improve their life, and in the past education has always been that way, so yes loans are necessary, but they shouldn’t become a lifelong ball & chain to anyone!

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  211. T says:

    At a bare minimum, the government needs to increase the tax deduction for paying your student loans back per year from $2,500 (I believe that is what it is now) to an unlimited amount. I mean, I pay well over $2,500 per year in interest on my student loans (well, I did when they weren’t in forbearance), and increasing the deduction from $2,500 to an unlimited amount would give those in my situation an incentive to try to pay these loans back more quickly – though many of us still would not be able to do so. The only real solution as far as I am concerned is restoring bankruptcy protection to ALL student loans – including government backed ones (that’s all I have). Unfortunately, there is no way I will be able to pay my student loans back in my lifetime. Now, I am a lawyer, so hey, if the government wants to offer some program to us lawyers who need to make more money to be able to pay back our student loans, I’m all for doing it – but not these wimpy few thousand here and there things and jumping through hoops to qualify and being under a certain age or whatever – I am in my mid 40′s, owe over $160,000 and do not make anywhere nearly enough to pay these loans back in my lifetime. Tell you what, send me overseas to work for the government for 5 years in some lawyer or legal type position, maybe with USAID or something like that, and then write off my student loans at the end of that period of service. Okay, probably never gonna happen, but something like that. By the way, most of us are so stressed by our student loan debt that we will probably die of heart attacks within a year or two, so don’t worry, you won’t have to worry about us – good thing that our student loans get discharged when we die though! Wow, so they will end up being forgiven anyhow. Phew!

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  212. James Robinson says:

    I am in my late 50′s. Manufacturing job tanked and all the retirement robbed. It is still in the courts. I was to get assistance for getting a Masters degree and it went South 12 mos. into the
    18 mo program. – just lost another job and have this debt breathing down my neck of over
    30k and interest never sleeps. For a short time forbearance then the inevitable deferment is
    keeping the monster at bay. When that defense ceases, I will never be able to pay back~ even with what is left in a clumsy ineffectual estate for my children to wade through.
    Somehow we bail out industries , banks and wall street…..another argument. What to do for all the lost careers and the middle class with sub par paying job hopping opportunities with pitiful pay and usually no decent benefits?
    Without this debt I could use the money to repair my leaking roof and possibly put some money down on a decent vehicle instead of a 17 year old rusted soccer mom circus wagon.
    Most jobs in our area require reliable transportation. My last job I rode a 25 year old bicycle to and from work to save the miles.
    In effect, my student loan makes me overqualified. Forgiveness would work for this American that was ripped with the manufacturing scourge these last several years have offered.
    Oh yes, do you want to buy a 6 story Fortune 500 rated former Maytag Office Building ?
    It is in the Wall Street Journal for $1.00–yes that is ONE DOLLAR
    That includes 200 + parking spaces and the entire campus of several other buildings.

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  213. ekka says:

    I did not go to a University cause I could n0t afford it. Why should student who also could not afford it and took out a loan get a hand out. Maybe I should have taken a student loan out if I knew I would never have to pay it back.

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  214. mike says:

    The problem is the same as every other economic issue…our government. Everything our government touches results in higher costs and lower quality; quite the opposite for organizations on the free market. Educational costs have increased almost 300% over the last 30 years (this is taking inflation into consideration), while the average income for American families has decreased by around 17%.
    While State & Federal funded systems (public schools and universities) have seen these effects, the average wage for those in administration has increased drastically. Greed is what makes the world-go-round. It always has, and always will. It also saw the demise of great empires, as power and money grubbing leaders sold the freedom and prosperity of their people for just a little more for themselves.
    In a nutshell, the government needs to get out of way; get out of education and let the free market competition drive prices down, while increasing the quality of the education given! But, if they are going to run things then they NEED TO BE ACCOUNTABLE!!!!! If Martha Stewart went to prison for insider trading, then SO SHOULD OUR POLITICIANS!
    All of the problems we see in our economy today, including our problems with the education system, is the fault of the American voters. We are uninformed, and choose to be ignorant. We vote for the best motivational speaker, while neglecting to research their past voting record and business relationships. If we continue voting in this way, what do we expect???

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  215. Cheryl says:

    I think your argument is totally flawed. The argument that degree-holders make more money and therefore should be able to repay their loans is ultra simplistic. I have both an associates and a bachelors degree and owe about 40K in student loan debt. This is of course no where near what everybody else is mentioning below, however it might as well be that much because I cannot pay them right now. I am disabled and require the use of a wheelchair. I returned to school to complete my bachelors degree in the hopes that I would get a higher paying job to better support myself. Three years after graduation I still have the same job I have had for the past 10 years, a job that although it is white collar does not require any formal education. I have had to put my loans into forbearance for the past three years because there just isn’t any money in the budget to pay them. To make matters worse my home lost 50% of its value and the association doubled their monthly dues because of all the foreclosures. This was enough to put me over and I ended up having to let the house go. I doubt I will ever be able to own a home again because of my student loans. I would love nothing more than to find a job that would allow me to make payments on my student loans but the way the economy is right now I just don’t see that happening anytime soon. Job seekers are competing for every job that is posted and if an employer has the choice between two equally qualified people with the same experience but one is in a wheelchair we all know who isn’t getting hired. Loan forgiveness would be a welcomed relief and would probably be enough to right my ship and allow me to purchase anther home once my credit has healed.

