Investing in the Future

A not so modest proposal for providing a major economic stimulus that doesn’t involve tax increases is available, though it has never been considered by more than a few random Representatives. What is it? Quite simply … forgive outstanding student loan debt. Many have labeled the latest group of kids “Generation Debt” (I first remember reading it in the Village Voice several years ago). Students leave college saddled with debts that rival a mid-tier mortgage. And while we can argue over the merits of youth paying for their own education, the reality is that the positive externalities associated with a more educated and skilled workforce far outweigh any costs. Today the cumulative student loan debt stands at over $1 Trillion dollars (CNN). Forgiving this debt, with a transfer from the government to banks would free up about 8 percent of GDP to push toward consumption. Sure some students will take that additional income and save it, but the reality is putting more disposable income in the hands of young people will invariably lead to increased spending – thus serving as a stimulus to the economy. Beyond this, there are a number of additional benefits: 1. Students with no debt load are more apt to spend time serving the public in either non-profits or public service positions. The pressure of debt repayment have long strained the non-profit sector, causing fewer talented people to make short or long-term sacrifices for the common good. 2. The immediate influx of cash into the economy means hiring more young people who bring fresh ideas to the workplace, thus providing for more opportunities for innovation and increased productivity. 3. Many of those young people would be in a position to purchase a home, thus serving as a boon to the housing market. And 4. It just makes sense in a democracy for youth to have the benefit of cheap education as it serves economic, social and political ends – particularly those a more free, vibrant democracy where new ideas and energy are brought to bear on the major issues of our time. We are clearly suffering through a dearth of new ideas and sensible solutions to the problems that ail us and freeing youth from the onus of excessive debt gives them more opportunity and even impetus to work to solve the problems that will define their collective future.