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Bell Jr., Frederick. "The Biden Administration Should Cancel All Student Loan Debt." Gale Opposing Viewpoints Online Collection, Gale, 2024. Gale In Context: Opposing Viewpoints, link.gale.com/apps/doc/XLIESL500849985/OVIC?u=cobb90289&sid=bookmark-OVIC&xid=2278091d. Accessed 8 Mar. 2024. Originally published as "If Biden Can Cancel Some Student Debt, He Can Cancel All Student Debt in the US," Truthout, 27 Aug. 2022.

This article is a response to Biden's plan to cancel $10,000 dollars of student loan debt for those who make under $125,000 a year. The article is written by Frederick Bell Jr. who is a programs and operations manager at Debt Collective. In it, he expresses his view that the money given by the government will barely affect the balance of many debtors. He states his belief that if the government has the power to cancel some student loan debt, they have the power to cancel all student loan debt. He believes that the next generation should not have to go through the struggle of student loan debt like past and current generations. This source will be useful because it outlines how financially straining unnecessary student loan debt is. However, this is article is likely to be a bit biased due to the author being a manager at Debt Collective.

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Walsh, Kate Padgett. "The Ethics of Canceling Student Debt Is More about Fairness than Broken Promises." Gale Opposing Viewpoints Online Collection, Gale, 2024. Gale In Context: Opposing Viewpoints, link.gale.com/apps/doc/JLDIIQ674826849/OVIC?u=cobb90289&sid=bookmark-OVIC&xid=3a0d5511. Accessed 8 Mar. 2024. Originally published as "The ethics of canceling student debt is more about fairness than broken promises," The Conversation, 28 Oct. 2022.

This article is also a response to Biden's plan to cancel $10,000 dollars of student loan debt. However, this article discusses the ethics and moral dilemmas of student loan debt cancellation and how to avoid them. The article is written by Kate Padgett Walsh who is an associate professor of philosophy at Iowa State University. The article discusses two main moral dilemmas with statistics to back them up. The first moral dilemma discussed is how unequal student loans, student loan payments and opportunities are for disadvantaged groups such as first-generation students and black students. The second is the financial distress that the debt causes the borrowers. This article is useful and relates to my topic because it discusses even more problems with student loans, especially how they affect minorities and first-generation students.

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Webster, Molly. "Drowning in Student Loan Debt." New York Times, 19 Mar. 2021, p. A25(L). Gale In Context: Global Issues, link.gale.com/apps/doc/A655492852/GIC?u=cobb90289&sid=bookmark-GIC&xid=850c32c0. Accessed 6 Mar. 2024.

This article provides a viewpoint of someone who is suffering from student loan debt and their experience with a certain student loan debt relief program. The author states that they have been in debt for 14 years and is nowhere near paying it off. The CARES act was supposed to help, but they did not end up qualifying for it. This source is useful because it provides a viewpoint from someone in debt. This relates to my topic because it shows how student loan relief programs are not reliable, and that it would be best if all student loan debt was cancelled.

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Jacques, Ingrid. "Biden should give up student loan debt fight." USA Today, 15 June 2023, p. 07A. Gale In Context: Global Issues, link.gale.com/apps/doc/A753075138/GIC?u=cobb90289&sid=bookmark-GIC&xid=3fb77418. Accessed 6 Mar. 2024.

This article discusses Ingrid Jacques' point of view on Biden's plan for student loan cancelation. Ingrid Jacques is a Columnist for USA Today. She discusses how relieving student loan debt is unnecessary for Biden's presidency. She also begs the question of why relive student loans specifically and why should taxpayers with no student loan debt have to help pay them off those who have them. This article is useful because is expresses an opposing viewpoint against student loan cancellation.

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https://www.consumerreports.org/student-loan-debt-crisis/student-loans-vs-mortgages-what-makes-student-debt-different/

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https://www.investopedia.com/the-impact-of-cancelling-student-debt-5101053#:~:text=Student%20loan%20debt%20slows%20new,borrowers%20to%20participate%20in%20it.

