Spa business

Bursting the debt bubble |

Does a presidential policy that you do not support still bring you an advantage? I know that feeling now, and it’s weird. Joe Biden announced last week that he plans to bypass Congress to forgive some student loan debt. Biden’s plan would provide up to $10,000 in federal student loan debt relief to people earning less than $125,000 a year ($250,000 for a household), while Pell Grant recipients are eligible up to $20,000 in debt forgiveness. This includes the roughly $4,000 in federal student loan debt I owe the country. So while people like me know they don’t need government help, it’s hard to be outraged by a plan that gives you thousands of dollars.

A few problems exist with Biden’s plan. It does not address the student debt crisis. Americans hold about $1.8 trillion in student loan debt. This plan will wipe out $300 billion if Biden is successful. Even though Biden wiped out all existing student loan debt, that doesn’t solve the real problem: high education costs.

Why have tuition fees increased three times faster than inflation in recent decades, according to the Federal Reserve Bank of St. Louis? Isn’t this an area where politicians should investigate price gouging? I’m not an oil expert, so I don’t know enough about claims that oil companies are price gouging. But I went to Emerson College for a year. And I know the total cost of attending for a year there before student aid is about $75,000. It’s a ridiculous price and a reason the school has a negative net return on investment in the first 10 years after graduation, according to to research from Georgetown University (I’m not a college graduate, for the record).

Biden is not ordering the feds to stop lending on low returns. It does not require schools to co-sign loans. It does not ask schools to create three-year bachelor’s degrees that do away with courses unrelated to the major. It does not require schools to reduce administrative burden. He is not attacking college sports to drive up costs. It hasn’t stopped the feds from loaning gender studies majors (not a common major, despite what some on the right say).

It is hard to imagine that this decision curbs the country’s high inflation rate. It helps some people, including me, but deficit financing this plan won’t help reduce inflation. It also has political implications. If Biden’s plan works and he can unilaterally write off student loan debt, it won’t be the last time a president does. This will become a campaign promise for most Democratic presidential candidates. They will enter into a bidding war for votes – and this will be the only instance where liberal politicians will support the use of taxpayers/government/public money to fund private education.

And that sets the Republican Party up for a divide-and-conquer strategy.

GOP politicians are using the opportunity to pit people against each other. The electrician who didn’t go to college pays the bills for the blue-haired feminist who specialized in underwater basket weaving. A legitimate anger exists among those who worked hard to repay their loans and never received any help from the government. This includes people who went to college and those who didn’t but struggle with other debts, such as payday loans, medical debt, credit card debt, mortgages, and debt. car payments.

My opinion on student debt forgiveness is that, while it’s messy, including it in a larger plan that takes a heavy toll on the existing higher education system would be a valid compromise. If $300 billion destroys educational credentials, destroys the professional licensing cartel, dramatically reduces college costs, encourages responsible lending, and makes colleges less woke, I will accept this deal. But we don’t get that. I’ll be happy to take the $4000 bailout, but that doesn’t make it a good idea.