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  216. Just a thought... says:

    I have 2 separate Bachelor degrees (one in Economics and one in Earth Science) along with an Associate’s degree in general science and engineering. You would think that makes me a diverse candidate for many different jobs. Well… it doesn’t. So I am stuck working as a secretary and not utilizing any of my degrees. I have paid off all but $15,000 of my student loan debt. My current payment is 1/4 of my monthly salary.

    Would it be wrong to create a program where you could give your degree back to the college for a certain about of loan debt forgiveness and charge the college rather than the government or loan company?

    This would put more responsibility back on colleges because right now all they seem to care about is raising tuition rates and pumping out graduates like a puppy mill. I didn’t even sign any promissory notes or documents, just said “yes” I would like financial aid. (Ha! Financial Aid… that in itself is a joke.) College today is a simple money-making scheme. I encourage everyone to read books and learn on your own… you will save money by gaining experience job shadowing instead of sitting in a classroom.

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    • Just a thought... says:

      Spelling error… “a certain AMOUNT of loan debt forgiveness”

      Also, I do not have a job in any of the three fields of study because no one will hire me or there simply aren’t jobs available. I have applied across the Eastern U.S. from North to South. At this point, leaving the country is sounding better to me each day and get out of this corrupt country.

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  217. CJ says:

    Forgiveness seems unfeasible… Can we instead have a viable refinancing option? Can we put a limit on predatory interest rates? Can we have payment application structure regulated so students actually CAN pay back their loans?

    When federal loans didn’t cover my expenses, I borrowed private loans. I understood the terms, and believed I would be able to pay back the loans within a few years. Cue the crash, triple my interest rate. Now the once small amount of private loans I’ve taken out are suffocating me at 14.75%.

    I have a decent job, and make my payments. Not a lot of money for much else. Whenever I have extra money I put it toward loans, but it hardly makes a difference. Sallie Mae’s ridiculous payment application structure functions to keep me in debt. I cannot choose which loans my payment applies to.

    IBR plans are nice for government loans, but where graduates need the most help is with private loans. How about someone intervenes and helps us get on top of this debt? Grads could perhaps put some of the $500 interest payments into the economy. They could get their lives started instead of working tirelessly to stay afloat.

    (Sidenote, Wolfers, I’m afraid you’re equating “degrees” to “high income.” Not always the case. Our poor are our educated.)

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  218. A says:

    This guy went to Wharton School one of the most selective collages in America, they take 75% of their intake from the most affluent part of society. My guess he holds a self-serving bias, odds are he would have come from a very affluent background and never had a student loan. Economics is an art not a science and anyone that doesn’t admit that is not telling you the full story. In terms of social justice it is better to forgive the debt of students and young people who went to college to try better their lot, than pay $100,000 a year on inmates and billions on corporate bailouts.

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  219. Maries says:

    Interesting how in this post grads with heavy student loans are pitted against “poor people,” as though forgiving student loan debt is something along the lines of the old trickle down economics where rich people get money and poor people get trickled on. But this is not economics, it’s rhetoric. Consider instead WHO needs to take student loans, and the most student loans – guess who – that’s right, the students whose parents are NOT rich. And the poorer the student, the more student loans they take. While these students may not come from the very bottom tier of the economic totem pole, they are certainly not very high up on it. Couple the fact that there families don’t have much money with the fact that there loan debt now prohibits investments such as retirement savings and home ownership, and where are we headed when these kids hit retirement age? They’ll have nothing. They’re kids will have even more debt, because they’ll need to borrow for their own education, given that their parents are still paying off theirs. Sure, they may not go out and spend the extra money from a forgiven loan on expensive shoes, but they are likely to buy houses and make other large investments. I’m not an economist, but is the sudden purchase of a bunch of retail trinkets really better for the economy in the long-run than freeing up working and middle class people to make long-term investments such as homes and retirement plans? Especially considering that, one day soon, all of those people will otherwise be old and penniless with children too saddled by their own debt to care for them. What then?

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  220. College Educmacated says:

    Are you serious? Do you know any 22-28 year olds? We spend money hand over fist, particularly in the retail economy i.e. food and beverage, clothing, electronics, travel. Anyone older is likely to take any such “stimulus” and use it to pay or pre-pay additional debt ( i.e. credit card, mortgage) or delever in some other respect. Your premise is sorely, sorely, mistaken. Put up some data points on spending habits before you blow more smoke.

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  221. John says:

    There needs to be reform of some sort. I will end up paying 145% due to interest. I took out loans for 20k, and will pay up to 36k. This means 16k in interest on a 20k loan. That’s what needs to be reformed – the usury.

    Not to mention, the myedaccount.com website is intentionally defunct on certain areas that increases company gain from interest. For example, when making an online payment, there is a check box next to “Do Not Advance Due Date” that has been nonoperational since at least Dec 23, 2011 (currently March 8, 2012). People select this option that want to pay extra on their loan’s principal. Making the box defunct is a criminal tactic allowing the company to accrue more interest.

    Also within myedaccount.com, they refuse the ability to allocate payment to a certain loan. You can allocate to groups of loans, but not individual loans within the groups. I called to ask why and was told that loans with the same interest rates in the same group get lumped together, but if the loans have different interest rates but are in the same group, I can allocate to an individual loan. Again, the website does not allow this option even for different interest rate loans — another criminal type tactic.

