Yeah I don’t agree with his numbers at all. If the graduate makes 150k a year that not really a problem like you just pointed out. Where I see the bad actor problem the university not the student. By running the income based repayment down to 5% from 10% almost +250% poverty line exemption everyone is better off doing income based repayment. That’s good for the student but it completely removes any price sensitivity because even at a state school you basically cap out your income based . Now there really isn’t any difference between getting the 100k loan or the 400k loan. It’s income based repayment for the next 20 years for everyone . Of course in practice the 400k loan will balloon to something like 1m and when it gets forgiven it will get taxes at 35% making it almost a balloon loan so the student still loses but scammy university isn’t going to tell people that they will have gotten paid long ago. They will just Jack up their prices advertise income based repayment and take in the profits shifting costs to taxpayers. The republican concept of “moral hazard” is a real problem it just doesn’t really apply to individual people like republicans say it does. Corporate entities do suffer from moral hazard, as soon as a loophole opens up they rush to exploit it and this is one big loophole
Again, cart before horse. I spent 2000-2005 designing fancy-pants rec centers for universities because they were competing in a market of "who's got the bitchinest dorms" not "whose degree program has the best earning potential and connections." My wife's alma mater is in a real crisis because they can't get anyone to sign up for their ridiculous tuition. Where did they open their branch campus? Torrey Pines, some of the most expensive real estate in the United States. Their expansion plans for the past fifteen years have been directly related to "what can we do to attract more conferences" not "what can we do to attract more students." But hey - let's look at income-based pricing. Average liberal arts starting salary: $42k Average liberal arts cost: $58k Average liberal arts student loan, no IBR: $614/mo, $74k Average liberal arts student loan, IBR: $350/mo, $42k Actual cost to the government: $0 Average CS starting salary: $76k Average CS cost: $52k Average CS student loan, no IBR: $551/mo, $66k Average CS loan, IBR: $633/mo. The loan already costs less than the IBR cap. Here's what this nothingburger really says: income-based repayment means 3rd party payments processors can't profit on underperforming student loans, they can only service them. How is that not an undiluted net good? I mean yeah - allow me to nod in the general direction of your AEI fever dream up there and say "cool story bro" but the whole point of college fucking loans is they increase the earning potential of your citizens thereby increasing your tax base. Skilled labor is more profitable than unskilled labor. Here's a video of Israeli robots picking apples. College is a clusterfuck and a scam, and the only way to maintain any edge in the world economy is to have more college grads. If the Biden administration can best execute a quick fix to the problem by leveraging Republican 9/11 bullshit good on 'em. Anyone who doesn't see that has failed macroeconomics.
In think maybe I’m calculating IBR wrong because under the new formulation I would get way less. Assumed: 76k a year salary with 52k loan 76k-32k (250% poverty line) = 44k ibr value 44k*.05/12=183$ a month. So slightly less than the interest on the loan. And that’s assuming that you didn’t bake in all your housing and other expenses into the loan to get it up well over 100k since ibr has you capped at 180/month
'k, 5%. Let's fucking shoot the moon. Highest room and board is NYU. Tuition is $58k a year. This poor sucka gonna average $34k a year. We're at $304k for that lesbian dance study degree or WTFever but keep in mind - there just aren't that many slots open for this kind of profligate waste. About a hundred undergrads at any given time. $58k plus $18k x 4 = $304k. 120 payments of $3209 gets you free! Or wait, $34k is $3400 is $141/mo is a mere $17k to the government! Holy shit! Those freeloaders are getting away with like $290k! Soon the world will be covered in lesbian dance majors, eager to make Starbucks wages and bilking the government of our hard-earned tax dollars! Sacramento paid $8m for this. That's about 27 Titsch grads. Who pay taxes, drink Starbucks and shop Amazon. A Titsch grad is also about three Excalibur rounds, about four Javelin missiles. A Titsch undergrad education, under the new 5% rules, would pay for about 78 inches of the Bridge to Nowhere or about 19 1/2" of Seattle's light rail expansion. So - is the world suddenly going to be aflood in profligate dance majors? Or do the arts just fucking cost money? You can't draw a normal distribution without drawing extremes. Are there programs that are going to get a boost from loan forgiveness? Undoubtedly. But right now, this hypothetical lesbian dance major at NYU is going from a 15% cap to a 5% cap and a 30-year repayment schedule to a 10% repayment schedule. The government was never seeing their money anyway (maximum payment on that loan was $166k). Enrollment was already down. Here, try this one on for size: I know of two midwifery schools closing. Why? nobody wants to pay the $200k tuition for an average salary of $49k a year. Know what that means? 3 birth centers are closing because they can't hire midwives. Know what that means for the state? It means about 300 fewer births at a cost of $4500, and 300 more births at a cost of $18k, because there aren't six midwives. That's a direct cost to the state Medicaid system of $4m per year for a tuition cost of $1.2m. There's a real "ZOMFG SOMEONE BESIDES ME IS GETTING LARGESSE" about all this student loan bullshit and I'm here to say - your selfishness is showing. Any fucking society with plans to last through the next election subsidizes something and if it isn't you, congratulations, that means your job is tedious enough that you have to get paid directly.