When a student loan is canceled, Treasury stops collecting principal & interest on it. That’s it. Nothing else happens and it has no discernible effect on anyone other than the borrower having more money to spend, save or invest. NO ONE ELSE PAYS FOR IT. Not you. Not me. NO ONE.
For all the reply guys saying “what about inflation?!l” Even if every penny of $1.6T was discharged, the hedge on inflation would’ve been paid out over 10-20 years… so like $100B/year…that’s a rounding error. We increase the defense budget by $60B without blinking.
@Steinernomics This is just the MMT idea that the government has no budget constraint. Wrong. It does.
The issue isn't the treasury. It's the action of Universities who continue to raise tuition knowing that kids may be more likely to take out a loan, thinking it might be cancelled in the future. The better way is to let borrowers file bankruptcy and discharge the loan. That will make borrowing standards higher, so kids will make fewer mistakes It will cause universities to think twice about raising tuition because it's harder for their customers to borrow. We might also discuss putting caps on how much a family can borrow to pay for a year of school. That would force schools to rethink how they run their schools and price tuition.
A lot of people are very upset at learning of the operational facts of sovereign currency loan discharges 🤷♂️
@Steinernomics So the taxpayer then has to make up the difference