Categories:
Economics of Education
Regulation and Subsidies
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 After all, current outstanding loans were originally made with no promises of future forgiveness.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).
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.”
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