Student Loans shouldn't be forgiven. We should focus on cost.

[dora_da_destroyer]

"Recent work suggests that student loan debt disparities may be contributing to these racial wealth gaps among Black and White Millennials (Houle & Addo 2018). When looking at student loan debt data, it is clear that Black Millennials took on a great deal more financial risk in pursuit of a college degree. They have acquired more education debt, and their repayment of education debt is slower (Houle & Addo 2018; Scott-Clayton & Li 2016).

Several mechanisms contribute to these observed debt disparities, including family background, postsecondary characteristics, and credit and labor market factors (Houle & Addo 2018). In response to rising tuition, students and their families have had to increasingly make up the difference between college costs and insufficient financial aid packages. However, research indicates that there were different impacts of parental wealth depending on race and ethnicity. For White young adults, their amount of education debt decreased as their parent’s wealth increased. Whereas for Black young adults, parental wealth was not associated with the amount of debt their children accumulated (Addo, Houle & Simon 2016). The Black-White wealth distributions are so incongruent that Black parents only comprise 3.2% of the top wealth quintile, which was defined as holding at least $191,000 (Addo 2018). This work suggests that intergenerational class status was not guaranteed for Millennial Black young adults. Similar to their parents and grandparents’ generations, they may find the pathway to middle-class status and long-term financial security a tenuous one.

Black borrowers also turned to private loan markets in greater percentages (Dillon & Carey 2009). Relative to federal loans, these loans are associated with costlier debt given the high and variable interest rates. They also lack similar protections afforded federal loans, such as loan forbearance, with a negligible chance of discharge in bankruptcy. And once in the labor market, Black young adults still face discrimination (Gaddis 2014). They are more likely to be unemployed or underemployed, holding jobs that do not require a college degree (Jones & Schmitt 2014). High-cost loans, discriminatory practices, and unequal wages are just a few of the structural barriers that inhibit college-attending Black Millennials from paying down their education debt at similar rates as their White counterparts.

These factors can have long-lasting consequences. There is suggestive evidence that not only are young adult Millennials acquiring student debt because of the limited wealth resources of their families, but that student loan debt is associated with lower wealth accumulation for Millennials. Young adult Millennials with student loan debt by age 30 have significantly less wealth than their counterparts with no debt, inclusive of those who never attended college and those who did. The wealth returns to a college degree appear to have greater benefits for those who either had no loans or were able to pay them back quicker.

These patterns are consistent for Black, Latinx, and White Millennials, yet the racial wealth differentials persist across all categories. Depending on whether they have outstanding student loans, White wealth is two to four times greater than Black wealth and 1.2 to 1.8 times larger than Latinx wealth holdings. Compositionally, Black and White educational debt disparities account for 10.5% of the racial wealth gap (Houle & Addo 2018); and for college graduates, for whom racial wealth gaps are greatest, it explains close to 20% (Addo 2019). Alternatively stated, if the education loan debt disparity was eliminated, wealth inequality between Black and White young adults with college degrees would decrease by 20%.

It is not surprising that the median wealth of all Millennials with any debt at age 30 is lower than those with no debt who attended college; however, their median wealth levels are also lower than young adults who never attended college. Uncovering these realities has led scholars to express concern that student loan debt may be reproducing racial wealth inequalities among the latest generation of youth (Addo, Houle & Simon 2016; Scott-Clayton & Li 2016)."

The Emerging Millennial Wealth Gap

But people were in this forum arguing how debt forgiveness widens the wealth gap


Clowns

 

[DEAD7]

Black and White educational debt disparities account for 10.5% of the racial wealth gap (Houle & Addo 2018); and for college graduates, for whom racial wealth gaps are greatest, it explains close to 20% (Addo 2019). Alternatively stated, if the education loan debt disparity was eliminated, wealth inequality between Black and White young adults with college degrees would decrease by 20%.

 

[ogc163]

Elaborate.

 

[DEAD7]

Elaborate.

• Higher education - number of bachelor's degrees by ethnic group 2017/18 | Statista

Its doesn't address the point made about forgiveness increasing the wealth gap in any meaningful way whatsoever.
Any form of debt forgiveness is a pro white plan that will benefits others slightly IMO.


