A few weeks ago, you may have seen a petition floating around Facebook: "Stimulate the Economy — Forgive Student Loans!" The reasoning was sound. If we forgive student loan debt, graduated individuals and families will have more discretionary spending money to "create new businesses, invest in homes and become a foundation for the new economy" (and buy things, of course).
Such a petition sounds utopian, doesn't it? Recent history has shown us that corporations are the only people (and they are indeed people, at least when it comes to funding campaign ads) who get such "bailouts." Students like us "need to repay and be responsible for paying [our] student loan debt," according to Congresswoman Michele Bachmann. Former Speaker of the House Newt Gingrich took it a step further, saying that forgiving student loan debt "bankrupts the entire country … you will later have to pay off the national debt as a taxpayer."
Given the numbers, Gingrich's assertion sounds valid. According to USA Today, outstanding student loans will exceed $1 trillion this year. Even adjusting for inflation, that number is the result of students borrowing twice the amount they did a decade ago.
Defaults are on the rise, too. From 6.7 percent in 2007 to 8.8 percent in 2009. And, unlike most other loans, even bankruptcy will not discharge students from their loan commitments.
These statistics must be the reason for President Obama's recent action on student loans. The federal government will be the only lender to students. The cap on monthly payments is lower, and after 20 years there is the potential for loan forgiveness.
This will actually save the country about $62 billion over the next 10 years, $36 billion of which will go to support Pell grants. This is what has prompted such concern from the likes of Bachmann and Gingrich.
Is this reform really even enough? I'm sure we've all heard about how dreary our job prospects are. As a somewhat dramatic Salon.com article ("Student loan debts crush an entire generation" — all it needs is a few exclamations points) puts it, even if we all get jobs "the money [we] make will go into paying off these now-delinquent loans instead of anything productive for the economy as a whole."
I'm inclined to think debt forgiveness, whether full or partial, is a better way to jump-start the economic growth and savings Obama seems to be aiming for.
If nothing else, the petition seems to have attracted some attention. Student loan reform is now a national issue. Although I don't think Obama's measures are enough, I think they are a good start.
But can we really afford anything more? Is student loan forgiveness a realistic option? As utopian as it sounds, I still think it is.
Gingrich shouldn't worry about the national debt and student loan forgiveness. We'll already have to pay off the wars in Iraq and Afghanistan, corporate bailouts and the War on Terror. We will be paying off these debts — not quite $15 trillion at the moment — for years and decades to come.
Personally, I'd much rather work to pay off my entire cohort's student loan debt than suffer through two disastrous wars, several squandered bailouts and an endless campaign against "terror." At least I know student loans are being well spent.
— Holley-Kline is a senior from Anchorage, Alaska, majoring in Spanish and anthropology.
opinion@thedepauw.com