Forgive student loans

So I just read in the news that a democrat is proposing a bill for an economic stimulus where the government will forgive student loan debt. I for one think this is an excellent idea. My husband and I pay over $600 a month to student loan debt and will be doing that for the next 20-30 years. This is preventing us from buying a second car we desperately need and from buying a house. Forgiving even half of our loan debt would be an amazing help.

What do you guys think?

 

So the government is spending so much more money than it can possibly afford and you want them to spend even more? And this just because you agreed to pay for it. Need I say any more?

 

No, you took out a student loan (just like any other loan you may have), so you need to re-pay it. End of story.

 

My husband was talked into going to an expensive school and forced by his parents to take out the loans. They said they would help pay them back but they haven't contributed a penny. He was just a kid and his parents should have been there to guide him, not take advantage of him. And he is working as a teacher in his field to help other kids instead of working in the field at a business where he could earn more. How is that fair either?

 

And just why is that my fault? And yet you want me to pay for it?

 

The millenials got sold a bill of goods. From birth til now, they were told by everyone that "education is the silver bullet" and going to college almost guaranteed you a good job. Yes, maybe there should have been more trepidation about going to school and taking on debt to do it, but again every person a millenial talked to suggested that going to an expensive school was the best investment. That being said, no one has really said how the forgiveness would take place. Under the US tax code, any time debt is forgiven, the person who owed the money has to report the money as income. Obviously you can't do that here, because if you do a ton of people would not be able to pay their taxes. And if the government pays for it, it will be entirely funded by national debt which could exacerbate issues globally when the world is already suffering from a surplussage of national debt.

 

I had foresight & was responsible enough to get through school without any student loan debt. What should I receive?

 

I pretty much agree with this. We've given trillions of taxpayer dollars away to the big banks because they were "too big to fail" and what have we gotten in return? Fired executives getting millions of dollars in severance, customer "service" outsourcing to India, and more fees announced seemingly every week. Aren't the American people "too big to fail?" If you check out the We Are the 99% Tumblr, student loans and medical debt are overwhelmingly what's dragging people down into poverty. I'm reluctant to just wave a wand and make these debts go away completely, but something clearly has to be done or they could continue dragging down our economy for years, even decades. Forgiving them would do far more good for both the economy and the American people than anything we've done so far for the banks!

As for a second car being a "luxury," that depends entirely on what part of the country you're from. My mid-sized Midwestern city is notorious for its sprawl, has virtually no public transportation, few bike trails, no bike lanes, and in many cases not even any sidewalks. When my husband and I had only one car, I was trapped at home while he was at work and for awhile had to arrange for my mother to drive me to my own job, which inconvenienced both of us to the point that I had to quit within the year. I'm a lifelong environmentalist, so owning two cars is against my values, but as long as we live here (hopefully not too much longer!), a second car isn't a luxury, it's a necessity.

 

If he is capable of earing more he should bite the bullet & get those student loans paid off so you can go about with your life. Helping kids can be done in many different ways, it doesn't have to be your livelihood.

 

With all due respect to David, it may not be so easy to just "go find a higher paying business job." Those things are scarce nowadays. And again, its one thing to say it is easy to go to a school you can afford, but I know when I was looking at colleges the idea was to find the best I could get into, regardless of cost, because it would ultimately pay for itself. Its hard to go against everyone you know pushing you in that direction. Also, David, and again I mean no disrespect, college might have been epically cheaper when you went meaning loans were unnecessary. I don't know when you went to school...we could be the same age. But I know with the advent of computers and the growth of the university's base staff have made college incredibly expensive, making real difficult for anyone to go to school without debt.

 

We've given billions to banks for economic stimulus, and all they've done is hold onto it and refuse to give loans to small businesses. They are using tax dollars to keep their golden parachutes well packed, and the rest of us have nothing to show for it. If you give an extra couple of hundred dollars a month to people struggling with student loans, they won't hoard the money like millionaires. They'll spend the money buying houses, and cars, and clothing, and going to restaurants, and grocery stores, and movie theaters... you know, things that actually stimulate the economy! A rich banker getting richer does nothing for the economy.

