• February 5, 2023

Canceling Student Debt: Is $10,000 Too Much or Not Enough?

Editor’s Note: This Week Future view Evaluates President Biden’s proposal to cancel a student loan debt of $ 10,000 per person. For the next week we will be asking students why moves like the ones Dr. Seuss have targeted for “rejection”, are successful on and off campus. Click here The best answers will be published that night.

President Biden’s proposal to reduce student debt is a regressive handout that fails to hold the real culprits of the debt crisis accountable: the universities.

In 1979, Cornell’s annual tuition was $ 3,368, or approximately $ 13,000 when adjusted for inflation. Today it’s north of $ 50,000. Universities charge these exorbitant fees, even for majors who have little financial return because they can get away with it. The government grants a simple line of credit to anyone who raises their hand. It’s like Oprah is in charge of politics: “You’re getting a loan! And you get a loan! “and on and on.

In addition to regulating the increase in predatory tuition fees, the government should also ask universities to publish statistics on the financial return each major receives. Students should know before taking out tens of thousands or hundreds of thousands of dollars in loans.

If we cancel some student debt, universities will continue to raise tuition fees – perhaps sending the next generation of students deeper into the spiral of debt. Oh, and how will the majority of Americans who never went to college but have other debts of their own feel about all of this?

– Rahul Srivastava, Cornell University, Law (JD)

The right balance

President Biden’s proposal to cancel student debt at $ 10,000 per borrower creates an effective balance. Student loans are a major economic drain and decrease the spending and savings of young adults and prime-age adults. Some forgiveness will ease concerns about potentially debilitating debt and help boost the economy.

A study by the National Center for Education Statistics found that around 64% of those who default on their student loans owe less than $ 10,000. A significant number of them have never graduated from college and come from underserved communities. You could use the help.

Too much debt relief, however, would relieve those who do not need it and create serious fairness problems for those who have paid off their debts. Debt relief is increasingly declining as the degree of relief increases, helping those with the highest earning potential. As Mr. Biden indicated, any additional forgiveness could be better used in other ways. His proposal could change the lives of millions of Americans for the better.

– Sunay Bhat, University of California, Los Angeles, Electrical and Computer Engineering

Put a name and face on a check

I’m in a college that doesn’t accept government-funded loans. Instead, students receive support through generous donor-funded scholarships and school loan programs that personalize financial assistance. The great accomplishment of this system is that it preserves accountability and accountability. Student loans essentially become a relationship where someone who is successful looks at someone with potential and says, “I believe in you.” A relationship with my credit manager motivates me to work harder in school to prove that the investment in me was worth it.

If I will repay my loans, the money will be used directly to support other students at my alma mater, making it a philanthropic exercise rather than a compulsory payment. This is how loans should work. When government interferes, it destroys the lender-borrower relationship and, consequently, the personal responsibility aspect. Now lenders are chasing after naive young adults knowing federal law protects their loans from bankruptcy, and student borrowers resent the institutions that fund their education.

Does this perverse system mean that we should cancel debt and give up wholly or partially holding people accountable for their decisions? No. Instead, we should revert to a localized system where students understand the severity of borrowing rather than view it as an entitlement.

– Callahan Stoub, Hillsdale College, history

Aim higher

President Biden’s debt relief proposal may seem generous, but it is a temporary band-aid solution to a much deeper problem. The president only came up with the $ 10,000 number after turning down $ 50,000 and feigning a lack of authority. Then he implied a wrong choice when he argued that extra money could be better spent on early childhood education. Most recently, Mr Biden suggested that those with higher debt must have attended elite private universities, but that is not true.

The country can do more for its students. Mr Biden’s non-binding position stems from his broader agenda to promote unity. While trying to heal political divisions is laudable, when trying to appease both sides, he often dislikes both.

– Riya Kale, University of Texas at Austin, Political Science and Economics

A good investment

Economic precariousness is no stranger to me. As a first-generation Mexican immigrant who grew up in San Francisco, America’s most expensive city, I get it. But let’s get one thing straight: student loans are not financial shackles. They are investments in economic mobility.

I was the first in my family to go to college. I had to be more financial sobriety than many of my colleagues in prep school, where I was one of the “scholarship holders” among the children of San Francisco’s elite. While my friends attended small arts colleges for $ 70,000 a year, I enrolled at nearby Berkeley City College. I saved tens of thousands of dollars on student loans by attending community college for the first two years and then moving to the University of California. I still have some loans, but I know they’ll be a good investment, not a burden.

At nearly 14%, the average return on investment on student loans is roughly twice the average long-term return on stocks and four times the return on bonds. The average college graduate makes $ 30,000 more annually than the average high school graduate worker who is likely to pay for President Biden’s proposal.

Progressives tend to be against subsidizing investments that are already profitable. Why should student loans be any different?

– Ivan Varela, University of California, Berkeley, Economics and Theology

Cut Gen Z a little loosely

The popular logic that “I had to pay for my full tuition so they would have to pay” is short-sighted. I have no problem offering relief even though I was fortunate enough to be able to pay my tuition in full. The stranding of students with outrageous amounts of debt will affect the next generation’s ability to take economic risks such as business startups and loan applications.

Ross Wheeless, University of Arizona, History (MA)

Who is subsidizing whom?

Those who argue that the government should pay our tuition fees often say that education is a good investment in America’s future. While it may be true that going to college is good for many people, it is categorically not good. A PhD may be worthwhile for one person, but it may be better for another person to only have a bachelor’s degree – or no degree. The value of education is not universal; it’s different for everyone. The best we can do is present the real cost of education so that people can decide for themselves what is worth paying for now and in the future.

President Biden’s proposal to scrap some student loan debt is a classic example of what the late economist Walter E. Williams called Congress “forcing one American to serve another’s purposes.” Since college education tends to result in higher future income, debt relief means that all taxpayers, including lower-income Americans, would subsidize the disproportionately wealthy and soon-to-be-wealthy student population.

It is ironic that Elizabeth Warren, Bernie Sanders, and many scholars claim to be defenders of the oppressed but support this reverse income redistribution scheme. This plan won’t make tuition cheaper, but as long as Americans want to live at the expense of other Americans, politicians will continue to make such proposals.

– Adam Stein, Washington University in St. Louis, chemical engineering

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