Author Topic: is student loan forgiveness taxable?  (Read 4924 times)

mathlete

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Re: is student loan forgiveness taxable?
« Reply #50 on: August 26, 2022, 03:21:49 PM »
I agree with the WaPo editorial board that cancelling debt for people who out earn their non-college peers by 50%, is regressive.

But it's probably the only middle class relief left that can be done through executive action so I guess I support it.

I get that this fits the narrative a lot of people want to spin, but I've yet to see solid demographic info that supports (or disproves) this.  We already know the top earners (>$125k, which is certainly a nice salary but hardly just the uber rich) are excluded.  And the forgiveness applies to those who never graduated, and I ASSume the "out earn their college peers by 50%" is a stat comparing grads from non-grads, so that number is already suspect since plenty of non-grads still have $10k+ in loans and thus will see relief with this.

Then there is the fact that is it tough to argue that people who pay no federal income tax are being forced to pay for this program, so that cancels out the lowest income earners who aren't benefitting, and shifts the "regressive" picture somewhat. 

It's mostly a gut instinct and I'm very ready to be wrong, but my sense is that this is far less "regressive" than many are making it out to be.  I'd love to see some demographic data on who is eligible, so see where they actually fall income wise. (Who knows what the picture of eligible compared to actually-applies will be, but that would at least give a sense of things.) Most of the people I know who are celebrating this are lower income earners.  One couple is a musician married to a person with a graduate degree in psychology who until recently worked as a school psychologist.  I know that anecdotes are meaningless, but it seems like there are very many low income people who have $10k+ in federal student loans (some of whom graduated and others who didn't). 

It just seems like a lot of opponents of this are making it out to be millions of people earning $120k-$124.9k getting a free $10k.

The data is good. Median bachelor's degree holders out earn high school grads by 64%. Less expensive associates degrees confer 17% over a high school diploma.

https://www.bls.gov/careeroutlook/2018/data-on-display/education-pays.htm

Median numbers are less polluted by people with massive salaries (who wouldn't get the forgiveness) than the mean would.

The $125K cap helps, but it doubles for married couples. I think most grads with college debt will be helped by this.

The way we pay for college is dumb and should absolutely change. But if you come to me and say, "We have $240b we want to spend.", giving it to a group of people who have upwards of 60% more earning potential than their non-qualified peers would not even make the short list for me.

I understand some non-graduates with debt will be helped too, but this is a very expensive way to help them.

In the end, I'm resigned to supporting this because I think congress is just about out of appetite for helping the country/poor/middle class (don't get me wrong I love the bills they passed over the last 2 years, the most recent one, I like quite a bit). If the President can help people with the stroke of a pen, I'll take it. Even if the people being helped aren't who I'd look to help first.


mathlete

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Re: is student loan forgiveness taxable?
« Reply #51 on: August 26, 2022, 03:23:35 PM »
Aaaand, just when I thought the Democrats had built some momentum to avoid a bloodbath in the midterms, they out-Democrat even themselves by handing the GOP this nugget.

Hey, college grads vote. And polling showed that debt forgiveness on the magnitude we're discussing is popular. My guess is they wouldn't have done this if they didn't think it'd help in the midterms. It unambiguously helps the middle class. It's gonna depend upon who spins it better.

Villanelle

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Re: is student loan forgiveness taxable?
« Reply #52 on: August 26, 2022, 03:27:29 PM »
Aaaand, just when I thought the Democrats had built some momentum to avoid a bloodbath in the midterms, they out-Democrat even themselves by handing the GOP this nugget.

You think so?  If my Facebook is any indication (and I readily admit it is not a representative cross section of American voters), this is wildly popular, even among some who vocally dislike Biden, and even a few who didn't vote for him.  It seems like a huge PR win for them, and perhaps an even bigger PR win if the Republicans push to challenge this or claw it back somehow.  Plenty of people--including in this thread--are calling this political theater, presumably because it seems to be a visible, popular thing.  Interesting that you think it is the opposite.  (To be clear, that's not snarky.  I genuinely think it is interesting and appreciate the different perspective.) I guess it remains to be seen not just how popular this it, but how popular it is with either independent voters, or unenthusiastic Dems who might otherwise have skipped the polls. 

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Re: is student loan forgiveness taxable?
« Reply #53 on: August 26, 2022, 03:52:03 PM »
Aaaand, just when I thought the Democrats had built some momentum to avoid a bloodbath in the midterms, they out-Democrat even themselves by handing the GOP this nugget.

You think so?  If my Facebook is any indication (and I readily admit it is not a representative cross section of American voters), this is wildly popular, even among some who vocally dislike Biden, and even a few who didn't vote for him.  It seems like a huge PR win for them, and perhaps an even bigger PR win if the Republicans push to challenge this or claw it back somehow.  Plenty of people--including in this thread--are calling this political theater, presumably because it seems to be a visible, popular thing.  Interesting that you think it is the opposite.  (To be clear, that's not snarky.  I genuinely think it is interesting and appreciate the different perspective.) I guess it remains to be seen not just how popular this it, but how popular it is with either independent voters, or unenthusiastic Dems who might otherwise have skipped the polls.

Yeah, I readily admit I could be wrong, but your last sentence is the key for me.  I've seen polls indicating that a slight majority of those polled support some measure of student loan forgiveness, but it seems a lot of these numbers are carried by very high percentages of left-leaning respondents being in favor.  I'd be really curious to see breakdowns by centrist voters.  Also, are the young people who are benefitting from this going to show up at the polls?  (I know it's not just young people benefitting, but still.)

