No More Opposition To Student Loan Cancellations – Here’s What This Big Newspaper Said
Another major newspaper ran an op-ed today opposite student loan cancellation.
Here’s what you need to know.
The Los Angeles Times The editorial board wrote that “Lawmakers should think much more strategically about student debt, rather than just offering everyone a tax-free loan forgiveness for such large amounts.” This follows 5 signs Biden will not embrace student loan cancellation. Whether you support or oppose large-scale student loan cancellation, several key questions raised in the editorial are worth exploring in more detail:
1. Canceling a student loan could cost up to $ 1 trillion
The editorial notes that while Congress cancels up to $ 50,000 in student loans, the the total cost to federal taxpayers could reach $ 1 trillion. Of course, there are also lower potential cost estimates. For example, there have been cost estimates ranging from $ 400 billion to $ 600 billion depending on student borrowers and the types of student loans eligible. Senate Majority Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA), who have proposed large-scale student loan cancellation of up to $ 50,000 per borrower, would limit the cancellation of student loans federal student loans only. Under their plan, only student loan borrowers who earn up to $ 125,000 per year would qualify. In contrast, if Congress were to write off up to $ 10,000 in student loan debt per borrower, the cost estimate would be lower. The editorial notes that canceling up to $ 50,000 in student loans would write off nearly two-thirds of all unpaid student loans. As part of Schumer and Warren’s plan, the US Department of Education estimates that nearly 36 million student borrowers – out of a total of 45 million – would have all of their federal student debt canceled.
2. It is financially irresponsible for the president to cancel student loans
If you’ve been following the latest updates on student loan cancellation, you are familiar with the legal debate that is brewing with large-scale student loan cancellation. According to the editorial, “But it’s hard to imagine a situation in which a president could responsibly spend so much money with the stroke of a pen, without explicit permission from Congress. This is the legal question of whether the president has the unilateral power to enact a large-scale student loan cancellation by executive order without further authorization from Congress. Progressives in Congress say President Joe Biden already has such authority, and as proof they cite the Higher Education Act of 1965. While the wording of the Higher Education Act may be questionable, the editorial takes the most practical point of whether a president should authorize up to $ 1 trillion by a “stroke of the pen” without the express authorization of Congress. It is unlikely that members of Congress in 1965 intended to give the president – a member of the executive branch – the unilateral authority to spend up to $ 1 trillion. They also probably couldn’t imagine that the total student loan debt would reach $ 1.7 trillion.
3. Student loan cancellation excludes a lot of people
The editorial explains that a large-scale student loan cancellation would help student borrowers who have experienced financial difficulties, some being unable to purchase a car or a house. At the same time, the editorial mentions the different constituencies that do not benefit from any student loan cancellation. For example, student loan borrowers who have recently paid off their student loans but are still in financial difficulty. Since the cancellation of student loans would be ad hoc, future student borrowers would not benefit from any financial relief. Another constituency not mentioned (but which should be taken into account) is that of those who did not go to university but are also experiencing financial difficulties. There are also other ridings that would not benefit from it. Supporters of student loan cancellation argue that while others may be in financial difficulty, student loan cancellation should still be implemented to provide tangible help to a broken higher education system.
4. Student borrowers shouldn’t be treated the same
The editorial highlights the unfairness of treating all student borrowers the same. For example, some student loan borrowers needed student loans to attend a low-cost public college, while others chose an expensive private college and didn’t think about the comparative cost. Other student loan borrowers have sufficient financial resources to pay off their student loans and do not need a bailout. Schumer and Warren sought to address the latter point somewhat by inserting an income limit. However, the income limit, according to some, is too high. An income threshold of $ 125,000, for example, is $ 50,000 higher than the income threshold of the last stimulus check, which provided for a threshold of $ 75,000 for individuals. The income threshold also does not take into account the amount of a student borrower’s savings, which could be used to pay off student loans.
5. Student loan relief should focus on the underlying problem
Rather than a full-scale student loan cancellation, the Editorial Board applauds other recommendations to ease student loans. For example, the reason student loans are so high is that the cost of a college education is prohibitive. Lower the cost of college education and you will have less overall debt on student loans. Biden proposed several measures to make the university more affordable: a tuition-free community college, increased Pell Grants, a simpler student loan forgiveness program, and reduced monthly student loan payments through student loan plans. income-based reimbursement. Democrats in Congress have also proposed canceling student loans with 4 changes. Ultimately, the editorial says that if a student loan is canceled, the amount should be smaller and the student loan forgiveness should target low-income students. This is in line with Biden’s approach so far to adopt a targeted and piecemeal student loan cancellation. For example, Biden recently canceled $ 2.3 billion in student loans. (You can find out here if you are eligible for this student loan cancellation). Interestingly, the Editorial Board says Biden and Congress should pressure colleges to cut costs, including a reduction in administrators, and also encourage employers to remove the college degree requirement for certain jobs, which would reduce the need to borrow student loans.
If you have student loans, make sure you understand all of your options. Student loan cancellation may not happen now or in the future, and if it does, its scope may be limited. Here are some potential options to consider: