No Such Thing as a Free Lunch

Should your student loan be cancelled? What do you think about the saying, “no such thing as a free lunch?” George G tries to reconcile all of it!

Jun 24, 2024 | Blogs, Podcast

About the Episode

There’s no such thing as a free lunch; can we all agree on that? Yet, there’s a lot of enthusiasm around student loan forgiveness. How and why is that different? 

George G talks about who this harms, what the ramifications will be, the real injustice in all of it, and what can be done!

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George Grombacher

George Grombacher

Host

Episode Transcript

How are you feeling about student loans? How do you feel about education? How do you feel about the cost of education? All the things, all the things who should or should not pay for your student loans? Maybe that’s the question right there. That’s probably the question, who should pay your student loans? Well, the answers you, you should pay your student loans. Yeah, but cost of education. Yeah. But this then the other thing. I have such little patience and tolerance for this whole subject for this whole topic. Two things can be true at the same time, in fact, many things can be true at the same time. But it’s incumbent upon us human beings to be able to suss those out and to be able to hold multiple thoughts or ideas in our heads at the same time. So two things may not be able to be true at the same time. How could it possibly be that a reasonable person would go through the exercise of applying to a college making a decision on how to pay for it, applying and being approved for a loan? Going through your college career, 23457 years? And then walking away and saying, oh, wait a minute, why would I pay for these? Can I get somebody else to pay for these? I got duped. Okay. I don’t think so. But okay. Is that really what you think? Is that your honest opinion? Does anybody really think that? Or is it just politicians, and the media saying this stuff to us, and then we parrot it back? I don’t know. There are a lot of victims out there. There are a lot of people who are victims of their student loan survivors. I am, I am a student loan survivor. I graduated high school in 1997. And went through a very exhaustive college search. And I was fortunate enough to, to compete at athletics at a really high level. And so I got a scholarship. And the covered the vast majority of my schooling, still graduated with, I think, $13,000 of student loan debt. Now in 2001, and I went through the exercise of paying it off $100 A time over the course of many years. So I am student loan survivor. But if you had come to me and said to me, when I was 22, or 32. You know, we Why would you pay these? why don’t why don’t do you don’t want the government to just wave a magic wand to pay these off for you? That wouldn’t make any sense to me? Like, why would why would the government pay off my student loans? Because at the end of the day, it’s not the government that’s paying off your student loans. It’s me, I am paying off your student loans. If you are not, it is the American taxpayer. It is not the federal government that is paying off your student loans. The federal government doesn’t have any money, except for the money that they extract from taxpayers. So if you’re sitting there thinking, I don’t want to pay these, I’ll get the government to cancel it No. Friend, it’s your neighbors, your co workers, other Americans that are having to pick up the bag and foot the bill, for your decision making, be it good decisions, or bad decisions. But don’t think for a second, that all of a sudden, this just money just disappears into thin air. And nobody’s responsible for it. Because that’s not how it works. American taxpayers pay it. It’s not forgiven, it’s not canceled. You’re just not paying it. That’s how it goes. A lot of language games and effort going on here. So student loan forgiveness, student loan, cancellations, these are dumb terms, as though it’s just pretend money that the President could simply make go away and there won’t be any negative consequences of side effects, just free stuff and a nice thing to do for poor young people who are struggling to get ahead. And I was once a young person struggling to get ahead. Now I’m a middle aged person who’s struggling to get ahead same as everybody else. So it is none of this has ever made any sense to me and it is one of those times where I’m perfectly happy to yuck other people’s yums and Just because it seems like a good idea, it’s not none of this is a good idea. So, you know, we want more money, so we just go ahead and print money. It’s like that, right? Feel like we’re doing this in other areas of our lives. Isn’t that what caused inflation? And isn’t inflation? What’s making it harder to service the debt that we’re piling up for printing money and spending money? Yes. That’s what it is. It’s way harder for us as a country to stay on top of this. So shouldn’t we stop using the magic wand thing? Shouldn’t we just stop waving it making things go away? Yes, we should. Does it make sense to anyone that you could simply wave a wand and wipe out student loan debt for millions or hundreds of 1000s? Or 10s? Of 1000s? of borrowers? That’s that’s unclear. Do you just want your student loan payments to go away? Yes. Would you like everything in the world to be free? Yes. Would you like everything to be free and have no consequences? Still sounded pretty good. Still making a lot of sense? Does that transaction exist anywhere else? Has it ever existed at any time in human history? No. No, it never has. And no, it will never exist. So why am I talking about this? What brought this on? George, from CNN, the federal budget deficit will hit $1.9 trillion, this fiscal year, according to an updated projection released Tuesday by the CBO Congressional Budget Office, that’s 27% or $400 billion. So we just missed on that one by a little bit by about a third came. So longer term, our nation’s debt will approach $57 trillion by 2034. That’s two and a half trillion dollars higher than previously projected. So I mean, at this point, this is just it’s funny money. It’s Monopoly money. 57,000,000,000,002 point 5 trillion, or what’s another 2.5 trillion. So what accounts for this? So security, medicare? It’s the interest on all of our debts. And that revenue, revenues failed to keep pace. At least they do based on today’s projection. What’s the revenue that’s money from taxing that the federal government takes them. So as interest rates are now higher, you apply a 5% interest rate versus a 2% interest rate to $30 trillion. That’s a substantial amount of money. So there you go, Social Security, Medicare, and interest payments, those are the three areas that are going to eventually crush us. So growing imbalance is expected to loom large over upcoming congressional budget and tax battles. Most of the spike in the fiscal year stems from four factors, the largest is $145 billion increase that’s partly due to changes in the administration, student loan, student loan repayment plans, and a new Brose forgiveness program that would waive some accrued interest for millions of borrowers. The latter has yet to be finalized, but could take effect as soon as this fall. Do you think it’s gonna happen before the election or just afterwards? Hmm. We’ll have to wait see on that one. Okay. So when the federal government is supposedly budgeting, I’d like to be a fly on the wall for that deal. And can I be? This is an honest question. It should be an open book thing, I should be able to sit in on that meeting. And to see how it is that they’re actually budgeting. But as they do this process as their budgeting, we factor in the receipt of student loan payments. So the student loan payments are based on what? Well, what happened was an adult person 18 years age or older, decided to pursue higher education decided on school and decided the best course of action for paying for that tuition was tickets, student loans, and then upon graduation, that student begins repaying their loans because the federal government is the guarantee or provider of those loans, the payments go to them.