    People should be able to afford college loans, not experience a situation where interest adds on another 45% of the loan to the total payment. The loan companies need criminal investigation. There is a clear need for reform.

    Also, you’re point 5 is flawed in the reasoning that student loan reform would give money to college grads on two points. First, most student loan periods are up to 20 years. There are 50 year olds still paying off their student loans, thus reform helps more than just recent college grads. Second, reforming the interest rate to save student loan holders money is not “giving them money”; they will not recieve a check in the mail, so you can’t compare “giving money to college grads” to giving money to “the 15% in poverty” because their is no actual money being given, only fees being reduced.

    Again, there is clear need for reform. No way should anyone be paying 45% interest on a loan.

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  222. Rethinking it all says:

    Forgiving student loans would create a preferred class with benefits not available to all others who may be in a similar situation, but not exactly the same, with burdensome debt. Where does the entitlement stop? First student loans are forgiven, then FHA mortgages near bankruptcy, then IRS debts over a target limit are forgiven …. It could go on and on.

    In the future, college grants should be treated as grants if you graduate, then loans that must be re-paid if you do not graduate. Opportunities for re-financing to a lower rate after two years of on-time payments is a good idea. Lower the aggregate loan limits for borrowers to amounts based on some index as a guide. Minimum age to borrow is 21. (That one will cause some stomachs to churn.) No borrowing after an undergraduate degree unless you are in law or medicine. (Another “ouch” for the borrower-student.) If you are a success in your field, your success should finance your future education. You should not have to borrow to pay for it on spec.

    Also, no loans co-signed by parents. An adult borrower should be responsible for his own debt, not the parents who are likely prepping for retirement.

    No loans should be given to students in certain academic areas or to students in schools whose graduates are in fields with high default rates.

    If loans were shut down, the tuition would fall. That’s just the way that economics works.

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  223. Drew Moody says:

    This is one hell of an appalling, uninformed, misguided, and presumptive argument. One of his points is based on the sole assumption that people who get their finances freed up are going to spend that money on something else – well, duh. They’ll probably spend it on other bills, or rent, or a mortgage, or a car payment, or hospital bills – anything. But the indebted can’t afford any of that with massive loan payments hanging over them. Student loan debt controls lives far too much.

    My fiance has $73,000 in student loans from a private school. However, she works at Starbucks. Now, even though she’s in full time and in a supervisory role, her income is still not enough to cover the minimum $600/month Sallie Mae payment and the interest it accrues, her rent, her utility bills, her taxes, her health insurance, her phone bill, her groceries… It’s ludicrous how much of a negative impact her education is going to have for the rest of our lives.

    Even if student loan debts were halved, that would be a tremendous relief to hundreds of thousands of people.

    In a perfect world, I’d agree with this writer’s argument. If a college education guaranteed gainful employment in your field, that wold be perfect. In that case, yes, it is your responsibility to pay your debt. But it’s not a perfect world, we have over 8% unemployment and nearly 20% underemployment. People can’t afford it – so they’re sinking deeper and deeper into debt, month by month; ruining their credit score, month by month; throwing away dreams, goals, and plans, day by day.

    Big banks and big business got bailouts and loan forgiveness and look how much that positively affected them. Hell, even the entire continent of Africa got loan forgiveness from America! It’s time that Main Street – real people that are really suffering and losing all sight of hope – got it too.

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  224. Brandon says:

    Let’s analyze this person’s opinion one point at a time. To begin with, before we get to points 1 through 5, the video that is added by the author of the Article is clearly added by him to help him point along. This congressman isn’t asking for immediate total forgiveness of all student loans, he is asking for a cut in student loan debt. His idea expands upon a current student loan policy that is only extended to those who, upon graduation, take jobs in the public service sector. Their loans are forgiven after 10 years of good faith payments. The congressman is asking that all debts be treated the same. This video doesn’t state that.

    Now let’s tackle these points one by one…

    1. The income growth compared with growth in the cost of a college education, insurance, rent, gas, groceries and countless other needs, coupled with the high number of people aged 18-34 who are out of work or only working part time isn’t enough to make up the difference. This is a very narrow view of the economic landscape of people in this age group. It is also looking at only the sort term benefits of the stimulus. People with these educations ARE in fact more likely to invest and grow this money than blow it immediately. The long term in the goal here.

    2. This point totally ignores the economic landscape. College grads are very liquid constrained. They are the ones who were allowed to borrow up to their eyeballs, listening to the older, wiser generation who said that we would be able to pay it back, and are now balking on our obligations to pay anything back, lowering our credit and ability to take out credit card loans, buy cars or houses. Would you rather invest stimulus money on a high-school grad or drop out, or someone who is educated and will put it to good use?

    3. Moot point. Nobody said that it would lead to more people getting an education. He just wanted to hear himself talk.

    4. “This is a bunch of kids who don’t want to pay their loans back”. Any sensible human being would stop reading the article at this point. This is like me saying “this is some old rich bastard who doesn’t understand the economic and political climate of the next generation, who probably has diabetes and a trophy wife”, instead of making valid arguments. My reality is that I was allowed to borrow over $100,000.00 dollars toward an education where the overwhelming majority of people don’t make it in the field. What type of responsible lending is that?? From the government no less. I’m not some punk kid who is complaining. I am a 30 year old man with a fiance in a 1 bedroom apartment with $130,000.00 in student loan debt making $21,000.00 a year trying to make something out of myself who was sold a lie.

