/finance/ - Finance

>>148 (OP) 
As an Eastern European, I can tell you that such bribery will make everyone suffer, but the masses are too blind and stupid to realize the problem, and instead they will be happy for the gibs. The greater problem is that such policies are not enough to instantly gut the economy, and that will encourage the politicians to engage in even more public bribery. After all, it worked once, it will work again. At one point your economy will collapse like a house of cards, most likely due to a crisis that stresses the system beyond what it can take, but don't except it to happen in the near future. It's a poison that kills slowly and painfully.

>>148 (OP) 
Keep in mind that $10k in student loans only translates to 120 payments of ~$100 (too lazy to do factor the exact amount with interested accounted for), which is significantly less than the increase in costs people have been hit with from inflation. While wages have gone off, they haven't got up proportional to prices - real spending power has dropped, and people have had less to invest into personal assets. Personal budgets for the past two years have been stylized around the pause in student loans, with only a small cohort of consumers specifically putting money aside with the plan of having it on hands when loans resume, so the practical inflationary effect should be negligible.

It would be one thing if the inflation of the past two years was solely based on people having "more money on hand", but most of those price hikes have been more closely related to supplies and transport (including gas prices, which is itself a supply issue). However, just because those issues are fixed, that doesn't mean that prices will drop back down. Corporations with price-setting powers in their industries will hold ground, and wage growth will stagnate. With this being the case, the loan forgiveness is closer to an artificial hedge against the deflationary effect of borrowers having another $100 down the hole each month.

In the long-term it opens up the door for further decisions of the same sort to be made in the future, which is where the greater cause of concern exists. Echoing the Trumpbux/Bidenbux and their state-level variants, the blatant bribery in American politics is only going to get increasingly worse. This is also going to strengthen the red-blue divide - it's positive reinforcement for Democrat voters, who are also more likely to have had those loans in the first place, and it's going to agitate the Republican voter base and exacerbate anti-government and anti-college stances, which altogether points to an increased wealth disparity for the general voters. That isn't something that will end well.

>>148 (OP) 
The government pumps over one trillion dollars into the economy. The people can only pay back a far smaller amount regularly, which would decrease in value as inflation occurs. The pumping increases the total money and thus increases inflation. This decreases the worth of the once repayments that the former students now have in their pockets. Now, people are also getting refunds out of their 10k, which means that they don't actually need debt relief (or at least don't need full debt relief) and would have paid the government back naturally. Since the system is first come, first serve, what happens to the people who typically hold low income jobs and cannot receive sufficient relief? They keep paying. Next, consider the effect of this inflation on taxation. The government will have to increase taxes to cover its losses and provide sufficient funding for other programs. What combined group would be the largest in America most hurt by these taxes and receive the least from the programs they support? The same people who didn't receive debt relief, and those who don't have degrees, and those who have paid off their degrees, and the unemployed. Now that medium to big earners have their refunds, and the government has injected money into the economy at all, prices will rise as the assumed income of the average citizen is higher because the portion of their wages that once went to repayments will now be free and operating costs have increased disproportionately to revenue. It's a recipe for disaster. Loan forgiveness rooves should be decided on a state-by-state basis depending on the demographics of who has the most to repay but makes the least and go up from there, and refunds of overflow shouldn't exist as they don't relieve debt. Instead, they attempt to make up for lost revenue for the former debt holder. While refunds work for taxes, they don't work for debt unless a clerical error was made.

This seems like a giant nothing. I have very little numbers to back this up but most people with student loans have far in excess of $10k (from what I have been told, the pell grant people will get $20k which does not change my point) outstanding. I do not know the loan details in specific but it is likely that this  will only change the final repayment date for loans. The monthly payment and interest will remain. Given the price of tuition in the US over the last 10 years, I can see many people in $50k to $100k of loan debt. A $10k reduction that only shortens repayment end date from 2060 to 2055 is meaningless. To these people (group one) this whole thing is a PR stunt. 

For the people who owe less than $10k (group two) and hence this will free them from loans, those people probably already have stable jobs and have gone through some amount of refinancing to reduce monthly payments (or never borrowed very much in the first place). For them this will free up a few dollars each month, but I seriously doubt it is more than $300 for many people in this situation. $10k (or less) is something the average person can reasonably payoff within 5 years (just like how car loans used to be). I do not see this group of people being numerous enough to have a major impact to the national economy or even economy of a city. 

