I think meaningful reform on student loans would include five things:
1. 25% of write-offs would be charged back to the university/college to incentivize them to have better policies on loans as part of financial aid - it may reduce the colleges' massive growth in adminstration staff
2. Student loans and Parent Plus loans can be written off in bankruptcy similar to other loans.
3. Student loans not paid off after 30 years of an income-based repayment plan are automatically discharged in full.
4. Student loan and Parent Plus loan interest rates at issuance or refinancing can't exceed the current 10 year T-bond interest rate which gives a chance for income-based repayment loans to actually be paid off in the future.
5. Simplify the student loan programs - right now it is an alphabet soup of student loan programs randomly created by Congress and handed over to private servicers that not even the servicers and Education Department understand. The public service loan forgiveness programs were a disaster because of the complexity of the rules and nobody could figure out which loans even qualified.
BTW - new high-end condo buildings can lead to affordable housing because the older buildings are now "downscale". There just aren't enough of any of them being built. Much of that is NIMBY regulations. The housing costs in our area are quite affordable (median county house value is currently 4x median county household income) mainly because a lot of communities have mixed housing near each other (apartments, townhouses, and single-family). You are buying a serious house (likely >3,500 sf on 1 acre lot) if it is over $600k.
I have a feeling that the executive order on student loans won't last. It feels similar to the vaccine mandates coming via exec order last year around this time. Regardless of what one thinks of that vaccine order, by December there were major cracks chiseled out by the courts. Now, a year later, the mandate doesn't really feel like it had much force behind it.
I would not be surprised to see an injunction against the forgiveness by the end of this year. On what grounds? Beats me. There's not a lot of case law establishing that someone can sue the government on behalf of the taxpayer. Someone will try, though, even if they get thrown out of the court for having no standing.
While I agree with you on all the problems coming from the student loan forgiveness plan as is (I wrote on my stack about why dropping interest would be a much more effective "bailout", and other smarter people have too), the fact of the matter is that in the circles of power around DC, the thoughts and feelings of the college-educated matter more. If you do not have the pedigree receipt in hand, your thoughts are not as important. That's why the administration, and many others, are shrugging over objections.
I'm wishy washy on loan forgiveness, but this is a little bit of rhetorical jujitsu that I think is worth quibbling with:
"I agree there are problems with student debt, especially for borrowers who did not graduate or went
to for-profit schools. But we can deal with that by allowing debt to be discharged into bankruptcy filings...."
You can solve nearly any problem with "let's assume away the filibuster and then assume that congress will enact this other, better policy that I prefer." But that's not really a solution to anything, it's fantasizing about a better world. Which is great and all, and If I Were King I would do all kinds of wonderful things that are better than what we do now. In this world, where loan payments need to be restarted in a way that provides political cover to the administration this seems like a decent enough candidate for least bad option.
I think meaningful reform on student loans would include five things:
1. 25% of write-offs would be charged back to the university/college to incentivize them to have better policies on loans as part of financial aid - it may reduce the colleges' massive growth in adminstration staff
2. Student loans and Parent Plus loans can be written off in bankruptcy similar to other loans.
3. Student loans not paid off after 30 years of an income-based repayment plan are automatically discharged in full.
4. Student loan and Parent Plus loan interest rates at issuance or refinancing can't exceed the current 10 year T-bond interest rate which gives a chance for income-based repayment loans to actually be paid off in the future.
5. Simplify the student loan programs - right now it is an alphabet soup of student loan programs randomly created by Congress and handed over to private servicers that not even the servicers and Education Department understand. The public service loan forgiveness programs were a disaster because of the complexity of the rules and nobody could figure out which loans even qualified.
It is difficult to find affordable housing because tax incentives and zoning regulations have steadily escalated new home sizes since the 1970s while number of people in average household sizes has shrunk https://www.aei.org/carpe-diem/new-us-homes-today-are-1000-square-feet-larger-than-in-1973-and-living-space-per-person-has-nearly-doubled/#:~:text=Likewise%2C%20the%20median%2Dsize%20house,2.
BTW - new high-end condo buildings can lead to affordable housing because the older buildings are now "downscale". There just aren't enough of any of them being built. Much of that is NIMBY regulations. The housing costs in our area are quite affordable (median county house value is currently 4x median county household income) mainly because a lot of communities have mixed housing near each other (apartments, townhouses, and single-family). You are buying a serious house (likely >3,500 sf on 1 acre lot) if it is over $600k.
https://fred.stlouisfed.org/series/HOUSTPFR2UMQ
https://fred.stlouisfed.org/series/HOUSTPFST1FQ
I have a feeling that the executive order on student loans won't last. It feels similar to the vaccine mandates coming via exec order last year around this time. Regardless of what one thinks of that vaccine order, by December there were major cracks chiseled out by the courts. Now, a year later, the mandate doesn't really feel like it had much force behind it.
I would not be surprised to see an injunction against the forgiveness by the end of this year. On what grounds? Beats me. There's not a lot of case law establishing that someone can sue the government on behalf of the taxpayer. Someone will try, though, even if they get thrown out of the court for having no standing.
While I agree with you on all the problems coming from the student loan forgiveness plan as is (I wrote on my stack about why dropping interest would be a much more effective "bailout", and other smarter people have too), the fact of the matter is that in the circles of power around DC, the thoughts and feelings of the college-educated matter more. If you do not have the pedigree receipt in hand, your thoughts are not as important. That's why the administration, and many others, are shrugging over objections.
I'm wishy washy on loan forgiveness, but this is a little bit of rhetorical jujitsu that I think is worth quibbling with:
"I agree there are problems with student debt, especially for borrowers who did not graduate or went
to for-profit schools. But we can deal with that by allowing debt to be discharged into bankruptcy filings...."
You can solve nearly any problem with "let's assume away the filibuster and then assume that congress will enact this other, better policy that I prefer." But that's not really a solution to anything, it's fantasizing about a better world. Which is great and all, and If I Were King I would do all kinds of wonderful things that are better than what we do now. In this world, where loan payments need to be restarted in a way that provides political cover to the administration this seems like a decent enough candidate for least bad option.
Very well said.