    5. I have made this point already. Looking for a quick economic boost or “stimulus” isn’t going to solve any of our problems for the long term. Perhaps those that got us here don’t understand that we are trying to secure the future of our country. It is people like the author of this article and their views on economics that got us into this mess. We are trying to fix it by having YOU invest in US!

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  225. Nikki says:

    Pretty sure I’m not the only college grad in poverty due to student loans. And credit? Wtf is that? From what I’m seeing, the only people I know struggling with their payments are people who came from nothing in the first place. College was an attempt to break the cycle of poverty, yet the lack of decent jobs available plus stupidly high payments and interest mean most of us are barely even able to feed ourselves after rent and loan payments are sent out. Some can get those amazing jobs with health insurance and 401k plans. There are a growing number of us making minimum payments and scraping by on minimum wage. I’ve been out of school almost a year now and my employment situation has only gotten worse. Even restaurant jobs are hard to come by. I work part time in fast food because they have no more hours available and I can’t get a job anywhere else despite 10 years of foodservice experience in a city known for its restaurant culture…and my bachelor`s degree? No one cares. Though I think a better solution would be cutting down interest and regulating tuition costs. I’m a first generation college student and I don’t have anyone to help me but myself. I am not alone.

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  226. Pat Mcgroin says:

    What planet are you living on?! Unemployment for those who have recently graduated is around 50%. The recent graduates who have jobs are making minimum wage in Walmart or being waitresses. THE STUDENTS ARE THE WORKING POOR! Take me for example: Upon graduation I became disabled. I was paralyzed. I can’t work. Do you think SSI cares? Do you think the loans will just disappear? No. Sallie Mae wants $1600 a month for someone who is a vegetable. SSI says I’m too young to be disabled. Right my husband is actually one of the lucky ones. He makes $14 in a job that a high school graduate could have. Out of the $1800 a month that we live on $900 of it goes to rent. (Don’t give me that bull about finding cheaper housing. We live in a city. It’s expensive.) $200 goes for the car payment. (Don’t give me that bull about what young people don’t need a car. That’s needed to actually get to work!) $100 for gas. $200 for heating in the winter. $300 a month for food. In order to live off of $300 a month, we eat 1000 calories a day. We are both over 6 ft tall. We have lost 80 lbs this year. We don’t own any PHONES because we can’t afford that luxury. We haven’t bought clothes in years. They have holes in them. My husband is constantly berated at work for neck stains on his 10 year old suits. At the end of every month we have nothing left. Oh I forgot the most important expense which I’m sure you don’t approve of since you are so friggin’ conservative and rich. $40 a month for birth control. Because we just can’t wait to have babies so they can starve as well. But you know what would be nice? Being able to get a home because we would get twice the amount of space while paying 30% less that we already pay in rent. But that’s never going to happen. And the housing market is never going to rebound until people my age can afford it. So those who dream of selling their houses are never going to do it. My story is actually good compared to my peers. They have it much worse than we do. Yes we are going to default. Yes we will be stuck being in indentured servitude. But hell, my husband makes more than minimum wage. I don’t know anyone my age in their late 20s, early 30s who makes more than $10 an hour. So before you being bashing students for having buckets of money to throw around. Why don’t you spend a month living on a a recent graduate’s salary ($0- $16k a year) and then taking out 80% of that salary to pay for student loans?

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  227. Jenny McGuire says:

    1. Distribution: Give money to college grads or dropouts. First off, it is the college grads who actually took the risk of lending money from the gov, it’s also the college grads who worked their ass off in school delaying the payback time for 4-8 years ( depending on the school) in order to assure income after college. Income growth for the past decades for college grads? Uhm, and why the fuck not since it’s precisely them who hold highly skilled professions in engineering, medicine, research, etc. Why should my salary be comparable to someone who puts less resources into work. Resources in, resources out. It’s logical!
    2. Give more money to high-school dropouts? Sure, so that they can buy more weed, make more babies, and alcohol while watching the Superbowl. While I acknowledge that they are vulnerable, I don’t see why should the ‘loan forgiveness’ be at our expense. The two arguments don’t have to be mutually exclusive!

    1. Macroeconomics: Grads don’t spend, why give to them? Surely, if you want to pump more money into a system whose logic is spending –> growth –> bingo! Dude, this is the logic of a faulty system, the logic of cancer. It’s shorter myopia that doesn’t take into account environmental and social implications. Growth in one place is human exploitation elsewhere.
    2. ” it’s not likely that college grads are the ones who are liquidity-constrained.” — Oh yeah? As far as I’m concerned, grad or not, in actual economic conditions everyone is in deep shit.
    3. ” they are the folks who could get a credit card or a car loan fairly easily.” –Grads don’t want to get another loan the cover the education loan or credits. WHY would grads want to buy into even more of the Feds traps?

    1. Education Policy “Want to increase access to education? Make loans more widely available, or subsidize those who are yet to choose whether to go to school” — Yep, more loans to the masses, more debt, get MORE people into overpriced schools. Are you fucking nuts? How is that a solution to 1 trillion worth of student debt? Make it 2 trillion?

