New York lawyer Robert Applebaum was struck with an idea after Obama’s inauguration in 2009. He was watching the cable coverage of the stimulus package debate and realized that if he were relieved of his student loan debt, a $500 per month payment, he could use that money to help struggling sectors of the economy.
Applebaum had no website or blog at the time but used his Facebook account to write the original essay that sparked the grassroots movement, “Forgive Student Loan Debt to Stimulate the Economy.”
Soon after, the Huffington Post wrote about the movement, the Facebook group had grown to 300,000 members and a website was launched.
“My primary responsibility, as I view it, is to educate the public as to the inequities and injustices inherent in the student lending industry,” Applebaum said in an interview with Pluck Magazine. “I don’t expect everyone to agree with my solution to the problem; however, I do expect those in positions of power to recognize that a very big problem does, in fact, exist.”
The full proposal, available on ForgiveStudentLoanDebt.com, includes 19 paragraphs about the problem, the proposed solution and the effects forgiving this debt would have.
“Forgiving student loan debt would have an immediate stimulating effect on the economy,” Applebaum said. “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.”
Applebaum contends the proposal is not a free ride.
He suggests that rather than simply giving another blank-check bailout to the banks that carry student loan debt on their balance sheets, the government should also give some relief to the Americans who hold that student loan debt. He also addresses the issue of future higher-education funding.
“To avoid the moral hazard that this plan could potentially create, going forward, the way higher education in this country is financed must be reformed,” he said. “Requiring students to amass enormous debt just to receive an education is an untenable approach, as demonstrated by the ever-growing student loan default rates.”
Applebaum notes that a well-educated workforce benefits the whole of American society. He says the loan-based higher education system should focus more on scholarships and grants as it has in the past, with small loans making up the difference.
The first question in the FAQ section of the website asks why students deserve a “bailout.” Applebaum said, “They don’t,” adding that no more deserving are Wall Street, the banks or insurance and auto companies.
“The American economy, however, needs to be rebuilt for the 21st century,” he said. “For a fraction of the cost of what has been and will be spent, forgiving the student loan debt obligations of all Americans would have an immediate and continuing simulative effect on our economy – one that seeks to rebuild our economy from the bottom up by helping real people with real struggles..”
The site also answers questions including how the proposal could help stimulate the economy, differences between federal and private loans, predatory lending and advice for students who have already paid off their loans prior to the proposal.
The movement to forgive student debt has grown since the original 2009 proposal. In November 2011, Applebaum posted a blog for new members of the site, including a link to a petition in favor of H.R. 4170, “The Student Loan Forgiveness Act of 2012.”
A three-page summary of the bill and the entire bill can be found on the website. The bill boasts the name of Representative Hansen Clarke (D) of Michigan’s 13th district.
Clarke guest-wrote an article on March 18 for the Detroit Free Press, noting that student loans surpassed credit card debt in the U.S. in 2010, totaling more than $1 trillion.
“For at least a century, this country has run on an implied social contract that says: ‘If you study hard and work hard, you’ll have a steady middle-class income and a stable career,’” he said. “Let’s reinstate that contract and put student borrowers back on higher ground.”