Is AOC right Congress should cancel all student loan debt?
- Alexandria Ocasio-Cortez, also known as AOC, serves as New York’s representative for the 14th congressional district. She fights for the rights of the working class, “advocating for social, racial, economic, and environmental justice.”
- On Biden’s first day in office, he rejoined the Paris Accords as well as the WHO, ordered a federal mask mandate, ended the Trump-era travel ban, as well as 13 other orders.
- Then President Trump first granted student loan relief in March during the first spikes of the pandemic, then extending it to October, and again in December. Before leaving office, he extended deferment until January 31, 2021.
- According to Forbes, there are 45 million Americans who owe a combined total of $1.6 trillion in student loan debt.
For many Americans, student loan debt is a shackle they must carry around for decades. Representative Alexandria Ocasio-Cortez is right to call for forgiveness of these loans. Without assistance, many Americans may face financial ruin or delayed homeownership and retirement savings. Forgiving student debt doesn't just help those making the repayments. In 2016, the average student loan repayment was $393 per month. For many individuals just starting out in their careers, this is a lot of money that could be spent at local businesses or other services.
Student loans are predatory. Unlike other types of debt, student loans are unable to be discharged through bankruptcy and do not have a statute of limitations. This means that no matter what happens in an individual's life, they are on the hook. This would be acceptable if the loans didn't target teenagers or young adults who most likely have had no experience in making big life decisions, let alone financial choices as monumental as taking out loads of loans. In many cases, they wouldn't be able to get a credit card with a limit of a few thousand dollars, yet they can easily sign up for tens of thousands of dollars in student debt.
Student loan debt is an economic justice issue. According to the Consumer Financial Protection Bureau, those with fewer means and minorities are hit disproportionately with debt from student loans. With few options other than forgoing education, many of these people are practically forced into these loans. This student loan debt can later affect future credit opportunities, making it harder to climb out of poverty through hard work. Rep. Ocasio-Cortez's call to forgive student loan debt is compassionate and economically sound.
AOC is wrong to urge Biden to cancel student loan debt. Her proposal is a budget buster—adding an additional $1.7 trillion to the national debt on top of the unplanned $6 trillion dollars incurred in the past seven months for Coronavirus relief.
Canceling student loan debt is a bad idea because it would constitute a white-collar bailout. Only one in seven Americans have student loan debt, and 40% of the total outstanding student loan debt is held by graduate students. College graduates already earn nearly twice as much as their non-degreed colleagues ($68K vs. $35K), and graduate students stand to earn over 60% more than those with bachelor's degrees.
Aside from being bad fiscal policy, a student loan bailout sends the wrong message to young people and is an insult to hard-working Americans who have worked diligently to pay off their student loans. A student loan represents a financial commitment and an incentive to complete their studies to the borrower. By removing the responsibility to pay back the loan, a bailout reinforces the wrong behavior and could prove to be a disincentive for students to graduate since there are no negative consequences for dropping out.
AOC's pitch for student loan debt cancelation appears to be a cynical political stunt designed to fool the public into thinking that the Democratic party is benevolent. This makes a public spectacle out of spending money the government doesn't have (as it is due to the taxpayers that the government has any funds whatsoever), and in fact, would plunge the country deeper into debt to do so. It's also a subtle political payoff to teachers' unions whose members' salaries are tied to their educational attainment.