Cancel Student Loan Debt to Stimulate the Economy

Discussion in 'Politics' started by amygdala, Jan 30, 2009.

  1. amygdala

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    Congress is poised to spend nearly a trillion dollars on top of the $700 billion bailout from last September. While many parts of the pending bill (H.R. 1) will act to stimulate the economy, many parts of it simply won't. Tax rebate checks DO NOT stimulate the economy - history shows that people either spend such rebates on paying off credit card debt or simply saving it, doing nothing to stimulate the economy.

    The Wall Street financial institutions, auto manufacturers and countless other irresponsible actors have received BILLIONS of taxpayer dollars to bail them out of their self-created mess. This, too, does nothing to stimulate the economy. It merely rewards bad behavior and does nothing to encourage institutional change. There is a better way.

    How many times have we heard from our leaders in Washington that education is the key to solving all of our underlying societal problems? For decades, Presidents, Senators and Members of Congress have touted themselves as champions of education, yet they've done nothing to actually encourage the pursuit of one on an individual level.

    Some of us have taken advantage of the Federal Stafford Loan program to finance higher education, presumably with the understanding that an advanced degree equates with higher earning power in the future. Many of us go into public service after attaining such degrees, something that's also repeatedly described as something society should encourage. Yet, the debt we've accrued to obtain such degrees have crippled our ability to reap the benefits of our educations, causing many to make the unfortunate choice of leaving public service so as to earn enough money to pay off that debt.

    Our economy is in the tank. There isn't an economist alive who doesn't believe that the economy needs stimulating immediately. The only debate now centers on how to go about doing it. While the current plan pending before Congress contains some worthy provisions, very little of it will have a significant and immediate stimulating effect on the economy. The Obama Administration itself doesn't expect to see a upsurge in the economy until mid-to-late 2010.

    Instead of funneling billions of additional dollars to banks, financial institutions, insurance companies and other institutions of greed that are responsible for the current economic crisis, why not send that money directly to the people?

    Cancelling student loan debt for people making under $150,000 per year would have an IMMEDIATE stimulating effect on the economy. Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy NOW. Those extra dollars being pumped into the economy would have a multiplying effect, unlike many of the provisions of the plan presently under consideration. As a result, tax revenues would go up, the credit market will unfreeze and jobs will be created.

    2009 and the new Obama Administration is supposed to be about change. Nothing in the present economic stimulus package represents a significant departure from the way Washington has always operated - it's merely a different set of priorities on a higher scale, but it's certainly not materially different from any other economic stimulus package passed during the past few decades.

    Washington cannot simply print and borrow money to get us out of this crisis. We The People, however, can get this economy moving NOW. All we need is relief from debt that was accrued under the now-false promise that higher education equates with higher earnings.

    Free us of our obligations to repay Federal Stafford Loans and We The People will spend those extra dollars NOW.

    If you're on Facebook, there's a new group devoted to this proposal. It can be found at: Login | Facebook

    If you believe that there's a better way of climbing out of this economic crisis, one that empowers We The People to directly spend money, start businesses, free up credit and create jobs, then please join this group and encourage others to do so as well.

    There's strength in numbers - the more people to join this group, the louder our voices and the greater the chances of being heard by President Obama and Congress.

    Support REAL change we can believe in!
     
  2. devron

    devron New Member

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    I'd rather see it spent putting folks to work. Instead of just "giving" it away, I'd like the government, and the workers as well as the rest of us by extension, get some bang for their (actually OUR) buck. I'm of the mind that a good economy starts at the ground level--your average, everyday Joe and Jane working.

    I'd like to see more TVA-type projects. I haven't done any good logistics research or anything, but I wouldn't mind seeing some of the money going for mine-cleanup, reclamation and other environmental work. There's no reason this work can't be done by unskilled laborers in a similar manner to the proposed roadworks program. IMO, more than a "stimulus" this country and the average person needs to regain their sense of self and pride.

    As far as education... There are people who graduate high school who can't name their state's capital. Any money spent on education should be done there because our public system is ridiculous. Until that's fixed, politicians can STFU about college as far as I'm concerned.
     
  3. Principessa

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    Speaking as one with mutiple degrees and the student loans to go with them I once chose to live in an . . . unsafe place so that I could pay my $750 a month student loan payment. I thought that was the right thing to do. :rolleyes: {DUMB!} Imagine how I could have helped the economy had that been part of my disposable income!
     