Make public colleges free, remove interest on loans, and let students honor their contracts.

edit: another good source for demographic analysis
The Demographic Statistical Atlas of the United States - Statistical Atlas

 

[the cac mamba]

another problem that needs to be addressed is the idea that everyone "should" go to college. this thinking needs to go. it starts in high schools, too

i bet a quarter of kids in college right now shouldnt even be there, and should have gone to trade school instead. and its not even some kinda bad thing; trades are facing a retirement wave without replacements lined up from this generation

 

[ogc163]

Its doesn't address the point made about forgiveness increasing the wealth gap in any meaningful way whatsoever.
Any form of debt forgiveness is a pro white plan that will benefits others slightly IMO.

It is very specific about its relevance regarding the gap between college-educated black and white millennials, so saying it doesn't address it in any meaningful way is a bit hyperbolic.

Any form of debt forgiveness is a pro white plan that will benefits others slightly IMO.

I'm struggling to see how this is highly relevant to the discussion. Most college students are white, which is not surprising considering most of the nation is white, and so it's obvious they will disproportionately benefit from a percentage of the population perspective. But the more relevant factor is that Black grads make up a disproportionate amount of those who have negative outcomes as a result of student loans, and so relief would substantially alleviate their debt burdens.

 

[DEAD7]

I'm struggling to see how this is highly relevant to the discussion. Most college students are white, which is not surprising considering most of the nation is white, and so it's obvious they will disproportionately benefit from a percentage of the population perspective. But the more relevant factor is that Black grads make up a disproportionate amount of those who have negative outcomes as a result of student loans, and so relief would substantially alleviate their debt burdens.

I believe the cost of forgiveness can be better spent, better meaning in a way that benefits more tax payers, specifically those taxpayers in our society most in need of help... and measures such as making public colleges free better address the racial wealth gap if college reform is what we are discussing.
The fact that whites are the primary benefactors is why i believe this is so popular.
Making public college free to everyone should be a higher priority... but this is Amerikkka

It is very specific about its relevance regarding the gap between college-educated black and white millennials, so saying it doesn't address it in any meaningful way is a bit hyperbolic.

Opponents are arguing it widens the racial wealth gap in America(which it does), and saying it lowers the gap between young graduates by 20% isnt meaningful, in my opinion.

 

[OfTheCross]

The Distributional Effects of Student Loan Forgiveness

The Distributional Effects of Student Loan Forgiveness

Full or partial forgiveness is regressive because high earners took larger loans, but also because, for low earners, balances greatly overstate present values. Consequently, forgiveness would benefit the top decile as much as the bottom three deciles combined. Blacks and Hispanics would also benefit substantially less than balances suggest. Enrolling households who would benefit from income-driven repayment is the least expensive and most progressive policy we consider.

 

[FAH1223]

The Distributional Effects of Student Loan Forgiveness

The Distributional Effects of Student Loan Forgiveness

Full or partial forgiveness is regressive because high earners took larger loans, but also because, for low earners, balances greatly overstate present values. Consequently, forgiveness would benefit the top decile as much as the bottom three deciles combined. Blacks and Hispanics would also benefit substantially less than balances suggest. Enrolling households who would benefit from income-driven repayment is the least expensive and most progressive policy we consider.

Beyond stupid and parody.

We already have income based repayment.

 

[OfTheCross]

Beyond stupid and parody.

We already have income based repayment.

It's just saying that Income Based Repayment is the most progressive policy they considered. Compared to regressive policies such as Full or partial forgiveness

 

[FAH1223]

It's just saying that Income Based Repayment is the most progressive policy they considered. Compared to regressive policies such as Full or partial forgiveness

Full or partial forgiveness are not regressive.

Eliminate the debt. Then pass legislation to curb tuition increases and make university tuition free.

Congress won't do the latter. But Biden should do the former. It's good politics and an easy branding opportunity.

 

[dora_da_destroyer]

The Distributional Effects of Student Loan Forgiveness

whole 28 page paper and no mention about high income earners not being able to deduct student loan interest paid, that alone can make the case for some level of loan forgiveness for all

 

[FAH1223]

whole 28 page paper and no mention about high income earners not being able to deduct student loan interest paid, that alone can make the case for some level of loan forgiveness for all

3 years ago, the GOP Tax Scam nearly passed eliminating the student loan interest deduction