Revisited: Student Loan Repayment and Education Costs - Tax Benefit Approach to Encouraging Loan Repayment without FORGIVENESS

Revisiting an idea from a few years ago.

As student loan debt reaches unprecedented levels, it will become important that government officials find methods to reduce the cost of a college education, encourage repayment, and allow debtors a way out if repayment is simply impossible. While reducing the cost of a college education and allowing debtors a way to receive a discharge of student load debt are issues that are beyond the scope of my expertise, utilizing the US tax code to encourage borrowers to repay their loans could be a powerful and beneficial tool to get student loan debt repaid.

There are a couple of misguided principles that currently rule how the tax code encourages American's to get a college education. First, education credits currently end up benefiting parents who  (in many cases) may not pay a dime of the student's educational expenses, or they are only available to the student in years where they have no income. Second is that student loan interest is the only benefit available to student's who are making their loan payments. Unfortunately, the student loan interest deduction is limited to a paltry 2,500 dollars and the deduction is completely eliminated if your income is more that 80,000 dollars (160,000 for taxpayers filing married joint returns). The first principle wastes tax benefits for the student who is going repay the debt, and the second principle doesn't provide a strong enough incentive for students to diligently repay their student loan debt.

Tax Credits for Graduates

Education tax credits would be better utilized if they were carried forward, usable by the student borrower only, and only allowable after graduation from a bachelor or graduate program. This would reduce the number of tax credits that are taken each year by making graduation a prerequisite for claiming the tax benefit. It may also reduce the number of students that attend college each year who lack the direction and intention of graduating with their degrees.

This would also provide new graduates with an income cushion that would make loan repayment a less stressful proposition in the early years of their new careers while their income is lower.

Unlimited Student Loan Interest Deduction

The student loan interest deduction could be made fully deductible. Doing so would provide incentive for repaying the loans and increase the repayment percentages. The deduction could also be tiered between borrowers who finish their degrees and those that do not graduate. If the borrower graduated, the interest deduction could remain a adjustment from income. Borrowers who do not graduate would be eligible for an itemized student loan interest deduction.

Revenue Neutrality

In order to keep this proposal revenue neutral, limits that have been in place against student loan interest (at different levels possibly) should be made to apply against the mortgage interest deduction. The mortgage interest deduction has been a special interest loophole for the mortgage industry and realtors for several years. Unfortunately, it has been a contributing justification for unsustainable increases in home prices across the country for the past 10-15 years and ballooning debt. If we take a utilitarian approach to providing individual income tax benefits, it is clear that providing more tax relief to college graduates is of more value to society than rewarding mortgage debtors. The cost of a completed college education benefits the country with a more competitive workforce and taxpayers with a high earning capacity, while bloated mortgages benefit big banks and the bottom line of realtors that make thousands of dollars on every sales transaction that they close.

Student loan defaults are a major problem facing our nation's budget. Congress must find better answers to encourage loan repayment, and this issue needs to be solved sooner than later. Current student loan default rates are at 11%, but the true rate of non-repayment is far higher if the number of borrowers on reduced or income based repayment plans are taken into account.

Response to Reps Owens, Stewart, and Curtis

Dear Sycophantic Congressmen, 

Here are some facts:

1.) Lee worked tirelessly to encourage, and fabricate a facade of constitutionality to the former president's attempt to overturn a popular election defeat of more than 8 million votes. (14 hours days by his own account). READ: Mark Meadows' texts with Mike Lee and Chip Roy - CNNPolitics

2.) Lee willingly misappropriated a hero from my scriptures in praise of a man who is the antithesis of everything that hero represented. See here

3.) Lee has continued to support the former president's position. Most recently by arguing the merits of the pseudo-scientific documentary 2,000 Mules.  '2000 Mules': Sen. Mike Lee says it raises questions about ...

4.) Lee's record is hardly the beacon of bipartisan accord. The man refuses to vote yes on even the most benign presidential appointment. See here: https://www.lee.senate.gov/voting-record-1 and here for clearer explanations of the votes: https://justfacts.votesmart.org/candidate/key-votes/66395/mike-lee

5.) Calling a refundable tax credit a legislative triumph is a bit of a stretch. You would be hard pressed to find a single senator a congressman who would vote against a gift to voters when their party is in power and they can gain the credit. Proving the point, Mike Lee noticeably did not support child tax credits under Biden.

6.) Nothing McMullin has actually said is incorrect. Lee joined the sycophantic likes of Cruz, Paul, Hawley for the majority of Trump's tenure. He votes on the far right, as McMullin has said, and that may not be a huge problem if Lee maintained any dignity during the Trump years. But he didn't, he prostituted his dignity for every scrap he could get the president to throw at him. 

But then again, two of you Congressmen have been nearly as sycophantic as Lee.

Biden and the Blood Red Independence Hall

 The first things I saw in regards to the Battle for the Soul of America speech from last night was the crimson-lit Independence Hall with two Marines standing in the shadows. From an optics perspective, I don't know that the backdrop was the wisest decision. It may have looked cool, but it looked a bit sinister.

I finally listened to the speech this morning. 

Positives

He called out the sycophantic portion of the GOP that has chosen to vilify the FBI for doing something that every American believes should be true. The FBI treated a former president as it would regular citizen who is under suspicion of committing a crime while executing a search warrant. Every single one of these sycophantic "conservatives" would be talking about the "heroic" FBI if the warrant was exercised on Hillary Clinton. They all know that is true.

He called out absurd hyperbole from people like Lindsey Graham claiming "riots in the street" will follow from the indictment of Donald Trump and from Ted Cruz, arguing that the IRS new agents will be weaponized against humble middle income GOP Americans.

He did call for a more united country, for the need to be vigilant about voting and keeping election deniers from taking local and state election offices where they could be in positions to perpetrate actual election interference and fraud. 

Bad Moves

The decision to refer to hard Trump followers and sycophant GOP congressional reps and senators as "MAGA Republicans" was ill-advised. I understand he was making a political statement, but he will end up alienating a large number of Republicans (the ones who thought Trump was a good president, but did not agree with Jan 6 actions). He could have made the same impact by pointing the figure with a simple epithet like ultra-MAGA or referring to sycophantic congressional reps and senators by name. For example, shaming Senator Graham directly for his threats of "riots in the street" after a Trump indictment.

He also made things more divisive by pointing to social-conservative beliefs as extremist. Things like pro-life and traditional marriage are not new Trumpian conservative values. Lumping those beliefs with anti-democratic extremist will lead to more circling of the wagons around the GOP banner, and to re-embracing strongman authoritarian style leadership. 

Those two moves, were the most divisive things his speech did.

Missed Opportunity

He should have made this speech a more direct call out to the most offensive GOP sycophants that are still in office. Greene, Gaetz, Boebert, Cruz, Graham, Hawley, and others who have done nothing but defend the indefensible behavior of Donald Trump and those that have sought to vilify the FBI, the DOJ, and the IRS. He should have called out specific upcoming elections where election-conspiracy promoters are in position to take positions where they could overturn elections. These are the most important things to fight against.

Overall, the optics and overly broad attacks in the speech will unfortunately drown out much of the unifying rhetoric he intended to give. Biden, I look at him like the steward of Gondor - not worthy to be King, but he is a better occupant of the White House than a puppet of Sauron (or Putin) like Trump. 

GOP: I don't want to vote for Biden in 2024 - I don't. However, if you persist in trying to bring Trump back, you leave me and many other clear seeing centrists and conservatives no choice.