It’s not uncommon to see student loan borrowers muse about what would happen if their student debt was suddenly wiped out. Whether it’s an unlikely pipe dream or due to legal issues with their college, it’s a life-changing fantasy.
Now, we have a sense of how widespread student debt cancellation would affect even those who don’t hold loans. And it appears, things might actually get better for all of us.
Wiping away the $1.4 trillion in outstanding loan debt for the 44 million Americans who carry it could boost GDP by between $86 billion and $108 billion per year, on average for the 10 years following the debt cancellation, according to a report published by the Levy Economics Institute of Bard College. Getting rid of the debt would also lower the average unemployment rate by 0.22 to 0.36 percentage points over 10 years and could add between 1.2 million and 1.5 million jobs per year, it found.
While I'm sure this will have a temporary boost to the economy it will not solve the problem of students burdened with debt and 5 years later we'd have another group of college students requesting their loans be cancelled.
The main problem we have in colleges today is too much government regulation and not enough free market forces. Burdensome student loan debt is really a symptom of the problem rather than the actual problem. The real problem is accumulation of government rules and regulations designed to help students get access to cheap low interest loans.
Students apply for these loans and can spend 5 years or more getting a worthless degree that pays only 35-40k a year and the student is left with 80k or more in loans. The worst part is colleges take full advantage of this and jack up rates every year know full well the government still be pumping out these loans to the students and can't even declare bankruptcy on this debt either because it's against the law just one giant debt slave system.
To fix this we need laws against the government lending money to students. If we do that college tuition rates would fall drastically. If a student wants a loan they would have to go to the private sector, ask a bank for one and the bank would probably only lend you so much money based on what college degree you choose you wouldn't be able to get 100k loan for a sociology degree anymore. Once that is done the government can sell all its remaining student loans to private banks and have normal bankruptcy laws apply to that debt.
That's how you solve the student loan problems for good, not this bail out crap where taxpayers get left holding the bill.
Normal increases and decease would happening based on the economy but notice there's no dips in tuition cost it only goes up, up, up and there's been two or three recessions in this time frame where the cost of everything goes down except for tuition because it's government backed.