"Biden made his first public comments today in response to an ongoing campaign by progressive Democrats and consumer advocates to convince the President-Elect to enact sweeping student loan forgiveness.
Speaking candidly to The Washington Post and others in the media about the challenges he will face in January and the limitations of his executive power, Biden said, ‘I’m going to get in trouble for saying this . . . it’s arguable that the president may have the executive power to forgive up to $50,000 in student debt… Well, I think that’s pretty questionable. I’m unsure of that. I’d be unlikely to do that.’
Earlier in the day, Biden had reaffirmed his general support for broad student loan forgiveness, but suggested that he would support a smaller amount of $10,000.
Last week, Rep. Ayanna Pressley and other House Democrats introduced a resolution calling on Biden to cancel $50,000 in federal student loan debt for every borrower using executive authority. Senate Democrats, led by Senators Elizabeth Warren and Chuck Schumer, had introduced a similar resolution earlier in the year." …
Canceling debt doesn’t just poof! make it go away. For every action, there is an equal and opposite reaction. I agree that an executive action of this magnitude is questionable. If forgiveness is to happen, Congress has to put on their big boy/big girl pants and work together to find a way to make it happen (including figuring out how to make the financial aspect work).
How are undergrad students saddled with $50k+ of debt if they’re limited to a total of approximately $27,000 over 4 years?
More importantly, this teaches zero responsibility, will paid for by people who have no say in the decision (taxpayers including those who have already paid off their own loans or saved so their own kids didn’t need to take out loans) and favors a random and capriciously chosen group of people. What happens to those students taking out loans this year, next year, 5 years from now? They’re just out of luck?
I believe debt forgiveness also has tax implications as well.
Federal loans are limited to $31k for undergraduate, although the yearly limits mean that a student who graduates in four years can take a maximum of $27k.
Any additional undergraduate loans would be cosigned (usually by parents) loans.
In no state is the average undergraduate debt $50k or more. In the worst states (NH and PA), it is just over $39k.
Where huge student loan debt is the norm is for professional school (such as medical, dental, law).
Exactly right… so why is there a big push to forgive $50k of debt? If you attend a professional graduate school you should consider your earning potential before diving into hundreds of thousands of dollars of debt. Seems like a lot of pandering to me.
50k sounds so generous, eh? And the promoters would be heroes, right?
Truth is (well, imo,) 10k would be mighty helpful.
Yes, the forgiven amount would be treated as ordinary income and taxable. But most of the young adults struggling with the debt are not highly employed and are likely in a lower tax bracket.
But they chose to incur the debt. Why should it be randomly forgiven? What about car loans, mortgages, rental payments? Surely many people would like assistance with their debt.
Large car loans are discretionary. Buying a home is out of range for most of those kids.
But a college degree of some sort is less discretionary every year.
I get that some overload with loans, not thinking of the implications. But some help would benefit.
Meanwhile, I do not have the answers, but some reduction in college costs would be a nice parallel pursuit. Or a major expansion of forgiveness programs.
I think the view from 30,000 feet is that forgiving a certain amount of loan debt is good for the economy, and therefore good for everyone. When college grads cannot buy homes, cars, or consumer goods because of crippling debt, the entire economy is affected. If you want to sell your house in five years, there will be more potential buyers if student debt burden is reduced.
I haven’t read anything that suggests that forgiving $10,000 of student debt is going to turbo charge the economy. Up until Covid the economy was doing fantastic. And even with Covid it’s still going fairly well.
I’m guess I’m just amazed that the concept of just handing out money to certain borrowers isn’t met with more skepticism. Will all student loan holders qualify or just certain ones? What happens to the new borrowers for fall 2021? Will $10,000 of their loans be forgiven upon graduation? Who will pay for this new entitlement program? Can the graduates of 2021 and after expect the same benefit? Can they sue if they don’t get it? Can people who were careful and responsible and paid off their loans also receive $10,000? How about the families that saved so their kids didn’t need to take out loans? Or maybe lesser loan amounts? Can they receive it too? How about current students with loans?
So easy to toss out the idea of debt cancellation but it’s a slippery slope because once you give out a benefit it never goes away.
