Higher education in the United States has become increasingly expensive and put many in debt. Despite this, government-mandated student loan cancellation represents a regressive and ineffective economic stimulus. For that reason, student loan cancellation is a bad policy. The macroeconomic argument for student loan cancellation relies on a boost in consumer spending. When people become suddenly free from their debt, they will spend more income and boost the economy. [1] That argument, however, does not reflect the entire picture. The cancellation represents an ineffective government redistribution of resources. It will result in an estimated $90 billion increase in cash flow, at the cost of $1.5 trillion. [2] In other words, the federal government risks sinking significantly in debt with a limited boost in consumer spending. Such a policy pales in comparison to other more direct and efficient means of government stimulus. Student loan cancellation represents an economically regressive policy. The policy benefits exclusively those with high education backgrounds. The benefits increase proportionally to the amount of education. Unsurprisingly, these people are not the vulnerable group in society. About 75% of the cancellation will benefit people with people from the top 40% income level. [2] The conclusion applies to both universal and targeted cancellation. [3] Since the federal government will have to fund such an initiative with its revenues, the policy directs general government sources into specifically well-off groups. Such a policy does not hold to its progressive reputations. For this reason, student loan cancellation is a bad policy. [1]. Fullwiler, Scott, Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum. 2018. "The Macroeconomic Effects Of Student Debt Cancellation". Levy Institute. http://www.levyinstitute.org/pubs/rpr_2_6.pdf. [2]. "Canceling Student Loan Debt Is Poor Economic Stimulus". 2020. Blog. Committee For A Responsible Federal Budget. http://www.crfb.org/blogs/canceling-student-loan-debt-poor-economic-stimulus. [3]. Catherine, Sylvain, and Constantine Yannelis. 2020. "The Distributional Effects Of Student Loan Forgiveness". SSRN Electronic Journal. doi:10.2139/ssrn.3739900.

Student loans help people go to college. College is expensive, and the most prominent way students pay for college is taking out loans from the federal government. Since the inception of federal loans by President Eisenhower in 1958, free education has increased. As a result, more students have taken out more loans as the opportunities increase. The average loan grew from $1,000 in the early-1970s to around $7,000 a year in 2020. The total amount of student loan debt has skyrocketed to $1.6 trillion. Since that number is still growing, the idea for cancelling all that debt has gained traction. Although to what extent the student loan could be cancelled remains dissident. Should only some of it be cancelled? All of it? Only those who come from impoverished backgrounds? But who would cancelling this debt help? Obviously, those in a younger age group would benefit the most. Since they have money with newly obtained Bachelor's degrees, they are able to focus more on how they want to achieve their career goals. As for older people, the AARP has reported that student loan debt for adults over 50 raised from $47 billion in 2004 to $289.5 billion in 2018. So, they have much to gain from student loan forgiveness as well. With a nation that boasts an incredibly competitive market, it makes sense that student loan debt be forgiven. With the costs of going to college no longer a factor, individuals will be able to focus their resources and accomplish things that would benefit the market, and therefore the greater good of society. Imagine the number of individuals who would accomplish amazing feats if they were able to obtain a sizeable amount of higher education. CITATIONS Vox. “All Student Debt in the US, Visualized.” YouTube, uploaded by Vox, 6 Aug. 2019, www.youtube.com/watch?v=NXHwelwmQPA. Zinshteyn, By Mikhail. “Student Loan Debt Soaring Among Adults Over 50, AARP Study Finds.” AARP, 26 July 2019, www.aarp.org/money/credit-loans-debt/info-2019/student-loan-debt-report.html.