You may or may not have heard of the fledgling, but growing, movement to forgive student loan debt to stimulate the economy. It’s one of the several hot topics that have been thrown about, along with the legalization of marijuana (especially for the state of California), that aim to stimulate the economy.
Haters are sometimes misled, I believe, by the impact of the popular title which grants its origins to a facebook group.
“Forgive Student Loan Debt! What a bunch of free riders who want to ‘forgiven’ for their trips to Jamaica!”
“Kids don’t work for anything these days!”
There are some aspects I’d like to bullet point before I turn to Applebaum’s organization:
- As students and alumni are aware, whether public or private, tuition rises each year.
- Demand for higher education levels is not new. As we have seen over the past few decades, a job that one could have gotten by with a high school diploma is now granted instead to those with undergraduate degrees. Likewise, graduates of MA or specialty programs are slowly replacing those with undergraduate degrees.
- The government has spent hundreds billions bailing out car companies and banks; trillions “liberating” Iraqis. Why not stimulate our own economy by focusing on the loosening the binds on our own educated citizens?
Applebaum writes:
Forgiving student loan debt 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.
His proposal is quite intriguing.
But that’s all well and good, how might this relate to the issues on this blog?
He noted a couple things that stuck out to me in his proposal:
The driving factor in today’s economy is fear. …
This proposal will immediately free up money for hardworking, educated Americans, giving them more money in their pockets every month, addressing the very real psychological aspects of the recession as much as the financial ones.
Fear is indeed an issue here. Fear of the Other, fear of inadequacy. What this plan is suggesting is a complete overhaul of the financial system that keeps a significant percent of the educated class tied down.
I have noted in the forums several people saying their own personal stories of having gone to a public university for undergraduate degree, and that their “friends” who went to “Ivy League” schools and ended up saddled with debt are “getting the last laugh”. Okay, well only one person wrote that specifically, but the sentiment is resounding.
This is not about punishing those who didn’t end up with loans, its about trying to reorganize the economy to restore and create jobs. Fear is what is driving so many people to save their money: if we alleviate some of that burden for the educated class, I agree with Applebaum that it would be like a shot of adrenaline to the system in which you, and I, necessarily live.
Further, it is my personal belief that a constant focus on personal funds (or lack thereof) drastically hinders one’s ability to relate to others. If we can wipe some of that debt away, it would free up the attention spans of people to obviously spend their money elsewhere, but potentially allocate their attention to service, further education, and health.
And does not generosity beget generosity?
It would open up a portal of possibilities: new ways of engaging the world for those with higher educations.
I welcome comments here. I also recommend you check out Robert Applebaum’s site to read his work for yourself, and/or the Huffington Post article in which he was interviewed, released on June 30th.
6 comments
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July 1, 2009 at 2:28 pm
Robert Applebaum
Thank you for your kind words and obvious insight into the purpose behind what I’ve proposed. So many people out there want to ascribe motives and intentions that I simply never had. You get it, and I appreciate your spreading the message!
July 1, 2009 at 5:13 pm
david Clark
What i’d like to see is forgiveness programs based on community involvement. an example would be volunteer programs in local communities where current students and graduates can donate their time in so many areas (hospitals, police & fire reserves, helping their elderly, tutoring the youth, church and school involvement programs, cleaning up litter, shoveling walkways, new and current home improvements, water meter reading, etc), or anything else that is currently not being done within the confines of a specific job. in return the students earns loan forgiveness. The local city benefits because it receives volunteers that can performs certain tasks that cost the local employers tons of money. employers benefit from a form of labor at no cost, have one on one development time with volunteers with whom they can later offer paid positions, and the student receives loan forgiveness along with experience in a wide array of potential future occupations. the government in turn receives a better educated workforce, a more experienced workforce, team based structures within local cities, and reduction in crime due to involvment and education.
July 1, 2009 at 5:44 pm
Janell
David,
I totally understand that you want the students to “earn” their repayment for their loans through volunteer work. The problem I have with that is I already did that. I volunteered at animal shelters, hospitals and with children during my high school and undergraduate years in order for me to have “extracurricular” activities in addition to the clubs and such that I was a member of so a school would see my as an well-rounded individual. I did that so I could be doing the job I love today.
If student loans were paid off there would be people willing to actually WORK in these areas that need help, instead of these individuals needing higher paying jobs to pay for loans plus other lifestyles needs, as in Robert’s case.
