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Education is one of the essential tools an individual can acquire. It gives people the knowledge and skills they need to get a job, make a living, and better their lives. President Joe Biden believes obtaining a college degree should be a ticket into the middle class. Nevertheless, for many individuals, the burden of student loan payments will prevent them from achieving this objective. In the fiscal years 2020 and 2021, his suggested proposal would cancel at least $10,000 of outstanding federal student loan debt for individuals and families in the United States earning less than $125,000 yearly or less than $250,000 collectively. This situation may imply a loss of up to $20,000 in Pell Grants, which are used to pay for higher education, for families in the United States earning the same amount of money. As such, federal student loan forgiveness is bad as it disproportionately benefits students from well-off families. It would also be a band-aid solution to the much deeper problem of rising tuition fees.
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Who Would Benefit Most From Loan Forgiveness Programs
College graduates who are already financially secure or wealthy would benefit more from the forgiveness of student loans than other graduates. Graduates with higher salaries profit the most from any plan that wipes out all of their debts up to a predetermined amount. In addition, while they borrow at the same rate as students from the most impoverished homes, families earning more than $114,000 annually borrow nearly twice as much as their counterparts (Ayers, 2020). People with advanced degrees, such as lawyers, doctors, and other professionals, owe 40% of the total student debt in the country. Also, roughly half of all outstanding student loan debt is held by the wealthiest quarter of households, which accounts for 25% of all families. People who already have a lot of money are typically eligible for forgiveness for their student loans.
Student debt forgiveness is only available to individuals who have attended an accredited institution or university. Most children raised in the wealthiest families graduate from college by the time they are 22 years old. At that age, just 35% of children who grew up in low-income households are the ones that have the most significant total amount of student loan debt. People who have completed their bachelor’s degrees earn an average of about $500,000 more throughout their lifetimes than people who have just completed their high school education. Consequently, according to Looney (2022), just 12% of student debt is owned by the lowest 25% of incomes, but borrowers hold around 34% of overall debt in the highest quartile of the income distribution.
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According to Kuchar (2022), students who borrowed money to pursue a master’s or doctorate are responsible for 56% of all student loan debt. There is a correlation between having a master’s degree or doctorate and having greater wages. People with just a high school education earn less money than those who have earned a master’s degree throughout their lives. Furthermore, the majority of the $300 billion to $1.9 trillion in additional taxes would be shouldered by working-class members who did not complete their education at a postsecondary institution. As such, this would be absolutely unfair for them to carry a burden they did not play a part in creating.
Forgiving Student Loans Would Be a Band-Aid Solution to the Problem of Tuition Fees
The problem of ever-increasing educational costs is far more widespread than just student loan debt, and forgiving that debt would not be a viable long-term solution. There is still a substantial amount of student loan debt in the United States, although several programs are available to forgive student loans. After completing 120 payments on a loan, those who serve in positions of public service may have the option of having their debts canceled. After five years of service, teachers who qualify for debt forgiveness may have up to $17,500 of their student loans canceled. The amount of student loan debt owed by a nurse may be forgiven, up to 60%, and then another 25%. After 20 to 25 years of payments determined by one’s income, loans may be repaid via the use of systems known as income-driven repayment (IDR) (Plunkett, 2022). Members of the armed forces may be eligible for the cancellation of all or part of their student debt. Also, there are different ways by which doctors and lawyers might seek debt forgiveness. In addition, the members of AmeriCorps have a chance of having all their outstanding debts canceled in exchange for their service.
The proposals for free or debt-free higher education have more weight than those for the cancellation of student loans since the former attend to the source of the problem rather than just the symptoms of it. During his remarks on student loans, President Joe Biden made a point to emphasize how ridiculous it would be to prolong the moratorium on debt repayments for any longer than necessary (Goldsmith, 2021). Since the ongoing embargo, the notion that it is pointless for families to save money for higher education because they can always take out student loans and have the government erase the debt continues to spread. It would be a poor financial decision that sends the incorrect message about the value of saving money to write off all the debt from student loans. Despite this, Congress and the President might do some things to lessen the overwhelming weight of student debt.
If people were not forced to take on so much debt in the first place, the economy would be better off in the long run. This statement reflects the factor that would be most beneficial. The United States has to find a long-term solution to the expensive college fees that push students to take out loans in the first place, rather than a short-term fix that will not prevent the next generation from amassing the same amount of debt that the current one has.
- Ayers, E. (2020, December 3). I sold bibles to keep my student debt low. Turns out, I didn’t even need that degree. USA TODAY. https://www.usatoday.com/story/opinion/voices/2020/12/03/student-loan-debt-forgiveness-joe-biden-column/3793204001/
- Goldsmith, J. (2021, October 15). The anatomy of a screw up: The Biden eviction moratorium saga. Lawfare. https://www.lawfareblog.com/anatomy-screw-biden-eviction-moratorium-saga
- Kuchar, K. (2022, March 11). Who owes the most student loan debt? Saving for College. https://www.savingforcollege.com/article/who-owes-the-most-student-loan-debt
- Looney, A. (2022, March 8). How progressive is Senator Elizabeth Warren’s loan forgiveness proposal? Brookings. https://www.brookings.edu/blog/up-front/2019/04/24/how-progressive-is-senator-elizabeth-warrens-loan-forgiveness-proposal/
- Plunkett, T. (2022, February 8). Redesigned income-driven repayment plans could help struggling student loan borrowers. The Pew Charitable Trusts. https://www.pewtrusts.org/en/research-and-analysis/reports/2022/02/redesigned-income-driven-repayment-plans-could-help-struggling-student-loan-borrowers