As graduation nears for many students, including me, the petition for student loan forgiveness pops up on Facebook statuses with increasing regularity. The petition, which can be found here, was created by Robert Applebaum in 2009 as he faced over $80,000 in debt.
Nearly 700,000 signatures have resounded Applebaum’s call to impose a one-time forgiveness on student loan debt so that “millions of Americans would suddenly have hundreds, or in some cases, thousands of extra dollars in their pockets each and every month with which to spend on ailing sectors of the economy. As consumer spending increases, businesses will begin to hire, jobs will be created and a new era of innovation, entrepreneurship and prosperity will be ushered in for all.”
Ah, the sound of Americans in pursuit of life, liberty and the perfect stimulus.
As others have indicated, forgiveness of student loans, which now total over $1 trillion, is not a cure-all for a lagging economy. As Justin Wolfers explained over a year ago in his Freaknomics blog post entitled “Forgive Student Loans? Worst Idea Ever,” a better stimulus would be achieved by giving $1,000 to 50 poor people, who are guaranteed to spend the money immediately. Students who had their debts forgiven might put the extra money into savings rather than spending it.
In addition to its failure to promote stimulus, a one-time forgiveness of student loan debt shifts the burden of educational costs onto the taxpayers at large, many of whom may never have borrowed loans themselves. The mentality that the government should wipe the slate clean for Americans who, in fact, can afford to pay the loans back uncovers a growing flaw in our national character, namely, looking to our neighbor to shoulder our self-created burden—simply because we would rather not face the consequences alone.