Given this information, sure the government will take a trillion dollar loss but that will be spread out over the remaining loan term (rather the difference in loan terms) people from group one have. This will do nothing to the national economy even years down the road. Inflation, which is likely to stay elevated for a couple more years, is going to be more harmful than this. 

The bigger issues I have with this is that it will do nothing but incite more such moves from future federal governments. As >>149 said, any problems that this will cause will come rolling out over the next 20 to 40 years. Surely a few years from now (2032) when children are loaded with college debt and another president is in midterms, there will be calls to do this again.

>>150
Your point on corporations is definitely going to happen. The whole reason prices were not higher in the past is due to the expectation that the market could not handle it. Right now and in the last year we are seeing that the market can in-fact handle very high prices on numerous goods and services. If the price of supplies comes down (we might be in a bullwhip effect) the price of goods will decrease somewhat but pre-(major)-inflation pricing will never return. After all, it has been proven that people can afford higher prices. 

>>151
You make a good point. The federal government may just raise taxes in order to offset the loss of tax income (interest on loans). It is worth mentioning however that government student loans whose termination date extends past a person's retirement age will never be paid off. Old people are exempt from student loan payments. Moreover, government employees at all levels can have their loans forgiven in full after 10 years of service. I doubt we will see any changes to the economy, GDP, CPI, inflation, housing market, none of it will change. This is too small to affect those. 

Your post does remind me of a recent situation in Canada. I'm not sure if its every province but I know Ontario raised minimum wage to $15 per hour a few years ago. The immediate effect was that all houses went way up in value since buying power increased for a huge number of people. What used to be $40k became $250k, an upward scaling that more or less reflected the increase in wages combined with aggressive buyer habits and low interest rates. Now there is a massive crisis. When the low end houses went up in value, so did the high end ones. People earning above minimum wage never received any wage increase but suddenly had to compete with a bigger section of the populace for housing. As a result, the pre-existing home owners now enjoy multi-million dollar homes that they paid $200k to $500k (or less) for and can sell to a mostly younger generation (groups of 2 to 4 pool together to buy a home) who does not earn individually any more than before and will be saddled with over a million in debt (impossible to pay off). Literally a situation where the older generation rakes in tons of profit from the younger generation and does not care about what happens after they die. It is so bad that the people who refuse to take such debt have finally become such an eyesore the government will build houses for them, sell those houses at reduced (normal) prices and the government will pay for the difference between the current market price (millions) and the reduced price. All the while this is happening there are calls to eliminate student loans.

>>152
I've heard some estimates that 93% of borrowers owe less than 10k debt, but I can't find any hard statistics on that number at this time. Just food for thought.

>>152
>Given the price of tuition in the US over the last 10 years, I can see many people in $50k to $100k of loan debt.
When you factor in financial aid offices and work studies, most borrowers who were low-income to begin (the ones on the Pell Grant list - and to make a correction to the OP, the numbers are $10k for all under $125k income / $20k for those with a Pell Grant, not an amount of $10k+$20k) should almost never seen greater than $20k once you factor in federal work studies. Overall the people who were the most responsible to begin with will be the ones who get the most benefit, while the ones who took out outlandish debts will see relatively little benefit.

That $50k-$100k number can be hit, but it's going to take a masters degree (usually no financial aid for grad degrees; PhDs can get grants and stuff more easily, so you have to fuck up hard to get in debt for a doctorate), or a very specific situation of:
>(a) the family has too high of an income to get any financial aid
>(b) the student wasn't able to pick-up a full-ride scholarship
>(c) the student still opted for a private university
>(d) the family was not wealthy enough to just cover tuition in full
>(e) the family did not instead opt for a private loan
Or something roughly equivalent in terms of fuckery. As for the masters degrees, if you have a masters and you're not (a) in a field with PSLF, (b) in one that pays so much it's irrelevant, or (c) coming out of a program that gets your masters at the same time as your bachelors, then you brought debt slavery on yourself. The other way to get big debt is if you're a fuck-up who extends your degree long enough to lose out on financial aid, by failing classes and getting a trash GPA.

