What consequences are there to “just forgiving” federal student loans?

Question

For context, I’m really referring to central banks. What would the consequences be if the central banks just decided to forgive entities that issue student loans, like FAFSA? I’m asking on a global scale and an individual household scale.

Thank you!

In: 13

Answer 1

It wouldn’t have much effect on the Central Banks. Other banks would be able to write it off in their ledgers. It would be a benefit to put that money into the system instead of into the banks.