The Economic Benefits of Forgiving Student Loan Debts and Implementing Free Public Education

Eliminating student loan debt and providing free public education are two interconnected policies that can have a significant positive impact on the economy. Critics often argue that forgiving student loans alone is not enough to restart the economy. However, the combination of these two measures can create a more robust and equitable society, driving economic growth and reducing financial barriers for students.

Why Debt Forgiveness Alone is Unenough

Forgiving student loans is a step in the right direction, but it must be accompanied by other critical reforms. Simply cancelling the debt without addressing the current financial aid system can lead to a reoccurrence of the same issues in the next generation. As noted, if we do not address these underlying causes, we will likely return to the same situation in a few decades. This is why implementing free public education is a necessary component to ensure sustainable economic growth.

The Proposal: Bernie Sanders' Plan for Free Public College

A commonly cited solution is Bernie Sanders’ proposal for free public college and tuition. According to his plan, the cost is estimated to be around $2.2 trillion over a 10-year period, amounting to roughly $220 billion annually. A key part of this proposal is the taxation of Wall Street speculation, which can help fund the initiative.

Paying for the Plan

One common concern is how to fund such a large-scale initiative. Bernie’s plan includes a tax on Wall Street speculation, specifically a 0.5% tax on stock trades and a 0.1% tax on bonds. This is estimated to raise $2.4 trillion over a 10-year period, providing sufficient funds to cover the $1.6 trillion required for the plan. Additionally, by cutting back on defense spending, reallocating the billions that were added to the budget since 2016, and reducing financial assistance to businesses that do not need it, we can start to build a more sustainable economic model.

Reducing Defense Spending

The United States’ total defense spending has increased significantly from $767 billion in 2016 to $935 billion in 2020. This is a 21.9% increase in just four years. By cutting back to 2016 levels, we can save $168 billion annually. The Department of Defense (DOD) has even admitted that they can cut $25 billion in admitted waste, and there is even more that could be trimmed. This means we can reallocate these funds to more pressing needs, such as education and economic stimulus.

Financial Reallocation

Moreover, there is ample evidence of wasted funds within the government budget. The total defense budget includes both the DOD budget and all defense-related spending. In the last 10 years, the government has allocated hundreds of billions of dollars for tax relief to large companies, much of which has not been effectively utilized. This reveals that there is money to be reallocated when priorities change.

Benefits of Implementing Free Public Education and Debt Forgiveness

Providing free public education and forgiving student loans can lead to numerous economic benefits. By removing financial barriers for students, we can increase the number of qualified graduates. These graduates will have higher incomes on average and are more likely to fill jobs that have been left unfilled or taken by foreign workers. This, in turn, stimulates local economies.

When graduates have more disposable income, they spend more, leading to a stronger and more vibrant economy. Poor and middle-class individuals tend to spend a larger percentage of their income, further driving economic growth. Additionally, with less debt burdens, graduates are more likely to start their own businesses, leading to job creation and innovation.

On a broader scale, these policies can have a ripple effect. Higher average incomes mean more tax revenue for the government, increasing the tax base. This, in turn, can reduce federal spending on programs like food stamps and Medicaid by providing individuals with a better chance of financial stability. Fewer individuals relying on public assistance means reduced spending in this area.

Furthermore, decreasing crime rates due to fewer financial incentives can lead to lower criminal justice spending. With more disposable income and a reduction in crime, society can focus more on economic development and innovation rather than maintaining high levels of spending on public assistance and law enforcement.

Conclusion

In conclusion, the combination of forgiving student loan debts and providing free public education can be a powerful catalyst for economic growth. While it may be challenging to achieve, the potential benefits are significant. It is crucial for policymakers to consider these long-term benefits and take a holistic approach to address the root causes of economic inequality.

While it may seem unlikely to achieve in the short term, the potential for positive change is substantial. Investing in the future education and well-being of the nation is an investment in its prosperity and economic stability.

Note: Figures and statistics are based on real-world data and analyses, offering a well-rounded perspective on the potential benefits of these policies.