Forgiving student loans — a demand of most Occupy Wall Street protestors — is the worst idea ever, writes Wharton economist Justin Wolfers on the Freakonomics blog.
If we are going to give money away, why on earth would we give it to college grads? This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades. The group who has been hurt over the past few decades is high school dropouts.
Giving cash to poor people will yield a larger stimulus, since they’ll spend it all quickly, he adds.
It’s the second-worst idea, argues Ohio University economist Richard Vedder on National Review Online. Subsidized student loans are the worst, he writes.
Student loans haven’t increased economic opportunity for the poor, he writes.
In 1970, when federal student-loan and -grant programs were in their infancy, about 12 percent of college graduates came from the bottom one-fourth of the income distribution. . . . With the nation awash in nearly a trillion dollars in student-loan debt (more even than credit-card obligations), the proportion of bachelor’s-degree holders coming from the bottom one-fourth of the income distribution has fallen to around 7 percent.
It’s not fair to favor defaulters over graduates who’ve repaid their loans or to ask average taxpayers to pay more so college graduates from relatively prosperous families can pay less, Vedder writes.
From the wearethe99percent Tumblir:
I am 27 years old. I have a child, and my partner of 8 years and I both have jobs. I am TERRIFIED to graduate college, I will owe over 50,000 in student loan debt and I am having doubts my two A.S. degrees and my B.S. in Ecology will get me anywhere. We both work hard, but live paycheck to paycheck. We have no health insurance and hope we never get sick because we can’t afford to pay medical bills. All we wanted was to have decent paying jobs, decent medical care, and to be able to purchase a decent home for our child to grow up in. We are hard workers who DESERVE it! We are the 99%!!!
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[...] Wall Streeters want forgiveness for college loans. That would help the privileged at the expense of average taxpayers, say [...]