I'm neither a Democrat or Republican and from what I'm seeing in my (also limited) worldview is strong opposition to this.  Plus I think it's just such good talking points for the GOP.  People who couldn't go to college or chose to serve in the military rather than take on obligations they knew they couldn't afford are now subsidizing Ivy-league educated DINKs on the coast who make $250K because these elites don't want to honor debts they knowingly incurred, etc.  Say what you want about the GOP, but to mathlete's point above about who will spin it better, I think the GOP will effectively hammer this message to rile up their base (who care more about owning the coastal libs) and centrists.  My understanding is that a lot of Dems in competitive districts are distancing themselves from this -- there's a reason for that.


PDXTabs

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Re: is student loan forgiveness taxable?
« Reply #54 on: August 26, 2022, 04:27:34 PM »
I agree with the WaPo editorial board that cancelling debt for people who out earn their non-college peers by 50%, is regressive.

But it's probably the only middle class relief left that can be done through executive action so I guess I support it.

But the Biden administration chose those cutoffs (apparently out of thin air). Why $125/250K? Why are people making $60k/yr going to subsidize higher education for people making $120k/yr? They are going to get to live with those decisions for the next two elections. Presumably they will get attacked from people on the left for being regressive and people on the right who just hate government handouts. The only people who will be left will be self interested moderates. Are there enough self interested moderates to win an election?

mathlete

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Re: is student loan forgiveness taxable?
« Reply #55 on: August 26, 2022, 05:24:33 PM »
I agree with the WaPo editorial board that cancelling debt for people who out earn their non-college peers by 50%, is regressive.

But it's probably the only middle class relief left that can be done through executive action so I guess I support it.

But the Biden administration chose those cutoffs (apparently out of thin air). Why $125/250K? Why are people making $60k/yr going to subsidize higher education for people making $120k/yr? They are going to get to live with those decisions for the next two elections. Presumably they will get attacked from people on the left for being regressive and people on the right who just hate government handouts. The only people who will be left will be self interested moderates. Are there enough self interested moderates to win an election?

I'm guessing someone did the political calculus and decided it was popular enough to be worth it. It did poll pretty well.

Setting the income limits lower is sticky because on average, college grads do tend to make more money. So setting it too low doesn't make a splash. While I do think it's regressive, and not what I would have done with a quarter trillion dollars, I do think college debt is bad. Even if you're doing okay income wise. It delays homeownership and starting a family. Both of which make individuals happy and are pro-social. So from a misery reduction standpoint, this is good.

I'd almost compare this to DACA. DACA isn't comprehensive immigration reform, which we need, but has proven extremely difficult to get through congress. DACA helps an already privileged cohort (people brought to the USA as kids) while leaving a less lucky cohort (refugees at the border) in the cold. But it is an unambigously good thing that can be accomplished through executive action. So another thumbs up from a misery reduction standpoint.

FWIW I think the odds of poor people "paying for this" in any way are slim to none. Taxes won't be raised on them, and while forgiving debt is inflationary, it will be spread out over many years (i.e. the payments that debtholders would have made will now go into the economy on a schedule that roughly lines up with their would-be loan payments). And it's worth noting that the most recent major bill passed reduces the deficit by a similar amount to the cost of loan forgiveness. So between the IRA and this executive action, we're taking about as much out of the economy through taxes as we're putting in through tax credits and loan forgiveness. My guess is that on balance, it's a tiny bit inflationary since you're taking money from rich people and giving it to poor and middle class people. But I don't think it'll be much, and it will ultimately be smashed by the Fed anyway.

Most voters are self interested, and it's the government's job to make them happy. The Biden coalition is very broad and cares about a lot of different stuff. Just off the top of my head, and aside from "the economy" and , we got

-COVID
-Restoring civility to the White House
-Healthcare
-Climate Change
-Student Loans
-Racial Justice
-Making the rich pay their fair share

I think it's now fair to say that everyone in that coalition has gotten at least a little of something they wanted. Makes sense to be from a purely politics perspective. Now it's up to the Dems to sell their base on that.

PDXTabs

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Re: is student loan forgiveness taxable?
« Reply #56 on: August 26, 2022, 05:39:25 PM »
Racial Justice

I'm glad that you mentioned racial justice.

"Black and African American bachelor’s degree holders have an average $52,000 in student loan debt... White bachelor’s degree holders make between 19% (among women) and 30% (among men) more in median annual income than their Black counterparts." - https://educationdata.org/student-loan-debt-by-race

Forgiving the same $400B but pushing it further down the earning spectrum would have provided more racial justice.

teen persuasion

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Re: is student loan forgiveness taxable?
« Reply #57 on: August 26, 2022, 06:41:26 PM »
One thing the Bible is clear about is that debt forgiveness is a good thing, so I'm fascinated by how many people on the right are upset by this.

I'd rather see the states fully support public universities, but that's a local issue.
Saw this on Twitter:
Quote
If you're a Christian and you're big mad about the possibility of student loan debt being canceled. 

Let me remind you that the entirety of your faith is built on a debt that you can't pay that someone else stepped in and paid for you.
and this in response:
Quote
  Jesus's miracle of the loaves and the fishes was a slap in the face to all those who brought their own lunch.

PDXTabs

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Re: is student loan forgiveness taxable?
« Reply #58 on: August 26, 2022, 06:43:22 PM »
One thing the Bible is clear about is that debt forgiveness is a good thing, so I'm fascinated by how many people on the right are upset by this.

But this isn't debt forgiveness. This is transferring debt from some citizens to other citizens.

Villanelle

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Re: is student loan forgiveness taxable?
« Reply #59 on: August 26, 2022, 07:17:53 PM »
Aaaand, just when I thought the Democrats had built some momentum to avoid a bloodbath in the midterms, they out-Democrat even themselves by handing the GOP this nugget.