    1. Political Economy: This is a bunch of kids who don’t want to pay their loans back. And worse: Do this once, and what will happen in the next recession? Recession was staged, so don’t threaten us with another recession as if students were to blame!
    2. “More lobbying for free money” — For OUR goddamn money. We also pay/paid taxes! “the lobbying industry.” — As far as I’m concerned it’s been historically abused by the CORPORATIONS not social activists or people.

    1. Politics: Notice the political rhetoric? Give free money to us, rather than “corporations, millionaires and billionaires.” And you are arguing FOR the corporations, millionaires and billionaires. You are by no means neutral! “Opportunity cost is one of the key principles of economics.” — The faulty economics which were designed to enslave the masses while giving them an illusion of freedom, WHILE making the opportunists rich! That kind of economics?
    2. “Why give money to college grads rather than the 15% of the population in poverty?” — because the 15% of population in poverty is far less than 84% of mid-class folks. And perhaps the impact over future decisions will be far greater?

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  228. sydney says:

    Intersting point, valid argument. Thanks for the share.

    http://www.singlemomeducationhelp.com

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  229. Bastiats law says:

    good article…my suggestion,open wide the gates of prisons and release all the inmates that copped a plea to their crime,they are far more honorable in their theft of others money than some of the posters here.

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  230. jmpumkpin says:

    “Why give money to college grads rather than the 15% of the population in poverty?”

    Funny you use 15% because
    “About 37 million people owe student loans, or 15% of the population”.
    http://lbo-news.com/2012/03/06/new-data-on-student-debt-from-the-ny-fed/

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  231. Tony Cortina says:

    You are all kidding right? Student Loans are not forgiven – someone else (i.e. Joe Taxpayer) ends up fotting the bill. Stop directing your anger at the companys that lent you the money and place the blame where it belongs – the colleges and universitys with multi-million or multi-bliion dollar endowments that continue overcharging you for a product that you are gladly willing to pay.

    Had more of you actually taken a more useful class in school, you would:

    A.) Understand that it is unrealistic and irresponsible for the Federal Government to forgive these loans.
    B.) You would probably be employed.

    Disclaimer – I am currently paying back about $60K in student loans for undergrad and MBA. I am not happy about it but I borrowed the money and it is my responsibility to pay it back.

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  232. John Adams says:

    The Wahmbulance has a lot of patients today. The only thing that matters is that you agreed to take out a loan. You now owe it back. Man or woman the $%^& up and pay it back. If you didn’t want the loan, you shouldn’t have taken it out.

    This is an exceptional rebuttal as it lays out all the reasons student debt forgiveness is stupid but personal responsibility trumps all the practical issues he outlines.

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  233. Joe Hunter says:

    Okay, lets cut through the politics, opinions etc. for a minute. This is being done for one reason; because we cant afford not to. Our government has been in survival mode for a number of years now and this is another example. Currently the economy is on a tip which can lean towards recovery or back to recession. The bill you do not like will free up credit and redirect a large portion of our money supply to service and goods industries. Unfortunately, the free handouts you hate will continue as long as the banks continue to withhold the issuing of bank credit. If there is not enough bank credit issued someone must compensate to keep money in the system and thus our economy afloat – our federal government.

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    • Rebecca says:

      How is this going to bet paid for? More taxes?

      It will encourage those same people to make poor choices, like buying a house that they can not afford or a SUV that they can’t afford. How about educating people on making smart choices, like going to State school and community colleges. How about educating on how to be financially responsible, how to make a budget, how to live below their means, and how to know the difference between a want and need?

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      • Joe Hunter says:

        Your missing the point Rebecca. There is not enough bank credit and dollars in the system. When there’s not enough money to go around, you get laid off. Look at the big picture. Even if our government will take on these loans, by doing so it still produces more debt and credit in the system, which is what our economic system needs to survive. Furthermore, promoting money management sounds good on the surface but when society and our economic system survives on credit, spending money and seducing the common man to participate in these activities then personal fiscal responsibility on a national level will never be the status quo.

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  234. James Winder says:

    Would this hybrid policy work? Have the Department of Education buy all loans used for educational purposes. Have the loans paid back at a 1% interest rate, also these monies would be paid from pre-tax income. Finally, do away with the student loan deduction on taxes entirely.

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  235. Rebecca says:

    I love your 4th point. Well said! I just learned of this bill today, and I am outraged.

    I busted my butt to live WAY below my means so that I paid my student loans off 15 years early. I’ve paid extra payments since I was 21, and now at 31, I am finally free. The government is not rewarding hard work, instead makes those who work hard thing twice about making smart decisions. How is this encouraging people to work hard, make smart decisions, AND become independent?

    What does this teach people, how is it encouraging financial freedom? This creates dependence.

    Before paying off my students loan, I honestly did think, “Am I screwing myself?”. Is Obama going to enact some crazy bill so that I just lost a load of money just like that, making everyone else richer and me poorer? I decided to pay them off, so that I could be debt free. I still have the total loan amount that I paid off written on my whiteboard because I am so proud of paying that off, ALL BY MYSELF BECAUSE OF MAKING SMART CHOICES!

    So the government gets to decide that I get to pay off everyone else’s student loans after paying mine off. NICE! Of course anyone who has a load of debt is going to sign this petition, because who don’t want something for free?

