"13 billion in forgiveness costs around 137 million in funding, so around 10.5 cents for each dollar"
It's not 10.5 cents on the dollar, but 1.05 cents on the dollar! Looking at the math of the debt collection study, the debt was purchased at 1% of face value, and the average debt was $2,167. So each person was given around $22. I am not surprised that this has a negligible impact on their finances.
What if, instead, the study had people negotiate with the collectors and pay the $20 themselves. So they feel the satisfaction of reducing the amount owed, and cancelling the debt themselves?
I'm interested to read the student debt relief paper. I would imagine that there is a huge difference between forgiving debt that people are paying down versus debt people have just given up on. I wonder if a retrospective on the housing bubble could provide insights? Billions in "debt forgiveness" by people walking away from mortgages and homes being foreclosed. How different was that to borrowers than loan modification?
"13 billion in forgiveness costs around 137 million in funding, so around 10.5 cents for each dollar"
It's not 10.5 cents on the dollar, but 1.05 cents on the dollar! Looking at the math of the debt collection study, the debt was purchased at 1% of face value, and the average debt was $2,167. So each person was given around $22. I am not surprised that this has a negligible impact on their finances.
What if, instead, the study had people negotiate with the collectors and pay the $20 themselves. So they feel the satisfaction of reducing the amount owed, and cancelling the debt themselves?
I'm interested to read the student debt relief paper. I would imagine that there is a huge difference between forgiving debt that people are paying down versus debt people have just given up on. I wonder if a retrospective on the housing bubble could provide insights? Billions in "debt forgiveness" by people walking away from mortgages and homes being foreclosed. How different was that to borrowers than loan modification?
"One technical issue pointed by the authors is that debt relief programs purchase the cheapest debt available"
So this was really a gift to collection agencies, ultimately! Guaranteed to minimise the benefit, why on earth do this?!