Student loan cancelled by Biden administration 2

Student loan debt has become a significant issue for millions of Americans, leading to a heated debate about whether this debt should be forgiven. Here, we explore arguments for both sides of the debate.

Biden Administration’s Actions on Student Loan Forgiveness

President Joe Biden’s administration has actively pursued measures to address the student loan debt crisis. As of now, the administration has canceled nearly $144 billion in federal student loan debt. This significant relief effort includes forgiveness programs targeting public servants, disabled borrowers, and those defrauded by for-profit colleges.

Brooklyn, New York United States - April 3, 2021: Protester at rally holding sign with words "Biden Cancel Student Debt already". Other signs: "Make College Free", "No Way 50K Schumer Go All the Way".
Brooklyn, New York United States – April 3, 2021: Protester at rally holding sign with words “Biden Cancel Student Debt already”. Other signs: “Make College Free”, “No Way 50K Schumer Go All the Way”.

Cost to Taxpayers

To estimate the cost per taxpayer for this debt cancellation, consider the number of taxpayers in the U.S. According to the IRS, there are approximately 150 million individual taxpayers. Dividing the $144 billion forgiven by 150 million taxpayers, the approximate cost per taxpayer would be:

Thus, each taxpayer has effectively contributed around $960 toward the student loan forgiveness initiative.

Argument for “Yes”

Economic Relief and Stimulation

Advocates for student loan forgiveness argue that canceling this debt would provide substantial economic relief to borrowers, increasing their financial freedom. According to Investopedia, this relief could lead to increased consumer spending and stimulate economic growth. Individuals burdened by student loans often delay major life decisions such as buying homes, starting businesses, or even starting families. By freeing up these financial constraints, the overall economy could see a boost in various sectors, ultimately benefiting everyone.

Social Mobility and Fairness

Supporters also highlight the social benefits, noting that student loan forgiveness could promote social mobility and reduce economic disparities. Many borrowers are from lower-income backgrounds, and forgiving their loans could help level the playing field. It is argued that the current system disproportionately affects marginalized communities, and loan forgiveness could be a step toward rectifying these inequalities, providing them with opportunities they might otherwise miss.

Mental Health Benefits

Another important aspect is the mental health impact. The stress and anxiety associated with student debt can be overwhelming. The University of Cincinnati article points out that alleviating this burden can significantly improve the mental well-being of borrowers, leading to a more productive and healthier society.

Argument for “No”

Cost to Taxpayers and Economic Consequences

Opponents of student loan forgiveness argue that the cost to taxpayers is too high. The Buckeye Institute article suggests that the financial burden of canceling student loans would ultimately fall on taxpayers, many of whom did not attend college or have already paid off their loans. This could lead to increased taxes or cuts in public services, affecting the broader population.

Unfairness to Non-Borrowers

Critics also emphasize the unfairness to those who have already paid off their loans or chose not to take on debt in the first place. Divided We Fall notes that forgiving student loans could be seen as penalizing those who made significant sacrifices to pay off their debts. This could create a moral hazard, encouraging future students to take on more debt with the expectation that it will eventually be forgiven.

Inflation and Economic Disruption

Additionally, there are concerns about the potential inflationary effects of a sudden increase in disposable income for borrowers. The University of Cincinnati highlights that this could lead to higher consumer prices, negating some of the benefits of loan forgiveness. Moreover, the disruption to the lending and educational systems could have long-term negative effects, potentially leading to higher tuition costs and a more unstable financial aid system.

Conclusion

The debate over student loan forgiveness is complex and multifaceted. On one hand, it promises significant economic and social benefits, particularly for those struggling with debt. On the other hand, the financial implications and potential unfairness to taxpayers and non-borrowers cannot be ignored. As this issue continues to be discussed, it is crucial to consider both the immediate and long-term consequences for all stakeholders involved.

For more detailed insights, you can read the articles:

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