By: Katie Lawrence / Staff Writer
A petition website designed by the White House has shown strong support for the forgiveness of student loan debt, a topic that has been brought up in various political circles and has also been demonstrated for in the recent Occupy Wall Street protests.
Student loan debt is slated to top $1 trillion this year and societal unrest in the business of education and general displeasure with our economic state has led to some radical ideas for improvement.
The website, titled We the People, gives citizens a chance to voice grievances and, upon reaching a certain amount of signatures, will be looked at by White House policymakers and an official response will be issued.
The petition to “forgive student loan debt to stimulate the economy, usher in a new era f innovation, entrepreneurship, and prosperity” gained momentum quickly and has received more than 27,000 signatures since its creation on Sept. 23, 2011, making it the second-largest petition on the site. A petition calling for the legalization and taxation of marijuana leads with more than 50,000 signatures.
“Forgiving student loan debt would provide an immediate jolt to the economy by putting hundreds and, in some cases, thousands of extra dollars into the hands of people who WILL spend it – not just once, but each and every month thereafter – freeing them up to invest, buy homes, start businesses and families,” claims the petition, penned by Robert Applebaum, who started forgivestudentloandebt.com after garnering significant debt for attending law school.
The petition continues “Student loans themselves are responsible for tuition rates that have soared by 439% since 1982 and for saddling entire generations of educated Americans with intractable levels of student loan debt from which there is, seemingly, no escape. Relieve them of this burden and the middle class WILL rebuild this economy from the bottom-up!”
In an article written for British paper The Gaurdian, Applebaum has continued to champion the idea, claiming that “by turning education into a commodity where the students must personally bear the full costs of an educational system that, in fact, benefits all of society, not just the students themselves, we’ve shifted the ever-increasing burden of skyrocketing tuition costs down the socio-economic ladder onto those who can least afford to shoulder them. Couple that with a job market that’s been utterly decimated by the irresponsibility and greed of those at the very top, the underlying reasons for the Occupy Wall Street protests start to come into focus.”
The idea was picked up by Congressman Hansen Clarke, D-Mich., who has advocated for forgiving student loan debt in congress. But the addition of the petition may really set fire to the conversation on what to do about the massive debts shouldered by millions of students.
But total forgiveness, although heralded by many Washington players and college grads who are ready to graduate from Ramen Noodles, has sparked hot debate as a macroeconomics policy by top economists as well.
Justin Wolfers, a contributor to Freakonomics wrote “If we are going to give money away, why on earth would we give it to college grads? This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades.”
“College grads with debt are unlikely to spend more than a tiny fraction of the money they save by debt forgiveness, making this, in economic terms, “the worst macro policy I’ve ever heard of,” continues Wolfers. “Nor would loan forgiveness encourage more people to go to college and get the skills they need to succeed, because forgiveness, by definition, is retroactive.”
“What your forgiving is future repayments, which our country needs to survive,” says Dr. Jorge Salazar-Carillo, a professor of economics at FIU. “The problem is, our country is kind of broke. I think this would just add to the debt problems of the nation.”
Forgiving student debt also does not erase the debt, Salazar-Carillo points out. It simply shifts the burden, which would most likely fall upon the taxpayers.
“Its important to look at this question from the perspective of lenders,” says Daniel Venture, a recent graduate of Creighton University with a Masters of Security Analysis and Portfolio Management, and $75,000 of student loan debt. “This money has been lent out and they have balanced their future cash flows and earnings to reflect. Banks and other lenders make their money by lending and collecting interest over the long term. It costs money to restructure debt. How fair would it be for the government to force lenders to take these expenses when a conscience borrower entered into the agreement? The student has made a choice and has signed a contract. To pursue a government bailout on your college loans just seems asinine to me.”
Most students look at the idea as a free pass, and economies with this type of policy have seen it backfire with economic collapse, such as the case in Greece.
But recent unrest and strong avocation from citizens have kept the idea alive.
“The American taxpayers bailed out Wall Street for their recklessness. It’s time for Wall Street to do right by the American people who did absolutely nothing wrong, but who feel punished every day,” writes Applebaum.
Pressure on the White House from Occupy Wall Street has opened up debate on a myriad of demands from citizens claiming to be “the 99 percent.” Student loan debt is just one of many issues that the government must carefully consider. But the balls have been lobbed and are now in the White House courts. What they choose to do with them remains to be seen.