Government relief of US college debt...

Have we reached the point predicted two hundred years ago where Congress has figured out how to bribe the American people with the people's own money??

We raise taxes (the people's money) and use it to subsidize everything from cheap oil and computer chips to bankrupt banks and auto makers. We use it to provide economic stimulus payments in down times and now to pay off student debts.

I know I've posted in the past about my support for access to abortion services and my support of marriage equality and transgender acceptance so many of you might consider me to be quite liberal across the board. And it's true that I support many liberal/progressive issues. But when it comes to economics and individual responsibility I tend to the fairly extreme right side of politics.

I don't support government subsidies. Period.

I think oil companies should pay fair market value for the land they drill on.
I think coal companies should pay the full life cycle cost of their ore.
I think solar electric should also should pay its full life cycle costs.
Same with wind.

If your car company can't make a profit, then maybe the guy who buys your factory from the bankruptcy court can.

If your bank is too big to fail, then take better care of it. Don't come to me with your hands out when you screw up.

And, if you borrow money to buy a home or get an education, then have a plan to pay it back.

It's called capitalism and, until it is replaced by something else, it is the system we have in place.

Let me tell you a story about one of my cousins. He's a couple years younger than I am. He's really a second cousin or maybe third, I'm not quite sure how all that works. In any case, he came to me when I was in my second year at university because he wanted to go to college and it wasn't looking possible for him. So we talked about it.

He wanted to go for the traditional four year bachelor's degree. He was really into theater arts and stage lighting and audio production. I asked him a simply question ... In that world would a bachelor's degree impact his income? In other words, how many years would it take for the increased income take to pay off the cost of a four year degree? A simple "return on investment" conversation (and no, I wasn't a business major).

He looked into it. What he found was stunning to us both. In that world, people with a degree and people without a degree made essentially the same money. It was crazy. He decided to take the savings he was able to blow on a first semester and instead bought some equipment. If I remember right, it was a trailer to cart stuff around and a bunch of lights and cables and speakers and some kind of board to control audio ... and he started going around to various venues and bars and clubs and offered to run events for them. He was 18.

My grandfather provided a lot of really good business advice and today he is 26 and has three crews running around Boston doing corporate events during the day and evening events at bars and clubs. No degree, no debt.

My point in bringing him up in this conversation about education debt is because he did assess (at my urging) what the debt of a four year degree would end up costing him and whether the benefit of that degree would support that debt. In his field it would not.

For other's the calculation may be different, but it is a basic calculation that anyone taking on any kind of debt (education, real estate, car, etc) should and could run. This is not advanced calculus.

So when I hear that people are strapped with huge debt and can't make their payments, I do feel bad. But I think it is fair to ask how they got into that situation and whether it is due to matters beyond their control or not.
- Took on loans and then got sick and couldn't finish school? Okay, legit issue and maybe some relief should be offered.
- Took on loans without thinking of payback and now don't make enough to support the debt? We have a process to handle this already in place. It is called bankruptcy. It comes with consequences, but it works and is fair to borrower and lender.

Am I too harsh here? Are we responsible for our decisions?

Edit: I became aware through the comments below and some personal research that student debt cannot be eliminated through bankruptcy. This is crazy. The concept of bankruptcy is critical to the smooth functioning of a capitalist economy. If someone truly took on too much debt through poor planning, then bankruptcy should be available to them and the federal guaranty would kick in and make the lender whole.

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ElwoodBlues · M

I think the student loan forgiveness program needs to be seen in the context of other government loan forgiveness programs.

The student loan forgiveness program will end payment streams to the government worth about $300 billion in today's dollars.

During the previous administration, 10.2 million Paycheck Protection Program loans were forgiven or partially forgiven. With average forgiveness $72,000, that works out to $734 billion in loan forgiveness subsidies to business owners.

Agricultural payments are too complex for me to sort thru for this little item, but in addition to farm loan forgiveness, there have been decades of agricultural price supports and payments to farmers not to grow crops. We've have a rich history of subsidizing farms ever since the great depression.

In other words, in the context of other loan forgiveness & subsidies, Biden's student loan forgiveness program is not a big deal at all and in fact may benefit a segment of the citizenry who have missed out on many other subsidies. In context there's nothing unfair about it.

As of July 4 this year, 10.2 million PPP loans, introduced to support small businesses, had been fully or partially written off.

The first loans were authorized by the CARES Act in March 2020, which provided $350 billion of fully guaranteed funds.

In April 2020, another $310 billion was allocated via the Paycheck Protection Program and Health Care Enhancement Act. A further $285 billion came in the second stimulus package of December 2020.