You think so?  If my Facebook is any indication (and I readily admit it is not a representative cross section of American voters), this is wildly popular, even among some who vocally dislike Biden, and even a few who didn't vote for him.  It seems like a huge PR win for them, and perhaps an even bigger PR win if the Republicans push to challenge this or claw it back somehow.  Plenty of people--including in this thread--are calling this political theater, presumably because it seems to be a visible, popular thing.  Interesting that you think it is the opposite.  (To be clear, that's not snarky.  I genuinely think it is interesting and appreciate the different perspective.) I guess it remains to be seen not just how popular this it, but how popular it is with either independent voters, or unenthusiastic Dems who might otherwise have skipped the polls.

Yeah, I readily admit I could be wrong, but your last sentence is the key for me.  I've seen polls indicating that a slight majority of those polled support some measure of student loan forgiveness, but it seems a lot of these numbers are carried by very high percentages of left-leaning respondents being in favor.  I'd be really curious to see breakdowns by centrist voters.  Also, are the young people who are benefitting from this going to show up at the polls?  (I know it's not just young people benefitting, but still.)

I'm neither a Democrat or Republican and from what I'm seeing in my (also limited) worldview is strong opposition to this.  Plus I think it's just such good talking points for the GOP.  People who couldn't go to college or chose to serve in the military rather than take on obligations they knew they couldn't afford are now subsidizing Ivy-league educated DINKs on the coast who make $250K because these elites don't want to honor debts they knowingly incurred, etc.  Say what you want about the GOP, but to mathlete's point above about who will spin it better, I think the GOP will effectively hammer this message to rile up their base (who care more about owning the coastal libs) and centrists.  My understanding is that a lot of Dems in competitive districts are distancing themselves from this -- there's a reason for that.

I run in military circles and most of them on my FB (very heavily Officer, for full disclosure) still seem to support this.  Some of them have student loans, but many either got free college via ROTC or a service academy.  And some of those are old enough to have kids whose college the parents also paid for (or some kids enlisted, and some when to service academies).  So I think the "military who joined if they couldn't pay for college will take issue with this" is perhaps not a fair assumption. 

Undecided

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Re: is student loan forgiveness taxable?
« Reply #60 on: August 26, 2022, 11:44:26 PM »
One thing the Bible is clear about is that debt forgiveness is a good thing, so I'm fascinated by how many people on the right are upset by this.

I'd rather see the states fully support public universities, but that's a local issue.

I’d rather see the federal government spend the money on highly-selective, non-military service academies.

SuperNintendo Chalmers

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Re: is student loan forgiveness taxable?
« Reply #61 on: August 27, 2022, 06:53:18 AM »
Aaaand, just when I thought the Democrats had built some momentum to avoid a bloodbath in the midterms, they out-Democrat even themselves by handing the GOP this nugget.

You think so?  If my Facebook is any indication (and I readily admit it is not a representative cross section of American voters), this is wildly popular, even among some who vocally dislike Biden, and even a few who didn't vote for him.  It seems like a huge PR win for them, and perhaps an even bigger PR win if the Republicans push to challenge this or claw it back somehow.  Plenty of people--including in this thread--are calling this political theater, presumably because it seems to be a visible, popular thing.  Interesting that you think it is the opposite.  (To be clear, that's not snarky.  I genuinely think it is interesting and appreciate the different perspective.) I guess it remains to be seen not just how popular this it, but how popular it is with either independent voters, or unenthusiastic Dems who might otherwise have skipped the polls.

Yeah, I readily admit I could be wrong, but your last sentence is the key for me.  I've seen polls indicating that a slight majority of those polled support some measure of student loan forgiveness, but it seems a lot of these numbers are carried by very high percentages of left-leaning respondents being in favor.  I'd be really curious to see breakdowns by centrist voters.  Also, are the young people who are benefitting from this going to show up at the polls?  (I know it's not just young people benefitting, but still.)

I'm neither a Democrat or Republican and from what I'm seeing in my (also limited) worldview is strong opposition to this.  Plus I think it's just such good talking points for the GOP.  People who couldn't go to college or chose to serve in the military rather than take on obligations they knew they couldn't afford are now subsidizing Ivy-league educated DINKs on the coast who make $250K because these elites don't want to honor debts they knowingly incurred, etc.  Say what you want about the GOP, but to mathlete's point above about who will spin it better, I think the GOP will effectively hammer this message to rile up their base (who care more about owning the coastal libs) and centrists.  My understanding is that a lot of Dems in competitive districts are distancing themselves from this -- there's a reason for that.

I run in military circles and most of them on my FB (very heavily Officer, for full disclosure) still seem to support this.  Some of them have student loans, but many either got free college via ROTC or a service academy.  And some of those are old enough to have kids whose college the parents also paid for (or some kids enlisted, and some when to service academies).  So I think the "military who joined if they couldn't pay for college will take issue with this" is perhaps not a fair assumption.

Interesting.  To be clear, I'm not saying I agree with the bolded above, it was literally a quote I heard from Mitch McConnell on the radio yesterday.   I do think the "slap in the face to those who didn't go to college and those who sacrificed to do the right thing and repay their student loans" is going to resonate with a lot of people in the middle of the political spectrum. 

MinorMiner

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Re: is student loan forgiveness taxable?
« Reply #62 on: August 27, 2022, 07:05:30 AM »
It's very strange to see the fed raising rates in an attempt to tame inflation while the executive branch is giving away $400 billion. Seems like the left hand isn't talking to the right. This whole thing really rubs me the wrong way.

wageslave23

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Re: is student loan forgiveness taxable?
« Reply #63 on: August 27, 2022, 07:41:05 AM »
It's very strange to see the fed raising rates in an attempt to tame inflation while the executive branch is giving away $400 billion. Seems like the left hand isn't talking to the right. This whole thing really rubs me the wrong way.

