The US Government is Digging Themselves Into Forgiveness
Every once in a while I love sharing my millennial in Southern California Perspective here on leofinance
For those of you who don't know, the US Government put a pause on student loans in March of 2020.
Everyone who owed money to the government in the form of studen loans, was given a pause in which they did not have to make payments. The interest rate was set to 0.00
Over two years later, they can't figure out how to "unpause" these
A little example of the mess they have created is me in my personal household.
By pausing my student loans at a 0.00 interest rate the government has put an "extra" almost $400 dollars per month spending power in my pocket
This means that if I had to start paying my loans back today, I would be paying almost $400 per month
according to credible.com my payment is pretty average.
I live in Southern California where minimum wage is $15 per hour and most people make more than that.
While $400 a month is hefty, it is very do able.
The thing about it, is that those $400 a month have not been going anywhere special. They aren't being invested, or saved. They are simply being used up by a family of 6.
When the time to pay comes, we will simply have to tighten our belts
Who will really be affected?
Target
Costco
Barnes and Noble
Papa Johns
The Ice Cream Truck
LifeTouch Photos
Yearbooks and such
Can the government really afford to have 1 in 8 americans suddenly stop putting money into the economy?
I guarantee you, the economy does NOT want us to start paying those loans back anytime soon.
I wonder when they'll finally make us pay them back
Hopefully by then, I'll be an HBD Millionaire
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Mine are at $350 per month. The pause has been great over the past two years. Between Mrs TWM and me, we are saving more than $500 per month. We have paid off stuff and even bought a home. We have requested deferments in advance to buy us more time to pay off the last of our other big payments. After that, we should be able to handle the student loans. Although, we'd also be in a position to start paying them off early.
I agree that they are, like the Federal Reserve, in a box. Once they resume charging student loans, the economy will take a hit. The worst thing is that the money is non-productive.
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I am happy to hear you did something useful with your money. I have a sinking feeling that most people are doing what I am doing and not what you did.
I will miss Barnes and Noble, I have been giving them plenty of my pandemic money.
We donated plenty to Barnes and Noble as well. And, we also gave their Starbucks coffee shop some support.
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oh yes, starbucks needs all the help they can get.
Seriously speaking though. If you can't afford two, you can't afford one.
So I got a starbucks app, and every time I fill the card up, I turn around and buy starbucks stock with it.
It slowed my coffee buying down, and made so that I own a WHOLE starbucks share.
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That's a good idea.
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Yeah I find it super hypocritical that they have forgiven almost all the PPP loans they gave to businesses but are just SO afraid of canceling student loan debt. It would be not only helpful to individuals who struggle with making ends meet, but also to the economy at large as all that spending power into the economy helps, as you point out.
NTM they're always talking about how "why don't Millennials buy x" or "why aren't Millennials having as many children" and such, and it's like ...because Millennials can't afford it, y'all. Give them a break already.
I try to stay neutral about it because I directly benefit and feel like I have been directly benefiting from "covid handouts" since March 2020.
But I completely agree with you.
I feel like there is enough for us all to live "in the green" and abundantly and am excited about getting there.
For now, I am looking to stack 50 HBD a month, so that by the time I am retirement age, I can have a nice little nest egg.
Thanks for coming and visiting.
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It's better you guys protest before it increase more than that, so it won't result to debt later
This is one of those "big ticket issues" that is talked about a lot here in the US, for sure in my City, in my circle.
There's lots of people protesting.
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Unfortunately, the end result of not collecting is even higher government debt. Sooner or later this translates into higher taxes. Nothing is free and the longer debt is deferred, the more it is going to hurt everyone. This doesn't just apply to student loans of course...
There are lots of different angles to this "problem."
But here is the angle I personally see.
Either I give my money back to the government - or I put my money into the economy.
Believe me, for at least the next couple of years my government WANTS me to pump an extra $400 into the local economy.
And nothing is free, except it is, cause I am breathing.
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Of course nothing comes free.
I just mean that by not paying it now, everyone will ultimately pay more for it later. In the short run, you are right, it's better to put that money into the economy. In the long run it is not such a good thing since the debt has to be paid, plus interest (because the government is borrowing money too, including what it is lending out to students). Government keeps deferring debt and it keeps growing exacerbating the problem. The longer the delay, the worse it gets. Again, that's not just with student loans, its with how government manages debt in general.
Right now, the government owes over $30 trillion dollars. That really means that you and I and every other taxpayer owes $30 trillion dollars. Add in unfunded liabilities (things like social security and medicare which have supposedly been paid for but the government spent it and converted it into debt via bonds) and divide by the total number of taxpayers and you get something like $500,000 each.
