Since more than two years ago, federal student loan payments have been suspended. Most recently, the government extended the pandemic-related suspension until August. 31. Rumor has it that President Biden is now “considering different options to forgive an unspecified but significant amount” of the $1. CBS News reported on Tuesday that approximately 43 million people owe the government $6 trillion.
However, not everyone — including Biden historically — thinks that would be the best course of action for addressing concerns about equitable college access. Here are the arguments on both sides of the debate.
Con: Forgiving debt isn’t fair to people who’ve already made their payments
Forgiving student debt would be a “great gift” to graduates, argues the Boston Herald editorial board — but so would having your “mortgages, car loans, and … credit card debt” forgiven, too. “Thats not on the table,” though, because “adults who assume debt are supposed to be responsible and pay for the things they purchase.” For that reason, others have called the renewed debt forgiveness rumors a “slap in the face to all who sacrificed and worked extra jobs to pay off their student loans.”
Pro: Debt forgiveness is the empathetic solution
But “the argument that this is how it was for me, so why should it be any easier for you is a lazy interpretation of — and solution for — a crisis decades in the making,” writes Christina Wyman for NBC News. In fact, harboring such resentment is just “another sinister layer in our countrys long-standing problem with empathy.” Ben Burgis puts the counterargument another way to Jacobin : “If a monster lives at the edge of town and makes a regular practice of eating bits and pieces of passersby, and after this goes on for years before the town finally brings in a monster hunter to put an end to it, do the people walking around with missing fingers because of past monster attacks have a legitimate complaint? … Its not unfair that theyre finally taking care of the problem.”
Con: Inflation is already bad — and student loan forgiveness will only make it worse
While student loan forgiveness might have “seemed like a good idea” in November 2020, that time has passed, Matt Yglesias argues at Bloomberg. The “supercharged” demand from the $900 billion stimulus package and the American Rescue Plan has become “superdupercharged” due to the sanctions — and resulting high oil prices — following Russias invasion of Ukraine, meaning the economy “no longer needs stimulus — in fact, it needs to restrain demand.” Since a “majority of the public” doesnt have student debt, Yglesias writes, and it is higher-income individuals who tend to be the ones who owe money, restarting collections would come largely at the “expense of a disproportionately high-income minority of the population” while also helping to “reduce the volume of customer demand in the economy,” rather than further increase it.
Pro: Loan forgiveness could be Democrats’ last chance for the midterms
Forgiving student loan debt ahead of the midterms could help Biden turn out younger voters for his party — a demographic that will be crucial if Democrats dont want to get swept by a red wave. “There are a lot of people that are still waiting” for Biden to forgive student debt who have become disillusioned with his inaction, Rep. Nikema Williams (D-Ga.) told Politico. Kristin McGuire, the executive director for Young Invincibles, added that while an executive order clearing student loan debt is “not a silver bullet,” there is still “something to keeping your word.” Sen. Elizabeth Warren (D-Mass.), a longtime advocate for student loan forgiveness, stressed on Face the Nation that “Democrats win when Democrats are in touch with the American people” and “weve got millions of people across this country who say theyre not ready for their student loan payments to resume, that they simply cant manage those loan burdens.”
Con: Many with student loan debt don’t actually need help paying it off
Unburdening student loan borrowers with the sweep of his pen “might not be the best form of stimulus available” to Biden, admits Annie Lowrey in The Atlantic. “Nor would it fix the countrys crushing student-loan crisis, or rationalize its higher-education financing structure.” But even if debt forgiveness wont instantly solve Americas problems with access to higher education, financial equality, or stimulating the economy, “this is a yes-and situation, not an either/or one.” While student loan debt would benefit the wealthy too, “giving money to rich people does not erode the benefits of giving money to poor people.” People shouldnt get too hung up on the policy being “ideally progressive,” either, Lowrey adds, because “the principle matters here too. The fact that higher education should be a public good matters.”
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What are the negatives of student loan forgiveness?
The drawbacks: It might be viewed as unfair to people who don’t have loans or who have already paid off their debts. People who took out the loans did so of their own volition and must pay for it. Due to their higher ability to pay and greater debt loads, those at the high end of the scale may reap the majority of the benefits.
Is student loan forgiveness a good idea?
Eliminating student debt would lessen this burden and assist families in paying off other debt. According to a recent CNBC survey, 45 percent of respondents said they would start saving for retirement and more than half said they would pay off other loans if student loans were forgiven.
What are the pros and cons of the student loan forgiveness plan?
- Cons: It’s unfair to forgive debt from those who have already made their payments.
- Pro: Debt forgiveness is the empathetic solution. …
- Con: Student loan forgiveness will only worsen inflation, which is already bad.
What are some of the pros to student loan forgiveness?
- Increased wealth and ability to achieve major milestones. …
- Advancement in gender and racial equity. …
- Relief for borrowers of all age groups. …
- Less financial strain for both low- and middle-income households. …
- An improvement on borrowers’ mental health. …
- Cost to cancel student loan debt.