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Old 07-28-2019, 03:45 AM
Wrenching Spanners is offline
Join Date: Jun 2011
Location: London
Posts: 580
Originally Posted by k9bfriender View Post
Student loan debt is a problem for more than just the student. It is a problem for the economy, the job market, well for everyone. I personally have a bit of SLD, meaning that I give about $400 a month to some loan companies, rather than spending it in the economy. Now, if you understand debt, then you know that when you create debt, you create money, you grow the economy. When you retire debt, you destroy money, you shrink the economy.

There is 1.5 trillion in student debt, and that is 1.5 trillion dollars that will not be contributing to the economy.

It's a double sided problem. Not only does the debt hold back students from becoming productive members of society, but the apprehension of taking on the debt will dissuade many from pursuing a degree. The ability to take on debt to finance education is one of the factors that allowed tuition costs to explode as they have.

So, student loan debt makes students less able and/or willing to go to college, it burdens those students and prevents them from moving on with their life, and it drains money out of the economy that all these 20-30 college graduates should be spending.
Let's start with the bolded statement first. This is so thoroughly wrong that I'm wondering if you got your terms mixed up. Debt retirement is the act of paying off a debt completely. That's what's supposed to happen. When debtors pay back their loans, it enables the bank to loan out those funds to other borrowers, which grows the economy. Maybe you've mixed up debt retirement with bankruptcy?

Regarding the economic effect, the students were borrowing money to obtain an education and a degree, both of which are enhancements that should increase their future earnings. Monetarily, they were assuming a future cost, betting that their future earnings would exceed that cost. Assuming they've graduated and are now paying off their student loans, the economic effect is that they're now more productive than they would have been without the college education. (See here for a discussion about how a college education makes an individual more productive: .) They're also able to use the knowledge and skills from their education to come up with new ideas. Increased productivity and creativity are two major drivers of economic expansion.

By the way, what is the debt stopping these former students from doing? If they've lost the bet about increased future earnings described above, then they're spending less than otherwise. However, the money from that reduced spending already went into the economy - it went to the colleges those students attended. Are you saying that former college student spending has a greater macroeconomic effect than university spending? The debt may force the former students to work more than they want to. However, from an economic standpoint, increased work is a positive. Not to mention there's much more to being "productive members of society" than spending.

Moving to personal responsibility, those students knew how much they were borrowing. They should have known about the reputations of the schools they were attending. They should have had a fair idea of their career prospects. All of that information is readily available. They should have been personally responsible for analysing the costs and benefits before taking out the loan and attending college. If they did the analysis and got it roughly correct, they've got nothing to complain about. Maybe they made a mistake and their future prospects were below what they expected. Personal responsibility is accepting the results of your mistakes. Or maybe the students wanting their debt relieved didn't really think about paying it off four years later, and just assumed everything would be good once they were out of college. Why should the rest of society, including people who didn't go to college, pay for their lack of forethought?

Last edited by Wrenching Spanners; 07-28-2019 at 03:48 AM.