Medina 1 Arlene Medina John Kubler English 114A 19 November 2013 Demolishing Our Economy all at once: By Forgiving

Student Loans Politicians remains confused with the Student Loan Crisis and remain troubled with deciding whether or not to forgive this specific debt, student loans. According to an American economist Richard Vedder, from his article Forgive Student Loans, he explains that forgiving the student loan is not only the second-worst idea ever but also forgiving the debt could trigger another financial crisis (Vedder 1). Most people argue, like Vedder, that forgiving the student loan, one trillion dollars, will have the US Government fall into another recession bringing a bigger question, which group will lose more from this downfall? This specific issue is widely controversial because student loans represent an opportunity to so many people; like firstgeneration students who want to go to college and pursue their professions however, in doing so these students take out loans of 5-10,000 dollars. Which result in students getting out of college and spending years trying to pay back their student loans. When the U.S fell into a recession back in 2008, I, coming from a middle class family recognized that my family and I fell into big financial problems, and then the recession did hit home for us. Therefore, I stand that forgiving the student loan crisis which is one trillion dollars, will not only position the US in another recession, but also have the poor and middle class once again deal difficulties with financial stability. However, having students struggle with their student loans for more than two decades is ridiculous; some type of regulations has to be constructed. In which President Barack Obama has ensured when passing the Reconciliation Act which gives students borrowers new payment choices in how they can repay their loans. This particular act

Medina 2 was signed into law March 30, 2010 by Oresident Barack Obama. The main cause for this act was to aid those students who had trouble repaying their dues. Lets outline what exactly can happen if we do forgive this trillion dollar debt. Not only will it have the US fall in to financial instability but, it will cause trigger another financial crisis as Richard Vedder explains. The US currently has its own national debt to deal with it and adding another trillion dollars on top of it will immediately have our economy collapse, almost certainly leading to more debt downgrades, which could trigger investor panic (Vedder 1). To excuse students that couldnt take the advantage of the opportunity they had when they received money to follow their careers will only have Americas finances crush. Having to raise taxes for the taxpayers and so many other things to uphold the economy, this process could take years. When mentioning about the national debt America is already dealing with, I want it to be clear that Im mentioning about the documentary, The Untouchables by Frontline. The video exclusively shows how our government is dealing with a bigger problem in Wall Street. The visual document gives the opportunity to let people see what bigger issues our government is dealing with, and adding a one trillion dollar issue on top doesnt really give our economy the opportunity to get right back. The Untouchables touch bases like fraud that goes inside Wall Street but stays hidden to protect the wrong people. In the video the wrong people are described as those who work inside Wall Street, however no specific name is listed. Issues like these is what more attracts our government more to aid at, and mixing this issue with another financial issue will definitely crush our government and our economy, bringing us back to a recession. As mentioned before, the US faced a terrible recession back in 2008 that left many poor and middle class facing various struggles. According to Congressmen from Michigans, Hansen Clarke, The financial tidal wave of 2008 left millions of American homeowners underwater owing more on their homes that their properties are worth (Clarke 1). Since the beginning of the

Medina 3 recession the un-employment record has been at its lowest, can anyone imagine how terrible it will turn out if the US forgave the student loan crisis and how difficult it will be to get a job after that? The recession of 2008 had poor/middle class standing in line to seek for jobs, any type of jobs, the US is already facing its own national debt crisis and it will only burden jobs and un-employment rates if the US economy stumbled. On the other hand, you have those who stand to forgive the student loan debt crisis which obviously is looking out for these students who are burden with their loans after college. Furthermore, even though I stand firm on not completely abandoning the student loan debt, its also justifiable to look out for these students too. President Barack Obama did an excellent job when he passed the Reconciliation Act. Under the law he had some regulations on how not completely forgiving the debt yet still cutting some slack to these students. Under this new law Forgiving any remaining debt after 20 years or after 10 years for those in public services will qualify for these students loans (Biden 1). Furthermore, President Obama made it possible for borrowers choosing the income-based repayment plan will pay no more than 10 percent of their income above a basic living allowance I believe that this new law President Obama passed is a perfect example how not to burden the US economy yet still not over see these students. Reporter, Kayla Webley also argues that President Obamas Reconciliation Act isnt the only program that offers aid to students. There are already programs in place that offer forgiveness, not to mention the governments effective and underutilized Income Based Repayment program (Webley 1). Just because people argue to not forgive the student loan doesnt mean there are not other people who are creating programs to help these students out with their debts. Webley argues that students who graduate and finish college actually graduate with a debt of 27,500 though its still a high amount, its still a reasonable amount to graduate college with and not that much of an amount so nobody can pay it back.

Medina 4 Ive mentioned briefly that the recession back in 2008 drastically troubled my family and our financial problems. As of right now, my family and I are just barely trying to recuperate from the recession that happened five years ago. I got lucky when I found out I didnt have to pay for my tuition at CSUN and my FAFSA money would cover it, which meant I didnt have to take out any type of loan. Moreover, I dont think any middle class family such as mine can sustain another recession and I know no lower class family can even survive if they received another recession when were still with a low un-employment rate. I know definitely I would personally connect with the financial troubles I will face if the US decides to forgive this trillion dollar debt and have someone else pay for it. When you have people that argue that student loans should be forgiven because they argue that they have fallen into bankruptcy many people start to side with them. However, one of the reasons so many people file for bankruptcy is because they want to escape from their loans. According to Jenna Ashley Robinson, who received her PH.D in political science, argues that students should be allowed to get out of their student loans burden as part of bankruptcy proceedings to file for bankruptcy just to get rid of your loans is, I think, is the same as fraud and any other illegal scheme. All in all, the recession in 2008 threw off many middle class and lower class families. Forgiving the student loan not only crushes the US economy, but it will burden so many families. However, to not over see those students who really need help with their student loans, President Barack Obama constructed the Reconciliation Act that gave students the opportunity to have their remaining debt eliminated after twenty years and help these students. Programs are out there that forgive these student loans, its up to these students that need extra help to research and try to reduced their debt as much as possible because having America file for another recession is the last thing that our economy needs.

Medina 5 Works Cited Biden, Joseph. Ensuring the Student Loans are Affordable. Whitehouse.gov. The United States Government. n.d. Web. (11/18/13). Clark, Hansen. Trillion Dollar Crisis: The Case for Student Loan Forgiveness. Huff Post/College. HuffingtonPost.com. The Huffington Post, 25 Apr. 2012. Web. (11/18/13). The Untouchables. PBS.org. Frontline, WBGH Education Foundation, 22 Jan. 2013. Web. (11/18/13). Vedder, Richard. Forgive Student Loans? Its the Second-Worst Idea Ever. NationalReview.com. National Review Online, 11 Oct. 2011. Web. (11/18/13). Webley, Kayla. Is Forgiving Student Loan Debt a Good Idea? Time Less &Money. Time, 20 April 2012. Web. (11/18/13).