This. We are in an inflation CRISIS. All new spending needs to be halted until inflation is under control.  If Biden wasn't worried about midterms, he would have waited until next year or the following year to do this once inflation retreated.  And married people making $250k a year should not even be in the realm of discussion for this bailout.  $60k/120k would have been explainable. For example, we made $127k last year and saved around $80k. Forgiving $10k of my loans is laughable (if inflation wasn't so serious).
« Last Edit: August 27, 2022, 07:50:45 AM by wageslave23 »

KarefulKactus15

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Re: is student loan forgiveness taxable?
« Reply #64 on: August 27, 2022, 07:56:00 AM »
I don't support it.

I'd rather see any funding used to address the underlying problems than throw money at the symptoms.

mathlete

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Re: is student loan forgiveness taxable?
« Reply #65 on: August 27, 2022, 09:51:58 AM »
While I'm a little hot and cold on this (leaning mostly towards it being a positive thing, all things considered) I think the rhetoric around people "doing the right thing" by repaying their loans is unnecessarily morally loaded and puritanical to a dumb degree.

Education is a tremendous asset not only to the person becoming educated, but to the country as a whole. Educated people produce more value in the economy. They grow the tax base. They make the country more globally competitive. They're less likely to stress the social safety net. And its incredibly short sighted how we've made getting an education so dependent upon debt.

The idea that there is some kind of honor or moral righteousness in paying loans to a servicer who

1.) Lent to you on fractional reserves and
2.) Had the obligation backstopped by the Federal Government

All so they can pass it on through, collect a spread, and repay the amount they borrowed from the treasury at a discount... it's all so silly to me.

If it help my case, I paid my own way through college. Waited tables. Had a bunch of roommates, etc. And I graduated debt free. I don't think I did anything "right" or heroic. I remain the primary beneficiary of all of that. And ultimately, I'm not bitter that other people are getting relief.

It's not how I would have spent money, but lightening the load on middle class people is what the government should be doing IMO. And I'm not sweating the cost in light of the fact that,

1.) a deficit cutting bill was just passed that, at the very least, is on the same order of magnitude as the projected costs here
2.) The 2017 tax bill created on the order of 2x-5x the deficits that this action took and the primary beneficiaries were the extremely wealthy. The IMF estimates that just 20% of the corporate tax savings were spent on capital expenditures while 80% went to buy bucks.

Buy backs from tax cuts are free money for rich people. So I don't buy that it's all gonna fall apart because middle class people see some relief now.

This doesn't solve the problem of college costs, but executive action was the option available here. And so it's the action we took. One thing I like about this, is that since student debt is traditionally not dischargeable in bankruptcy, almost all the cost of skyrocketing tuition has been borne by people going to college. That's bad. By setting this precedent, and by making the modifications to income based repayment, the treasury and the federal government become stakeholders too. Maybe that motivates more action.

mathlete

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Re: is student loan forgiveness taxable?
« Reply #66 on: August 27, 2022, 10:10:28 AM »
Racial Justice

I'm glad that you mentioned racial justice.

"Black and African American bachelor’s degree holders have an average $52,000 in student loan debt... White bachelor’s degree holders make between 19% (among women) and 30% (among men) more in median annual income than their Black counterparts." - https://educationdata.org/student-loan-debt-by-race

Forgiving the same $400B but pushing it further down the earning spectrum would have provided more racial justice.

For sure, I don't disagree. If I had 100% say, this isn't what I would have done. And if I did, this isn't how I would have done it. But I "get it". Reading your posts, I think we might be kind of similar in some respects. I would imagine we'd both describe ourselves as pretty successful people who don't need much in the way of help from the government.

There's no way for me to say this without being completely up my own ass, but my involvement in politics is solely about helping other people. I make a top 1% or 2% income for a millennial and I could be a decamillionaire if I work until 65. I cheered when Manchin fought for the $1400 checks to miss my family and I cringed at how much money we got when we had our baby.

Having worked the past few years to get democrats elected though, most voters I meet aren't like this. Even if they're doing well, most people want to feel like they're voting for people who care about them and who will do things for them. So when I put on my economist hat, no, I don't want to give $10K of relief to 29 year old making $75K. By my estimation, that person is on a great trajectory already.

But it's not up to me. I'm one person among hundreds of millions. More than half the people in my state want Trump to be president. A small fraction of my own party are communists. A larger fraction of my own party are the 29 year olds who I see as on a great trajectory, but see themselves as struggling. Ideologically, I don't have a ton in common with any of these people, but I have to work with all of them to advance my goals a little bit. So we get ugly compromises.

As far as ugly compromises go, I give this one a B-. Not too bad.
« Last Edit: August 27, 2022, 10:12:07 AM by mathlete »

Michael in ABQ

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Re: is student loan forgiveness taxable?
« Reply #67 on: August 27, 2022, 10:32:54 AM »
Education is a tremendous asset not only to the person becoming educated, but to the country as a whole. Educated people produce more value in the economy. They grow the tax base. They make the country more globally competitive. They're less likely to stress the social safety net. And its incredibly short sighted how we've made getting an education so dependent upon debt.

I don't know the breakdown but clearly the amount of debt someone might rack up getting the first two years at a local community college then finishing up at a public school is going to be far less then choosing to go to a private school or out of state public school. The former can be done without debt while the latter is going to be nearly impossible without debt unless your parents are very generous, or you won the scholarship lottery.

The local community college here charges $756 for 18 credits. With mandatory fees and books that probably climbs to $1,000 - $1,200 for a semester with a full load of classes. So, an associate degree would cost about $5,000 and then finishing up at a state school would run another $10,000 per year with in-state tuition and fees. $25,000 over 4 years is an obtainable amount without debt. It's not as easy as taking out a bunch of loans and not working during college, but it's not impossible.