    Thank you for writing this post.

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  236. Patriot4America says:

    It’s redistribution of wealth and a stealthy way to win votes from the younger generation. When we give in to these tactics we open more doors to help the communists goals!

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  237. williamjacobs says:

    I scanned the comments but did not see this problem mentioned:

    The wide availability of student loans increases the demand for degrees. Supply cannot be easily ramped up to meet this demand so prices rise. As the rising prices fail to inhibit demand, the student loans have become inadequate.

    What we see today is the inevitable result: a questioning of the value of a degree. This isn’t just anti-intellectualism. This was UNAVOIDABLE. At the rapid rates of tuition hikes we’ve seen, NO ONE could afford a college degree if the rate didn’t plateau at levels that produce crippling debt.

    The solution for sky high tuition is to increase SUPPLY of degrees. To his credit, President Obama’s call to expand community colleges nationwide is a solid proposal to rectify the glut of applicants and shortage of institutions. Problem is, expansion of colleges at federal expense is “GOVERNMENT SPENDING”!!!!! You know, unlike defense, which is free of charge and should never ever be cut to balance budgets which is far more important than getting our economy going again.

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  238. Rusty G says:

    It’s important to recognize that at some point, lenders begin to abuse their privilege.

    Undergraduates should not be put in the position where they have to decide whether to leverage $100,000 or $200,000 of future earnings.

    An 18-year old student who turns down $100,000 in student loans, is like a 70 year old man who decides not to marry an 18-year old.

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  239. Vince says:

    Tell that to the college grads who work minimum wage to get a four degree. Tell that to the college grads, who come apply at the place I work at… a pizza place. Tell that to the students who went to schools for profit and went to school for 30 grand and now work minimum wage or just above it. It may have been students mistake for not seeing what students loans would do to them. But where are the wise people in congress protecting people from predatory loans???? Wether it is loans for homes or college, I only see dollar signs for bank CEO’s in the short term. And when this student loan bubble bursts, everyone will say, where was laws protecting banks from CEO’s? I’ll give you this, there are those who went to college and are making great money. You think very minded son. Your thinking is too polarized and needs a little bit more in the middle. Let me guess, you’ve never lived in the street, you’ve never had to make the decision to either pay your student loans or buy groceries and gasoline. But this is the new economy, where the rich have no sympathy and the poor have no sympathy for the rich. I sense a revolution in twenty or thirty years.

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  240. Melissa says:

    Did Wolfers even read the text of the bill?? It’s not absolutely FORGIVING the debt, but restructuring it. I currently have interest rates of 8.9% on my federal law school loans. I pay thousands a month and I do not see the balance decrease. Sure, I make more money than people who didn’t go to law school, but my discretionary income is probably as much as the guy working at McDonald’s because I am stuck paying such high interest rates…and taxes…LOTS of taxes. And to those who say, “oh you signed the promissory note, etc.,” the terms changed. I started out with a 6% rate, and it grew. After I checked that box my 1L year, I simply received a check for living expenses every semester after tuition was paid (although I did work the 20 hours a week throughout school…the ABA prohibits working more while in law school). This bill would cap interest at 3.4% and after making payments of 10% of discretionary income for 10 years, the balance is forgiven. I cannot refinance and when I ask Sallie Mae (in vain) to lower my rate because I’m gainfully employed and although struggling, always make my payments, they say they “don’t have programs for that.” Government consolidation only gives a blended rate that it locks in forever, which barely drops my interest to 7.75%. It doesn’t cut anyone a break on the interest…on top of that, I cannot deduct the thousands I pay a year in interest (barely anything goes to principal). My future is looking very bleak. Considering that I will have paid 3x’s what I originally borrowed, I feel that the proposal is fair. Otherwise, I will never own a home, be able to afford children, etc. I also know many people who face this same dilemma, and some who have forewent having children because they did not want to have a child in a financial unstable situation. If educated individuals who are struggling to find work and pay back student debt are not having children, then I guess only the elite or those who aren’t responsible enough to know that they shouldn’t have children will be reproducing. Good luck, America.

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  241. Diana says:

    I make $88K, living in NYC after taxes that comes out to about $4500/month. My 15-year student loan payment is $1,200/month. So that means, I have enough for living expenses and rent. No money to go anywhere else. If I had that extra $1,200 a month, yes, I’d spend it, and I’d save it to buy a house.

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  242. Beth says:

    I can see what they are saying about the effect on the economic situation if student loans are forgiven. However, when some of my hard earned money goes to pay for women who are willingly choosing to have babies to get money from the government, and live in cheap/free housing, etc. and are given money for food, gas, clothes, whatever, that they generally mostly spend on themselves while I work and pay for them, for the prisoners who aren’t made to lift a finger because that would be “slavery” and for the bank bailouts and other stupid programs, why can’t I, as a single mom, doing her duty to her child- and by the way, I was married, but my ex husband decided he didn’t want a family after all- oh, and that oh-so-useful government doesn’t even help me get the child support I’m due, like they’re supposed to, so why can’t I get a break? I did go to college, and yes, it would be a HUGE help to have my student loans forgiven. Now, as far as stimulus, no the money would not all be spent, some would be saved, but investments also make a difference in the economy. Looking at the economy on the consumerism side is simply not accurate. Part of the equation is savings. They also matter. After all, it is our savings that are invested- as other people’s mortages, small business loans, equity, bonds, etc. by the institutions we deposit our money with. We get a percentage of the revenue for those investments the instutions make. It plays into it as well. I would work on paying down and paying off bills, and save for my daughter’s college. After all, at the rate it’s growing, she will probably have to pay a quarter of a million just to go to the state school.

