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
