4 ms·
1. Economically speaking, this is actually a really good thing in terms of stability. We would be much more concerned if these borrowers could default. Instead,
by epsolos 7y ago
1. Economically speaking, this is actually a really good thing in terms of stability. We would be much more concerned if these borrowers could default. Instead, they have to work, which is good for our economy and good for this specific debt market's health as a whole.
- dfischer 7y agoNo it’s not. The need for work doesn’t offset that economic calamity that happens with a liquidity crisis and the subsequent devaluation of the dollar. That means people need to work and there’s no money available to pay them. You get a run on banks with more debt than cash available. Everyone is frozen.
- epsolos 7y agoAre you saying that student debt being non-renounceable is bad if and only if we have a liquidity crisis? Because, that's the way your comment reads, to me at least. For the record, I am not endorsing this type of structure for all forms of debt. I am simply bringing to light a more positive view on the supposed "student loan crisis". If so, let's look at some numbers to paint a broader picture: the US mortgage market is 10x the size of the student loan market with average monthly payments in the $1000-1600 range, whereas the national average student loan payment is less than $500. If there were to be a liquidity crisis, the worst we would see out of the student loan market is a larger fraction of borrowers struggling to come up a few hundred dollars per month throughout the recessionary cycle. I just don't think this market is large enough to have the kind of effect your are describing in your comment. I think your comment makes sense for debt as a whole, but I don't think it scales well with the market it's targeted towards.