Why The U.S. Government Should Forgive Student Loan Debt

Why The U.S. Government Should Forgive Student Loan Debt

I have a bachelor’s degree in International Business and Economics and a master’s degree in Accountancy. Today’s economic turmoil has made me consider the current state of the economy. Watching the news, I have seen several people’s opinions on what will help the economy recover. One thing that was ingrained in my head from my studies is that trickle-down economics DOES NOT WORK. However, discretionary fiscal policy, by way of government spending or reducing taxes, does work. Forgiving student loan debt is a sort of government spending that would immediately impact the economy by allowing more disposable income. As there are thousands of students that are crushed under their student loans and debts it would be a really wise decision for the U.S. Government should forgive student loan debt. You can read more about the condition of students and how this will help students on Velgenklere.

I recently had the pleasure of meeting Mr. Robert Applebaum. Rob graduated from Fordham University in 1998 with a law degree, was an Assistant District Attorney for Brooklyn and Medical Malpractice Defense Attorney, so I think it’s safe to say he’s “wicked smart.” Rob is an advocate for forgiving student loan debt for what he calls the “educated poor” (forgivestudentloandebt.com, 2011). These are people who have college degrees and expertise and would like to work, but due to the economy, they are unable to find jobs or are currently underemployed and subsequently with low or no income. These people, in many cases, also have large amounts of student loan debt that they are unable to pay. While there are programs for deferral of student loan debt, there are few programs that allow for forgiveness of debt.

The government has spent billions of dollars trying to jump-start our ailing economy on programs that pump money into the nation’s financial system, allowing for easier access to loans, and supposedly spurring job growth. However, the money is mostly going to large corporations, banking institutions, and government-approved construction projects. Again, trickle-down economics has been proven not to work. So why are our lawmakers continuing to approve more of the same failing policies? Why not use the same money and forgive student loan debt, allowing America’s “educated poor” to use their disposable income to spur economic growth?

In January 2009 Rob submitted a proposal on forgiving student loan debt. Since then, the cause has multiplied exponentially via Facebook (over 300,000 members) and moveon.org/signon.org petitions which are delivered to every member of the U.S. Congress (over 437,000 signatures at the time of publication). According to Rob, “in the last year student loan debt has surpassed credit card debt and is expected to reach $1 trillion by next year (http://blogs.wsj.com/economics/2010/08/09/student-loan-debt-surpasses-credit-cards/, 2011).” So why not forgive credit card debt and mortgage debt? Applebaum said it best: “Because student loan debt is treated unlike every other type of consumer debt in America. Whereas you can have your credit card debt or mortgage debt (and even your gambling debts) discharged or restructured in Bankruptcy, with student loans, there are no good options for those struggling under the weight of their student loan debts. Moreover, you can sell the things you bought on your credit card or sell your house – not so for the degrees obtained through student loans which no longer have the same worth they once did since our economy was nearly destroyed by those at the very top.”

America needs an economic stimulus that works. Trickle-down economics only puts more money in the hands of the richest population. Forgiveness of student loan debts would allow middle-class Americans access to more of their money, which allows for more spending, and spending leads to growth. Forgiveness of student loan debt is one way to reach scores of educated Americans who could greatly benefit from this program. If you would like to sign to petition for the government to pass this program, visit forgivestudentloandebt.com.