The student loan cancellation has triggered a debate between proponents and opponents. A student loan is a significant debt burden in America after the mortgage debt. Students graduate with huge debts that usher them into lives of financial struggles. This denies them the opportunity to build wealth at their prime ages as significant income goes into servicing their student loans. Proponents of student loan cancellation cite economic stimulus and the need to address generational racial and gender economic divides. In contrast, the idea’s opponents believe the move would inspire other groups reeling in debt to petition the government for bailouts. With the ballooning cost of education, high inflation and slow rise in salaries, student loans are expected to grow in the US, and forgiving these loans is progressive.
Education supplies the skills needed for economic development and thus should be offered by states and governments free of charge to every willing citizen. Students in the US take loans to finance their studies because the government has failed to make education a right for all (Applebaum). The relationship between students and the economy is symbiotic, with the former supplying critical competencies required by the latter. Therefore, it should be the government’s obligation to educate its citizens to prepare them sufficiently to contribute to nation-building. States financing their citizens for a college education is a successful model in other developed economies like Germany, Denmark and Finland. Finland, for instance, provides free college education for Finns and European citizens. The model ensures that a student graduates with no debt and can start building wealth immediately. Other than reducing graduates’ debt burden, making education free increases access by many who would otherwise have dropped out of school. It will act as the ultimate motivating factor for students to further their education. Therefore, students’ loans should be forgiven on the basis that education should be a government responsibility.
Forgiving student loans would address the gender and racial disparities in American society. Statistics show that most defaulters of student loans are female students. The reason for this is the long-standing problem of unequal access to jobs between males and females. There are more job opportunities for graduating males as compared to their female counterparts. The net effect means females will take extended periods to repay their loans, hindering them from acquiring property at the speed of the males. Another disadvantaged group by student loans is students of color. The African American populace gets paid less for the same qualification as their white counterparts. This generational issue stems from a long-standing culture of economic disparity where opportunities are skewed. In addition, because the majority of the African American students hail from struggling backgrounds, student loans them is a must. Once they graduate, they have to strike a balance between repaying their loans and changing their economic fortunes. Therefore, canceling student loans would address gender and racial inequalities caused by generational and systemic failures.
Forgiving student loans is an economic stimulus strategy that can encourage spending and business startups. Currently, 45 million students owe the federal government over $1.7 trillion, which they have to service monthly (Friedman). The money being sliced from their earnings leaves them with little discouraging spending or starting a business. Essentially, America has a significant workforce that does not provide a market for American products, not because they choose to but because of the student loan burden. The group cannot start businesses for the same reason; thus, there is prudence in canceling student loans to provide the needed economic stimulus. Forgiving loans would translate to more spending due to increased purchasing power among the affected citizens. Americans would see a rise in demand for homes, cars and other goods compared to the current situation (Hoffower & Madison). Besides, there is a possibility that more businesses will come up due to the cancellation, which translates to more jobs and taxes for the government. Therefore, cancelling student loans would stimulate the economy of the nation.
However, student loan cancellation should be made in a targeted approach to minimize the ripple effects. First, it should be acknowledged that taking a loan to finance education is accompanied by a promissory note to pay the money in the future. Many other citizens make other choices other than going to college and, in so doing, avoid falling prey to the student loans burden. It would be unfair to bail out people who made what now seem to be poor financial decisions without compensating those who never furthered their studies (Wolfers). Several voices have advanced this argument against student loan forgiveness, and I partly agree and partly disagree. I concur to the extent that some people take loans out of choice, and this group should not be forgiven because the majority can service what they owe the government. However, some people struggling with student loans today had no option as that was the only way to finance their education and change their lives. Therefore, student loan forgiveness should be targeted to those who are deserving and not everyone.
There is a need to balance the positives and negatives of student loan cancellation. A well-thought-out forgiveness would deter a spike of many students taking loans, knowing that they will lobby future governments to cover their borrowing. It will also prevent a possible attempt by other debtors, such as those struggling with mortgages, from petitioning the government for a bailout. The government should cite the pandemic as the basis for student loan cancellation, which should be carried out meticulously to ensure that only deserving citizens get the relief. The next step the government should take is to find ways to finance a college education. The current situation of commercializing education exposes students to institutions of learning who are keen on making profits without providing value to students. As with Germany and Finland, sanity will be restored with the government taking control of education. Every student will have access to college education as a right and not as a privilege in the current situation, thus addressing the question of education equity.
In summary, forgiving student loans is not only noble but progressive. There are three main reasons why canceling loans is a reasonable step that any regime should consider. Cancellation would stimulate economic growth, bridge racial gaps and reduce generational gender disparities. In addition, education is a right every citizen should have and not a privilege for a few, as is the situation currently. However, the process should be carried out in a targeted way to ensure only those deserving are bailed out. A lasting solution to forgiving student loans should include the government making education accessible for all or at least affordable.
Applebaum, Robert. “Debate On Student Loan Debt Doesn’t Go Far Enough”. The hill, 2021.
Friedman, Zack. “Student Loan Debt Statistics in 2021: A Record $1.7 Trillion”. Forbes, 2021.
Hoffower, Hillary, and Madison Hoff. “The Case For Cancelling Student Debt Isn’t Political – It’s Practical. Here Are The Benefits Of Erasing $1.6 Trillion, No Strings Attached.”. Business Insider Africa, 2021.
Wolfers, Justin. “Forgive Student Loans? Worst Idea Ever. – Freakonomics”. Freakonomics, 2021.