Within the past few weeks, rumors emerged from the White House regarding student debt relief. It was even learned that President Biden was considering adding to the budget proposal a $50,000 per student relief plan for any student debt accrued. However, on April 9, Biden proposed his budget, excluding any student debt relief but adding a 41% increase to the Department of Education’s budget.
I believe that the exclusion of this debt relief plan is a mistake on Biden’s part. Looking at European schools, we see that many of them have little to no tuition costs. When attending a public university in Germany, Finland, Scotland or Sweden, there are no tuition costs whatsoever.
Compare that with the United States’ average student loan debt, which as of 2019 is $29,200 according to Forbes, and we can see why loan forgiveness may become a necessity, especially considering the economic hit we have taken due to COVID-19. Obviously, I am biased toward forgiving student loans because I don’t feel like having to pay thousands per year to repay what I spent on education, but it isn’t just students who would be impacted.
Student loan forgiveness in the U.S. wouldn’t just help the students in the long run; it could have a large impact on the economy. According to Bharat Ramamurti, a member of the Congressional Oversight Commission, forgiving even $10,000 per student could have an extremely positive impact on the GDP. He postulated in a paper in 2018 that the one-time cancellation of $1.4 trillion in student debt could result in a boost of $86 billion to $108 billion per year due to the students’ funds being shifted from debt repayment to participation in the market.
Aiding the Department of Education is a good step forward, but it isn’t enough. There are jobs to be filled in the U.S. and the harder it gets to attain the proper education, the less willing people are going to be to pay when considering higher education. Forgiving student loans, even at the smaller increment of $10,000 per student, could help not only the students struggling under the weight of this debt, but also the economy and the aptitude of those going into the workforce.
