AEM's Response to FreakOnomics: Justin Wolfer's "Forgive Student Loans? Worst Idea Ever."

Over at FreakOnomics, Justin Wolfers is arguing that the call to forgive student loans is a bad idea. The piece is response to a recent petition drive by Signon.org. The argument in favor of student loan forgiveness has been espoused by many and for several years. In my view, the strongest argument thus far was made by economist Zeus Yiamouyiannis - that's why I included references to his work in my piece about Obama's Jobs Speech. While Yiamouyiannis was not writing specifically about student loan debt forgiveness in "Endgame: When Debt is Fraud, Debt Forgiveness is the Last and Only Remedy," his theories for a debt jubilee certainly apply. So, Mr. Wolfers, there are probably a few economists, like Yiamouyiannis, who would support this "idiotic idea." Yowser. Your piece is poorly researched.

But why exactly does Wolfers think this particular idea being promoted by Signon.org, which, mind you, isn't nearly as strongly stated as Yiamouyiannis's, is so bad?

Wolfers has five arguments against it, and most of the assertions are highly questionable. The first one is about distribution.

Wolfers argues:

If we are going to give money away, why on earth would we give it to college grads? This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades.  The group who has been hurt over the past few decades is high school dropouts.

I'd like to see the figures on this claim. Please show me how much higher their incomes are. And even if they are making higher incomes, does it really help if they are saddled with 60k, 70k, 100k, 200k in student loan debt? When it comes to employment - and I am not really sure that's what Wolfers is even referring to - it is true that individuals with high school diplomas who are between the ages of 18 - 29 have a higher rate of unemployment than folks that same age who just have a high school diploma. But if the educated folks who are drowning in student loan debt have jobs flippin' burgers or selling Starbucks-slurpee-slop and earning minimum wage, then the fact that they are employed really isn't helping them. (In addition, minimum wage is far too low, especially when you're making payments to usurious companies like Sallie Mae and Nelnet).

But getting back to the claim that their incomes are higher, I want the evidence. I think his data is old or something. Give me data for this period of time that some refer to as the Great Recession. I prefer Great Depression Deux, but we're all talking about the same thing. We're talking about a shitty, shitty economy.

This also flies in the face of evidence that shows how wages have not only remained stagnant since the '70s for middle class homes, but are actually going down! So, Mr. Wolfers, provide me with some stats for this claim.

In another line, he writes, "This is a bunch of kids who don’t want to pay their loans back." Uh. Really?!? Are you kidding me?!? Wow. This is so off base, I don't know where to begin. The word "kids" is (a) condescending and (b) false. As I have argued over and over again, this is an inter-generational problem. And if you took any time, Mr. Wolfers, to read testimonials from student loan debtors, it's not that easy. Many of them feel humiliated by the fact that they can't pay their loans back. They want to be productive members of society, but they are struggling to make ends meet, and they are falling off the societal grid. So, when you make your point about poverty, we're talking about people who are fucking impoverished. That is a theme I have followed closely. I wonder if Wolfers is aware of the man with multiple master's AND a Ph.D. who is homeless? What about all the couch-hopping grads?!? So, you need to, again, do your friggin' research before writing such fluff. And don't forget the college grads who are becoming SEX WORKERS (see here and here) in order to pay off their student loans. How's that for poverty, Mr. Wolfers?!? Finally, are you aware that a huge portion of recent college grads have moved home? Are you aware of that figure? Well, if you're not, it's a whopping 85% of recent college grads who have had no choice but to move back home. EIGHTY-FIVE PERCENT, Mr. Wolfers. Are you seeing the picture yet? Are you seeing why people are calling for loan forgiveness? I bet you aren't even aware that by June of 2012, outstanding student loan debt will hit $1 TRILLION.

You see, we used to invest in higher education in this country. But we've gotten away from that. It's been turned into a fucking racket. That's what has happened, and that is why so many of us are pissed off. We feel duped. We were duped, and by institutions that should not have fucking duped us. We're all told that we must go to college, and so we did. And now what? We're homeless, living with our parents, jobless, and screwed. We're looking for jobs as sex workers. We're abusing alcohol. We're hating ourselves, when we should be angry at a system that has been rigged for a tiny percentage of rich assholes. We've been left behind, Mr. Wolfers, and we're not happy about it. You have the audacity to call us kids? Oh, and I bet we're "entitled," too? Give me a break. It's just dumb. You sound dumb here.

Your tone is condescending and you clearly haven't done a lick of research on the student lending crisis.