With the democratic candidate elections coming up, many of the candidates have plans for student debt. Candidates such as Bernie Sanders and Elizabeth Warren want to let go of the over $1.5 trillion student debt loan that currently exists. Sanders wants to make plans to make college free, while Warren wants to impose a "billionaires tax" to help lighten the debt.
However, economists have predicted that this will simply act like a tax cut and lead to household consumption and investment. William Foster, a credit analyzer, also predicted that it would increase the national GDP by close to $100 billion over a 10 year period. (Which isn't much in a $21.5 trillion economy)
On the other side, there could also be some negative effects. "'It could also increase the risk of moral hazard and the accumulation of even higher student debt burdens."' Future borrowers, for instance, might be encouraged to run up big loan balances on the assumption that their debts will be forgiven at some point." Alongside this, it is determined that 2/3 of student debt is held by the top 1/2 of earners in the US.
Sources:
https://www.cnbc.com/2019/11/01/wiping-out-student-debt-would-be-small-boost-to-economy-moodys-says.html
Personally I think that relieving the student debt will help past generations more than it will in the future. Although the concern for people racking up debt is valid, I don't know many people who would purposefully rack up the debt to millions of dollars. I think that Warren's plan will work better than Bernies in order to target the goal of an affordable education. As Mr. Stewart has said in class, nothing is ever free. Taxing billionaires such as Jeff Bezos would take the burden off of the middle class. As we are also applying to college at this time, it can be stressful for those whose families make a good living (enough to not qualify for FAFSA), but not enough to pay $70,000 a year for education. Making college cheaper should be the goal in mind for whatever candidate is elected into office in 2020.
ReplyDeleteI think for this we need to find a fair middle ground. As of right now many people suffer from extreme student debt they won't be able to pay off, while many others have been fortunate enough to pay it off by now. I think making college free is a big mistake, but finding solutions to decrease student debt by even 15 to 20 percent would be a big improvement from what it is currently at.
ReplyDeleteThis is interesting to read because most arguments I have heard are for getting rid of or trying to alleviate student debt. I don't think that making college free is a valid option anytime in the near future, especially since tuition money is used by colleges for things like professor salaries. However, many of the prices of tuition are so high that some students are discouraged to go for fear of taking on heavy student loans, and that is a problem that definitely needs to be addressed in some way.
ReplyDeletePersonally I think that relieving student debt is good, however I'm not sure that these candidates are going about it in the right way. I personally believe that all public colleges should be free and that private colleges should not give out any scholarships and instead be able to cover 100% financial need. This is what the Ivy league now does and it has helped a lot of kids.
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