Student loan forgiveness will cost US $300B

You are assuming that everyone who is having student debt forgiven/paid off by the government has or would have earned the money in question and can now put it into the economy. If that's true then the very reason for absolving the debt, that these people cannot afford to repay their loans, was a lie. More likely they really don't have the money, we're bailing out financial institutions (yet again), and the people who couldn't afford to pay their loans still won't be able to afford to generate enough economic volume to offset this.

If the goal was $300B in consumer spending, then they should've just given a tax rebate to everybody below a certain income. Instead, this penalizes students who paid off their loans and non-college graduates who might've taken out loans to setup a service business like electrician or car mechanic.

This assumes a check is mailed or that everyone intends to pay back their loan. They either have 10k in new money or are "saved" from spending 10k in future money.

This will not turn into consumer spending if the debt is just "erased". People who can't pay their loans don't have money to spend elsewhere.

It's not free money for the economy though. that $300b will be paid for by increased inflation or additional future taxes.

What would lenders have done withe the money? Or the government?

I don't think either would just hide it under a mattress. Lenders would invest it in capital projects and the Government would use it to pay off political supporters.

> Forgiving someone of a $10K or $20K loan is the exact same thing as sending them a check for the same amount.

False. The government isn't holding the note for student loans: banks are. Paying off these student loans goes to a bank's balance sheet whereas checks sent to people get spent on any number of consumer goods (or invested into Wall Street Bets stonks if that's your thing).

No it’s not. That’s only true if they already had the money and were going to pay. A lot of people just can’t pay their student loans so this would just have the effect of taking the pressure off them, not enable them to go out and spend money.

It’s not exactly the same thing because of interest. Give someone $10k in cash and they can choose to buy the toys and not pay down their existing debt, so they’ll still be paying $500 a year in interest (assuming a 5% rate).

But if you give the $10k to the lender instead, the person now has $500 more to spend every year in addition to having increased their net worth by $10k.

With which money exactly? Not the money the government just "handed" to them, that went straight to the debt repayment.

Possibly some would do with income they had already set aside for repayment - if the person in question had enough regular income to have had no problems repaying before, and if they nevertheless fall under the required criteria:

> Following more than a year of internal debate, the president said Wednesday that he will cancel $10,000 in federal student loan debt for borrowers making under $125,000 a year or couples making less than $250,000 a year. In addition, those who receive federal Pell Grants and make less than $125,000 a year would be eligible for total forgiveness of $20,000, Mr. Biden said.

The amount of people falling into that particular bucket seems rather small to me, compared to the amount of people who this will be a genuine help.

Because despite your assumptions, there are many reasons someone might be in debt beyond "not knowing how to handle financial responsibility", especially when it comes to student loans. Why do you think financial numbers are a good metric for whether someone "deserves" to survive without excessive struggle/pain?

Don't buy into the contrapositive of the American Dream; the Dream isn't true, and so neither is its contrapositive.

The real reason here is that the lenders have the same view you have. They would rather lobby the government to force everyone to pay those loans than gamble on getting money back from students who struggle to get jobs with their degrees.

Kids are heavily pressured to go to college. Some kids are in fact under the threat of going to college or getting kicked out of their home at 18. That kid doesn't really have a "choice". They can't live off the minimum wage jobs that are the only thing they qualify for (and this assumes they'd be hired). As a bonus, the loans you're able to get depends on the income of your parents despite you being an "adult" and regardless of whether your parents help or not. You can end up with a ton of student loan debt without being irresponsible. We are treating 18 year olds as "adults" only as long as it's convenient.

The world is a very hard place to live in and we do very little to prepare 18 year olds for adulthood. Can't get a job or afford a place to live on their own. God forbid they make a mistake. It's cruel and predatory to give them loans they'll be stuck with for the rest of their lives unlike any other type of loan.

Because most people can't put two and two together and most of the media isn't helping them out on that front.

Big companies with that money can hire more employees, offering the community more jobs and furthering our economy. It's very rare for a large company to take a subsidy and hoard it, or not use it for public goodwill.

Not sure I buy that strawman. Big corp bailouts were wildly unpopular all sides in 2008, and still are.

Edit: that's also ignoring the position of "don't bail out corps and don't bail out individuals alike"

They aren't. You assume that nothing in government happens unless citizens directly order it to; this is a bad assumption. Most of what happens in government, especially at the federal level, is out of the hands of citizens. This is by design as we are a representative republic, but that relies on representatives not being corrupted and controlled by lobbyists and special interests. In the low-trust country we now live in, grift is the order of the day.

Part of the reason is that what most people care about is their relative standing (i.e. doing better than their neighbor). Handouts to the rich do not change their relative social standing in society, whereas handouts to people like them (but not them directly), do.

The relative standing matters so much because it affects your social capital (and since your genes are always trying to find/mate with the best possible partner, relative social standing feels a lot more important than absolute one)

That is the reason behind a lot of the backlash to programs like this. It changes (in a small way) the relative standing of ordinary people. Same underlying reason as the NIMBY movement.

The bailouts were loans that were paid back. You know, that thing you're supposed to do when you agree to take out a loan.

Also, those companies failing would have lead to not only their employees getting hurt, but possibly plunge us into a depression - hurting everyone.

What this loan forgiveness does is help a select few by hurting literally everyone else.

> One interesting thing I noticed here is that people don't have see any problem when government give large subsidies to big corps full of money or forgive their debts or use public money to "save" them during economic crashes, but when government give money to people whatever the reason, there is all kind of comments about how this is a bad thing and why government should not be doing it.

> Why people are so merciful to big rich companies but so ruthless to other people?

Because that's a straw man? A lot of people aren't OK with the government "give[ing] large subsidies to big corps full of money."

You should try asking "people" what they think of bank bailouts sometime.

> One interesting thing I noticed here is that people don't have see any problem when government give large subsidies to big corps full of money or forgive their debts or use public money to "save" them during economic crashes

It’s a VC site…

If you ask me, the entire post second education system needs reworked, but I won’t hold my breath.

> On the other hand, I know people who've suffered a lot because they couldn't afford to take on student loans, or because they paid off every predatory dollar.

So you understand the pain

Would they have accepted loan forgiveness for them ?

What do you think of tax cuts for business or home owners ?

This. It didn't need to be governmental. Establish a non-profit and encourage people to contribute. Pull Obama off the bench. Use AI to resurrect Jerry Lewis. Put pleas on Tiktok or Wikipedia or wherever.

We could give all 11 million kids in poverty $27,000 this year for the amount we just spent on a student loan bailout. Wouldn’t fix poverty, but this doesn’t fix student loans either.