Student debt has ballooned to about $1.5 trillion when it stood at $363 billion in 2005. This has lead to a number of politicians looking at ways to reduce this debt and if possible, cancel all the debt. But it's not an easy solution. It won't be fair to everyone since someone might have studied a different program if they knew their debt would be waived off. There are questions to be answered like who deserves to have their debt waived? What percentage of debt should be waived for people from high-income homes? Should the debts be waived?
If these debts are waived, it is estimated to bring in about $86 billion -$108 billion over a 10 year period.
The benefits of the waiver could help families spend these monies elsewhere in things they would most need. It could also be capital to start a new business which would employ people in future, further growing the GDP
https://www.cnbc.com/2019/11/01/wiping-out-student-debt-would-be-small-boost-to-economy-moodys-says.html
I think loan forgiveness, while expensive, could stimulate the economy. Incentivise employment, improve financial conditions of people who are less likely to file for bankruptcy etc. Encourage people to find employment and enter the job market. However, eliminating all student debt widens the wealth gap as people who are defaulting on their loans owe significantly less than the people with costly loans, in the upper income brackets. This is counterintuitive, and people should have their loans forgiven based on how much they’re earning.
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