President Biden’s plan to forgive every college graduate between $10,000 and $20,000 in student loans is overdue, but disappointing.
Biden’s plan to finally provide much-needed relief to individual borrowers who earn less than $125,000 a year or whose annual household income is less than $250,000 follows decades of systematic underfunding of education nationwide and recognizes that borrowers are victims of predatory lending practices.
But this erasure is not enough. More than half of all college graduates have student loan debt, and on average undergraduates leave school with more than $28,000. Some have loans totaling over $100,000. More than 45 million borrowers are collectively in debt of $1.75 billion due to their student loans.
Borrowers who have paid off their student loans in the last 10 years or more and are still making payments have seen their debt amount either stay the same or increase as interest compounding has added to their loans initials. This unchanged and growing expense results when these loans are sold and resold to other lenders when the loan companies buy themselves out.
The cost of a college education has increased exponentially over the past four decades. The White House cites that at that time the cost of higher education in public and private four-year institutions nearly tripled. Forbes magazine reported last June that over the past 30 years the cost of tuition in four-year schools has risen from $4,160 to $10,740 in public schools and $19,360 to $38,070 in private schools. This has only increased the demand for student loans and other financial aid.
The president’s plan will erase up to $20,000 in loans for those who received Pell grants. These grants, at one time, covered up to 80% of the cost of attending a four-year school. Today, Pell Grants cover only about a third of these expenses.
Dave Kamper, senior state policy coordinator for the Economic Policy Institute’s Economic Analysis and Research Network, has worked for 20 years in labor movements in Illinois, Minnesota and Pennsylvania. His most recent work was for the Association of Professional Employers of Minnesota, where he recognized the exorbitant cost of higher education. Kamper found that students attending the University of Minnesota in 1960 could afford a full year of tuition with only six weeks’ pay from a minimum-wage job.
About 92% of all student loans come from the federal government. Each May, the Federal Reserve sets student loan interest rates for the upcoming school year and bases that rate on an auction of 10-year Treasury bills. The Fed has repeatedly raised interest rates to help stave off inflation. Last May, the Fed raised the interest rate on student loans for this reason.
When you consider that we live in a time when our government has bailed out banks and corporations at a time when these institutions are facing financial difficulties, how can our elected leaders hesitate to consider forgiving the student loans that plague most borrowers with debts that last for many years beyond? their degree and sometimes for the rest of their lives?
President Biden should be commended for pushing and signing into law student loan forgiveness. I just wish he had been more forgiving.
Will Buss teaches broadcasting and journalism at Western Illinois University.