Wednesday, January 12, 2022

Forgiving Student Loan Debt, Why Not All Debt?

Progressives continue to advocate forgiveness of up to $50,000 of student loan debt.   Apparently, excessive student loan debt is preventing borrowers from buying goods and helping the economy.  (Paraphrasing reason from Lizzie Warren, Senator from Massachusetts.)   

Let's assume that is true.    Then why not forgive all debt: mortgage, credit card, payday loans and car loans.   Without the burden of loan payments, these borrowers could then spend payments on other goods and further stimulate the economy.

As they say in Wall Street Bets:  Can't go tits up.   

On the other hand, does the economy really need more stimulation?   CPI was at 7% for December, the highest since June 1982.    Using Lizzie's reasoning, maybe we need to NOT forgive any student loans to keep from further stimulating the economy.

Key learning:   
  • Except for a mortgage, don't borrow what one can't pay back.   Maybe not even for a mortgage.  
  • Today's college education tuition is way over priced, cause primarily by availability of student loans.  Maybe true of cars also.
Final thought.  If I were in charge, I would allow new student loans to be eliminated by bankruptcy.   Institutions would then be more judicious about requirements to qualify for a student loan.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial, student loan, nor policy advice. Please consult a professional advisor.

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