Student Loan Forgiveness
Text Version
What it is
With the growth of higher education, 1 in 6 Americans now hold federal student loans while costs continue to rise. Student Loan Forgiveness is a proposed policy that would eliminate some or all education debt held by former students. One such plan advocated for by Sen. Elizabeth Warren would use revenue generated from a wealth tax to eliminate up to $50,000 of debt for individuals, with the forgiven amount decreasing by $1 for every $3 of household income above $100,000. On the other hand, Sen. Bernie Sanders would institute a financial transaction tax to pay for his plan, which eliminates all students’ debt without eligibility requirements.
The case for it
Advocates have touted the potential economic benefits of forgiving student loans, referring studies which claim that spending, job growth, and GDP may increase, and that unemployment could decline. For example, one study estimated up to $1.1 trillion GDP growth over a decade, and 1.5 new jobs annually. Others argue that forgiving student debt leads to higher spending and financial freedom. Additionally, both Sen. Sanders and Sen. Warren claim that because of higher borrowing rates among students of color, their plans would decrease the racial wealth gap.
The case against it
Critics of forgiving student loans emphasize its large cost, which are estimated to be $2.2 trillion and $640 billion for Sen. Sanders and Sen. Warren’s plans respectively. They also claim that these plans do not adequately address the root causes of higher education costs, and could enable colleges to raise prices, accept more students, and offer more programs, even in the absence of value. Others argue these plans can reward financial irresponsibility, enable over-education or non-profitable degrees, and that public funds should not fund individual decisions.
Sources
Forbes: "If $1.6 Trillion Of Student Loan Debt Is Forgiven, This Is What Happens"
Forbes: "Student Loan Forgiveness: Where The Top Democratic Presidential Candidates Stand"
CNBC: "We should all be concerned about the student debt crisis"
Finance & Commerce: "Here’s the argument for erasing student debt"
NPR: "Student Debt Forgiveness Sounds Good. What Might Happen If The Government Did It?"
The Levy Institute: "The Macroeconomic Effects of Student Debt Cancellation"
NBC: "Congress promised teachers student loan forgiveness — but hired loan companies that made it impossible"
Center for American Progress: "Addressing the $1.5 Trillion in Federal Student Loan Debt"
Forbes: "The Moral Hazard Of Student Loan Forgiveness"
Forbes: "Most Total Student Loan Forgiveness Plans Are A Bad Idea"
Wall Street Journal: "Canceling Student-Loan Debt Is a Bad Idea"
American Institute for Economic Research: "Student Loan Forgiveness Is Bad Policy"
Slate: "Forgiving All Student Loan Debt Would Be an Awful, Regressive Idea"
The Heritage Foundation: "No, Your Student Loans Should Not Be Forgiven"
Fox Business: "Student loan debt forgiveness could juice the US economy, but create potential problems, too"
Click here to view the full Research Outline!
With the growth of higher education, 1 in 6 Americans now hold federal student loans while costs continue to rise. Student Loan Forgiveness is a proposed policy that would eliminate some or all education debt held by former students. One such plan advocated for by Sen. Elizabeth Warren would use revenue generated from a wealth tax to eliminate up to $50,000 of debt for individuals, with the forgiven amount decreasing by $1 for every $3 of household income above $100,000. On the other hand, Sen. Bernie Sanders would institute a financial transaction tax to pay for his plan, which eliminates all students’ debt without eligibility requirements.
The case for it
Advocates have touted the potential economic benefits of forgiving student loans, referring studies which claim that spending, job growth, and GDP may increase, and that unemployment could decline. For example, one study estimated up to $1.1 trillion GDP growth over a decade, and 1.5 new jobs annually. Others argue that forgiving student debt leads to higher spending and financial freedom. Additionally, both Sen. Sanders and Sen. Warren claim that because of higher borrowing rates among students of color, their plans would decrease the racial wealth gap.
The case against it
Critics of forgiving student loans emphasize its large cost, which are estimated to be $2.2 trillion and $640 billion for Sen. Sanders and Sen. Warren’s plans respectively. They also claim that these plans do not adequately address the root causes of higher education costs, and could enable colleges to raise prices, accept more students, and offer more programs, even in the absence of value. Others argue these plans can reward financial irresponsibility, enable over-education or non-profitable degrees, and that public funds should not fund individual decisions.
Sources
Forbes: "If $1.6 Trillion Of Student Loan Debt Is Forgiven, This Is What Happens"
Forbes: "Student Loan Forgiveness: Where The Top Democratic Presidential Candidates Stand"
CNBC: "We should all be concerned about the student debt crisis"
Finance & Commerce: "Here’s the argument for erasing student debt"
NPR: "Student Debt Forgiveness Sounds Good. What Might Happen If The Government Did It?"
The Levy Institute: "The Macroeconomic Effects of Student Debt Cancellation"
NBC: "Congress promised teachers student loan forgiveness — but hired loan companies that made it impossible"
Center for American Progress: "Addressing the $1.5 Trillion in Federal Student Loan Debt"
Forbes: "The Moral Hazard Of Student Loan Forgiveness"
Forbes: "Most Total Student Loan Forgiveness Plans Are A Bad Idea"
Wall Street Journal: "Canceling Student-Loan Debt Is a Bad Idea"
American Institute for Economic Research: "Student Loan Forgiveness Is Bad Policy"
Slate: "Forgiving All Student Loan Debt Would Be an Awful, Regressive Idea"
The Heritage Foundation: "No, Your Student Loans Should Not Be Forgiven"
Fox Business: "Student loan debt forgiveness could juice the US economy, but create potential problems, too"
Click here to view the full Research Outline!