With student loan debt surging, U.S. Sen. Kirsten Gillibrand on Tuesday pushed for legislation that would allow graduates to refinance their loans at lower rates.
"People are spending all their money to pay back debt instead of investing in the economy," she told reporters during a conference call. "It's a huge drag on the economy."
In one example, refinancing could save "$70 to $100 a month". It's not nothing. But it only eases things. It doesn't turn the trend around. We need to accumulate less debt. You know what's gonna happen: You save $70 a month on student loans now, and you're feeling pretty good, and pretty soon you go out and put that new TV on the credit card...
Policy has to change. The Fed has to keep an eye on the ratio of private debt to circulating money; and Congress has to create policies that encourage repayment rather than accumulation of debt.
Once this is done, we can eliminate a lot of the policies established since the 1980s that were designed to moderate inflation by keeping wages down. And rising wages will mean we have money enough that it doesn't kill us to pay down our debt a little faster. Something we want to do, anyway.