Millions of Americans are struggling with student loan debt, and the impact of that debt reaches far beyond individual borrowers. People burdened by large student loan payments have less money to spend, meaning they’re not doing their part to stimulate the economy. The 7 million student loan borrowers who haven’t made a payment in more than a year are limited, too. Damage to their credit can make it impossible to purchase homes and other big-ticket items.
In fact, a study from the National Association of Realtors (NAR) revealed that only about 20% of Millennials own homes. 83% of those who are not homeowners say that student loan debt is an inhibiting factor.
Now, a study from the Levy Economics Institute of Bard College is suggesting that the answer may be to simply cancel student loan debt across the board. Wiping out student loan debt would be expensive for the federal government–there’s about $1.4 trillion in outstanding student debt right now. Still, the study’s authors believe the net impact would be positive.
Stony Brook University Economics Professor Stephanie Kelton says eliminating that debt could boost the GDP by as much as $100 billion per year, and add more than 1 million jobs to the economy each year.
Canceling $1.4 Trillion in Student Debt Could Have Major Benefits for the Economy
Tags: student loans
