Making the Case for Student Loan Forgiveness: A Flat June for Jobs and Consumer Spending

Today the news is riddled with the latest numbers on nonexistent consumer spending and job growth. This trend, that has arguably been perpetuating for at least the past two years and will continue for the foreseeable future, highlights a favorite argument of mine: forgive student loan debt - it will do unbelievably more to stimulate our economy than previous measures have to date.

Why, you ask? Well, with stagnant wages (for those who can even manage to find employment), which are grossly disproportionate to tuition rates/student loan indebtedness, its no small wonder why our nation's educated cannot afford repayment, let alone discretionary spending to bolster our economy. The proof, beyond disastrous unemployment numbers, can be seen in the unprecedented rate of student loan defaults coupled with persistently flat consumer spending. Basically, if the countless numbers of graduates flooding the market every year cannot infuse our economy with a much needed spending injection, who can?

Many point to the recent Income Based Repayment (IBR) incentive, and loan forgiveness after ten years if you go into the public sector. This in no way solves our spending woes. First of all, IBR does not apply to private education loans. If you have ever studied abroad, or as is additionally true in my case, studied for the bar, chances are better than not that you financed such endeavors with a private loan. I am in roughly 30k in private loans. Further, IBR sounds like such a breath of fresh air, but when you consider that payments are 15% of your AGI, they lose any semblance of helpfulness when you crunch the numbers. Add those heaping private loan payments, and families are lucky to afford essentials, let alone a mortgage or new car payment. And, forget about taking the family out on the weekends or purchasing luxury items, such as home electronics or that new washing machine you have been eying.

So what is the solution? Well ultimately I feel that our lawmakers have to address the out-of-control tuition problem. In the short term, however, our country can seriously benefit from getting our graduates spending again! I will tell you, with what my fiancé makes, and with what I can expect to make if I can find work, there is no way we will be able to save money, let alone infuse the economy. If, on the other hand, we didn't have to dedicate 15% of our income plus payout to private lenders, then we could make plans to buy a home in the near future or even get married. So we get college grads spending again, by either flatly forgiving student loan debt or substantially lessening the burden on graduates. I know that this means increasing the deficit, but the alternatives are far worse...