With 1 out of 6 adults in the U.S. now faced with student debt, the issue of canceling student debt is causing heated debates across the country. On average, people with student debt often struggle with it for decades, with the debts preventing them from things like good credit scores, buying cars at dealerships, and even landing good jobs.
Student debt is quickly carving out a massive crater in the nation’s economy – with the figures fast approaching $2 trillion this year after hitting $1.7 trillion last year.
President Biden made reducing student debt one of his cardinal campaign promises, and his administration has made a series of moves so far to mitigate the problem. In one of such moves, the President directed the Department of Education in March to investigate and cancel the debts incurred by students who were misled by their school officials about issues like cost and employment prospects.
However, many of the President’s party members are calling for more decisive moves. Senate Majority Leader Chuck Schumer, together with many other top Democrats, is calling on him to waive student debts of up to $50,000 through an executive decree.
The proposal is calling for the write-off of debts for over 34 million people – that’s about $1 trillion by some estimates. That would be just about as much as the total cost of the country’s housing programs over two decades.
Biden has so far rejected the proposal, saying it would mostly favor graduates of elite schools and the fund would rather be better used for other programs like those for reducing tuition costs. His proposal is instead more moderate, writing off $10,000 in debts, which would amount to some $400 billion and free up some 15 million.
Such ambitious social intervention wouldn’t even have been given any time of day in previous administrations. “It’s fundamentally unfair to ask two-thirds of Americans who don’t go to college to pay the bills for the mere one third who do,” said Betsy DeVos, Donald Trump’s Education Secretary in a conference last year.
Nonetheless, the fact that the discussions about student debt forgiveness have gone mainstream with top leaders weighing in on the matter is a tremendous departure from the approach of previous governments. But it also shows how increasingly consequential the subject of student debt has become to the national economy.