Should the United States Forgive Student Debt? A new debate

Intelligence Squared US today released its latest debate on the “Forgive Student Debt” motion. During an hour of lively exchanges, the two sides debated topics ranging from whether student debt forgiveness counts as a bailout for the rich to student debtthe disproportionate impact of on minority students.

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Consumer Financial Protection Bureau veteran Dalié Jiménez and Center for Responsible Lending Ashley Harrington are supporting the motion. Beth Akers of the American Enterprise Institute and Nick Gillespie, editor-in-chief of Reason, oppose it.

The winner will be determined over the next week. Anyone watching the debate can cast two votes on the issue – one before watching and one after. Whichever team wins the most in terms of percentage points wins. The winning team will be announced on April 1.

Watch the video of the debate here: https://www.youtube.com/watch?v=wuJB9ZohQNI

Listen to it in podcast here: https://smarturl.it/iq2podcast

Vote here: https://www.intelligencesquaredus.org/vote

Debate: Forgive student debt?

Transcription

The following is a partial transcript of the “Forgive Student Debt” debate.

Jean Donvan: I want to move on a bit, Dalie, with a point that was made earlier by your opponents, I believe by Beth, that if the agenda you are championing were to come to fruition and a significant amount of student debt wiped out from a pin stroke from the president, say April 1, it can be a very tough political sale to all students who borrowed, paid off their debt, liquidated it, worked hard to do it. They’re going to say, “Well, why did I do that? Where was my turn for that? And I just wanted to ask you to address that question, because I think that’s probably a question that would come to the minds of a lot of people watching the debate.

Dalie Jimenez: Yes. I am one of those people to whom I owed a debt of $ 140,000. And, you know, I was able to pay. Great. Great for me. I fought. I don’t want anyone to struggle, and many struggle much worse. I don’t feel sorry for myself.

Beth talks about making these really nuanced political decisions. Great. When does Congress get to do it? When did this actually happen? President Biden can actually do it now, forgive $ 50,000 per person across the board, easy, quick, with no way to test, boom. Then we have a smaller program, that $ 1.7 trillion to run, where we can then, you know, improve the RDI. By the way, IDR is not a single program. It’s four or five programs, and they’re different, and you don’t qualify for all of them, and it’s a mess. And even people who study it don’t know it by heart, because it’s so complicated. We shouldn’t be forcing people to go through all of these hoops and learn all of these nuances – just all of these silly things, really, in order to get forgiveness in two decades.

Jean Donvan: OK. Beth, I want to ask you a question.

You naysayers – again, in Ashley’s opening commentary, she sort of alludes to the idea that an individual’s education is not just about the individual, but it’s about is in fact a public good. This individual, by being educated, number one, can be a taxpayer, contribute to the economy, simply contribute socially. And also, that being tax-relieved frees up that money to become a stimulus in itself in the economy – no, Ashley didn’t say he would pay it in full, but she said it was a positive benefit. for the economy, especially in this year of COVID so that people have more money in their pockets so they can spend more. I just want to ask you to address that part of his argument.

Beth akers: Sure. So it’s a common belief that student debt is in fact a really effective stimulus, which is especially important right now. We are in a depressed economy. The problem, again, is actually what I mentioned earlier about the regressivity of politics. When economists design stimulus packages, they cut the checks and send them to the people with the lowest incomes in the economy. Because the way stimulus It works is that people have to go out and spend that money for it to have a stimulating effect on the economy. When you give money to wealthier people, the multiplier is lower. They go into the community less and spend less and it creates less jobs and less sales and things like that. And so student loan cancellation has the same problem. Since a lot of the money goes to the very wealthy, it’s really inefficient because they’re not the ones who are going to come out and stimulate the economy.

The other problem is, let’s say we had to forget everything. Those $ 1.7 trillion. Student loans are totally different from that number, from what people see from month to month. So maybe easing a $ 200 a month payment for someone with a decent amount of debt is costing us. Again, this $ 1.7 trillion, we are only getting a small fraction of that stimulus today because of the way people have their cash flow just have to manage a monthly payment on their student loan.

So, is it a stimulus? Yes. Is it tackling wealth and racial inequalities? Yes. Is he doing these things in a very, very, very inefficient way? Yes. And so, the problem is, if these are the problems that we are trying to solve, there are more direct solutions to these problems than student loan cancellation.

Jean Donvan: Ashley, I’d like to let you answer that.

Ashley harrington: Well, I think we have to be very careful about – say, our perch and our position in our lives, a monthly payment of $ 200 is not difficult. It’s actually difficult for a lot of people who are struggling. So I think we have to be very clear about this, that people have different levels of what is considered a struggle. And there are a lot of people who absolutely have a hard time making their payments.

Many studies have been done that show the economic benefits of cancellation and how it will be fed back into the economy over the years. And I think we also explained how it’s not just the rich, the rich. The majority of people who will receive these benefits are low-income and low-income people. Student debt, the balances themselves having to go into debt add to the cost of credit over the life of someone, it prevents them from saving. It affects their ability to get a home. They can’t save for a down payment. It also means that this money determines their debt ratio when they want to qualify for a mortgage. And we just learned that house prices are skyrocketing. So people who have a lot of student debt, and houses cost more, and they can’t get a loan to get it because they can’t qualify, they couldn’t even save for a advance payment.

Updated Aug 22, 2021, 7:27 a.m.