Canceling all student debt might be a bit drastic, but the system is so out of whack that some significant adjustments definitely need to be made.
The figures surrounding student loan debt in this country are staggering. As of 2021, students have borrowed about $1.73 trillion. The average student loan debt is about $36,500.
Kind of hard to get a decent start in life if you come out of college owing that much money.
The problem is twofold: the high cost of a four-year education, especially if you go to a private school, and the high interest rates charged on student loans.
The problem has grown steadily worse in the past 20 years or so. Tuition rates have far exceeded wage increases, making it hard for freshly graduated students to keep up with their loan payments.
Loan recipients often owe between $20,000 and $40,000, but there are also many who owe more than $100,000. The average payment for loan-payers is about $400 per month.
Of course, when paying the minimum amount each month, the payments go mostly towards the high interest, leaving the large principle untouched for years.
This makes it impossible to catch up.
Student loans wind up being like a mortgage, taking decades to pay off.
When people are paying such high amounts for student loans, they have less to spend on a house, cars, food, entertainment and just about every other aspect of life.
Forget about opening up your own business or investing in a business or the stock market.
All of these things help stimulate the economy, but they are not happening to the degree they could because of student loan debt.
Canceling student loans has been a political issue in recent years as champions of the idea believe it will help jolt the economy in the right direction. They also feel that it has been an unfair rigged system that needs to be done away with.
Student loan payments were put on pause when the COVID-19 pandemic hit, but many people believe more needs to be done.
President Joe Biden is toying with the idea of canceling up to $10,000 per person in student loan debt, but there are others like New York Sen. Charles Schumer who would like to see up to $50,000 or more canceled.
Canceling $10,000 doesn’t seem like it would have that much of an impact on a student who owes more than $100,000, but it’s better than nothing.
There is also the counterargument that no loans should be canceled since the borrower entered the loan voluntarily, and presumably earned something of value with it in the form of their diplomas.
Taking out student loans at the agreed upon interest rates are decisions made by adults and they should have to live up to the agreements, many believe.
There is also the crowd that says “hey, I paid my loans off so why should someone else get a free ride?” Fair enough.
Solutions to the debt problem lie in lowering the high cost of education and the high interest rates on loans.
Making community college and some public four-year universities free is also not a bad idea, which would give people a starting chance on becoming successful and being a contributor to the economy and society.
College is great, but it shouldn’t cripple you financially for most of your adult life.