Want to save America’s future? Kiss student loans goodbye

Want to really change our economic future for the better?

Free the millennials and the ones who came before them (by about 10 years) by declaring a sort of debt jubilee on student loans.

The US is just about the only country in the civilized world that saddles its college graduates with massive amounts of debt to get a degree they may not be able to use.

Most other countries invest in their doctors, lawyers, teachers and others by providing those with aptitude who are willing to work hard for free college tuition.

Here there are some scholarship and grants, but mostly we ask those who want to have professional careers to take out loans.

Loans that never seem to get paid back. Loans some students are paying on into their 40s.

This is a pretty horrible thing to do to our kids, and it will be a drag on our economy for decades unless we do something about it.

Thom Hartmann, in his book The Crash of 2016, says the total amount of outstanding student loans is about $1 trillion, and he suggests that a debt jubilee forgiving all student loans would be the best thing we could do for our economy.

Id like to suggest something that might be a little more elegant.

I seriously doubt were ever going to see a debt jubilee passed. A transfer from the rich to the middle class? Thats not the way we do things in America.

But heres a thought.

Anyone who has ever had credit card debt knows that its the interest that kills you, so what if we immediately reduced student loan debt to just the principal. Nobody gets out free, but most of these folks have already paid enough interest to make the lenders very profitable.

You pay back the principal, youre free.

Almost.

At the time of the reduction, we figure out how much interest each person owes. Then they are required to pay that amount the amount that would have gone to the lenders into a personal account. Money in this account could be used for one of three things:

– A down payment on a house (first-time buyers only).

– Medical expenses.

– Tuition for more education.

The account itself would be a retirement account that could supplement other retirement.

This could ameliorate several bad situations, not the least of which is that Americans dont save money. Remember near the end of Bush and Cheneys rampage across America, for a year or two the percentage of their incomes Americans were saving was less than zero.

Its no great surprise. Saving is a virtue.

When I came of age in the late 1960s, banks usually paid in the neighborhood of 4 percent annually on savings accounts. Since most of our savings in recent years has been in retirement accounts, I didnt keep track of what banks were doing.

So I was stunned recently to learn at least one bank in our area was paying not 4 percent, not 1 percent but one-tenth of one percent per annum.

Its still good to save you might need the money for something someday but dont expect your savings account to grow unless you keep pumping money into it.

Still, it seems to me that wiping out the debt for interest on student loans (as long as you save the money) could go a long way toward rebuilding an American middle class.

And that, we know, is good.