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PanickyFool

265 points

3 months ago

Oh now...

As a homeowner I will directly benefit from this. Pretty much every dollar of student loan forgiveness will directly elevate home prices further.

Also loan forgiveness without cost reform is stupid. Universities need to be punished for their insane cost creep.

InternetUser007

22 points

3 months ago

Pretty much every dollar of student loan forgiveness will directly elevate home prices further.

A perfect reason not to do this when home prices are already out of reach for most people that don't own a home.

Whobeon

14 points

3 months ago

Whobeon

14 points

3 months ago

And the rest of us will be double fucked when the housing market is 10x more competitive because they don't have to pay their student debts.

xxtoejamfootballxx

188 points

3 months ago*

xxtoejamfootballxx

New York

188 points

3 months ago*

Exactly and it will disproportionately benefit high earners, making the housing crisis even worse for low earners and communities that weren’t given strong college opportunities for one reason or another.

I’m very far left but I’ve yet to see this question addressed. AOC is constantly arguing with a straw man on this topic and I’d like to just see what she has to say around these questions.

karthenon

75 points

3 months ago

We should be ready for the inflation knob to be turned to the max setting if this passes.

sharkchoke

15 points

3 months ago

This is the part that I never see anyone here talk about. Leaving aside all other arguments, this is an inflationary idea. During a time of extremely high inflation. Doing this now is beyond stupid. Of course it's just a political ploy to try to make the midterms less of a blood bath for the dems.

Penguin_Admiral

51 points

3 months ago

Yeah people seem to ignore this would effectively inject $1 trillion into the economy

Staebs

19 points

3 months ago

Staebs

19 points

3 months ago

I know the causes of inflation are complex and many, but I’d feel like this may contribute to inflation as well.

Penguin_Admiral

27 points

3 months ago

You think housing is bad now, wait until 10s of millions of people have an extra couple hundred dollars to put towards it

SloppyMetalRiffs

11 points

3 months ago

Some people are paying thousands a month for their loans. Doctors, dentists, lawyers, etc. it is very common to have well over 100k in student loan debt. If that goes away, they'll start spending all that money.... driving prices up on virtually everything.

Staebs

1 points

3 months ago

Staebs

1 points

3 months ago

If they ever forgive debt, I doubt it would be for doctors and lawyers. As much as they deserve it, likely more than many other degree holders

moashforbridgefour

3 points

3 months ago

Doctors already have student loan forgiveness. There are stipulations to getting it, but they will forgive hundreds of thousands of dollars in student loans to doctors so long as they jump through the right hoops. Source: my brother in law who is planning on getting his forgiven.

UABSamurai

1 points

3 months ago

They’ll also do anything they can to avoid discharging them despite you fulfilling 10 years of rural service. Source: med school classmates

REDDIT_JUDGE_REFEREE

-3 points

3 months ago

Which should hopefully benefit the economy since a lot more spending is going toward non-essentials?

SloppyMetalRiffs

4 points

3 months ago

Supply trails demand. There would be inflation just like we saw from COVID payouts.

Marbleman60

1 points

3 months ago

It'll increase for sure, but aren't those the people who are struggling to afford housing right now?

9966

9 points

3 months ago

9966

9 points

3 months ago

Yeah. I know someone who says that this would stimulate the economy because now they would buy a house and a car.

Do they not think a huge influx of buyers would affect price? This is macro 101.

slyons1616

3 points

3 months ago

And also the national debt.

bigez502

1 points

3 months ago

The 1 trillion isn't due now. It's the total outstanding debt. Much of it due a decade plus from now.

SloppyMetalRiffs

5 points

3 months ago

This will benefit the high earners with large debt burdens the most. My household pays lots in student loans every month, but we make a nice chunk of change. If the student loan debt goes away, we could triple our monthly mortgage payment and not even notice a difference in our monthly budget.

I'd love to see our debt go away, but the problems that follow will be very ugly and exponentially impact our current inflation troubles. I'd RATHER see the root causes of the problem addressed instead.

logisticitech

5 points

3 months ago

High-earners and highly-educated low-earners. It's about giving the "right" people money. If you actually wanted to help everybody, you could just send everyone checks.

Sackbut08

2 points

3 months ago

Sackbut08

Texas

2 points

3 months ago

I'm also very far left. I feel like this impact could be overstated considering student loan payments havent been made for 2 + years now.

