Stimulus idea: How about massive forgiveness of student loans?

Nothing on this yet from Congress or The One, but a Facebook group dedicated to the proposal has 138,000 members and counting. No typo. My sense of personal responsibility says no but my debt-crushed monthly budget cries proceed:

Tax rebate checks DO NOT stimulate the economy – history shows that people either spend such rebates on paying off credit card debt, or they simply save them, doing little to nothing to stimulate the economy…

Forgiving student loan debt would have an IMMEDIATE stimulating effect on the economy. Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy NOW. Those extra dollars being pumped into the economy would have a multiplying effect, unlike many of the provisions of the new stimulus package. As a result, tax revenues would go up, the credit markets will unfreeze and jobs will be created. Consumer spending accounts for over two thirds of the entire U.S. economy and in recent months, consumer spending has declined at alarming, unprecedented rates. Therefore, it stands to reason that the fastest way to revive our ailing economy is to do something drastic to get consumers to spend…

I am in no way suggesting that the lending institutions who manage such debts get legislatively shafted by having these assets wiped from their books. The banks and other financial institutions are going to get their money regardless because, in addition to the $700 TARP bailout, more bailout money is coming their way (stay tuned!) – this proposal merely suggests that educated, hardworking Americans who are saddled with student loan debt should get something in return, rather than sending those institutions another enormous blank check. Because the banks are being handed Trillions of dollars anyway, there would be no danger of making funds unavailable to future borrowers…

Washington cannot simply print and borrow money to get us out of this crisis. We The People, however, can get this economy moving NOW. All we need is relief from debt that was accrued under the now-false promise that higher education equates with higher earnings.

Unfair to those who repaid their loans or didn’t have loans in the first place? Sure — but no more so than dumping oceans of TARP cash on the banks that created the crisis. And if, if the stimulus effect of loan forgiveness is as profound as these guys think, taxpayers would be repaid in the form of a quicker economic rebound. One question, though: Why do they assume forgiven debtors would spend the savings instead of pocketing them or using them to pay off other debt a la tax rebate checks? The answer, maybe, is the sheer amount of money we’re talking about. In my case, forgiving federal loans would save me north of $8,000 a year; toss private loans in there and it’s a cool ten grand. I’d sock some of that away, but with tens of thousands dollars suddenly freed up, I’d also start looking at home prices in the area. Stimulating! Exit question: Who’s onboard?

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