Maybe it’s time for Student Debt Jubilee. Student loan forgiveness would not only give a reprieve to those in debt, it would create an economic upswell for all of America. Imagine the boon to our economy if student loan debtors could afford to replace old shoes, cars, and washing machines — instead of merely paying down the compound interest of their student loans.
How Student Loan Debt Skyrocketed
Because most student loan payments barely touch the principal of the original loan, student loan debt has skyrocketed to $1.37 trillion — and is growing by the second. Most of that trillion dollar figure is accrued interest.
The U.S. government created a monster when they guaranteed repayment to the privatized student loan industry. Lenders took advantage of a no-risk business opportunity and responded by jacking up interest rates on student loans. It didn’t stop there.
Young people in need of education were easy targets to exploit, so why not make it a life-long experience? Laws began to change in the 1970s that eventually prevented student loans from being discharged through bankruptcy. Then in 1996, the U.S. government allowed student loan lenders to garnish Social Security checks on any amount over $750 or 15%, whichever is higher.
Debt Forgiveness for People Spurs Economic Growth
When huge financial institutions are bailed out by taxpayers, and billionaire entities repeatedly file bankruptcy, the general economy is not infused by greater buying power. The “saved” money is preserved in the corporate bottom line, and actually emboldens a continued pursuit of reckless business practices.
However, debt forgiveness for individuals has a different economic effect than it has with corporations. If we forgive student debt, we redirect monetary funds from a predatory student loan industry into our economy.
Folks who now forego the purchase of many things they need, would be able to buy more goods and services — like haircuts, veterinary treatment for a pet, or a reliable car. Multiply that buying power by 43.3 million, the number of Americans with student loan debt, and you readily grasp the positive growth in store for businesses of every size — and that job creation would be necessary to meet revitalized consumer demand.
A Student Debt Jubilee would oxygenate the economic experience for most Americans — not just the people with student loans.
It’s Time for Student Debt Jubilee
Student loan forgiveness may seem alarming or radical to some. But personal debt forgiveness is not a new or foreign idea. As Student Debt Jubilee proponents, Hickey, Swig and Swig, note in a Huffington Post article:
“The words inscribed on the Liberty Bell — ‘Proclaim liberty throughout the land, and to all the inhabitants thereof’ — are from the Book of Leviticus and refer to a Biblical ‘Year of Jubilee,’ when the nation’s rulers forgave all debts.”
Is it not time to “cause the trumpet of the Jubilee to sound?” (Leviticus 25:9) Parallelling the wisdom of Jewish forefathers, liberal arts educator Leon Botstein, President of Bard College, makes an impressive argument for student loan forgiveness: Why the Next President Should Forgive All Student Loans | Time
“First, all outstanding student loan debt should be forgiven. Second, a new loan program should be created that is tied to incentives for college graduates to choose careers in public service and which indexes repayment to income. […]
The average debt at graduation has skyrocketed from $10,000 in 1993 to more than $35,000 in 2016. Furthermore, the federal government has set interest rates on student loans at twice the current market rate of other types of loans. Going to college should not be a profit center for Wall Street and the federal government.
By forgiving student loan debt — which is largely held by the government — a tremendous economic stimulus would be generated, whose beneficiaries are people, not banks. […]
Critics of this idea will object that it is an irresponsible and unaffordable bailout that constitutes a bad precedent and a ‘moral hazard.’ The opposite is the case. We cannot afford not to do it. Student loans of the type we now have should never have been instituted. [Emphasis mine.] They were predicated on an inflationary economy and rising wages over time, which is not the reality we all now face.”
~ Leon Botstein
Education Lifts Everyone
Numerous nations provide free college education for their citizens: Argentina, Austria, Brazil, Czech Republic, Denmark, Finland, Germany, Greece, Hungary, Iceland, Luxembourg, Norway, Poland, Slovenia, Sri Lanka, and Sweden. How is it that the largest, wealthiest democracy in the world doesn’t make the list?
For one moment, please set aside objections to student debt forgiveness and free college that arise from a knee-jerk fear of the cost. Every country mentioned in the above paragraph has managed to do it. (Most of them also provide free health care.) The residents in these countries are delighted to pay higher taxes because their personal expenditures are reduced and they come out ahead financially. Here in the States, we have additional options to pay for education and student debt, like closing corporate tax loopholes and taxing Wall Street trading. Enough said.
For another moment, please forget about the economic boon that student debt forgiveness would generate. And forget that education may sometimes help people garner higher-paying jobs.
Take a few moments to rest from thinking about money. Instead, reflect on the intrinsic value that education has in itself, and what that means to a nation as a whole.
Education is vital to democracy. Education encourages students to question and think. It gives people the cognitive tools, and the confidence, to meaningfully discuss proposed solutions to a variety of problematic issues that we face. But here’s the intriguing thing: When education and critical thinking are valued, the entire citizenship takes on a sharper attitude. Everyone in a society is lifted by education, whether they personally earn a college degree or not. It’s a phenomenon; enlightenment rubs off.
Let the trumpet sound.