Economic Stimulus

Right now there is a petition going around for the president to relieve student loan debt as a means of economic stimulus. There are different versions of the same proposal that I've read. Some would have the president wipe away all student loans, some would have various restrictions. Each proposal suggests that wiping out student loan debt would boost the economy because that demographic of professionals would put their money back into the economy rather than spending it on student loans.

I have heard a few arguments against this proposal. I understand where they are coming from. Most of the time one's position is based on their own worldview. This is true in all aspects of life. If you are not currently paying back loans you're more likely to disagree with this stimulus plan.

I put myself through college and now I am in my second year of graduate school. I have always paid my living expenses out of pocket completely. That includes laptop, books, travel, etc. My student loans have been applied to nothing but tuition. Those loans were only paid to the balance after various scholarships. I was never eligible for a grant from the government. My point is - I am also speaking from my own worldview. I admit it.

On the other hand - I have friends who have responded to this stimulus as ones to whom it doesn't apply. They didn't go to school, never had to take out loans, etc. Many of them have replied saying it isn't fair to those who had to pay off their own loans. This is a very good point - and the fact that one would speak to that outside of their own interest is notable.

With that said, there will never be a stimulus plan that is fair to everybody. When "cash for clunkers" was instituted I had just bought a car and worked hard to sell my previous car for $2,000.00 when I could have been given $4,000.00 had I known there would be a stimulus plan called "cash for clunkers" that would be passed a few months later.  I was definitely happy for those who were able to take advantage of it. I felt the same with the $8,000.00 tax credit given to first-time homeowners. I would love if that is when I go to buy my first house but it simply doesn't apply to me. I was happy for my friend who bought a house during that time period.

Some would suggest: That a lot of people would lose their jobs. That large banks would have to let go of thousands of employees because they aren't making money on student loans anymore. I'm no economist but I have no doubt that most bank revenue doesn't come from student loans. There are mortgages, auto loans, retirement plans, fees, ridiculous interest rates, the list goes on and on.

Then there are the companies like Sallie Mae - the lender from whom I took out my student loans. To my knowledge student loans are their primary source of profit. It would be great if these types of companies weren't needed in the first place. If the U.S. cost of tuition weren't far beyond one's ability to pay. Sallie Mae is the company that constantly takes my loans out of deferment, doesn't notify me, then I get a phone call about every 6 months saying I'm 3 months past due on my loans and I own them $xxxx.xx. I tell them I've been in school non-stop for the past 7 years and they should be deferred. The conversation ends with me sending in another in-school deferment request and paying another $xxxx.xx in interest charges for the time period when my loans went out of deferment. The first time this happened I took a serious hit to my credit because they sent it into collections an notified the credit bureaus. I have experienced this organization engaging in unethical business practices non-stop for the past 7 years. The only reason they have deferment requests is because they want an excuse to charge more interest. They could easily go on the National Student Debt website and see that I've been enrolled in full time study and that I was just rewarded another loan from a different lender when I started graduate school for this quarter 2 months ago. Do I really care if those kinds of business are effected because of an economic stimulus plan? No.


So far I've heard a lot of opposition toward this particular stimulus plan. Each time it is a valid point. But it is also a line of thinking that could be applied to any stimulus plan we've ever seen. Speaking from my own perspective I know this would change my life completely. I would be able to put money back into the economy immediately. People would be taking out mortgages and auto loans like crazy now that they are free of the student loan burden. If this isn't the best plan I hope the government will consider moving money to a place that encourages higher education in times of economic hardship.


Here is a link to sign the petition if you are so inclined.