America today is facing a financial crisis of unprecedented proportions. No, I’m not talking about the economy, or even the national debt, but something much more personal. Students today are racking up more student loan debt than ever before and it has many young adults around the country asking for help.
Today, roughly 43 million Americans owe the federal government over $1.7 trillion according to a December 2021 report from The Hill. When looking back a decade, in 2011, that number was just under one-trillion. On average, those with student loan debt owe around $40,000. It is not uncommon for former students to be paying off their student debt into their thirties or even forties. On top of historically high rates of inflation caused by the COVID-19 pandemic and higher average costs of living, combined with low wages and income inequality, this has become quite a stressor.
In recent years, the conversation around student loan forgiveness has turned divisive. During the 2020 election cycle, Democratic candidates campaigned on progressive style social programs, many of which included some sort of plan to address the crisis of student financial aid. In what was a surprising move by more progressive members in the Democratic party, the eventual Democratic nominee, the moderate former Vice President Joe Biden advocated for a more progressive plan. The plan included canceling up to $10,000 per person of their student debt owed to the federal government. This policy brought Biden a slew of young voters, helping to carry Biden to a victory on election night.
Since taking office, President Biden has been spotty with keeping this stance. In recent months, Biden has been avoiding questions on the issue. His administration has extended the student loan repayment pause through May of this year, but many are arguing that this action is not enough. Many within his party are asking Biden to forgive $50,000 worth of student loans owed to the federal government per person.
Despite the political narrative around student loan forgiveness, studies have shown that the action would have practical benefits economically. If we use Biden’s plan for $10,000 in student loan forgiveness, there can still be a large impact. According to a February 2021 report from Business Insider, “Based on fourth quarter 2020 data, loan forgiveness of $10,000 would mean complete debt cancellation for 33.6% of borrowers.” If a plan to cancel out $50,000 were to be implemented, complete debt cancellation would jump up to as high as 75% of borrowers according to the same data.
The money saved by the average American as a result of debt cancellation can be set aside for savings or other spending, which would benefit the economy. Having an extra $200 to $300 extra per month could help families pay for other bills. Extra money can allow younger adults to hit life milestones such as further education goals or buying a house. Extra money can allow them to feel more comfortable interacting with the economy whether that be through stocks or by consumption of goods.
Student loan forgiveness would also further benefit wealth disparity amongst people of color. According to research from Brookings.edu, Black college students on average owe $7,400 more in student loans than their white peers. Black students also on average owe double what white college students owe in student loans after graduation. By canceling student loans, Black college graduates will be able to close that financial gap.
Overall, the benefits of student loan forgiveness would have a widespread benefit for all Americans. The fight for student loan forgiveness is far from over and it will not be dispersing any time soon. It is worth pushing for policies that can help students everywhere to build a more stable future not only for themselves, but for everyone.
(Find on Page 10 of Mystician 83.5)
Comments