For perspective: Going to a private university (ballpark of $60k per year) on poorfag financial aid (university+federal), in a given semester of working ~16-20 hours per week, that left only about $1500 per semester. Had every semester been that ideal, then less ~$8k in scholarships from high school, that would have been about $4000 in debt. Not every semester went that "ideal", because it never does for poorfags (a lot of kids work in high school to pay the bills, and then take out extra loans in college so they can help cover for the family once they leave), but student workers are common. They always have been, it's just that you used to be able to pay your entire college tuition with a single semester working part-time at the KFC.

Failure.png
[Hide] (124KB, 290x290+0+0)

>>154
So if I have ~50k in debt from b and d and only have a bachelor's, even if it has a potential to be high paying, I'm fucked? Someone I know is going to pay my private loan (14k) paybacks, but that leaves either ~$360 or ~$500 a month in government loans across ten years. I want to pay it back sooner, but I might have to tighten my belt into my thirties. I'm likely to get a $1.5k to 2k refund in a few months due to how the aid acceptance system works. Should I use it to pay off a bulk of my private debt or public debt or to set myself up somewhere? I know that it would only be a 7th or an 18th respectively, but I want to escape debt as fast as possible.

>>155
It's not an ideal situation, but look at it this way. People take out $100k to pay for a new car. Cars sharply depreciate in value every year - as far as investing your money goes, they're a terrible option. Let's be generous and say minimum wage is $40 - on average about $2600 per month working a 40 hour work week. If you pay $500 per month in loans, you need $3100 per month, or a starting salary of $37,200 to break even. This is ignoring the opportunity cost of not working for those four years - while that will be balanced by other things (generally better retirement options, "the value of education", networking opportunities at a university, a higher base salary is easier to raise, etc.), let's err on the side of a very good investor and say $45k. And let's say you need to move to a nicer area to get the best paying jobs, so make it $55k. If you're working in anything STEM related that's not hard to get. And even if you're not in STEM, you're still morally superior to a BMW driver.

The metric breaks down when skills are accounted for. I'm pretty good with computers - if I invested every dollar I had from undergrad into starting an independent repair business, it would be an almost objectively better fiscal decision. But while as a poorfag with good grades, I could get money for school, there is no government loan opportunity for high-school graduates looking to start up a small business (and it didn't even cross my mind at the time, because recent high school graduates aren't objective). There are lots of ways to do better than a university degree if you have the right skills to begin with, and are pointed to the right opportunities. If you're a poorfag, you can't do much better than the military or university. If you're middle-class, if you can't get a full-ride for sportsball or something, the best option is actually going to a local community college (staying at home) and work part time with the family business or whatever for experience - but nobody actually tells families this because it's not intuitive, and it's somewhat bullshit. And richfags can do whatever the fuck they want.

As far as paying back - $100 today is always better than $100 tomorrow. If you are going to pay off debt, start with whatever has the higher interest rate and cut down the principal. But if that interest rate is lower than the projected rate of inflation, you're better off holding onto the money and finding things you can invest it into. That investment can look like proper "investments" (stocks, etc.), a rainy day fund, or just improving the general quality of life at your residence. Ultimately you're the only one who can make those decisions, but don't let the conceptual fear of death overshadow being able to take a step back and appraise the situation holistically.

>>156
I chose a really niche STEM major that most graduates use to proceed to their Masters or PhD afterward, but I realized that I don't have an interest in working in a laboratory. I had a hard time networking due to the coronavirus. I don't have many skills and basically live with my parents. I'm a poorfag with bad grades because of consistent extenuating circumstances. While I could have gone to community college for nothing, I was pressured into ruining myself financially with four year college. Despite posting on /finance/, I have no experience with investment and only an intuitive understanding of money rather than real knowledge. When I tried investing in crypto, I failed miserably. Should I use my time to learn a skill? I'd like to learn programming and another language but never seem to have the time. I don't want to let the conceptual fear of death overshadow my reasoning, but I'm really lost. The person making the payments for my private loans has plenty of profitable connections but expects me to stand on my own. My family has tons of funds hidden but thinks it's immoral to spend it on my debt over their luxury. Also, the 1.5 to 2k refund looks closer to 5.5 to 6k after I redid some math.

