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Turning student debt into national recovery and renewal

Turning student debt into national recovery and renewal
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These are trying, challenging and even dangerous times for many people. There is harrowing unemployment, dizzying government debt, startling inequality and a seemingly out of control pandemic that has struck our economy with devastating force. 

With these challenges we could quite easily fall into the depths of despair and anxiety. However, we could also lift our people to help create a better future. We have an opportunity to repair, rethink and reconfigure a future that is much improved, more prosperous, more peaceful and more hopeful for us all.

There are many economic policies that we have used in the past to help dig us out of such messes, such as expansionary monetary and fiscal policies. But since interest rates are exceptionally low right now, there is not much space for more expansionary monetary policy. The national debt is exceedingly high, and as the debt grows even more, it could prove to be much more difficult to get more economic stimulus packages passed. 

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An important aspect of debt is that you must pay it back; however, raising taxes — which is normally what’s done to pay back debts — isn’t the answer. 

The future of our country can be found in our younger people. Many people are crushed with student debt that will likely put a strain on their futures. Many of these younger people have slim job prospects as the virus ravages the economy. Some have gone through two cycles of economic and employment despair — the Great Recession of the late 2000s and the economic current crisis brought on by the coronavirus pandemic — which have left many hopeless and has stagnated their skills, education and training. 

One way to deal with this is to write off some, if not all, of the student debt of those who will be contributors to national recovery and renewal. If there were a careful administering of student debt forgiveness based on each student’s contribution to the country, it may just make a difference. Ninety-two percent of student debt is held by the government. The federal government has the leverage to make this happen.  

“How?” you might ask. Well, it could be through something like a Civilian Conservation Corps or a Works Progress Administration designed for a new era. For example, each former student would have to write a business plan, or even a life plan, that would show a contribution to the country. Each would sign off on an agreement with reasonable milestones and goals. In return, as they reached these milestones and goals that would, in theory, help the country recover, a portion of their student debt would be written off. Their debt payments would be suspended during their period of service. Most, if not all, would be paid for their contributions as well. At the end of each year the most successful students would be given national awards and prizes. Those who abuse this system would have to pay fines and pay back their loans at an accelerated rate. 

Those families whose parents worked so hard and sacrificed much to pay for college, but did not qualify for the federal student loans, could also be part of this initiative. 

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This would offer a better option for students, who might otherwise be suffering in unemployment lines or living in their parents’ basements, or worse, be homeless. 

Such a program could be extended past the recovery and redirected towards efforts from developing strategies on how we, as a nation, can waste less resources, like food, energy and water, to developing an avenue through which we can boost our supply chains without relying on China. 

Others could tread new paths towards strategic, moral and ethical leadership, while others could focus on the problems of poverty, hunger, structural and chronic unemployment and racial inequalities. The limits to the success of such a program would be found in the creativity and drive of those students who want to reduce their student debt and want to contribute to the national recovery, prosperity, innovation and hope. 

If you want to make American great again, then unburden the youth from crushing student debt and give them incentives to work for the recovery and renewal of the country. It could be a big win-win. Our country and our younger people, our future, could be a lot better off from it. Priming the pump of hopes and dreams for younger people in this way is doing well by doing good. 

Mr. John Hofmeister is the former president of Shell Oil Company. Dr. Paul Sullivan is a professor at the National Defense University and an adjunct professor at Johns Hopkins. All opinions are the authors’ alone.