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  243. sarah says:

    I would just like to say that all people that are having a hard time paying pack their student loans are not all graduates…. And not to mention not all graduates are able to find jobs in which they have trained for… I was unable to finish college due to lack of income and lost the place i was living in.. Now i have a husband and two children to support, and 30,000 dollars in loans to pay back. I live in a small town where jobs are few and far between, i live on 140 dollars a week and the bills dont pay themselves. As for those who did graduate, try sitting down and talking with one who cant find a job. Ask them how they get their loans paid, ask them how they put food on the table. Not everyone can get a cushy job sitting behind a desk all day dictating how they think other people can afford this and that, because the truth is most people are stuggling just to keep what they have. I think that you should look at those people and not the ones who made it and got the job the wanted, I didnt and without student loan forgiveness i dont know how or if i would ever be able to pay it back, they cant take what i dont have. Its alot of money and even if you are able to make a payment none of it goes to the actual loan its all just intrest. You might as well set your money on fire if you ask me. Put yourself in those shoes and ask yourself what would you do. Some people need this and some dont. Those that do, give. Mabey education shouldnt be so expensive in the first place and we would all be alot better off. With all of this going on alot of people here about it and dont even want to go to college because it is such a risk. You dont know if you will graduate and get the job or dont get the job and have to spend the rest of your life paying it back. Just sayin!!!

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  244. erik w says:

    I got a student loan and now it’s dubbled because there is no jobs for what I went to school for!

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  245. Jake H says:

    Is any of this even in the relm of possibility (forgiveness or even tax deductible principle payments)? I spent 40k on loans the past two years and would probably hold off if I thought slacking would give me more of a free ride …

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  246. Ben Robertson says:

    HR 4170 will never get out of committee. It is a shadow.

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  247. Darla says:

    Maybe we need to take a step back and criticize the more expensive schools by simply not choosing them unless we can actually afford them. I went to a state school where I was able to get scholarships, rather than pick a more expensive school where I would rack up debt, and have likely ended up with the same job I would have anyway. My guidance counselors would have described those more expensive schools as more prestigious. We were pushed to go away to school and get as close to the Ivy Leagues as we could, because they could brag about it later. But honestly from where I’m standing (with a full time job), none of that matters to ME. Maybe to the high school’s reputation, but not ME. Rather than ask for gimmes, encourage the future generation to think about the consequences of the loans they are taking out for something that doesn’t necessarily mean anything. Pick a school that you can afford, invest time on scholarship applications, and pick a major that is sensible to your opportunities. This would help prevent the death-by-crushing-debt phenomenon from happening to future generations.

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  248. Ben says:

    Bailouts are a bad idea in general because it encourages bad behavior.

    The bubble is slowly bursting on college education but the one thing preventing it from happening quickly is the federal student loan guarantee and lack of bankruptcy protection. That then drives up the cost of education that now many times ends up hardly being worth the return on investment.

    People will change their behavior eventually once they learn that there is risk involved with buying a college education.

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  249. sam says:

    So on No. 4 & 5 it’s alright to give trillions of my tax dollars to bail out businesses that are “Too Big to Fail”, but not help me with my student loan debt? The hypocrisy and disingenuous nature of that argument as well as the overall argument is laughable.

    I want my damn bail out too. If politicians and Wall Street have taught me anything it’s that responsibility is a joke and anyone who robs at the trillion dollar level doesn’t even get indicted let alone go to jail, so don’t preach to me about responsibility on paying back my student loans when Corporate America got a big fat socialist bail out by the taxpayers.

    Also these overall arguments do not take into account synergistic impacts. That is forgiving 100, 1000, or 10,000 student’s student loans, which will free up those respective student’s monthly disposable income. Allowing them to spend that money or save it. Regardless, see the fact that Corporate America got a bail out on my dime I am demanding one too.

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  250. Sgt Steve says:

    I got an idea! How about paying back what you borrowed, or join the military. Nobody owes these lazy kids anything. This generation thinks they are entitled everything, and shouldn’t have to work for it.

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  251. Beth says:

    ARight, sargent, we are so lazy we are working our tails off supporting social security, which will be gone by the time we retire, supporting our kids, and some of us even supporting our parents. Ooh, and through our other taxes we are supporting all those in prion and on welfare because we are just that lazy! Get a clue! I am not saying this is the best idea ever, but I do know there are a lot of people who would have hope restored to them, and while hope isn’t quantifiable, it is essential for mankind. Hitler gained unwavering support from the german people by giving them hope. It is truly powerful. Forgiviing the student loans can have a powerful effect.

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  252. Jamie says:

    WOW. I find this “rebuttal” appallingly simple-minded, as if it were written by the people who drafted George W. Bush’s 2003 tax-cut program.

    Distribution of wealth isn’t a factor; Item 1 can be discarded outright.

