Student Debt Relief

Allowing students  to refinance their debt is a great idea, and really is a no-brainer ( except as will be discussed later). We refinance in all other arenas every day.

Reducing the student debt burden by refinancing at today's low rates primarily only helps the middle class;  mostly because the accursed  1% didn't need those loans in the first place and the poor largely got full scholarships. No debt needs to be forgiven, just reduce the rate to the market rate,  like every one else does. No moral hazard problem.

Who could be against it?

While  it may increase the deficit, at this stage of economic cycle, it's not that major. Besides it's certainly worth it, and the economic growth it  may well set off could counteract the short term deficit increase.  Remember Obama has already brought the deficit down dramatically. 

The GOP needs to get over its deficit obsession for this situation  and the Warren  Democrats have to stop talking about raising taxes to pay for it. That's why Warren is only half right on this issue. 

However on a moral level, it's a total government rip off of young people and their families. To paraphrase the Passover Haggadah, "why is this debt different from all other debt? All other debt can be refinanced when rates drop , why not student debt?"

The answer is that the Federal government is making a boat load of money on this debt and the loss of it would reduce revenue and lead to an increase in the deficit. It's pretty obscene when you  think about it-- the government profiting on the backs of middle class students.

 On the other hand, refinancing student debt would be boost to the economy, and housing in particular.  Young people would be better able to buy a house.

Sadly today  the root cause of the failure to allow student debt refinancing is the titanic political fight over reducing the deficit and raising taxes. The Republicans need to recognize this situation for the unfairness that it is, and not worry about the reduction in revenue and ensuing increase in the deficit in the short term.

The Democrats are also at fault because they want to use it as an excuse to permanently raise taxes ( of course they say on the rich) and as such know very well the GOP would not go along.

Meanwhile our young people continue to needlessly be burdened by this trick bag our politicians have put them in.

 I'm sure the general public is not really  aware of this rip off, and I don't know why the media hasn't covered it more extensively.

I wonder what Hillary's position on this issue is. I hope she doesn't fall into the trap of raising taxes on the rich to pay for it . The whole situation is  just wrong, and as such doesn’t need to be paid for by cutting other spending or raising taxes. 

Eric