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What is the long-term economic impact of forgiving student loans?

Fidencio Twitty

Hey there friend,

That's a really interesting question you pose about the long-term economic impact of forgiving student loans. For starters, it's important to note that the current student loan debt crisis in the United States is nothing short of staggering. As of 2021, it's estimated that student loan debt has surpassed $1.7 trillion, affecting over 44 million borrowers. So any kind of policy change regarding student loans has the potential to make a huge impact on a large portion of the population.

When it comes to forgiveness specifically, there are a few different schools of thought on what it could mean economically. On one hand, forgiving student loan debt could, in theory, provide a huge economic boost. With less debt to worry about, borrowers would have more disposable income to spend, invest, or save. They could potentially buy a home sooner, start a business, or contribute more to their retirement accounts. In turn, all this spending could stimulate the economy and create new jobs, which would only benefit everyone in the long-term.

However, the reality may not be quite so straightforward. For example, student loan debt is often held by those who are already struggling financially, and who may not have a high income to begin with. Even with their debt forgiven, they may still struggle to make ends meet, particularly in the face of rising costs of living, wage stagnation, and income inequality. Additionally, forgiving student loans could actually have some negative consequences for taxpayers. After all, if a large amount of student loan debt is suddenly wiped away, taxpayers would essentially be footing the bill for that forgiveness. Depending on how the policy is structured, this could potentially be quite costly.

So, to sum it up, the long-term economic impact of forgiving student loans is somewhat of a mixed bag. While there is certainly potential for economic growth and relief for borrowers, the realities of income inequality and taxpayer expense must also be taken into account. Ultimately, I think it's important to have conversations about solutions to the student debt crisis that take a variety of factors into consideration, rather than looking for a quick fix that might not be sustainable.