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!
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Immediately, it’s an additional expense to some government ledger somewhere. A few years ago the amount would have been huge, now it’s probably not a huge amount relatively speaking. This applies only to those loans owned by the government, which is most, but not all.
In the long term, it does nothing to reform the cost or spending structure of US universities so we’ll be in the same spot against in not nearly as many years. Only worse, because many will assume they’ll do the same again later.
A more reasonable alternative is to forgive some or all student loan interest. More extreme steps might be to start taxing endowments of universities to cover the costs or reform student lending to make universities have some liability for the loans (which would drastically adjust their offerings and advice to students).
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