
With more and more evidence showing that our economy isn’t about to rebound on its own – that we will need some type of stimulus in order to spur growth – progressive economists have outlined a slew of ideas on how to give our economic engines a boost: worker training programs, payroll tax cuts, direct hiring programs, etc.
One idea I haven’t heard, though, is that it might be time to give some type of additional assistance to the millions of younger Americans who are drowning in student loan debt.
Americans now owe more than $900 billion on student loans. For the first time ever, that number has surpassed the combined total that we owe on credit cards.
The average graduate now leaves college with more than $24,000 in debt.
Between federal and private loans, my own monthly payments are in the neighborhood of $300. And I consider myself lucky. Many young people are paying significantly more, giving up huge chunks of paychecks that might otherwise be put back into the economy.
Even if the assistance was not centered on something as generous as full or partial forgiveness, a temporary relief program could still free up income and stimulate demand, possibly with a large multiplier effect.
Think about it.
How many newer graduates – those with decent jobs but large monthly student loan payments – might trade in their old vehicle and purchase a new car if student debt was more manageable?
How many younger homeowners are putting off basic repairs – roofs, siding, plumbing, etc. – that could create jobs for a residential construction industry that is still in dire need of a boost?
Or, to take things one step further, how many new families have ruled out a home purchase because of lingering student debt?
Putting homeownership back into the reach of younger families – and doing it responsibly through a restructuring of student debt, rather than reckless mortgage lending – could prove invaluable for a sector that has struggled to recover.
Even smaller purchases, if made by a large number people, could provide a huge stimulus. We are, after all, among the people who are most likely to actually spend additional income.
With even a $30 or $40 reduction in monthly payments, I might buy more food from my farmers’ market rather than my big-box grocery store. I might purchase a gym membership or renew the newspaper subscription that I was forced to cancel. I might even save for a couple of months and then splurge on a flight to visit friends and family.
Most of us went to school and borrowed money understanding fully well that we would need to pay it back, and that those payments would often be difficult. I don’t think anyone is asking for a free ride.
But at what point do we have to recognize that student loan debt has essentially become the ball and chain that is holding back an entire generation?
How many would-be homeowners and entrepreneurs have been deterred by crushing debt burdens? How many otherwise successful workers – well-educated and with decent incomes – are living more like the working poor due to unmanageable student loan payments?
We’ve bailed out the banks and the automakers. We’ve extended tax cuts for the wealthy and renewed unemployment insurance for the out-of-work. And, however futile, we’ve at least attempted to stave off the tide of foreclosures by restructuring underwater mortgages.
Maybe it’s time to consider similar assistance not only for those who are now overwhelmed and encumbered by student debt, but also for the future students for whom borrowed money will open the door to higher education.



