President Joe Biden plans to forgive federal student loans for up to $10,000 per borrower, a major part of his 2020 campaign promise. Due to the COVID-19 pandemic, recent college graduates, already burdened with mass amounts of debt, face a dark economic reality—the worst job market since the Great Depression. Due to the surveillance of predatory loans and a near-complete shutdown of the job market for nearly a year, it is in the best interest of the lower and middle class for the Biden administration to forgive $50,000 in student loans in order to ensure economic stability.
Predatory loans have devastated our economy. Due to a lack of legal definition for what predatory lending is, it is difficult for individuals to seek out justice for the unfair, abusive terms predatory loan companies place upon their customers. This statistic is further concerning considering that predatory loans disproportionately concern lower-income communities with poor credit. The idea of taking out predatory loans with college tuition has become normalized, especially with first-generation college students who are more likely to have to take out large, private loans before understanding the implications of high-interest-rate loans.
The United States is facing a historic crisis caused by this pandemic, with more than 40 million Americans faced with repaying 1.5 trillion in federal student loan debt. Biden states that student loan forgiveness is part of his plan to invigorate the economy, citing the HEROES Act which was purported to pay off a portion of student loans. However, this is not enough to create lasting change for the many Americans crushed by student loans, nor is it a sound long-term solution for the economy.
According to the Brookings Institution, student loan debt is the second biggest share of debt in the United States. Student debt cancellation will boost the economy, as a debt cancellation would put $3,000 a year back into the pockets of many student loan holders. Therefore, loan forgiveness is the most effective action available to the Biden administration to create a massive increase in economic stimulus for the economy, due to the relief it would provide to millions of Americans who are on the brink of bankruptcy during this recession. Some argue that the forgiveness of $10,000 would be the most beneficial to the economy, but what they fail to take into account is that the cancellation of that sum would only cancel out 30% of student loans, which is not nearly enough to tackle the enormity of the debt that exists. Forgiveness also benefits millennials who have put off milestones such as car purchases, marriage, and buying their first home. In the short term, this would be very beneficial for the housing market in many parts of the country, as student debt delays people from homeownership by five to seven years.
Aside from this massive debt’s impact on the economy, the student loan crisis is making people miserable. A survey found that more than half of student loan borrowers state that they’ve experienced depression due to their debt, and 90% reported having anxiety. Even if taking out a loan boosts one’s lifetime earnings, it is unjustifiable to compromise the long-term mental health of individuals. Furthermore, depression and anxiety have real-life consequences on our economy. As young Americans place a significant impact on the economy, and the confidence of each individual’s spending hinders their spending.
The fact that education and higher education have become economically infeasible is simply un-American. Canceling student loans would help lower and middle-class families – arguably one of President Biden’s primary platforms during the 2020 election. The Biden administration must take action and increase the currently proposed $10,000 in federal student loan forgiveness to $50,000 in order for young Americans to fully participate in the economy. The US government’s lack of accountability in regulating the increased cost in college, loan interest rates, and poor handling of the pandemic necessitates forgiveness of $50,000 in student loans.