Student Loan Debt Forgiveness Lecture




00:01 Alright, today’s lecture, and I’ll try to keep this to under 30 minutes, is on the November, December public forum topic: The United States federal government should forgive all federal student loan debt.

I want to go over a few things, one of which I would not normally go over in terms of definitions.

And the first one is the federal government. The federal government, as you may be aware, has three branches.

The legislative branch, which is the congress, the executive branch, which is the president, and the judicial branch, which is the courts.

This is important because there is a dispute that went to the courts about whether or not Biden had the authority under certain pieces of federal legislation to fill in.

Because Biden tried forgive part of the that students have and ultimately the Supreme Court, at least for his first proposal, said that he was not able to do that.

And the reason he was not able to do that. Is not because the federal government you know, as a whole can’t forgive debt, but just because the President didn’t have the authority, they said, under the legislation that he was trying to forgive the debt.

But if Congress passed legislation that explicitly said, the federal government could forgive the debtor ought to forgive the debt, or even is forgiving the debt, right?

The Congress, could either give the explicitly give the President the authority to do this, or just do it in the legislation itself, and then students loan forgiveness could happen.

So it’s important because if the con on this topic, you know, reads evidence that says, oh, the President doesn’t have the authority to do this, that’s only relevant if Congress doesn’t, you know, potentially relevant if Congress doesn’t explicitly grant him the authority.

That’s what the affirmative would be proposing. And then, of course, the courts would interpret that law that Congress passed that explicitly gave him the authority and said that it would say that he has the authority to do this.

The other thing I want to emphasize in the resolution is that it says all. So if you go back up to the resolution, it says it should forgive all federal student loan debt.

So that is, and I’ll talk about that in a second, that is most of the debt that students have. That’s around over 90 percent of the debt that students have.

Is to the federal government. The federal government’s the one that guarantees the loans that they take, provides funding for the loans.  That is guarantee that is through the federal government and they want the proposal, the resolution says to forgive all of that.

hat’s really important because they’re, you know, occasionally you can find an article, a short article, a blog post, or somebody just kind of really saying we should forgive all the debt but there haven’t been any, like, actual legislative proposals to forgive all the debt, right?

So that, that’s kind of a point of, a kind of weakness for the pro that they’re gonna have to defend giving, forgiving all the debt whereas nobody, nobody really advocates for that and would probably, you know, kind of supercharges the con arguments that I’ll talk about. 03:08 The resolution, you know, again to go back to the resolution. Right? United States federal government should forgive all federal student loan debt.

This is debated, you know, as one time forgiveness, right? That whatever, you know, if this legislation were to pass this year, then all the debt people currently have currently would be forgiven.

The proposals don’t do anything future debt, which, which kinda makes sense, right? Because if the, if the proposal was to also forgive future debt, then people would just keep taking our debt and the federal government would pay for it.

And what would happen is that, everybody would just borrow money. Nobody would even pay for it, even if they’re capable of doing that, because the federal government would just pay for it.

The resolution would become about people whether or not the federal government would pay for it. It should pay for college, right, which is, which is a different topic.

Now, so it makes sense to interpret it as one-time forgiveness. That’s what people are talking about. The problem with interpreting it as one-time forgiveness is that it doesn’t really solve, a lot of the underlying issues.

We’ll talk about poverty and inequality and fairness and those types of things. Well, that’s great for the people who have debt now, if it all gets forgiven and could help with those things.

But what about the future? It doesn’t really address any of that. And I’ll talk about that. That’s it. A little bit as we, a little bit as, a little bit as we go.

Now, what is the issue? With student federal loan forgiveness, how much total debt is there? There’s approximately 1.7 trillion dollars in student loan debt.

And most of that is federal. You can, and some people do, take loans from, you know, just privately on the private market.