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President Joe Biden's efforts to cancel student debt for eligible borrowers would be welcomed relief and life-changing for many U.S. adults and families. Canceling this debt would be of particular benefit to households of color. But for people who never went to college or who have already paid off their loans, the impact would be minimal, and the economic impact may not be as positive as some think.

Key Takeaways

What Is Biden's Plan to Cancel Student Debt?

On Aug. 24, 2022, the Biden-Harris administration announced its long-term student debt relief plan, but it was overruled by the U.S. Supreme Court in June 2023. The plan featured three prongs:

1. Borrowers earning less than $125,000 per year would have been eligible for $10,000 of federal student loan forgiveness. Married couples filing jointly or heads of household who make up to $250,000 still would have been eligible. Those who received the income-based Pell Grant while students would have been eligible for up to $20,000 in forgiveness.

2. The pause on federal student loan payments would end on Sept. 1, 2023.

3. Income-driven repayment (IDR) plans would have been capped at 5% of discretionary income rather than the current 10%.

The application process for student loan forbearance was briefly opened, but legal challenges prompted the U.S. Department of Education to stop accepting applications indefinitely and pause processing applications that already were submitted.

While the debt forgiveness plan was ultimately rejected by the Supreme Court, the administration continued to pursue alternative measures for debt relief through loan forgiveness and income-driven repayment (IDR) plans. The pause on student loan interest ultimately ended on Sept. 1, 2023, and payments resumed on Oct. 1, 2023.

Note that while the American Rescue Plan makes student loan forgiveness granted from Jan. 1, 2021, to Dec. 31, 2025, tax-free at the federal level, some states may see it differently. Currently, forgiveness is expected to be taxed as income in Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina, and Wisconsin.

Student loan forgiveness would apply to certain federal loans held by the Department of Education. Private loans are ineligible for forgiveness.

Positive Impacts of Canceling Student Debt

Though plenty of borrowers owe more than $10,000, any sort of student loan forgiveness would benefit them financially. Some economists believe loan forgiveness also would stimulate the economy as borrowers could use that money for other purposes, such as buying a home.

For example, if you have $35,000 in student loan debt, and pay $300 per month on the loan with a 4.66% interest rate, over the course of 13 years, you'll pay almost $12,000 in interest. By canceling $10,000 of that student debt, you could save about $6,000 and pay off the rest of your debt five years sooner.

Canceling student debt could be of particular benefit to lower-income borrowers, especially women and people of color. An academic paper in 2020 maintained that the "median wealth for Black households overall, not just borrowers, would instantly increase by 42% with $75,000 in student debt forgiveness and around 34% with $50,000 in forgiveness." Those are higher amounts than President Biden has suggested, but would be in keeping with his administration's initiatives to address racial equity.

Negative Impacts of Canceling Student Debt

Critics argue against canceling any amount of student loan debt, in part because it would unduly benefit a relatively privileged class of people: college students. While more than 45 million Americans have at least some student loan debt, they represent only approximately 13.5% of the U.S. population.

In addition to concern regarding the fairness of the plan, it also is not without its costs. Fiscal experts estimate that loan cancellation would cost $519 billion over the course of a 10-year budget window. Add another $16 billion in forbearance for 2022 and potentially another $450 billion for the new income-driven repayment (IDR) program, and the total sticker price could be near $1 trillion.

That potential trillion dollars in forgiveness has to come from somewhere. Current estimates state that forgiveness will cost roughly $2,500 per taxpayer, whether they went to college or not.

While forgiving student loans may have an impact on current borrowers, an analysis by the Committee for a Responsible Federal Budget said they would expect student loan debt to return to $1.6 trillion by 2028. Since the plan does nothing to dampen higher education costs, it has no impact on current and future students facing historically high education costs.

