With the 2020 presidential primaries in full swing, a major topic of discussion has been student loan debt. A variety of politicians alike believe that student loan debt is a serious problem that needs to be addressed. To get a picture of the current student loan crisis, there’s nearly four times the amount of student debt today than in 2005. Student debt affects more than 40 million individuals and totals more than $1.6 trillion dollars. The question now is what can be done about it?
What are Current Proposals to Reduce Student Loan Debt?
Nearly every Democratic candidate for the 2020 election has created a proposal to significantly reduce or eliminate student loan debt. The plans vary greatly and offer everything from complete forgiveness to income-based assistance. The most progressive proposals, such as from Sen. Bernie Sanders, go even further would make public colleges and universities tuition-free, and thus debt-free for students.
Why is the Student Loan System Considered Broken?
No matter who gets elected, the majority of student loan borrowers are hopeful that some relief from outrageous monthly payments will come their way. A popular opinion among student borrowers is that if their student loans were eliminated, the economy would benefit. Many experts believe that if these individuals were not burdened by making monthly student loan payments, they would pump that money back into the economy by making larger, more frequent purchases. Eliminating student debt would also make it possible for more students to invest in homes, stocks, and retirement accounts — all of which would further improve the economy.
Student Debt Elimination and Short Term Economic Stimulus
According to Moody’s, reducing and/or eliminating student loan debt has the potential to add anywhere from $86 billion to $120 billion GDP over a ten year period. Their research states that adding that amount would not be enough to significantly impact the economy on a short-term basis. On a long-term basis, however, experts firmly believe that reducing or eliminating student loan debt will go a long way toward creating a more financially stable future in the United States.
How would less student debt make an impact on the future? It would help to create:
- More small business start-ups and funding
- Growth of household investments
- Increased buying power for the average citizen
Although these differences may seem small to the world’s largest economy, they can make a significant difference in the lives of more than 40 million people across the country.
Move Forward Without Student Loan Debt
Currently, there is no straightforward path to eliminating all student loan debt. Even if federally-backed student loan debt will be eliminated, private student loans most likely will still exist and need repayment. Student loan debt usually cannot be forgiven in bankruptcy and, likewise, can’t be easily written off. There is hope for borrowers, however, in the form of debt settlement.
At McCarthy Law, we are a debt settlement law firm that helps people move forward in life without the burden of debt by coming up with a workable plan for one monthly payment that meets the needs of our clients, and negotiating settlement agreements with creditors of student loans. Once an agreement is reached, a large portion of student loan debt is typically forgiven and the borrower can start working to achieve their dreams.
To date, McCarthy Law has settled thousands of cases for all types of people. Let us help you achieve financial freedom in the future. To schedule a free consultation with one of our knowledgeable student loan attorneys, call 855-976-5777 or contact us online today.