Dr Marshall Steinbaum scorches newly-minted Big Debt shill Matthew Yglesias on student loans

[Celerity]

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https://threadreaderapp.com/thread/1478023167482335232.html

A few words about this Yglesias post, which I hesitate to do since the man has made a lucrative career out of authoritatively not knowing what he’s talking about. But he surfaces several issues that are decisive to the policy question of cancellation.
/1

The vanishing case for student loan forgiveness
With no more need for stimulus, this doesn't make sense anymore
https://www.slowboring.com/p/student-loan-forgiveness
I won’t respond to the macro stuff, since that’s never been the real heart of the matter, which is rather about 1. distribution, and 2. overall higher education (and labor) policy.
/2
On distribution, Yglesias is correct that the populations of student debtors & non-debtors are each highly heterogeneous. The population of non-debtors is more so, since it includes people who didn’t need debt to pay for college and people who’ve never touched higher ed.
/3
(One should also keep in mind that the borrowers ineligible for cancellation, having refinanced out of the federal system, are also the richest borrowers.)
/4
Yglesias asserts that comparing these very heterogeneous distributions, the distribution of borrowers is on the whole higher-income. That’s possible, with the caveat given in (4) above. But the distribution of borrowers is almost certainly lower-wealth.
/5
Nearly all negative-net-worth households are in negative territory thanks to student debt. And that category is growing rapidly. The usual response to this is “ah but their human capital!” And that response reveals a failure to comprehend labor market credentialization.
/6
It also reveals a logical inconsistency: “adding” human capital to HH net worth to rationalize negative-wealth households has to be done for everyone else. Especially the people whose families paid for their higher education—a giant inter-vivos transfer, benefiting the rich.
/7
The final flaw in that move is just the usual basic social science error of confusing correlation with causation. People with more higher ed credentials have higher income. So do people with more luxury cars. That doesn’t mean the very expensive asset caused the higher income.
/8
Yglesias states that “strange math” underlies the claim that cancellation reduces the racial wealth gap. While stipulating that exactly how it should be measured is not obvious, that claim is slanderous. I & the others who’ve published on that question have been transparent.
/9
The strange math is coming from the “scholars” who said that since Black people are poorer than white people, Black people are less burdened by their debt thanks to IDR, and so cancelling “true, effective” student debt per their calculations is racially regressive.
/10
Finally, to higher ed policy: Yglesias also rightly says that higher ed finance is a mess & that cancelling student debt won’t solve that. Instead, to solve it you need a reform coalition. The implication being that administrative cancellation is an unfair political shortcut.
/11
The coalition blocking such a reform is also the coalition opposed to student debt cancellation, with which Yglesias affiliates himself. The reason that coalition dislikes cancellation is b/c it highlights that the feds are issuing loans thither & yon that won’t be repaid.
/12
Yglesias says nothing about the current reality of non-repayment. So he must think that even if the Feds won’t collect regardless, borrowers should still suffer.
/13
The politics of higher ed policy is that there’s been massive public disinvestment from higher ed, which has re-engineered institutions to rely on tuition. That’s viable as a business model b/c of labor market credentialization, which is also why the loans won’t be paid back.
/14
But it’s still, basically, a scam: institutions charge high tuition, the Feds write a blank check enabling that, and the loans just sit there, ruining people’s lives. That by itself is sufficient justification for cancellation.
/15
But beyond that, the political theory is that setting those loans on fire would galvanize the reform coalition Yglesias says is lacking, b/c Congress would rightly ask why the Feds are pumping so much money through loans to individuals into an exploitative Higher Ed system.
/16
If we can “afford” to cancel debt (which we can, and I suppose that touches on the macro point, but also, Yglesias concedes it) then there’s no sound reason not to do it. What remains is an aversion to pointing out that the emperor is in fact clothesless, plus age-ism.
/17
As the kids say, couldn’t be me.
/fin
Oh, re: the “strange math” slur, I should also link to these pieces by @_cromer043 & @andreperryedu:

https://www.brookings.edu/essay/student-debt-cancellation-should-consider-wealth-not-income/

Student debt cancellation should consider wealth, not income

As enrolment numbers and tuition at higher education institutions grow, the rise in student debt is outpacing both.

https://www.brookings.edu/essay/student-debt-cancellation-should-consider-wealth-not-income/

Student loans, the racial wealth divide, and why we need full student debt cancellation

Anti-Black polices across multiple sectors have diminished wealth-building opportunities that accelerate economic and social mobility.

https://www.brookings.edu/research/student-loans-the-racial-wealth-divide-and-why-we-need