Wednesday, August 31, 2022

Student loan forgiveness

This is Joseph.

Mark mentioned this briefly yesterday but I thought it was worth a full post. 

In the United States there has been some controversy about student loan forgiveness and the modest amount of debt relief that was recently given. I understand the reasons why it was good to do something and also why the time isn't optimal as it could have an inflationary impact. Still, the amount of inflation, according to Paul Krugman, is about 0.2% and much larger sums were forgiven for business support in covid-19. It is quite reasonable that the lockdown could have made student loans worse than expected for some people and so forgiveness is a reasonable policy.

It was then attacked for funding very left wing educational opportunities -- the exact phrase being "lesbian dance theory". Now, one thing to consider is that very few students take classes in identity. Here is a statistics from the far more left wing province of Ontario in Canada:

That's less than 1%. As expected, in the United States it is even lower:

There are more philosophy majors than in these fields!

Looking at the linked tables from the Department of Education (USA), we see that the top two majors are business and health sciences, together making up 32% of bachelor degrees (that is 1/3). There are five times as many students studying agriculture than "Area, ethnic, cultural, gender, and group studies" which is lumping a lot of different things together (are Russian studies and women's studies really appealing to the same students?). Now it is true that 4.5% of degrees go to visual and performing arts (which would include dance) but also things like acting, painting, and film school. Maybe it is or is not the optimal vehicle for teaching these skills  but there are also a lot of students taking degrees in "Homeland security, law enforcement, and firefighting" (about 2./3 this total) which is also a case where the applied and theoretical pieces might be quite different. 

And this ignores the engineers, computer scientists, and mathematics degrees. Now, it is true, that a system where students pick what they want to study does occasionally result in bad decisions that compound. But this is also true of health decisions, employment decisions, and financial decisions -- we are not considering regulating those, either. 

If the student loan program is seen as a type of covid-19 relief than it isn't a bad program. It will help most those students who started a degree and did not finish due to the world changing -- most defaults are for small amounts and students who did not finish their degrees. This also addresses the question of whether it is only backwards looking -- it is, but the justification is reasonable and it matches other parties who borrowed money and had it forgiven due to covid-19 impacts

Now I agree with Dean Dad that a forward looking policy is overdue. But that doesn't mean that this plan is without merit and the general idea seems to be justifiable.

1 comment:

  1. Originally, boondoggles were clever tricks for saving work. Now they're sometimes called "life hacks" or "helpful hints". There was a New Deal program which had someone studying and recording boondoggles, neat little folk ideas, from, I believe, West Virginia. Naturally, some Congressman denounced this spending saying that the government shouldn't be funding boondoggles. Now boondoggle means a waste of government money.