Students Loan Forgiveness
The passing of time has manifested education as a justifiable resolution for forthcoming generations. Governments have instituted strategies to sustain education levels, for instance, through the provision of free education for primary education and student loans for advanced learning. The students’ loan has enabled a large number of individuals to acquire a college education and certification. However, these student loans and a dynamic and uncertain job market have led to the development of student debts that have significantly affected the majority of American college graduates. As a result, there is a culmination of debates and proposals to relieve the college scholars; hence, the students loan forgiveness agenda. In the US, the students’ loan forgiveness agenda has elicited significant discussions, particularly on the viability of college education, to avail universal solutions for the greater society instead of aiding individual benefactors. The matter on the forgiveness of student loan debts does not augur well with several economists and members of the public who have either fully serviced their loans or did not benefit from the loans, especially those with high school diplomas not get the opportunity to attend school. Individuals opposing the forgiveness of the loans cite economic slowdown, prospects of increased costs of goods, and an unfair approach to debt settlement as some of the reasons against the agenda. Similarly, a significant figure of the American population would be relieved from the forgiveness of students’ loans that has hampered their dreams of starting a family, owning a home, or undertaking business investments and avert the unemployment crisis currently experienced. In this light, the paper pursues to address the impacts of forgiving student loans in support of the withdrawal of the agenda, and allow for individuals to service their loans.
To begin with, the forgiveness of student loans equates to giving money away to a category of individuals who prospectively could earn higher incomes and experienced significant income growth over the past several decades (Farrington 1). College graduates are favored when it comes to the job market, given the presumption of possessing considerable skills compared to high school diploma holders and dropouts. If help is to be availed using the tax dollars availed as free student loans, then it ought to be individuals who require it the most (Wolfers 1). Although the college education’s effectiveness attracts significant queries, the progression of “free money” readily available through students’ loan has elicited disturbance within the educational structure. Institutions of higher learning continue to raise tuition on the argument that students can readily acquire loans. Nevertheless, the essence and value of the advanced learning certification are queried given students are rarely influenced by the desire for lump sum remunerations on graduation (Applebaum 1). Also, the cost of tuition must not be pegged to the ease in availability for funding sources, such as the student loans or the prospects of higher pay on course completion (Applebaum 1). Despite these shortcomings, forgiving debts in student loans equates to aiding an already elite category given the college graduates are consumers that have acquired a college degree from the deal.
Secondly, by forgiving student loans debt sums up as asking the taxpayers to cater to personal decisions. According to Leslie Tayne, a financial attorney with Tayne Law, the decision equates to pushing the taxpayers to facilitate personal decisions irrespective of how well they turn out to be (Farrington 1). Tayne adds that considering the plan currently engages extra taxes for the rich, it would be significant to all individuals in the long run (Farrington 1). The rich always work out ways to minimize their tax burden, and the middle class bears most of the brunt of these effects. Leslie Tayne believes the plans are sold like an earlier government framework on mortgage amendments, and loan forgiveness package availed a few years back (Farrington 1). Many individuals were trapped within the structure’s weak point that made the mortgagees’ position worse. The government-backed and bank loans had management alternatives; thus, the debts were not forgiven. Further, critics of forgiving student loans argue that it is unfair and divisive (Sloan 1). There are plenty of individuals who had similar experiences or opted for cheaper colleges to avert accruing debt (Sloan 1). Some picked a year graduate course rather than the two-year program to minimize costs. Then there are the millions who applied for student loans and worked hard, planned their lifestyle frugally, and managed to fully service their loans (Sloan 1). In canceling the student loans, it comes as a great disservice to individuals who saved, scrimped, were prudent, and settled their debts. Instead of writing off student loans, better strategies could be adopted, such as expending the “Public Service Loan Forgiveness” framework, allowing for more individuals to teach in rural settings, practice medicine in remote areas, or serve in the military, thereby having some of their loan debts settled with progressive years (Sloan 1). Importantly, by forgiving student loans and placing the burden on the taxpayers, this creates a negative response from the public given people have other loans they are servicing, for instance, credit card and mortgage, and would not appreciate another task that they prospectively have not advantaged from.
