Not So Righteous Anger over Student Loan Forgiveness

I must say that I am amazed at the reactions of people over Biden forgiving $10,000 of student loan debt to individuals earning $125,000 a year or less ($20,000, if you received a Pell Grant). Scroll through Facebook, Twitter, and Instagram, the outrage is palpable. The comments range from “Will I get reimbursed for the loans I already paid back?”, to “This is Socialism and redistribution, and I won’t pay it”.  I don’t think I have seen people from various backgrounds and political parties ever come close to an agreement on an issue like I have seen with this one. The commonality among these folks is they see this as being stuck paying for the debt of someone else. On the surface the anger appears to be legitimate, but if we dig down, the arguments are quite weak, considering the fact almost all the people complaining have had their debts absorbed by society, in one manner or another, as well. If added up their benefits would absolutely exceed $10,000-$20,000. So, before the comments start, calling me a Socialist or insisting I am somehow supporting irresponsibility, let me explain my conservative point of view on this.

Have a mortgage?

                One of the best arguments us conservatives use when debating tax policy with the left is to say to them, “Hey if you think we should all pay more taxes then simply send the government more money than your tax return indicates”. It makes perfect sense to call them out when they take every deduction they can, hiring accountants to maximize them, to minimize their liabilities. So, if the argument is good enough to use on them, then it is only logical to flip it back, and use on ourselves. No?  

  Do you have a mortgage and pay interest? Do you pay property taxes? If so, do you claim them both on your tax returns to minimize your liability? We all know you do, and you have every right under the law to do so.  BUT, with that said, you are passing your tax liability to others to absorb (Since we know the spending of the government will not decrease). For example, in the early years of a mortgage much of the payments you make go towards interest and taxes, with a minimal amount towards the principal balance. So, say you have a $3,000 a month mortgage, and $1,000 a month school and local tax bill. You will immediately be granted about a $25,000 deduction for the interest, and another $10,000 for your taxes (current law caps property taxes at $10,000 per year). That is $35,000 you will not be paying taxes on. Take a conservative tax rate of 15% and you just pocketed $5,250. In 2 years, you’ve gotten more than the $10,000 you are complaining about. Over the life of the loan, you are getting multiples more.  Most of the people receiving the $10,000 relief do not own homes, but rather rent their residences. (The average relief is benefiting folks earning under $75,000 per year). Last I checked the renters cannot deduct any of their expenses that are housing related. Is anyone championing the cause of renters being able to deduct their expenses, or are we all oddly quiet on that front because it doesn’t affect us? We all lucked out because the banks and housing lobbies codified their corner of the market into the tax code. Are you still mad at the student loan forgiveness? Don’t take the deductions if you want to be consistent.

Have a Home Equity Line of Credit?

                Keeping with the theme of deductions, how many of the complainers of student loan forgiveness have paid off Student Loan’s for your children, or yourself (PLUS Loans), using a Home Equity Line of Credit (HELOC’s), because you realized that you make too much money to deduct the standard student loan interest, OR those deductions are capped?  With the recent surge in home prices, most homeowners have had the fortune of seeing drastic increases in their home equity. Now you may ask, “What is the connection to student loan forgiveness?” Well, I am glad you asked.

  Christopher and Maria send their 3 children to college and take out a home equity loan to pay off existing student loans and cover the gaps in the remaining costs of tuition/room and board. When they head to their accountant he will ask them for their Home Equity Line of Credit statement to see how much interest they paid. He does this because that interest will be listed as a line item for an additional full deduction from their taxes. (Yes I am aware HELOCs are supposed to be used for home repair/improvement, but the IRS isn’t confirming what you spent the money on.) So, add the thousands in taxes not paid because of the equity line, to the other mortgage and tax deductions, and you are close to the $10,000 in year one alone! Multiply these breaks over decades and you don’t have much ground to stand on with your outrage over student loans. While yes, students can deduct their student loan interest, it is capped. Home equity lines are not capped (Unless you run into the Alternative minimum tax issue.) As I said earlier if you are so inclined, do not take the deductions. Stand on principle or “Shaddup” because you’re benefiting much more than the ones you are complaining about.

Have you pushed for tuition accountability?  

                Every year my town, and every town on Long Island, presents a school budget to be voted on. The process is a running joke and an insult to hard working people who live here. The budgets are always an increase from the year before, often 5-8% higher. The financial impact on the residents is never considered, particularly elderly residents who live off fixed incomes. We have teachers who work 9 months a year making over $100,000 a year, designer baseball and football fields, refurbished gymnasiums, computerized classrooms (all new equipment), funded by homeowners barely making ends meet. Were, or are, your kids attending public schools? Did you howl in protest that parents who send their children to private schools (who don’t use the schools at all) are massively subsidizing your child’s education? Have you used the terms Socialism or income redistribution when discussing it? Did you vote in favor of raising my taxes, and everyone like me, who sent our children to Catholic school? If so, you are saddling me with a lifetime of debt for a school I don’t use and have no connection to. This is Socialistic. Schools should be forced to adhere to a strict budget and anyone attending gets a turion bill that ends the day your last child walks out its doors for the last time.

