Recent debates over student loan cancellation ignore a fundamental question: should the federal government be subsidizing such loans in the first place? The standard argument for this intervention is that, otherwise, some for whom higher ed is productive will be unable to finance such “investments” due to imperfections in private credit markets. That claim is plausible, but subsidizing such loans has negative effects as well.
Great point, Jeffrey. The second wave problem: subsidies for student loans make some people wonder about subsidies for car notes. What about citizens with home mortgages? Do small businesses have debt - what about them?
agreed. One bad intervention creates precedent for even more!
What about federal loan guarantees for rebuilding Ukraine?
Great point, Jeffrey. The second wave problem: subsidies for student loans make some people wonder about subsidies for car notes. What about citizens with home mortgages? Do small businesses have debt - what about them?