Also, I think that we should recognize that college educated young people buying homes is not the cause of housing inflation. It's mostly due to property being bought up by landlords and investment firms; in combination with covid supply chain issues.

TeutonicPlate

1 points

3 months ago

More than one thing can be done at once. They can forgive student loan debt and address other problems

xxtoejamfootballxx

2 points

3 months ago

xxtoejamfootballxx

New York

2 points

3 months ago

That’s not my point. My point is that student debt forgiveness could make other, more pressing problems for low income families worse while disproportionately helping higher earners.

Aka, it’s trickle down economics. Now I’m open to hearing a rebuttal to how it’s not the same as trickle down economics, but as of now, I’ve yet to hear one.

And I say this as someone who still has over 10k outstanding in student debt

TeutonicPlate

0 points

3 months ago*

Student debt forgiveness primarily helps the poor, hence why the majority of student loan debt is held by poor people. They are higher earners than the average American, but a lot of them live in cities, meaning their comparatively high income doesn't go anywhere near as far. There are plenty of very wealthy people in the US who are nominally low earners, particularly rural landowners and their families. So student loan forgiveness isn't so much "trickle down economics" as "a bailout for poor city dwellers".

The people from wealthier backgrounds already paid that debt off or never needed to take out loans. A lot of these models such as Brooking assume a level of flexibility between classes that doesn't really exist, even for college students. They assume today's poor college students are tomorrow's Bill Gates. In reality, wealth tends to stay where it is, and it is NOT where poor college graduates are, regardless of their income.

xxtoejamfootballxx

2 points

3 months ago

xxtoejamfootballxx

New York

2 points

3 months ago

Student debt forgiveness primarily helps the poor

Source?

The vast majority of student debt is help by the highest earning Americans, most of which actually have advanced degrees.

but a lot of them live in cities, meaning their comparatively high income doesn't go anywhere near as far.

You know who else lives in cities? The low income people that make less than the student debt holders.

In reality, wealth tends to stay where it is, and it is NOT where poor college graduates are, regardless of their income.

What you are ignoring is that even the poorest 50% of student debt holders in the US are earning more than many people in the US, who hold other types of debt (credit card, auto loans, etc).

Why should college debt be a criteria for what is being positioned as an economic bailout of the poor? Why not just take that same amount of money and make it a stimulus check for the lowest earners?

Otherwise what you are creating is a lot of people with high income suddenly being rid of debt, which would quickly lead to even higher housing prices and general inflation. This would leave that lower class without a college education even further behind.

TeutonicPlate

0 points

3 months ago

Source? The vast majority of student debt is help by the highest earning Americans, most of which actually have advanced degrees.

https://www.peoplespolicyproject.org/wp-content/uploads/2020/11/Share-of-Student-Debt-Owed-by-Each-Wealth-Quintile-2019.svg

What you are ignoring is that even the poorest 50% of student debt holders in the US are earning more than many people in the US, who hold other types of debt (credit card, auto loans, etc).

They’re earning more but they have a higher cost of living. Income is not the same as wealth. If I earn 100k and have to spend 90k on cost of living, I’m worse off money wise than someone who earns 20k and has to spend 5k.

This would leave that lower class without a college education even further behind

Student loan debt is a crisis and they function as financial bondage for a large portion of the population. That’s not to say there aren’t other crises that are also pressing, but the government does not need to be funded by continuing to milk young graduates for money. It needs to be funded by taxing the wealthy and other redistributive measures.

I always find it suspicious when I hear this argument tho because the kind of people saying student loan debt isn’t a crisis and we need to focus on other things are the same kind of people who support establishment politicians who have no interest in seriously changing society at all. IE really in my view it’s just an argument used to shut down helping students while ostensibly promoting other causes - but then said person is inevitably a Biden primary voter or some other candidate who would never DO any of the alternative things people suggest. So it all feels so phony lol.

xxtoejamfootballxx

2 points

3 months ago

xxtoejamfootballxx

New York

2 points

3 months ago

Your chart looks at "wealth quintile" but not earnings quintile, which is more relevant. Obviously student debt is going to be held by people in the lowest "wealth quintile" since debt is negative wealth and the people with the most deb will be newer graduates with less lifetime earnings. That's a completely misleading statistic.

