We’ve all heard about it, the U.S. student debt is over $1.5 trillion now, and climbing. About 1 in 4 Americans have student loan debt, an estimated 44.7 million people. The average student loan debt amount is $37,172 with an average monthly loan payment of $393. Several of Democratic presidential hopefuls for 2020 say they want a greatly reduced if not eliminate it. $1.5 trillion is a lot of money just to write off. News Forecasters asks, how likely is the monstrous $1.5 trillion in U.S. student debt be canceled?
According to a survey from the National Association of Business Economists, canceling Americans’ student debt would actually have an adverse impact on the U.S. economy. The Progressive argument for canceling the debt is that it would help Americans reduce wealth inequality, freeing up potential spending on other items – such as household formations. The counter-argument is that, if students know they won’t need to pay back the debt for their education, they might make more expensive, and more reckless decisions. A decision to get an undergraduate degree in women’s studies followed by a master’s degree in gender theory is not exactly what people will be willing to hire someone for – unless forced by a socialist social engineering state – another subject.
When looking at the current nonhousing consumer debt, very soon it will be one-half of all nonhousing consumer debt. Considering that back in the year 2000, when it was relatively nill, the scam on the youth has been truly astounding – making virtual financial slaves out of the next generation.
Are there any other downsides to canceling this debt? For those who have the debt canceled, no of course not. But let’s be clear here, what we are talking about with debt forgiveness is – currency debasement. The purchasing power of the Dollar will be reduced for everyone by the amount of the debt canceled. Currency debasement tends to hurt the poor more – no assets to hedge this effect. In a paradoxical twist, the educated freeloaders will become the bosses of the less education responsible people.
Regardless of your opinion, what is the likelihood of this student debt cancellation? The News Forecasters take is that in fact perhaps 10% of the debt could get canceled ($150 billion) in some means-tested assistance program. The rest of the debt will get purchased by a government entity (perhaps the Treasury or the Fed), and offer at least at a lower interest rate to the student borrowers. Most likely, most of the debt will stay intact – the cost will be too great to get through the U.S. Congress.
But this is only half of the problem – how does the U.S. stop continuing student debt and its growth. News Forecasters take is that U.S. lawmakers will not have an answer to this, and the credit bubble grows. Until when? We have already answered to a degree this question – hyperinflation coming. The long-term solutions look dubious.
A video presentation of this subject: