Millennial Debt This Week: Mar 20

Another coronavirus edition of Millennial Debt This Week. What are your thoughts on the economic impact of the coronavirus? Post your comments on the articles at the bottom of the page.

The Responsible Solution to the Student Debt Crisis

  • Millennials are putting major life events on hold, like getting married
    • "The Chicago Tribune reported that while about 85 percent of women 25 to 29 had married in 1976, their marriage rate dropped to 46 percent in 2014; and for men 25 to 29, it plunged from 75 percent to 32 percent."
  • The author's solution to the student loan crisis is that employers should have the ability to contribute tax-free dollars to help pay down the student debt of their employees. 
  • The author also notes that there's currently a similar setup for employers, where they can pay tuition with tax-free dollars, but are unable to pay student loan balances at this time. 
  • This isn't a terrible idea. I think that many employers would offer to help, and it could help decrease the student loan balance considerably for many borrowers. I can't see many employers contributing more than $5,000 a year to something like this, but for the vast majority of people with student loans, that still goes a long way. 
  • The other condition I would need included would be that the borrower remains complete control over the loan(s), and that reimbursement is only contingent on employment, not on something like consolidating loans, which might not help borrowers in the long run

Pressley, Warren say next coronavirus spending package should include student debt cancellation

  • Some democrats have been calling for student loan debt cancellation in an effort to support the economy through the coronavirus pandemic. 
  • Warren stated, "Student loan debt cancellation MUST be a part of the next emergency coronavirus package to deliver relief immediately to millions of families and remove a giant weight that’s dragging down our economy."
  • While I would love for this to happen, personally, federal student loans already have avenues for decreasing or temporarily suspending payments, so if we are to hit a major recession, including mass layoffs and loss of income for many families, they can easily put their student loan payments on hold. 
    • Cancellation, or subsidization of mortgage loan payments would likely have a much larger potential to prevent a major recession, but would mostly serve those who already own property, in the hopes that the savings are passed on to renters as well. 
    • Student loan debt cancellation definitely would help the economy though, because it would indefinitely increase the amount of disposable income for many Americans. Cancelling some mortgage payments would only be a temporary relief, so people might be more inclined to save that money during a recession. 
  • Four Democratic senators proposed a plan to cover student loan payments for six months as a plan to combat the economic impact of the coronavirus.
  • In the plan Congress would make monthly payments on behalf of borrowers for the duration of the national emergency.
  • None of these payments would be considered taxable income.
  • These payments would all count as qualifying payments for student loan forgiveness. 
  • Student borrowers would receive a minimum of $10,000 in relief.

Sorry, millennials: A coronavirus-induced recession won’t help you buy a house