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Forgiving Student Loans: A Stimulus Measure to Revitalize the Middle Class
How would your life change if, all of a sudden, you no longer had to re-pay your student loan debt? What would you do with that extra $250-$1,000 of your paycheck every single month? If Congressman Hansen Clarke (D-MI) has his way, this question might not be rhetorical anymore. Student loan debt forgiveness could be the stimulus measure that breaks us free of this long recession.
What would you do with an extra $250-$1,000 of your paycheck every single month? (Image: wearethe99percent.tumblr.com) Millennials are being strangled by record high student loan payments, more than any previous generation due to the skyrocketing costs of higher education, high unemployment, and stagnant wages. A whole generation is seeing their plans and ambitions shackled by the extra weight of their student loan payments. These young people are unable to buy a home, start a family, or do the socially important but underpaid jobs in the social services sector where many recent grads cut their teeth.
Congressman’s Clarke resolution, H.R. 365, aims to redirect the attention of government officials from reducing the federal deficit to addressing the real crisis facing millions of Americans and perpetuating this recession: the unrelenting financial drain on the economy caused by record levels of household debt. H.R. 365 also deals with home mortgage and personal debt, but as a Millennial the part I am most interested in is his proposal to forgive student loans.
Acting on this resolution would provide a trillion dollar stimulus to the demographic most sought after by advertisers and by realtors: college educated young people. These are the people that have the potential to revitalize the housing market and local economies. Best of all, this wouldn’t just be a short-term money injection; this resolution would result in millions of people being able to keep more than 13% of their paycheck every month for 30+ years (assuming Stafford loan interest rates and using average millennial debt and wage).
Now, any measure that specifically targets student loans, mortgage rates, and other forms of personal debt carries some inherent social justice issues. This measure would do little to directly help the poor.
On the other hand, eliminating student loan debt and helping people lower their home mortgages are investments that revitalize the middle class. This country used to take immense pride in its strong middle class, but it hasn’t promoted its growth for the past thirty years. When the American Dream was still achievable, a poor household could aim to achieve middle class status, but recent trends are showing just the opposite. Regardless of work ethic, more and more middle class families are slipping into poverty, in part because of the heavy debt burden of house ownership and of pursuing a higher education degree. For the first time since the Great Depression, today’s Americans are not likely to have a better standard of living than their parents.
Another criticism rests on the assumption that if current debt is forgiven, it would discourage future borrowers from paying theirs back. This argument points at the real crisis in higher education. The problem isn’t simply that people have too much debt, but that by choosing to enroll in an institution of higher learning to hone their skills and become a more productive member of society, they are essentially forced to. This is a financial burden that used to be largely taken on by the government (and still is in most other modern democracies) because it was recognized that the road to social and economic growth was rooted in an educated citizenry. Thus, while this criticism has some validity, it simply stands to underscore the need to reform our systems of financing public higher education altogether so people no longer have to take on such high debt burdens.
By injecting a trillion dollars directly in the bank accounts of college graduates, forgiving student loan debt will enable them to finally put their education to a good use and get their adult lives off the ground. Will this measure alone be enough to revitalize our ailing economy? Perhaps not, but I still haven’t found a valid argument as to why it should not be a major component of a recovery package.
3p is proud to parter with the Presidio Graduate School’s Macroeconomics course on a blogging series about “the economics of sustainability.” This post is part of that series. To follow along, please click here.
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Show AllThe reason students owe all this money in the first place is that the states are no longer supporting higher education. As a result, state universities are hiking their tuition. Some of us remember the California system in the sixties: Get residency and school is essentially free. I remember when working paper routes for a couple of years paid for two semesters of college. Society turned its back on young people, turned its back. It is time to make it up to them.
Why should higher education be SO expensive in the first place? Have there been audits of major universities to see where the money goes? Compared to some other countries with comparable levels of teaching and research, I would think there is a whole lot of waste (IMO) and overspending in U.S. colleges and universities in things like sports stadiums, teams, student amenities, etc. Everything from text books to eating at the cafeteria adds to the expense and maybe some of these could be cheaper.
There is no democracy in universities and colleges when it comes to deciding how and where to spend the money. And all that money has to come from somewhere. Where? Most of it from students, of course.
What's the point of spending all this money and what do the students get in return? Along with the call for forgiving student loans, there has to be a call for public scrutiny of where money is spent in colleges and universities.