Forgiving college loans in any amount won’t make college costs come down. In fact it may make them rise. Colleges are going to charge what the market will bear. When loans became more prevalent and easier to get, costs went up. If more federal money gets tossed at college costs then the cost will continue to rise.
Not sure why it’s fair for taxpayers to be on the hook for student choices. The vast majority of taxpayers did not go to college. How is this fair to them? Many have worked hard to pay for their own or their children’s college expenses. Is this fair to them to get saddled with others debts?
Sorry, not a big fan of forgiveness. How about a program where some type of service can be exchanged for money to pay off one’s loans?
I don’t have exact numbers but $30,000 in debt looks like it could be paid off in ten years with just over $300 a month in loan payments. Obviously some borrowers are going to have extenuating circumstances but that’s not a huge amount.
Young borrowers in the past 10 years or so have met an incredible double pressure: due to the 2008 great recession public universities’ costs became more tuition dependent and rose sharply while budget cuts made financial aid less abundant. As a result, it became impossible to “work your way through college”. Financial issues became predominant in college choices even for families looking at instate public universities… At the same time, a college degree is no longer discretionary spending- if you cannot buy a house, you can rent. If you cannot drive a new car you can buy an old one, take the bus, ride a bike, depending on where you live. There’s no substitute for a college degree if you want a foothold to the middle class. So, there’s this thing you MUST have , the costs of which have doubled, and for which aid has decreased - something people 40 and older simply didn’t have to deal with.
The more your forgive the more you help the economy since even back in 2018 college graduates’ debt was dragging it down. Starting in 2019 it started causing real problems st the micro level - young people not buying houses was one. Without covid it would have exploded at some point. It all depends whether you want to turbocharge spending or if you want to alleviate problems linked to construction and everything around families. (A big issue is that college graduates are not just no longer buying houses in greater numbers than is good for the economy: they’re also delaying having a child, with all the consequences or the country down the line.)
I’m not sure 10k would be enough to reverse that trend -50k would but would matter to fewer people since most owe 30k. 10 would be 1/3 average debt load which would be reinvested into the economy but not enough for a downpayment.
You can call it a tax cut for 22-35 year olds.
It’s no stranger than a myriad other tax cuts in the past 20 years.
I agree with other posters that student debt should not be forgiven, though I would be supportive of interest rates that are more reflective of the underlying risk of the debt. Since these debts cannot be discharged it seems that the interest rates should be similar to those for buying a house.
One-time debt forgiveness won’t fundamentally alter the trajectory we’re currently on. The issue of cost won’t go away because of it.
Colleges are competing with one another for nicer dorms, gourmet food, study-abroad programs, counseling and other services in every conceivable area (not unlike hospitals are competing with each other for every piece of fancy equipment and driving up the cost in the process). This isn’t affordable, especial when we also have a worthwhile goal of equitable access.
Why so many students need five, or even six, years to graduate, when oxbridge can graduate their students in three? Do they produce inferior graduates? Or do we indulge our students more, by letting them enjoy their college years with all the pampering (including remedial courses for their unpreparedness, light course loads for more party time, study-abroad programs that have little relevance to their studies, etc.)?
Oxbridge selects the top students in their country and US colleges that are similarly selective graduate their students at roughly the same rate.
Graduation rates at typical UK universities that accept 2 A Levels only with BC or even CC or D grades don’t do better than US directionals.
The reason some universities graduate students “on time” is that they have great resources lavished upon a few top students. Less well-resourced universities with many less well-prepared students graduate way fewer students.
To me it makes sense.
In the US like in the UK, debt is an additional problem, in that the UK’s maintenance grant (lower income and working class students received a stipend from the government to help them pay room&board) was converted to a maintenance loan, backed by the government. Therefore, some students work rather than take the extra loan and working more hours means less time to dedicate to studying which in turn makes it less likely lower income students will graduate on time (they’re allowed to work part time and attend part time, thus graduating in 6 years is “on time” for working students).
