What if the govt cancelled student loan debt to stimulate the economy?
Posted in Economics on 04/21/2010 03:33 am by
jd asked:
would this help? I think it would free up an extra 3-400 dollars a month for millions of people who are in their prime earning years. Agree/disagree?
Mike
would this help? I think it would free up an extra 3-400 dollars a month for millions of people who are in their prime earning years. Agree/disagree?
Mike
04/21/2010 at 10:02 pm
Joe
Disagree. It sounds good for the folks who took out the student loans, but it doesn’t help the economy because money that has already been promised (the student loan amount plus any interest or fees) is wiped away. That could cause the company that secured the loan to go bankrupt, in turn causing more layoffs and job loss.
04/24/2010 at 8:08 am
Tanya
If this happened, what financial institutions would be interested in underwriting future student loans? None. Understand, the government only guarantees it will pay the loan to a lending institution if the borrower defaults. If the govt. could do what you suggest, then why could it not cancel its debt to the lenders?
I repaid mine early, and I hope some prospective degree earner got the benefit of my money being placed back into the loan pool.
04/27/2010 at 5:32 am
Allen
OK, it probably would. But, then what???
If the government is allowed to do such a thing every lender in the country with a positive I.Q. would stop making loans to anyone. Now that would really be great for the economy.
Of course the government could always raise taxes on the rich. Yeah, that would work, that is until the rich start leaving the country at a more alarming rate than they are currently.
People don’t seem to understand. The ONLY person in this country who actually pays taxes is the final consumer. Everyone else in the chain can pass their taxes to the next person in the chain. The final consumer of that loaf of bread pays the taxes on the land it was grown on as well as every damn cent of tax after that and until it is consumed.
I don’t know what your problem is but if you made a debt with someone who was acting in good faith, were you ever acting in good faith or have you only changed since there may be some way you can transfer your debt to someone else.
A complete and total lack of personal responsibility contributed greatly to the situation we are in. Now we get a brain trust like you coming along who wants to reward that irresponsibility. Of course those who bought houses without reading or understand the contract have been rewarded for their stupidity, why not you???
04/28/2010 at 7:27 am
Mark
one person’s debt is another person’s savings, so helping one would hurt the other, and the two effects cancel each other out. Since it’s older people who have savings, it would also be unfair since as you said, young people have easier time earning money than the old ones. Finally, having debt is precisely what motivates young and strong to work hard for the benefit of society.
04/29/2010 at 8:50 pm
Cecil
Then the banks wouldn’t get back the capital they lent out.