Student debt has become a major political issue in recent years. As movements have formed and proposed policies for debt relief have been in the works, nothing has come to fruition to help the student debt crisis.
But a new report has the answer to help alleviate 44 million Americans with a collective $1.3 trillion in student debt and help grow the economy – cancel student debt.
A group of economists at the Levy Economics Institute of Bard College, who recently published the report, determined that forgiving all existing student debt would positively impact the economy.
“The idea of canceling student debt is not just some crazy idea out of left field, but is actually something that could be done, and done in a way that has a moderately positive economic impact,” Marshall Steinbaum, a fellow and research director at the Roosevelt Institute and a coauthor of the report said in an interview. “The way this and similar polices are often discussed is in a mode of ‘well can we really afford this?’ and the answer is definitely yes,” he said.
The cost of eliminating student debt would total approximately $1.4 trillion over 10 years, according to Mic Network Inc., a leading digital news company. But once cancelled out, it would “lead to an increase in U.S. GDP between $861 billion and $1,083 billion over the course of 10 years,” according to Mic Network Inc.
This idea would cost half as much as the Trump administration’s tax cuts and would increase the macro economic impact on the U.S. economy.
“What our report shows is that you get a greater macro economics impact, bigger bang for the buck, and that student debt cancellation has about half the budgetary effect of the Tump tax cuts,” Stephanie Kelton, Stony Brook University professor of Public Policy and Economic, said.
Also, the report stated that canceling student debt would create more jobs estimated between 1.18 and 1.55 million over the stated decade.
The report also determined that canceling student loan debt might “attenuate some longstanding racial disparities in debt and education… helping keep the high cost of borrowing from exacerbating the racial wealth gap between the growing number of Americans seeking better employment through higher education.”
Overall, if these 44 million Americans were debt free, it would promote consumer spending and grow every sector of the U.S. economy. And this impact would most “likely be more broadly felt than those of the tax bill.”