Almost any private school or out-of-state public school is going to charge upwards of $20k per year. Both routes will get you a bachelor's degree with virtually identical value in the job market. No employer cares if you did your first two years at a community college. And most don't care what college your degree is from as long as it's not an online degree mill.

The people who rack up $50-100k+ in student loans either went to a very expensive college and/or got a master's degree. In both cases, those extremely high costs are due in large part to the easy availability of loans. A lot of colleges and degree programs would either go away or get a lot cheaper if there weren't massive subsidies from student loans.

PDXTabs

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Re: is student loan forgiveness taxable?
« Reply #68 on: August 27, 2022, 11:38:44 AM »
Racial Justice

I'm glad that you mentioned racial justice.

"Black and African American bachelor’s degree holders have an average $52,000 in student loan debt... White bachelor’s degree holders make between 19% (among women) and 30% (among men) more in median annual income than their Black counterparts." - https://educationdata.org/student-loan-debt-by-race

Forgiving the same $400B but pushing it further down the earning spectrum would have provided more racial justice.

For sure, I don't disagree. If I had 100% say, this isn't what I would have done. And if I did, this isn't how I would have done it. But I "get it". Reading your posts, I think we might be kind of similar in some respects. I would imagine we'd both describe ourselves as pretty successful people who don't need much in the way of help from the government.

There's no way for me to say this without being completely up my own ass, but my involvement in politics is solely about helping other people. I make a top 1% or 2% income for a millennial and I could be a decamillionaire if I work until 65. I cheered when Manchin fought for the $1400 checks to miss my family and I cringed at how much money we got when we had our baby.

Having worked the past few years to get democrats elected though, most voters I meet aren't like this. Even if they're doing well, most people want to feel like they're voting for people who care about them and who will do things for them. So when I put on my economist hat, no, I don't want to give $10K of relief to 29 year old making $75K. By my estimation, that person is on a great trajectory already.

But it's not up to me. I'm one person among hundreds of millions. More than half the people in my state want Trump to be president. A small fraction of my own party are communists. A larger fraction of my own party are the 29 year olds who I see as on a great trajectory, but see themselves as struggling. Ideologically, I don't have a ton in common with any of these people, but I have to work with all of them to advance my goals a little bit. So we get ugly compromises.

As far as ugly compromises go, I give this one a B-. Not too bad.

I agree with everything you have written except the grade, but I spend a lot of time riding my bicycle through homeless encampments near the I-5 freeway. I can't see people living in squalor and then praise $600B for the college educated as a win for the progressives. My new favorite article that I agree with is Atlantic: A Democratic Economist’s Case Against Biden’s Student-Loan Plan: Jason Furman, a former Obama economic adviser, thinks Biden’s debt-relief plan helps too many of the wrong people.

EDITed to add: Economist: “Progressives champion this policy but it’s not very progressive”—Biden cancels student debt, Economist: Biden spends hundreds of billions on reducing student-loan debt
« Last Edit: August 27, 2022, 11:41:16 AM by PDXTabs »

mathlete

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Re: is student loan forgiveness taxable?
« Reply #69 on: August 27, 2022, 03:03:51 PM »
Education is a tremendous asset not only to the person becoming educated, but to the country as a whole. Educated people produce more value in the economy. They grow the tax base. They make the country more globally competitive. They're less likely to stress the social safety net. And its incredibly short sighted how we've made getting an education so dependent upon debt.

I don't know the breakdown but clearly the amount of debt someone might rack up getting the first two years at a local community college then finishing up at a public school is going to be far less then choosing to go to a private school or out of state public school. The former can be done without debt while the latter is going to be nearly impossible without debt unless your parents are very generous, or you won the scholarship lottery.

The local community college here charges $756 for 18 credits. With mandatory fees and books that probably climbs to $1,000 - $1,200 for a semester with a full load of classes. So, an associate degree would cost about $5,000 and then finishing up at a state school would run another $10,000 per year with in-state tuition and fees. $25,000 over 4 years is an obtainable amount without debt. It's not as easy as taking out a bunch of loans and not working during college, but it's not impossible.

Almost any private school or out-of-state public school is going to charge upwards of $20k per year. Both routes will get you a bachelor's degree with virtually identical value in the job market. No employer cares if you did your first two years at a community college. And most don't care what college your degree is from as long as it's not an online degree mill.

The people who rack up $50-100k+ in student loans either went to a very expensive college and/or got a master's degree. In both cases, those extremely high costs are due in large part to the easy availability of loans. A lot of colleges and degree programs would either go away or get a lot cheaper if there weren't massive subsidies from student loans.

Mostly agree. Community college is awesome. State universities are awesome. People should make better choices and we need to reframe the discussion around the whole system to empower them to do so. But we've made navigating the minefield of higher ed really complicated and the mistakes are both extremely costly, and super easy to make.

"They should have known better" isn't a strong enough reason on it's own to keep people saddled with uniquely burdensome debt IMO. Especially when we're talking about decisions they made at age 17.

PDXTabs

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Re: is student loan forgiveness taxable?
« Reply #70 on: August 27, 2022, 03:07:54 PM »
"They should have known better" isn't a strong enough reason on it's own to keep people saddled with uniquely burdensome debt IMO. Especially when we're talking about decisions they made at age 17.

Or 16. I was 16 when I started taking community college classes. Any other contract with a 16 year old would get laughed out of court but student loans? No, that's fine.