I may sound mean, but in my profession I don’t have the hours to donate. I do my charity work that I see fit. I am not against volunteer work, I’m all for it, but those programs already exist and to my knowledge public service forgiveness is not “booming”.
July 1, 2009 at 6:51 pm
J
Robert, no problem at all. The concept is exciting, and I’m glad to help spread the werd to the herds!
David, I think I see what you’re saying about the bottom up, local volunteer acts. And I like it.
I agree with the benefits of volunteer and charity work, but I think the reality for the grads most affected is as Janell posted: their schedule may not allow for it. What’s appealing for me about the idea on the table is that it would be a sweeping/one fell swoop movement instead of volunteer working in addition to paycheck working and/or job searching.
A blank slate would be rejuvenating for people in multiple regards, and would allow for people to invest (actual investing, donating newly available allotments of time, or consumer activism) in areas that are currently hurting due to the economy.
It has potential to be really, really awesome.
July 1, 2009 at 10:07 pm
TSeidl
I fully support Student Forgiveness not just for an economic stimulus plan but also because the government practiced irresponsible lending. It is too easy for a student to take out a student loan and not understand/realize the consequences of the loan, there are no credit checks, there is not a plan that is laid out stating what your payments will be every year you take out a loan, there is not a statement that tells you hey you have this much out now you will take this additional amount out therefore your payments after graduation will be X dollars. If that were the case I would only predict a drop in student borrowing. When my husband and I went to buy our house we went over numbers and more numbers and then the bank went over numbers and more numbers with us. Allowing both the bank and us to make a responsible educated decision on whether to purchase the home or not. I give this example because if every time I took out a student loan and lender would have reviewed numbers with me I assure you I would only be sitting here with a Bachelor’s degree vs. a Master’s as it is not worth a fraction of the price. The government lending in the case of student loans is irresponsible, it represents some of the same bad practices that large financial intuitions used on all the housing loans that are going into foreclosure today. (Do you think they would be willing to take my degree back? It is still in the envelope that was mailed in, I only touched it once)
I also support Student Forgiveness in the fact the programs that are being offered want me to “work the system”. If I am an unproductive citizen receiving some type of government aid my loans could be deferred vs. going into forbearance. With the new program offered as of July 1, it would change my monthly payments by only a few dollars (the monthly payment would remain over 1000.00 a month) because I am married. However, if I was divorced my payments drop to 50.00—yes that is correct there is close to a 950.00 difference. I may have to divorce my husband in order to unburden myself of that $12000.00 yearly debt, and since my husband would never agree to hand over his legal rights to our children it would only drop to $450.00 a month.
I work a job that pays less than 55K a year, I lead a green team for my corporation in the state of Colorado, I sit on the Board of Directors for a non profit organization, I set an example for my children to be the best person I can be, work hard and be successful and I am very middle class. I am a productive member of society yet there is no forgiveness for me (or my family for that matter as it affects them as well.) The “system” such as it is, forces a difficult choice between remaining a productive member of society and breaking up my family, losing my job or my home. Isn’t this what we are supposed to be forestalling with this stimulus? or with higher education ? A better, smarter, more highly educated workforce is supposed to save America, right? If I paid my student loans sadly enough I would be forced to sell my home to foreclose on it.
Society gives us the illusion that you are better off with a higher education. I wish I would have known 4 years ago it was simply just that–an illusion. As of right now my education is not giving me the return on investment the government expects for me to make the absurd monthly payment. Mine is only one horror story (without all the details) and I know there are worse ones out there…but they are all real and holding back individual/family lives and the economy.
July 6, 2009 at 7:20 pm
diana d
David, I have MS do you think I could do services effectively?? Note I pd off my loan and some, but because I became ill and ended up 1 year down and now outrageous compounded interest I now have a $17,300.88 Sallie Mae Bill with no end in sight. Contacted by GC Service making ACH payments before I can settle with any garnishment or forbearance.. I have contacted them as long as I work at my telemarketing non physical job I can pay.. what happens when I can’t, they will take my SSI that means I will live on the street. ” I think that Sallie Mae is the other mafia. “Thanks I’m having a bumper sticker made for this! I have contacted every high person in my state Maria cantwell, Cathy mcmorris-Rogers,Patty Murray, all with same esults students in rolling now get the new benefits not the ones in the past.. Di