Blog

Short blog posts, journal entries, and random thoughts. Topics include a mix of personal and the world at large. 

Unforgiven

As a person employed by a university, I am perhaps not the most unbiased opinion in this whole student loans forgiveness issue. My job depends on the college system continuing on to be a revolving door of incoming students turning into graduates. Should the value of a college degree crater into oblivion, well, I better go find something else to do.

The students are the paying customer, that is of no doubt. And in grand American tradition, they pay in credit. How else can anyone afford to attend college when room and board for a year is the equivalent of a used car. I managed to avoid student loans because one, my family was poor enough to get me all sorts of State and Federal grants, and two, I lived at home.

I’d have signed loan papers too had I needed to pay $900 per month just to share a tiny dorm room with a complete stranger. Probably a guy named Mike from Souther California.

Students graduate with a tremendous amount of debt weighing down their financial future. Unlike other debts, students loans do not get wiped off in a bankruptcy. I wonder what were they trying to prevent when that was implemented. Seems to me they don’t want people to declare bankruptcy upon graduation to shed the school debt. The graduates can take the credit hit because they’re just starting their adult career anyways.

Piggybacking off that, I think student loan forgiveness will create negative incentive for universities. There would be no motivation to control costs (like building a lot more student housing) if there are no consequences for the students down the road. Don’t worry about the tuition increase! Borrow all you want from the government! Uncle Sam will wipe it away eventually!

We need to look at the whole thing holistically: how to lower the total cost of college, so that whatever students has to borrow can be repaid timely and responsibly. Numbers getting too large (and inescapable) is how we got into our current mess.

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A billionaire pays off some students' loans

A notable bit of news out of this past weekend was the Morehouse college commencement speaker announcing to the graduating class he’s going to pay off the entirety of their student loans. The final bill is estimated to be around 40 million dollars for the nearly 400 students, a princely sum that’s but a drop in the bucket for the billionaire Robert Smith, not to mention it’s likely tax-deductible.

A grand gesture, nonetheless, and for the 2019 Morehouse graduating class, the most welcome of reprieves as they embark on the next stage of their lives.

How much are you kicking yourself if you’re the Morehouse student who missed graduating this year by a few units, or busted your ass to graduate a year early and missed the opportunity at this tremendous gift? Also, whoever’s commencement speaker for the college next year is going to be put in a very tough position (“Sorry, class, I am not going to pay off your loans. Good day!”). Indeed, not just anybody can hand out eight-figure sums with relative impunity.

Someone ought to do a study of these lucky graduates on how this loan forgiveness will impact their future success compared to previous classes that aren’t as fortunate to receive such largess. I’d bet the blank state would prove quite significant a factor.  

Anyways, a billionaire paying off student loans: isn’t this exactly what’s being bandied about by the likes of Elizabeth Warren and Bernie Sanders, only on a grander scale? Tax the billionaires to raise revenue and forgive all of the outstanding student loan debt. I do wonder what the Venn diagram look like of people who are applauding Smith’s actions and people who are against the federal government – via taxing the ultra-rich – paying out student loans.

My position on this is the government can do what it wants as long as it’s not using my particular tax money, though I wouldn’t necessary vote for the affirmative on student loan forgiveness; I literally have zero skin in the game. I never had student loans, and I’m definitely not in the tax bracket to be affected by the tax increase.  

But that raises a question: if people with student loans are getting bailed out, shouldn’t people like me who graduated college without being saddle with them get something as well? I mean, I could’ve taken out loans as well; and had I known beforehand it’d be forgiven a decade down the road, I’d most certainly would have. I think it’s only fair the government forgive my other types of loans, like the car note on the 911…

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