Of course the normal way to get rid of debt is bankruptcy which the founders remember to put in the constitution.

mathlete

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Re: is student loan forgiveness taxable?
« Reply #71 on: August 27, 2022, 03:09:04 PM »
I agree with everything you have written except the grade, but I spend a lot of time riding my bicycle through homeless encampments near the I-5 freeway. I can't see people living in squalor and then praise $600B for the college educated as a win for the progressives. My new favorite article that I agree with is Atlantic: A Democratic Economist’s Case Against Biden’s Student-Loan Plan: Jason Furman, a former Obama economic adviser, thinks Biden’s debt-relief plan helps too many of the wrong people.

EDITed to add: Economist: “Progressives champion this policy but it’s not very progressive”—Biden cancels student debt, Economist: Biden spends hundreds of billions on reducing student-loan debt

Administering federal student loans is something that can be done with executive action alone though. Federal homelessness programs probably require 60 seats in the Senate unless we're just doing stuff with taxes and tax credits. And even then, homelessness probably needs a healthy dose of local action (zone to build more homes!) anyway.

I guess the way I reconcile this; it was either do this "stroke of a pen" move that can help middle class people at the expense of deficit reduction, or do nothing and wait for the opposition party to get power again and nuke that deficit reduction and give the money to rich people.

Edited to add: Of course there's always the possibility that I'm not knowledgeable or creative enough to see a way where executive action could have helped needier people. If that's the case, the plan gets downgraded for me and viewed more as a means to win votes than it already is. (which by the way I support because I'm kind of a shill but w/e :) )
« Last Edit: August 27, 2022, 03:11:23 PM by mathlete »

PDXTabs

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Re: is student loan forgiveness taxable?
« Reply #72 on: August 27, 2022, 03:20:39 PM »
I agree with everything you have written except the grade, but I spend a lot of time riding my bicycle through homeless encampments near the I-5 freeway. I can't see people living in squalor and then praise $600B for the college educated as a win for the progressives. My new favorite article that I agree with is Atlantic: A Democratic Economist’s Case Against Biden’s Student-Loan Plan: Jason Furman, a former Obama economic adviser, thinks Biden’s debt-relief plan helps too many of the wrong people.

EDITed to add: Economist: “Progressives champion this policy but it’s not very progressive”—Biden cancels student debt, Economist: Biden spends hundreds of billions on reducing student-loan debt

Administering federal student loans is something that can be done with executive action alone though. Federal homelessness programs probably require 60 seats in the Senate unless we're just doing stuff with taxes and tax credits. And even then, homelessness probably needs a healthy dose of local action (zone to build more homes!) anyway.

I guess the way I reconcile this; it was either do this "stroke of a pen" move that can help middle class people at the expense of deficit reduction, or do nothing and wait for the opposition party to get power again and nuke that deficit reduction and give the money to rich people.

Edited to add: Of course there's always the possibility that I'm not knowledgeable or creative enough to see a way where executive action could have helped needier people. If that's the case, the plan gets downgraded for me and viewed more as a means to win votes than it already is. (which by the way I support because I'm kind of a shill but w/e :) )

I'm not opposed to executive action on student loans. Actually, I question why the rates are so high? If the executive has the ability to wipe away debt surely they have the right to lower the rates? I'm also not opposed to forgiveness, I'm only opposed to forgiveness that is so regressive. Forgiveness for the top 10% with zero needs test? How does that pass the smell test?

As to the filibuster, I think that there is lots of stuff that you could get through reconciliation (though possibly not with the current class of Democrats in the Senate). The 1993 assault rifle ban was passed through reconciliation. Also, there is bribery. That's how we got a 21 year old drinking age in every single state: the threat of withholding highway funding. I'm 100% willing to use that threat to influence local zoning, but I'm a crazy liberal like that.

ATtiny85

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Re: is student loan forgiveness taxable?
« Reply #73 on: August 27, 2022, 03:27:25 PM »
"They should have known better" isn't a strong enough reason on it's own to keep people saddled with uniquely burdensome debt IMO. Especially when we're talking about decisions they made at age 17.

Or 16. I was 16 when I started taking community college classes. Any other contract with a 16 year old would get laughed out of court but student loans? No, that's fine.

Of course the normal way to get rid of debt is bankruptcy which the founders remember to put in the constitution.

I signed my ROTC scholarship paperwork at 17, and knew exactly what it meant, the risks, the benefits, the obligations, all of it.You can’t tell me kids don’t understand what getting a loan means.

PDXTabs

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Re: is student loan forgiveness taxable?
« Reply #74 on: August 27, 2022, 03:35:08 PM »
"They should have known better" isn't a strong enough reason on it's own to keep people saddled with uniquely burdensome debt IMO. Especially when we're talking about decisions they made at age 17.

Or 16. I was 16 when I started taking community college classes. Any other contract with a 16 year old would get laughed out of court but student loans? No, that's fine.

Of course the normal way to get rid of debt is bankruptcy which the founders remember to put in the constitution.

I signed my ROTC scholarship paperwork at 17, and knew exactly what it meant, the risks, the benefits, the obligations, all of it.You can’t tell me kids don’t understand what getting a loan means.

You can't tell me that the terms for a student loan extended to a 16 year old should be different than the terms for an automobile loan extended to a 16 year old. Also, my quarterly bill was legally a non-dischargeable student loan. You can't tell me that every community college student understands that their bill for the term is a student loan.

lifeisshort123

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Re: is student loan forgiveness taxable?
« Reply #75 on: August 27, 2022, 05:03:57 PM »
The system is not doing well.  College is way too expensive.  And graduates are able to borrow WAY too much money, which is another big problem.

The problem is, politically, this was doable via executive action.  The rest of the major fixes would require a more legislative solution.

