State your case: Forgiving student loans
The case for forgiving student loans:
Earning a postsecondary degree or certificate these days is all but necessary to find a decent career, but it should not bankrupt students in the process.
According to a report by the National Student Clearinghouse Research Center, 17.5 million graduate and undergraduate students enrolled during the Spring of 2019. Over that same period, the U.S. racked up $1.4 trillion in student loan debt, according to data provided by the credit reporting company Experian.
In the state of Utah, individual debt is $31,671 per person, up 25 percent from five years ago. That may not seem like much compared to the cost of a car, but the cost to pay off the loans over 10 years with the average interest rate of 5.8 percent brings the total to around 42 grand. Mind you, this is just the average and those seeking degrees beyond a bachelor’s will owe much more: just ask your doctor.
This is where loan forgiveness comes in to save the day. Not only do these programs relieve the burden of student debt, they also incentivize hard work in school and allow students to follow through with career aspirations.
While implementing such policy in the U.S. seems like a no-brainer, many people think loan forgiveness amounts to taking money from taxpayers and giving students a retroactively free ride in school. Except that isn’t the full story.
It is fair to feel fleeced as a person whose taxes go towards tuition costs that are not their own. However, loan forgiveness programs are merit-based, in that they award people for successfully completing their schooling and going on to find a career within their specialized field.
Not only are qualifying graduates working to earn forgiveness, they are also paying off their debt in the interim. For teachers, having some or most of their debt expunged requires a five-year gap between the time they start working until they become eligible. That amounts to roughly half the amount they owe, if they set up the aforementioned 10-year payment plan.
The formula then becomes simple: graduate from school, get a job within your field and stick with it for a few years.
Perhaps one of the most tragic consequences when it comes to student loans is the rut it forces students to graduate in and the potential for delaying certain life events. The decline in homeownership is linked to millennials with student debt and many are holding off on getting married and starting a family due to their financial pitfalls.
In an ideal world, college would be affordable enough to enable students to work part-time or full-time jobs to pay for tuition. Unfortunately, postsecondary education is not getting any cheaper and jobs available to the average student do not pay well enough to avoid taking out loans. It is imperative to continue funding programs that stimulate the workforce by ensuring students have a path to prosperity without the obstacle of debt to hold them back for the first 10-plus years of their careers.
— Scott Froehlich
The case against:
The democratic debates have renewed discussions about several hot-button issues, including the idea of student loan forgiveness. Forgiving student loans is a common proposal, especially within the campaigns of presidential hopefuls Bernie Sanders and Elizabeth Warren. These plans are a lot easier said than done, however, and the promises politicians make often have unintended consequences. For example, both Warren and Sanders’ proposals would require trillions of dollars in order to pay off debt that many taxpayers never agreed to shoulder. Because of this, the proposal to remove student loan debt promotes an enormous amount of inequality.
The way that these plans are set up is unfair. Let’s consider those who get through school debt free. They spend copious amounts of time working in order to pay for tuition and are likely to be making constant sacrifices so they can make ends meet. Ten years after they complete school, debt free, they have to pay tax money on someone else’s student loans. These tax consequences would apply to all loans that were forgiven under PAYE, REPAYE, IBR and ICR, which are all basically pay as you earn programs. Americans can expect “a student loan forgiveness ‘tax bomb’ of between 10% and 37% of the amount forgiven, depending upon your taxable income after loan forgiveness.” In other words, if student loans are forgiven, every American citizen will have to pay for student loans, regardless of whether or not they have student debt or even went to college. “Even Elizabeth Warren admits her plans would cost $1.2 trillion over ten years — a tab taxpayers are expected to handle on top of everything else.” By asking for student loan forgiveness, we are “asking taxpayers to cover individual decisions regardless of how good or bad they are.” Forgiving student loans fosters irresponsibility and creates a world that isn’t fair to those who avoid debt.
Getting student loans is not a bad thing. Receiving a higher education is becoming more and more important, and student loans have helped many people attend college. However, these are personal decisions, and they should carry personal consequences. That means paying off your debts yourself. People pay off their student loans all the time; it’s not impossible. Of course debt is hard to deal with and can be overwhelming, but that doesn’t justify a debt forgiveness program that punishes taxpayers for a decision that wasn’t theirs. You shouldn’t be required to pay off my student loans, and I shouldn’t be required to pay off yours. That’s not fair. I believe in equality, do you?
— Emily White
Both arguments make valid points. How about a compromise? Is there a candidate that is willing to slash student loan interest rates and put a cap on the tuition required for certain degrees?
The big problem with tuition caps is that the university’s just raise their fees. I started at a university in Georgia where ANY student that graduates high school with a 3.0 gpa gets a 90% scholarship to any GA university. Part of the law though limits university’s ability to raise tuition. Because if that my fees were $2000 a semester with tuition at $4000 a semester. The universities will still get money. It’s a VERY complicated issue and I’ve never heard a complete argument for it. Definitely not in politics. Finances and taxes are complicated issues, but in political discussions they ALWAYS over simplify to the point of misleading. I have taken thousands of dollars in student loans and as Emily said, that is something I’ve accepted to pay, but I have also watched people that I know go out and spend their “extra student loan money” because they have it. I watched someone buy 2 apple homepods because they had the student loan money. I think there should be some relief, but I do not think it is fair for me or anyone to pay for that persons loans. There are a lot of people who do that, and one of the big questions is whether paying for them is worth it to us. I’m probably ore likely to agree than someone who worked their way through school debt free.
These loans are predatory. The Founding Fathers called for uniform bankruptcy laws ahead of the power to raise an army and declare war. These have been taken away uniquely from student loans. Not only that: Statutes of limitations have been removed. So have Fair Debt Collection Practice Laws. So have Truth In Lending laws. All this, combined with a hugely vicious and costly collection regime have essentially weaponized these loans against the people.
In the absence of all of these consumer protections, it turns out that the government (ie the “taxpayer”) is NOT ONLY making a wild profit on these loans, it is even profiting on defaulted loans. This is a perverted fiscal incentive that is directly responsible for enabling the rise in college prices, and the exploding default rates that we are now seeing. This has become a big-government monstrosity that conservatives, especially, should be very concerned about.
At a MINIMUM, the bankruptcy rights that the Founders called for must be returned to the loans. Otherwise, they must all be forgiven. With a greater-than 50% default rate staring us in the face, and $100 Billion in interest being sucked out of the borrowers every year, this simply cannot be allowed to continue in a so-called free country.
When LBJ created the lending system in 1965, he declared that these loans would be “free of interest”. He would be shocked to see how these loans are now being used to conquer and enslave this country, the words of John Adams.
#S.1414, #HR.2648