Proponents argue that large-scale debt cancellation would help advance racial and socioeconomic equality and boost the economy.
Student loan debt has disproportionately hurt black students. Forgiveness could help rectify racial inequity. Black college students borrow more than their white counterparts due to family income, generational wealth, parental education…
Borrowers with undergraduate loans more than 20 years old and people whose loan balances have grown due to interest are among those who would have federal student debt forgiven under rules proposed by the Department of Education.
Myth: Student loan forgiveness is the fair way to help Americans escape massive amounts of debt. Fact: Borrowers signed on the dotted line for their loans. Erasing these loans does not teach borrowers to manage their debts. Moreover, the cancelation is an insult to those who diligently paid off their loans.
Canceling student loan debt may result in higher inflation rates. Canceling student loan debt may also result in higher interest rates.
"The nearly $5 billion in additional debt relief announced today will go to teachers, social workers, and other public servants whose service to our communities have earned them Public Service Loan Forgiveness, as well as borrowers qualifying for income-driven repayment forgiveness because their payments are for the ...
Since the student loan cancellation program is unfunded, all else equal there won't be any additional future revenues to offset this increase. Thus, the real burden has to decline. This is achieved by an increase in the price level.
The Republican lawmakers said they view President Joe Biden's plan to forgive student debt as an unfair approach that saddles taxpayers with the bill and doesn't address the underlying issues that are causing college costs to rise.
Though plenty of borrowers owe more than $10,000, any sort of student loan forgiveness would benefit them financially. Some economists believe loan forgiveness also would stimulate the economy as borrowers could use that money for other purposes, such as buying a home.
Canceling student loan debt could help with economic opportunities by making other wealth-creating investments, such as homeownership, more feasible. Student debt has led to a 20 percent decline in homeownership among young adults. Cancellation could help reverse this trend.
In a pair of recent cases, the U.S. Supreme Court ruled on the Biden administration's student loan forgiveness program. In Biden v. Nebraska, which was decided 6-3, the court struck down the administration's student loan forgiveness program and agreed with the six challenging states that they had standing to sue.
Who could benefit the most from Biden's latest attempt at student loan forgiveness? Undergraduates at public two-year colleges might be in the best position – if the administration's new policy holding predatory colleges more accountable goes as planned, that is.
The court's three liberal voices — Justices Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson — all opposed the decision.
Loan Debt Is an Economic Drag
Despite their qualifications, grads often have to settle for lower-paying, lower-skill jobs just so they can start paying their loan bills right away. As a result, graduates in debt often miss out on the benefits that come with a degree.
For decades, there had been enthusiastic bipartisan agreement that states should fund high-quality public colleges so that their youth could receive higher education for free or nearly so. As a result of this ideological swing, student loan debt began to mount.
U.S. student loan debt totals $1.74 trillion as of September 2023. Eliza Haverstock is a lead writer and spokesperson on NerdWallet's education team, where she focuses on student loan repayment and college alternatives.
According to economists, the repayment of student loans will result in a monthly reduction in consumer expenditure in the United States of up to $9 billion, or over $100 billion annually.
What does the Supreme Court's decision mean for student loan debt relief? REPAYING LOANS. Under the court's ruling, the U.S. Department of Education (ED) has been prohibited from implementing the Biden-Harris Administration's one-time debt relief program.
The federal government or a commercial entity owns your student loans. Private companies own all private loans. The U.S. Department of Education holds most federal loans. Both the Department of Education and private institutions partner with third parties called student loan servicers.
That proposal was hugely popular with borrowers, who saw it as a chance to alleviate at least of some of the debt they've complained is holding them back from moving ahead in life. However, many Republicans— including the lineup of politicians seeking the 2024 GOP presidential nomination — didn't like the policy.
Around two in five (39%) support forgiving all student loan debt for people earning less than $125,000 per year or less than $250,000 for married couples. However, just three in ten Americans support forgiving all student loan debt, regardless of income (29%).
US President Joe Biden has announced a new round of federal student loan forgiveness to address the “unsustainable debt” that borrowers accumulate to complete their college education. This move aims to help 125,000 borrowers by clearing $9bn in debt through existing programmes.
Another concern of forgiving student debt is “moral hazard,” the idea that students might make riskier choices if they think their debt will end up being forgiven, Jones said.
Many economists say it's plausible for the policy to increase inflation. If people have less student loan debt to pay off, that frees up a portion of their budgets that they would otherwise spend on their loans.
Student Loan Forgiveness is Unlikely to Impact Inflation Rates | Bankrate.