Should Uncle Sam forgiving student-loan debt the answer to fix the ailing economy?

A current petition movement at SignOn.org is pushing the idea of amnesty for student loans as a solution to the current economic woes that the United States — and the world — is finding itself in.

For college students — past and present — in the Oakland and East Bay, such an action would be a welcomed sign of relief.

"I see ads on TV all the time for lawyers who get people out of paying tax debt," said one student at Ohlone College in Fremont who asked for anonymity. "Why not give students a break, too? At least students are trying to make the world a better place."

The actual text of the petition currently making the rounds — and which is currently just short of the required number of signatures needed to ensure delivery to Congress and President Obama — is as follows:

Forgiving the student loan debt of all Americans will have an immediate stimulative effect on our economy. With the stroke of the President’s pen, millions of Americans would suddenly have hundreds, or in some cases, thousands of extra dollars in their pockets each and every month with which to spend on ailing sectors of the economy.

As consumer spending increases, businesses will begin to hire, jobs will be created and a new era of innovation, entrepreneurship and prosperity will be ushered in for all. A rising tide does, in fact, lift all boats – forgiving student loan debt, rather than tax cuts for corporations, millionaires and billionaires, has a MUCH greater chance of helping to rise that tide in a MUCH shorter time-frame. The future economic success of this country is wholly dependent upon a well-educated, prosperous middle class. Instead of saddling entire generations with debt from which there is no escape, let’s empower the American people to grow this economy on their own! Therefore, we, the undersigned, strongly encourage Congress and the President to support H. Res 365, introduced by Rep. Hansen Clarke (D-MI), seeking student loan forgiveness as a means of economic stimulus.

The petition site also claims that, "For over 30 years, the rich have gotten richer, the poor have gotten poorer, and the middle class is slowly but surely being squeezed out of existence. Instead of more of the same corporate welfare/’trickle-down’ economics that have been an abysmal failure for the middle class, why not try a trickle-up approach to rebuilding our economy by targeting relief at those most likely to actually help grow the economy?"

Many college graduates struggle under the weight of student-loan payments, and the default rate on federal loans is close to 9% now — an all-time high.

For students who took out loans to be teachers, it’s a double-whammy as the government’s cuts in funding for education mean they can’t even get or keep jobs that will help pay off the student-loan debt incrued while trying to make the world a better place.

Yet it also seems dicey to let so many people out of the promissory notes they signed when accepting the loan money in the first place. Many problems exist currently with the student-loan system, where too many students take out loans for non-academic spending.

And what kind of message would this send to future borrowers, as well? Will they, too, expect amnesty in the future?

Of course, this is just one idea amongst many to solve the economic challenges, and it happens to involve higher education from a different angle.

It’s hard to see Congress accepting such a proposal for serious discussion, but stranger things have happened in politics

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About defaultprevention

Default Prevention Specialist since 1998.
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