But most people take it through the federal government, which makes sense because the rates are lower and it’s guaranteed by the federal government, right? 04:56 So there’s not incentive to take much of an incentive to take a, to pay a private loan.And, you know, college costs are rising, so it’s very expensive.

My son’s in college now, the tuition is, is quite high. So it’s a lot, it’s a lot for people to be able to afford, so they’re borrowing to do this.

What happened is during the pandemic, the federal government actually froze payments.But now they’ve  unfroze in the payments, and I think it was starting in October.

You have to start paying again on your student loan, so this  has become kind of front, front and center. Mentioned at the beginning, there was originally a Biden proposal to forgive some student loans.

He announced a plan to forgive up to $10,000 in federal student loan debt for borrowers who made less than $125,000 a year.

So you made a less than $125,000 a year to forgive up to $10,000 instead of federal student loans and proposed for giving up to $20,000 for Pell Grant recipients who also made less than $125,000 Pell Grant in order to qualify for a Pell Grant.

Family has to have a more, ah, a more limited income, right? So this would expand the amount of forgiveness o students or families still carrying this who had more limited means to begin with.

October of 2022, a federal judge in Texas struck down that plan, said Biden didn’t remember, didn’t have the authority.

Not that the government can’t ever forgive debt, but didn’t have the authority under existing legislation. Because remember, the president is the one who executes the law.

The president doesn’t independently have the power to, to raise debt. So he’d have to have that authority under the law and the court and then went all the way to the Supreme Court on a 6-3 decision said Biden doesn’t have that authority.

Now, Biden did try again under the HEROES Act. The HEROES Act says that, you know, the president could take measures similar to under, if there’s a national emergency.

So he looked back, okay, when was there a national emergency? Twenty-twenty. Twenty-twenty-one due to COVID and kind of used some of that to cancel some, some loans.

He’s kind of recently issued some other cancels, a cancelization under some authority that, you know, dealt with that there were illegitimate schools that people took loans to attend, he could cancel that. So there is some limited forgiveness, but it’s not as broad as what he originally wanted to do and it’s certainly not all, right?

Nobody has really said all. So look, look, look, look at the pro, right? What are the benefits of student loan forgiveness?

Well, the first one is that it could provide an economic stimulus to the economy, right? Because, and now instead of people paying back their loans, they could go out and buy new cars or, you know, they could save more for a house, right?

Or buy, buy a bigger house or, you know, just kind of buy more things. More clothes, those types of things.

Kind of function is an economic stimulus to the economy. Now, in order to win this argument, it’s a little bit tricky because the economy is not doing that badly now, right?

Some people say the economy is doing recently. Well, it’s certainly debatable. But as part of this argument, the pro would need to win that the economy is not doing that well, that maybe we were headed towards a recession, and we need to stimulate the economy a bit.

You know, on the con, we’ll talk about how maybe that stimulation would produce inflation. But that, that’s kind of where we are in terms of the arguments stimulation.

The second thing is this is where we even are immediately writers starting to get into the arguments about like, well, okay, this could solve the problem for current borrowers.

But what about, what about future? What about. Future borrowers, right? So, but it could reduce economic inequality, right? Student loan debt, exacerbates this, right?

Generally, people who had to take loans for the most part that, you know, obviously their, their families couldn’t just afford this, right?

So it’s gonna, it’s saying, okay, you know, in some cases it was more difficult for people to pay for school.

Now they’re, right? Now they have these loans on top of that.So it just kind of, there’s more like inequality that gets sustained.

And if we forgive things across the board, it could help reduce that. It also may create some more social mobility in a couple different ways.

One is, right? Like if you don’t have the loans, then you’re going to be better off financially. But also, the other thing is that people may work in professions.

Where, you know, maybe they’re social workers, teachers, their salaries aren’t as high, but those empower people in the future to move, you know, across classes to be more easily, to take under more socially conscious work and to pursue their dreams and passions.