 

Hold on. If we give a few hundred bucks to a family struggling with student loans, they better not spend it buying houses, cars and clothing. All that stuff costs, and a few hundred bucks would go towards a down payment, which would just mean more debt for them. I believe that is part of the reason we go into this situation in the first place. People kept acquiring more and more debt to get more and more stuff. And, if those who get the extra money spend it pay down their debt, its going to go to the bank. Now, don't get me wrong, I am not about providing more cash for golden parachutes to banks. But the last thing I want people who are underwater on debt to do, if they get some money, is to spend it on buying a house or car. I want them spending it to get out of debt, which would have a small immediate impact on the economy (although good in the long-run).

 

Spending money paying down current debt would do nothing for the economy. The banks are holding all of the money to begin with. If I pay my credit card bill first, the bank that holds that debt simply holds onto that money too. If I buy a steak from a local grocery store, then that store has more capital to buy stock, hire workers, pay delivery drivers, etc.

I'm not advocating that people ignore their debt, but buying real items from real people in your real town will do more to stimulate the economy than giving billions to billionaires has done.

 

But at what cost? The deficit spending that our nation has done has only put the country in a deeper hole. You can say, well we'll just pay more when the good times roll, but no one wants to do that ever. And yes, no one is advocating that people don't use extra money to put food on the table and buy staples. But using that money to buy cars and houses that you can't afford is irresponsible and contributed to this mess. I mean the whole housing bubble was premised on people buying property they couldn't afford or maintain. And I am not advocating giving the money to billionaire either. I just think it is shortsighted to suggest that providing individuals more money will turn the economy around.

 

Money trickles up. I'm not advocating buying a second home or a mercedes either. In my case, I live in a cheap apartment and drive a car that's falling apart. My student loan payments every month are equal to my rent and bills. Over half of my monthly income goes to pay student loans. That money is going straight to banks that are refusing to lend the money to people who could be hiring workers and buying goods. The banks are hoarding the money and hurting the economic recovery. If I didn't have to send that money in every month, I'd be spending it on goods and services in my community. The money would end up in the economic system. Right now, it's just going from me to the bank and then staying there.

If the banks want to get on board with the recovery, let them start lending again. If not, give the money to people who will use it to speed the recovery.

 

But again, its not that easy. You and I live in the same situation, or close enough. I don't have a car cause I live in a city that makes one superfluous. I am saying that to make it clear that I am not writing this in the lapse of luxury. I feel the economic pain too. But to blame the banks for acting logically is fear and sense. You and I should be terrified, because life is going to suck. The issue is systemic, and is not solely because one side is not living up to their side of the bargain. You don't spend your way out of a recession when the problem is the system itself. The American, as well as the global, economic system is outdated and needs to be fixed. No one on either side of the aisle, either in the public or private sector has proposed alterations to the system that will get the economy humming again. The sentimental notion that old fixes (more spending on the left, less taxes on the right) can work are dangerous because they waste time and resources.

Because the scary thing is that the internet and technology are making everyone more efficient. There is not the need for as many jobs to produce as much stuff. One person can produce more, meaning that there is smaller demand for resources. And all the spending in the world won't fix that, because companies will just grow more and more efficient. In an integrated global system where the need for jobs decreases as efficiency grows the old fixes don't work. The banks are hording because they are scared. And you and I should be too. Yeah, the housing bubble triggered this. But this event has been coming for decades. Putting it off by lowering taxes or doing emergency spending is just going to put off the fix for a few more years when we are all a little older and have a little less.

So instead of worrying about debt and cash flow, the bigger questions are what will it mean to be employed in the future? How will people make money for their needs? Because all this stuff we grew up with? Yeah, thats as outdated as horse drawn buggies and the pony express.

 

Also, one final note...you forgive all student loans, thats it. The debt market would be destroyed. Because no one would ever loan out money again out of fear that they will never be repaid due to another crisis.