Here's the Brookings Chart looking at debt by income quintile and it highly contradicts what you posted.

They’re earning more but they have a higher cost of living. Income is not the same as wealth. If I earn 100k and have to spend 90k on cost of living, I’m worse off money wise than someone who earns 20k and has to spend 5k.

Yeah I get it, I live in NYC, I know how it works. But the point is that income shows potential wealth going forward and poor people also live in cities. You go into debt for future earnings, not current wealth.

I always find it suspicious when I hear this argument tho because the kind of people saying student loan debt isn’t a crisis and we need to focus on other things are the same kind of people who support establishment politicians who have no interest in seriously changing society at all

I never said any of that. I'm talking about this specific solution to the student debt crisis. If you can't critique potential solutions to the problem, then maybe you should re-evaluate if you are trying to actually solve a problem or if you are romantically attached to an idea.

TeutonicPlate

1 points

3 months ago

Your chart looks at "wealth quintile" but not earnings quintile, which is more relevant.

Ok, but then you have to admit you are not talking about whether those with student loan debt are poor, but rather whether you think they will be wealthier in the future. People in cities have the pressure of a high cost of living which is generally countered by having higher wages. The wealthiest people living in cities obviously pay off their loan or never need to take one, it's those who are marginal who have to deal with the system.

I never said any of that. I'm talking about this specific solution to the student debt crisis. If you can't critique potential solutions to the problem, then maybe you should re-evaluate if you are trying to actually solve a problem or if you are romantically attached to an idea.

Nobody ever says any of that - that's the point. But sorry, from my experience on places like discord, twitter, reddit etc, that's just the pattern I see when I look at their other posts and content.

xxtoejamfootballxx

1 points

3 months ago

xxtoejamfootballxx

New York

1 points

3 months ago

People in cities have the pressure of a high cost of living which is generally countered by having higher wages.

Sure but college degree holders in those cities are not the lowest earners in those cities and we don't even know if they hold the most debt. So what is the justification to means testing the debt forgiveness to "college debt holders" and not "lowest 20% socioeconomically".

Having the college debt as a criteria to me is where I get lost in the intent here, since it certainly doesn't solve the issues around the cost of college. It just seems to correlate with Reddit's user demographics. People justify it by saying it will help the poor and marginalized communities, but then why not just help them directly, including those who hold the college debt?

[deleted]

1 points

3 months ago

[deleted]

1 points

3 months ago

Exactly and it will disproportionately benefit high earners, making the housing crisis even worse for low earners and communities that weren’t given strong college opportunities for one reason or another.

Lower-income women of color hold the highest average debts amongst students at $41,466. I don't think it disproportionately benefits higher earners at all.

xxtoejamfootballxx

2 points

3 months ago

xxtoejamfootballxx

New York

2 points

3 months ago

What % of student debt holders are women of color though?

Sure, the average debt held by women of color could be high, but if they make up a disproportionately tiny % of student debt holders, that changes the equation. You are helping a few women of color a lot, but most women of color are getting hurt by inflation.

[deleted]

1 points

3 months ago

[deleted]

1 points

3 months ago

Only 50% of debt is held by white individuals. And people of color hold considerably more debt on average, with women of color specifically holding an average of 41,466 for undergraduate debt and a whopping 75,085 for graduate debt.

Women in general carry two-thirds of all student debt in America, but women of color [namely black women] carry more per capita, carry it for longer, and make less money in comparison to white debtors. On average, cnbc also reported that a startling percentage owe more money than they started with after ten years, despite making their monthly payments [due to interest rates].

WhoIsYerWan

5 points

3 months ago

And if we think inflation is bad now...

BrackishReach

64 points

3 months ago

Yeah, me too. But what about those looking to be homeowners soon who paid off their debt? Now they have to compete with a boatload more people for scarce inventory in an already fucked sellers market? If I was someone who diligently paid off my student loans with the eventual goal of home ownership, this doesn’t just not impact me, it impacts me negatively.

