Is Biden right to reject the $50k student loan forgiveness proposal?
Regardless of whether or not the cost of higher education is fair, students who take loans to attend do so knowing full well they have to pay it back. The debt is voluntary; it’s not the government’s job to put it on taxpayers. Although this seems to be a generous policy proposal, there are still no clear answers as to who would get the forgiveness and how much.
According to Business Insider, 'Biden said he was reluctant to forgive debt for people who attended elite institutions, listing Harvard University, Yale University, and the University of Pennsylvania as examples.' And CNBC states, 'he suggested that forgiving $50,000 in student debt would disproportionately benefit students who go to 'elite' private colleges.' There are a lot of factors to consider, such as community college versus university, people who are less than or greater than 50k in debt, and individual income levels.
Additionally, there are many students who have had to take private loans from non-federal lenders in order to attain higher education. Does their debt not matter? What about hard working parents who juggled several jobs to pay for their children’s education so they’d graduate debt free? By this metric, they are entitled to a refund. There is no way to do loan forgiveness down the middle that isn't fundamentally unfair to everyone across the board.
What’s more alarming is how a program like this would add massive debt to our “already-ballooning national deficit, which totaled a record $3.1 trillion for the 2020 fiscal year,” and would weigh down an economy already dealing with COVID shutdowns and joblessness. With the $1.9 trillion stimulus bill Democrats are proposing, it is not wise to add to the load.
The student debt crisis affects the rest of the economy as well, not just students, and forgiving that debt would be one way to help foster economic growth. About 45 million Americans currently owe a student loan debt, and for many of them, 'saving is an impossible dream.' As Jennifer Blatz, the CEO of StriveTogether, points out, forgiving student loan debt is actually an investment in workers and the economy and would 'help narrow the racial wealth gap.' A Roosevelt Institute study from August 2020 shows that forgiving only $20,000 in student loan debt 'would mean that half of all households with student loans would be free of debt,' allowing them to put their earnings back into the wider economy. For example, a survey conducted by the National Association of Realtors also found that 'because of student loan debt, the average borrower delays homeownership by five to seven years.'
To address a common argument against forgiving this debt, such as saying that it is unfair to those who have already paid off their loans, is an argument that could be applied to anything and is actually not a reason to stop improving conditions for people in the future. In an article on Jacobin, Ben Burgis illustrates this idea with an allegory of a monster who lives outside of a village, 'eating bits and pieces of passersby.' Should the villagers not hire someone to hunt down the monster because it would be unfair to those who have already been attacked? Just because loan forgiveness won't directly impact many students who graduated and possibly paid off their loans should not mean we canceled the entire goal.
- Former President Trump first granted student loan relief in March under the CARES Act during the first spikes of the pandemic, then extending it to October, and again in December. Before leaving office, Trump’s Department of Education extended deferment until January 31, 2021.
- On the campaign trail, President Biden proposed a $10,000 student loan forgiveness program.
- In December, 73% of Americans supported Biden’s student loan forgiveness proposal.
- On Tuesday, February 16, Biden rejected the Democrats’ $50,000 student debt plan saying, “I will not make that happen.” He said he “understands the impact of debt, and it can be debilitating” but he does not believe he has the authority to do so.
- Forbes reports 45 million Americans who owe a combined total of $1.6 trillion in student loan debt.