I was on San Francisco all-news radio station KCBS on Sunday morning to address the issue of student debt.
The link is here. The whole thing is only about 5 minutes. You’ll see that the interviewer caught me off guard with his first question, but I adjusted.
Thanks to Brandon Berg, who commented on my April 28 post on this issue. The numbers he cited and their source were valuable in helping me prepare.
READER COMMENTS
robc
May 18 2022 at 12:26am
This is an easy example of Betteridge’s Law.
BC
May 18 2022 at 3:22am
Plenty has been written about student debt cancellation being a subsidy paid by low-income non-college workers to subsidize education of higher-income college graduates. I worry most, however, about the incentive effects of forgiving college debt. Is there any evidence that people have been delaying repaying their college loans over the last few months? If I had unpaid college debt right now, I’m not sure that I would be in a rush to repay it. Why repay it now if there’s a chance that the debt will be forgiven in the near future? I know I would experience regret and feel like a sucker if I were to make loan repayments over the next few weeks and months only to find out a few months later that, had I not made those payments, those loan amounts would have been forgiven.
Also, even if the government claims that any debt forgiveness will be “one-time only”, how could it possibly make such a claim credible? After all, current outstanding loans were originally made with no promises of future forgiveness. If we think students have incurred too much debt now, imagine how much debt future students will take on given a precedent that much of the debt may eventually be forgiven. Are proponents of debt forgiveness also planning to eliminate all new college loans to avoid this moral hazard? It doesn’t seem so and, even if they were, eliminating all new college loans doesn’t seem like a good idea because there are legitimate reasons for college loans (that are actually paid back).
Walter Boggs
May 19 2022 at 2:02pm
There are legitimate reasons for college loans, but there’s no reason the US government needs to be involved in them.
Jon Murphy
May 18 2022 at 8:11am
A great interview, David. I have a few thoughts/comments/questions:
2:06: You bring up the point that the conversation is about forgiving student debt but not other kinds of debt. Is that a fair comparison? The more I think about that comparison (which I have used in the past), the less apt it seems to me. The only reason we are discussing forgiving debt at all is because it’s largely government owned. I don’t think the discussion points toward a bias toward people going to college (2:24), but rather a political reality.
2:42-3:22: The discussion on student expectations of salaries. I do not recall if I was part of your Facebook discussion, but I’ve witnessed (both as a student and a professor) such gaps between expectations and reality. In 2011, when my friends and I were job hunting in undergrad, I had one friend who expected $100k, minimum, from his Bachelors in Accounting. He turned down multiple offers in the 40-50k range because they didn’t meet his expectations. He was unemployed for nearly two years before his expectations and reality aligned around $50k.
3:45: Entry-level trade wages. So very true. I brought this up in a conversation with my old high school teachers and one of them got furious with me, accusing me of spreading misinformation and saying I was a “typical capitalist elitist” who believed “college was only for the select few.”
robc
May 18 2022 at 9:26am
Re: your first point, what is the comparison to Fannie and Freddie? It isn’t exactly the same, but it is close enough that maybe home mortgages would be next?
15 years ago, that would have been the call, instead of college loans.
Jon Murphy
May 18 2022 at 10:50am
I think Fannie/Freddie are the better comparison as Sallie Mae owns most of the student loans.
David Henderson
May 18 2022 at 12:56pm
Thanks for your compliment, Jon.
Now my responses.
You write:
Yes, I think it is a fair comparison. I don’t think the fact that it is owed to the government matters much. I also don’t think there’s any contradiction between the idea that there’s a bias toward people going to college and there’s political reality.
Good stories about student expectations and entry-level trade wages. Thanks.
vince
May 18 2022 at 5:37pm
Excellent interview IMO. And I agree that debt and contracts owed to the government deserve no special status. Why should it?
You mentioned the average debt about $28,000. How much extra will those students make in the future compared to students who didn’t–excluding those who went into the trades that you mentioned instead of attending the four-year party?
And we can offer everyone a free college education–as it is now–by reforming High School. It’s free!! It can even include trades!!
David Henderson
May 18 2022 at 7:09pm
Thank you. The source that Brandon Berg cites in his comment on my April 28 post answers your question. I would check and get it for you but I’ve a deadline on something else.
To answer your question qualitatively, though, they’ll make a lot more: a multiple.
vince
May 18 2022 at 5:39pm
If student loan is forgiven, the students will have failed to learn the most essential lesson: A fool and his money are soon parted.
David Henderson
May 18 2022 at 7:08pm
Good point.
Comments are closed.