Is Universal Student Loan Forgiveness a Good Idea?
In the United States, the combined student loan debt has climbed to an astonishing one trillion dollars. The average graduate leaves with at least $30,000 in debt, while thousands of students owe $200,000 or more. Paying back student loans for the next few decades has become so common that it’s practically a rite of passage.
In recent years, politicians and commentators have floated the idea of mass student loan forgiveness. People in certain job fields are eligible for student loan forgiveness to an extent. However, some have proposed legislation that would wipe out at least $10,000 for every student. Some have suggested wiping out $50,000 for every student while others have suggested cancelling student debt altogether.
This idea is fairly popular but not without its controversies. While some have argued that canceling student debt would help graduates get on top of their finances, others have claimed that canceling student debt would be unfair to the students who have already paid off their loans. Either way, the student loan crisis shows no signs of stopping. The United States currently has over 40 million student loan borrowers, with thousands of new students taking on debt every year.
Who Would Benefit Most from Student Loan Forgiveness?
The average college student in the United States graduates with tens of thousands–if not hundreds of thousands–of dollars in debt. Some students land a high-paying job that allows them to pay off their loans quickly. Unfortunately, many students aren’t that lucky. Interest seems to accumulate nearly as quickly as the debt itself–and the longer it takes to pay off the loan, the more the interest accrues. A student could pay off their interest for years without making a dent in the original loan.
Even forgiving a relatively small amount like $10,000 could help students make progress on paying back their loans. For some, $10,000 or $50,000 would be enough to wipe out their student loans altogether. Complete debt cancellation would leave students 100% free of debt, making it easier for them to pay rent and utilities and start saving up to buy a house. With mass student loan forgiveness, thousands of students would be free of the cloud of debt that’s hung over their heads for years.
Forgiving student loan debt could also stimulate the economy by freeing up people’s finances and leaving them with more spending money. For thousands of people, student loans make up a large percentage of their monthly bills. Student loan forgiveness would change that.
Who Would Not Benefit from Student Loan Forgiveness?
On the other side of the coin, thousands of students have managed to pay off their student loan debt by scrimping and saving for years. Others worked hard to apply for scholarships while they were in high school so they could graduate with as little debt as possible. Taking out student loans has also helped some students learn responsibility and start building their credit scores after college.
Some have argued that student loan forgiveness would be unfair to the students who already paid off their loans. For example, if a student took out $10,000 in loans and paid them back in a few years, they’re not going to get that money back. If student loan forgiveness wiped out another student’s $10,000 debt, they’d have an advantage over the first student because they never had to pay back their loans.
Ultimately, student loans have been both a gift and a curse for thousands of students in the United States. Student loans have helped people go to college and learn how to manage money, but they’ve also created a debt crisis that might not be solved in this generation’s lifetime.