If you are interested in seeing why this would be so catastrophic. Go to Jenner/ Block law firms web site
(Chicago, Illinois) and read archived books by Anton Voelkner (Federal appointed Bankruptcy Examiner for Lehman Brother’s bankruptcy). He was a partner at Jenner/Block. Special attention to books 8 & 9, those 2 books will show you why taking all of student loans out circulation would be disastrous.
At the core of the 2008 financial collapse, there was no underlying weakness in the economy that caused it. It was a lack of confidence by the market and the run on the banks as investors sold off their investments.
Yes, student loans may be in some percentages backed by the Government. But there are way too many that are not. Banks loan student financial aid as well. As it can not be discharged through bankruptcy. Yes there has been a court ruling against but the Department of Education, Secretary Devos is insisting that any loans to be “forgiven” must be reviewed on a case by case basis.
You can not arbitrarily remove $1.6 trillion + of debt from the economy ( 8% of the value of the US economy) without destroying it. Which would most likely cause another massive loss of confidence in the market and trigger another massive sell off of investments and create another 2008 financial crisis.
I am not Chicken Little on this. Under my mentor I spent 5+ years studying and analyzing the 2008 market collapse caused by the Lehman Brother’s collapse. There were literally thousands of accountant’s involved in assisting Anton Voelkner in distilling 3 billion plus pages of evidence into the 11 books that Anton Voelkner gave to the bankruptcy proceedings.
Senator Warren’s position on eliminating student loans would be catastrophic.