January 25, 2021--Best Investment Ever

If Joe Biden has a spare trillion to include in his emerging economic rescue plan, I have a suggestion--

Use it to pay down most of what is owed by college students who borrowed money though the federal government's guaranteed student loan program and are now struggling to make their monthly payments.

It would be a great deal for all concerned--the banks that carry what is owed; the borrowers who are having difficulty paying what they owe; the seven million former students who are in default; and the American economy which would be boosted by the trillion-plus that would pour into various private and public coffers. 

There would also be a significant boost to the knowledge economy that would result from the flood of additional college graduates into the workforce. 

We've seen the power that this sort of public policy can provide to a struggling economy by the experience of the G.I. Bill after the end of World War II when the economy was still struggling to recover from the Depression. 

Nine million veterans availed themselves of the G.I. Bill's benefits, especially the subsides available to pay for college tuition--$500 a year (which at the time was enough to pay for Harvard), plus $600 for housing and living costs. 

Despite the hefty price tag of the program--about $14.5 billion in 1945 dollars--veterans who took advantage of the educational subsidy earned, on average, over ten years, $10,000-$15,000 more per year than those who did not, in cost-benefit terms, generating, in taxes, ten times the cost of the program.

As a result, the G.I. Bill was the best investment the U.S. government ever made.

We can debate how to structure a loan forgiveness program, from Bernie Sanders's which would wipe out all debt to Joe Biden's which would subsidize up to a total of $10,000 per student, but in bottom line terms, there is no reason not to proceed.