Is student loan forgiveness necessary?
Imagine if student loan forgiveness gave those with $50,000 or less in student loan debt a free pass, allowing them to avoid having to pay it back. Since adding student loan forgiveness to the U.S.’s already high national debt would cost nearly $1 trillion, the forgiveness program is still pending. There are clear pros and cons of forgiving student loan debt.
Pros for Loan Forgiveness:
Students truly are burdened with debt; student loan debt alone is nearly $2 trillion.
Due to excess student loans, 40% of Americans are unable to save for retirement.
The emotional exhaustion, low quality of life, depression and burnout caused by excessive debt would be rectified.
Cons for Loan Forgiveness:
The U.S. debt ceiling is already extremely high at over $31 trillion.
Loan forgiveness will help the wealthy the most since student loans are disproportionately carried by wealthier families.
Adequate proof is unavailable that reducing student loan debt would reduce the economic gap between low and high-income populations.
Debt is creating exhaustion, low quality of life, depression and burnout for more Americans than ever before as student loan debt has skyrocketed, nearly tripling in the last 15 years.
Even students going into medical professions (typically a student group from wealthier backgrounds) are experiencing incredible mental despair over accumulating student loan debt; this is according to a medical student survey titled “Quality of life, burnout, educational debt, and medical knowledge among internal medicine residents” published by JAMA.
“The average medical school graduate owes $250,990 in total student loan debt,” according to the Education Data Initiative. Even though a U.S. physician makes upwards of $260,000 annually, a physician would still have to pay back an entire year’s salary to back their loans. That may sound small to someone making minimum wage, but think about it this way: how easy would it be for you to save one entire year of your income? If the answer is one decade that means the borrower is burdened for about 1/3 of their working career (10 years is about 1/3 or more of the years most adults work). On top of this, the physician must also go into debt if they choose to purchase or build their own practice.
Adam Looney, executive director of the Marriner S. Eccles Institute at the University of Utah and a senior fellow at Brooking Institution (a nonprofit public policy research organization) is a U.S. tax policy researcher who has been called to testify in Congress by members of both parties on tax and student loan policy. His research has influenced the development of federal tax policies and education reforms. Looney’s report explains that people want to have student loans forgiven because student loans “contribute to racial and socioeconomic wealth gaps.” However, Looney suggests there are problems with using financial aid forgiveness to increase opportunities for racial groups and lower socioeconomic groups: He argues that loan forgiveness will help the wealthy the most.
Looney also argues that it is not the student loans that are creating or sustaining the economic gap between low-income and wealthy Americans. He believes that student loans do not have that large of a contribution to wealth gaps.
Looney has a genuine concern for the loan forgiveness movement. His solution is to do the following:
- Improve the student loan forgiveness programs we already have for low-income households
- Improve the special income-based repayment programs we already have for low-income households
- Improve the “means-tested” grant and loan aid systems that promote access and school completion.
Looney’s report explains that people want to have student loans forgiven because student loans “contribute to racial and socioeconomic wealth gaps.” However, Looney suggests there are problems with using financial aid forgiveness to increase opportunities for racial groups and lower socioeconomic groups because not enough data exists to prove this will happen.
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