Because of a clear amortization schedule, the government plans and budgets based on the money coming in that they know based on the number of students and everything else that I was just talking about, here’s how much money we have coming in. So if those payments are never going to be made, or they weren’t made, there’s the shortfall in here. We are so very little this makes any sense to anyone, certainly not to me. First, the exploding cost of education in the United States of America makes zero sense. Do you know this? That in the 1989 90 academic school year tuition at the average public four year institution was $1,780. In 1990, tuition at the average four year public school in the United States was $1,700 a year. In 2000, the average was $3,300 a year. So it’s about a 9% annual increase between 90 and 2000. The total cost of attendance fees tuition room and board increased by 66.3%. At public four year schools. So it went from $4,900 to $8,200, from 90 to 2000. About five grand $8,200 That increased at private schools, the cost tuition grew 74%, from 8300 to $14,600. The average cost of attendance for a student living on campus and an in state public for institution this year. Wait for it. $27,000. So that’s 108 grand over four years. Give me a break, man. A lot of state students, they 45 grand a year, or $182,000 for four years, private schools $58,000 A year $234,000 for four years. What about just regular school, you know, elementary school, stuff like that. third largest city in America, Chicago Public Schools will spend nearly $9.5 billion this year on its 323,000 students. That’s just over $30,000 a student just under $30,000 of student $30,000 per student spin it has jumped by 40%. It’s increased by 40%. Since 2019. Wow. Amazing. By the way, about three quarters of Chicago Public School students have not read at grade level 83% did not meet proficiency in math. That’s crazy. Three quarters 75% Can’t read at grade level 83%. Can’t do math at grade level. Gosh, amazing. So Oh, no doubt about it. That’s a problem. That’s exploding cost of education. Now, the second part of this forgiving you’re canceling debts makes zero sense. It makes zero sense. Like it or not, you the borrower made the decision and signed an agreement. Now you no longer think that you should pay it back. Is that true? Are there people who are really saying this again? Maybe it’s just a talking point? Or maybe there are plenty of human beings that are standing up and saying out loud? Somebody should pay this for me? Or is it just politicians who are trying to buy your votes? Sure, the truth is somewhere in the middle there. couple thoughts on this? If I make the decision that I bought too much house, or the interest rates now too high, and I just stopped paying on my mortgage, I default to my mortgage, do I get to keep the house? By stop paying my car loan? Do I get to hold on to the car? Of course not. I lose the house, I lose the car. So I want to get to default on my student loans and keep my degree I shouldn’t you have your loans wiped away. You should have to surrender your degree. Sorry, not sorry. You don’t get to make an agreement. Go through the four or 56789 years of school. And then make the decision that well. You know, I know I enjoyed the benefits of going to school. It’s fun, and I learned a lot and now I have a job because of my degree. But I don’t want to pay these loans anymore. Nope. You have your loan forgiven or canceled or whatever the term is, you should also have to surrender your degree. Next and finally, this is just at direct odds of my beliefs and feelings about what it takes to become financially successful. The first thing you have to do, first thing you have to do you have to be become financially successful is to accept personal responsibility for your finances. I often talk about how there’s never going to be anybody more interested in your financial success than you are. So you have to act accordingly. Having the frickin federal government bail you out is the act exact opposite of that. So what are we doing ourselves? Better put? Why are we allowing fuckheads? To fuck everything up? Why are we tolerating the explosion of education costs? Why are we tolerating the exploding of our debt, we need to put our feet down and put our foot down and say, enough is enough. Because it is, you may think that you’re benefiting from having your student loans reduced or erased or canceled, but long term, it’s going to fuck you over. Don’t believe me? Who do you think’s gonna pay for all this? You think the 1% is going to take care of it, billionaires are going to take care of it. Oh, sure, he can penalize and tax or do whatever. But they’ll just be the first target because they don’t have that much. We’re talking about $50 trillion of debt. He took all of their money, maybe, but not even then. So we’ll go after them first, but mark my words. They’re coming for you next brothers and sisters. And it will be in the form of much higher taxes, much higher taxes. Maybe you’re okay with that. I am not there. Maybe you’re into that. Maybe you want to be told what to do, where to go, when to be there. What to do while you’re there. Maybe you want somebody else doing your thinking for you? Is that what you want? Of course not. So stop acting like it’s what you want. take back control, take back responsibility. Finally, a friendly reminder of an earlier reminder. There will never be anybody more interested in your financial success than you are. But that doesn’t mean that you cut off your nose to spite your face. Or that you take up your perceived re money and screw over your neighbor. Because that’s what you’re doing. No free lunches. Surprise, surprise, shocking information groundbreaking. Somebody is going to foot the bill, and it’s going to be you and it’s going to be me. Never going to be the morning. I’m more interested in your financial success than you are to act accordingly.

 

 

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