Is student debt relief fair? 5 experts agree

During the campaign process, Joe Biden repeatedly pledged to take action to forgive at least $10,000 in student debt per borrower.

But frustration grew when his administration didn’t take immediate action to ease the financial burden on tens of millions of Americans — and progressive Democrats and other advocates called on Biden to forgive at least $50,000 in student debt per borrower.

The Washington Post on Friday reported that the Biden administration’s current plan is to forgive student debt at a rate of $10,000 per borrower, but cap the relief based on income.

The latest plan would limit debt relief to those who earned less than $150,000 in the previous year and $300,000 for married couples. The post reports with reference to people familiar with the discussions.

Biden had hoped to make an announcement over the weekend, according to the paper, but the mass shooting at an elementary school in Uvalde, Texas, forced the White House to change its schedule.

And it’s unknown if the administration will require payments on federal student loans to resume at the end of August, when the current moratorium is due to expire. The White House has been contacted for comment.

As Americans await an announcement that could ease a significant financial burden for many, news week Several Experts Asked: Is Student Loan Debt Forgiveness Fair?

Diana Angstgott-Roth, associate professor of economics at George Washington University and former chief economist at the Department of Labor

“The basic injustice is that the government gives unlimited large loans to students who cannot repay the money. Schools know this and will increase tuition income for 10 years and qualify for full loan forgiveness if they choose certain jobs.

“Forgiving student loans is unfair to students who have paid off their loans; unfair to students who have chosen cheaper community college options; unfair to taxpayers whose dollars are paying off the loans and who don’t have a college education; and it won’t save students from high debt.”

Jason Furman, Harvard economist and top economic adviser during the Obama administration

“The constant deferral of interest on student loans is pretty much the worst policy. It is costly, unjustified and has contributed to inflation.

“Specifically forgiving student loans while resuming interest payments for everyone else would be a less bad policy that would at least help the biggest beneficiaries of colleges and graduate schools pay the cost of the probably very beneficial investments they are making in higher education to have .”

Miles Kimball, economics professor at the University of Colorado

“Most Americans would view a lump sum on student loans as unfair to those who have made sacrifices to pay off their loans. And the vast majority of college students hail from the top half of the income distribution in serious financial trouble: it’s called bankruptcy court. We should qualify student loans for redemption or modification in bankruptcy on the same basis as other loans. As it is now, they cannot be redeemed in bankruptcy.

“Part of the problem students have with loan repayments isn’t the loans themselves, or even the high cost of college in general, but that students often don’t get a good education or get an accurate picture of their financial prospects by different majors. Colleges and universities have to put their feet in the fire to collect data and report honestly on the quality of their education and the financial prospects of students pursuing different majors.

David McClough, Professor of Economics at the James F. Dicke College of Business Administration at Ohio Northern University

“Debt cancellation isn’t fair, but more importantly, it’s bad policy. It distorts incentives and encourages behaviors that contributed to the “problem” it’s trying to address. The policy is pure political opportunism designed to aggravate the situation.

“It’s not fair to the generations of students who took out loans and paid them back. It is not fair to future generations who will continue to pay the interest on the debt that does not benefit from it. It’s not fair to the students who will continue to borrow with the expectation of forgiveness in the future.

“Studies show that graduates earn more on average. A college education does not guarantee that all people will earn more. Government involvement has encouraged many to take out credit to attend college, despite limited interest in educational experiences. Expanding government involvement will make things worse, with more students borrowing even more to fund the higher tuition costs that are inevitable when demand rises. The most insidious part of the proposal is how the impact will harm those most vulnerable the most, with minimal benefit to others individually or to society as a whole.”

Rebecca Neumann, Professor of Economics at the University of Wisconsin-Milwaukee

“The question of whether student loan forgiveness is fair is a political hot-button issue with no single answer – it depends on where individuals believe our taxpayer dollars should be going.

“I worry about the incentives to just pay off a certain amount of student loan debt across the board. Students sign contracts to take out loans to further their education. Simply eliminating a certain balance may be viewed by some as an unfair advantage for those who went to college at the expense of those who didn’t.

“Programs to eliminate student loan debt for those who went to for-profit entities that were in doubt can be an appropriate use of taxpayers’ money that can create a level playing field. Eliminating a lump sum of student loan debt for students can also be a short-term boost that allows those students to focus on other current expenses or save for the future. But this also sends a signal to prospective students that they could take on more debt in anticipation that those amounts could be eliminated in the future.”

Student loan borrowers gather near the White House
Student loan borrowers gather near the White House to pay tribute to President Biden on May 12. Joe Biden may now be ready to act.
Paul Morigi/Getty Images for We the 45 Million Is student debt relief fair? 5 experts agree

Rick Schindler

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