You might have gotten a scare when you saw “Student Loans” trending on Twitter this week, but it’s actually good news. President-elect Joe Biden and a host of Democratic politicians have been speaking out about figuring student loan forgiveness into the next administration’s economic plan.
Biden claimed that student loan debt relief “should be done immediately,” even if it takes executive action to achieve it. Biden echoed a multitude of progressives from the Democratic camp adding to the growing discussion about the potential to cancel student loans next year.
Getting rid of student loan debt is a myth many American politicians have recounted, but very little has been done to actually turn these promises into reality. However, there is hope that the upcoming Democratic administration could help alleviate the burden of student loan debt for real. Not only is it more important than ever, but several economic proposals suggest it’s actually feasible.
So, will Joe Biden cancel your student loans? Here’s everything you need to know.
What’s the average student loan debt?
According to Forbes, 45 million borrowers currently collectively owe more than $1.6 trillion of student loans, making this the US’s second-largest consumer debt category. At a record high, the average student loan debt for recent college graduates is more than $30,000 — that’s about $6,300 more than borrowers had to shoulder 10 years ago.
The truth is, student debt is a hydra that is only growing larger and more vicious. As tuition costs continue to go up, so do loans and the ever-increasing racial wealth gap.
How long (if ever) does it take to pay off student loans?
It’s unsurprising that, for most Americans, paying off student loans is a life-long commitment.
According to a 2019 survey conducted by Cengage Student Opportunity Index, on average, students believe it will take six years to pay off their loans. In reality, however, it will take closer to 20.
And loan repayment is not the only dimension of post-college life where new graduates’ expectations may differ from reality. Try finding a full-time job after college to start paying off those debts. A survey by job site Monster revealed that only a lucky 60 percent of grads land a job related to their educational background within six months of graduating.
One thing is clear: College remains a solid investment long after graduation.
So, why would anyone even be against canceling student loans?
With student loans stifling a generation of new graduates and making higher education more and more unattainable, why would anyone be against canceling them? Well, the answer lies in the proposed solutions.
In the past days, several progressive leaders have taken it upon themselves to share their bids to end student loans. For instance, in 2019, Bernie Sanders introduced a plan to cancel all $1.6 trillion of student loan debt in the United States, bundled into the neat Bernie-esque tagline: “The American people bailed out Wall Street. It’s time for Wall Street to bail out the American people.”
In translation, Sanders’ debt cancellation and free-tuition plan sought to fund itself through taxes on Wall Street financial transactions. “If we can provide over $1 trillion in tax breaks to the top 1 percent and large corporations and $740 billion for the bloated Pentagon,” he tweeted, “please don’t tell me that we cannot afford to cancel all student debt and make public colleges and trade schools tuition-free and debt-free for all.”
Other progressives in Congress made their stance on the issue clear this week when they proposed a resolution to effectively cancel student loans. The plan proposed by Senators Chuck Schumer and Elizabeth Warren would enable the President to forgive $50,000 of student loans through an executive order.
However, there’s a reason proposals like this one might never pass. Currently, Republicans control the Senate, and Republican lawmakers are famously critical of any plans to cancel student debt, expressing concerns for taxpayers.
“When you say #cancelstudentdebt, you’re saying a minority of people who had the advantage of obtaining a degree should have their debt paid off by hardworking taxpayers, 2/3 of whom don’t have degrees themselves, or already paid their own student debt off,” said conservative Representative Dan Crenshaw.
If this doesn’t make sense, let AOC break it down for you: “’Things were bad for me, so they should stay bad for everyone else’ is not a good argument against debt cancellation — student, medical, or otherwise.”