What would happen if all student loans were forgiven?

A thought experiment.

The total US student debt is estimated to be $1.4 trillion (Trillion. With a T or 1,000 billion). Of that amount a relatively small percentage (about $7 Billion, with a B) are private loans. Private loans are student loans made to students (or their parents) by banks. Compared to Federal Student Loans, they have higher interest rates, are not guaranteed by the government but also (mostly) cannot be discharged in bankruptcy. The bulk of the $1.4 trillion in debt was loaned to students by the Federal government.

It’s actually interesting to think about whether the government could just wipe out the debt and take a $1.4 trillion hit. Sometimes numbers are so big, so impossible to truly conceive of, they seem to only really exist in the land of governments and playgrounds. Governments can print money, so it’s not outside of the realm of possibility, but at the same time, that’s a big number. Let’s look at some other figures for comparison:

• For (Fiscal Year) FY 2015, Pentagon and related spending totaled $598 billion, about 54% of the U.S. discretionary budget.
• The annual budget (different from discretionary) of the United States is $4.094 trillion (for 2017–2018) which is higher than its revenue of $3.654 trillion, contributing to the overall…