BTW the UK student loan’s system is interesting: The loans are backed by the government (like in the US) but reimbursement is tied to the salary perceived: the students only pay it back if their salary is middle class level (so, in the US, someone earning under 50K a year wouldn’t have to pay the loans back till they reach that level), with a fixed % and a cap, and the obligation stops 30 years after graduation. As a result, it’s basically an investment in social workers, teachers, etc, since their salary is low enough that they won’t be able to pay back loans till later in life.
Erasing Millenials’ debt will free money spent on paying back the loan they HAD TO take (in fact, nowadays, federal loans are just straight packaged in the financial aid award). $300 to $400 a month they’ll be free to spend or save toward a downpayment.
Seeing it as a Millenial Tax Cut (money you don’t have to pay back to the government) makes it easier to understand. Tax Cuts for middle class families, brandy producers, etc., have gone through. Why not a tax cut for Millenials? Especially since this age group is especially struggling and the money would have direct impact upon the economy (since we know college graduates’ debt slows the economy down in a way that’s never happened before.) So, double benefit: for one group that got a raw deal in life so far and for the economy (all of us) in general.
A “cheaper” way to deal with unpreparedness is to have high school college prep classes offered for free to students who want to go to college and aren’t college ready - instead of struggling in college they’d be in daily classes with “college-bound postgraduates”. But it’s another issue.
The issue is the dramatic increase in college costs. My husband graduated Rutgers in 1989, total cost was around $12,000. Our daughter graduated in 2018, her education was $120,000. As for students only having $27,000 in loans, our private loans were transferred into her name only in 2018, she pays $1000 a month and they should be paid off in a few more years. This will be the same situation for her 4 younger siblings. Unfortunately, we were unable to save $600,000 for public university tuition, only about a third of that.
You point out why a very real issue – how it affects Millenials specifically: basically students who went to college starting in 2009 have had a specifically raw deal since it was IMPOSSIBLE for their parents to have saved enough (none of us could have imagined costs would skyrocket this way even at State Universities) and impossible to “work their way through” college. Suddenly, loans became the only way you could attend college, rather that one possibility among several ways of financing. We (parents) simply cannot compare ourselves and our situation to theirs, even if we graduated in the 1992-1993 slump.
Well I am on both sides of this argument. Came from public aid and food stamps to over $100, 000 in medical school and undergraduate loans in mid 80s. I had no choice. Either take a chance on myself or go in a different direction. Honestly, much easier to do back then. Wouldn’t attempt that now. Paid back every penny plus forbearance that drove this number up since I had no money. Plus my wife’s $150,000 loans plus interest etc.
So like for 65 % it is 20,000 or less. But these aren’t the people that need the help. It’s the other 35%.
As stated above we need to change how we do things 6 years in college is criminal. But what if it was mandatory to do a co-op and integrate it into your schooling. The idea is many co-ops can help defray the cost of college and might give students a leg up in the job market.
In Chicago community College is free if you have a B avg… That needs to change. Many have C and just get it together in Community College. I went my first year to a CC since I had no choice monetarily. It was a great option and didn’t put me behind anyone or anything.
Maybe programs that are set up with guaranteed acceptance to X college if you complete the 2 year community College path first. Add in co-ops learning or the like and I think your chance of success is greater. Have it like let’s really get you prepared for college…
But both my kids will hold off on $10,000… One just graduated and one this spring (did I really say that… Lol) sure it would be great if they each got money to help payoff their loans. I know we are fortunate. It won’t change their life. We would just put that money to fund our retirement accounts.
(going on here)… I just don’t have sympathy for the families that think it’s a great Idea to send their kids to NYU(insert name of college) for a degree that will pay $25,000/year. They will have no chance.
Families have to take ownership and not indulge their children into a life time of debt and ruins. Look at all the posts on CC about this. We each read these daily. We mostly ask"can you afford X and how will you pay for it "… Many families just think they will figure it out or their kid is so special they will make it work out. It’s like we are creating a new sector of welfare. People with an education.
I’m a firm believer in the investment in education, whether primary, secondary, or higher education. However, we have to consider how to effectively use the limited resources we have. One-time debt forgiveness will help some students but wouldn’t solve the systemic issue of affordability. It would only kick the can down the road, delaying the recognition of the underlying problem. It may even exacerbate the problem as some posters have argued.