As the country prepares to transition into a Biden administration, there are many economic plans that could be in play, especially with a Democrat majority in the House of Representatives and Senate. One such option is eliminating student loan debt. Some more progressive Democrats have advocated for wiping out student loan debt completely, but Biden is said to be favoring a plan that would eliminate $10,000 per student. Whether you agree with this policy or not is politics. However, I think it is time to ask a bigger question: how do we limit the student loan debt in the future?
The main idea that I would support is a venture capitalist model. We always hear: “Make an investment in yourself.” Well, why not accept investments from others too? This idea has been proposed before by 13th Avenue Funding: financing students the same way venture capitalists finance companies,” that require students to give 6 percent of their income after graduation to the fund for 15 years to pay back what they have borrowers”. These numbers seem a bit high to me, but it varies by degree. If the investor takes on little risk (MBA/JD student), they will gain little in interest. I believe plans like this should be an option. The investor takes on some risk that they do not get their full principal back and the student takes the risk of getting a really high paying job and paying back a decent amount more than they borrowed. I also think students should be able to negotiate with multiple investors and borrowers. I envision it a little like Shark Tank. Students can write the plan they have with their degree and investors can make an offer. The offer could be one such as 5 percent of their income for 10 years after they finish their degree or it could be a loan, potentially with a lower interest rate than market average if an investor truly believes in their plan. Another idea I thought of to complement the venture capital one is to eliminate the sales tax on books and laptops. This idea would obviously make a less substantial impact on student loan debt. In some states, it would not make a difference because there is no sales tax. However, with some law books and higher-level business books as well as laptops, the savings could add up over the course of a degree in high sales tax states. Students could send a picture of their student ID and have to use a .edu email to prove their status as a student. These are just a few ideas that I think should be brought to the table. If the government forgives student loans, it still will not solve the long-term problem. Some have kicked around the idea of making public university free, but it does not seem like a viable option. These options should be considered in creating a more maintainable solution. ***Check out 13th Avenue’s Plan and Results of Pilot Study here: https://www.13thavenuefunding.org/
0 Comments
This blog is not going to be political. However, we can acknowledge that there is a crossroads between politics and economics. Instead of discussing politics, I will be discussing the resulting economic consequences of political decisions. The Georgia Senate races are upcoming and there could be a slight shift in the market.
Regardless of political affiliation, the stock market typically seems to favor at least one chamber of Congress to be the opposite party of the President. The market recognizes that if this is the case, there is unlikely to be any major changes in regulation, taxes, and other economic areas. Regardless of who wins, we can expect a sell-off when the winners are official due to political panic. This is mostly to be ignored as it will be an overreaction. If Democrats gain a majority in the Senate, there is a clear path towards marijuana legalization on the federal level. This decision would be symbolic in nature at this point. However, there are definitely stocks in this industry worth putting on your watch list. (My personal preferences are ACB and TLRY). I will be keeping a close eye on that sector regardless. Another sector that seems to benefit is electric vehicles and green energy as Democrats create policies in accordance with their environmentally friendly platform. It also remains to be seen how both Democrats and Republicans will regulate cryptocurrency. Though if Ripple is any indication, there is most likely going to be more regulation soon. Again, I won’t get into my personal politics here. However, I will say this: I am confident that however the market as a whole is going to act long term, it will do so regardless of politics. Politics makes up about 5 to 10% of the influence on the stock market. Enough to make it drop short-term? Of course, but not enough to crash it or pump it up for longer than a week or so. Ever since Bitcoin’s rise in December 2017, economists and the financial industry have explored the question of if Bitcoin actually is currency. There are three properties of money that economists use to classify something as currency: store of value, means of exchange, and unit of account.
All three categories are debatable for Bitcoin. However, I would argue that the cryptocurrency has store of value and means of exchange. There is nowhere you can put your money currently that will grow as fast as Bitcoin. The US Dollar is not growing nearly as fast as Bitcoin. That in itself should prove its worth as a storage (and even an enhancement) of value. Means of exchange is a little trickier. People can now send Bitcoin to each other. The means of exchange will become more defined as businesses accept Bitcoin as payments. They have incentive to do so as it will be cheaper to process these transactions. Both sides will benefit. Lastly, there is unit of account. Bitcoin struggles in this area currently. If a friend sends you $10 through Venmo, Cashapp, or Zelle, you know what that $10 means. It means about 5 cups of coffee, 2 and a half Big Macs, or 10 things from the dollar store. If someone sends you .0001999 Bitcoin, you don’t really know what goods or services you can purchase for that until you calculate what it is in US Dollars (or your native currency). With Venezuela now using Bitcoin amid hyperinflation in their country and NFL player Russell Okung getting half his paycheck in Bitcoin, this topic of discussion is not going away. In fact, it will become a hotter debate as Bitcoin has become more mainstream in 2020. Maybe it is just a growth investment, but Bitcoin sure is looking more and more like money everyday. |
Archives |