I was visiting the we are the 99% website last night. The common theme on the website besides lack of healthcare and poor wages was student loan debt. It is not uncommon for students to graduate with $100,000 in debt for a degree. At $25,000 a year this can never be repaid.
How congress can help us? Read on below the fold.....
This level of debt is a permanent drag on future consumption. One of the great challenges for economic recovery is the literal lack of demand. This prevents hiring, business expansion, and worsens the nation's deficit problems.
There are concrete steps Congress can take to provide relief for everyone. If you consider that the debt payment for student loans is financed at 6%, that translates into monthly payments of eight hundred dollars per month.
This is an usurious interest rate. The federal government can borrow money at 0%. Effective inflation is between one and 2%. Congress can refinance Student loan debt with a single legislative act. Congress can provide immediate stimulus to the 99%. I would propose that student loan interest rates be reduced to 3%. Congress would give middle-class families an instant pay raise.
Think about the level of demand can be created with the stroke of a pen. Families at a minimum, would see their student loan payments drop by 50%. Our hypothetical student loan holder would have $400 per month more to spend. The economic multiplier would probably be about 1.3. This means that $400 would result in $500-$600 of additional economic activity monthly.
This would be instantly popular. It would benefit the bottom 95% of the economy. How can Congress refuse to take this step? Write your Congress critters and demand this instant help for the American family.