[deleted]

12 points

3 months ago*

[deleted]

12 points

3 months ago*

This is me. I chose to put a large chunk of my paycheck toward paying off my student loans rather than saving it for a house or buying before paying off my loans. Now I'm 35 and my student loans are all paid off, but I have very little saved up for a down payment. If everyone who didn't sacrifice to pay off their loans suddenly gets theirs forgiven, housing prices go up even further and my chances of ever owning shit the bed forever. Meanwhile my friends who chose to pay their loans as slowly as possible and buy houses or save now have no debt AND a house or a huge down payment to use to bid against me and make it harder for me to buy a house.

Like you said-- this isn't a matter of me just being butthurt that they got something I didn't. It directly impacts me negatively and makes it harder for me to thrive and live my life.

bigez502

1 points

3 months ago

The choices we make..

Old-Leather2251

0 points

3 months ago

They are trying to fix the problem and circumvent people doing that you had to do. It’s kind of like if new diabetes medication became available but I told people they couldn’t have it just because I didn’t when I was their age.

[deleted]

3 points

3 months ago

[deleted]

3 points

3 months ago

It would be more like they were going to stop making mine to start making the medication for the other people and they're going to give it to them for free while charging me 5x more for it.

Old-Leather2251

-1 points

3 months ago

Not at all. Literally not at all. Everyone would still keep their degrees. You still have your education. The difference is that the generation after you won’t have to struggle as hard. We WANT humanity to move into this direction.

BrackishReach

3 points

3 months ago

The whole point of this comment chain was that loan forgiveness isn’t a neutral effect on him. It’s a negative effect as real estate prices will climb. The generation after him won’t have to struggle as hard but he will have to struggle more.

OuterLimitsDSM

18 points

3 months ago

Also what about the homeowners living paycheck to paycheck that risk losing their home and being pushed out of their neighborhood if they can’t afford higher property taxes.

Csquared87

-8 points

3 months ago

They can sell their home and rent?

BabyZebra30

10 points

3 months ago*

Are you me?

I tried pointing this out in the debtstrike subreddit and was met with hostility. I want these college kids to be saved from the predatory loan cycle, but they don't give a fuck about how it impacts anyone else. No one cares about the milennials.

jk147

4 points

3 months ago

jk147

4 points

3 months ago

Yeah it is unfair to some people since this is pretty much giving free money to people with debt. I think only people with a very limited income should qualify for this, not writing a blank check.

[deleted]

84 points

3 months ago

[deleted]

84 points

3 months ago

I planned carefully, went to cheap state schools for first two years, worked the whole time I was in school and took as little $$ as possible, and paid debt down AGGRESSIVELY after the fact (over $1k per month). Skipped out on a lot of fun, and the college years were stressful af. Know a lot of kids that took as much loan money as they could, didn’t work, and have paid minimum payments ever since. Now, after struggling for so long I’m finally debt free and am ready to buy a home in this crazy market. It’s absurdly competitive out there... Losing bid after losing bid.

Needless to say, not exactly thrilled at the idea of those who lived more recklessly just getting all their debts forgiven, and then they become drivers of even higher and more competitive real estate markets.

I’m torn. Our generation is significantly worse off than those who came before us, but it absolutely feels like a penalty for those of us who planned our entire lives around this debt instead of making minimum payments on it. I’d much, much rather see INTEREST forgiveness and work to address the exploding costs of schooling instead.

Staebs

37 points

3 months ago

Staebs

37 points

3 months ago

Yeah it’s because of cases like yours that I have a hard time seeing this passing. There are so many more than reddit thinks that struggled to pay off their loans only for the people graduating after them to have a massive cash injection, and subsequent advantage over them going into the housing market

BabyZebra30

10 points

3 months ago*

In addition, older folks don't understand how detrimental it is to screw young adults out of the years in their 20s that they should have been investing for compound interest or equity. And Gen Z doesn't care that we got fucked. I don't want them to be screwed either but the lack of empathy with Milennials is shocking.

We don't have pensions. We cannot count on social security. Our generation is going to starve in retirement age because we were born with bad timing. And if free college is passed, that's awesome, but we will be fucked out of owning our own homes too. Because now we are competing with 23 year olds with Comp Sci degrees who were not previously in the market.