    Macroeconomically, we saw (in that same 2003 tax-cut program) that handing a lot of people small chunks of money is only stimulative in the short run, while giving people with stable prospects steady income stream increases (functionally equivalent to increasing their salaries) allows them to direct these recurring revenues to longer-term obligations like houses and other purchases of durable goods.

    I’ve seen NO ONE touting this as Educational Policy (#3), and can you be any more smugly representative of the moralizing crumudgeons whose self-voted benefits actually pose the greatest threats to fiscal solvency than to describe those adults under 40 who owe tens or hundreds of thousands of dollars in student loan debts as “kids?”

    How about we look at the extent to which tuition prices were driven up by all of the tax cuts enacted with the support of those same “keep your hands off my Medicare” crumudgeons who think the purpose of the working people is to make sure retirees have it easy?

    As for cost, the true cost of forgiving Federal student loan debt is far lower than the total amount owed, because the government only assumes a very small portion of revenue from those loans each year and only projects its budget out for ten years. When every year already sees spending at 200% of total income, the real impact of erasing a few tens of billions of loan payments is negligible.

    Mr. Wolfers says that “I bet that the proponents can’t find a single economist to support this idiotic idea,” but what precisely is he “betting” on this claim? It appears that Mr. Wolfers is dismissing a proposal with complex consequences as a gimmick mostly because of intellectual laziness.

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  253. Victor Robert says:

    Wolfers is wrong on this one. Long term stimulus is much, much better than short term stimulus. Collage loan forgiveness will help because it takes time to build a service/manufacturing base in response to stimulus. A one time flash in the pan does nothing except enrich off shore manufactures of cheap goods. Jobs are created by stimulating industries or classes, in this case collage students. These people are more likely to purchase goods and services such as cars and homes with long lasting benefits to our economy. Stimulus for poor people would be better in the form of a 40% in minimum wage increase coupled with a corresponding decrease in payroll and employment taxes. This will result is a purchasing power increase for poor people with no ill affects to employers except of course less paperwork and compliance issues. Many poor people will then qualify for car and home loans helping to break the cycle of poverty. Ex president Bushes one time tax refund did nothing for our economy. However, the cash for clunkers program did. The program may have saved our auto industry. Also a national flat sales tax exuding food would really help as all manufactures would be taxed the same regardless of point of origin on the goods. Now American manufactures and employees are taxed on production via employment and payroll taxes and compliance with environmental laws and payment into social programs. I vote for both, total debt forgiveness for collage graduates and a 40% rise in the minimum wage coupled with reduced employment taxes and a national flat sales tax. Our economy will regain its manufacturing base and collage students and poor people will have the means to purchase homes and cars

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  254. Puzzled parent in PA says:

    Help me here. As a single parent with two sons who graduated from private schools, one Ivy League and one small engineering school in PA, I had to fill out extensive financial aid forms to get any consideration for aid or loans. And while my boys both had grants and scholarships to help them, and I had two other younger children at home, both schools assessed part of their educational expenses to me and my ex-husband, then grants were given by the schools themselves, then and only then were loans considered to make up the difference. I guess my question is, what has happened to the idea that parents help their children achieve their higher education goals? It sounds like most kids today are taking on the entire burden, and parents are getting away scot free, only too happy to see the loans their children assumed “forgiven”. Perhaps I am mistaken in this assumption, and if so, I apologize. But I worked long and hard to help my kids realize their educational goals, sacrificing much, as did many parents I know, and I would be very interested in knowing just how many of these student loans are now given out before first considering the parents’ ability to help with expenses and minimize the amount of debt the student needs to assume.

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  255. Gavi says:

    I am a Community College employee. I personally see the value of obtaining every, last credit at the CC level and transferring it over to University, where tuition is greater. This whole issue of forgiving student loans bothers me. While there may be certain cases where it might be necessary (rare)–it’s a LOAN for Pete’s sake! Here is what I am experiencing with my step-daughters. Two girls who have an educated, able-bodied welfare mom with a drug problem, and a dad who has hidden from his Student Loan creditor calls since I’ve known him (nearly a decade). These girls were OFFERED the opportunity to live rent-free at home, go to Comm. College FIRST, then move on to University–or at the very least, live at home and go straight to Uni–though that made no sense to me to pay $300 per credit for the same thing they could get for $62 at CC. Their Uni is commuter distance. Rather, they chose to “live independently” and pay all their expenses via Student Loans. This is an apartment, groceries, gas for themselves and their loser boyfriends. They have gone from full time to taking 1-2 classes at most–just to keep the “loan” er, HANDOUTS, coming. At the end of their third year, they have around 50 credits! They’re just having the time of their lives, “living independently.” Again, they refuse to see this is A LOAN. I believe at this point, they have ABSOLUTELY NO INTENTION of paying this back. Not a dime. It is wrong. I WISH I could have had it so easy at 18, living off of free money. But I did what everyone else my age did: get a job and pay for all those trappings of adult life myself. Don’t get me wrong, I have too much pride to steal money and feel so entitled so I am not mad that I didn’t have this for myself. I’m outraged at all these kids who feel so entitled to get something for absolutely nothing. Really?????

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  256. Scott says:

    While I’m not necessarily in favor of forgiveness of these loans, I am in favor of a cap on the interest rates that are charges with the rate being tied to the rate the banks are borrowing money at. Why should I be paying back loans for my daughter with int