Our Debt Free Family

Commit. Plan. Take action.

  • ABOUT
  • CONTACT
  • FREE FB GROUP
  • FREE DEBT REDUCTION TOOLS
  • GET OUT OF DEBT
  • Privacy Policy
You are here: Home / Uncategorized / Is the Secret to Growing the Economy Canceling Student Loan Debt?

Is the Secret to Growing the Economy Canceling Student Loan Debt?

February 19, 2018 | 1 Comment

The United States economy has seen better days, that’s no doubt. The stock market recently saw one of its worst trading days in recent history. Many economists have been debating what could help mend the current climate. Could the secret be forgiving student loan debt?

A recent report says yes. The easiest way to ease the pressure being felt by more than 44 million Americans is to forgive all student debt. (And I’m not just saying that because I’ve got about $24K in student loans…)

A group of economists at the Levy Economics Institute of Bard College found there could be some great benefits if the federal government were to forgive student debt. The report details how young people struggling to pay off a massive amount of debt from college will help the economy as a whole.

While it may sound like a fantasy, it is possible, and it could have a significant and positive economic impact. The report found that canceling all student debt could potentially lead to an increase in U.S. GDP (gross domestic product). How big of an increase, you ask? Economists predict the increase could land anywhere between $861 billion and $1,083 billion over the next 10 years.

In addition to increasing the GDP, economists predict that canceling student debt would also lead to an increase in new jobs (an estimated 1.18 to 1.55 million).

Why is Canceling Student Loan Debt Such a Big Deal?

Why would forgiving student loan debt have that kind of impact on the United States economy? Well, the answer is pretty simple. There are more than 44 million Americans with some type of student loan debt hanging over their heads. Giving 44 million Americans a clean slate, where student debt is concerned, could help the economy greatly. The collective student loan debt in the U.S. is $1.3 trillion, which is higher than credit card debt and auto loan debt held in the U.S.

Who Would Pay the Student Loan Debt?

If the federal government decided to go about canceling student loan debt, it wouldn’t be that difficult. The problem, economists seem to believe, is that government officials consider paying the student loan debt as a zero-sum game. However, canceling student loan debt will free up tons of money to be put back into the economy.

Lawmakers have been able to provide massive tax cuts, and canceling student loan debt would be about the same. In fact, they’d be spending nearly the same amount of money to do so. Economists also found that canceling the debt could also help alleviate poverty.

As you probably know, poverty tends to be a cycle. Generally, people who grow up in poverty tend to live in poverty as adults. However, many people attempt to break the cycle of poverty by going to college. Canceling student loan debt could help ease racial disparities in debt and education. Canceling student debt would help keep borrowing/loans from continuing to support the racial wealth gap between the number of people in the U.S. looking for career opportunities and better employment through higher education.

Final Thoughts

It is your typical millennial response to be like, “Oh yeah. Cancel all the student debt.” However, it could make a significant impact on the economy. Taking into consideration my own student loan debt, I know it would free up $275 a month (more than $3,000 a year). Of course, some of that would go into savings, but a lot of it would also go back into the economy. (In fact, there are things I know I could buy with that money).

So, what do you think about canceling student loan debt? Would it help you? Do you think it’ll help the economy? Let me know in the comments! 

You may also enjoy reading:

  • How One Couple Paid Off $200K in Debt
  • Three Radical Debt Reduction Strategies You Should Try
Amanda Blankenship
Amanda Blankenship

Amanda is an editor and writer. She has a passion for sharing information that helps people and communities to better themselves in some way. In addition to writing online, she also freelances for local newspapers in her hometown of Charlotte, NC.

Filed Under: Uncategorized Tagged With: debt, economy, student loan debt, student loan forgiveness, student loans

Comments

  1. Derek says

    February 21, 2018 at 6:52 am

    I’d be interested in how much interest they’ve been able to collect on the existing Debt. How many have been making interest only payments for years, unable to put much of a dent in to their principal? i know this would alleviate a lot of pressure on my family, this year marks 10 years of payments with $30k still existing collectively. Thank you for your blog!

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • Facebook
  • Pinterest
  • RSS
  • Twitter

 


Five Steps To Debt Freedom

Here are five simple guidlines that will help you pay off debt.  

1) Get an emergency fund so you don’t take on debt when something comes up.

2) List your debts. This way you know where you stand.

3) Use the debt snowball. Pay your debts from smallest to largest, or most expensive to least expensive.

4) Avoid new debt. No new credit cards or loans. Period.

5) Go all cash. After everything is paid off, switch to all cash.

Helpful Resources

The Free Checklist for a Strong Financial Plan

U of Tennesse Debt Repayment Plan Basics

Vertex 42's Debt Payoff Calculator

Savingadvice's Helpful Debt Forums

Jackie Becks Debt Blog

Our Most Popular Articles

How Alice and Scott Paid off $200,000 in Student Loans

Learn How Christine Paid off $500,000

Use the Debt Snowball to Create a Payoff Plan

Do Nothing and Save Money with the Paribus App

Thanks To Our Advertisers

Get the tools to start living debt free! Learn more…

Need a title loan in Jacksonville, Florida? Go to 1-800 Loan Mart. Fast and easy applications.

Copyright © 2022 Runway Pro Theme by Viva la Violette