Could Forgiveness of Students Spur the Economy?
63Currently in this country, our youth is bogged down with crippling student loan debt. Many can not afford to do anything but make student loan payments. Many Americans in their 20s and 30s are saddled with large monthly payments and some even have payments the size of small houses. All of this debt is keeping those in their 20s and 30s from buying homes, cars, and other items. Just imagine the buying power that would be released into the market if this large section of the population was relieved of some of this burden.
If this population was released of some of their burden, millions of Americans would be in a position to buy homes, which could revitalize the housing market. In neighborhoods that were seeing their property values falling with each passing month, we could see that trend turn around and start to go the correct way: up. Cities would receive more money from property taxes, therefore being able to spend more money on struggling schools or needed improvements to the community. Home builders, construction workers, banks, real estate agents, etc would all be helped by this new influx of spending. Sales of cars and other consumer items would increase spurring companies to hire more employees, which would lower unemployment. This is a group of Americans that would put the money back into the economy and really spur our economy, which they were less able to do with their heavy burdens on their backs.
The sentiment that "no help was given to me so nothing for anyone else" is strong and does exist out there, but this is counterproductive in jump starting our economy and for America to compete in the world today. There is also the sentiment of "no free handouts" or "no bailouts" but those people with that sentiment need to look at the bigger picture and how this would help the country in the long-term.
This CNBC.com article states that there are around $556 Billion in outstanding federal student loans in America:
http://www.cnbc.com/id/30438711/America_s_Biggest_Types_of_Personal_Debt?slide=7
$556 Billion is a lot of debt on the backs of our youth in this country and it is weighing down our economy. We can all discuss the correct amount to spend on this program so the cost is up for debate but something needs to be done.
One Truth We Can All Agree on:
College needs to be affordable for Americans and something needs to be done to stop the skyrocketing cost to our students and youth just to achieve a higher education. America needs as many people with higher educations that it can get to be productive and competitive in the world market.
There should be some kind of service to the community would be a great way to work off some student loans as an option. There is always a need to have as many people out there helping the community as possible and this way, people would be doing something in return for the reduction in their debt or interest.
Would forgiveness of student loans or a reduction in interest rates of those student loans spur economic growth?
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Forgiving student loans would send the wrong message. Debt is evil. College costs way more than it should. So someone decided to pay an additonal 80K in tuition to attend an expensive school, now they can't get a good job because they didn't learn anything and they didn't make any respectable friends. They could have lived at home with their parents and attended the nearest community college, then transfer to the nearest state school, then earn a fellowship for grad school, but no. They wanted to party and blow money and cheer on a winning football team. Oh well.
Jed, thank you for sharing your thoughts on the subject. You need to remember that students these days are taught that they have to go to the highest ranked school they are able to go to and usually they cost more. When a college graduate tries to get their first job out of college, most employers look at what school they went to so yes community colleges are great, but they are judged more harashly by employers.
So in the end, it is the catch 22 of you need to go to an expensive school to get the good paying job, but you can't afford the good school to get the good job without taking out huge amount of student loans because colleges have skyrocketed so much in the last decade or two. Even state schools are extremely expensive now, in my state, state schools are still close to 25,000-30,000 per year.
The first thing potential employers really look at is credit scores, criminal record and debt load, to determine if the job applicant can be trusted.
Jed, the first employers really do is look at their resume. One of the first thing they look at is where they went to school and then their experience. They only look at their credit scores, criminal record, and debt load if they like the resume.
Have a good day.
This is a great hub. It's interesting to see it now that student loans are getting more and more attention, and the level of debt has gone over $870 billion. At this point it's higher than credit card and auto loan debt.
I think a lot of the issue would be solved by serious financial education for college bound high school students. It's unbelievable that we expect 18 year old kids to understand the real impact of student debt on the rest of their lives.
It's hard to determine who should be responsible for cleaning up the mess. I can see how forgiveness would be nice (I'd love to have mine forgiven!), but without serious reform to go along with it we'll just end up in the same spot 10 years from now.
Timstown 19 months ago
Interesting idea. I really wish we could make all these student loans disappear, but the country's already in a catastrophic amount of debt. Overall, I don't think it's a good idea... but I'd have to do some further research on it. On another note: I found that graphic interesting. I live in NJ and it shows that everyone around there goes to expensive private schools. That's definitely the case, so many people in my high school were going away to expensive colleges. I'm going to community college and I believe it to be the smarter route, unless you can get some pretty hefty aid or a good scholarship.