Right? If people have excessive student debt, it forces them to prioritize higher paying jobs in their careers, right, rather than their and talent, and talents, and you know, you’re combining that kind of with the that they could pursue more, idealistic career paths.

Having a lot of debt and being in financially difficult circumstances can certainly affect your mental health, make things stressful, it could put a financial burden, right, so you have, you know, if you have the actual financial burden, then maybe you’re not eating as well, you’re not exercising, right, because you’re kind of stressed and that stress itself can produce mental health problems. Overall, this could just kind of strengthen the middle class because the middle class is kind of stuck, right, and kind of the middle, literally, right, like, you know, maybe they can, they don’t call, you know, students in the middle class, obviously, they don’t always qualify for a lot of financial aid, right, because they’re not in a very difficult financial situation, but they can’t necessarily afford to pay, you know, $50,000 to $80,000 a year for their kids to attend school, so they’re kind of just stuck in the middle, and it’s kind of hard to, it’s kind of hard to move on, but, or if you have less means, it’s hard to get into the middle class.

So this would a strengthen the foundations of the middle class financially, they wouldn’t be stressed over all these loans, but also would allow more people to move into the middle class related to the jobs argument above, there’s, there’s an argument about boosting entrepreneurship, right, so, you know  earlier I talked about how people might pursue their, their dreams and their passions, right, with their jobs and they may do something that’s socially valuable, well they could also become an entrepreneur, right, because they don’t have to take a job, right, for the same reason above, they don’t have  to take a job where they’re making a certain amount of money in order to pay back this student loan, they can generally become kind of entrepreneurs and move forward that way. Another argument is it can correct a broken system, now it’s not going to completely correct the system but it’s going to solve for the harms of the system. This transcript could include filler words which are transcribed when they appear as a part of the This transcript could include filler words which

Some people drop out of college because they’re saying, well, I already have been taking on all this debt. I’ve been in school for two years.

I don’t want to keep accumulating all this debt. I don’t know that I’m going to be able to get a good enough job to pay this back, so I’m going to drop out. It could increase civic participation, and a lot of times when people, you know, they’re under financial constraints, they have to take extra jobs, right, or they’re just stressed, they don’t kind of engage.

Don’t engage in things civically. Could create an investment in future generations, and there’s kind of philosophical arguments about this. Oh, you know, we should really invest in our future generations, our children, or the future.

14:07 This is what we want to do as a society. You could make a compelling, ah, moral argument here.You know, again, ah, some people may spend, you know, it’s part of the kind of freedom to do what you want.

14:19 They may make career choices and engage, ah, in more cultural enrichment. They may take some of the money. They may make money that they don’t have to pay for their student loans and make donations in philanthropical donations, right?

They may spend more time in the community since they don’t need that part-time job anymore to pay back their student loan.

They may just spend more time in the community. They may make donations to community organizations. Thanks for watching! They may choose to more children.

You know, some people are postponing children because saying, gee, I have all this student loan debt, I can’t really afford to have kids, right?

Or I’m gonna have fewer kids, or I’m gonna wait, you know, for longer to have kids because this is just not something I can do.

It’s just something I can really afford to now. There’s arguments about national security. I think this argument is a little bit sometimes, you know, in public foreign debate, you know, obviously, in any format for public of debate, you’re just looking for an argument that maybe somebody can’t answer.

If people are highly stressed financially, then they may be willing to, you know, sell a secret to a foreign government if they have access to it in order to get some funds and, you know, that could cause some problems.

Obviously, issues of US hegemony are always coming up. I really should give a separate talk on that, but you know, you debated that probably before certainly on the military presence.

The argument is is that, you know, there’s three basically there’s three forms of power in the international system. There’s hard power, which, you know, there’s there’s economic power.

I’ll say it this way. Military power and arguably soft power, which is which is a new concept, you know, relatively new. It’s from the early 1990s when Joseph Nye and Harvard published a book called soft power, but there’s soft power and international influence.

