President Joe Biden announced on August 24 that the Department of Education will begin "forgiving" up to $20,000 in student-loan debt for Pell Grant recipients and up to $10,000 for non-Pell Grant students.
The decision is controversial, to say the least. Many people view student-loan debt forgiveness as unfair and unjust. Others believe Biden's plan doesn't go far enough.
Here are 5 graphs that support forgiving student-loan debt.
Student-Loan Debt Forgiveness Can Be Viewed as a Tax Break
Biden's student-loan debt "forgiveness" plan targets low- and middle-income Americans. Pell Grants are Federal scholarships awarded based on financial need.
The same people who decry the unfairness of canceling student-loan debt usually support tax breaks. Tax breaks, they argue, allow people to buy more goods and services, which then benefits business, which then creates jobs.
So, one could view canceling $10,000-$20,000 in student-loan debt as a tax break intended to help low- and middle-income Americans spend money and stimulate the economy. The following graph shows that 90% of the debt cancellation will benefit people who earn less than $75,000 per year.
Imagine the benefit to the economy of millions of low- and middle-income Americans suddenly having a major monthly payment eliminated.
Boomers and Gen X Paid Far Less for College
Some critics of Biden's student-loan debt cancellation argue that Baby Boomers and Gen X didn't receive a similar benefit.
They didn't need it. Boomers and Gen Xers paid far less for college than Millennials and Gen Z because the government funded higher education much more when they were students..
The graph below shows how much college tuition increased from 1991 to 2021. The amounts are in 2021 dollars, adjusted for inflation.
The cost of college has nearly doubled in 20 years.
But you have to go back to 1970 to see the full extent of the dramatic increase in the cost of higher education.
Average annual tuition and fees totaled $394 in1970 and required about 246 hours of work at the Federal minimum wage.
Fifty years later, it requires 1457 hours of work at the Federal minimum wage to pay for average tuition and fees.
The next graph visualizes the steeply rising costs of college since most Baby Boomers attended.
The increase in college tuition resulted from a corresponding decrease in state and federal funding for higher education. As the government began cutting higher education funding, starting in 1980, colleges began raising tuition to make up the difference.
But colleges also began spending much more money on nicer dorms, dining halls, and recreation centers. They began creating student services and hiring staff to run them.
Why? To entice students to choose them over other schools. Because without full state and federal funding, colleges had to become businesses to stay open.
It's true that absolute funding has increased massively from 1980 to the present day. But spending per student decreased, especially after the Great Recession.