This proposal is radical, and not a good idea.  I’d prefer something like:

Cap payments at 5% for all students undergraduate and graduate
After 20 years of payments, loans disappear tax free
Cap interest payments at 2%
Lifetime student loan origination amounts federally available not to exceed $75k
Public Student Loan candidates receive 10% of principal reduced every year they work in PSLF, after 10 years, the balance is forgiven

COUPLED WITH
State reinvestment in colleges.  No state university should cost more than $15k a year including room and board, more like $8k tuition only (about $1k a month of each month school is in session). 
Federal grants for research tied to student success metrics
State tuition increase caps not to exceed 3% a year
Invest in putting full time teachers in the classroom, and get rid of the ridiculous adjunct professor/GA scheme.  Eliminate overpaid administrators, deanlets, athletic people, etc.  Also, acknowledge that a professorship is a service position, and pay accordingly.
Let private colleges and universities do whatever they want to do, and allow market forces to do what they do.  Continue to make Federal loans available, but only up to those limits, and eliminate Parent PLUS loans.

clifp

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Re: is student loan forgiveness taxable?
« Reply #76 on: August 27, 2022, 07:38:21 PM »

I'd almost compare this to DACA. DACA isn't comprehensive immigration reform, which we need, but has proven extremely difficult to get through congress. DACA helps an already privileged cohort (people brought to the USA as kids) while leaving a less lucky cohort (refugees at the border) in the cold. But it is an unambigously good thing that can be accomplished through executive action. So another thumbs up from a misery reduction standpoint.

FWIW I think the odds of poor people "paying for this" in any way are slim to none. Taxes won't be raised on them, and while forgiving debt is inflationary, it will be spread out over many years (i.e. the payments that debtholders would have made will now go into the economy on a schedule that roughly lines up with their would-be loan payments). And it's worth noting that the most recent major bill passed reduces the deficit by a similar amount to the cost of loan forgiveness. So between the IRA and this executive action, we're taking about as much out of the economy through taxes as we're putting in through tax credits and loan forgiveness. My guess is that on balance, it's a tiny bit inflationary since you're taking money from rich people and giving it to poor and middle class people. But I don't think it'll be much, and it will ultimately be smashed by the Fed anyway.


This is where I disagree with you. First poor people are going to pay for it in two way, first inflation.  On forums and Twitter, I have heard lots of young people say this what they need to be able to go out and buy a car, a house or rent an apartment.  Now under normal circumstances, increasing consumer demands is a good thing for the economy.  However, we don't have enough cars, houses, or rentals to meet current demand, so increasing the number  of people looking to purchase those things will only result in high prices and inflation, not something that almost anyone, but especially poor people want.

Second the $500 billion or so that is going to cost,is added to the deficit and debt and makes it much harder to pay for any target programs to help the poor.

jim555

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Re: is student loan forgiveness taxable?
« Reply #77 on: August 27, 2022, 08:08:32 PM »
This should have gone through Congress.  Abuse of power.  Even if it is technically legal if you stretch things, you don't spend this kind of money without Congress approving. 

The loan forgiven will have state taxes on them.

wenchsenior

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Re: is student loan forgiveness taxable?
« Reply #78 on: August 28, 2022, 10:25:22 AM »
The system is not doing well.  College is way too expensive.  And graduates are able to borrow WAY too much money, which is another big problem.

The problem is, politically, this was doable via executive action.  The rest of the major fixes would require a more legislative solution.

This proposal is radical, and not a good idea.  I’d prefer something like:

Cap payments at 5% for all students undergraduate and graduate
After 20 years of payments, loans disappear tax free
Cap interest payments at 2%
Lifetime student loan origination amounts federally available not to exceed $75k
Public Student Loan candidates receive 10% of principal reduced every year they work in PSLF, after 10 years, the balance is forgiven

COUPLED WITH
State reinvestment in colleges.  No state university should cost more than $15k a year including room and board, more like $8k tuition only (about $1k a month of each month school is in session). 
Federal grants for research tied to student success metrics
State tuition increase caps not to exceed 3% a year
Invest in putting full time teachers in the classroom, and get rid of the ridiculous adjunct professor/GA scheme.  Eliminate overpaid administrators, deanlets, athletic people, etc.  Also, acknowledge that a professorship is a service position, and pay accordingly.
Let private colleges and universities do whatever they want to do, and allow market forces to do what they do.  Continue to make Federal loans available, but only up to those limits, and eliminate Parent PLUS loans.

I agree with all of this. I am generally left leaning centrist except for a few particular issues, and I think this student debt forgiveness plan is a stupid and inefficient way to attempt to deal with a huge problem (much like Trump's fucking stupid border wall). I understand why both presidents decided to do these stupid and inefficient actions (attempting fulfillment of campaign promises) and I'm very excited that my sister, who works in the public sector health care helping poor and mentally disadvantaged people, and who had to get a surprisingly expensive master's degree to be eligible for her position, is going to get a chunk of her loans forgiven.

But it's still a stupid and inefficient way to address the problem.

mm1970

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Re: is student loan forgiveness taxable?
« Reply #79 on: August 29, 2022, 11:13:14 AM »
"They should have known better" isn't a strong enough reason on it's own to keep people saddled with uniquely burdensome debt IMO. Especially when we're talking about decisions they made at age 17.

Or 16. I was 16 when I started taking community college classes. Any other contract with a 16 year old would get laughed out of court but student loans? No, that's fine.

Of course the normal way to get rid of debt is bankruptcy which the founders remember to put in the constitution.

I signed my ROTC scholarship paperwork at 17, and knew exactly what it meant, the risks, the benefits, the obligations, all of it.You can’t tell me kids don’t understand what getting a loan means.

