It would be, if the debtors had been paying their debts. But since they haven't made payments for two years there will be no change in the real world.
The actual issue posed by cancelling the debt is the inequity of further advantaging those who already have the advantage of college credentials at the expense of those without the B.A. or B.S. on their resume, much less the M.A.'s and M.S.'s and higher levels of credentialing.
Our solution to this gross unfairness had been to give every adult the $10,000 with the student debtors forced to use the money to pay their debts.
Now that would be inflationary so to mitigate that effect the payment to the non-college credentialed should be in the in the form of some sort of 10-year bond ladder with the first $1000 coming due in one year. Sticking with the fairness approach, the notes should be in the form of TIPS or a variation of the I-bond to compensate for the inflation already in the system.
There, easy-peasy.
From Bloomberg, August 23:
Larry Summers, President Emeritus of Harvard University and former Treasury Secretary, argued against “unreasonably generous student loan relief” because it is spending that “raises demand and increases inflation.”
I hope the Administration does not contribute to inflation macro economically by offering unreasonably generous student loan relief or micro economically by encouraging college tuition increases.
— Lawrence H. Summers (@LHSummers) August 22, 2022
Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions.
— Lawrence H. Summers (@LHSummers) August 22, 2022
If relief is to be given it should not set any precedent, it should only be given for the first few thousand dollars of debt, and for those with genuinely middle class incomes.
— Lawrence H. Summers (@LHSummers) August 22, 2022
....MORE
HT: FT Alphaville
