Business Report: Is Free College And Student Loan Forgiveness Possible?
KPBS reporter Amita Sharma and George Belch, Senior Associate Dean of Marketing at SDSU, discuss some of the week’s top business stories.
Q: We saw the first presidential debates this week. Presidential candidate Bernie Sanders pitched a plan to cancel all student loan debt. Is that proposal a pipe dream or a possibility?
A: I don't think it's a pipe dream. I think the numbers are like $1.6 trillion worth of student debt being held. If you look at statistics I think 70% of students are graduating with debt. The average is about $30,000. If you look at students who attend private universities or graduate or professional schools those numbers are astronomical. It’s something that needs to be addressed because these graduates trying to pay off these loans simply can't participate in other parts of the economy.
Q: If that were to happen, how big of an economic stimulus would it be?
A: If I'm paying $300-$400 a month repaying a student loan, now I could put that into a car payment. I could put that into a home payment. I might be able to buy my first home. I might be able to upgrade. That's going to have the potential for some economic stimulus.
We do have to realize you have to pay for it one way or another, and this whole movement is part of trying to address the income inequality issue. The proposal is to impose a tax on transactions on Wall Street, stocks, bonds, derivatives and that's where the funding would come from. So it depends on how you want to look at that in terms of what impact will that have. People would probably argue those taxes can be absorbed more easily by wealthy people who were participating in these markets, and that would free up funds for students.
Q: President Trump ordered hospitals and insurance companies to provide more up-front details for out-of-pocket costs. How far will that information go in actually cutting people’s healthcare expenses?
A: What the president is trying to do is introduce more transparency into the system by telling consumers: this is what it's going to cost you to go to the doctor, this is what the insurance company is going to pay, this is what the out-of-pocket costs are going to be. All that transparency is good. And in theory, the idea here, that might introduce more competition which in theory would reduce health care costs.
Q: Will patients have the power to negotiate?
A: I think that's difficult to say, because think of ourselves: when we go to the doctor if I go in and I'm meeting and I look at how much I want to shop around. I've been with my personal physician for four years. If I thought his prices were a little too high...do I really want to shop around? What happens when we go to the emergency room? The President also signed an executive order that would require disclosure of drug prices on all TV commercials starting July 1st. That's being fought by some of the big drug companies. It's a step in the right direction, but we will have to see how much it would really have an effect because we don't know what the patients will do.
Q: The union representing grocery workers voted to authorize a strike. It would be the first in 16 years. What's at stake for both sides?
A: Both sides have a lot at stake here. We have to back up 16 years ago. We had a very long and protracted strike in California. That was one of the longest in history in the grocery store industry and I think both sides have to be very fearful of a return to that. I think the stakes are a little bit different this time because consumers have more alternatives. I can now go get groceries at: Target, Wal-Mart, and Trader Joe's, and Whole Foods. I can order them on Amazon. I think the grocery stores have to be sitting there saying "What happens here if we don't come to some agreement? They strike, and it's not only them but all the organized labor people who boycott our stores.” On the other hand, the workers are saying: “You're giving us a 1% or 2% pay increase, but what we really want in many cases is better health care. We want a better pension plan.” So there is a lot at risk. The strike is going to hurt both of them, and I think both of them have to be fearful of what's going to happen.