The government's Pandemic Response Accountability Committee found that 97 percent of PPP loans were used to help fund payroll. The average amount of PPP loan forgiveness was $72,500.

Full disclosure, I've never had student loans; my wife paid hers in full.

sarabee1995 · 26-30, F

@ElwoodBlues Thank you for the context here. It helps me a lot.

KiwiBird · 36-40, F

@ElwoodBlues @sarabee1995 No Agriculture Subsidies in Australia or New Zealand as far as I am aware. One end result of this is very efficient farming practices.

sarabee1995 · 26-30, F

@KiwiBird Any time the government gets involved in an industry and "subsidizes" it, it becomes less efficient. When businesses need to survive on their own, they do much better. Very efficient farming practices are just one example.

SW-User

When businesses need to survive on their own, they do much better

Which is why so many UNsubsidized restaurants and bars that rely on paying workers a sub-minimum wage Liberty Wage™ completely failed to plan for an extended period of not being open due to a pandemic, when pandemics have been predicted for awhile now, and were scrambling to find new ways to feed landfills such as to-go cocktails in single-use packaging. The Invisible Hand™ is brilliant!

@sarabee1995

ElwoodBlues · M

@sarabee1995

. When businesses need to survive on their own, they do much better. Very efficient farming practices are just one example.

Do you realize how heavily the US subsidizes agriculture?

In 2019, government payments made up one fifth of all farm income at 20.6%. Moreover, as more small farms are bought out by larger ones, farm subsidies per-farmer have greatly increased.

Of the US's 2 million farms, 31.5% receive subsidies. See
https://farm.ewg.org/farms_by_state.php

sarabee1995 · 26-30, F

@ElwoodBlues

Do you realize how heavily the US subsidizes agriculture?

Yes, I do. That's why I was praising the comment from @KiwiBird regarding the lack of subsidies for NZ & Aus farmers and the resulting efficient farming operations.

Farm subsidies are a huge problem here. The whole reason for the SoCal water crisis is the fact that we subsidize the water used for agriculture. If it is not economical to grow produce in the desert, then we should grow produce in the desert. It's that simple. Same with any other farm. If the business is not viable on its own, then the answer should not be federal bailouts.

SW-User

whole reason for the SoCal water crisis

is that Europeans started settling where they should not have long before anything was subsidized, because Liberty™

Good luck getting them out of such places NOW, because Liberty™

If all farms in CA went away today, OC and LAC Libertarians™ will still be demanding to take showers and water their lush green lawns, among other #freedumb activities.

Whether Iowa should be subsidized or not, Los Angeles should not even exist. Ask the wildlife upstream in and along the Colorado River. Agriculture is only one facet of that.

@sarabee1995

sarabee1995 · 26-30, F

@SW-User Yes, agriculture is only one facet, but it is the biggest by far.

And, yes, everyone drawing water from the Colorado should be paying the fair market value for that water. No one should have a lush green lawn or an acre of lettuce without paying in full what the cost/value of that water is.

Yes, I understand that farms in Cali will go out of business in droves if they had to pay for their water. But guess what?!?! The great news is that the thousands of farms that they drove out of business with their federally subsidized business model will start back up in areas that get plenty of rainfall!!!

SW-User

Turf grass is the number one irrigated "crop" in the US, consuming 1.9% of all land in the US

https://www.businessinsider.com/americas-biggest-crop-is-grass-2016-2

Moreover, all that grass is typically maintained with polluting landscaping machinery, and supplemented with chemicals. Add more pollution if you pay someone else to truck their mower to your yard.

everyone drawing water from the Colorado should be paying the fair market value for that water

I think you've completely missed the point, the problem is not who is paying. Nor is it simply a matter of raising the membership fees at golf courses in SoCal.

@sarabee1995

sarabee1995 · 26-30, F

@SW-User Most of that irrigated crop of grass is in places that get plenty of rainfall or have sufficient aquifers, etc. My parents have about a half-acre of beautiful lawn that they irrigate with well water drawn from under their property. Yes, they do pollute with lawn cutting and fertilizer, etc. I get it. But they live in New England and the situation there is very different.

In the Colorado River basin, way too much water is drawn from the river because it's usage is hugely subsidized by the federal government. I would announce today that the subsidy ends in five years and step the pricing 20% toward market pricing every year starting now.

Lawns can be replaced with desert-scapes, farms can move their operations to wetter climates or grow crops that are more naturally amenable to the desert climate of SoCal. The point is that we treat the area like it's lush and tropical!! We plant Palm trees!!!! It is supposed to be a desert.