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Debt & Degrees: The Urgent Need for Student Loan Reform

By Jacob Carter

1.77 trillion dollars. 44 million Americans. 55% of undergraduates.  These statistics encapsulate the breadth of U.S. student loan debt. Millions of adults are mired in a crisis that continues to impede generation after generation, saddling young people and parents with unending interest and ceaseless monthly payments. Yet, the workforce of tomorrow is imbued with the understanding that a college degree is a golden ticket to the middle class. Especially with technological advancements, highly educated employees have an outsized role in today's economy. Conversely, the barriers to pursuing a postsecondary degree are only worsening, and the reality of decades-long repayment for existing degree-holders is unappealing to would-be college students. Simply put – student loan debt is a pervasive virus, eating away at the aspirations of our country’s brightest minds and most skilled technicians. Something must be done to stop it. 

Let’s put the crisis into perspective: $1.77 trillion in student loan debt, collectively owed to the government by 44 million Americans. Astoundingly, total student loan debt in the U.S. eclipses collective auto loan and credit card debt, which is $1.46 trillion and $1.14 trillion, respectively. Over the last two decades, average loan debt per borrower has risen by 25% as students struggle to cover the skyrocketing costs of higher education. According to the National Center for Education Statistics, the price of attending a four-year, full-time college has increased by 180% on average since 1980. In dollar amounts, present day students are paying around $18,500 more per year than their counterparts 43 years ago.

Such dramatic price hikes force students to take out federal loans of increasingly higher values and interest rates. This form of price gouging is especially exploitative of students from historically marginalized backgrounds who already face intersectional inequality from stigma and lack of representation on college campuses. Black, Hispanic, and Native American students often incur more debt than their white peers. Students from those backgrounds are also more likely to default on their loans. Debt compounds generational burdens of poverty and forced exclusion in these communities, and minimal reform by the federal government only entrenches this disproportionate strain on non-white students. Some may point to the Pell Grant program as one of the government’s most robust support systems for low-income families. Unfortunately, funding for the program has not kept pace with the exorbitant rise in cost of attendance, leading to further reliance on federal loans.

In recent years, national leaders have elevated the conversation of student debt relief to the halls of power, with lawmakers on both sides of the aisle engaging in earnest. The havoc wrought by the COVID-19 pandemic certainly expedited the call for relief, eventually leading former President Trump to issue a moratorium on student loan repayments and interest accrual beginning in March 2020. The moratorium would be extended by President Biden for a total of three and a half years, but the payment pause ended in October 2023. The substantial grace period enjoyed by 44 million Americans came to an abrupt and frustrating end, with promises of outright relief going unfulfilled.  

Recognizing the need for reform, President Biden capitalized on the moratorium by spearheading an initiative for broad-sweeping loan forgiveness. The administration’s proposal, estimated to cost $400 billion over 30 years, was part of ongoing efforts to address economic disparities stemming from the pandemic. The plan sought to forgive up to $20,000 in student debt for Pell Grant recipients and $10,000 for non-grant recipients earning less than $125,000 annually. The ambitious initiative was projected to benefit more than 40 million borrowers and forgive around $441 billion in debt, with nearly half of borrowers expected to have their entire balance forgiven. Despite its potential to alleviate the financial burden of millions, Biden’s administration encountered a significant setback: the Supreme Court declared the plan unconstitutional, describing it as a vast overreach of the President’s executive authority.

Interestingly, the Trump administration recently used debt forgiveness on such a scale in their administering of Paycheck Protection Program (PPP) loans. PPP loans were crucial in supporting small businesses during the pandemic, with 10.2 million loans distributed primarily to subsidize payroll costs. The program was designed with the understanding that most loans would be forgiven outright, and the Trump administration followed up on this promise by canceling $742 billion of PPP loan debt. Conservatives, who decried Biden’s student debt relief plan as an abuse of power, were far less critical of PPP loan forgiveness, citing the program’s intent to support millions of frontline workers.  Unsurprisingly, a study conducted by MIT and economists with the Federal Reserve revealed that 66% to 75% of PPP benefits flowed towards business owners and shareholders. Thus, the program funneled a supermajority of the funding to individuals in the top 20% of household incomes.

So, despite costing the government nearly double that of Biden’s proposed student loan forgiveness, the PPP program was unchallenged and lined the pockets of the already-wealthy during a time when income inequality widened. Regardless, the current administration took the Supreme Court’s ruling in stride. Biden, alongside Secretary of Education Miguel Cardona, unveiled a robust plan to change the rules of student loans. Dubbed ‘Saving on Valuable Education’ (SAVE), the plan seeks to cut loan payments in half and forgive balances after 10 years for low-income individuals. Reforming income-driven repayment plans is a core component of the plan, ensuring a minimum annual savings of at least $1,000 for borrowers. Significantly, loan balances will not grow as long as borrowers consistently make monthly payments. The plan also includes a 12-month on-ramp to repayment from October 2023 to September 2024, during which inability to pay will not result in delinquency or default. Additionally, the Biden administration secured increases to Pell Grant funding and canceled $66 billion in loans, benefiting 2.2 million borrowers. While not nearly as impactful as outright loan forgiveness, the Biden administration has proven to be a fierce advocate for college accessibility. 

As we head toward the 2024 election, we must advocate for bold education reform. Join the conversation, engage with policymakers, and demand solutions prioritizing accessible and sustainable higher education. Share your stories, experiences, and ideas on social media, encouraging a broader dialogue on the urgent need for change. By collectively pushing for student loan reform, we can ensure that the next generation is not burdened by insurmountable debt. Let's shape a future where quality education is a right, not a privilege.

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