First, I guarantee Bernie Sanders understands how collateral works. People are simplifying a much larger issue by conflating the facts -- trying to be funny.
Student debt is a major, major, major issue for this country. Too many young people are in major debt and cannot afford to start 'traditional American families'. I can dig up the numbers if someone is interested, but more and more millennials are missing traditional milestones. Many are putting off buying a home, getting married, and having children. The reasons: underemployed and student debt.
Now, I have a hard time being sympathetic for someone who amasses $50,000+ in student debt because they chose to go to a small, liberal arts school and earned a bachelor of arts in social work.
But then you have examples like me. Stayed in-state. Took advantage of HOPE scholarship and a teacher discount. Worked part-time during the year and full-time in the summers. Graduated in four years with a bachelor of science in business and earned a master of science (while on a full graduate assistantship). I still incurred $30,000+ in debt, with living expenses, books, general emergencies, etc. ($6,000/year).
Now I pay 6.9% interest on the student debt. I am gainfully employed and earn plenty of money to 'get by'. I have a small car payment (3.8%), a mortgage (3.125%), and my student loans as my main expenses. My student loans cost me roughly $280/month -- most of which is interest. I am taking advantage of a loan forgiveness program through the government, but must pay 120 consecutive payments (~$33,000) before my debt is discharged. If the government reduced my interest rate in half...I could save thousands of dollars of the next several years. I would put some of the money in savings, but the rest would be spent on new furniture, renovations on my home, paying off my car, taking a weekend vacation, etc.
Reducing interest is not an insane idea when you consider it a stimulus to the economy. It would increase spending and demand. The vast majority of folks are in the same or worse shape than me and would spend nearly every dollar on goods/services. Sure there is no 'collateral' for this debt, but we are talking about loans that the government actually earns money on. Loans that cannot be discharged in bankruptcy. Do some folks make poor decisions (degree choices) sure! But not everyone makes poor decisions...
