In other blog news . . . over at Inside Higher Ed, Dean Dad wrote a piece entitled, "A Student Loan Stimulus?,' and suggested, thanks to the smart Twitter folks' idea, that Obama's plan to invest in community colleges should be used to forgive student loans for people in their 20s and 30s.Here's a snippet (for the full read, go here):
President Obama has proposed spending five billion dollars on building renovation at community colleges across America.
It’s a nifty idea, even though it’s politically DOA. Divided among 1100 community colleges, it works out to between four and five million each. That’s certainly helpful -- no argument there -- but it’s not enough to add much capacity. Even a smallish, not terribly cutting edge classroom building will run at least ten million. It would help tremendously with certain kinds of deferred maintenance, but that tends to be too inconspicuous to hold much political appeal. And the stimulus would take an awfully long time to work through the system. “Shovel-ready” is a myth; we don’t get to shovel-readiness unless and until we’re serious, at which point the decision has already been made. First there’s the environmental impact, the ADA compliance issues, the retrofitting, the bid process, yadda yadda yadda. In other words, it’s a helpful long-term idea, but the short term payoff isn’t there politically or economically.
The helpful folks on Twitter pointed out a much better idea: use the money to forgive interest on student loans. (And I say this as someone whose loans are paid off.)
The student loan stimulus would do a world of good for people in their twenties and thirties, who are struggling badly as a group at exactly the times when the economy is counting on them to start both careers and families. Reducing their monthly (and total) loan payments would give them more spending money immediately. And unlike a one-shot tax refund, the reduction in loan payments would be permanent, so the money would be more likely to go into increasing aggregate demand. (One-shot windfalls are likelier to be saved.) Without demand, hiring just isn’t gonna happen.
Good remarks, Dean Dad!