Here are 5 serious questions on student loan forgiveness for President Joe Biden.
Here’s what you need to know — and what it means for your student loans.
Student Loans
As Biden decides whether to enact wide-scale student loan cancellation, there are several questions that he should answer for the American people. While student loan forgiveness will be a major win for student loan borrowers, Democrats and Republicans alike will want to know the “why” behind the “what.” The Biden administration should start by answering these 5 questions:
1. Why cancel student loan debt?
First, Americans will ask: “Why cancel student loan debt?” Advocates for wide-scale student loan cancellation offer several reasons. This includes, among others, economic stimulus, reduction of disparities, increased family formation and homeownership, and higher retirement savings. However, some Americans ask: “Will Biden cancel mortgage debt?” Or credit card debt? How about medical debt? There are millions of Americans who struggle every month to pay a mortgage or medical debt. They want a shot at the American Dream. They too have sacrificed starting a family, saving for retirement or starting a business. The Biden administration needs a clear answer why student loan borrowers will be prioritized over homeowners when members of both groups may be struggling financially.
2. What’s the message to people who don’t have student loan debt?
Second, Biden needs to explain to the 80% of adult Americans who don’t have student loans why student loan debt is being canceled for millions of Americans. The answer could be “because it’s the right thing to do” or “we need to help our fellow Americans.” However, only about 35% of adult Americans have a college degree. That means most adult Americans don’t have a college degree. Some of these Americans may support wide-scale student loan cancellation, but most will wonder why student loan borrowers are getting special treatment. Americans without a college degree may view college as a privilege and path to higher earnings. For these constituents, it seems illogical to focus on the elite few who were able to access college when millions of others have been excluded due to life, financial or other circumstances. (Student loan forgiveness is completely unfair to these people).
3. What is the message for future student loan borrowers?
Third, Biden needs to clearly explain whether student loan cancellation will happen again. Currently, student loan cancellation is expected to be a one-time deal. That is, if Biden proceeds with wide-scale student loan forgiveness, it will happen on one day. If you have student loans on that day, you could qualify for student loan relief. If you borrow student loans the next day, you’re out of luck. What is the message for future student loan borrowers? Should they expect student loan cancellation? Or will student loan cancellation become a campfire story about that time when all your student loan debt got paid off? Future student loan borrowers need an answer. Otherwise, they could borrow more student loan debt, expect student loan cancellation, but never get any. If the answer is, “Yes, there will be more student loan cancellation,” the American public should know that too.
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4. Will former student loan borrowers get student loan cancellation?
Fourth, former student loan borrowers need official clarity on whether they too will get “student loan cancellation.” Yes, they have already paid off their student loans. However, they will wonder whether they will get compensated for honoring their financial commitment. Some critics of this policy say former student loan borrowers are among the lucky few who could afford to pay off their student loans. But, many of these former borrowers made major life sacrifices to pay off student loans. From working three jobs to not saving for retirement, they too struggled financially. The Biden administration should address whether student loan borrowers who recently paid off student loans will receive financial help.
5. What’s the plan to lower tuition?
Fifth, any student loan forgiveness should be accompanied by a comprehensive plan to make college affordable. Republicans and Democrats can agree that tuition is too expensive for most Americans. What’s the game plan to address the cost of higher education? Biden has proposed tuition-free college at public colleges and universities. Are there alternative strategies? Can the federal government help lower the cost of tuition at private colleges and universities? Without clear changes to higher education, Americans could lose confidence in attending college if the price tag is too costly. Without a plan to address the underlying issue, critics of student loan forgiveness will label Biden student loan forgiveness as a bandaid to help Democrats win the midterm election.
If the Biden administration answers these questions, it will help provide more clarity to the American people to understand the broader picture of student loan forgiveness. However, simply announcing “student loan forgiveness” without further explanation may create resentment, which could hurt Democrats’ election prospects and weaken the push for student loan cancellation. As student loan borrowers navigate the best ways to pay off student loans, consider these options to save money and get out of debt faster:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)
