Student Loan Forgiveness (MERGED) (2 Viewers)

[el caliente]

Rumors floating around is that today President Biden will be canceling a portion of student loans. That’s fine and all, but what’s your take on it? If it truly is only $10k in forgiveness, is that enough to make much of an impact? Is student loan forgiveness just tax payer funded student loan bribery?

Should be interesting to see how this plays out.

 

[samiam5211]

Are you saying the average outstanding debt will increase after this program? I'm not sure that math works.

It’s mathematically possible.

It’s like how life expectancy can go down if a bunch of old people die.

 

[el caliente]

Are you saying the average outstanding debt will increase after this program? I'm not sure that math works.

No, I am saying if you and I go in together on a project and we have a total net worth of $60M then the an average total net worth of the enterprises ownership is $30M. If you leave and take your $10M then the average total net worth of the enterprises owners is now $50M. It’s a bad example, but the math still maths.

Remove your $10-$20k loans, and that $36.7k average will increase because so many loans are greater than the $36.7k.

I heard someone on the Daily this morning saying that this bailout won’t impact taxes in a negative way, but he didn’t go too much into the weeds on it. I looked for what he was talking about, and found nothing but the opposite, this will impact taxes in a negative way. It’s hard to trust anyone these days.

 

[Joan's E]

It’s mathematically possible.

It’s like how life expectancy can go down if a bunch of old people die.

Right, except it's nothing at all like that. To use your analogy, this would be like a disease wiping out people at all ages equally and then arguing that the life expectancy is going up because it's killing young people.

Yes, the program is erasing loans that are dragging down the average (like the $5000 balances). But they're also pulling down the $200,000 balances by $10,000 and pulling the $15,000 debt balances down to $5,000 (thus replacing the old "erased" $5,000 balances). In other words, I can't see any way that a "mostly" universal reduction in debt balances could possibly increase the average.

 

[samiam5211]

Right, except it's nothing at all like that. To use your analogy, this would be like a disease wiping out people at all ages equally and then arguing that the life expectancy is going up because it's killing young people.

Yes, the program is erasing loans that are dragging down the average (like the $5000 balances). But they're also pulling down the $200,000 balances by $10,000 and pulling the $15,000 debt balances down to $5,000 (thus replacing the old "erased" $5,000 balances). In other words, I can't see any way that a "mostly" universal reduction in debt balances could possibly increase the average.

But if a disease wiped out all of the young people, technically the life expectancy would go up.

An 80 year old man has a higher life expectancy than an 18 year old.

 

[Joan's E]

But if a disease wiped out all of the young people, technically the life expectancy would go up.

An 80 year old man has a higher life expectancy than an 18 year old.

Well, A) that's not right. Average life expectancy would decline because all the people dying at 15 would drag the number down (I think where you're confused is that the average AGE would increase), and B) that's not what we have here because debts across the board are being reduced, be they $5,000 or $500,000. Average debts can't be increasing if there is only a negative force across the board.

Here's where I could see the average debt burden increasing as a result of this. If lenders took notice and loaned MORE money out, and offered larger loans because they were more confident that there would be fewer defaults, then in theory this program could increase average debt burdens. But the way it's structured now, there's no way the average is increasing absent some secondary result like I just outlined.

 

[el caliente]

Well, A) that's not right. Average life expectancy would decline because all the people dying at 15 would drag the number down (I think where you're confused is that the average AGE would increase), and B) that's not what we have here because debts across the board are being reduced, be they $5,000 or $500,000. Average debts can't be increasing if there is only a negative force across the board.

Here's where I could see the average debt burden increasing as a result of this. If lenders took notice and loaned MORE money out, and offered larger loans because they were more confident that there would be fewer defaults, then in theory this program could increase average debt burdens. But the way it's structured now, there's no way the average is increasing absent some secondary result like I just outlined.

You are right, if you and I have a combined amount of debt of $100,000, our average debt is $50,000. If this forgiveness reduces our combined debt by $20,000, then we are looking at a combined debt of $80,000 (or a $40,000 average). However if the $10k wipes out your debt, it leaves me alone with a loan amount of $80,000, and the average amazing of debt matches that (because now there aren’t two debtors, there’s just 1).

It’s all very complicated, but you can read more about it in my new book, “Mathing for the rest of us”.

 

[J-DONK]

You guys want to listen to a strange clip about student loan debt considering the source?

I give you Tucker Carlson ala 2018.

