PERSONAL FINANCE/JOHN NINFO: Financial Literacy Month continues –

As Financial Literacy Month continues, I want to include some interesting and important coverage by some of the media.

First, however, I want to return to the subject of forgiving student land debt, which, as I predicted in this column, is starting to percolate more now. The push now is to just have President Biden, who is the head of the Executive Branch, and thus the Department of Education — which holds all of the non-private, government guaranteed student loan debt, on your behalf as a taxpayer — just issue an executive order to have a certain amount of that student loan debt forgiven.

As a taxpayer, I continue to be concerned about the message given, if that happens, because, as I have said, that debt was never REALLY underwritten for the likelihood of repayment, as most other debt is, like credit card debt and private student loan debt, and debt that is secured with collateral, like a mortgage on a home, where interest rates are adjusted accordingly.

Also, I, and most economists I have spoken to, don’t fully buy the economic stimulus argument, since, in terms of short-term spending power, essentially it is only the monthly payments, sometimes over 20 to 30 years, that are being forgiven.

So forgetting all the reasons for and against the idea of forgiveness, where the taxpayers get nothing in return, at a fully vaccinated family gathering, I suggested, what if we just required a certain number of hours of community service for every $1,000 forgiven? I suggested that the community service could be focused on all of the issues that have been highlighted by the pandemic – homelessness, food insecurity, racial justice, equality, and more. Now I am not suggesting community service for the truly disabled, or those who can’t work for various reasons, or maybe even some of those private school students who received absolutely no educational benefit — just for students who did get some educational benefit because of their loans.

The responses I received were very insightful, but it says something about our society. First, what would it cost to set up the government bureaucracy, even if it were in the Department of Education, to monitor that public service requirement, and could it possibly be efficient and effective? Second, I need to forget about this issue, and just continue to provide tips to students and parents on how they can minimize college costs …….


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