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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Central bank do not own those loans so it doesn’t affect it. If they were to buy those loans and forgive it would be no different than quantitative easing.
We do not do so because of the culturally ingrained idea that debt has to be repaid, the perpetual discontent among future college indebted students who will not benefit from this and the cultural/political refusal to publicly fund affordable college, european style.
Are you, personally, prepared to pay the cost of writing off those loans? No? Why should anyone else?
It would set a precedent that government can simply arbitrarily give money to whatever group they want to. They do this already, but it would ne more blatant than usual.
It does nothinng to discourage colleges from continuing to charge inflated tuition rates, admit students who really shouldn’t be there, keep them there instead of flunking them out, and inventing degree programs of questionable value.
If they are selling degrees that are truly producing an income that is too low to repay the loans needed to buy them, the money for those loans should come from the people who sold the overpriced degrees.
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