What Impact Will President Biden's Student Loan Forgiveness Have on Your Investments?

February 10, 2021, 04:59 PM

.38supersig

Simples.

I need a $50,000 check because I didn't get a worthless degree and act stupid enough to not use it.

I'd also like to use it before inflation takes off since the government is hemorrhaging extra money that nobody had to earn and/or lose. Hopefully I can invest it before the currency devaluation...

If they do forgive the loans for the whiny little snots, I'm sure they'll bitch about it being taxable.

February 10, 2021, 07:56 PM

wrightd

One other factor to throw into the mess. That the govt got into the education loan business and gave out any amount of loan money to any and all students without any qualifications at all, none, nada. So institutions made themselves filthy rich with the flood of govt loan money, overbuilt programs, buildings, and everything else that goes with that. The fault of student ignorance or lack of character ? Sure. The fault of the govt for getting involved in funding post-public education in such a stupid way, much worse in my opinion. The real evil in this system is again, uncle sugar spending other peoples' money.

February 10, 2021, 08:19 PM

Scoutmaster

^^^^^^^^^
You make sense. I might add another factor. When the gov't spends money "for the people", the first checks go to themselves. "The people" stand at the back of the line.

February 10, 2021, 09:15 PM

sigfreund

quote:
The fault of the govt for getting involved in funding XXX in such a stupid way, much worse in my opinion.

XXX = any such program.
Henry Hazlitt warned about the bad effects of such programs in Economics in One Lesson first published in 1947. His example was government-subsidized housing purchases, but the things he identified as the problems of such programs apply directly to the college loan program.

When people have what they view as essentially free money (until the loans come due in some distant, unimaginable future) they don’t object to ever-increasing tuition costs and the colleges have no compunction or reason to not raise them as much as they can get away with.

February 11, 2021, 06:19 AM

kramden

Today colleges.....pay ridiculous tuition ....come out dumber than before you went in...let your neighbors pay the bill. Perfect.

February 11, 2021, 12:42 PM

BBMW

So far this is the only reply in this thread that is relevant to the original question.

Until more details are released, which means the proposal actually goes any where, we won't know. If the government just eats the balance on loans it's carrying, it's just another deficit increasing giveaway. If it forces private lenders to eat the debt their carrying it's a whole other ballgame. I don't know how many people actually invest in student loan debt. I suspect that bond mutual funds likely due. But I have a hard time thinking he government can or would force private debt holders to just eat the debt uncompensated.

I do think that this will be either irrelevant or a positive to the equity markets. The reason that stocks have been going up is that a lot of the stimulus has been ending up invested in the stock market. This will just be more of that.

quote:
Originally posted by redstone:
Remember there are two kinds of student loans. Loans through the government, and loans from private institutions guaranteed by the government. This is important.

We already have the ten year forgiveness program. If you work for a non profit or in the service (firmean, nurse etc.) and you have made 120 payments AND it is held by the government for all 120 payments you get the remainder of the loan forgiven.

I did the math, I basically pay back all of the principal. So the government wont make money on my loans, but they dont lose it either. (I use this logic to sleep at night).

IF your loan is with a private vendor and it is but guaranteed as a student loan it does not qualify for the 10 year loan forgiveness program. (this, and not working for the right non profit / service are why so many applications for 10 year forgiveness get rejected)

My question is, what loans are they talking about, government or private student loans? Government loan forgiveness would be like a stimulus package that we already live with. But the private ones? that gets more complicated and I am not sure how they would do it.