Should Biden continue to defer student loan repayments?
Editor’s Note: In this view of the future, students discuss whether President Biden should defer student debt. Next week we will ask, “What is the greatest threat to Jews in America: left-wing anti-Semitism or right-wing anti-Semitism?” Students must click here to submit opinions of less than 250 words by January 25. The best answers will be posted that evening.
Outstanding student loans have exploded in recent years. According to a recent study, borrowers owed about $1.6 trillion in 2020, a 144% increase from 13 years ago. The average amount owed is north of $36,000.
This is a crisis that will have serious long-term consequences. We are already seeing some of these: a third of young people are delaying marriage, probably viewing family life and raising children in part as financially impossible when burdened with student loan debt. At a time when birth rates in the United States are at historic lows, this should be of concern to any policy maker.
Individuals must take responsibility for debts they voluntarily incur. But in an age when a college degree is required for most professional jobs, it’s no wonder students (especially those with few resources) are resorting to crippling loans to fund a brighter future.
Major reforms need to be made to make student loans fair and sustainable, starting with implementing federal revenue-sharing agreement programs for borrowers and loosening student loan repayment parameters in the event of bankruptcy. Until then, the federal government, which holds 92% of student loans, is expected to continue deferring payments. This will relieve the man-made barrier that stands in the way of prosperity for millions of young people in our country.
—Matthew Wilson, Princeton University, Politics
Covid is no excuse
Despite the government spending tons of money throughout the pandemic and the more than 10 million jobs currently available in America, progressives still say there is a pressing need for more public funds to facilitate the forbearance from student loans.
One has to wonder when politicians will stop milking Covid-19 to serve their political agenda. It’s not hard to see that for progressives, the ultimate goal is not just student loan forbearance, but outright cancellation. A perpetual moratorium on the repayment of these loans is a way for them to achieve victory, at least temporarily.
Those advocating for greater deferral of student debt need to explain why student debt should be treated differently from other types of debt. Students are no more likely to be in distress than the average American, but Covid relief for mortgage and credit card debt has ended. If Covid becomes endemic in American life, which it increasingly seems to be, we must learn to live with the virus, which includes resuming such ordinary adult responsibilities as paying off debts.
—Jeffrey Wolberg, Columbia University, Computer Science
Starting salaries don’t cut it
President Biden should continue to defer student debt, but only for recent graduates and current students. It is difficult to find a good enough job and to be financially stable in the six months granted by the government before the debt repayment begins. Tuition fees are often very expensive and entry-level positions usually do not pay equivalent salaries. I am a student with large student loan debt and am in a stressful situation. If I can’t find a job that pays enough to cover living expenses and monthly loan payments, my debt will likely remain unpaid and could hurt my budding credit. There are lots of job openings now, but will they still be there when I graduate this year? And will they pay enough to carry my debt? If the answer is no, I don’t know what I will do.
—Sophie Davison, Quinnipiac University, finance and economics
Incremental changes will have an impact
Part of the Democrats’ 2020 campaign platform was a promise to solve the student debt crisis. Joe Biden and his fellow Democrats have said they will write off outstanding student debt.
To date, most borrowers have seen nothing and President Biden is backtracking on his debt cancellation rhetoric. The announced deferral of student debt until May has eased the burden on borrowers, but with unemployment at low levels and an overall labor shortage in the economy, further deferral of student debt will not is not necessary.
Instead of promising to cancel all debts, politicians should fix the flaws in the system. One example is taxable scholarships. I had years where the scholarships I received exceeded tuition and turned into taxable income. This is really a backward idea as tuition is only a fraction of tuition. Students have rent, food, student activity fees, and countless other costs. The federal government taxes these funds, often overwhelming those who need this financial assistance the most.
Our leaders in Washington must stop promising the world and instead implement small changes that can make a meaningful difference for students.
—John Grabda, University at Buffalo, Economics and Chemistry
It’s our debt to assume
Postponing student debt payments during the early stages of the pandemic, along with suspending interest compounding, was a well-reasoned idea. Nobody knew what was going on and there was a justified fear of a severe economic recession which could reduce the ability of graduates to pay off debts or even meet basic expenses.
We are now well past this uncertainty. The economy is growing, albeit timidly, and graduates are finding jobs. The dreaded layoffs across all sectors of the economy never materialized, and Americans of all ages have increased their financial security while working and studying from home.
While I and many of my classmates have benefited from the suspension of student loan repayments, we have paid off the debt and we need to start paying it down. It is unfair to place this burden on the rest of America, and the longer student debt payments are deferred, the harder they will be to restore.
—Jeff Willets, UNC Kenan-Flagler School of Business, MBA
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