I am reading a story today about a woman graduating from the University of Minnesota veterinary school with $300,000 in student loan debt. The average debt for students graduating from Minnesota’s veterinary school is $188,000.
Student loan debt is in the news a lot these days and for good reason. It will top $1.2 trillion this year. There are many reasons for this. The cost of education is going up while real incomes are not. At the same time there is less and less aid for students. While some are likely to call this a “personal responsibility” issue — the knee-jerk non-answer for many of our poor national policy issues — the problem really shows how badly America has abandoned education.
Under the influence of bad politics, the United States neglects the future. Enormous student debt, beginning in the 1980s through today, reflects the nation’s poor choices quite clearly. The time to change course is long overdue.
The United States should adopt a program that would forgive student debt, in part if not in whole. Don’t think of this as letting students off the hook, think of it for what it would do. Forgiving student debt would benefit our national economic future. Rather than pouring large parts of future income into the repayment of loans, graduates would have more money to spend on everything from weekly personal needs to homes. This spending — something the conservative side of our national politics inexplicably cannot understand — drives demand and growth. Demand and growth are good for everyone, rich and poor alike. (It is especially good for the so-called job creators.)
Instead, policy favors long term debt because that benefits the very few who control political discourse in this country. The irony, of course, is even those who hold loan paper as an asset would benefit overall if the economy grew at a faster pace.
Estimates predict that student load debt could put as much as a 1% drag on future economic growth, not including the potential ripple effect that drag creates. It is a simple argument. An average GDP of 4% is better than a GDP of 3%.
Where would this money come from? Well, you know…we have to pay for it. Taxes. Again, this is a real simple concept, one of investment. Those of us most likely to afford a tax increase — and I’m not picking on the maligned 1%, but them too — would also be the people likely to benefit most from a stronger economy. If you have a $100,000 in the bank or a billion, a more robust economy is going to make that number look better down the road. So why should we feel cheated if we are called on to invest in that future? The entire discourse and understanding of the public sector and its economic benefit has been twisted and misrepresented. That sort of thinking needs to change.
And one simple place to make that change is the place of student debt in the United States. Education should not ruin the finances of students. It shouldn’t compromise the economic future of the nation either.