The price of a college education in America has long been a subject of great frustration for many people. The hefty cost of a degree has reached the point where college attendance itself becomes a debate. It is very discouraging for middle-class and lower-class students to know that simply following the course of action needed to pursue certain career choices comes with financial setbacks and the bureaucratic hassle of repayments. As the issue of student loan debt plagues over 46 million Americans, it is naturally a huge issue — one that made it into President Joe Biden’s campaign promises during the 2020 election cycle. On the campaign trail, President Biden promised that he would “immediately cancel a minimum of $10,000 of student debt per person.” President Biden says that the outcome of this promise will play out in the coming weeks. However, Sen. Elizabeth Warren — who ironically was the inspiration behind President Biden’s promise — Sen. Chuck Schumer, and Sen. Raphael Warnock want to delay the decision in hopes of securing a bigger win.
Sen. Warren, Sen. Schumer, and Sen. Warnock all want to push the spending from $10,000 per person to a potential $50,000 per person. This is a pretty steep price hike in the legislation, but it would generate a significantly larger impact. As President Biden’s plan currently stands, roughly one-third of debtors would be freed of their student loan debt by the $10,000 forgiveness. However, increasing the spending to $50,000 would lead to 72 percent of debtors being forgiven. While the price increase would change the cost of the legislation from $245 billion to $950 billion, its effectiveness would also have impacts on the U.S. economy and make up for the hefty cost. According to Scholarship America, a company that specializes in providing scholarships to students in need, students who are currently in loan debt are 36 percent less likely to purchase a house. Other research also indicates that people with student debt have worse credit scores, are less likely to take out car loans, and are more likely to live with their parents. The forgiveness of student debt will ultimately funnel money into facets of the economy like the housing and automotive industries, as it will level out the aforementioned monetary disparities between people with and without outstanding debt.
The biggest downside of this larger forgiveness package would be a potentially greater stress on the U.S. national debt. While it is true that the cost of the increased spending would be immense, the notion that it would greatly impact the U.S. government’s fiscal debt is not entirely correct. According to the Peter G. Peterson Foundation, an organization that does work surrounding “America’s long-term fiscal challenges,” President Biden’s initial $10,000 per person plan would only increase the national fiscal deficit by 0.3 percent. Even with five times the spending, the ultimate increase in the national debt that would occur as a result of the spending package would not be particularly bad, especially when weighed with the economic growth that would occur as a result of the debt cancellation. Some critics of loan forgiveness have said that it might unfairly benefit people of higher socioeconomic status due to the distribution of student loan debtors. However, such benefits also apply to lower socioeconomic percentiles as well. Furthermore, according to Sen. Warren, increasing the debt cancellation spending will greatly help in decreasing the racial wealth gap, as communities of color are often underfunded. Making college more accessible will help people from such communities acquire higher-paying jobs, which is a step toward the lessening of the racial wealth gap.
Through debt cancellation, President Biden has an opportunity to both aid the welfare of 46 million people in the U.S. and create a powerful catalyst for economic growth. Throughout the Biden era, a common criticism of the Democratic Party has been a lack of vigor when trying to cultivate meaningful change. By enacting Sen. Warren, Sen. Schumer, and Sen. Warnock’s $50,000 loan forgiveness plan, President Biden can begin to prove this perception wrong while also boosting the American economy.
By Sebastian Lemberger