The argument is, you know, hard power is military power. Economic power is your financial power, which obviously can is critical to oour military power as well. Soft power is how much like politically how much influence you have, how much people like you and people say, you know, of course, these things are related to one another.

So people like you and they have soft power, they’re more likely to trade with you, which is going to benefit your economy.

Maybe they’re likely to support your deployment of military forces, which could increase your hard power. But the argument is, is that if we reduce the inequality in our society, that’s going to lead to more soft power and international influence.

There are political benefits to this, right? It could alter  the outcome of the election. Maybe, you know, Biden were able to say, okay, well, I finally got, I finally got all the loans forgiven, you know, got Congress to act, which people don’t really even pay attention to in that much detail. Biden would get the credit. Maybe it could swing the 2024 election.In favor of him, sometimes they think politics arguments are ridiculous, but this one is probably not, and there’s evidence that says that student loan forgiveness could affect the election outcome.

Then just, you know, but, you know, so that, that’s the election side and then the political capital side. Which I actually need to do a separate lecture on as well, since this is making its way into public forum debate, is that there are political, you knowthis would be divisive, right, at a minimum

The Republicans would not like this, spending, you know, 1.5, er, a kind of, absorbing, it’s a little bit different than spending it, right, it’s just that you’re, you’re not, the government’s not getting all its, its money that it put out.

But forgiving all this debt at a minimum would very, very controversial and it may under- mind the prospects for things Ukraine aid passing or our ability to get continuing resolution.


Okay, the con. What are the con arguments? So one big argument, you know, especially for giving all federal student loan debt is that this would benefit the wealthy, right?

Because, you know, even if you may under this proposal, even if you make a million dollars a year and you have student loan debt, it’s going to be forgiven because it’s forgiving all federal student loan debt, right?

So this you know this protects the wealthy people if they have some student loan debt, right? They’re still paying that they can probably easily pay.

Indirectly it’s a program for people who are, you know, kind of generally okay well they went to college, right?

They have a college degree We’ll be right back. Which increases their earning power. It doesn’t do anything for people who didn’t go to college, right?

Who don’t have a college degree, who are going to tend on the whole to be worse off financially, right? So this is a programs since it doesn’t have any income restraints at all, right? 18:52 you’re saying all debt should be forgiven is going to benefit the wealthy, but even so, even if it had some conditions on it, right?

It would still benefit the wealthy because it only deals with people who went to college. With questions of, you know, inflation risk, and I think inflation is arguably a pretty strong argument against this, right?

Because now people have started, you’re going to start repaying their loans. That’s less money they’re spending into the economy. That helps kind of keep inflation under control, right?

It doesn’t, it doesn’t dump money into the economy because that would be the case if people were paying now, right?

And then suddenly on their student loan debt and then didn’t have to pay on it anymore. So now they have money to spend elsewhere.

The reality is most people for a couple years. Haven’t been making student loan payments, right? And because they haven’t been making student loan payments, they’ve been spending on other parts of the economy.

Now they’re going to have to start giving that money back to the federal government. That’s going to reduce, maybe take some money out of the economy, help keep inflation.

And right now the government, and I’ll do a separate lecture on inflation, but right now the government is trying kind of keep inflation under control, right?

It keeps getting back up there. They want generally a 2% inflation target, but inflation, they want to keep inflation under control. They’ve been struggling to keep it there.

So the argument is if you have more inflation in the economy basically what happens is the federal government reacts to that by trying to raise interest rates a little bit on overnight lending, which could if interest rates rise could affect, hurt the economy.

I mean as the whole, right? Because then it’s more expensive to borrow money to purchase things like a car or, you know, something else that you need to purchase, right?

So that, that all becomes that all becomes much more, right? Problematic, right? In terms, in terms of kind you’re trying to do.

And then it could hurt the poor because as the price of goods increase you know, that, that hurts the poor the most because even when their groceries get more expensive, right?