You can't tell me that the terms for a student loan extended to a 16 year old should be different than the terms for an automobile loan extended to a 16 year old. Also, my quarterly bill was legally a non-dischargeable student loan. You can't tell me that every community college student understands that their bill for the term is a student loan.
Yup.  Also was in ROTC AND took out student loans, and the ROTC stuff was FAR easier to understand than the student loans, and my mother worked at a frigging bank!

iris lily

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Re: is student loan forgiveness taxable?
« Reply #80 on: August 29, 2022, 02:47:43 PM »
One thing the Bible is clear about is that debt forgiveness is a good thing, so I'm fascinated by how many people on the right are upset by this.

I'd rather see the states fully support public universities, but that's a local issue.

Ah, so your  point is that “many people on the right” must not be good Christians (assuming they are
Christians at all) or are certainly hypocritical.

I think I have seen an instance or two of a lesson in the Bible being used as a moral bludgeon. Perhaps this is one of those instances. I really cannot imagine that your broad idea “not forgiving debt is bad” should be taken up by all of society. But again, I may be wrong.

Fortunately as someone who often pulls the GOP lever in the voting booth, I am not Christian and so do not fall under this hypocrite label, and I may disparage the
White House all I like  for taking this wrongheaded and probably illegal action.

So, do YOU think all debt should be forgiven, debt of any kind?





wageslave23

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Re: is student loan forgiveness taxable?
« Reply #81 on: August 29, 2022, 04:01:59 PM »
One thing the Bible is clear about is that debt forgiveness is a good thing, so I'm fascinated by how many people on the right are upset by this.

I'd rather see the states fully support public universities, but that's a local issue.

Ah, so your  point is that “many people on the right” must not be good Christians (assuming they are
Christians at all) or are certainly hypocritical.

I think I have seen an instance or two of a lesson in the Bible being used as a moral bludgeon. Perhaps this is one of those instances. I really cannot imagine that your broad idea “not forgiving debt is bad” should be taken up by all of society. But again, I may be wrong.

Fortunately as someone who often pulls the GOP lever in the voting booth, I am not Christian and so do not fall under this hypocrite label, and I may disparage the
White House all I like  for taking this wrongheaded and probably illegal action.

So, do YOU think all debt should be forgiven, debt of any kind?

Yeah its just an assanine comment.

Arbitrage

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Re: is student loan forgiveness taxable?
« Reply #82 on: August 30, 2022, 07:49:37 AM »
Not a fan of the policy, or student loan debt cancellation in general, mostly because of the moral hazard aspect (rewarding bad behavior).  By bad behavior, I'm referring less to the borrowers and more to the colleges - loan providers - government complex that has enabled tuitions to rise the way that they have.  The root causes of the problem need to be addressed, and this unfair bandaid is not that.  I've been surprised by how many people support loan forgiveness as an unambiguous "good", especially $50k or unlimited loan forgiveness. 

We may benefit from it - not sure yet.  We consolidated our loans decades ago, but they were federal subsidized loans, consolidated under a federal loan servicer.  We aggressively paid down the private chunk of loans after graduation.  We'll certainly take it if it's offered, especially after missing out on all the other handouts over the last few years (pandemic cash; loan forbearance - not eligible due to loans not being held by Dept of Education; PPP; Trump tax cuts (lived in a high tax state and paid about the same due to SALT changes), etc.  Given our recent luck, it wouldn't surprise me if we were ineligible for some reason.

Cranky

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Re: is student loan forgiveness taxable?
« Reply #83 on: September 01, 2022, 07:31:23 AM »
One thing the Bible is clear about is that debt forgiveness is a good thing, so I'm fascinated by how many people on the right are upset by this.

I'd rather see the states fully support public universities, but that's a local issue.

Ah, so your  point is that “many people on the right” must not be good Christians (assuming they are
Christians at all) or are certainly hypocritical.

I think I have seen an instance or two of a lesson in the Bible being used as a moral bludgeon. Perhaps this is one of those instances. I really cannot imagine that your broad idea “not forgiving debt is bad” should be taken up by all of society. But again, I may be wrong.

Fortunately as someone who often pulls the GOP lever in the voting booth, I am not Christian and so do not fall under this hypocrite label, and I may disparage the
White House all I like  for taking this wrongheaded and probably illegal action.

So, do YOU think all debt should be forgiven, debt of any kind?

Well, notice that I didn't say where I stood, merely that there is an awfully big overlap between the evangelical Christian/political stance that forgiving student debt is horrible, and the actual Judeo-Christian position on this. the Bible has quite a bit to say about usury, too.

Arbitrage

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Re: is student loan forgiveness taxable?
« Reply #84 on: September 01, 2022, 10:33:07 AM »

Well, notice that I didn't say where I stood, merely that there is an awfully big overlap between the evangelical Christian/political stance that forgiving student debt is horrible, and the actual Judeo-Christian position on this. the Bible has quite a bit to say about usury, too.

Unfortunately (at least from my viewpoint), the evangelical Christian right has confused itself into believing that the rightmost portion of the Republican party is in lockstep with their values, which many politicians certainly take advantage of.  I see it plastered all over my Facebook feed when I don't have certain people blocked, or in tirades by
relatives.

I'm by no means the most devout Christian, but I'm pretty sure Christ would have been ambivalent about (or even opposed to) keeping regulations off of the oil companies; keeping giant gas-guzzling trucks in every driveway and crushing cyclists/pedestrians/electric mobility; making sure the rich don't get taxed; destroying the earth in the name of money and capitalism; ensuring everyone has the biggest and most plentiful guns, especially in schools; judging everyone different from them rather than loving your neighbor and letting God handle the judgment part; keeping the poor, disabled, and nonwhite downtrodden; etc.

I'm sure that many of them find Bible verses to twist to their own needs to justify their viewpoints.  I prefer to think about "is this behavior Christlike" as the guidepost rather than finding a way to use religion to justify my bias.