More so, forfeiting student loan debt would significantly impact the US economy. Understanding the effects of writing off student loans necessitates the elaboration of the figures. From 2004 to 2020, the student loans rose from $250 billion to $1.5 trillion, becoming the second-largest portion of domestic debt behind mortgages, while surpassing credit card debts. Nearly forty-two million Americans have active student loans. According to William Foster, the vice president of Moody’s, the US real GDP could receive an average boost of between $86 billion and $108 billion annually in the event there is total forgiveness of student loans, and it would aid in mitigating the progressing income inequality (Arnold 1). However, despite the enticing prospects of writing off student loans, it would come at an expense. Foster asserts that the majority of these loans are provided by the federal government, which could forgive them. Though, that means that they forfeit an annual revenue of $85 billion collected presently from these loans; hence, that would generate a broader fiscal deficit (Arnold 1). Significantly, passing the cost to the people through increased taxes would slow down the economy. The economists posit that the determinant of the boost from the debt forgiveness stimulus being more robust compared to the drag resulting from revenue raised in another way was dependent on the legislation details if adopted (Wolfers 1). Even with proposals to tax the rich, the keen individuals already observe that ultimately the cost will trickle down to every individual with enough time (Farrington 1). The rising tax bills and costs are but a few effects of forgiving student loans, and; thus, the need for more awareness of other significant egregious moral risks.
Conversely, the forgiveness of debts arising from student loans presents significant opportunities for the American citizens trapped in the loan situation. The student debt situation has limited plenty of prospects for the American population that affects them at personal levels. Notably, individuals can no longer make significant progress in their life, such as starting a family or owning a home due to their debt situation and limited opportunities for better employment. A generation of Americans is forced to perform major life decisions due to these student loans. For instance, Laura Greenwood, a state education agency staff in Montpelier, presents that when it comes to children, it is not a question on wanting them rather, does one have the capacity to care for them (Arnold 1). In her job, Greenwood makes an annual paycheck of $63,000, and on completion of college and graduate school has accrued student loans to the sum of $96,000 (Arnold 1). She asserts that they are interested in having a family with her partner, but the student loans and other bills limit their decisions significantly. In this regard, it is without a doubt that writing off student loans would open up bottled desires and consumption that would be positive for the economy. There are plenty of individuals who would buy houses, develop businesses, and have children. As earlier presented, forfeiting student loans could release a positive stimulus to the economy and advance the US national GDP by contributing between $86 billion and $108 billion annually (Arnold 1). Similarly, group surveys depict that student loan debts force individuals to postpone homeownership by over five and seven years. As such, the economists observe that there would be a short-term positive effect in the housing market, with the prospects of pushing up the figure of home sales by a significant margin.
Altogether, the agenda of forgiving student loan debts present significant impacts that manifest majorly in the negative. As discussed, the forfeiture of these educational loans unfairly advantages individuals with college degrees who prospectively possess higher chances of getting better jobs that guarantee higher pays. Besides, the economy would be significantly impacted owing to the large number of persons entangled in the student debt cycle. As stated above, student loan debt currently stands at $1.5 trillion and is the second-largest domestic debt after mortgages in the US (Arnold 1). Remarkably, forgiving student loans present as unfair to the non-beneficiaries of the loans as well as those persons who have endured the hustle of servicing their loans. Transferring the costs to the taxpayers affects their financial plan and disadvantages them in settling their other legit debts. The agenda carries significant weight, and politicians encouraging this forfeiture must present an effective plan and rationale. Despite the negatives of the forgiveness of student debt, it would be fulfilling to see young Americans not having to make decisions that affect their natural lives due to debt. Family plays a vital role in one’s development as a human being; hence, the need to be presented with an opportunity to develop one’s family.
Works Cited
Applebaum, Robert. “Debate On Student Loan Debt Doesn’t Go Far Enough.” The hill, 2012, https://thehill.com/blogs/congress-blog/education/226037-debate-on-student-loan-debt-doesnt-go-far-enough. Accessed 19 May 2020.
Arnold, Chris. “Forgiving Student Debt Would Boost Economy, Economists Say.” Npr.Org, 2019, https://www.npr.org/2019/11/25/782070151/forgiving-student-debt-would-boost-economy. Accessed 19 May 2020.
Farrington, Robert. “The Moral Hazard of Student Loan Forgiveness.” Forbes, 2019, https://www.forbes.com/sites/robertfarrington/2019/06/25/the-moral-hazard-of-student-loan-forgiveness/#26701c37364c. Accessed 19 May 2020.
Sloan, Allan. “Canceling All Student Debt Is A Bad Idea.” The Washington Post, 2019, https://www.washingtonpost.com/business/economy/canceling-all-student-debt-is-a-bad-idea/2019/07/05/09b3d11a-9dc4-11e9-85d6-5211733f92c7_story.html. Accessed 19 May 2020.
Wolfers, Justin. “Forgive Student Loans? Worst Idea Ever. – Freakonomics”. Freakonomics, 2011, https://freakonomics.com/2011/09/19/forgive-student-loans-worst-idea-ever/. Accessed 19 May 2020.