The pause on student loan payments — accompanied by zero interest accrual — is continuing through September. But here’s the bad news: The Federal Student Aid (FSA) office announced newly increased interest rates for the next year. According to Forbes, the new rates could cost borrowers about an additional $590 per $10,000. President Biden vowed to address the $1.7 trillion student loan crisis, but in his budget for the year, no plans for student loan forgiveness were mentioned. Should the president consider at least partial student debt relief?
The case for student debt relief
Student debt can hinder Millennial wealth: It’s harder to save for retirement, put away money to buy a house, or think about marrying and starting a family when you have decades worth of debt weighing you down. And it isn’t just a few students who take out loans and are dealing with this issue. Democratic strategist, Kristal Knight, told Bold TV, “Seventy percent of students — no matter if it’s undergraduate, community college, or even at the graduate level — take out student loans. And so this is something that’s not escaping the education atmosphere.”
College is becoming more standard but continues to be priced as though it is only for the elite. Without some assistance, most borrowers will never pay back this debt in full, and because of this debt, it will be harder for them to contribute to the economy the way their parents and grandparents did.
The case against student debt relief
Student loan forgiveness seems like a good idea, but 50% of the population doesn’t agree. For one, it’s a lot of money. And from the perspective of taxpayers who have avoided debt or paid it off, they don’t want to use their money to bail out others. As Kenneth Schrupp told Bold TV, “Sorry, but I don’t think the educated elite should be bailed out by people who didn’t go to college.”
Schrupp also said the expanded federal student loan program is to blame for high tuition prices, so more federal money may incentivize schools to keep raising prices. He agrees that student debt is out of control and that the government should do something about it. But more money is not the answer.
Holding schools responsible
Bridging the partisan gap, both sides agree that schools have inflated prices, adding more cost without adding value. So, where do we go from here? How do we get schools to make pricing reasonable? If they don’t, will Millennial wealth be able to grow? The debate continues.
Check out the full conversation here. And for more Millennial Minute segments, check this out.
