#moralhazard

(For a description of a tuition waver please read the blog written by, “politicalprof.”) 

If Trump’s tax plan becomes law many students, approximately 145,000 of them, will be faced with the problem of choosing between crippling debt or being disqualified for jobs of interest and earning less. It’s a negative for the individual, their future family, our economy, and our society.

As it stands the number of people who are retiring with student loan debt has quadrupled over the last ten years. If the bill passes, we will see a major jump in long term debt and retirement would become impossible for many.  

The additional debt would make it harder for individuals to purchase goods, eat “avocado toast,” go on vacation, buy a home, etc. Some individuals will seek relief by dissolution of student debt through bankruptcy.

The health of the economy is measured by the GDP. Sparknotes states, “Strictly defined, GDP is the sum of the market values, or prices, of all final goods and services produced in an economy during a period of time.” In other words, everything that is produced and purchased within an economy is calculated. Well what is behind production? People! So, to increase the GDP you want to increase production, which means you should increase people’s ability to produce. Education has proven to increase one’s abilities to produce. 

A decrease in college degrees would be a decrease in “human capital,” which would result in a decrease in the economy’s ability to produce. The impact would place the economy in a precarious position, possibly into a recession.