Impact of Forgiving Students on the US Economy - Essay Example

The key reason behind rising student debt is that in the peaceful era, before the Great Recession, millions of youthful Americans secured loans to go through university, just to graduate in an economy that did not need workers any longer. The graduates are thus finding it more difficult to repay their loans than they probably had anticipated (Lankford, 67).

However, that does not mean that there have not been benefits at their expense. The federal loan interest rates are liable to be even elevated.

Forgiving the student debt would result in an immediate effect on the economy. Responsible individuals who devoted themselves to pursuing a university education would have more extra dollars every month to use and this would fuel the economy presently. The extra dollars being pumped into the economy would result in a multiplying outcome, unlike most of the provisions of the latest incentive package. Consequently, there will be an increase in tax revenue, the credit markets will be active and there will be the creation of jobs. Consumer spending accounts for more than two-thirds of the whole US economy and in the current months, there has been a decrease in consumer spending at an alarming and extraordinary rate. Thus, it is reasonable to argue that the quickest manner of reviving the ailing economy is to act drastically to get consumers to spend (Lankford, 68).

This proposal would rapidly regenerate the housing market, travel and tourism industry, the automobile industry, durable goods, and other numerous sectors of the economy. This is because the individuals who maintain those sectors will have a lot of extra dollars to spend per month. The motivating factor in the economy today is fear. Unless the individuals in the middle class feel comfortable enough that they will have their health insurance, jobs, and additional money to use not just the following month, but the month following that, the economy cannot and will not indeed grow fast enough to avoid the bleeding (Lankford, 69).

According to analysts, student debt loan has a broad economic impact. In a report that was published last year, according to the Consumer Protection Bureau, the debts of students are one of the reasons there seem to be younger adults in their 20s to 30s living with their parents and not paying into retirement accounts and postponing big consumer buying like of cars (Lankford, 69).

Increasing student debts may prove to be one of the most painful aftermaths of the Great Recession, especially if it is not addressed. Read More