When the property taxes were capped at $10,000 a year what was the reaction of those complaining about student loan forgiveness? They were outraged.  Not outraged at tax increases that well exceed the annualized inflation rates, just outraged they were being capped on their deductions. Deductions that others would have to pay to fund.

                Now take this to the college level and ask when the last time a serious conversation about the costs of tuition was had, and about the student loan programs, that help facilitate the costs continuing to soar. The college costs are a modern-day Bernie Madoff Ponzi scheme. Massive hype is created about these institutions. Parents fear their children cannot succeed unless they attend these places of learning. Degree programs are offered that offer no chance of success, accompanied by bills costing 10’s of thousands a semester. Where is the government holding them accountable for jobs received, commensurate to the costs paid to attend? Where are the complainers of student loan forgiveness insisting on accountability? Harvard and Yale, for instance, have more money than most hedge funds in the United States. The tuition at Harvard is about $75,000 a year. St. John’s University is $45,000 a year. What exactly is this money going towards? Why does a “non-profit” such as Harvard have in their coffers 82 billion dollars yet still be allowed to participate in the student loan program? If truly non-profit shouldn’t they be forced to spend the money on the incoming students (while retaining an amount to continue operations) before being allowed to ask for loan money?

The fact is these places of “higher education” are run by a majority of highly overrated left-wing professors who make more than a quarter of a million a year, teaching useless courses such as foreign languages, Sociology, or the History of Native Americans. Professors who would otherwise never amount to anything in the real world. Just like our governmental leaders they have been fleecing taxpayers for generations, yet not a word, or attempt made to break up these useless cartels.  These schools have strayed from their mission statements of educating the children of the future, pushing them into camps of ideological rubbish, with the budgets of fortune 500 companies.  I don’t hear any outrage from people on them not paying a dime in taxes, or threats to escalate to the federal courts if they are not brought into compliance of the Federal Student Loan programs to teach meaningful subjects. If you’re particularly quiet on these topics, please stay quiet on student loan forgiveness. You seem content with the public funding of these universities as playgrounds for the rich professors as they screw over generations of young adults at a harmful cost. Why no objection to these costs being absorbed by the public? Is the bumper sticker on your car telling the world your child goes to Georgetown too important to you to stand up?

Big Education is a Big Lie

                I will wrap this up by saying that entire college experience is the most overhyped lie going on today. I should know, as I believed all the degrees were going to open the doors of life for me and give me smooth sailing. I have 2 Bachelors and 2 Masters degrees, and the cost to obtain them have been tremendous, and a total waste. While the degrees may have gotten me through the door, the remainder of my work was my experience. I had to scrap and fight countless times in the corporate cesspools, against corrupt people, BS artists, con men/women and simple flunkies. None of this was taught in school and I can say that with the exception of one degree (Finance) I would have had the same abilities I have now. The entire degree scheme is just that, a huge Ponzi scheme to rip off families, where the educational establishment profits at the top. Very much like, and part of, the political establishment. It is of no surprise they come down on the left side of the political spectrum. They have billions to protect at all our expense. So perhaps rather than be upset at people being relieved of $10,000 dollars, you focus your attention on the trillions of dollars being wasted on the connected and favored members of society. The ones who rip us all off every day.

                Real change would be insisting on massive tax, education and political reform that is meaningful. We have generations of kids with useless degrees, indoctrinated and ill equipped to compete in the real world. Kids who believed opportunities would exist once they completed school, only to be forced into unfair matchups against imported workers. Good luck getting a job in technology as your favorite corporation, with the full support of the government, brings in plane loads of workers from other countries for cheap labor. (As they all took American tax bailouts)

  So, while I may understand the initial arguments about adding 300-500 billion to the deficit, I don’t understand the same folks using the tax code to get their own breaks, lashing out at those who got $10,000 dollars. I don’t understand those folks who stayed quiet while businesses were shut down, but “loans” were made to them to stay closed, that didn’t have to be paid back. (Loans way beyond $10,000) I don’t understand the silence as millions were sent to places such as the Kennedy Center in Washington D.C. to “fund the arts”, while the staff working there are the usual suspects of the Democratic party. I am glad kids were given a break and a refund for the exorbitant tuition they were charged.  Let’s be honest. Most of the people complaining who say, “I paid back my loans”, didn’t pay back $20,000 a semester. Their entire college cost over 4 years was less than that. Your outrage is ill informed and dare I say hypocritical.

The cost of college is a direct response to the actions of the government over decades. Its not unreasonable to see some sort of compensation for those affected. Maybe see the whole picture before being outraged. To you on the left, you caused this, you perpetuate this, and you have no intention of ever seeing it end. To my pals on the right, you get your own breaks, just in different ways, and much more of them. The system is corrupt and broken. Admitting it is the first step in fixing it. Not blaming kids who had nothing to do with any of it, rather are the actual victims of this massive scam that enriches frauds like Elizabeth Warren, who in one year made over $400,000 teaching one class. Nothing Sitting Bull could teach would be worth this amount, yet somewhere a group of kids are still paying it off and will be for a generation.