I'm not heartless- BUT PLEASE HAVE PEOPLE PAY THEIR STUDENT LOANS
The student loan pause has been extended- AGAIN. Please stop!
Inflation is the biggest issue of today.
How do we stop inflation? The answer is simple: take money out of the economy.
The Fed's Actions
The Fed is raising rates and taking away the punch bowl. They are also reducing their bond holdings, which means private entities will pick up the slack and reduce money in the economy.
The Case for Student Loan Payments
Why don't we do the simple thing and have people pay their student loans? This will take money out of the economy.
Some Numbers Here
This pause has cost the Federal Government $95+ billion in lost interest - MONEY THAT WAS ADDED TO THE ECONOMY through consumer spending.
There is $1.75 trillion in US student loan debt.
46 million Americans have student loan debt.
The average monthly student loan payment is $300.
Unemployment of college graduates is 2%, way under the 5.2% for those who only graduated from high school.
So essentially, we are letting the rich/employed folks off the hook instead of making them pay.
If the 46 million people started paying $300/month, that would take $13,800,000,000 (Thirteen Billion Eight Hundred Million) a month out of the economy.
Local Impact Example
Let's just take Central MA - imagine there are 5,000 students who stopped paying their student loans of $300 each. That is $1,500,000 a month that has been artificially added to the economy on top of stimulus checks, PPP loans, and other government largess.
Is there a wonder why housing prices have risen so much?
This may not solve inflation, but it will make a big dent.
Responsibility for Debt
And please do not forgive student debt! People need to be held responsible for their personal economic choices.
Currently, when we keep extending the pause in student loans, borrowers are making poor economic decisions with the hope that they will be forgiven. They need to face the reality that they should pay their debts and spend accordingly.
Comments