  4. Principessa

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  5. D_Bob_Crotchitch

    D_Bob_Crotchitch New Member

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    Where you attracted to this site because all those years you had to hear boys talk about their weenies, willies, peckers, peters, cocks, meat, dick, and penis?
     
  6. TurkeyWithaSunburn

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    :rofl:
    YOU, yes YOU, want a personal bailout because you spent x number of years going to school and getting an education and now have a degree which, if you are smart, is in a field that is in demand?
    :wtf: :rofl:
    You probably had a subsidized loan to start with and you want MORE?
    :rofl:
    Forgive the student loans for a Doctor and also forgive student loans for someone who spent 7years to go thru a 4yr college (cuz they partied way too hard) to get a full degree in English and now works as a telemarketer?
    :rofl:

    (This post contains bombastic statements and is not directed at any user.)

    The proposal has zero sound logic in it, IMO. And somebody loses out. Whoever gave you the loan, will have to eat that cost.
     
  7. Iokua

    Iokua New Member

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    If everyone got an education for something that is in demand, then that job won't be in demand by the time you graduate.
     
  8. ledroit

    ledroit New Member

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    ???

    Economies are about interaction. What is to say that if I cancel your $1k debt that you are suddenly going to interact with others in a way that creates or sustains value? What guarantee do I have that you won't just watch TV and smile all day?

    This is the fundamental mistake the GOP has been making for 40 years, and Paulson just make in the first bunch of Treasury bail-outs.

    If people are scared, and you give them a tax break of $500, that $500 is going into the bank and it's going to sit there. Same with Wall St tycoons, who take TARP funds and give themselves big fat bonuses as insurance against bad times.

    Tax cuts, low interest rates, forgiving you your debt--none of that is going to work when the economy itself starts to freeze up and people just start hiding in their caves.

    It's stupid to waste money on small "stimulus" packages like Bush did. But when a global economy starts to shut down because people are freaked out and "value" or wealth vanish, then there is only one entity large enough and confident enough to spend, for better or for worse, and get things moving on a stable scale: governments.

    This is the time for global govts (not just the US) to invest, since individuals are scared to. Without investment and interactions, economies simply stop. Starting them up from scratch is a nearly impossible, extremely expensive, and very risky task--a bit like bringing someone back from the dead.

    Is it your student debt that is keeping you from interacting with others in an economically valuable way for all concerned? Is that the primary thing that is blocking economies and financial systems on a large scale?

    If so, then forgiving student debt is exactly the right remedy. If not, a false "solution" like this would be one more example of exactly what the GOP did to create a mess like this, and then push the entire economy into it. Economic behavior is driven by beliefs, and the GOP has been a pied piper leading people over the cliff for a long time, with absolutely idiotic beliefs. There is no quick and easy fix for undoing the damage. The only thing we can do, however, is change course, and hope the damage is not going to be as severe as some seem to think. What we have to do is to try to change, on an individual level, from being primarily concerned with consuming to people who are primarily concerned with producing and generating value that is sustainable, and that can be shared with others easily.
     
    #8 ledroit, Jan 30, 2009
    Last edited: Jan 30, 2009
  9. TurkeyWithaSunburn

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    While true, that is a risk you take... :frown1:
     
  10. Principessa

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    Actually once one deals with education administrators you have all the experience you need talking to big dicks. tongue:

    Seriously though, the majority of people who got rid of their student loans via bankruptcy before the laws changed in 1998 were lawyers, dentists, and chiropractors. They were NOT liberal arts majors.

    I still maintain that the cost of a degree should be determined by your potential to earn. A degree that costs you $60,000 in a field were your maximum earning potential is only $40,000 is ludicrous.
     
  11. _avg_

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    My state (AZ) just passed a budget that will bring per-student spending back down to 50% of what is was 20 years ago.

    There is zero political interest in preserving (much less improving) education.
     
  12. D_Pubert Stabbingpain

    D_Pubert Stabbingpain Account Disabled

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    The government doesn't hold your student loans (unless you hold a Direct Loan), your lender or lender servicer does.

    In any case, to obtain a student loan in the first place means that you *too* were living beyond your means on credit instead of paying for your education through grants, scholarships, savings, and, um, WORK. Therefore, just another credit borrower who should not have been given credit if you did not have the ability to repay.

