This galaxy take on student loans tries to convince us that loan forgiveness is “not actually costing anyone any money.” It received a disturbing amount of likes and shares, which means it’s being taken seriously, so here’s the breakdown.
▪️It begins by giving a hypothetical scenario where the lender is charging a 365% interest rate, which is well into loan shark territory. In this scenario, yes the lender could still profit despite forgiving some of the interest accrued, but student loans avg around 7% interest, entirely different.
▪️All money for Federal student loans originates from the US Treasury, which is then sent to the Dept of Education and then to students. Congress appropriates this money each year. It is funded through federal tax dollars (or borrowing) and absolutely costs money.
▪️When recipients repay their loan, this is sent back to the US Treasury (via a student loan servicer middleman). Ostensibly, this would repay the initial taxpayer money sent out, if everyone repaid their loans. If the loans are forgiven, the US Treasury takes the hit.
▪️Pretending it’s not costing money because interest accumulates is nonsensical. In the meme’s hypothetical scenario of 365% interest, yes. But at 7% interest, when the CPI is currently above 8%, the government (i.e. taxpayer) is already losing on the loans.
▪️And that’s if everyone was paying and there were zero costs associated with administering the loans. But people aren’t paying (there’s still a moratorium), there are always defaults, and there are administrative costs.
▪️Plus, not only is $10K per borrower being forgiven, Biden’s order also changes the income-based debt repayment program (IDR) to cap payments at 5% of discretionary income (income exceeding 225% of the poverty line).
▪️Thus, an individual making $75K/yr would only be responsible for $2,221/yr ($185/month) whether they borrowed $20K or $200K. And after 20 years (now sometimes only 10 years) the remaining loan balance is forgiven (i.e. absorbed by the US Treasury).
▪️The result is this will cost a lot of actual money. The Wharton School estimates ~$500B over 10 years, but the real impact could be the changes to the IDR, which could easily cost over $1T as new borrowers change their behavior (take on even more loans).
https://budgetmodel.wharton.upenn.edu/issues/2022/8/26/biden-student-loan-forgiveness
▪️This meme is correct on one aspect, your taxes aren’t paying for loan forgiveness, because the government isn’t adding new taxes to pay for it. It will simply add to the debt, which will be paid by future taxpayers and/or through inflation. But it will certainly cost someone actual money.
It’s funny to see the left use the same conspiratorial rhetoric as the right did a year ago regarding the jobs numbers being downwardly revised. So many on the right, who knew nothing of how the jobs numbers are calculated or why they revise them, were convinced the downward revisions were a conspiracy to help Biden win.
If people want to have a debate about the birth death model or the survey methods, ok, but that’s not what’s happening here. Most people are under the delusion that the BLS report is the govt reporting every job created and lost, and are thus easily swayed it’s rigged when it suits their political ends.
This is almost laughingly misleading, as it leaves out everything before the letter.
▪️After being repeatedly lampooned by the Smothers Brothers over Vietnam, Johnson finally had enough. One night at 3 am he called the head of CBS William Paley, demanding that he “get those bastards off my back.”
▪️Paley then asked the heads of CBS entertainment to get them to back off of LBJ. However, instead of backing off the Smothers Brothers doubled down, booking a folk musician performing “Waist Deep,” an anti-war song about a soldier being stuck in the mud while “the big fool says to push on,” clearly a dig at LBJ.
▪️At the last minute, CBS cut the song from the pre-taped show to the outrage of the Smothers. They continued to push the boundaries off and on for the rest of his presidency, with CBS sometimes cutting segments that they thought went too far. Basically, it was a soft form of censorship.
▪️It wasn’t until Johnson made his surprise announcement not to run in 1968 ...