Student loan debt cancellation may have another negative impact: higher inflation rates. The Committee for a Responsible Federal Budget estimates that the influx of $10,000 to $20,000 for millions of borrowers could push inflation rates even higher, with personal consumption expenditure (PCE) inflation increasing by 15 to 27 basis points.

Do I Have to Have a Certain Type of Loan to Qualify for Forgiveness?

Yes. The student debt relief plan applies only to federal loans held by the U.S. Department of Education. Those loans include undergraduate and graduate direct loans, Federal Family Education Loans (FFELs) and Perkins Loans held by the Department of Education, and certain defaulted loans held by the Department of Education.

What Are Three Pros of Canceling Student Loan Debt?

Three of the major arguments in favor of broad student debt cancellation are:

Student loan debt slows new business growth and limits consumer spending. Broad student loan debt forgiveness may help boost the national economy by making it more affordable for borrowers to participate in it.

Due to a combination of family income, generational wealth, and other factors, student loan debt is disproportionately held by Black borrowers compared to their White counterparts. Canceling student debt could go a ways toward narrowing the racial wealth gap.

High debt burdens have prevented an entire generation from achieving life milestones like getting married, purchasing a home, or even saving for retirement. Lessening the student debt burden would likely improve financial and personal well-being, credit, job stability and satisfaction, and even family stability for thousands of people, in addition to allowing more people to enjoy homeownership earlier in life, the capacity to build an emergency fund, human capital investments, and the accumulation of wealth.

Is Enrollment in the Saving on a Valuable Education (SAVE) Plan Automatic?

It depends. Borrowers who are already enrolled in the Revised Pay as You Earn (REPAYE) plan will be automatically enrolled in the new Saving on a Valuable Education (SAVE) Plan. Other borrowers will have to submit an application in order to qualify for forgiveness.

The Bottom Line

Though there is a general consensus that higher education reform, particularly in regard to costs, is desirable, experts are divided as to whether canceling some or all student loan debt is the best way to go about it. While those receiving forgiveness will see a financial benefit, there may be longer-reaching ramifications that will be more costly for all taxpayers in the long run.

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President Joe Biden suggested a plan to cancel $10,000 to $20,000 of student debt for eligible borrowers. Here's how that would have impacted people in the U.S.

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https://www.investopedia.com/articles/personal-finance/100515/10-ways-student-debt-can-destroy-your-life.asp

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Millennials have the unenviable distinction of being the most indebted college students in history. According to a report from the New York Federal Reserve Consumer Credit Panel, consumersunder the age of 30 owe a combined total of over $1 trillion in student loans as of 2018.

Unfortunately, many college students are inexperienced with money, and many take out more money than they need. Often they use their extra money to purchase items that they want, rather than need.

Key Takeaways

While it's often necessary for students to take out loans to pay the full cost of their education, you need to carefully consider how you use that loan.

Mismanaged money could have a profound impact on your life. Below are ten ways student loan debt can negatively affect your life. (Read more on the topic, here: Technology Can Help With Student Loans.)

1. You Might Have to Forego Grad School

Student loan debt can hinder you from attending graduate school. The average undergraduate accumulates $30,000 in student loan debt. Students who are leaving their undergraduate programs with significant amounts of debt often cannot afford to take out another massive loan.

2. You Might Not Be Able To Afford Buying A Home

Student loan debt significantly impacts one's ability to purchase a home. When Equifax asked in 2015 millennial renters why they did not buy a home, 55.7% of respondents listed "student loan debt/not enough money saved" as the top reason they were not able to purchase a home.

Even if you can afford the monthly payments, putting money toward your student loans might prohibit you from saving enough for the minimum down payment required by many lenders.

3. You Might Have to Live at Home

While some renters can't afford to purchase homes, other millennials with student loan debt can't afford to rent apartments. Across the board, roughly 14 million young adults between the ages of 23 to 37 are living at home with one or both of their parents, according to a Zillow analysis, released in May 2019.

