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While you’re at it, I’d like a handout too

Another group joins the bailout pile-on


 

Robert Applebaum, a 35-year-old attorney from New York, was watching the TV news in late January when a piece flashed across the screen about the US$700 billion Wall Street bailout—money that seemed to him to be flowing without accountability to the very people that caused the crisis. That’s when he came up with what he figured was a much better way to rescue the economy: forgive student loan debt. “Why not free up hardworking, educated, middle-class Americans of their student loan debt, such as myself, so that we would have hundreds, if not thousands of extra dollars to spend each month?” he asks.

His proposal, while hardly mainstream,  has been gaining a surprising amount of support lately. A Facebook group he started, called “Cancel Student Loan Debt to Stimulate the Economy” has over 100,000 members, and has been circulating a petition it plans to send to President Barack Obama. (It has over 30,000 signatures.) “I think that I’ve obviously hit a nerve,” Applebaum tells Maclean’s.

Supporters argue this isn’t about a free ride or an easy out of their debt obligations. Rather, it’s a plan that could have a very meaningful impact on the economy. “Forgiving student loan debt would have an immediate stimulating effect,” the Facebook site states.  “Responsible people who did nothing other than pursue a higher education” would have the money to spend on things like cars and down payments on houses rather than being caught in the often punishing cycle of student-debt payments.

The idea has a certain appeal to it, if only because of the major pitfalls of the current stimulus package. The U.S government has already handed General Motors and Chrysler US$17.4 billion. They will likely need another US$20 billion. Canada could end up lavishing them with $10 billion. The stimulus efforts in the U.S., all told, now total over US$10 trillion. Whether this largesse will fix the economy is a subject of much debate. And one that leaves a bad taste for a lot of people. Wall Street is hardly an innocent victim here and auto makers have long been beneficiaries of public money, with less-than-stellar results. The only certain outcome is massive public debt, which younger generations (often enough, those with student debts) will be saddled with long into the future. “My proposal doesn’t ‘break the bank’ any more than every other approach Washington has done or is considering,” says Applebaum. “It’s simply a different approach.”

A student loan bailout would arguably have some useful effects in Canada too. There is about $13 billion worth of student debt in this country—a figure that increases by $1.2 million a day, according to the Canadian Federation of Students (CFS). Student groups here have long preached that government spending on debt relief for students is good for the economy. There’s a “compelling argument” for relieving an entire generation of its student debt obligations, says Ian Boyko, the campaigns coordinator with CFS. It would allow young grads to do things like invest in the housing market, he adds.

The proposal is long shot for grabbing Washington or Ottawa’s attention. But at the very least, says Applebaum, it has “opened a dialogue that shifts the focus away from the typical Washington solutions to our economic problems and has gotten people to start thinking outside the box.”


 

While you’re at it, I’d like a handout too

  1. A1 to forgiveness of student debt. Mine has been paid off for over 65 years. Now i have some real money to spend.

  2. While I have taken full advantage of Canada’s student loan program over the last seven years ($50,000 buys you an undergraduate degree in aerospace engineering and master’s in mechanical) and fully expect to pay it all back (with interest) , I have to admit that such a “student loan bailout” has its appeal. Now that I am working, I find that the $500-$700 per month payments (for ten years!) take a significant bite out of my spending and saving capacity, which prevents me from either buying the home I want or saving for my retirement. That said I did not take on this debt with my eyes closed. In truth, I am thankful that the student loan program exists at all, as it has enabled me pursue my career and improve my overall standard of living despite the associated debt.

  3. The idea of loan forgiveness should be given greater attention by our policy makers. Having all or a significant percentage of a loan forgiven based on degree/diploma completion will encourage students to complete a post-secondary education. If a student does not complete a course of study within a given time frame then they can be charged interest and not have the opportunity to have loan forgiveness.

  4. Wow, do I feel like an idiot for working my tail off throughout school, scrimping every penny, and graduating with a debt load that I eliminated in just one year. Stupid stupid me.

    Should have took summers in Europe, spent more money at the bar, AND took those Caribbean trips during reading week that everyone else did. :(

    BTW – if this is the direction we’re moving in, why not just make post secondary education free, or almost free?

