OP-ED: Need for a long-term solution to the problem of student debt | Op-Ed

Student debt is a growing problem, rising from $ 250 billion in 2004 to over $ 1.5 trillion today. President Biden has claimed he is ready to write off $ 10,000 in student debt, while more progressive Democrats (Senators Elizabeth Warren and Bernie Sanders, for example) want to write off up to $ 50,000 in student debt. . This is a complex problem that needs a solution, as debt not only affects people who have it, but reduces their ability to drive economic growth, which hurts the rest of us.

People against debt cancellation claim it’s expensive, so it’s fiscally irresponsible. People who will not benefit personally do not see why their tax dollars should support something they will never use. Some people who have paid off their student debt feel that it is unfair that those who come after them do not have this burden. These arguments are not particularly strong; recent years have proven that the budget deficit is not the problem critics initially thought it would be; your taxes will often support things you will never use, and if we all wanted people to suffer because we did, society would never improve.

A stronger argument against debt relief is that it is regressive; those who benefit the most are those who spent the most on education, and they will end up being richer than most of the people whose tax dollars pay off their loans. Why should a Walmart cashier’s taxpayer money help an Ivy League graduate reduce debt? This is a fair question, but also a misleading one. People who attend the more elite schools often come from families wealthy enough to pay their fees, or the schools are wealthy enough to help non-wealthy students, so most elite college graduates don’t have hefty fees. debts. The most indebted students tend to come from the less elitist schools: students at Drexel University, Maine Maritime Academy, Detroit Mercy, and Alabama State are the most indebted (Ivy League students are among lowest). Black students have a much higher debt burden than white students because white families have more wealth to spend on education, so reducing student debt would reduce part of the wealth gap between students. races.

Of course, the people who struggle the most are those who took on debt to attend college but didn’t graduate (nearly 40% of borrowers). They have the worst of both worlds; high debt without a degree to help them get better paying jobs. Students at many for-profit schools are also struggling, as many of their promises of paid jobs after graduation fail to materialize.

Some critics of loan cancellation argue that students should be held accountable; they should have known that the promises of a for-profit college were too good to be true, or that their failure to graduate was their fault, so they should learn from the consequences. But that’s a lot to ask of an 18-year-old. Anyone who has helped a high school student navigate the college selection process knows that to expect them to make a rational college choice based on their job prospects four years later, and decide how many The money he can borrow based on his ability to make post-graduation payments when most live at home and have never had to pay for living expenses, knows this to be unrealistic. And most students who fail to complete college don’t do so because they partied too much and failed their exams, but rather because they couldn’t keep up financially (often while still working on time. full at low-paying jobs during school) and just couldn’t keep going.

Excessive student debt is not only a problem for individual students, it also causes bigger economic problems. This generation of students is less wealthy than their parents at their age. Over-indebted youth find it difficult to buy a house or other major purchases, and may be more reluctant to marry and start a family. Graduates with high monthly payments need to focus on making money, which limits the number of graduates who can work in lower paying fields, such as social work, or who can live and work in areas in economic difficulty. Students in rural areas are less likely to return after graduation because they need the higher salaries offered in metropolitan areas to be able to pay off their debts.

Another problem that people with student debt face is that because of interest and penalties, they can make payments for years and owe more than they originally had. Many students struggle economically upon graduation and may obtain loan forbearance, allowing them to reduce or stop their payments for a period of time without defaulting, but interest charges add up. , which adds to their overall debt. And unlike most debt, student loans cannot be canceled in bankruptcy.

Student debt is actually caused by another problem, the high price of college education, so any long-term solution must address this. In the short term, paying off the first $ 10,000 of undergraduate student debt should be the minimum ($ 25,000 would be better), as it will help everyone with college debt, and it will be especially appreciated by those with the least amount. of resources. The remaining debt, I think, should be consolidated with reduced interest charges (say 1% above inflation) and payments limited to a percentage of income until the debt is paid off. University attendance should help students thrive, not be a debt trap.

Kent James holds a PhD in History and Politics from Carnegie Mellon University and is an Assistant in the History Department at Washington & Jefferson College.

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