    If you want to blame someone for the sad state of student loan lenders, go after the Kennedy clan that originally wrote the bill to force lenders out of business which, BTW, just happened to be damn close to the beginning of this recession.
     
  13. D_Pubert Stabbingpain

    D_Pubert Stabbingpain Account Disabled

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    Very good point!
     
  14. ledroit

    ledroit New Member

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    ... um, not to get off topic, but to say "from whence" is redundant. The word "whence" includes the preposition implicitly, since it's the archaic ablative, like Latin ablatives. So what you said is equivalent to stuttering, and saying "from 'from where.' " It's the same as saying "to whither" (ie, "to 'to where'.")

    Thought you'd like to know.
     
  15. earllogjam

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    What is the interest rate on student loans these days? 3%?

    Can you negotiate with Sally Mae or a lender to lower your rate?
     
  16. TurkeyWithaSunburn

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    Or maybe no degree at all...
    Average plumbers salary $47,350...

    Just saying that a college education is NOT everything that it is cracked up to be. College is a business, like everything else. It has to attract people, build up it's image, keep people coming in the door even if there isn't anything on the store shelves, so to speak.

    Not wanting to repay student loans could be considered a case of buyer's remorse... :eek: Just sayin...

    (And yeah with all of that said, I'd love to go to college one day :biggrin1::cool:, but I'm a nerd at heart)
     
  17. bigbull29

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    I wish. Nowadays, 7, 8, 9, 10 is more like it. Some are in the teens and higher
     
  18. amygdala

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    First of all, let me be clear that I do not in any way feel entitled to student loan debt relief. Those who pointed out that it was my choice to borrow money to attain a higher education are exactly right. That said, I don't think that the central point of my argument was fully understood by most who've responded thus far.

    Let's start with the premise that the economy is in the tank. Agreed? The next logical step is to determine how to fix it. The present economic situation was rooted in the bursting of the housing bubble - when one too many people who couldn't afford the houses they bought, thanks to the sub-prime mortgage fiasco, and thus defaulted, the derivative mortgage-backed securities that were created during the height of the housing bubble became illiquid. In other words, there were no assets to back up the value that only existed on paper. That, in turn, lead to a freezing of the credit markets. When lenders stop lending, companies cut back on their spending, leading to layoffs. A recession is as much a psychological phenomenon as an economic one. When the general public started paying attention to the economic crisis back in September, fear set in and people stopped spending money on all but necessities. When people stop buying HDTVs, Cadillacs and expensive coffee, companies like Circuit City, GM and Starbucks have to lay people off. This has a snowball effect on the entire economy across the board. Jobs start to hemmorhage because companies can no longer afford their overhead, not only because their products aren't selling, but because they can't obtain additional lines of credit.

    Last fall, Congress authorized $700 Billion to bail out the very Wall Street financial institutions that created this mess and we've only recently come to learn that there was no accounting for how that first $350 Billion was spent. In recent days, it's come to light that the very same companies that held their hands out for a piece of the TARP bailout, paid out BILLIONS of dollars in bonuses to their obviously inept executives. Free money, no regulation, rampant greed results in what we're dealing with now.

    As I said in my original posting, the current economic stimulus package before Congress contains nearly $1 TRILLION worth of spending - some of which will have a stimulating effect on the economy, most of which won't. One time tax rebate checks do nothing to stimulate the economy. People hoard that cash or pay off debt - there is no multiplying effect from those dollars because the purchases were already made.

    Beyond the present economic stimulus package being debated, Washington is gearing up to craft ANOTHER bailout package for the financial institutions that not only got us into this mess to begin with, but who hoarded the cash they received in the last bailout just last fall. My central point in my original posting is that, regardless of what you call it, it's NOT a stimulus to the economy.

    Let's be clear about what an economic stimulus is. It's the flooding of the monetary system with cash - either borrowed or printed by the one entity capable of doing so - the federal government. That money is usually handed over to Central Banks and other financial institutions who have proven time and again that they DO NOT act in the interests of the whole country but, rather, their own provincial, greedy self-interests. Other parts of the stimulus package involve tax cuts under the "trickle-down" theory of economics. With now 28 years of evidence that trickle-down economics does not work on a large scale, it's time to try a different approach. Even Arthur Laffer, the man credited with coming up with the theory of "supply-side economics" and the Laffer curve has admitted as much. So my point is simply that what is presently being debated in Washington is largely (but not entirely) more of the same type of economic "stimulus" that has been proven time and again to be based on false premises.

