Is student debt cancellation fair? 5 experts weigh in

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

But frustration grew as his administration failed to take immediate action to ease the financial burden on tens of millions of Americans — and progressive Democrats and other advocates called on Biden to reverse at least $50,000 of student debt per borrower.

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

The latest plan calls for limiting debt forgiveness to those who earned less than $150,000 in the previous year and $300,000 for married couples, The post office reported, citing people familiar with the discussions.

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

And it’s unclear whether the administration will require federal student loan repayments 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, Newsweek asked several experts: Is student loan debt forgiveness fair?

Diana Furchtgott-Roth, adjunct professor of economics at George Washington University and former chief economist for the Department of Labor

“The fundamental injustice is that the government gives large loans without constraint to students who will not be able to repay the money. Schools know this and raise tuition fees. Graduates should enroll in a program of reimbursement from the Ministry of Education, pay a small part of their income for 10 years and receive full loan forgiveness if they choose certain jobs.

“Student loan forgiveness is unfair to students who have repaid their loans; unfair to students who have chosen cheaper options at community colleges; unfair to taxpayers whose money is used to repay loans and who do not haven’t had a college education; and that won’t save students from big debt.”

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

“The perpetual deferral of interest on student loans is just about the worst policy. It’s costly, unwarranted, and has contributed to inflation.

“Some targeted student loan forgiveness while resuming interest payments for everyone else would be a less bad policy that would at least help ensure that the largest recipients of college and higher education pay the cost of the likely very beneficial they have done in higher education.”

Miles Kimball, professor of economics at the University of Colorado

“Most Americans would view blanket student loan forgiveness as unfair to those who have sacrificed to repay their loans. And the vast majority of students come from the top half of the income distribution. We already have a system of forgiveness of loans for those in serious financial difficulty: this is called bankruptcy court We should make student loans eligible for discharge or modification in the event of bankruptcy in the same way as other loans As is currently the case, they cannot be discharged in the event of bankruptcy.

“Part of the problem that students have in repaying their loans is not the loans themselves, or even the high cost of college in general, but the fact that students often don’t get a good education or don’t not receive a true picture of their financial outlook after different majors Colleges and universities need to be grounded in collecting data and reporting honestly on the quality of their education and the financial outlook of students taking different majors. channels.

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

“Debt cancellation is not fair, but more importantly, it is bad policy. It distorts incentives and encourages behaviors that have contributed to the ‘problem’ it seeks to solve. The policy is pure political expediency which is destined to aggravate the situation.

“It’s not fair to generations of students who have borrowed and repaid. It’s not fair to future generations who will pay interest on the debt in perpetuity and get no benefit from it. is not fair to students who will borrow even more while awaiting forgiveness in the future.

“Studies show that on average, graduates earn more. A college education does not guarantee that everyone will earn more. Government involvement has encouraged many people to borrow to attend college despite limited interest in educational experiences.more students are borrowing even more to finance the higher cost of college that is inevitable when demand increases.The most insidious part of the proposal is how the effects will hurt the most vulnerable the most with minimal benefit to others individually or society as a whole.

Rebecca Neumann, professor of economics at the University of Wisconsin-Milwaukee

“Whether student loan forgiveness is fair is a hot political topic that cannot have a single answer – it depends on where individuals think our taxes should go.

“I am concerned about the incentives to simply wipe off a certain amount of student loan debt at all levels. Students sign contracts to take out loans to further their education. Simply eliminating a particular balance can be considered by some as unfairly favoring those who went to college at the expense of those who did not.

“Programs to eliminate student loan debt for those who went to for-profit institutions that were dodgy may be an appropriate use of taxpayer funding that can level the playing field. The elimination of a fixed amount Undergraduate student loan debt can also be a short-term boost that allows these students to focus on other current expenses or save for the future. But it also sends a signal to future students. students that they could take on more debt in the hope that these amounts could be eliminated in the future.

Student borrowers gather near the White House to tell President Biden to cancel student debt on May 12, 2020 in Washington, DC. Joe Biden may now be ready to act.
Paul Morigi/Getty Images for We The 45 Million
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