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Student Loan Debt: Forgive or Not to Forgive?

Student Loan Debt: Forgive or Not to Forgive?
Photo by Andrea Piacquadio: https://www.pexels.com/photo/young-troubled-woman-using-laptop-at-home-3755755/

The Student Debt Relief Plan of the Biden-Harris Administration in 2024 has sparked continuous discussions on the effectiveness of forgiving student loan debt. This plan was designed as a multi-step process aimed at alleviating the educational debt burden for eligible citizens. According to the Education Data Initiative, “43.6 million borrowers have federal student loan debt, with an average balance of $37,718.” The magnitude and frequency of these debts have been shown to have a negative impact on the nation, affecting individual citizens, college graduation/enrollment rates, inflation rates, and the overall economy.

On average, it takes approximately 21 years to fully repay student loans, with repayment periods ranging from 10 to 30 years. While it may seem feasible for individuals to repay student loans in small installments, this debt can be extremely burdensome for graduates. The consideration of student loan debt by many high school students can influence their college choices, potentially hindering their pursuit of higher education.

With the exponential rise in college costs (not directly proportional to wage increases), most college-goers are compelled to take out loans. Many high school students find themselves in a middle ground where they do not qualify for financial aid but struggle to save $300,000. Studies have also shown that reducing the amount of debt graduates face would encourage more people to pursue higher education. Discussions surrounding student loan forgiveness plans have the potential to increase college enrollment, thereby impacting the lives of individuals and the nation’s future.

Despite President Biden and his administration pushing for the approval of these plans, there have been frequent adjustments due to various objections and interventions from the Supreme Court and the Department of Education. President Biden has also implemented “pauses” on repayments for these specific debts, particularly during the COVID-19 pandemic. Presently, efforts are being made to make these changes permanent and enshrine them in legislation to fulfill the primary purpose of assisting Americans in relieving student loan debt.

Critics from the Republican Party continue to express concerns regarding the potential negative impact of loan forgiveness on inflation rates. However, there are contrasting views on this issue. As reported by Forbes, “President Joe Biden’s plan to forgive up to $20,000 in student loans for millions of borrowers drew criticism for possible inflationary effects, but new analysis suggests that this may not significantly impact inflation and could even help moderate it.” Some argue that without the financial burden of student loans, citizens can contribute more to the nation’s economy.

The full effects of these student loan forgiveness plans remain uncertain, leaving many questions unanswered. Nonetheless, there has been a sustained effort to implement these changes. During his 2020 presidential campaign, Biden focused on uniting the country and developing and implementing student loan forgiveness programs. If successfully executed, many graduates could experience life-changing benefits. Implementation of this plan could also improve access to higher education for minorities and individuals in low-income jobs. However, the potential impacts on inflation rates and the economic landscape of the U.S. remain unclear. In summary, there is ongoing debate in Washington regarding the effectiveness and suitability of President Biden’s plans.

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