That hurts them. Things they have to buy, right? So inflation, I think, is a pretty decent argument. And, of course, in the literature there’s a debate about whether or not student loan forgiveness would trigger a substantial amount of inflation.

21:01 But what most people say in the, in the kind of literature that responds to the arguments is, well, you know, even, you know, even under Biden’s most aggressive proposals, it’s not really forgiving that much of the debt, right?

21:13 It’s forgiving ten to twenty thousand dollars per person, basically, and said, okay, well, sure, that may be, maybe like a little bit of inflation, but not very much. 21:21 So the problem is, this is, this proposal calls on for forgiving all the debt, which is definitely going to beor arguably, I should say, inflationary, right?

21:31 So a lot of the responses in the literature, inflation do not even apply.You know, and as I mentioned, that could increase poverty.

21:39 Then you have arguments about the national debt itself, right? Like, say the federal government already spent this money, but they’re going to supposedly get it back, right, over time.

21:48 But if they’re just now suddenly not going to get it back, rightit’s going to be about 1.5 trillion more dollars in debt that they’re definitely responsible for.

21:57 I mean, they’re certainly not going to get it back. Because some people are going to default on their loans, rightin the current system. 22:02 Some people’s loans are already being forgiven. But it’s probably still like well over a trillion dollars, a trillion dollars that they’re agreeing to keep on.

22:11 If you have a lot of high debt, and I can do a separate lecture on this, that’s arguably bad for the economy becauseyou know, the federal, the banks are always willing to lend to the federal government when they lend more to the federal government.

22:23 There’s kind of like less, so to speak, that it’s complicated, but there’s kind of less that they have to lend on the private market, right? 22:30 And so then the, the price of that, the interest on that could, could increase.The value of our dollaryou know, could decline that I’ll talk about in a second.

22:39 And you know, maybe, maybe the government in the long term would have to raise taxes to deal with this or they could have to cut programs which are maybe economically beneficial.

22:48 As I said, that’s a separate lecture, but you can imagine one of the big arguments is this increase the debt.

22:53 It could also undermine the importance of the strength of the dollar because you know, as you have more inflation in, in the economy. 23:00

Right, as you have more spending than the value, the value of the dollar arguably declines and we try to protect the strength of the dollar.

We want global trade to occur in dollars so we can do things implement sanctions.And it gives us kind of a lot of geopolitical power. 23:15

That way, obviously, a strong dollar can give us more soft power which I already talked about.So, a lot of debt could undermine this.

23:23  You know, there’s a question of, like, fairness which already touched on a little bit at the beginning. Just like, hey, some people never went to college.

23:31 So, it- it- it- it’s a problem there that they’re not getting equal treatment, but then also, really, they’re- people are paying through this for their taxes, right?

23:37 So, okay, I have to pay for my kids to go to college, but now, like, I essentially pay for other people to go to college.

:43 Even if my kids, you know, you know, if my kids didn’t go to college, I would have to pay. If I never went to college.

23:47 I would have to pay. Essentially, I have to pay for other people to go to college. Now, it’s not really that necessarily that bad, right?

23:55 I mean, we pay for other kids to go to high school, right? I mean, public schools, most kids actually go to public schools, right?

24:00 People pay for that. So, I don’t see it as that. That big of a deal, but there is this fairness argument.

24:07 There’s an argument that would undermine personal responsibility, that people wouldn’t take responsibility for paying back their loans or those types of things.

24:14 There’s a moral hazard argument that says look if the loans are forgiven then people are just going to start borrowing a lot more money. In terms of college costs, people say that this wouldn’t do anything to control college costs, so we do the reverse.

24:52 college became kind of more expensive, right, way beyond the normal inflation, after the federal government started guaranteeing these loans because they knew people could just take the loans, so they’re just like, okay, whatever, we’ll charge what we want.

