The issue of student loan debt forgiveness, hotly debated for years, has become increasingly important since the onset of the COVID-19 pandemic.
In his first CNN Presidential Town Hall on Feb. 16, President Joe Biden refused to commit to a proposed $50,000 in student loan forgiveness per borrower, instead reaffirming his original campaign promise of $10,000 per borrower.
Some argue this amount is not enough, while others argue it is too much. I believe it is at least a step in the right direction, one that I and most UCCS students will likely benefit from.
According to Business Insider, “about 45 million Americans hold student loan debt,” and the average outstanding amount per borrower is “between $20,000 and $24,999.” This is close to the amount I will owe upon completion of my undergraduate degree.
Business Insider reported that, “based on fourth quarter 2020 data, loan forgiveness of $10,000 would mean complete debt cancellation for 33.6 percent of borrowers.” It would also considerably benefit those in the $10,000-$40,000 range, which constitutes another 41.3 percent of borrowers.
Those against student loan forgiveness argue that it will negatively impact the national debt, that it won’t benefit the economy, or that it benefits already-privileged Americans. What about those who didn’t go to college? Is it fair to those who went to college and have already paid off their student loans?
Regarding the national debt and the economy, Bharat Ramamurti, attorney and member of the COVID-19 Congressional Oversight Commission, said via Twitter, “Student debt loads are part of the reasons we’re seeing declining home ownership and small business formation rates. Canceling the debt will mean more jobs and growth.”
Ramamurti linked a 2018 study from the Levy Economic Institute of Bard College evaluating 2016 data, which Business Insider summarizes as showing that “a one-time cancellation of the $1.4 trillion outstanding student debt held would translate to an increase of $86 billion to $108 billion a year, on average, to GDP.”
As for the question of who benefits from student loan forgiveness, some take issue with the fact that a relatively small percentage of affluent college students with high loan balances of more than $100,000 account for “37 percent of all student debt,” according to Business Insider.
However, higher-income students would not be the main beneficiaries of forgiveness. The American Prospect clarified that “lower-income households would get the largest relief relative to their incomes.”
While not everyone in the U.S. goes to college and therefore would not directly receive student loan forgiveness benefits, this fails to account for the families of college students, many of which already bear the burden of paying for their children’s education. In the past decade alone, approximately 20 million students have been enrolled in public and private universities each year, according to Statista.
Finally, to the critique of those who have finished paying their student loans, The American Prospect made an important distinction: the group that has already left the student loan pool largely consists of the highest-income students who have the means to pay their loans in full or refinance them at lower rates.
Conversely, it takes a little over 20 years for the average college student who graduates with a bachelor’s degree to pay off their student loans, twice the 10-year estimate touted by federal student loan providers, according to a study by the One Wisconsin Institute.
It’s clear that student loan debt is a real issue, and one that must be resolved as soon as possible. Currently, there is a moratorium on student loan payments and interest, initiated under the former presidential administration and extended at least until Sept. 30.
Biden also spoke about plans to eliminate interest on student loans, adjust the current student loan payment system, and ensure tuition-free community college education for all and tuition-free public university education for students whose family income is less than $125,000.
No current student loan forgiveness plan is perfect. A one-time, $10,000 per borrower deal does little to address the root of existing and future problems of higher education costs. However, it would greatly ease the burden on many students and families in this pandemic and beyond; it would set us on the road to more comprehensive reform.