Please Don’t Cancel Student Loan Debt. Sincerely, A College Student
Democratic candidates in 2020 had one rally cry; student loan forgiveness. Now that Biden is president, loan cancellation is looming. Eliminating student loan debt seems like a good solution for the current situation, which sees 43 million Americans carrying $1.5 trillion in federal loan debt and $119 billion in private loans. But it will ultimately cause more harm to those it’s aiming to help.
Various politicians have floated potential plans for ending student loan debt before. The most radical ones coming from Senators Bernie Sanders and Elizabeth Warren. Both called for the forgiveness of almost all student loan debt. And guess how they were going to pay for over $1.6 trillion? Through increased taxes of course.
Fortunately, neither one of these plans will be happening anytime soon. But Biden’s spin on the policy is full steam ahead. His administration cancelled $1 billion worth of student loan debt for 72,000 students in March.
The current plan essentially expands the Borrower Defense plan. This allows for student borrowers who have been frauded by their schools to gain relief. Under the previous administration, the Borrower Defense only provided partial relief to students’ debts. The Biden Administration plans to take this a step further and provide total relief to qualifying students.
To qualify, you must be a student with an approved borrower defense claim. Borrower Defense is a program designed to forgive federal direct loans for students whose schools misled them or engaged in certain misconduct. To potentially receive repayment, students have to demonstrate that the school violated state laws related to loans or other educational services. These students will receive total discharges of borrower related federal student loans, reimbursements of the amount paid on the loan, requests to credit bureaus to remove related negative credit reporting, and potential reinstatement of federal student aid eligibility.
“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” said Secretary of Education Miguel Cardona. “A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt.”
Along with this cancellation, Biden passed a temporary tax exemption on both federal and private students loan forgiveness as part of the latest stimulus package.
These moves have been praised by Democratic lawmakers as the beginning of student loan cancellation. It comes as many are pushing for cancellation of debts ranging in amounts from $10,000 to $50,000.
Student loan forgiveness on the surface seems to be an overall good. Researchers say that cancelled student loan debt can provide a major boost to the economy. It can allow students to start their lives quicker and invest in long term purchases like housing. Ultimately, they claim it will increase spending overall to stimulate the economy.
As a college student I definitely understand the pressure that loans bring. And they certainly aren’t something I enjoy spending money on. Like many students across the country, I often wonder how I am going to pay off my loans when I graduate. But cancelling loans will not relieve the pressure that students like me face.
There is no method where cancelling student loan debt does not include raised taxes.The federal government must get the money to pay for loans from somewhere.
Unfortunately, that “somewhere”, by default, is always the American taxpayer.
Paying for 72,000 students is already pretty pricey. But that’s only a portion of the current amount of debtors. The bill for all the students in the country comes close to $1.6 trillion.
Charging older generations of Americans for the debts of today’s youth is not fair to anyone. The majority of the people that will be hurt by increasing taxes are the middle and lower classes who in many cases don’t even have a bachelor’s degree.
Conversely, those who will benefit the most from student loan relief are those who come from wealthy backgrounds. Since they tend to choose the most expensive schools to study at, they borrow more.
The wealthy benefitting from a plan that’s meant to provide relief to those of lower economic status seems counterproductive. The entire point is to alleviate the burden that recent graduates are under to pay off massive debts with entry level salaries.
If exuberant amounts of student loan relief is not the answer, then what is? One obvious option; don’t borrow so much.
This may seem impossible, but it can be done by not attending the most expensive school possible. Going to a more cost-effective institution means students borrow less.
Many students choose to go to the top universities because they think it will give them an advantage. These schools are portrayed as the path to the greatest success in life, but it’s more about you as a student than the school you attend.You can get just as good of an education, if not better, at lesser known schools and pay half the price.
Cancelling student loans for everyone is riddled with good intentions, but ultimately it will hurt those it is intended to help even more than their loans will. If those who are pushing this solution wanted to find the best possible solution to relieving the burden students are feeling, it would be best to start considering viable alternatives.