Olivia Simpson’s student loan forgiveness is unfair to many Americans
President Joe Biden recently announced a new plan to forgive $10,000 in student loan debt for each borrower. One in eight Americans has student loan debt. This new plan cancels nearly a third of all borrowers’ full balances. While this plan sounds good in theory, in reality it’s unfair to many Americans. By canceling outstanding loans, Biden is punishing families who have been saving for years, people who have already paid off their debt, and not solving the underlying problem.
I believe it is unfair to waive student loans for many reasons. First, according to the Association of Public and Land Grant Universities, 42% of students complete an undergraduate degree debt-free. There are many college savings plans available to families. Many parents have used these savings options such as 529/ESA to prepare for their child’s college education. People worked overtime, weekends, holidays, and retired to have money to put away for college. Families have made unnecessary and ultimately futile sacrifices now that their children have been able to borrow money and have their debt forgiven.
This new plan is also not fair to people who have already paid off their student loans. Why should a certain group of people have $10,000 forgiven while others have worked hard to pay off their debt? This plan undoes the hard work and sacrifices people have made to pay off their student debt. Finally, by canceling student debt, the Biden administration does not solve any fundamental problem in the issue of student debt. In a loan, you promised to repay the money. It is not acceptable to be able to waive this commitment, nor is it behavior that we want to allow in our economy or our society. As a result, interest rates will rise for prospective students and borrowing will become more difficult as lenders become hesitant. These students will expect their debt to be forgiven while letting taxpayers cover the debt of others.
I don’t think that writing off any amount of student loan debt is a fair and beneficial policy. By enacting this, there is no incentive or reward to save money for college. This encourages people to borrow more in the hope of not paying back more, which contributes to the problem that debt cancellation seeks to solve. It also leaves Americans who have saved discouraged that their financial sacrifices will be wasted if their children can borrow money and then walk away from debt. I think a better solution to the current problem would be to lower the borrower’s interest rate and extend the term of the loan. This allows it to be less of a monthly burden on people while still honoring the commitment they made when they borrowed.
Olivia Simpson is a graduate of Texas Tech University, where she majored in pre-law humanities.