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Student loans and fiscal stimulus

Chris Farrell Feb 24, 2009

Question: Is there any chance of bailout money for student loan borrowers? I assume that if there is any bailout money aimed at student loans, it will be given to the lenders and not to the borrowers, but if individual homeowners are eligible for bailouts, why not individual students? A lot of students imprudently ran up too much debt, just like home buyers. : Eric, San Diego, CA

Answer: It’s a good question, and we’ve gotten a number of similar queries from listeners and readers. The bottom line answer is that indebted graduates with a college sheepskin aren’t getting help. The stimulus package does direct money toward making college more affordable, especially for students from lower income families. Higher education isn’t going empty-handed, either, with money available for investments like university research and university infrastructure. But nothing was targeted at easing the student loan debt burden of college graduates. My guess is that policymakers–if they thought about it at all–decided the tax breaks will give graduates extra money this year and, if it makes sense, they can direct the money toward debt payments.

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