25:04 Now if the loans can get forgiven. The colleges have even less incentives to control the costs.It might cause, you know, more people, and this sound, this kind of like a, you know, difficult argument, but if more people go to college, right, it could contribute to a rural brain drain, where fewer people you know, staying rural areas and developing rural areas, they’re leaving, it’s kind of the opposite of the brain drain argument I talked about earlier you know, it could you know, politically divisive, right, I mentioned that, right be fore I talk, like, gee, like, you know, you could argue this on the  pro, right, you could say, well gee, this without, you know, this would affect the outcome of the elections you could also say, gee, maybe it’ll be good, you know, what scuttle you create aid and you create aid is bad, so maybe, right, that’s on the pro, you could say that here on the con, you’re saying

25:52 a political divisiveness that it createsand that could actually cause, like, say, you create aid not to pass and you create aid, ah, is good, or you could say, like I said earlier, you could say, well gee, this would cause Biden to win the election and Biden is actually bad, we need a Republican president

26:07 , right, so there’s politics effects.I don’t really want to say much about these eligibility concerns but I want to highlight, just like I did about the authority arguments, there’s a lot of arguments about whether, you know, it would be hard to determine eligibility, exactly how much money people make

26:21 and what years they made it, you know, maybe some Subs by other things about figuring out the forgiveness, if it’s a different proposal where, where the income limits should lie, but these don’t apply to this argument, right?

26:33 Like these don’t apply to the pro because the pro is just saying forgive everything. So it doesn’t matter what the criteria is, the only criteria is, hey, prove your student debt, we’ll forgive that.

26:42 And the federal government knows how much debt you have because it’s debt to them. I do think a big problem is that this could kind of, kind of have a limited impact, right? 26:51 It’s going to have a limited impact because it’s only one shot. So this is good. It’s good for the people who have the debt and it’s a big impact to them.

27:00 But when pro teams are talking about solving like inequality and social mobility and allowing people to pursue their passions and the dreams and like creating innovation, I mean that’s all great. 27:10 But if you just get your one set of people who currently has debt gets their loans forgiven, that’s not going to affect even like say the people who are in college now or the people who go next year and start taking out loans depending on, you know, when the, the loans are, you know, even under the proposals

27:26 you just have to have had your loans for like so long. But here. It’s like, okay, we’re going to forgive everything as aggressively as we want to define any debt.

27:33 Even if somebody who’s a college freshman who just started taking it on this year, okay, we’re going to forgive this debt like, you know, but then that’s it.

27:41 What about the kids who go to school next year? So it has a limited. Limited effect and you know, if colleges start raising tuition and people have to take even more look and because that you know, there’s this expectation that it’ll get forgiven in the future and people take more loans that could even make the situationthe situation worse. Now, of course, there’s the capitalism critique. People started arguing critiques in public forum. So I’ll bring this up, right?

28:06 It doesn’t solve the underlying structures of capitalism. It doesn’t solve, you know, people have like a poverty contention or poverty advantage or whatever inequality.

28:15 You can say, look, the core part of this is the core part of this is capitalism. That’s the big problem. 28:21 I’ll leave open the question, you know, we’re kind of even, even though we have critiques and all other kinds of form of public arguments in public forum.

28:27 Nowfor the most part, we’ve kind of held the line and you can’t have an alternative, right? But.If you could win as some type of argument and justification argument or anything like that, that the federal, that, you know, you could partial forgiveness is okay, right?

28:41 We should just, we, we shouldn’t forgive all loans. We should give, forgive the loans of people with certain like income limits or things like that.

28:51 You know, that would probably be more fair, it would probably make more sense and it would be cheaper, it would be less inflationary and there’d be less political resistance to it.

29:02 There’d be a good amount, but less political resistance, right? There’d still be inflation dead, all those things, but lessand it might solve the fairness and inequality arguments more.

29:10 So, if you can get away with arguing for an alternative, you might, you might want to try that one. Alright, thank you, I kept it to 30, 30 minutes.