May 31, 2022
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Student debt is one of the important issues facing Americans today. More than 43 million people in the United States owe money to the federal government which is about 92% of all student debt. This equals to about $1.61 trillion.[i]This is a tremendous amount of money that equates to about $37,440 per person. There have recently been many calls by progressives within the Democratic caucus asking for the government to forgive different amounts of debt.[ii] Senator Elizabeth Warren is asking for $50,000 to be forgiven per person while President Joe Biden promised to forgive $10,000 during his presidential campaign.[iii] These requests, while noble, would be unfair to millions of people who have paid off student loans in the past while also setting a dangerous precedent for the future.
A mass forgiveness of student debt in any amount would be unfair to many and would send the wrong message about student debt. For years, Americans have borrowed money with the belief that higher education would provide them with a pathway to pay back that money and also make much more over their lifetime. This can still be possible if their educational choices lead to a profitable career. However, a mass forgiveness of student debt even of $10,000 would send the message that Americans don’t have to work to pay off their loans, they can just wait and have them forgiven by the government. It would set a precedent for future generations that the government will bail out people with loans. It could also lead to people believing that since the government will forgive some or all of their loans, they should try to get higher education when that would be unwise financially. College is not for everyone and there any other options outside of college that can provide lucrative careers like trade schools or vocational training. It would also be extremely unfair to older generations who had to work and work to pay off their student loans so that they can have the opportunity to better their life. While tuition has increased over the past few years, so have the number of scholarships and grant programs. These programs attempt to compensate for the increased tuition that many students face. Many people did not have this opportunity that the government is considering currently. This opportunity could have helped millions of people and who will never be able to get their money which they spent on student loans.
The government already provides some ways of debt forgiveness with the Public Service Loan Forgiveness (PSLF).[iv] This program allows people who work a full-time job for the federal, state, or local government, or for a non-profit organization to have their debt forgiven after 120 payments after graduating. There is also a program for teachers called Teacher Loan Forgiveness where teachers have to work for five consecutive years at a low-income school or educational service agency, they can have up to $17,500 of their debt forgiven.[v] These are productive programs which incentivize people who want to get a degree, or some form a higher education, a chance to have debt forgiven in exchange for public service and jobs that are necessary for the country. Another program is ROTC programs at school.[vi] This allows students to prepare to be officers in the U.S. military while giving them scholarships to pay for college. Students have to sign contracts saying they will enter the military after college in exchange for scholarships. These programs are extremely helpful to students who want to enter the military after school and to students who are need of money to pay for school. These programs should continue and be expanded to include other jobs that benefit the government and the country like nurses or public health jobs. Since the government is the entity forgiving the loans, they should receive the work that forgives the loans. The government can continue to expand on these programs instead of adopting a mass forgiveness policy. The government should also expand its advertising and messaging around these programs to the general public to inform them of this opportunity to have loans forgiven. Locating information about these programs proved difficult, even with my resources and access to a personal laptop and internet connection. The lack of information could further extend to people who don’t have access to these things. This can be done through Congress, who can instruct the Department of Education to establish a new contract to outsource the advertising and marketing.[vii]
One part of this equation is the loans that many people consider student aid. These loans are not student aid and should not be treated as such. When people are applying for student aid through the government, they are directed to a website called Federal Student Aid (FSA). This where students can complete the Free Application for Federal Student Aid (FAFSA). When people put all of their information and hit the enter button, they are sent their student aid package which might include grants and scholarships but could also include various types of loans. These loans should not be considered student aid. This is false advertising that makes people, especially young students, believe that these loans are a part of student aid. This falls upon Congress to pass legislation that will help the Consumer Financial Protection Bureau increase the warnings and safety measures to protect against loans that might not be in their best interest. The Bureau could create safety labels for the FSA website that would help inform people of the dangers of borrowing money. Another possible solution is to include a calculator that shows the person how long till they are debt free. This would help protect against people taking out loans for higher education when they are not fiscally ready.
Mass forgiveness is not the solution to the student debt crisis. This would be extremely unfair to past generations who had student loans while also creating a dangerous precedent for the future. In place of mass forgiveness, the government and specifically Congress should expand its targeted debt forgiveness that incentivizes people to takes jobs that benefit the country and the government. This would allow the amount of student debt to decrease while providing necessary jobs and functions that benefit the country. Congress should also provide money for -the Consumer Financial Protection Bureau to help safeguard against false advertising for students. These combined solutions would help drive the debt down while not providing a one size fits all solution.
[i] “A Look at the Shocking Student Loan Debt Statistics for 2022.” Student Loan Hero, 6 Apr. 2022, https://studentloanhero.com/student-loan-debt-statistics/#:~:text=Nearly%20%241.75%20trillion%20in%20total,of%20the%20crisis%20relief%20measures.
[ii] Sheffey, Ayelet. “Biden Campaigned on Cancelling and Reforming Student Debt. A Year into His Presidency, Here’s Where Those Promises Stand.” Business Insider, Business Insider, 20 Jan. 2022, https://www.businessinsider.com/student-loan-debt-forgiveness-biden-campaign-promises-education-department-2021-6.
[iii] Sheffey, Ayelet. “Canceling $50,000 in Student Debt Would Help Americans Whose ‘Only Sin Was to Be Born into a Family Who Couldn’t Write a Check for Them to Go to School,’ Elizabeth Warren Says.” Business Insider, Business Insider, 14 Mar. 2022, https://www.businessinsider.com/cancel-student-loan-debt-elizabeth-warren-only-sin-check-biden-2022-3.
[iv] Fontinelle, Amy. “Debt Forgiveness: Escape Your Student Loans.” Investopedia, Investopedia, 9 Apr. 2022, https://www.investopedia.com/articles/personal-finance/051214/debt-forgiveness-how-get-out-paying-your-student-loans.asp#:~:text=Public%20Service%20Loan%20Forgiveness%20(PSLF,to%20be%20consecutive%2C%20to%20qualify.
[v] “Teacher Loan Forgiveness.” Federal Student Aid, https://studentaid.gov/manage-loans/forgiveness-cancellation/teacher.
[vi] What ROTC Programs Are and How They Work | Best Colleges … https://www.usnews.com/education/best-colleges/what-rotc-programs-are-and-how-they-work.
[vii] Congress’s Authority to Influence and Control Executive … https://sgp.fas.org/crs/misc/R45442.pdf.
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