Merits of cancellation debts al Affiliation) Introduction Cancellation of loans occurs in rare situations though it is the best way to deal with students loans debts. Cancellation of federal loans always requires a procedural approach according to law. In some situations, cancellation of loans can result from serious problems that occur in an institution that a student attends. For loan cancellation to take place, a specific criterion has to be met. The cancellation can also occur if a student has worked for a certain period of time in the public service. Merits of cancellation The forgiveness program brings about the main merit of cancellation of student debt since the program encourages individuals to enter and continue working full-time in the public service sector.
Under the program, borrowers are also able to qualify for forgiveness of other debts that they have in the direct loan after they have been able to make 120 payments that make them qualify for those loans (Khalfani-Cox, 2007). In agreement with the arguments put forward by phoenix lawmaker, it is evident that there is a high rise in the cost of higher education and one way of tackling this financial phenomenon is the cancellation of the student debts.
The economic concept inherent in this argument is the impact on the labor market. There will be an increase in employment. Cancellation of student debts has also played an important role in encouraging students to study. The encouragement arises from the reduction in the education cost that would otherwise be a financial burden to the students and their families. The costs that were to be paid out of pocket such as the 2000 dollars in the case of Arizona colleges and universities no longer apply.
The reduction in education cost has led to more self-interest in education by the students as compared to the time when they were to self-finance their studies. Arguments of a reporter for Capitol media Services are vague as the students will also be able to take their education seriously as even those that were not able to afford the amount will be able to get the education. The cancellation will be beneficial to the society as individuals will attain education and start earning high income in the process improving their living standards.
Another merit is that students will be able to manage their payments by using a qualified repayment plan, which will be used to forgive students under the initiative (Khalfani-Cox, 2007). The availability of full-time work for students also brings about economic merits to the students and to the community. The earnings that are obtained from the job will enable students to meet their needs and support their families. The economic concept in this merit is that students will be able to satisfy their needs by maximizing utility subject to their income. Conclusion Cancellation of students’ debts has several benefits as demonstrated in the arguments above.
Some of the economic concepts that cancellation of student debt addresses include employment, accessibility of education and reduction of education costs (Khalfani-Cox, 2007). The students will be the highest beneficiaries of the cancellation of student debt. The society will enjoy the positive externalities of the initiative including improved living standards and a reduction in unemployment rates. Reference Khalfani-Cox, L.
(2013). Zero debt for college grads. New York: Kaplan Pub.