If you read the latest student loan headlines, it seems all your student loans may be cancelled.
Should they really be cancelled?
Here’s what you need to know.
Bernie Sanders: Cancel All Student Loan Debt
Sen. Bernie Sanders (I-VT), a 2020 presidential candidate, believesthat all $1.6 trillion of student loan debt should be cancelled for the nation’s more than 44 million borrowers. There is no criteria to receive student loan forgiveness. Everyone’s student loan debt – including both federal student loans and privates student loans – gets cancelled.
Sen. Elizabeth Sanders (D-MA), a 2020 presidential candidate, also wants to cancel your student loan debt. Warren argues for a more concentrated student loan forgiveness proposal based on certain financial criteria. Warren’s proposal would cancel $50,000 in student loan debt for every person with household income under $100,000, which could help millions of Americans. Her proposal also makes private student loan debt eligible for cancellation. Both Sanders and Warren want to fund these student loan forgiveness programs with new taxes.
If you have student loan debt, this may sound like a dream come true. However, not everyone may agree. Here’s what proponents and opponents believe.
Student Loan Forgiveness: Proponents
Proponents of widespread student loan forgiveness believe it’s one of the most important issues for the 2020 election. They believe that the student loan issue is a national crisis and that student loan forgiveness is necessary to save a generation from financial ruin. Proponents argue that student loan debt has disproportionately hurt people of color and has prevented younger Americans from starting a family and buying a home, which also adversely impacts the economy. Without wiping the slate clean, they argue, some borrowers will never be able to pay off their student loans.
Student Loan Forgiveness: Opponents
Opponents call these student loan forgiveness proposals massive wealth transfers. Someone – namely federal taxpayers – will pay for massive student loan forgiveness, opponents argue. The debt burden effectively transfers from student loan borrowers to taxpayers. Also, opponents argue that there are several additional weaknesses, including, among others:
- If you borrow debt, you should repay that debt. Opponents argue that mortgage holders or credit card holders don’t get their debt forgiven.
- If everyone receives student loan forgiveness (as Sanders proposes), then presumably many wealthy student loan borrowers will benefit.
- If taxpayers bail out student loan borrowers, these borrowers still have an economic benefit – namely a college degree – which can help them earn higher income. However, critics say someone else besides the borrower has effectively funded that economic benefit for free, or nearly for free, which generally seems unfair.
- What about former student loan borrowers who already repaid their student loans? Are they out of luck?
- What about the colleges and universities that charge high tuition and cause many to borrow student loans? Opponents argue that colleges and universities should lower their tuition and be held financially responsible (along with taxpayers) when their students default on federal student loans.
The 2020 presidential candidates and legislators alike from both major political parties will continue to debate the student loan issue. Some 2020 presidential candidates have weighed in on the future of higher education, how to manage growing student loan debt, and how to pay off student loans faster. Candidates including President Donald Trump, Mayor Pete Buttigieg (D-IN), U.S. Senator Kamala Harris (D-CA), U.S. Senator Kirsten Gillibrand (D-NY) and others have proposed everything from tuition-free college and bankruptcy to student loan refinancing and public service loan forgiveness.