Should the Federal Government Write Off All Student Loan Debt?

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Timmy sullivan

Student loan debt is a $ 1.6 trillion crisis that demands immediate relief.

Since 2003, the number of Americans in student debt has more than doubled to an estimated 44 million financially burdened borrowers. This represents a huge drain on our economy that prevents other forms of borrowing, diverts money from local economies, and traps entire generations in a financial bind.

In addition, the deleterious impact of student debt is unevenly felt, landing along existing fault lines of social inequalities. Student loan debt has a disproportionate impact on low-income and black borrowers. For example, among the student body of public institutions eligible for the federal Pell grant – those from the poorest households – 84% graduate with student debt, compared to just 46% of non-Pell recipients, according to a study. by the public policy organization Demos.

Additionally, due to historical structural racism and the resulting racial wealth gap, black families are more likely to depend on debt-based funding for higher education. Considering the interest rates, this means that black borrowers may end up paying more for their education. Almost two-thirds of black borrowers owe more than they originally borrowed when they entered college 12 years ago, compared to less than a third of white borrowers, Demos reported. Therefore, canceling student debt is as much a policy of racial justice as it is a bottom-up economic stimulus.

And, at a time when the COVID-19 pandemic has resulted in high unemployment and an economic recession, putting money back in people’s hands has never been more important. Fortunately, canceling student debt is extraordinarily simple. About 92 percent of all student debt is held by the federal government. This means that, under existing executive authority, the Biden-Harris administration can write off almost all of the student debt with a single executive order. The remaining 8% of private loans can be forgiven through federal spending, as some lawmakers have already proposed.

Ultimately, given the large number of Americans affected by student debt and the timeliness and simplicity of eliminating it, debt cancellation is an effective way to provide much-needed relief. to tens of millions of Americans, to narrow the racial wealth gap, and to stimulate our economy.

NO

Jordan gys

resident of Lowell; member, Massachusetts Young Republicans

Jordan gys
Jordan gysDamon Francoise

In the last election year, we heard calls from a number of prominent political candidates to write off student loan debt. There is a long list of problems with this idea, but several in particular stand out.

Certainly a popular sentiment, especially among millennials who have seen the cost of higher education skyrocket in their lifetime, that the simple act of “forgiving student loan debt” not only sets a bad precedent. moral, but also a bad political precedent.

There is no denying that higher education in the United States is incredibly expensive today. Yet even with the current inflated cost of a bachelor’s degree in this country, there’s a simple reason we have $ 1.7 trillion in student loan debt spread across 44 million people: Despite the high cost, borrowers make a wise investment. University graduates in the United States earn about 80% more than high school graduates. Therefore, taking on student debt, depending on your specialty, is actually a smart decision, even if it takes years to pay it off.

I myself was struggling with student loan debt. I paid it because I recognized that investing in university brought me a return that allowed me to eventually free myself from this obligation. If you were to write off student loan debt – all or most of it – it would likely add further to the already high cost of a college education. The reasoning is simple: the demand for higher education would increase as student borrowers would have a reasonable hope of seeing their debts canceled in the future. Therefore, the idea is actually a slippery slope.

I would also say that student debt is not the crisis that some of those advocating its cancellation would claim. In reality, student loan debt is only about 11% of household debt, which doesn’t seem excessive considering the financial benefits of a college degree. These benefits increase with mastery. Rather than writing off the debt, a smarter solution would be to maintain borrowers’ current obligations, but make the debt repayment schedule more closely tied to their income.

As told to Globe correspondent John Laidler. To suggest a topic, please contact [email protected].

This is not a scientific investigation. Please vote only once.

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