Magnifisyncopathological

...I've been wondering what the precise argument against the forgiveness of student loan debts would be. I currently have $11,000 in student loan debts, and my fiance has over $90,000 in student loan debts. Altogether, once we marry, we'll have over $100,000 in student loan debts, which is crazy. He has to pay over $600 a month for his student loans, so that's money that doesn't directly stimulate the economy aside from the loan companies themselves. And I pay over $100 a month for my own student loans since I had them consolidated before the deadline.

Having over $700 in dispensable income would be great, and that'd help boost our local economy here in Austin. Once again, why would this be so bad to have a one-time forgiveness of student loan debt?

The Facebook group that prompted this news is Cancel Student Loan Debt to Stimulate the Economy.

I just finished reading it and you'll find a remarkable lack of coherency in the action the group's creator, Robert Applebaum, desires. Take this passage for example:

Let me be clear. This is NOT about a free ride. This is about a new approach to economic stimulus, nothing more. To those who would argue that this proposal would cause the banking system to collapse or make student loans unavailable to future borrowers, please allow me to respond.

I am in no way suggesting that the lending institutions who manage such debts get legislatively shafted by having these assets wiped off their books. The banks and other financial institutions are going to get their money regardless - this proposal merely suggests that educated, hardworking Americans who are saddled with student loan debt should get something in return, rather than sending those institutions another enormous blank check. Because the banks will receive their money anyway, there would be no danger of making funds unavailable to future borrowers.

Applebaum later writes "Free us of our obligations to repay Federal Stafford Loans"...so what exactly does he mean? There can't be too many variations on this theme:

• All (or some) loans written for the purpose of funding college education are "forgiven."
  
• All (or some) state-subsidized loans written for the purpose of funding college education are "forgiven."
  
• Only Stafford loans written for the purpose of funding college education are "forgiven."

Combine that with whatever the hell "forgiven" might mean:

• The loans are simply written off and treated as a straight gift transfer to the student; i.e., no need to ever repay the remaining principle and interest.
  
• The loans' remaining principle or interest is written off as a straight gift transfer to the student.
  
• The loans' repayment clauses are rewritten so the student can pay as little as he or she wants for a certain time frame before the previous contractual obligations reactivate.

Any of the above can be done voluntarily by the lenders should they desire to see their loan portfolio take a vicious hit, but it's certainly possible. I bet there are banks out there in far healthier condition than the nationals who might be able to do this for specific cases, perhaps as a monthly lottery or a contest.

However, color me skeptical if you think this Applebaum guy expects this to happen without force of government.

His economic education is clearly in the shitter if he honestly thinks that "[t]here isn't an economist alive who doesn't believe that the economy needs stimulating immediately."

I have a private loan through Wells Fargo that has helped pay for the last year of my tuition at St. Edward's University. I refuse to get a loan through a federal program. I have no intention of reneging on my promise to pay and I have no sympathy for people who didn't pay attention to the language in their loan contracts. Signing a loan is as much of an attempt at informed forecasting as a COO estimating future demand for his employer's products or a CFO figuring out how much revenue to invest for future use.

Regarding the local Austin economy, where does slinkerwink think local businesses get their loans? I bet most of them originate at local banks, the very same banks that probably wrote a great deal of local Austin college loans. To be effective from the student's perspective, this "forgive" nonsense will have to involve some kind of deep loss on the lender's part, a loss that means less money for the lender to use on other deals.

The incestuous relationship between banking and the state has nearly brought the whole system to ruin and the blame can be spread far and wide on that one. Bailout mania has created awful stinking piles of - yes - "inter-generational theft"...but that doesn't mean a few hundred billion additional wrongs added to a few trillion wrongs make a right.