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Close your eyes and imagine being a fresh college graduate. Your hometown is an area of the US with a high poverty rate. All your life, you're told the key to a better future is college. You work hard for five years for your degree.
Months after graduating, you struggle to find a job. It's getting too expensive keep renting your place. You have to move back in with your parents. Back to the hometown where you still can't find a job that works with your degree. The best you can get is cashiering or fast food.
Any spare change you get goes to fixing your car. Better paying jobs require relocating, which you can't afford to do. Your highest bill is your loan payment, and you're barely scraping by. Even with the income-driven plan, you don't see a difference. The interest is piling higher and higher, making your debt impossible to pay.
During the pandemic, Congress put a moratorium on borrowers paying off their debt. As of now, borrowers don't need to make any payments until September. Until then, they can make payments with 0% interest.
Progressive Democrats are trying to push President Biden to approve forgiving 50K in student debt forgiveness. As of now, Biden is against forgiving up to 50K. However, he says he'll forgive up to 10K of student debt. For someone like me, that takes out most of my debt. But for borrowers who have up to 100K in debt? That's peanuts!
Forgiving 50K of college debt could do more for people than we think it will. It would be one less expense for millions of Americans, and we'd see better things for the country.
Millennials could finally have the funds to hit important life milestones
In 2021, the oldest millennials are turning forty. It's no secret that this generation isn't doing as well compared to past generations. One of the reasons for that is we have so much college debt we're delaying the milestones our parents achieved in their twenties.
We don't want to buy houses right now because we'd never get out of debt. Having a child is getting more expensive by the day. It's financially impossible to raise a child for a lot of us. It's a joke to assume most millennials can afford to throw $10,000 at a future wedding. Some of us can't afford to rent an apartment or buy a car.
Forgiving student debt is a game-changer. According to Business Insider, 61% of millennials delayed buying a house because of their debt. Imagine if most of the debt disappeared tomorrow. Suddenly, more people are going to want to start looking for a home.
The article also said that forgiving debt would be like giving borrowers and extra $3,000 a month they can use to spend on other things, start investing, and start looking into getting married and having a child. It'll be a relief to our bank accounts and our mental health to have the same financial power as generations before us.
The country would see a siginificant drop in student loan debt
If the president signed an executive order saying all Americans had up to 50K in student loan forgiveness, 80% of all borrowers would turn debt-free. That's thirty-six million people! As of now, the whole country has 1.7 trillion dollars in student loan debt. If Biden signed an order today to forgive 50K of debt for every person in the country, then student loan debt would shrink to 700 billion dollars.
It's a massive jump from Biden's 10K proposal. According to CNBC, if borrowers had 10K of their debt forgiven, the whole country would fall from 1.7 to 1.3 trillion dollars in college debt.
It would help get rid of the racial wealth gap in the country
Additionally, we'd start seeing the racial wealth gap close. According to Huffington Post, student debt is why the wealth gap grew by 57% between Black and White borrowers with bachelor's degrees. Black graduates are more likely to take on college debt than White graduates. Historically Black College graduates can have up to 32% higher debt than white graduates.
With so much good, why are so many people opposed to forgiving debt?
The one thing I'll never understand in the student loan crisis is why so many people get angry at the thought of forgiving debt for millions of people. I found a Bloomberg piece to help me understand why some people would have an aversion to debt forgiveness.
For some, it's pure jealousy. People who paid off their debts get annoyed with loan forgiveness because they won't be seeing anything from it. These people graduated college before a global pandemic. They also didn't have as high-interest rates as the average college student. Public colleges are 213% more expensive now than they were in the 1980s.
Others are afraid that it's going to benefit higher-income people the most. Those with higher incomes and over 100K in debt will still have a significant amount of debt they need to pay. The ones in the most amount of debt are low-income households and communities of color.
The one argument I saw that's worth considering is the possibility of the cost of college going up after a mass debt-forgiveness. One of the reasons college debt is rising is because of a lack of state funding. More students are going to college. Meaning colleges need more teachers, more student services and possibly less transparancy on what colleges are spending their money on. States are helping, but they're not covering everything.
Huffington Post wrote that if loan forgiveness happened, the government would lose billions in the revenue from people paying back their debt. So there is a chance it would come back in the form of higher taxes. The government could also need to find a way to budget for a plan B.
I don't regret my college education at all. I don't think I ever would've fulfilled my dream of traveling the world and living in China if I never went to college. It's great to be out of the house when you're in college and figuring out who you are. But the rising costs make you think about what the next step will be before you do it.
If I were graduating high school today, I don't know if I'd go to college right away. College would still be in my future, but I would take more time to look into the cost and whether or not it's worth it for what I want to do.
Whatever your stance on debt forgiveness is, it starts a conversation we're getting braver about having. College isn't the golden ticket to wealth that it used to be. It's best to put more time into researching degrees and the cost than ever before.