Would Forgiving Student Loans Stimulate the Economy?
There are a number of proposals out there for stimulating the economy that center on regular folks. Leaving aside, for the moment, that there probably isn’t money left to spend much on regular folks (a lot has been spent already on banks), it is tempting to decide to provide a stimulus for individuals who are having a hard time. Help them, and they can in turn help the banks. Doing things the other way — helping banks so that the effects will “trickle down” — hasn’t been working very well.
Student loan economic stimulus
One of the plans floating around out there is forgiving student loans in order to stimulate the economy. Robert Applebaum is the creator of a Facebook group calling for the forgiveness of student loans:
In a way, it makes sense. How many of us graduated from school with student loan debt? What would we be able to buy if we didn’t have it? How much more would we be able to borrow if we weren’t making student loan payments? The stated goals of our leaders, since the issue of financial crisis reared its head, have all been connected with getting us to spend more money. So why not make it possible?
Student loan forgiveness would be costly, though. The government would have to buy all the loans from the folks it subsidizes to offer low cost student loans, and then forgive the loans. It could work, though, as part of the effort to cut out the “middle man” when it comes to student loans. If the government began making the loans directly to students, rather than paying others to do so, the government could make money on it. And it might go toward reducing the horrendous deficit we’re in.
At any rate, I think there are a number of ideas out there related to stimulating individuals — and I think that maybe the government should consider that as an alternative to throwing bad money after bad with all of these efforts to prop up failing businesses and banks.
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- Three Ways You Can Pay For College (refinanced.blogspot.com)
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- Large Student Loan Debt’s Place In Debt Snowball Plan (frugaldad.com)
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March 14th, 2009 at 9:00 am
[…] from: http://www.banks.com/blogs/mortgages/2009/03/13/wo… In a way, it makes sense. How many of us graduated from school with student loan debt? What would […]