A college education is not that easy for all students. Some students in college depend on loans to pay their bills and support their educational needs. Students` loans usually demand interests or impose defaulting penalties. Cancelling these loan debts for students would, therefore, be of great joy to them. Benefits of cancelling these loan debts include:
PROS:
1. Promotes the creation of small businesses by students: Cancelling the debts means the students will not be tied to repaying his or her load but will concentrate on putting more investment into his or her business. The students will also have access to other credit alternatives and money sources to set up business any other economic unit of their choice.
2. Leads to Increased degree attainment: With proper grant funding, fewer students will drop out of the college to look for finances to pay the loan. The students will also study peacefully.
3. Reduces economic liabilities to the students: The homes of the student who has acquired the loan may encounter a financial crisis that may limit the ability to pay. Cancelling the debt will simply relieve them.
4. Promotes early marriages and households: With debt cancellation, the student is free to marry as soon as he or she completes studies which are good for it ensures good care of the family while still young. A student having debt cannot just move into marriage matters as this adds added costs to those of paying the debt.
5. Peace of mind to the student: Its usually a great relieve to the student since his or her education is usually a smooth journey. The student is able to concentrate on books or work and achieve his or her dreams without too many thoughts or worries.
6. Removes government and bank restrictions: This cancellation will enable students to request for other funds from other lending agencies to support their businesses for those students who own small economic units. The growth of these small units will lead to the overall growth of the countries` economy.
7. Leads to creation of jobs: A recent study by Levy Institute shows that Cancellation of students debt will experience a sudden peak in the number of jobs created. This is because some jobs may require one to pay the loan first. Students will also face fewer job restrictions.
8. Increases the student`s net earnings after completion of college: with debt cancellation less of the income gained by students having loans. The student will, therefore, have adequate resources to grow him or herself.
9. May lure students for votes: Any politician who proposes to cancel students loan debt may receive mass following and voter turnouts in support of him or her.
10. Eliminates the huge fees from defaulting rates imposed: Those who might have accumulated lots of fees or charges for not paying the loan on time are set free.
The demerits of cancelling student loan debts include:
CONS:
1. Students may become very proud: Cancelling the debts of students will lead to them having overconfidence on themselves and being boastful
2. Teaches students the wrong lesson: This might teach students that one does not need to repay any loan on time while expecting the loans to be cancelled. This, however, may be different in future for the student who requests loans from other financial institutions like banks.
3. May lead to loss of jobs: Lending companies may be forced to fire their employees for example debt collectors since there would be less or no one required to follow up on those who had not paid loans.
4. Burdens the economy: Loans given by the government would not be recovered hence the government would have to look for other ways to recover the huge amounts of money.
5. May lead to losses to lending organization or government: Lending organizations would go bankrupt or incur enormous amounts of losses if there are no alternative methods of sustaining itself.
6. The citizens who pay for it: In most governments, the government would enforce levies and taxes on the common citizens to recover its money back.
7. May interfere with the government`s plans: Plans that might have been set in the past relating to student loans become obsolete. This government may thus stop being an economic leader due to the burden imposed by this move.
8. No interests for lenders: Awaited interest by lending agencies becomes a thing of the past. Lenders fail to enjoy economies of scale.
9. Results to inter-agency and government conflicts: Those implementing the move may face opposition from those against it. Lending arms of the government or some agencies may feel betrayed.
10. Possible disconnect with parents: Some students can forget the importance of their parents since the burden of paying back would get eliminated from them. Students would also not need to depend on their guardians to help them in finances.
