Back in 2007, as I was thinking about my little Dr. Sammy in 2008/EdF1rst project, I conceived a heresy. It went like this: What would happen if, as a massive economic stimulus, you forgave all outstanding student loan debt in America?
I knew from experience the impact that loan debt has on consumer spending. You have, at this point, a couple of generations who can’t afford to spend (or save) in service to the debt racked up getting their degrees (degrees, which, by the way, didn’t position them to pay off that debt in anything like a timely manner). My generation is and will continue to be underwater. The Millennials are well and truly fucked in ways that us Xers couldn’t have imagined in the 1980s. And I know at least one Baby Boomer, a guy bearing down on retirement age, who expects to die well before his loans are paid off.
The US is willing to give a trillion dollars in corporate welfare to prop up the very financial institutions whose incompetence and malfeasance created the worst economic crisis since the Great Depression. We’re willing to spend trillions more on military adventures that benefit nobody but the war industry. Have these moves improved your life?
Okay, now think about this:
In 2010, total outstanding student loan debt exceeded total outstanding credit card debt in America for the first time ever. In 2012, total outstanding student loan debt is expected to exceed $1 Trillion.
In short, student loan debt has become the latest financial crisis in America and, if we do absolutely nothing, the entire economy will eventually come crashing down again, just as it did when the housing bubble popped. Reasonable minds can disagree as to the solutions, they cannot, however, disagree on the existence of this ever-growing crisis, as well as the unsustainable course we’re on towards financial oblivion.
As a result of more than 30 years of treating higher education as an individual commodity, rather than a public good and an investment in our collective future, those buried under the weight of their student loan debt are not buying homes or cars, not starting businesses or families, and they’re not investing, inventing, innovating or otherwise engaged in any of the economically stimulative activities that we need all Americans to be engaged in if we’re ever to dig ourselves out of the giant hole created by the greed of those at the very top.
If those numbers are a little hard to get your head around in the macro, try it this way. What would you do if, tomorrow, all your student loan debt were erased? If you’re like me, there are purchases you have forgone. Maybe you’d pay off your credit card. Maybe you and your S.O. would finally buy the house you’ve always dreamed of. Maybe you’ve always wanted to send your child to a better, albeit more expensive school. Maybe you’d like to put more aside for retirement.
You tell me. Now, multiply the investment you’d make in your community times everyone in America who’s packing student loan debt. Then think about how that sort of consumer spending ripples through the economy.
Yes, such a move would represent a huge one-time hit on the Treasury. But my best guess is that the lost revenue would be more than returned in a few short years as the surge drove unprecedented vitality through the US economy.
I was wondering aloud about it in 2007, and now there’s an actual bill in Congress to do just that. (More or less – read the summary and FAQ for more details on how it would work specifically.)
Representative Hansen Clarke of Michigan has just introduced H.R. 4170, the Student Loan Forgiveness Act of 2012, in the House of Representatives – legislation designed to lend a helping hand to those struggling under massive amounts of student loan debt.
Fellow scrogue Lisa Wright asked me yesterday if I thought there was a bat’s chance in hell of this thing passing. Well, I can probably answer that a number of ways (cynical, rational, optimistic, quantum probability, etc.), but in the end student loan debt forgiveness* strikes me as a good idea that benefits everyone, from those with loans to local businesses to big corporations, from poor to middle class to rich. And it’s best chance of becoming reality begins with you signing the petition and encouraging everyone you know to get on board by spreading the word and contacting their elected representatives.
* Caveat – I haven’t had a chance to read the whole bill yet, so it’s possible there are elements of it that I won’t like. If that happens, I’ll be back.