Student loans: To forgive or not to forgive
According to the U.S. Federal Reserve, more than half of the young people who enrolled in college in 2018 took on debt. No surprise there.
A recent Federal Reserve report states that the average annual tuition is $34,740 at a private college or university, $9,970 for state residents at public colleges, and $25,620 for out-of-state residents attending public universities. This is tuition only and does not include the cost of room and board.
A college education is not cheap. The question is, has the price of a diploma become too steep?
The reality is that when Dick or Sally walks across the stage, accepts his or her diploma and ventures into the real world, it is not with a clean slate. Accompanying them are student loans that will have to be repaid.
This is nothing new. Their parents and grandparents were likely in the same boat. Higher education comes at a cost. It is not free, and more often than not it is necessary to borrow to attain that education.
Statistics show that loan debt has risen at a rather alarming rate over the last two decades. According to the Federal Reserve report, about 69 percent of students from the Class of 2018 graduated with an average debt balance of $29,800.
The reserve’s report states that outstanding student loans now total nearly $1.5 trillion in the U.S., more than triple the debt young people held 30 years ago. Almost 45 million Americans have student loan debt, and nearly 7.2 million are in default on those loans, as they face stagnant wages and rising costs of living. Black and Latino Americans face the worst effects of the student debt crisis, with many still owing more than 100 percent of their loan balance 12 years after college, even with a degree in hand.
So, how are we to respond to the rising student loan debt burdening our college graduates? Do we find a way to fix it, or is there anything to fix? One could easily take the approach, “Hey, you borrowed the money understanding it would need to be repaid, so quit whining repay it.”
U.S. Senator and 2020 Democratic presidential hopeful Elizabeth Warren views it as a “student debt crisis” and wants to do something about it. Warren and S.C. Congressman James Clyburn recently announced their plan to introduce legislation to cancel student loan debt for millions of college graduates.
The proposed bill would call for the federal government to eliminate up to $50,000 in student loan debt for 42 million Americans, providing debt relief to 95 percent of student borrowers, including cancelling student debt entirely for 75 percent of borrowers.
According to a press release from Warren’s office, “The bill would significantly lessen the student debt crisis that is holding back generations of young people, help millions of struggling families obtain financial stability, and would also take meaningful steps to begin to close the racial wealth gap.”
Warren proposes a wealth tax to cover the cost, which some estimate at nearing $640 billion. The wealth tax itself has not been defined or detailed.
Depending on who you ask, the proposed bill is either wonderful and long overdue, or just another preposterous illustration of liberal overreaction.
Sen. Bernie Sanders has his own idea on fixing the problem. Of course, that is if you agree there is a problem. Sanders has proposed a “College For All Act,” which would eliminate undergraduate tuition at 4-year public colleges and universities. The legislation would provide $47 billion per year to states to eliminate undergraduate tuition and fees at public colleges and universities.
Free education. Is it realistic? Is it wise? We’re not sure.
Loan forgiveness or tuition-free college moves the burden of payment onto taxpayers and off the individual student. This does not seem fair.
Also, it’s not an absolute certainty that loan forgiveness would alleviate the problem, if in fact there is one. It might even create an even greater problem.
We won’t take sides on the issue, but we are certain that the cost of higher education and who should foot the bill will be a hot topic issue when campaign season is in full swing.