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Let’s talk about poor people with student loan debt:
Based on their relative lack of income, poor people are not actually paying their student loans. Single mother of one making 35K, with 30,000 in student loan debt qualifies for economic hardship deferment.
Based on their relative lack of income, poor people are not actually paying their student loans. Single mother of one making 35K, with 30,000 in student loan debt qualifies for economic hardship deferment.
The debt is hanging over her head, but she’s not making payments. Forgiving her debt removes the stress of living with debt, but it does not improve her economic conditions. Her income and monthly expenses do not change. HOWEVER:
She now owes taxes on the loan forgiveness, and the IRS wants their money now. Maybe not right away, but you will have to enter a payment plan, and if you fall behind, the IRS WILL get their money one way or another.
Her credit score drops because the average age of accounts drops precipitously and student loans are no longer reporting “pays as agreed” every month. But, at least the debt that she wasn’t actually paying is gone.
Meanwhile the married couple aren’t even combined 140k has an extra $1000 to spend every month. This is good. This will stimulate the economy, and enable young professionals to buy houses, while accelerating the rate of gentrification, making life that much harder for our woman.
To be clear, I think student loan debt forgiveness is very important, but the order in which social programs are implemented is very important. If you don’t do the most universally impactful programs first, and you can’t get the others done, you may end up with negative impact
