Just how many things have millennials killed? Applebees, fabric softener, designer handbags, department stores and diamonds, just to name a few. How could such heartless creatures do such a thing to these poor, innocent, money-sinks? Perhaps it is because millennials have very little money. Why do they lack money? Maybe it has to do with the staggering amount of student loan debt they are saddled with, a number that only increases every year with interest. With all their money tied up in debt from the degrees everyone-and-their-mother agreed were necessary to get a job in the future, certain mainstays of the economy have been phased out of people’s budgets.
Luckily, this pattern won’t repeat itself with Generation Z, right?
Well… things might just get worse. The next generation is similarly debt-strangled, and companies refuse to raise wages across the board. Once millennials finish their “killing spree” of beloved American capitalist institutions, it seems like Gen Z is in prime position to continue the slaughter. For the incoming government, the way to stop this problem is simple: cancel student loan debt.
Be it through an act of congress or through an order issued by President-elect Biden, the government should not take a half-measure on this issue. Senate minority leader Chuck Schumer suggested eliminating $50,000 of debt per person, and Biden has watered that suggestion down to $10,000 of certain-types of debt and only for certain individuals. However, research suggests that there is no reason not to go for the whole turkey on this issue.
Economists Scott Fullwiler, Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum examined the effects of the Federal government cancelling all student loan debt in their paper: “The Macroeconomic Effects of Student Debt Cancellation”. Pulling from their conclusion, they found: “student debt cancellation results in an increase in GDP, a decrease in the average unemployment rate, and little to no inflationary pressure over the 10-year horizon, while interest rates increase only modestly.” The economic benefits stem from a simple concept: when consumers have more money, they spend more money into the economy. With more people buying things, businesses can stay in business and even start hiring more–especially small businesses.
So, why are incoming Democrats, and especially Joe Biden, so cagey about doing the smart thing and taking bold action against student debt? Well, some budget-hawks suggest that student loan forgiveness is either not the most effective type of stimulus or would increase the deficit too much. For example, The Committee for a Responsible Budget (you can guess what their most important value is) makes the fair point that, since people pay off student loans over decades, the real amount of spending potential each person gets is doled out in small amounts over time, but requires a large up-front expenditure to cancel. The average borrower will only see an increase of spending of about $200-$300.
However, cancelling $200-$300 of debt each month is a huge deal for people in the long term. Those extra dollars are the difference between defaulting in rent, being able to purchase car insurance, or even just having the extra cash to afford shopping locally as opposed to shopping from Amazon or Walmart. It would also immediately change the mindset of college grads, who would suddenly be free to take on other investments like purchasing a house or car without having to worry about the proverbial monkey-on-the-back that is college debt. Lastly, it would signal a shift in our country’s mindset that people who pursued a higher education shouldn’t be endlessly punished for it.
American teens are endlessly pushed towards pursuing college degrees and if their degree of choice isn’t insanely and bizarrely lucrative, they are crushed by debt for decades. It is a foolishly punitive system, and canceling student debt is a good first step towards ending it.
Vincent Rendon is the Opinion Editor for the Nevada Sagebrush. He can be reached at firstname.lastname@example.org or on Twitter @vincesagebrush.