Wednesday, October 5, 2011

27,000+ Americans wrong on forgiving student loan debt

The Obama White House recently introduced a petition feature on its website, where Americans can digitally sign on to various policy proposals or questions. If a certain threshold is reached, the White House promises to give an official response to the petitioners. Depending on how seriously the White House takes these petitions, it could be a great way for voters to voice their concerns to the government.

As you might expect, the clear champion amongst the petitions in terms of number of signers concerns the end of marijuana prohibition. The second-most popular petition advocates the forgiveness of all student loan debt in order to put money in people's pockets and stimulate the economy. As a holder of significant loan debt, I would greatly benefit personally were this to be done. However, it is terrible fiscal/economic policy.

While most college graduates have taken a hit in the past few years, they are still doing better than non-grads. Most immediately, that should disqualify them from being a preferred group to receive government benefits, as there are people (some of whom are themselves college graduates, to be fair) who are struggling for the essentials of living. In terms of stimulus, forgiving student loan debt is an inefficient use of government resources because college grads are less likely than their poorer counterparts to spend any money they have and stimulate the economy. People who already can afford the essentials might save some of the windfall from the government, but those in poverty will spend it.

Student loan forgiveness is a waste of government resources, giving benefits to people who are less likely to need them and less likely to use them to stimulate the economy. It's better to give money to the janitor than the secretary. Of course, either is better than giving money to the boss, which is the Republicans' plan.

1 comment:

Anonymous said...

I have two kids with student loans, they will struggle very much to get these paid, please help!