The US administration’s plan to cancel up to $20,000 in federal student loan debt for low- and middle-income borrowers could cost $400 billion, according to a Congressional Budget Office report released Monday.
The administration announced the forgiveness plan in August, after facing mounting pressure from progressives to broadly cancel some student loan debt.
The Department of Education plans to release an application for the program in October. No student debt has been canceled yet.
The CBO, which conducts nonpartisan analysis for Congress, warned in the report that the estimates are “highly uncertain.”
The estimate relies on a number of assumptions, including how many eligible borrowers will apply, as well as what portion of the outstanding federal student loan debt may not have been repaid anyway over the lifetime of the loans due to other existing forgiveness programs, for example. Those projections depend in part on future economic conditions, the CBO said.
Though the number is rough it is the exact time we need to stimulate the economy mostly through millennial spending. This is very smart economics for the US. This money makes the recession milder. Keeps many people employed and paying taxes. Keeps more businesses profitable compare to…just doing nothing for anybody. Now that is a dumb plan doing nothing for nobody.
And it’s another plan to get government further involved in education, by - in effect - preferentially funding economically worthless degrees and further decreasing the incentive for people to seek lower-cost ways of getting those degrees.
I could be happy with the forgiveness plan as a one-shot event (or, more appropriately, for “student debt incurred prior to today”) to fix the bad effects of past policies and in combination with correcting those policies. But as an ongoing program, it instead makes the bad policies a bit worse.
We need to encourage lower-cost college/equivalents/alternatives, and decrease subsidies for low-value degrees.
To many generalizations. College degrees are not worthless. Does not matter what the degree is in corporations hire and train.
Low cost always means screwing someone. The professors need to be paid, the workers in the caf or on the grounds etc need to be paid. That is the world we live in. You were paid. Or you were paid less because you cared to be paid less.
There are no lower cost colleges. Colleges already charge under the actual cost of the education. Endowments and government subsidies etc pick up part of the tuition costs.
Oh I see you mean cut them off and the costs will go down? Life does not work that way no matter how many ponies were promised. We need colleges for US productivity. The longer way around colleges and universities more than pay for themselves building our nation.
We have to allow for the lazy HR people. They receive baskets of resumes each day, and want an easy way to sort them out. Education is an easy way to dismiss a lot of people. Sticks in my mind I once read of a McDonald’s that was requiring a college degree. Radio Shack would hire non-graduates, but flew college graduate store managers to Fort Worth for extra indoctrination, so they certainly saw value in a degree.
[quote=“Leap1, post:4, topic:76239”]
There are no lower cost colleges. Colleges already charge under the actual cost of the education. Endowments and government subsidies etc pick up part of the tuition costs.[/quote]
As noted before, the trend has been to reduce government subsidies, and transfer a greater portion of the cost onto the students.
A candidate running for Gov of Michigan right now, wants the state to subsidize private schools, which would, of course, reduce the amount of money in the education budget available for government run public schools. The result being a wider divide between those who can afford to pay for K-12 education for their spawn, as their out of pocket costs are reduced, vs those who can’t pay, as the public schools see their funding cut, again.
Apparently you don’t understand that something can be valuable but still be non-essential and have little economic value. We call those things “luxuries”. Some college degrees qualify the holder for a high-paying job of great benefit to society… others, unless the holder is both extremely talented and extremely lucky (or extremely connected), they are qualified to flip fast-food hamburgers.
And low cost does NOT always mean screwing someone. It can mean a minimal amount of bureaucracy and fluff that is not actually part of the mission.
You are correct that college charges “to the student” are lower than their current costs - that is precisely the problem, when applied to degrees that are luxuries without regard to the suitability of the student.
And yes there is a trend of decreasing state subsidies and higher tuitions/fees - in spite of which the total cost is rising faster than general inflation, and has been doing so since the 1960s. But the higher tuitions/fees are covered by federal loan programs, and now there are demands that those loans be forgiven - preferentially for the luxury degrees, because the holders of economically valuable degrees have the income to pay off their loans. This isn’t transferring costs to the student, it’s transferring costs to the taxpayer. And primarily the costs of luxuries that don’t benefit the taxpayer even indirectly.
But the claim that there are no lower cost colleges is plainly false even today. Total costs are lower at your local community college than at Harvard. And if less money is there, some colleges will go broke - but others will find a way to make ends meet. This happens every day in pretty much every area of the economy except government, education, and medicine - the areas with the largest amount of government intervention.
I completely agree with you. And in some cases (like my education – an EE and an MBA from CUNY, NYC’s “owned” university), education is both inexpensive, very well provided and extremely useful in assisting one’s career.