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Author:  Pabst [ Mon Nov 13, 2017 5:35 pm ]
Post subject:  Re: GET OUT OF MY SPORTS!!!!

SteelKnife wrote:
I see loan discussions going on, but I haven’t read the full thread.

My proposal to fix the student loan problem is

1. Make all federal student loan payments tax deductible. Interest, definitely, but I would propose principal and interest.

2. No more student loans for whatever you want. Federal student loans will be awarded only for majors determined to be in demand or needed (based on projections), to be re-evaluated every year. So, if you want to go to school for engineering, or computer science, etc? The government will pay. Want to go to school for art history? You can pay for it out of pocket.

3. Partial, across the board student loan forgiveness up to a certain amount, so long as that money is used for purchasing a home, starting a business that employs people, or put into a retirement fund (e.g. up to $30,000 forgiven upon showing that you have put that amount into a down payment or into a 401k). Could add other categories.

In theory, in the short term, you decrease what the government gets from the loans, but you also significantly decrease delinquency and you boost entrepreneurship and the real estate market.

1. Making student loans cheaper will only spur demand for more loans - economists on both the left and right agree on this (though to different extents).

2. Who determines what an 'in demand' major is? Believe it or not, Architecture has the highest unemployment rate for recent grads. Social work does pretty well.
I completely understand where you're coming from, but best of luck selling this. And it is more complicated than you'd think.

3. Two major problems here. First is moral hazard - What about the people who have already paid their loans back? Or the people who chose not to attend college (or grad school) because of financial considerations? You've just punished people for making a correct financial decision while rewarding bad behavior. Second, you need to make up that revenue shortfall somehow. Does the government issue more debt? Do they increase taxes? Either way, you're pulling money out of the economy which will offset any of those expected boosts.

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