This figure is a much larger number than in previous generations. Many of these young adults aren't leaving the nest because they aren't making enough money to pay back their student loans and also pay rent.

4. You Might Have a Lower Net Worth

In 2014, a report from the Pew Research Center revealed that disparities among college graduates with student loan debt vs. those without debt. The median net worth of a household headed by a college graduate under the age of 40 with student loan debt is $8,700. However, the median net worth of a household headed by a college graduate under the age of 40 with no student loan debt is $64,700-which is seven times greater.

5. You Might Not Be Able to Pursue Your Dreams

Student loan debt affects more than your financial independence and standard of living; it also determines which dreams you pursue. For example, you might have a desire to work for nonprofit organizations; however, you are likely to forego these aspirations for a job that pays more to cover your student loan payments. You may find yourself sacrificing a job, which offers you more fulfillment and purpose, for the job with a higher salary.

6. You Might Have a Lower Credit Score if Payments are Late

The major credit bureaus treat student loans like other types of installment loans. Failing to make timely payments can negatively affect FICO credit scores. Lower credit scores indicate higher risk and will make lenders less likely to extend you credit to purchase a vehicle, home, etc. It can also increase the amount of interest charged if the credit application is approved. Also, companies like insurance carriers often use credit scores to determine insurance rates.

7. Your Student Loan Debt Doesn't Go Away

Student loan debt is different from other types of debt. A consumer who can't afford to make car payments can return the car to the dealership. Similarly, a homeowner can hand the keys back to the bank. However, by the time you are in the student loan payback process, there's nothing left to "return." The money has already been spent-whether you spent it on school or not. Also, student loans are very rarely discharged in bankruptcy court.

8. You Might be Disqualified for a Job

Companies frequently conduct background checks, which now include credit checks. According to an article on CNN, 34% of companies perform a credit check on some job applicants, while 14% do a credit check on all job applicants. If you are late making your student loan payments, you should expect to have this information viewed by prospective employers who might hold it against you.

9. The Feds Might Seize Your Funds

If you have a federal loan that is more than 270 days in default, you might not get a state or federal tax refund for a long time. That's because the feds can seize those tax refunds if you default. They can also take any other type of government payment, such as social security. Additionally, the feds can garnish up to 15% of your income to help pay back your loans.

10. You Might Have a Higher Default Rate

According to the website Student Loan Hero, 11.5% of student loans are 90 days or more delinquent or are in default, and the news is worse if you left college without getting a college degree.

According to the National Center for Education Statistics, "students who borrow for college but never graduate are three times more likely to default" than those who do graduate. (Learn more about how to manage your student loans, here: A Beginner's Guide to Student Loans.)

The Bottom Line

More students are taking out student loans to pay for college. However, it's essential to recognize the consequences of borrowing money and to be disciplined enough only to borrow what is needed.

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10 Ways Student Debt Can Destroy Your Life

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Millennials have the unenviable distinction of being the most indebted college students in history. According to a report from the New York Federal Reserve Consumer Credit Panel, consumersunder the age of 30 owe a combined total of over $1 trillion in student loans as of 2018.

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https://www.nationalpriorities.org/interactive-data/taxday/average/2022/receipt/

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Fighting for a U.S. federal budget that prioritizes peace, economic security and shared prosperity

The average taxpayer in the United States paid $13,367 in federal income taxes in 2022. How does that compare to where you live?

2022 Federal Income Tax Receipt
Average Federal Income Taxes Paid by State
April 15, 2023
Inflation adjusted to 2022 dollars

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2022 Average Federal Income Taxes Paid by State

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Fighting for a U.S. federal budget that prioritizes peace, economic security and shared prosperity The average taxpayer in the United States paid $13,367 in federal income taxes in 2022. How does that compare to where you live?