Do your student loans really need to be canceled?
If you read the latest student loan headlines, it looks like all of your student loans can be canceled.
Do we really have to cancel them?
Here’s what you need to know.
Bernie Sanders: write off all student loan debts
2020 presidential candidate Senator Bernie Sanders (I-VT), believe that the $ 1.6 trillion in student loan debt is expected to be canceled for the country’s more than 44 million borrowers. There are no criteria to qualify for a student loan discount. Everyone’s student debt – including federal student loans and private student loans – is canceled.
2020 presidential candidate Senator Elizabeth Warren (D-MA) also wants to cancel your student loan debt. Warren argues for a more focused student loan forgiveness proposal based on certain financial criteria. Warren’s proposal would write off $ 50,000 in student loan debt for every person with a household income of less than $ 100,000, which could help millions of Americans. His proposal also makes private student loan debts eligible for cancellation. Sanders and Warren both want to fund these student loan cancellation programs with new taxes.
If you have student loan debt, it might seem like a dream come true. However, not everyone may agree. Here is what supporters and opponents believe.
Student loan waiver: Promoters
Supporters of a blanket student loan forgiveness believe this is one of the most important issues for the 2020 election. They believe the student loan issue is a national crisis and the cancellation of student loans. student loans are needed to save a generation from financial ruin. Proponents argue that student loan debt has disproportionately affected people of color and prevented young Americans from starting families and buying homes, which is also negatively impacting the economy. Without erasing the slate, they argue, some borrowers will never be able to repay their student loans.
Student loan waiver: opponents
Opponents call these student loan forgiveness proposals massive wealth transfers. Someone – namely federal taxpayers – will pay for a massive student loan forgiveness, opponents say. The debt burden is effectively shifted from student borrowers to taxpayers. Additionally, opponents argue that there are several additional weaknesses, including:
- If you borrow a debt, you have to pay off that debt. Opponents argue that mortgage or credit card holders do not get their debt canceled.
- If everyone receives a student loan discount (as Sanders proposes), then likely many wealthy student loan borrowers will benefit.
- If taxpayers bail out student loan borrowers, those borrowers still have an economic advantage – namely a college degree – that can help them earn higher income. However, critics say that someone other than the borrower effectively funded this economic benefit for free, or almost free, which generally seems unfair.
- What about former student borrowers who have already paid off their student loans? Are they unlucky?
- What about colleges and universities that charge high tuition fees and push a lot to borrow student loans? Opponents argue that colleges and universities should lower their tuition fees and be held financially responsible (along with taxpayers) when their students fail to repay their federal student loans.
The 2020 presidential candidates and lawmakers from the two main political parties will continue to debate the issue of student loans. Some 2020 presidential candidates have weighed on the future of higher education, how to deal with growing student loan debt and how pay off student loans faster. Candidates including President Donald Trump, Mayor Pete Buttigieg (D-IN), US Senator Kamala Harris (D-CA), US Senator Kirsten Gillibrand (D-NY) and others have offers everything from tuition-free college to bankruptcy student loan refinancing and cancellation of public service loans.