Yes! Magazine — Ellen Brown writes: Among the many ideas posed by different groups of protesters on Wall Street and around the nation is student debt forgiveness—a debt “jubilee.” Occupy Philly has a “Student Loan Jubilee Working Group,” and other groups are studying the issue.
Commentators say debt forgiveness is impossible. Who would foot the bill? But there is one deep pocket that could pull it off—the Federal Reserve. In its first quantitative easing program (QE1), the Fed removed $1.3 trillion in toxic assets from the books of Wall Street banks. For QE4, it could remove $1 trillion in toxic debt from the backs of millions of students.
The economy would be the better for it, as was shown by the G.I. Bill, which provided virtually free higher education for returning veterans, along with low-interest loans for housing and business. The G.I. Bill had a sevenfold return, making it one of the best investments Congress ever made.
There are arguments against a complete student debt write-off, including that it would reward private universities that are already charging too much, and it would unfairly exclude other forms of debt from relief. But the point here is that it could be done, and it would represent a significant stimulus to the economy.
Toxic Student Debt: The Next “Black Swan”?
The Occupy Wall Street movement is heavily populated with students—many without jobs—groaning under the impossible load of student debts that have been excluded from the usual consumer protections. A whole generation of young people has been seduced into debt peonage by the promise of better jobs if they invest in higher education, only to find that the jobs are not there when they graduate. If the students default on their loans, lenders can now jack up interest rates and fees, garnish wages, and destroy credit ratings; and the debts can no longer be discharged in bankruptcy.
Total U.S. student debt has risen to $1 trillion—more than U.S. credit card debt. Defaults are also rising; and with a very tight job market, the situation is expected to get worse. The threat of massive student loan defaults requiring another taxpayer bailout has been called a systemic risk as serious as the bank failures that brought the U.S. economy to the brink of collapse in 2008. To prevent a repeat of that disaster, we need to defuse the student debt time bomb before it blows. But how? (11/03/11)