Will they be forgiven?
On August 24th, 2022, President Biden announced his student loan forgiveness plan. Biden’s plan is to cancel $10,000 of student loan debt for “low to middle-income borrowers” (The White House, 2022, para. 1). Many who pursue higher education are finding themselves in heaps of loan debt; however, can it truly be forgiven? If so, concerns about what would manifest as a result have been raised. Firstly is the concern of cost. The White House estimates a 300 billion dollar price tag; however, according to the Wharton School, the total impact of this plan could be 1 trillion dollars (Burroughs, 2022, para. 9). The current state of inflation brings more concern to this price tag. Additional consequences of this plan are what it incentivizes current students to do. Some students have been able to keep their loan debt below the $10,000 dollar forgiveness maximum or have no bed at all.
Nevertheless, in light of Biden’s announcement, it is foreseeable that students will intentionally take out loans, realizing they have the promise of forgiveness. As a result, the plan would increase the overall amount of student loan debt across the nation. The increase in student loan debt could be compounded if the plan does not actually see fruition. Attorney general Mark Brnovich says this plan is on “very, very shaky legal grounds right now” (Sheffey, 2022, para. 2). The Biden administration claims they have the authority to enact the forgiveness plan under the HEROES Act of 2003, which gives the education secretary the ability to change student-loans in the context of a national emergency (Sheffey, 2022, para.4). The claim against Biden’s forgiveness plan is that it is an overreach of this authority. In the case that the forgiveness plan is overturned, hopefully, it will be sooner rather than later so that borrowers are not becoming reliant on the plan.
References
Burroughs, Dillon. (2022, September 7). ‘Excessive’: Democrat Joe Manchin Blasts Biden’s
Student Loan Forgiveness Plan. Daily Wire. Retrieved from: https://www.dailywire.com/news/excessive-democrat-joe-manchin-blasts-bidens-student-loan-forgiveness-plan
Sheffey, Ayelet. (2022, September 8). A GOP attorney general says people are 'celebrating
prematurely' Biden's student-loan forgiveness, suggesting lawsuits are to come. Business Insider. Retrieved from: https://www.businessinsider.com/arizona-attorney-general-prematurely-celebrating-biden-student-loan-forgiveness-lawsuits-2022-9
The White House. (2022, August 24). FACT SHEET: President Biden Announces Student Loan
Relief for Borrowers Who Need It Most. Retrieved from: https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/
Josh,
Great post! I think you bring up an excellent point in regards to student's intentionally taking out loans because they know that they will be "forgiven." I wonder if this will cause an even greater loan crisis. Federal loans are generally capped in the 20 thousand amount. Therefore, many students will still have loans to pay after their ten thousand amount is forgiven. My concern is that you will now see thousands of more students taking out loans because of this partial forgiveness plan, but this will; only make the problem worse.
Hi Josh, you made some excellent points about student loan forgiveness. I agree that students can take out loans because of this. It is the fact that people assume something will be given to them, but they don’t look at the long-term effects loan forgiveness could have, maybe not for an individual but for society. The more loans that are pulled out, the more the government has to forgive, and the more people rely on the government, the less they will want to work or be productive. I think it could even affect the way students perform in school. Overall, you brought up some great thoughts in your post.
Hi Josh!
You stated that students would be more interested in taking out loans due to the forgiveness plan. I think this is a great point to mention because anyone can potentially be "forgiven" for up to $10,000. And I would say this is detrimental because loans are supposed to be given out to those in need of cash now that do not have it. The real concern would be how high taxes will get due to the amount of school debt the government promises to forgive.
Another good point you made was the idea of productivity decreasing. I think you are right about this. The "relief" of debt has a cost somewhere. It may not be a direct cost, but in the long run, I think it will encourage the Great Resignation movement. It is quite alarming to see how much people do not want to increase productivity within the country.
Sources
FASFA. (2022). The Biden-Harris Administration's Student Debt Relief Plan Explained. Federal Student Aid. Retrieved September 11, 2022, from https://studentaid.gov/debt-relief-announcement/
The White House. (2022). FACT SHEET: President Biden Announces Student Loan
Relief for Borrowers Who Need It Most. Retrieved from: https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most