For many people, attending school can be a life-changing opportunity. However, this opportunity is not created equally as many individuals and families cannot afford to put themselves or their loved ones through college due to the cost. With seemingly every product and service costing more these days, it is hard to ignore the price tag of a college degree as well. According to educationdata.org, the average annual tuition and fees at a 4-year public school has increased from roughly $3,501 in 2000 to $9,349 in 2020. With an increased emphasis on obtaining a degree and access to student loans over the past 20 years, it shouldn’t be a surprise that Americans collectively hold more than $1.5 trillion in federal student loans (Krause). According to the College Board, “Borrowers who graduated with bachelor’s degrees in 2018 left school owing an average of about $29,000” (Krause).
Our government’s level of debt has been a hot topic recently, and with student loans accounting for the second largest category of debt behind mortgages, the argument of whether or not student loan debt should be forgiven has yet again made its way to the front of headlines. Below are two summarized arguments; one for and one against forgiving all federal student debt.
Suzanne Kahn, deputy director of the Great Democracy Initiative and Education Program at the Roosevelt Institute, makes the case for debt cancellation. Besides delaying the cost of a home purchase or marriage, student loans may put a significant strain on individuals’ retirement savings as they can’t take full advantage of the powers of time and compounding to increase their retirement nest eggs. Additionally, economists have argued that canceling all federal student loans debt could significantly boost real GDP while lowering unemployment rates incrementally over the next 10 years (Krause). Overall, Suzanne’s argument for the cancellation of student debt would be economic growth, a narrowed racial inequality, and a correction of policy mistakes that have limited an entire generation’s ability to build wealth (Krause).
Jason Delisle, a resident fellow at the American Enterprise Institute, argues against forgiving federal student loan debt. If access to student loans wasn’t as easy it was today, only a small number of people would be financially able to obtain a degree. While not all innovation and change comes from college graduates, a degree is often the foundation for career advancement along with the breakthrough of ideas leading to successful businesses. And when this happens, Jason argues that people are able to repay their loans consistently over time. A Brookings Institution study in 2014 found “student-loan payments tend to take up less than 6% of a borrower’s earnings, an amount that has been remarkably stable since the mid-1990s" (Krause). In short, Jason argues against overhauling 100% of student loan debt and instead for the restructuring of debt repayment programs for those who need the assistance.
Millions of Americans are currently making student loan payments as they attempt to get off the ground in the professional world. In the event all debt is canceled, would our country benefit as much as Suzanne thinks? That is the argument economists, politicians, legislative bodies, and those alike are debating. For more information, explore the links listed below.
References:
Hanson, M. (2022, January 9). Average cost of college over time: Yearly tuition since 1970. Education Data Initiative. Retrieved March 21, 2022, from https://educationdata.org/average-cost-of-college-by-year#:~:text=In%20the%201999%2D2000%20academic,(65.2%25%20with%20inflation).
Krause, J. (2020, May 26). Should we forgive all federal student-loan debt? The Wall Street Journal. Retrieved March 21, 2022, from https://www.wsj.com/articles/should-we-forgive-all-federal-student-loan-debt-11590525387?mod=markets_minor_pos10