This is all part of a bigger problem. The government can't control its spending and puts off paying debt because it is too painful. Yet it wants to buy votes with "free" money. The problem is it only gets more painful.
The problem here is that you are using "sense" when this is a senseless problem.
There is a deeper problem that needs to be fixed and "fixing" the student loan problem is just a band aid to a truly broken system.
Let's say EVERYBODY paid back their student loans at the same time. The economy would still not be fixed.
If its all a bandaid anyway, why not use a bandaid that stimulates the economy?
So what is the ;deeper; problem? To my mind this is how it works...If someone takes a loan fully knowing that there is a moral and contractual responsibility to pay it back ... then it is clear... I agree with darth-azrael ... there are no free meals and for every 'winner' there is a loser.
In the US, if you can’t pay your bills, you can declare bankruptcy.
For everything except student loans.
So it is not as simple as you borrow, you pay back. It should/could be, but it’s not.
There is no winner and loser here, everyone is losing.
Regarding the deeper problem here’s an analogy. I have kids. Rules are simple, keep your room clean.
When a kid doesn’t clean their room everyone gets “punished” because the problem needs to be addressed before we can go on to the next activity.
It seems like a simple solution, if the kid doesn’t clean their room - they get left out of the next activity.
But that doesn’t really work all the time.
What does work is finding the deeper solution. Does the kid have too many things? Do they need help organizing? Do they need better skills?
Student loans are a trillion dollar problem. What do these people who aren’t paying need? Government paid “overtime?” Classes on money management? Help starting passive income streams?
And besides - in crypto and in life we tell people not to invest more than they can lose. We tell people not to lend more money than they can gift - how came the government let themselves get owed that much money?
I guess we could just be “hardcore” and start sending people who don’t pay to jail - pay for them to live and eat there - and put all their dependents on welfare… (I know that’s not a solution either)
Fair enough, it is complex. But in my opinion each person should take responsibility for themselves (and as a parent... for their children) . Finding 'deeper' solutions to millenia long challenges is an admiral endeavour but I believe unrealistic. Once one delegates responsibility to 'others', be it the State or any other 'formal' institute one is at their mercy to do the right thing.
The 'hardcore' solution you (I assume) tongue in cheek propose at the end would be better served for bankers and central banks who push their agenda regardless of the consequences of the poison pill they push to the small person sitting the other side of the desk. Since the establishment of the Federal Reserve in the early 20th century the strategy for power and control has been debt ....
Debt forgiveness or no debt forgiveness, i agree, we all need to be responsible for ourselves.
Got debt forgiveness? Stay out of future debt.
Don’t get debt forgiveness? Pay it off.
And always, invest in HBD (lol)
Amen to that.
Thanks for the chat 👍
The fact that everybody wants (and usually gets) their own bandaid (which usually involves irresponsible spending on the part of the government) IS part of the he deeper problem. Ultimately the solution is lower government spending (within its means and actual responsibilities) and simple, reasonable taxation. To function properly, the government has to actually make decisions on what is more important to spend money on instead of just spending on everything because somebody somewhere wants it. But it doesn't do that for fear of pissing off one voter or another. Hence where we are today. It's not really the government's job to fix the economy. It just needs to not break it. Massive uncontrolled spending and the debt that comes along with it, breaks it (this is where inflation comes from, for example).
It’s not like I think the government is doing a great job.
We are in the US - the solution is never - buckle up and pay your debt - the solution is - find a different way to make more money and go big!
I think we really are finding solutions here in the crypto-sphere. We are finding ways for future wealth not based on debt.
Still, I can’t understand a system where everyone doesn’t want the people to be debt free, clothed, sheltered, and fed.
Until resources are infinite, I don't know that everyone CAN be debt free, sheltered, fed etc. Or at least I don't see how to achieve that. Certainly not via government force. We've seen where that leads time and time again. People speak of crypto as if it will provide unlimited abundance but it can't create more physical goods whether that is food, shelter, transportation, energy, etc.
Crypto can help of course but the degree to which it can help is still restricted by physical reality. It isn't magic.
Not all debt is bad depending on the realities of the dominant monetary system. In a system with significant inflation (like what we have now), you can be much better off going in to debt to make big purchases than saving for a significant amount of time to pay cash for it because the value of the dollar (or whatever currency you are using) is constantly going down. This applies to low interest loans like for a house, perhaps a car...that sort of thing. Probably not 20%+ credit card debt though. And you still have to keep your debt levels reasonable relative to your income. Crypto is changing that but it is difficult to say how crypto will be valued when it is the norm. Some crypto is inflationary...some is deflationary. Assuming Bitcoin survives, it will likely always go up in value over the long term. Doge on the other hand...