Student Debt

  • 02.06.18

    The Macroeconomic Effects of Student Debt Cancellation

    Among the more ambitious policies that have been proposed to address the problem of escalating student loan debt are various forms of debt cancellation. In this report, Scott Fullwiler, Research Associate Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum examine the likely macroeconomic impacts of a on...

    Among the more ambitious policies that have been proposed to address the problem of escalating student loan debt are various forms of debt cancellation. In this report, Scott Fullwiler, Research Associate Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum examine the likely macroeconomic impacts of a one-time, federally funded cancellation of all outstanding student debt.

    The report analyzes households’ mounting reliance on debt to finance higher education, including the distributive implications of student debt and debt cancellation; describes the financial mechanics required to carry out the cancellation of debt held by the Department of Education (which makes up the vast majority of student loans outstanding) as well as privately owned student debt; and uses two macroeconometric models to provide a plausible range for the likely impacts of student debt cancellation on key economic variables over a 10-year horizon.

    The authors find that cancellation would have a meaningful stimulus effect, characterized by greater economic activity as measured by GDP and employment, with only moderate effects on the federal budget deficit, interest rates, and inflation (while state budgets improve). These results suggest that policies like student debt cancellation can be a viable part of a needed reorientation of US higher education policy.

  • 11.12.14

    How the U.S. Government Could End the Student Debt Crisis Today

    This article from Yes! magazine looks at student loans in the United States from a different perspective. Student loans are an increasingly large issue in the United States "In the United States, student loan debt has passed the $1 trillion mark. The burden is now becoming increasingly heavy for middle-class and ...

    This article from Yes! magazine looks at student loans in the United States from a different perspective. 

    Student loans are an increasingly large issue in the United States "In the United States, student loan debt has passed the $1 trillion mark. The burden is now becoming increasingly heavy for middle-class and wealthy students, but especially for those from lower-income backgrounds." This article argues that it does not have to be.

    "At a basic level, the U.S. federal government doesn’t need to scrimp and save to fully fund higher education. It can just spend money rather than lend it, without incurring any significant negative economic consequences."

    This concept stems from an economic theory: "Many economists known as “deficit owls ” have argued for decades that the U.S. federal government doesn’t need tax revenues or bond payments in order to spend money on education or anything else. Rather, the true limits to federal spending are the availability of real resources and the stability of prices."