Why bother thinking about something that'll never happen?
Student debt cancellation is only plausible because the Federal government is already on the hook for it as the ultimate guarantor. It is entirely ridiculous that the Federal government would ever buy up debt it had no existing relationship with.
And I'm asking what the economic effects would be of the whole sequence I described.
Treating economic effects in isolation of political effects is ludicrous when you are asking about a political decision. No government is going to implement a policy of acquiring any form of debt just to cancel it without having some plan in place to prevent the recreation of that debt after the cancellation. Since there's no way to prevent other countries from issuing no debt, the idea of a general acquisition of foreign debt is an impossibility.
What the government can politically do is engage in a cancellation of government guaranteed debts as part of a program to get out of guaranteeing such debts in the future, in which case, the interest rates on such debts will rise, fewer people will acquire such debts, and the related industries such as education, home building, etc. will suffer.
