This means that some of Mark’s loan proceeds are also being used to subsidize undergrads and less profitable departments
Graduates wait in line to cross the stage during La Salle University’s Class of 2021 commencement at Lincoln Financial Field in Philadelphia, .
We hear that we have $1.6 trillion of debt outstanding, or that the income-driven repayment programs might cost taxpayers $100 billion or more, or that there’s a $500 billion hole in the system, or that canceling $50,000 of debt per person might cost $1 trillion.
Estimates like these purport to frame contested policy choices in terms of hard dollars, with the clear inference that policies like one-time student loan cancellation or expanded income-driven repayment programs are simply unaffordable
There’s only one problem: These numbers are made up. They are mere artifacts of a series of policy and modeling choices, with little basis in the reality of personal or public finance, or the costs and benefits of higher education. There are real dollars involved, to be sure, but quoted dollar amounts like those above are based on a lie-really a series of lies.
This matters because the policy choices we make now will transform these fake numbers into real ones. If the law demands repayment of $x from a student borrower, that becomes a very real cost that can impact their life for ount. The legal institutions and moral obligations of debt have significant power to turn hypothetical cash flows into real obligations, without us even realizing what’s happening. [Read more…]