Freakonomics contributor Justin Wolfers recently examined a proposal to forgive all student loans as a short term simulative policy to help boost the economy. He was, to say the least, unconvinced about the merits of the policy. He points out four primary difficulties with the idea:

• Distribution. College kids typically have high incomes. It would further income inequality.
• Macroeconomics. With such a large debt relief only a fraction of the money would be spent. Most of it would be saved and would fail to stimulate the economy.
• Education Policy. It won’t encourage more students to get an education since only those who already have a college education would benefit from the policy.
• Political Economy. Everybody will want to have their loans forgiven in not just this crisis but future ones.

To read more about how such a plan would strengthen the lobbying industry as well as the political rhetoric that Wolfers believes is driving the policy click here.

Source: Freakonomics