This is really low-hanging fruit, but since I have now seen it a half dozen times, I thought I would quickly address it. Some are arguing that forgiving student loan would be a good stimulus plan:
Forgiving student loan debt would have an immediate stimulating effect on the economy. Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy now. Those extra dollars being pumped into the economy would have a multiplying effect, unlike many of the provisions of the new stimulus package. As a result, tax revenues would go up, the credit markets will unfreeze and jobs will be created. Consumer spending accounts for over two thirds of the entire U.S. economy and in recent months, consumer spending has declined at alarming, unprecedented rates. Therefore, it stands to reason that the fastest way to revive our ailing economy is to do something drastic to get consumers to spend.
This is an old proposal; so I am not sure the author here takes it seriously anymore. But in one form or another I have seen people mention or write about student debt forgiveness in a similar way. Although this proposal is couched in a somewhat complicated manner, it basically amounts to giving $1 trillion to student debt holders via retiring their debts, on the hope that doing so will encourage them to spend more of their income on personal consumption.
Handing money to those with student debt would disproportionately funnel money to the affluent or soon-to-be-affluent. Those with the highest student debt are in the top 10 percent of income earners, and student debt holdings in general skew to the upper half of the income distribution. This is a problem on class justice grounds, but also a problem on stimulus grounds: handing money to wealthier people is less effective stimulus because they are less likely to spend it.
Every dollar this plan proposes to give to those with student debt must come from somewhere and could go somewhere else. If we are going to hand out $1 trillion to a group of people for stimulus purposes, the people we choose should probably be the most likely to spend it or the least well-off. Luckily, those two populations are the same: the poor. For every dollar someone proposes to hand to those with student debt, that same dollar would have a bigger stimulative impact if it were handed to the poor instead.
The trickle-down theory of student debt forgiveness is very similar to the trickle-down theory of tax cuts for the rich. Will it have some stimulative impact that helps poor and working people? Yes. Given the opportunity costs it requires, is the policy justifiable on those grounds? Not really.