    The total amount of Student Loan debt held by Americans in the aggregate is approximately $450 Billion. A large amount, to be sure, but significantly less than the amount that was ALREADY handed over to Wall Street last fall and significantly less than what will be handed over to them again in the months to come. Instead of throwing good money after bad, why not give relief to responsible, hardworking American workers whose only mistake was to borrow money to finance their educations under the assumption that advanced degrees equate with higher earnings? Teachers, public health workers, social workers and, yes, even lawyers who work in the public interest have amassed incredible amounts of debt only to find that their earning power is significantly less than what would have been the case if our economy wasn't sabotaged by the greed of the very rich. I'm not arguing in favor of giving away money for nothing - I'm arguing that educated, middle class Americans with student loan debt, in the aggregate, could and would spend that same amount of money in a way that WOULD stimulate the economy. Personally, if my student loan debt were to suddenly be erased, I would have a guaranteed extra $500 per month that I could spend on HDTVs, Cadillacs and Starbucks. So would every other person in the same predicament. This is very different than a meager, one-time $500 tax rebate. Knowing that such extra money would be in my pocket every month, rather than a one-shot deal, psychologically frees me up to spend at least some of it without worrying. Multiply that by the hundreds of thousands, if not millions of other educated Americans similarly situated, and we have a REAL stimulating effect on the economy. When the economy is stimulated in such a way, retail sales increase, jobs are created, credit markets are unfrozen and wealth is created from the bottom up, rather than the other way around. We've tried it time and again the other way, I'm talking about real, significant CHANGE.
     
  19. amygdala

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    Just so you don't think I'm merely talking out of my ass:

    Wy Spano: Want to really stimulate the economy?

    I disagree, however, with his figure of $70 Billion. My own research has lead me to conclude that the $450 Billion figure I quoted is much more accurate. Either way, there is merit to the proposal. I'm not a PhD in basket-weaving who spent 13 years in school now hoping to have the taxpayers subsidize my desire to sit home all day watching paternity tests on Maury. I'm a serious, productive member of society who has never defaulted on my student loans, nor do I intend to. I do, however, believe that if the federal government has to print or borrow a TRILLION dollars to get this economy moving again, I and others like me should be unsaddled with the burden of the debt we accrued for the sole purpose of maximizing our contribution to society as a whole.
     
    #19 amygdala, Jan 30, 2009
    Last edited: Jan 30, 2009
  20. D_Martin van Burden

    D_Martin van Burden Account Disabled

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    I received my stimulus check a few months after I had to shell out $300 in state taxes. That just made up for my loss, and the remaining $300 got banked for my drive out here (pretty much paid for gas and food on the road).

    To borrow from Jon Stewart (who, surprisingly, raised my eyebrows), the government should give the bailout to the people so that way we can repay our unsecured debts -- loans, mortgages, credit card balances, etc. You just have to show proof of your current unsecured debt and establish a contract of how you will allocate your funds, and then you would get funds according to how much you contractually allot to pay back. If you balk, then you have to repay the borrowed money immediately with penalties attached. So, the banks, the mortgage loans, the creditors would get their money back, and we would be freed from a debt obligation, and thus we could spend the money on disposable goods. Sure, some may hoard, but I know I would be quite unburdened if my debts were taken care of!

    Finally, to those of you who brought up the student loan thing. There's a big difference between getting your Bachelor's (which really doesn't amount to shit anymore) and your higher degrees. There are some graduate schools that will pay for your tuition and allow a small stipend for your monthly expenses. But even here in Tucson, where the standard of living is pretty cheap compared to back home, $900 doesn't stretch far. $390 is rent; $280 is car payment; $60 is insurance; food and goods are $100-150. There goes my paychecks. I still have unsecured debt to pay each month, despite any unforeseeable emergencies (e.g. getting sick, car breaks down) or even the foreseeable stuff (e.g. school books, fees). There is no summer funding, so I'll have to rough it or hit the streets to see if I can supplement my income. No guarantees. Student loans are almost always needed to supplement whatever funding you do get. However, there are many universities out there that operate on highly competitive funding; they may pay your tuition and that's it, or nothing at all. So there's no getting around a student loan; you need it to live. Borrowing $10,000s per year adds up rather quickly. So, just to be clear, some students have to borrow to maintain a livelihood even with responsible spending, not just because we want to have a spring fling and charge it later.
     
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