 

[J-DONK]

Are you saying the average outstanding debt will increase after this program? I'm not sure that math works.

My mind went to they will buy houses. If that happens, debt does go up.

 

[MT15]

You are right, if you and I have a combined amount of debt of $100,000, our average debt is $50,000. If this forgiveness reduces our combined debt by $20,000, then we are looking at a combined debt of $80,000 (or a $40,000 average). However if the $10k wipes out your debt, it leaves me alone with a loan amount of $80,000, and the average amazing of debt matches that (because now there aren’t two debtors, there’s just 1).

It’s all very complicated, but you can read more about it in my new book, “Mathing for the rest of us”.

In order for your math to work, I think, there would have to be equal numbers of people below and above the income threshold. I’m not sure that’s true. I think the vast majority of student loan “havers” are below the income threshold and their loans would also decrease by $10-20k.

 

[samiam5211]

Well, A) that's not right. Average life expectancy would decline because all the people dying at 15 would drag the number down (I think where you're confused is that the average AGE would increase), and B) that's not what we have here because debts across the board are being reduced, be they $5,000 or $500,000. Average debts can't be increasing if there is only a negative force across the board.

Here's where I could see the average debt burden increasing as a result of this. If lenders took notice and loaned MORE money out, and offered larger loans because they were more confident that there would be fewer defaults, then in theory this program could increase average debt burdens. But the way it's structured now, there's no way the average is increasing absent some secondary result like I just outlined.

It depends on how you set the demoninator.

If you continue to calculate the average debt including the people who now have no debt, then yes, it would have to down, but if you calculate the average debt using only the people who have debt, then it could go up.

It's the same thing with life expectancy. The life expectancy is not the number of years people have left, it is the average age that the people living could be expected to live to.

 

[coldseat]

The average student loan debt may increase depending on the number of borrows who get their debt wiped out, though I think it will still likely come down some. Either way, the total student load debt held by Americans will decrease and individuals loan balance will either get wiped out or reduce, which is the goal. So the average doesn't really have much significance in that context.

 

[samiam5211]

The average student loan debt may increase depending on the number of borrows who get their debt wiped out, though I think it will still likely come down some. Either way, the total student load debt held by Americans will decrease and individuals loan balance will either get wiped out or reduce, which is the goal. So the average doesn't really have much significance in that context.

it won't matter in reality.

But you can bet that if that average number goes up, Republicans will be saying that Biden increased the average student debt.

 

[SaulGoodmanEsq]

 

[DaveXA]

Doesn’t hypocrisy go hand and glove with politics?

It shouldn't...but yeah.

 

[brandon]

You are right, if you and I have a combined amount of debt of $100,000, our average debt is $50,000. If this forgiveness reduces our combined debt by $20,000, then we are looking at a combined debt of $80,000 (or a $40,000 average). However if the $10k wipes out your debt, it leaves me alone with a loan amount of $80,000, and the average amazing of debt matches that (because now there aren’t two debtors, there’s just 1).

It’s all very complicated, but you can read more about it in my new book, “Mathing for the rest of us”.

Yes, if “debtors” is what you’re going with. If “amount of household debt” is what the average is based on (which it will be), then you now have a household with $80,000 debt and a household with $0 debt, thus bringing the average down to $40,000.

In other words, what I’m saying is your stupid math spin doesn’t make this a net negative for families or the “average” debt of the country.

 

[el caliente]

Yes, if “debtors” is what you’re going with. If “amount of household debt” is what the average is based on (which it will be), then you now have a household with $80,000 debt and a household with $0 debt, thus bringing the average down to $40,000.

In other words, what I’m saying is your stupid math spin doesn’t make this a net negative for families or the “average” debt of the country.

Did my math not math for you? It mathed for me just fine.

Put it this way, you and I have a 100 combined problems. We have an average of 50 problems. Now if you leave, and take your 1 problem, the average of my problems now shoots up to 99, but the good news is you’re problem isn’t 1. If your having math problems I feel bad for you son.

 

[brandon]

Did my math not math for you? It mathed for me just fine.

Put it this way, you and I have a 100 combined problems. We have an average of 50 problems. Now if you leave, and take your 1 problem, the average of my problems now shoots up to 99, but the good news is you’re isn’t 1. If your having math problems I feel bad for you son.

Did you even read my post? The metric that will be used is "average household debt," not "average household debt among debtors."

 

[MT15]