Student Loan Forgiveness: Advantages and Disadvantages

Student loan forgiveness implies that the loanee is no longer required to pay part or full amount of the outstanding loan balance. The current policies base on the universal loan balances in ensuring student loan forgiveness to the debtors. President Biden rejected the $50,000 request for loan forgiveness in the office and suggested a lower provision for the situation (Murakami, 2021). Factors such as job description contribute to loan forgiveness.

There are several types of loan forgiveness, including public and teacher loan forgiveness. The public service forgiveness program allows application from individuals working as government employees for non-profit entities (Chapman & Dearden, 2017). The program forgives employees on the remaining direct loan balance after making 120 monthly payments in the required repayment plan under full-time service to a qualified employer. On the other hand, teacher loan forgiveness involves individuals who have worked full-time hours for five years in a low-income elementary or secondary school or educational agency.

This individual is legible for up to $17500 on the direct loans. Other student loan forgiveness includes instances of the student’s death or withdrawal from the institution. The students claim for the federal funds refund in degree deferment under loan funding people also applies for loan forgiveness while under bankruptcy. Individuals apply for loan forgiveness through the servicer and continue paying during the approval period. The cancellation approach considers critical issues in the higher education loan board, such as the distressed debtors, the higher loan holders, and those struggling to pay to ensure that all individuals gain from the service. It also captures essential aspects such as the disabled individuals who are legible for loan forgiveness application.

There are several advantages concerning student loan forgiveness to the debtors. The call $50,000 student forgiveness fund will successfully eliminate the racial wealth gap, benefiting around 40% of loan beneficiaries and improving the nation’s economic status (Murakami, 2021). Forgiveness helps the students in managing their financial situation, mostly those originating from low-income backgrounds. Students from poor backgrounds struggle to attain higher education due to high tuition fees, requiring them to borrow loans for sustenance. As the students graduate and join the workforce, the salaries cannot support the high cost of living and loan repayment.

The sociological research depicts gender inequality in the students’ financial status. In some cases, male graduates receive higher salaries than females (Saleh et al., 2017). Student loan forgiveness also serves justice to defaulters who could not complete their studies for various reasons. Through loan forgiveness, these individuals can comfortably support the living standards and contribute to the nation’s economy through investment.

Economist study indicates that financial prosperity depends on increasing families’ economic stability (McKay & Kingsbur, 2019). It suggests that the US economy cannot stagnate due to inadequate college-graduate workers, but it lags due to more graduates taking longer to pay larger loans. Another advantage is that loan forgiveness contributes to equity driving towards reducing the racial wealth gap. The higher loan debt undermines many families from attaining financial security. The economic situation results in diverse consequences affecting the nation and its citizens. The loan forgiveness move ensures that the education gained enhances financial protection to all beneficiary students, adding economic flourishing.

Student loan forgiveness also encompasses disadvantages in its progression. The forgiveness plan that exists could ensure inequality by favoring the high-income individuals who are more likely to repay the loan consistently than the low-income persons (Yannelis & Sylvain, 2020). This situation contributes to the concentration of wealth among the wealthy while the poor languish in poverty. The policies allow the upper-class individuals to complete and accumulate wealth while the low-incomers struggle to repay the loan for more extended periods (McKay & Kingsbur, 2019). Another disadvantage is the uneven distribution of the forgiveness policies regarding race and ethnicity.

Basing on the universal loan balances in forgiveness progression, the blacks and whites are bound to benefit more while the Hispanics receive lower average benefits depicting the inequality aspect. This situation displays the low-income Hispanics having financial insecurity (Yannelis & Sylvain, 2020). Lastly, student loan forgiveness contributes to the high federal expenditure. This situation is evident in Biden’s statement concerning loan cancellation funds that could improve early childhood learners’ learning standards in the lower-income areas. By supporting the learners from starting level to higher education, especially among the low-income individuals, the nation improves its citizens’ living standards.

Forgiveness in student loans is essential in every nation that wishes to improve its economy and its citizens’ financial status. The various policies and provisions concerning the forgiveness process entail some advantageous and disadvantageous aspects depending on the beneficiary’s income status and the universal balance status (Collier, 2020). Federal intervention advantages in loan progression include eliminating the existing wealth gap, improving the borrowers’ financial situation, and nourishing the national economic level (Murakami, 2021).

On the other hand, the disadvantages include the inequality level relating to income and ethnicity and financial constraints with early childhood education support requirements. The federal government has the responsibility to ensure equitable distribution of student loan forgiveness provisions. It can achieve the goal through the involvement of educational and financial stakeholders in the intervention process. The successful policy intervention will strongly contribute to the nation’s economic improvement.


Chapman, B., & Dearden, L. (2017). Conceptual and empirical issues for alternative student loan designs: The significance of loan repayment burdens for the United States. The ANNALS of the American Academy of Political and Social Science, 671(1), 249-268.

Collier, D. A. (2020). Exploring IDR: A comparison of financial situations and behaviors between those in traditional student loan repayment and those in income-driven repayment. Journal of Student Financial Aid, 49(2), 1-24.

McKay, K. L., & Kingsbur, D. (2019). Student loan cancellation: Assessing strategies to boost financial security and economic growth. Web.

Murakami, K. (2021). Biden rejects $50,000 loan forgiveness. Inside Higher ED. Web.

Saleh, A., Yu, Q., Leslie, S. H., & Seydel, J. (2017). Gender equity, student loans and returns on investment in American higher education. International Journal of Sociology of Education, 6(2), 216-243.

Yannelis, C., & Sylvain, C. (2020). How student loan forgiveness could increase inequality. Web.

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ChalkyPapers. (2023, September 17). Student Loan Forgiveness: Advantages and Disadvantages. Retrieved from


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ChalkyPapers. (2023) 'Student Loan Forgiveness: Advantages and Disadvantages'. 17 September.


ChalkyPapers. 2023. "Student Loan Forgiveness: Advantages and Disadvantages." September 17, 2023.

1. ChalkyPapers. "Student Loan Forgiveness: Advantages and Disadvantages." September 17, 2023.


ChalkyPapers. "Student Loan Forgiveness: Advantages and Disadvantages." September 17, 2023.