Just after news broke of President Joe Biden’s plan to fulfill his campaign promise to cancel student debtRepublicans introduced a bill to explicitly prohibit him from doing so, despite evidence proving that student debt is a significant burden. a major economic crisis.
GOP Senators Bill Cassidy, John Thune (South Dakota), Richard Burr(North Carolina) and two other unveiled a measureThat would be great! bar the president from canceling student debt because of a national emergency, and limit the president’s ability to extend a student debt payment pause.
Their proposal, which is not likely to pass Congress, would also cap any future payment pauses for borrowers with a salary over four times the federal poverty line — or a mere $54,360This is for single adults without children. This is less thanThe starting salary of college graduates from 2020 was $55,260.
The bill was introduced just after a possible breakthrough in the student debt issue. Biden In a meeting with House lawmakers, he said on Tuesday that he’s considering canceling a substantial amount of student debt after Democrats and debt activists have begged him for months to do so.
Roughly 43 millionBorrowers owe $1.9 trillionAccording to the Student Debt Crisis Center, there are approximately 2.4 million student loans. Debtors are often crushedBy the amount of the debt, both financial and mental; some owe triple or quadrupleThey are now unable to repay the original loan amount and feel numb.
Debtors also face “hidden” costs due to their loans, with higher interest ratescredit cards and home and car loans. Cancelling student debt could have wide-reaching economic benefits. Boosting borrowers’ ability to buy a home or start a business.
During this time, the student loan payment suspension, which was initially implemented by Donald Trump during the pandemic’s onset, is still in effect has saved borrowersOver the course of two decades, it was worth approximately $200 billion.
The Republicans argue that student loan cancellation and the payment freeze are a “handout” to wealthy college graduates and those who may have taken on loans for them, parroting a right-wing argument that the people who would benefit most from loan forgiveness are already wealthy and don’t need the money.
These arguments are based upon false premises. People who take out student loans often come from families with little or no generational wealth. has found thatStudent loan forgiveness is progressive. This means that it would be most beneficial to those with the lowest incomes. According to the Roosevelt Institute, the Roosevelt Institute found that the benefit is more progressive the higher the amount of the loan being canceled.
The report also concluded that student loan debt cancellation is crucial for closing the racial wealth disparity, helping Black and Latinx borrowers most affected by student loans.
In a press release, the senators claim that the payment pause costs taxpayers $5B per month. dataThis shows that the pause extension saves borrowers $5 billion per month. However, that’s an oversimplification of how federal student loans work and a flattening of the reason that the government gives student loans to begin with.
It also suggests student loans should be a means of raising money for government, something that even Trump has criticized as cruel. “That’s probably one of the only things the government shouldn’t make money off — I think it’s terrible that one of the only profit centers we have is student loans,” Trump said in 2015.
Student loans are available given out with the purposeIt makes it easier for students that college tuition can be afforded. is rising at astounding rates. It’s in the government’s best interest to make higher education more accessible, as this can help strengthen democratic participation in society and stave off fascism.
The government can lend loans borrowstemporary increase in the deficit until the loans have been repaid; the government may sometimes collectsDue to interest, the loans make only a small profit. While it’s true that student loan cancellation may affect the deficit, a 2018 study by economic scholars found that the benefits of cancellation would be vast — not only for borrowers, but for the entire economy.
The study found that a one-time mass cancellation student debt would give rise to the GDP and generate $1.1 trillion in GDP over a ten year. The policy would create employment, reduce unemployment, and have the potential to offset some of its cost with a modest negative effect on inflation and the deficit.
