If you have student debt, you are far from alone in the United States, roughly 45 million
Americans collectively over one point seven trillion dollars in student debt.
And many people are hoping for forgiveness because simply put, the student debt crisis has
gotten out of control.
In the past, the US used to highly subsidize higher education, which gave people a chance to
work their way through school.
But today, that's almost impossible.
Today, a college in working a minimum wage job 40 hours a week would make about fifteen thousand
dollars. But during the 2019-2020 academic year, college costs averaged about
30,000 dollars.
Here's what's being proposed and what the controversies are.
This is Make It Explores.
In the past 10 years, college costs have increased by more than 16 percent and student debt has
increased by nearly 100 percent, which means that roughly 70 percent of colleges today take
out debt to pay for their education.
But here's the frustrating thing, those people who take out debt have very rational reasons for
taking out loans. Automation is rapidly eliminating jobs for those without a college
degree, and college graduates earn 80 percent more than those without a college degree.
The gap in average life expectancy between those with and without a college degree is growing
Prior to the pandemic.
Nearly one in four student loan borrowers are behind on their loans, and one in five was in
default, which is important, an important distinction because the consequences of default
are so devastating.
Approximately one hundred and sixty five billion worth of federally managed student loans are
currently considered in default, which means someone hasn't been able to make a payment in 270
days. And that total may increase once the federal pause on student loans expires.
Now, many legislators appear more serious about student loan forgiveness than ever before.
There are currently two options for student debt forgiveness being discussed.
House and Senate Democrats want Biden to broadly forgive up to fifty thousand dollars of federal
student debt through executive order.
Biden says he's in favor of ten thousand dollars in student debt with some conditions and that he
wants Congress to do it. And the battle between these two options has created some disagreements.
The first disagreement is about whether Biden has the power to cancel debt through executive order
in the first place.
President Biden absolutely has the authority to cancel student debt.
This is the same authority that was used by the Trump administration last year to waive
interest in past payments for federal borrowers who had federally held loans.
He has the authority to direct the secretary of education to at least cancel all of the
student debt held by the federal government, which is about 90 percent of the student debt out
there.
But then there's the question of who's in debt forgiveness would benefit.
There are some economists who say that people with ten thousand dollars of student debt are
actually the most likely to go into default.
They tend to be more in the category of a student who started at a community college, something
some unforeseen event occurred in their life.
They didn't graduate.
Certainly there are students who borrowed 50,000 dollars to go to, you know, a four year college or
whatever and are struggling to pay it back.
But there's plenty of students who borrowed that 50,000 dollars who are going to get that money
back.
We would see a significant number of borrowers in default, have their entire loan balances canceled
at ten thousand dollars of student loan debt.
It would be about two thirds of borrowers in default would have their loan canceled.
However, at fifty thousand dollars, between 93 percent of student loan borrowers in default have
their loans canceled.
White students make up the majority of college students and thus borrowers.
But Black students often take out larger amounts of student debt and are more likely to have
trouble repaying their loans after graduation.
The Brookings Institution estimates that on average, Black college graduates of 52,000 dollars
in student debt while White college graduates owecloser to twenty eight thousand.
African-American borrowers in particular have to take on more debt in order to get an education.
And they often struggle more to repay those loans.
There's a study out of Brandeis that showed that 20 years into repayment, the typical black
borrower still owed 95 percent of the original balance, while the typical white
borrower only four percent of their original balance.
And then there was the controversy when Biden claimed that fifty thousand dollars of debt
forgiveness would lead to forgiving, quote, billions of dollars of debt for people who have
gone to Harvard and Yale and Penn.
And this is misleading.
Just point, five percent of college kids attend Ivy League schools like these.
And many of the students who attend these schools don't need to take out loans.
But what I think Biden is getting at is the sense of what's fair.
Is it fair for people who got the chance to go to college, a chance many Americans don't get, to
have their debts forgiven? And what about the people who skip college, but could still use a
boost?
The vast majority of households with student loan debt are, you know, families making less than one
hundred thousand dollars. So it's true that there are some folks who would benefit who are higher
income. But what we would see is the vast majority of people who would really, truly
benefit are low and middle income student loan borrowers.
There have been several times in the history of this country where direct benefits have flown from
the federal government to help people who are struggling or to help people go wealth, right?
And land houses, education benefits, GI Bill, all of those
things have happened before.
This is not something new or unique that we are asking for is just something that will actually
help so many people of color in a way that none of these other programs did.
It's a very good investment.
Sometimes the right way to finance a very good investment is through debt.
That doesn't mean it should be excessive debt.
That doesn't mean it should be to the point where it's placing such a heavy burden on people that
they're unwilling to take it up.
System itself is unsustainable.
A debt financed model of higher education is unsustainable.
But, you know, there's nothing wrong with small amounts of debt if those small amounts of debt are
contributing to a quality education, that can provide them with the economic returns that
college typically does.
On the campaign trail, President Biden talked about debt cancelation.
All we're asking is keep your promise.
Hold up your end of the bargain.
And this is important to so many communities, so many voters.
Here's the thing:
The student debt crisis isn't fair either.
Low income students, middle income students and Black students have to borrow more money for the
same education. That isn't fair.
And student debt is one of the only types of debt that stays with you for life.
That isn't fair either.
So I think the question is less about is it fair?
And rather, do we actually think student debt is the smartest way for us to fund our country's
future? And that is still up for debate.