The United States, like so many other countries around the world, is facing an affordability crisis. Coupled with the fallout from the Great Recession of 2008 and a high cost of living, student-loan debt has made it difficult for millennials to save and has forced them to delay milestones like getting married, buying a house, and having kids.
These milestones may not seem like much at the individual level but they are having an extremely negative impact on the future of the American economy. Ideas on how to address the growing student loan debt crisis are pouring in from across the political spectrum but one of the ideas gaining the most momentum is student loan debt forgiveness. But where did the idea come from and what exactly does it mean for the 45 million Americans who owe a share of the $1.6 trillion student loan debt?
President-Elect Biden will take office as president with a long list of to-do’s but many are pressuring him to prioritize student loan debt.
We still have over two months until President-Elect Joe Biden takes office on January 20, 2021. However, that hasn’t prevented people and pundits from discussing what needs to change (and how quickly) once he’s sworn in. Obviously, the new president will have a lot on his plate.
But one possible agenda item for Biden’s first days in office involves the student loan debt crisis. Currently, our collective student loan debt stands at $1.6 trillion (the second largest debt behind mortgages), so it’s no surprise that the Biden team are looking to address the crisis.
During a recent press conference, President-Elect Biden confirmed his support for forgiving some student debt “immediately.”
He repeated his support for a provision passed as part of the HEROES Act, which the Democratic-controlled House updated on Oct. 1. The provision calls for the federal government to pay off up to $10,000 in private, nonfederal student loans for “economically distressed” borrowers. Biden specifically highlighted “people … having to make choices between paying their student loan and paying the rent,” and said the debt relief “should be done immediately.”
But many want a President Biden to take more sweeping action.
Although it sounds like forgiving student load debt would be an easy move, some are asking should it be done? Most economists agree that canceling student debt will boost the economy, freeing up younger people to start businesses, buy homes and even start families.
In fact, Elizabeth Warren, in her presidential campaign proposal, cited arguments that debt forgiveness would reduce the racial wealth gap, reverse rural brain drain and allow more people to complete their educations. Activist groups such as the Debt Collective go further, arguing that student debt is wrong in principle. “We must return education to the status of a public good,” the organization says on its website.
The Squad (the nickname given to Reps. Alexandria Ocasio-Cortez of New York, Ilhan Omar of Minnesota, Ayanna Pressley of Massachusetts, and Rashida Tlaib of Michigan) have strongly supported wiping $30,000 off student loan debts, which they outlined in their Student Debt Emergency Relief Act in March.
The bill aims to provide immediate monthly payment relief to those who have taken out federal student loans and crucially prevent those with student debts from having to make involuntary payments during the coronavirus pandemic.
Student loan debt is having severe impacts on so many facets of American life.
A college education has soared in costs over the last few decades, with the cost of an undergraduate degree increasing by 213% at public schools and 129% at private schools, adjusting for inflation, according to stats from The College Board. Costs for professional degrees are rising too. In 2013, only 14 people in the US owed $1 million or more each on their federal student loans, The Wall Street Journal reported, citing the Education Department. By 2018, that had increased to 101 people.
Student loan debt is also a major contributor to the racial wealth gap. Black graduates with a bachelor’s degree default on their loans — meaning they do not make a payment for 270 days — at five times the rate of white graduates. A recent Wall Street Journal report found that graduates of historically black colleges had 32% more debt than students at other colleges and that most had not paid off any debt in their first few years out of school.
And millennials aren’t the only ones suffering. More than 3 million Americans ages 60 and older owe more than $86 billion in unpaid student loans, and to pay if off their dipping into their Social Security benefits, according to CBS News.
But why are so many people seemingly against the idea of debt forgiveness?
Many opposed to canceling student debt claim that it would create resentment in those who spent a long time paying off their own college debts. The argument goes that they had to sacrifice and suffer and it wouldn’t be fair that current and future college grads might not have to sacrifice and suffer in the same way.
Other critics of debt forgiveness state that a bailout will simply redistribute the debt to other Americans, and will largely benefit those who can afford to go to college, disproportionately helping a well-off segment of society at the expense of the taxpayer.
Something those people should keep in mind, though, is that their experience of massive student loan debt is not one shared by every generation of students. From 1988 to 2018, the cost of college increased by 213%. Wages, unsurprisingly, did not increase by 213% in that period — in fact, they’ve pretty much remained stagnant since the 1970s.
Perhaps most importantly, canceling student debt doesn’t negatively affect those who’ve already paid off their student loans. Insisting that other people pay off their loans in full, no matter how much of a hardship, is demanding suffering for the sake of suffering.