By Jacob H. Weissman
In light of the looming student debt crisis, the Biden-Harris administration has presented a plan to write off $ 10,000 in federal student loan debt for every borrower. We are a long way from total cancellation of student debt, as some 55% of Americans would like.
As a former public university graduate and a borrower burdened with tens of thousands of dollars in federal student debt, I saw first-hand the impetus behind these calls.
Full forgiveness supporters argue President Joe Biden’s plan fails to adequately deal with nearly 30 million Americans with debt above the proposed threshold, failing to stimulate the economy or address injustices in the system in place.
But what exactly are these injustices? On the one hand, while students are expected to repay the loans they take out, this same expectation does not always apply to large companies. In the 2008 bank bailout, the federal government spent billions to save companies like Bank of America, Morgan Stanley and General Motors from bankruptcy.
Currently, student debt is our second largest debt category, behind only mortgages; it represents a staggering $ 1.67 trillion owed to some 45 million borrowers. The government, on behalf of the Congressional Budget Office, collects multi-billion dollar annual returns on these debtors: a whopping $ 135 billion between 2005-2015.
One could reasonably question the moral considerations of a state that concludes such lucrative credit agreements, especially since a university degree is required or expected for nearly two-thirds of jobs in that country.
Federal interest rates on student loans are between 4.5% and 7.5%, which is higher than the average for a 30-year fixed mortgage (3.8%), a loan 60-month automobile (4.5%) or the current 10-year Treasury lending rate of 1.1%.
If many students are unable to repay these loans due to insufficient salaries, interest rates will rise, causing the whole tangle to spiral downward. The pervasive stagnation in wages combines with the exponential rise in the costs of college education to create a situation in which it is risky for a generation to seek the education they need to survive.
The government cannot bear the brunt of missed payments. Billion-dollar losses don’t mean much when you can take advantage of your college-educated taxpayers, who contribute some $ 381,000 more in taxes than they receive in benefits over their lifetimes. . The state is amortized by an infrastructure that almost guarantees that it will get its money’s worth.
If the government wanted to help create a future sustainable workforce, it would cap the cost of public higher education, support adequate salaries, and prosecute those who manufacture dangerous financial instruments.
More than 325 organizations echoed the call for the cancellation of federal student debt in a letter to the new administration, including the NAACP, the Hispanic Federation, the National Women’s Law Center and the American Psychological Association. A growing number of politicians – including Rep. Alexandria Ocasio Cortez, DN.Y., Rep. Ayanna Presley, D-Mass., And Senator Bernie Sanders, I-Vt. – encouraged Biden to unilaterally write off the debt, a move deemed “legal and admissible” in an analysis by three legal experts at Harvard University this fall.
It’s time to cancel student loans, along with debt-free tuition at public universities. We do not owe the government a tribute for seeking the means to survive; these opportunities are due to us.
Jacob Weissman is a Los Angeles-based musician and former organizer of the Massachusetts Public Higher Education Network.