There has been talk lately about eliminating student loan debt, mostly by the Democratic candidates for president, but also a few Congressmen. The idea is that there is over one trillion dollars of student debt out there, which is putting a burden on the younger generation that is almost impossible to get out from under.
There seem to be a few different proposals out there. Some want to bail out those people, the government would spend the $1.6 trillion to pay the loans off (mostly to themselves). Another proposal is to just cancel the debt. For the purpose of this discussion, we will go with bail out idea.
What is the benefit of bailing out people with student loan debt? First of all, it would spur on the economy. The vast majority of the people with this debt are lower income (not too many rich people are sitting on student loans), and they are unable to do things that people starting out could do years ago…such as buy a house.
So how would this be a boost to the economy? Well, the idea is that these people would have the extra money per month to perhaps buy or build a house (that would provide work for realtors, carpenters, etc). They could use the money to travel (boost for airlines, hotels, restaurants, etc). Maybe they decide to just buy stuff (helps retailers, manufacturers, etc). With this extra money or lack of debt, they take out a small business loan and start a company.
I know, this sounds unfair to all of those people who did not go to college. However, they benefit too. If you are an electrician, then when the newest housing boom comes, who are they going to call to upgrade these houses so they can install smart lights, smart outlets, and whatever other smart electrical things they need to survive? If they build a house, guess what? They will need an electrician.
The fact that so many people get mad about this idea shows just how messed up things are in this country. This should not be a battle between college vs. non-college. This is still the super-rich vs. the middle/lower classes. All of these plans call for taxing them more. Make Amazon pay federal taxes. Make sure the billionaires pay more than you & me.
However, once this happens then we need to have a serious discussion about the future. The way we prepare people for the future is messed up and needs reform.
When I was in high school, my parents and family (as well as the school system) pushed college on everyone. Yet there was very little information given to us about the loan process and all of the fun stuff that goes with it. I remember trying to figure it out later and it was all so confusing (I believe schools today do a little better job of educating parents and students about this). I agree when people say we need to take the stigma off of trades and vocational tracks.
I believe that state four year and trade schools should be free for in-state students. However, I think the bar needs to be raised for admission. If you want the free education, you have to work hard and study in school. Or apply yourself at vo-tech and prove that you are serious. I do not think the free schools should be the fall back option for someone who does not get into a private school.
Universities figured out years ago that encouraging kids to take out ridiculous amounts of loans because it was guaranteed money. I remember hearing from people that the admissions people would tell them to take out more so that they would not have to work during college. All of this while raising tuition to astronomical rates.
I remember my dad saying that he could work each summer and earn enough to pay a large portion of his tuition. That used to be normal. Now? Not a chance. Clarion University is one of the cheapest schools in PA, tuition is around $7500. That may not seem like much, but that is not including a place to live, food, and other bills. Maybe you are from the area and can live at home. It would still be close to impossible to make that much during the summer. Do not believe me? Tuition has increased about 1300% since 1978. Imagine if the price of a new car increased that much since then, a $5000 car in 1978 would be about $70,000 now. Do you think people would be cool with that?
Anyways, I realize that people will say “hey, if you want free college, then join the military.” That is an option. I also like a few of the candidates ideas for using the different government run volunteer programs (Peace Corps, AmeriCorps, Teach for America, etc) to also provide college money. If you volunteer for two yeas, then you get a free year of college (maybe in this system, the government then pays for any college, not just the free ones I mentioned before). Whatever, they can work this idea out.
Obviously this idea of buying out the debt will most likely never happen. That is one of the reasons I like Andrew Yang’s Freedom Dividend (universal basic income). Since everyone gets the money, people with high college debt could elect to use their $1000 per month to just pay off their loans. And since everyone receives the money, then people cannot complain that someone else is getting it.
