I've mentioned student loan debt as an issue only twice before on this blog, most recently in Ten years ago, we were partying like it was 1929. Are we about to do it again?
Student loan debt is indeed a problem, one that I've mentioned only once on this blog thanks to Benie Sanders campaigning on the issue in Ann Arbor two years ago. However, I doubt it will send the economy into recession the way the housing bust did in 2007-2008, as the value of housing declining contributed to reduced consumption then caused a financial crisis, which made the recession worse. That's because the value of a college education will not decline before a recession, so that won't drag down the valuation of the debt as an asset, putting strain on the financial system and causing a panic to start a recession. Instead, the causality will go the other way; the recession will hit first, causing people to lose their jobs and make them unable to pay. That will cause a debt crisis in the financial system. At least banks can't foreclose on and repossess people's educations, so the students will still have them, unlike all the people who lost their homes, although that's small consolation to the graduate whose increased earnings from their education have gone to paying off the debt to get their education. That alone is reducing consumption and home ownership, slowing down the economy.My last point showed up in two videos last week, one funny, the other dead serious. I begin with the funny one, Full Frontal with Samantha Bee's Student Loan Debt: It’s Not Just For Millennials Anymore!*
Student loans: Is it time to forgive and forget? When it comes to 2020 election issues, nothing unites voters like crushing student loan debt. Just take it from Extremely Young™ Presidential Candidate Pete Buttigieg: student loan debt sucks, fam!That was the silly video; now for the serious one from NBC News, How Student Debt Is Crippling Young Farmers And The Future Of Agriculture.
Young farmers like Lauren Manning struggle to prosper because they are buried in student loan debt, yet the average age of U.S. farmers approaches 60 and they have no one to pass the torch to.I couldn't resist the connection between student loan debt and farming. As someone who is fond of Commoner's Laws, I think it's a good example of two them; everything is connected to everything else and there is no free lunch. It's not just the graduates who are paying for those loans; it's all the rest of us, too. The only question is how.
*Bee has another video about last week's Democratic debates that covers immigration. I might get to that one later this week.