Student loans have plagued Millennials and generations following them since they first started going to college. In a way, student loans prevent the middle class from catching up with those who are affluent and were able to pay for college out-of-pocket. These often high-interest loans are preventing younger, middle-class people from building their wealth. By paying off these loans, they cannot put money away to buy a house or start a family. Student loan forgiveness seems like the answer on the surface. However, if we make all this debt disappear, what will happen to the economy? What kind of disruption will occur?
Millennials and Gen-Z would benefit
If we forgive all student loans, Millennials and Gen-Z could put a lot more money into their local economies. They would not have to boomerang back to their parents’ house after college and need to take a higher-paying job outside of their field just to make payments. But, when you make debt disappear, someone is losing money. Will the colleges and universities suffer, or are they already making enough money to afford the hit?
Will forgiveness make the problem go away?
On top of all of these other issues, what is stopping more debt from consuming students in the future? If we forgive all of the current student debt, then we are doomed to have history repeat itself. The way that our current education system is set up is flawed. It allows universities to charge astronomical prices for what many job fields now deem a necessity: a college degree. We got here in the first place because of policy issues that will continue to create student debt until our entire secondary education system is changed. What are the proper changes that must occur? Find out more about student loan forgiveness on this edition of the Millennial Minute.