Your debt is worth less on the world market, but that probably doesn't make much of a difference to you because the strenght of the dollar is not effecting your income or expenditures much due to our relationship with China. The thing that really changes the value of your debt to you is inflation which causes the value of our dollars to fall in our economy. Hopefully, at the same time inflation is occuring, wage growth is occuring at the same rate, in which case the value of your debt (at least the principal) shrinks in a real way since you have more dollars to pay off the same amount of debt. Unfortunately, for debt holders, the interest rate of the debt is nearly always higher than inflaton, so you lose in the long run, unless you have someone else paying that interest for you as is the case with government subsidised student loans.
To be sure, the falling dollar does put upward pressure on inflation as we still do buy quite a bit of stuff from places that are not China (Oil being a very large one). So in a roundabout way the falling dollar does affect student loan debt.
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Date: 2008-03-07 10:39 pm (UTC)To be sure, the falling dollar does put upward pressure on inflation as we still do buy quite a bit of stuff from places that are not China (Oil being a very large one). So in a roundabout way the falling dollar does affect student loan debt.