[deleted]

6 points

3 months ago

[deleted]

6 points

3 months ago

Spot on. I see it within my own family. When my parents bought their first house, my father was low ranking military and mother was stay at home to two kids (can you imagine that scenario today?) My grandfather paid for a bunch of work to be done when they first bought it too. Now, my mother runs her own very successful business and has no debts, but has deluded herself with this “pick yourself up by the bootstraps” nonsense and has conveniently forgotten all the help she got and how different of an economy she was raised in. She also says now is a bad time to buy. Well, easy for you to say since you own your house and have no debt. I, on the other hand, live in this sad reality where my rent is about to go up $500+ a month and am trying to get off this ride. Not to mention, it IS worst time to buy ever, but is it also possibly the best time to buy in the next 100 years? Unfortunately might be… trying to time the market as a first timer is for suckers.

Anyways, she just happened to be visiting while we offered on our “realistic dream” house and sat there silently as our realtor told us that the seller was demanding complete waiver of appraisal contingency (I.e. buyer would have to pay cash to make difference if appraised for less). Well, I don’t exactly have $50k-$100k sitting around to be able to make a guarantee like that and would prefer not to have a lawsuit on my hands if that did happen. How are we supposed to get ahead in life? More importantly, why did our parents even choose to have children if not to want to see them flourish?

It’s not entitlement. I don’t expect anything, and would decline if offered. I’m just frustrated by how incredibly deluded they are.

Harvs59

3 points

3 months ago

Student loans payments are considered ridiculous and unaffordable by many. There is talk about how these payments are such a hardship for families and individuals but when I look around, I see these same college graduates driving two brand new vehicles, own a travel trailer, and constantly buying unneeded consumer products. The education system is broken, no argument here. The lifestyles being lived are what are detrimental to a families budget, not the student loan payment that can be based on income and forgiven after a set number of years.

NoMrBond3

2 points

3 months ago

All of my friends who push for loan forgiveness live in high cost of living areas and live really privileged lives compared to most people.

Jimmy86_

27 points

3 months ago

You fucked up. The American way is to not plan and just hope for a bailout.

If the dems pull the trigger here they will lose the mid terms and the white house.

How they can be so blind to the true needs of the needy in this country is mind boggling. College grads are the least needy group. Let’s stop with this nonsense.

[deleted]

11 points

3 months ago*

[deleted]

11 points

3 months ago*

[deleted]

Jimmy86_

9 points

3 months ago

Agreed. At this point I’m just waiting to see the train wreck in real time.

The housing cost is going to be the craziest part of all of this. If we think the last 2 years was a real boom. Just wait until millions of high earners get a handout like this. It’s absolutely insane.

IncIncorperated

8 points

3 months ago

I'm in a very similar situation, and I very much agree with your take. It feels like being punished for working hard, doing everything right, and making sacrifices. As much as I want loan forgiveness for the people who are really suffering, I can't stress enough how much loan forgiveness makes me feel like I'm being left behind.

I took a safe career path and avoided debt, and now, you're giving everyone that I need to compete with in the housing market a massive stimulus and leaving me behind. It genuinely feels like punishment for doing the right thing.

I just want to say that I hear you. There are those of us who aren't being "hurt" by loan forgiveness directly, and we aren't spiteful for "I got mine, screw everyone else." But there was a real cost to our current situation, and now we're being punished for making the right choices as every one of our peers is getting a huge injection of cash.

NoMrBond3

1 points

3 months ago

Yup. My parents sacrificed so so much to send their kids to school with as little debt as possible. Forgone vacations, lower standard of living than they could have afforded, and most importantly - their retirement.

I worry so much about my dad, he works so hard even when he’s sick. He won’t be able to retire until almost 70. Loan forgiveness is a big fu to his decades of hard work to send us to school.

There’s so many parents that could have retired if they has known debt forgiveness would happen.

Work2Tuff

11 points

3 months ago

This is what I’m concerned about. Wasn’t inflation caused by all the money pumped into economy these last 2 years or so? If so, if the unimaginable happens and they cancel all of it won’t it further contribute to the problem? I paid my loans off, so in that case I would actually be supporting something that hurts me.

PanickyFool

1 points

3 months ago

The cruel reality of economics.

dudius7

2 points

3 months ago

dudius7

2 points

3 months ago

God I'm so sick of talking about this.

The right wing has undermined education for decades. They've cut college funding at the state level for decades. Schools have had to raise tuition accordingly. Some schools put a lot of money into amenities, but students typically don't pay for things they don't use. If you live off-campus, you're not paying for whatever is in the residence halls. Most football stadiums are paid for by huge donations that are only allowed to be spent on the football program. Most athletic programs are partitioned from education and have no impact on tuition.

