Student Loans – Should The United States Forgive Student Debt? A new debate | Zoom Fintech
Intelligence Squared US today released its latest debate on the “Forgive Student Debt” motion. During an hour of lively exchanges, the two sides debated topics ranging from whether forgiving student debt counts as a bailout for the rich to the disproportionate impact of student debt on minority students.
Fourth Quarter 2020 Hedge Fund Letters, Lectures and More
Consumer Financial Protection Bureau veteran Dalié Jiménez and Center for Responsible Lending Ashley Harrington are supporting the motion. Beth Akers of the American Enterprise Institute and Nick Gillespie, editor-in-chief of Reason, oppose it.
Hedge funds are once again underperforming the markets
Hedge funds performed exceptionally well during the pandemic, and investors rewarded them with inflows of capital. However, things are changing now, as March brought a marked turnaround for the industry and a return to the underwhelming returns it struggled with for years. Letters, conferences and more on hedge funds in Q4 2020 Disappointing performance in March Morgan Read more
The winner will be determined over the next week. Anyone watching the debate can cast two votes on the issue – one before watching and one after. Whichever team wins the most in terms of percentage points wins. The winning team will be announced on April 1.
Watch the video of the debate here: https://www.youtube.com/watch?v=wuJB9ZohQNI
Listen to it in podcast here: https://smarturl.it/iq2podcast
Vote here: https://www.intelligencesquaredus.org/vote
Debate: Forgive student debt?
The following is a partial transcript of the “Forgive Student Debt” debate.
Okay, I want to move on a bit, Dalie, with a point that was made earlier by your opponents, I believe by Beth, that if the agenda you are putting forward comes to fruition and a significant amount of student debt was wiped out on the president’s pin on April 1, say, this can be a really tough political sell-off to all the college students who borrowed, paid off debt, forgave it, worked hard to make it. They’re going to say, “Well, why did I do that? Where was my turn for that? And I just wanted to ask you to address this issue, because I think that’s probably a question that would come to the minds of a lot of people watching the debate.
Dalie Jiménez: Yes. I am one of those people. I –
Jean Donvan: Yeah, you are. In fact, you said –
Dalie Jiménez: I have incurred a debt of $ 140,000. And you know, I was able to pay. Great. Great for me, I struggled. I don’t want anyone to struggle, and many struggle much worse. I don’t feel sorry for myself.
Maybe you are fighting a lot worse than I had to endure. I think there is an interim period, is there not. Like, Beth talks about making these really nuanced political decisions. Great. When does Congress get to do it? When did this actually happen? We have to – President Biden can do it now, forgive $ 50,000 per person across the board, easy, quick, no way to test, boom. Then we have a smaller program, that $ 1.7 trillion to run, where we can then, you know, improve the RDI. By the way, IDR is not a single program. It’s four or five programs, and they’re different, and you don’t qualify for all of them, and it’s a mess. And even people who study it don’t know it by heart, okay, because it’s so complicated. We shouldn’t be forcing people to go through all of these hoops and learn all of these nuances – just all of these silly things, really, in order to get forgiveness in two decades. Have I answered your question?
Jean Donvan: OK. Beth, I want to ask you a question.
You naysayers – again, in Ashley’s opening commentary. It sort of alludes to the idea that an individual’s education is not just about the individual, but is actually a public good that that individual, number one, if – in being educated, number one, can be a taxpayer, contribute to the economy, just contribute socially. And also, that being tax-relieved freezes that money to become a stimulus in and of itself in the economy, no – no, Ashley didn’t say he would pay it in full, but she said it was a positive benefit for the economy especially in this year of COVID for people to have more money in their pocket so they can spend more. I just want to ask you to address that part of his argument.
Beth Akers: Sure. So it’s a common belief that student debt is in fact a really effective stimulus, which is especially important right now. We are in a depressed economy.
The problem, again, is actually what I mentioned earlier about the regressivity of politics. When economists design stimulus packages, they cut the checks and send them to the people with the lowest incomes in the economy. Because the way the stimulus works is you need people to get out and spend that money and – for it to really have a stimulating effect on the economy. When you give money to wealthier people it has a lower multiplier. They go into the community less and spend less and it creates less jobs and less sales and things like that. And so, student loan cancellation has the same problem. But since a lot of it goes to the very well-off, it’s really inefficient because they’re not the ones who are going to come out and stimulate the economy.
The other problem is, let’s say we have to forget everything. It is 1.7 trillion. Student loans are totally different from that number, from what people see from month to month. So maybe easing a $ 200 a month payment for someone with a decent amount of debt is costing us.
Again, this $ 1.7 trillion, we are only getting a small fraction of that stimulus today because of the way people have their cash flow just have to manage a monthly payment on their student loan.
So, is it a stimulus? Yes. Is it tackling wealth and racial inequalities? Yes. Is he doing these things in a very, very, very inefficient way? Yes. And so, the problem is, if these are the problems that we are trying to solve, there are more direct solutions to these problems than student loan cancellation.
Jean Donvan: Ashley, I’d like to let you answer.
Ashley Harrington: Well, I think we have to be very careful with – say, our perch and our position in our lives, that – a monthly payment of $ 200 is not difficult. I think we have to be – it’s actually difficult for a lot of people who are struggling. So I think we have to be very clear about this, that people have different levels of what is considered a struggle. And there are a lot of people who absolutely have a hard time making their payments.
There have been many studies that show the economic benefits of cancellation and how it will flow back into the economy over the years. And I think we’ve also explained how it’s not just about the rich, the rich, and the very – and the majority of people who will get those benefits are low-income and low-income people. Student debt, the balances themselves having to go into debt add to the cost of credit over the life of someone, it prevents them from saving. It affects their ability to get a home. They can’t save for a down payment. It also means that this money determines their debt ratio when they want to qualify for a mortgage. And we just learned that house prices are skyrocketing.
So people who have a lot of student debt and houses cost more, and they can’t get a loan to get it because they can’t qualify, they can’t even ask for a down payment. Again, we are all affected by the housing market which is not functioning as we saw in 2008. I do not think like the lease, the housing market is a central part of our economy.