Attacks from the Left

What Bernie and Warren Don’t Want Students To Know

Both Bernie Sanders and Elizabeth Warren have pledged to “forgive” all student loan debt if they are elected president. Like all socialist ideas, on the surface that sounds like a wonderful thing, but let’s take a look at their claims, and what would really happen if suddenly all student loan debt was eliminated.

Sanders and Warren both believe that among other benefits, universal student loan forgiveness would reduce the wealth gap in America, provide an economic stimulus to the middle class, increase home purchases, help start small businesses, and enable young people to start a family without a significant debt burden.

However, Moody’s assessed the economic impact and found that student loan debt cancellation would result in only a modest increase in household consumption and investment. They did agree with the progressive senators in that it could lead to an increase in small business formation and homeownership.

However, Moody’s also found that the economic impact would be relatively minimal, similar to a “tax-cut-like stimulus to economic activity” in the near-term. The report also found, among other impacts, the potential for:

  • Increased moral hazard: For example, future student borrowers could be incentivized to borrow more student loan debt knowing that their debt will be forgiven.
  • More student loan debt: Future student loan borrowers may borrow more student loan debt, but their student loan debt may not be forgiven, leaving them with potentially higher leverage.
  • Lost Revenue: Since about 90% of student loan debt is federal student loans, the federal government would lose about $85 billion, or 0.4% of GDP, in forfeited student loan principal, interest and fees.
  • Muted Impact Due To Borrower Base: The majority of beneficiaries of universal student loan cancellation are high-income earners, which could limit the economic benefit.

In reality, the true economic impact of student loan forgiveness will be based on how it is implemented, the income of student loan borrowers, how much student loan debt is forgiven, and most importantly who ultimately pays for the student loan forgiveness.

The point of that last paragraph was to say there’s no way to know exactly what would happen, but we all know that there is no such thing as a free lunch, and things that sound too good to be true, usually have a downside.

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Attacks from the Left
15 Comments on this post.
  • Robin J. Gale
    11 December 2019 at 4:22 pm
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    Yeah, but the the interest on the student loan is killing us. How bout eliminating the interest that has accrued and future interest. The interest compounds faster than i can pay off the loan. At this rate, i’ll never be able to pay it off.

  • Brad Lillmars
    11 December 2019 at 4:25 pm
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    Why no discussion on the impact to the students who have paid off their debt. If I was one, I would be more than angry. Maybe Bernie and Liz have a secret plan to reimburse all the students who have repaid their debt?

  • Michael Pasternak
    11 December 2019 at 5:12 pm
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    There is a general term being used here… Student Loan’s…if true loans that were used for true education payments, rather than being lumped in with residence costs, meals, trips, parties, transportation, cell phone costs, clothes, and many other personal benefits… there should be a real consideration offered to manage the burden. Through personal experience, I have seen that student loans were a “free money” bonus where many of my friends used a portion of the funds for personal use even an example in one case where a friend put a down payment on a car… How in any reasonable person’s mind is this fair for the tax payer to forgive these loans, bear the burden, while much of the Student Loans were in many case used improperly….
    Forgiving these loans is reckless, teaches the beneficiary no responsibility for obligations, will encourage more reckless debt, and fraudulent use of these funds, and most concerning, continue to dramatically increase the direct cost of education when indirectly funded through the student loan program…
    Once this Student Loan program is forgiven, does this set precedence to forgive credit card debt, personal loans, mortgages…where does reckless spending stop, if it potentially will be forgiven….
    VERY RECKLESS !!

  • Matthew William Menefee
    11 December 2019 at 5:15 pm
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    So, they think that if they just forgive student loans, then those students will be able to buy houses and start businesses? I find it difficult to believe that people who were so irresponsible they could not pay back their loans, will be responsible enough to pay back their mortgages on a house, or manage a business. The fact that they were unable to pay their loans tells me they are not responsible and would fail to pay back loans associated with a house or business.

