Student loan cancellation benefits the entire economy
Some are surprised that the stimulus dollars granted by the US government have boosted the economy. The point is, government spending spurs economic growth that will create jobs, exceed the deficit, and position the country to better fill its social gaps and improve its competitiveness. But that work is not done, even with the approval of the infrastructure bill this week.
The loan forgiveness that the heads of government suspended in front of the 45 million student borrowers in the country remains for the moment on hold.
At a time when the United States faces economic competition from all corners of the earth, those best trained to unleash the nation’s intellectual strength for the long term, through a storm of entrepreneurship and innovation, often find themselves limited by the personal debt acquired by obtaining the best possible that higher education emerges only in the event of a pandemic. The sooner they get rid of these constraints and are let go to accomplish what they are capable of, the sooner the nation will benefit.
This is why the calls for the cancellation of student loans make so much sense.
Student borrowers in the United States owe more than $ 1.7 trillion, an amount of federal debt that grows by $ 100 billion annually. As Forbes points out, this puts student debt second after mortgage debt and higher than credit card balances or car loans.
Shortly after taking office, President Biden said he would ask Congress to forgive $ 10,000 per student loan, but the issue faded amid negotiations on the infrastructure bill and the reconciliation process where Democrats hope to generate more money for social programs without demanding Republicans. approval.
Student loan relief is not included in either of the talks. Rather than legislate on this relief, Senate Majority Leader Chuck Schumer, DN.Y. and Senator Elizabeth Warren, D-Mass., among others, want Biden to use executive power to forgive $ 50,000 per student. Biden says he’s not sure he has that authority. He weighs his options.
Meanwhile, those resisting the economic challenges of the resurgent pandemic have gained significant relief from Biden’s recent decision to freeze student loan payments and interest for three more months, until January 2022. That is. a great help but time is running out.
Surely there must be a figure between $ 10,000 and $ 50,000 on which our leaders can agree, for debtors of modest means.
There are good arguments for being cautious about canceling student loans.
After all, forgiving debt doesn’t make it go away. This only shifts the burden of government into the future and onto the backs of many taxpayers who have not borrowed, and those who borrowed but kept their promises to repay their loans.
As the Wall Street Journal pointed out in a recent commentary, the government swallows $ 100 billion a year in defaults, plus hundreds of billions more in loan reduction programs for low-income borrowers.
Isn’t personal responsibility a value to be encouraged, after all, they say? Finding ways to cut college costs makes the most sense in the long run, rather than establishing an unsustainable practice of letting borrowers off the hook.
But in today’s extraordinary circumstances, it makes sense to give one-time relief to those who will be in debt for decades.
Not everyone is born in third base or even first, and can afford to enroll in a multi-billion dollar endowment university, where financial aid flows freely. And while lower-cost community colleges often offer an attractive alternative and an invaluable work-study opportunity, they aren’t for everyone.
Should we be looking for ways to lower the cost of higher education, in a free market competing for the sharpest minds and the best facilities to help your child compete in the workforce? Absoutely.
But in the meantime, enjoy the benefits to the country’s economy, in a time of great tension, of unloading and unleashing our best and brightest to perform and realize their potential.
Have faith that all of this education will benefit not only them, but society as a whole. We would pay it in advance.