Why Its Wrong For My Student Loans To Be Forgiven
Joe Biden held a press conference at the White House last Wednesday to discuss his plan for student loan forgiveness. I will have $10,000 of loans forgiven, and it’s wrong. What students need more than a hand out is a cost-efficient college system and a thriving economy to join once they graduate.
My initial response to Biden’s announcement was excitement. I am one of 20 million borrowers expected to have their remaining debt completely canceled. The money I have put aside for loan repayments is suddenly accessible again. This is the sentiment Biden was hoping for, and the one that contributed to a 4% spike in his approval rating since July.
However, fear comes after the initial thrill. It’s the same sinking feeling when I see $5 gas prices, skyrocketing grocery bills, and elevated interest rates. Although intended to help, this forgiveness plan may further choke the economy and hinder all Americans.
The cancellation will cost taxpayers around $500 billion, and while some argue the expense won’t hurt the economy, it will contribute to the existing problem. In his public address last Wednesday, Biden said, “There is plenty of cumulative deficit reduction to pay for the programs several times over.” While the deficit has lowered since its record highs in 2020 and 2021, it doesn’t mean America has more money. The U.S. is still overspending trillions of dollars after surpassing 3.1 trillion dollars in 2020. Even if the deficit lowered to nothing, the national debt would still total over $32 trillion. Even if this doesn’t seem urgent, the $393.5 billion of taxpayer dollars spent servicing it annually is. Just because we are used to more overspending doesn’t mean we should increase current spending.
Biden’s loan plan could also exacerbate the national labor shortage. People aged 20 to 24 have some of the largest declines in employment since the pandemic started. On top of stimulus checks and other government incentives, this age group is less likely than ever to work a minimum wage job to get through school. This labor shortage, along with a sudden increase in demand for goods, is a foundational cause of the inflation burdening us today. Handing out more money will not solve this issue.
Furthermore, Biden’s attempts to address the root of the problem aren’t promising. The annual “watch list” proposed by the Department of Education is an attempt to shame schools from the top down. Schools are incentivized to overbuild campus amenities and add costs knowing the readily available subsidized student loans. A finger wagging from the government is unlikely to change this. Requiring schools to draft “institutional improvement plans” also implies more government costs and a weak, artificial incentive for schools to lower prices.
I have looked at a tuition bill and felt like I was drowning. I have wondered how my family would make ends meet. I have experienced living insecurities exacerbated by tuition payments, and I am grateful for the relief. However, what I hope for America is an efficient college system that allows students to pay their way. I want myself and others to feel like they can do anything if they work hard enough, and relish the benefits of our labor. We don’t need to run up the the federal government’s tab.