The Biden administration’s decision to provide student loan debt relief, specifically $10,000 for those earning less than $125,000 in annual income and $20,000 for Pell Grant recipients, has sparked a massive debate on the fairness of debt relief for people who have contractually agreed to pay it. return. Much of the noise came from those on the political right, and that resulted in a tit-for-tat back-and-forth between members of the United States Congress and the official White House Twitter account.
We need to cut through the partisan noise and have an honest conversation about debt relief and the future of student loans.
Two things are true
1) People should pay their debts.
2) People should be protected against predatory lending practices.
An in-state degree, and let’s take an education degree as an example, can easily cost a student over $100,000 when you factor in tuition, room, board, books, transportation and unpaid teaching time.
Assume the student in this scenario has accumulated $40,000 in government guaranteed student debt over this 4-5 year period. Assuming that the average teacher’s starting salary is around $40,000, if that student follows a 10-year repayment plan, the minimum monthly payments will exceed 20% of that teacher’s pre-tax monthly income.
If this hypothetical student is able to make every minimum payment over the 10 years to pay off this debt, he will have repaid over $80,000 to the government and probably given up a fifth of his income over the course of a decade ( assuming they are still able to support a teacher’s salary in their early thirties in the face of housing needs, family planning, inflation, etc.).
That same student who was able to get $40,000 in student loans was probably early enough in his credit history that opening a bank-protected, bankruptcy-protected line of credit for a few hundred dollars would have been more difficult than getting an unprotected and previously unforgivable loan for tens of thousands of dollars.
When the banks think you’re not a good bet to recoup a few hundred dollars, why should education lenders think you’re a good bet to bear exponentially more unforgivable debt in an economy where wages are stagnating by relation to inflation and housing?
I totally feel the frustration of people who have endured the pain of a full refund looking at people who have not yet completed this process and feeling unfair. But what we can’t do is pretend the government has no history of targeted bailouts that benefit one group over another.
American taxpayers have bailed out banks, the auto industry, the agriculture industry, and more recently, corporations struggling to meet payrolls during Covid via PPP… We are also perpetually helping to subsidize mega corporations that fuel the creation of bazillionaires.
We even spend, and it’s absolutely true, hundreds of millions to make sure that free penis pumps are available for men who are unable to achieve an erection under natural circumstances.
So why is it that when the subject of solving a student debt crisis born of rising tuition fees between 4 and 8% per year, outpacing inflation nearly five times, so many people start to decry and mock the generation of people who withdrew these loans in the hope that they would be qualified to fill the available jobs and live with the same quality of life as previous generations? If millennials are drowning in debt at a rate never seen before and wages are not rising to ensure the debt is resolvable, then without relief the people who are really hurting are anyone who produces any type of good or of service which depends on disposable income.
In other words, if we don’t have any money left at the end of the month, you can’t have any.
I sympathize with anyone who views those who receive loan forgiveness as gratifying irresponsible individuals and as an endemic symptom of a “give me generation.” But does your definition of the “give me generation” include America’s soybean and corn farmers? What about the baby boomers who wrote subprime mortgages that led to the financial and housing crisis of 2009? Or the restaurateurs who needed a subsidy to retain their employees during the worst pandemic in 100 years? Or the millions of people and businesses that enjoy bankruptcy protection?
What about those who suffer from erectile dysfunction?
At the end of the day, colleges are bloated, overcharging, and not responsible for helping students understand the employment landscape versus the debt they’re racking up.
Companies are doing all they can to show investors ever-increasing profit margins at the expense of stagnant wages for a generation that is being forced into more debt than ever to even participate in many entry-level jobs. range. $10,000 in loan forgiveness is fine…but colleges will continue to charge students based on what the government will allow an 18 year old to borrow and knowingly send them into fields that don’t pay a salary commensurate with the ability to live and honor their commitment as a borrower.
The whole system needs an overhaul, but it won’t happen if we’re all busy bickering over who deserves this helping hand.
The only reason our entire economy hasn’t collapsed as fuel prices, food costs and housing expenses run amok is that right now tens of millions of Americans did not have to give up more than 10% of their income to repay a student loan. the last two years. When these payments start again, times will be very tight. And people who are unhappy that there are Americans enjoying loan forgiveness right now, are going to be forced to realize that our economy is entirely interdependent on the purchasing power of its middle class.
Like it or not, we are in the same boat, and the income that remains in the hands of people who were previously indebted to the government for loans they took out at an age where a financial institution would have scoffed at even of a $300 line of credit, will find its way into the economy, and potentially into your pocket.
Instead of fighting, let’s be grateful that we were able to press the snooze button on our complete financial demise as a society until another day, and come together to make the changes necessary to ensure people use the system college more wisely and be trained for the jobs that will keep us afloat for decades to come.