Here's what $1.6 trillion in student loan debt is doing to the economy

[Yo_Mama_Been_Loggin]

American families are carrying about $1.6 trillion in student loan debt, a massive burden that amounts to nearly 8 percent of national income, a share that has roughly doubled since the mid-2000s.

This week, Sen. Bernie Sanders (I-Vt.) and some of his House colleagues unveiled a proposal that would cancel student debt for 45 million Americans and make public higher education tuition-free. The 2020 presidential hopeful said he would put a tax on Wall Street, raising an estimated $2 trillion over 10 years, to pay for the plan.

As lawmakers debate the merits of various proposals, it’s worth taking a step back to ask a basic question: What is student loan debt doing to the economy? Economists have been digging into this issue for several years. Here’s a roundup of what they’ve found.

Student loan debt is delaying marriage and family formation

A 2014 study found a link between a woman’s student loan repayment schedule and marital timing. A $1,000 increase in student loan debt, researchers found, lowered the odds of marriage by 2 percent a month among female bachelor’s degree recipients in the first four years after graduation. That finding has been bolstered by more recent research showing a similar trend.

Research has shown that marriage confers myriad economic benefits: For starters, married people, particularly men, earn more money. And children who grow up in two-parent households tend to be better off as adults.

Student loan debt is hampering the growth of small businesses

A 2015 study by economists at the Federal Reserve Bank of Philadelphia found “a significant and economically meaningful negative correlation” between rising student loan debt and falling small-business formation. The mechanism isn’t hard to grasp: If you’re paying off a student loan, you’re less able to pull together the cash to start a small business.

https://www.msn.com/en-us/money/markets/heres-what-dollar16-trillion-in-student-loan-debt-is-doing-to-the-economy/ar-AADosRu?li=BBnbfcN

[tblue37]

1. K&R for visibility. nt

[Panacea-monger]

3. Debt Cancellation, Not Free Education

Debt Cancellation: Good idea. Like the promiser, the third-party punisher (the state or its electors) faces finite, not infinite, reputation costs to breach (or failure to enforce), and it is not written in stone that said costs will exceed the straightforward benefits of breach. Unexpected circumstances arise, and it is rarely possible to account for them in the drafting of the contract without perversely incentivizing them. So efficient breaches, even by the enforcer, are an inevitability, and insisting on the sanctity of contract is a recipe for instability.

Free Education: Bad idea. Distributing the Citizen's Dividend in free this and free that is like giving someone a gift card: strictly worse than money. The only difference is that, in gift-giving, a gift card at least proves you know a little something about the recipient that a random stranger may not. In public spending, free this and free that has a darker implication. It's paternalistic to the core, implying you think you know more than they do what they need, and that your opinion should prevail; it is that, not leftism per se, that causes people to not vote Democrat.

[smirkymonkey]

4. K&R