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Could Cancelling Student Loans Actually Save Money?
Finding the balance between servicing and forgiving debt.
For the past few years, the alarm has been sounding ever louder that student loan debt is causing massive economic harm, on both personally and nationally.
When saddled with too much debt, individuals find it hard to keep their more of their income to make the big purchases in life, such has homes and cars. Even if they do scrape together enough capital, getting a good mortgage or car loan can be difficult, since their outstanding loan balance dings their credit scores.
If this happens to one person, it affects that one person.
If this happens to millions of people, it effects millions more.
When homes and cars aren’t being bought (i.e. demand goes down), prices go down, jobs go down, and the economy goes down. This is the much-feared deflationary cycle that most economists worry about.
Sure, we’re living in a time of relatively high inflation, but that’s mostly because of COVID-induced shortages on the supply side that are outstripping. Plus, demand for goods will taper off once the stimulus money is spent and student loan payments resume.