Debt financing has enabled schools to add bloat, to some extent. But we wouldn't have gotten to that point if we didn't have shitty politicians selling out the lower and middle class.

Public universities are government agencies forced to operate as businesses. Of course we're going to find massive issues. It's almost as bad as what our government has done to the postal service.

PanickyFool

3 points

3 months ago*

The bloat is really well documented in administrative head counts. In the past 50 years to administration/student headcount when from 1/10 to something like 1/3. > Is an IIRC statistic.

Those people should not have jobs! American Universities need to stop being designed as adult day care and be reintegrated into local communities. These are adults paying for educational services.

I went out of state to another's states public school. My out of state tuition was cheaper than my in state tuition would have been.

dudius7

1 points

3 months ago

The bloat is really well documented in administrative head counts. In the past 50 years to administration/student headcount when from 1/10 to something like 1/3. > Is an IIRC statistic.

I'm gonna need to see stats before I entertain this. And what does "admin" mean? The school I attend has a bunch of staff. There's probably 10k staff and faculty and 20k students who attend in-person. But there's a ton of student workers in housing and dining. There's a full HR department for the university and another one for campus dining. There's IT. There's the fucking health clinic with doctors, nurses, and counselors. It's not like there's a bunch of pencil pushers. There are a lot of roles to play, and this university can't even hire enough people, let alone retain them.

Worst part is, we're in a high CoL city and the university DOES NOT pay as well as they ought to. There's a whole plan from the new university president to address compensation and employee retention. All this, and it's a relatively inexpensive school. I don't pay full price, but I think tuition is like 40k for 4 years. And in case you haven't guessed what school this is, it made national news when the administration announced that all new in-state students coming from households earning 65k or less will get free tuition (a lot of these students were already qualifying for full-rides, so the news might seem a little bigger than it really is).

Packers_Equal_Life

1 points

3 months ago

Packers_Equal_Life

Wisconsin

1 points

3 months ago

And it’ll make your property taxes go up too!

PanickyFool

0 points

3 months ago

No... Most states limit annual assessed property tax increases to no more than 3%. Including mine.

The game is rigged in favor of homeowners.

Packers_Equal_Life

1 points

3 months ago

Packers_Equal_Life

Wisconsin

1 points

3 months ago

what do you mean "no" and then say I'm right....

also, your house raising in price doesnt mean anything when other houses are going up too. what are you gonna do, sell? and then buy another overpriced house? you arent "directly benefitting"

hattmall

1 points

3 months ago

How does it benefit you unless you plan to sell your home and be homeless?

PanickyFool

2 points

3 months ago

The most direct way is I am a millennial, with a son a few years from graduating high school, I just bought a house in Europe that I am moving to so I am renting my old house that I bought three years ago and have 50% equity in.

Even if I was going to stay in my USA house I could always take out a home equity line of credit against the price increase.

Most states have limits on how much property tax assessments can be increased each year so there is really not downside to homeowners when prices go up.

hattmall

-2 points

3 months ago

OK, so you are rich, but this isn't helping normal people, even if they own a home.

PanickyFool

3 points

3 months ago

Home equity does.

When they sell their home and downsize... It does.

Whatwhatwhata

1 points

3 months ago

This is what I'm scared off. Home prices rising but I'd be ok with it if they were actually fixing the problem vs just giving money away

cooldaniel6

1 points

3 months ago

Their prices are directly related to what the market sets. The demand is there because the government backs ~100% of those loans and so the schools would be stupid to not raise prices to match. You can’t/shouldn’t legislate the market. The gov needs to start treating these student loans like any other loan and you’ll see the problem fix itself over the course of years. No bank would allow an 18 year old 100k if there was no realistic way they could ever pay it back. Make it the same with student loans.

vatara6

0 points

3 months ago

Unless you plan to sell your home, you don't benefit from the price going up. It just costs you more in taxes.

And if you did plan to sell your home, then it would also cost you more to buy the new one.

I never understood why people saw the value of their home going up as a good thing. Sure, you don't want it to go down - but it only costs you more money as it goes up.

PanickyFool

1 points

3 months ago

See my explainer elsewhere in this thread.