    • I agree with meany. I led a miserable existence, so I also believe that everyone should also have a miserable life.

    • oh hush you’re just jealous your parents were too poor to give your money to live the good life. poor poor “average canadian”

    • congratulations for your achievement but this would benefit everyone. helping the economy is in everyone’s best interests. face it, this is a much better solution than the proposed alternative.

      • No, this benefits former students. It’s the working class subsidizing the middle class. I don’t see why the working class should have to bailout the middle class because they apparently don’t feel their education is worth the price they paid for it.

    • Meany,

      I worked a part time job during college, never took a Spring Break trip, and the only time I went to Europe was with a music group (another facet to my education). Not everyone is as fortunate as you, nor is everyone as spoiled as you make them out to be.

      My family and I worked hard so I may go to college. This was done with the intentions of having a higher earning power. I have made every loan payment since I graduated. I intend to make payments, but a little relief (if not forgiveness) would be nice. If that were the case, I could invest or use my money in other failing markets (i.e. automobile or housing) to stimulate the economy.

      I want to give back. I want to serve the people and make our society/country better, but I can’t afford to take an even lower paying job. I’m barely getting by as it is.

    • Umm…Why NOT make schools cheaper in the first place? I think that would be a great idea. Then nobody would have as much debt to pay off in the first place. Do you have something against making higher education more affordable and available for everyone?
      There are plenty of people who worked hard in school who still graduated with a lot of debt, and especially in this economy, it's tough to find a job right out of school that will help you pay off any significant amount of that debt. I'm not sure why you insist on portraying everyone who would appreciate a little financial help as lazy and selfish–unless, of course, you're trying to bolster your own ego.

  5. I agree 1000%, the corporate/wall street terrorists that have raped and pillaged the country should not be rewarded with millions in bonuses or even a dollar. I had a student loan that got involved during a nasty divorce( at the same time with a corporate collusion/merger fraud costing me a million) that started at $6-9K and before I knew it: it has escalated to $22,000 and even based on incorrect data as I shelled out an additional $12,000 in cash while still enrolled at the college. Even before I could contact the university to correct the dates of this scam/sham student loan-sharks, it had escalated to $54,000.. Penalty and Interest of a thousand a month on a $6K loan. It was up to $92,000 by the time I had to declare bankruptcy because of losing a million dollars as a result of pump & dump scam of 2 major oil companyies (of which I will not mention the names of but will state that Mr. & Mrs.Cheney were on BOD of one of the companies).

    I think that the banking/financial institutions inflate and add penalties just to increase the false revenues so their bonus plans will be more. If anyone would like to argue that point, let’s get with it, but be prepared to discuss the insurance companies in BERMUDA and the CODA insurance that covers corporate executives even for illegal activities and how those insurance companies also own around 45-49% of many companies that furnish the executive CODA policies. Can a layman spell COLLUSION. Maybe all is legal on paper but BILLIONS of dollars disappearing does not smell right.

    Maybe the poor college student that put his dreams ahead of his future and signed on the dotted line with the one-way contract just because it was his/her only way to obtain the education. The ones that did not have a Dad or Mom that was a corporate executive with all the fancy UNDISCLOSED PERKS.

    Bankruptcy laws should be adjusted, especially if the student’s situation changes because of factors beyond his/her control.. like the AIG bullsh*t.. Billions going to executive bonus troughs while debt collectors call/ harass students trying to MAKE A DECENT HONEST LIVING.

    Relieving some of the student debts and not garnishing their wages when they retire (like I read where a disabled postal worker had retired and the IRS was still going to garnish 15% of his Social security retirement to repay a 10-20 year old school loan– who needs the frikin money more– the corporate executive bonus plan or a disabled retiree living on social security and probably no medical.. THAT IS REALITY.. AMERICA NEEDS TO DO A REALITY CHECK..

    I will be glad to discuss with anyone what I consider ( personally )collusion between these offshore insurance companies and how they DO relate to corporate bonuses/golden parachutes/ troughs. I have been saying that for 10 years, now people are believing…

    The Mongooscobraexterminator

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