Regarding what's shown in the photo: I'm sorry, but the correct word is "physician." There are many, many "doctors" who are not "physicians." The traditional use of the word "doctor" was first for persons with theological training, next applied to those with law degrees, and then for those persons with academic "Doctor of Philosophy" or "Doctor of Science" degrees (PhD's, DSc's, Sc.D's, etc.). In fact, in many physician training programs abroad, the equivalent of the M.D. given here in the U.S. is actually a Bachelor of Medicine, Bachelor of Surgery (MBBS) - no "doctor" in the title at all. Perhaps not so surprisingly, physicians who practice abroad also have lower salaries than physicians working Stateside.
On Sunday evening, during a discussion at Zuccotti Park/Liberty Square, led by Eve Ensler -- a discussion about economic violence perpetrated by the PTB -- and we discussed the student loan issue as one prong of economic violence here in the U.S.
A man from Guyana (South America) stood up and said that his father had moved from Guyana to the U.S. to have a better life, and he went to college here in the U.S. The father still is $40,000 in debt. His sister was able to go to an Ivy League school, and she received her degrees, but has been unable to find sustainable work. She is so stressed about her level of debt, and her inability to pay off her student loans, that she is having health problems. And, we don't have a health care system -- we have a health insurance system.
The man who spoke said that he is returning to Guyana. He can't believe what people are tolerating here in the U.S. -- student debt, no security, the cost of housing, lack of medical care, etc., etc. He was very articulate. He told us that his father wants him to stay and go to school here in the U.S. -- like his sister. He thinks we are nuts here in the U.S.
On Saturday, I was marching next to a young woman -- 28-30 -- who has a degree from Princeton and can't find a job. Of course, she was told that if she worked and received a degree from Princeton she would be fixed for life. Well, that turned out to be a big lie. This young woman is currently working at WBAI radio here in NYC for NO pay. She told me that her parents, today, cannot think about retiring because in 2008 they lost more than 40% of their savings. And, their home (I don't know if it's a house, condo or apartment) is worth at least 1/3 less than it was, which has created problems for them, too.
This is what Eve Ensler meant when she brought up the subject of economic violence. When people can't feed themselves with healthy food and clean water, house themselves, receive any kind of medical care, etc., etc., "we the people" are under assault. It is violence, too, albeit of a more silent and subversive sort of violence.
I also spoke to a man from Germany -- at length -- who asked me a lot of questions. He just couldn't grasp the fact that OUR government, here in the U.S., does NOT work FOR the people of this country.
CONTINUE TO OCCUPY WALL STREET! BRING DOWN THE WALL!!
Keeping us in debt and working for pennies keeps us from taking time off to protest. And if we do, we lose our jobs. Their plan all along.
Direct democracy
Not sure if a completely free education is appropriate. I paid for mine, including a prepayment penalty (Free bad advertising: Southwest Student Services Sucks!) until I was 44. Folks don't appreciate free things (and nothing is truly free, really).
For the future doctors like the one holding the sign (bag?), Obama needs to suggest a revamp of the health care law, since it must apparently be revisited anyway. Try this:
• Doctors (and dentists) who work for the equivalent of a student stipend in their locale get $100K of student loan debt paid off for each year of service to a national health care system. This covers the cost of one of the most expensive portions of the health care system we need: the specialists. Most if not all would be willing to go through such a program, and I've asked many (>10), and not a one has said NO to me yet.
• Abandoned or low cost structures get leased by our government for the purpose of being used as clinics.
• Anyone in this country can go to a clinic and get "free" health care, including life saving care as needed (like our current system).
No death panels, no doing away with the current system.
It gets paid for through savings on prescription drugs via Uncle Sam negotiating as the biggest gorilla on the block! Which he is! And the cost is lower than under our present regime where folks wait until on death's doorstep before going to an emergency room where the cost of care is more than 10x higher than if health issues get addressed at their inception.
Folks, like me, who can afford to pay for additional insurance coverage to visit private doctors and private specialists can still do so.
Since we're all already on the books with our SSN's through the social security and medicare systems, we get hit with the single payer cost of this program. If you are not in your city of origin and still need urgent health care, you get it! No copay, no additional fee.
a house is no longer a good investment, either...
get used to it...
more radiation and moisture in the warming air...more acidic oceans...
this planet is not the same place it once was...
humans have chemically altered it...poisoned it...used it up...
having the same expectations no longer makes sense...
do you?