system
Given the following post, respond as if you're commenting on Reddit:
human
Who's ultimately going to be paying for the loan forgiveness?

I just had 20k forgiven and I'm pretty happy. But I'm curious.

I asked a question previously about where the money would come from and someone said it's an asset on the governments balance sheet and a liability for those who took out the loan.

I hear right wingers complain that they have to pay for it through their taxes, but will this have any effect (long or short term) on taxes? Are the universities going to have less money or funding because of this?
gpt
The government for the most part doesn't spend specific money on specific things. It's not like capital gains taxes pay for one thing, income taxes for another, etc.

Really, it's more that the government has a big pile of income from various sources and a big pile of expenses from various sources.

So, what can a government do when expenses go up, or income goes down?

They can cut other expenses. They can tax more. Or they can borrow more (which is ultimately also just future tax revenue).

Taxes tend to be rather inflexible in a way, meaning the government doesn't change tax rates very often. Tax revenue still rises and falls, mostly with the economy (during downturns, people lose their jobs so the government earns less in income tax for example), and the same goes for expenses (unemployment insurance is used more during downturns) and the same goes for the opposite direction during booms.

In the short term, the government will just compensate revenue shortfalls via borrowing, in the longer term student loan forgiveness is just a small part of the big pile of expenses.

But from a different perspective, everybody who didn't receive this loan forgiveness is paying for it either directly (through taxes or more debt that has to be financed by future taxes) or indirectly (because the government can't spend this money on anything else now).

Of course that's not necessarily very meaningful. We all pay for things we don't personally benefit from. At least not directly. Your social security dollars are going to some grandma you've never even met and never will. Well, at least a tiny fraction of them, just as your taxes pay for schools nobody from your family or friends will ever attend, and they pay for firefighters saving a house from people you don't know. That's how essentially every country on the planet works. We *all* run on the same basic social contract of handing over a portion of our money to be spend on society at large, not anyone in particular, because that's the only halfway decent way to run a society.