  • Jeff
    11 December 2019 at 6:02 pm
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    I disagree, student loan forgiveness would be great for the country and improve the lives of millions of people…I have been making payments for over 20 years and the amount I owe has only gone up…Student loans are an economic trap. I will never have my loans paid off in this lifetime…never.

  • Karen Hoyle
    11 December 2019 at 8:18 pm
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    Don’t forget—–no matter whether a candidate “promises” they will give something FREE, or forgive something like school debts —— the money has to come from somewhere!! You know darn well they will increase taxes —- for both examples and even more they bring up!!! NOTHING is FREE!! If it sounds too good to be true—–it is!!!

  • janet
    11 December 2019 at 9:25 pm
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    Hi, I was wondering about that. What is to stop someone from borrowing money and using that money to party, buy car, buy clothes etc etc etc. You need to be accountable for what you do and forgiving a student loan is give people a free check.
    Students need to learn how to budget and control their spending. giving them free money is not doing that.
    If anything students need to work off their loans. Say your going to be a teacher, well every year you work so much of your loan will be forgiven. You still have to pay each year but it can be reduced.
    or have everyone go into the military to work off their loans.
    Anyways just some ideas. What the Democrats want to do is down right stupid. Period.

  • Harriet Graham
    11 December 2019 at 9:26 pm
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    I know for a fact America was not ready for a strong President that we all know ? But to impeach him ignoring what he had done it’s a disgrace . The President has seen money all his life his kids are doing well, for someone to say he does not care about the American people… More so he has been transparent from day one he warns you about what he is going to do before he actually do it I don’t think it can get better than that . I love the President the way his leading our country tackling every thing which was swept under the rug and bring it to light. I get it if you don’t like a person you don’t crucify them or falsely accuse them of something they didn’t do if they did you not the one to tell the person’s intent why they did what they did, In this case the Democrats are showing they hate what they are witnessing he doing things so well and it’s bothering them because that’s not they
    Expected of him. We have to keep supporting
    Him every step of the way .

  • Bob
    11 December 2019 at 10:03 pm
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    If you forgive Student Loans now.

    Will you refund my daughter’s loan

    Which she PAID back.

    And all those other Students who have repaid .

    Bob

  • Navvet67
    12 December 2019 at 4:24 pm
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    Just reduce the interest rate on college and parent plus loans to 1%. Limit the amount that can be borrowed forcing better choices of higher institutions of learning. Those two items alone would be very beneficial. All that would be is a simple click of the pen

  • David Johnson
    12 December 2019 at 4:25 pm
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    Student debts should NOT be forgiven. My whole family paid theirs, and ALL of the younger one did NOT go to college!

  • Chuck Truitt
    12 December 2019 at 5:58 pm
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    I agree with Navvet67. Reduce interest and cap the loan limit. Too many students become perpetual students with no plan to complete.

  • Nr
    13 December 2019 at 5:04 pm
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    These treasonous hypocrite libs(lying sack of Schiff) don’t know the meaning of the truth! They are at it again and just as mentally deranged as the rest of the Globalists NAZI Muslim Commie Liberal Demoncrats! Deep State, Pelosi, Waters, Schumer, Hollywood, Academia, Fake News, Swamp News and you know the rest!! ‪Expose, Boycott, Sue, prosecute and bring to justice all these lying Fake News deep state treasonous Godless NAZI commie liberal demoncrats and RINOs post-haste,Patriots! Drain the rat infested swamp President Trump!‬

  • Thomas
    14 December 2019 at 3:46 am
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    I worked my way through college working between quarters and summers. If you can’t afford a college pick one you can afford or go half time and work half time.

  • sheri
    15 December 2019 at 1:48 pm
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    I agree with Navvet67. Also, the states need to stop raising tuition every year, this should have a cap. Once every 5 to 10 years would be better. Then they let the students decide what new amenities they want the next year without letting them know how much it will cost the students in fees, it increases the cost of going to school dramatically. Because the tuition and fees go up then they lend more, then the cost of living goes up in the school and the city it is in. Your room and board goes up, off campus your rent goes up. It’s a cycle that needs to stop.

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