As paying for college gets harder, student debt continues to spiral upwards affecting close to 50 million Americans. Policy makers and universities have been exploring options for turning the tide on this crushing financial burden. According to recent research at Bard College, “there is mounting evidence that the escalation of student debt in the United States is an impediment to both household financial stability and aggregate consumption and investment.”
In other words, if students graduate from college and need to pay hundreds if not thousands of dollars every month to service their student loans, they will have little money left over to spend on other important things like buying a house, a car, or even paying for rent!
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Attempting to address this crisis in a dramatic fashion, researchers at Bard explored the potential impact of total Student Debt Cancellation by the Federal government. Just like banks were deemed “too big to fail” during the mortgage crisis of 2008, legislators could find that an entire generation of heavily indebted students are also “too big to fail”.
But – what would be the economic impact of yet another massive Federal bailout? It turns out that investing in an entire generation of young Americans actually has a very positive economic impact. Researchers at Bard projected that a one-time policy of student debt cancellation would:
• Boost real GDP by an average of $86 billion to $108 billion per year.
• Over the 10-year forecast, the policy generates between $861 billion and $1,083 billion in real GDP (2016 dollars).
• Eliminating student debt reduces the average unemployment rate by 0.22 to 0.36 percentage points over the 10-year forecast.
• Peak job creation in the first few years following the elimination of student loan debt adds roughly 1.2 million to 1.5 million new jobs per year.
• The inflationary effects of cancelling the debt are macro-economically insignificant.
Of course it’s true – the political will and cooperation necessary to institute this type of massive policy intervention is hard to imagine! Fortunately, here at Pay For Ed we are moving forward with our own Student Debt reduction policy, one student at a time! Don’t wait for policy makers and politicians to figure things out. Instead, take steps today to dramatically reduce your own student debt load and make an incredible impact on your financial future.
So, to learn more about how to pass your own Student Debt reduction program, please click here to learn about our In-College Payer. This powerful tool helps you to quickly take control of your student debt and lays the foundation for a strong and prosperous financial future.