>>157
The hardest thing based on your description is going to be getting the first job, since that's pretty much the only time your grades (GPA) have any influence on hiring (you don't need to put it on a resume, but a 3.5 or higher will look good). If you're still in school, finding a summer internship is the best bet, and then going around any job fairs (some universities have a career center where you can book practice interviews, have someone review your resume and application letters, etc.).

From my understanding of programming (and if someone knows more, jump in here) is that it's not just enough to know it; you also need to start building a portfolio, throwing yourself at people, and perhaps picking up certificates. Some people can find coding boot camps and the like, but a lot of those are scams, and I have no idea how to vet the good vs. bad ones. Still, I've known a few people to come out ahead with them. Of course, just having the skills is still useful. And the same goes for just having a bachelor's degree - it gives you options. An old roommate of mine (philosophy major, for perspective here) started in some consulting job at around $52k, made a good impression on a coworker there, taught himself some code, and about a year later got invited by that guy to a new job at some tech start-up for $90k.

If you do decide to go for a masters, and not brave the immediate job hunt in search of that job, then for the love of God look for something with a low tuition.
Worst case scenario and you end up one of the unfortunate souls that's adding $100k in debt on a grad degree, that'll look like another $1000 or so in monthly loans. Going off of the previous numbers, that means another +$12k, plus maybe an opportunity cost of $10k from possible run-ins and not accumulating interest, so let's call it $77k. If a masters degree can get you $77k as your starting salary, or $22k over the starting salary that the bachelors could get you, it's clean. The actual number might even be lower, depending on cost of living, wages in the area, how cheap you can get the degree, hours worked, etc. Of course, that doesn't address the "interested in working in a laboratory" issue. So:
>Should I use my time to learn a skill?
Anything you can teach yourself is valuable. The greatest asset you have is your ability to market yourself, and being able to write on a resume that you can do X or Y is great. Actually being able to do it is better. And when all else fails, be prepared to jump ship if something looks like it's sinking.

If all else fails, I understand that you can make pretty good tips as a bartender. And it's like a lab, but without any lab reports, and you get to experiment on live, willing human test subjects.

Bribery or not, the American student loan system is predatory and needs to be castrated. The economy is fucked regardless and the absurdly high taxes americans are expected to pay are more than enough to keep the government afloat.
Maybe if they spent less money on Israili gibs or literally burning it in the desert they wouldn't need to fuck over young adults and patients.

>>158
>is that it's not just enough to know it; you also need to start building a portfolio, throwing yourself at people, and perhaps picking up certificates
In my experience, this is incredibly true. I'm certain all of my jobs in embedded development was due to my portfolio of independent projects with only a helping hand of my degree to get in the door. My classes never taught me much of embedded design, pcb design or much practical programming. All of those things I had to learn on my own. My employees were impressed I could even hold a soldering iron since it's not really taught anywhere. My GPA was also a little rough. Learning seemingly unrelated skills also helps. I never knew that fumbling around with a personal website to learn the basics of HTML and CSS, or messing with an old computer to make a home server would help in embedded, but it does. Learning programming has been a great skill for me, and I highly recommend picking it up, even if it's just to automate something boring in your life, like organizing data, moving files around, or have something like Excel not suck so much.

>>164
>My employees were impressed I could even hold a soldering iron
Lol, that's something even I can do, and I'm not doing embedded shit.

>>164
A soldering iron is a big hot pen. Its very obvious how to hold. But this is another example of the value of a skill being overlooked in HR. Is there even a way of putting such skills on your resume to get the actual hiring people (future bosses) to notice without getting mad at HR? Similarly when it comes to salary negotiations, HR does not give a shit about this and in my experience will attempt to undervalue you. The best thing I ever did was twist HRs arm to get more out of them and even then I still feel undervalued.

Would it be incredibly stupid to cash out my 401k with my employer to pay off my student loans? Currently have about $11k in it so I would get about $9k after taxes and fees/penalties for cashing out early. Currently have about $20k in student loans, which I could probably pay off within two years with my current employment status. Should I even be putting money in a 401k instead or prioritizing getting out of debt? My employer's plan is very generous (up to 10% matching which I am taking advantage of) but I'm not sure which one I should be focusing on.