While your post has some good points about the place education has in our national spending strategy, there are a few issues I have.
You image a world in which student loans are forgiven and college is free. Yes, it would be nice is $1.6 trillion in debt was suddenly injected into the economy, but you could make the same argument for auto loans ($1.3 trillion) or credit card debt ($870 billion). New York Fed link
Why should only student loans be forgiven, but not other consumer credit?
What about the car loan that was used to purchase the only vehicle capable of transporting a family’s sole source of income to work, given the appalling lack of mass transportation in the average US city?
What about the credit card debt that was used to pay for a medical procedure that would have otherwise resulted in a dead body. Medical expenses are the biggest reason for bankruptcy in the US, even after the ACA.
While private student loans have gotten a bad rap through yellow journalism, most student loans are still federal. The ratio is about 10:1, federal: private. Federal student loans have myriad repayment plans, all of which are eminently accessible for most loans.
Additionally, we are still in an historically low interest rate environment. If ever there was a time to go into debt, especially for something that can never be taken away and has a lifetime benefit (college education), it is now.
The plan that Sanders has put forth is interesting, but it should be noted that it will only increase income inequality, especially the racial wealth gap.
Whites and Asians, who are already wealthier than Blacks and Hispanics, also graduate at a higher rate than their less wealthy minority peers. So forgiving $20,000 of student loan debt for a less wealthy, degree-less Black student helps far less than forgiving $5,000 for a more wealth, degreed White student. That White student will still have a degree that will result in a more than $1,000,000 lifetime earnings advantage.
Plus, graduate student will disproportionately benefit from total student loan forgiveness, as they have not only have the highest average student loan balances but also the highest career earning potential. So you’re giving the biggest benefit to those who have the best potential to not need it.
Also, your numbers are off for the student loan burden. You state that the average student loan debt was close to $40,000. That’s an exaggeration. Your source was debt.org, which tagged the 2017 average as $37,172. The 2019 Q2 average sourced from the studentaid.ed.gov has the average as $34,500. However, even this is misleading.
A much different number is the median student loan balance, which is around $17,000. I expound on the different in an article on Medium.
The biggest problem with student loans is those who went to college, took out loans, then didn’t graduate. The $10,000 average balance for dropouts is harder to overcome than the $25,000 average for graduates.
Lastly, the political reality is that mass student loan forgiveness will never see the light of day. It’s a pipe dream. Sanders, and to a lesser extent Warren, might have the best intentions in the world, but student loan forgiveness will never get passed, even if one of them gets elected and they have both houses of Congress.
