experts – La Hachette GW
After President Joe Biden announced a $10,000 student debt forgiveness for eligible borrowers, experts said the move could have gone further to distribute economic aid to Americans fairly.
In a decision that will likely affect tens of millions of borrowers, President Biden announced on Wednesday that the federal government would forgive up to $10,000 in student loan debt for people with incomes below $125,000 and up to to $20,000 in debt for Pell Grant recipients. Higher education and finance experts said the program would provide relief to millions of Americans, the plan should be income dependent so that it can help all borrowers proportionately.
Debt relief aims to hold universities accountable for maintaining a ‘reasonable’ cost of attendance and teaching quality instead of maintaining a reputation for student debt, says a press release from the White House. Student loan borrowers were given the option to pause monthly loan payments in March 2020 amid the COVID-19 outbreak, and the White House extended the pause to Dec. 31 last week in the order. federal.
Steven Brint, a sociology and public policy professor at the University of California, Riverside, said he was “skeptical” of the loan forgiveness program because the relief will be distributed to people from more affluent backgrounds who had the financial privilege of attending college, unlike their non-graduate counterparts who may not have had access to the same opportunity.
“Unless it’s really targeted at people in difficulty, I don’t see the reason for it myself,” Brint said.
Difficulty repaying student loans falls disproportionately on black borrowers, who owe an average of $25,000 more than white borrowers, according to a study by the White House Initiative on Excellence in Education for African Americans. Americans in 2016.
Higher education experts said the $10,000 loan forgiveness may not benefit GW students who have taken out larger loans given the nearly $80,000 cost of attendance.
“This plan provides targeted debt relief as part of an overall effort to reduce the burden of the rising costs of college education and make the student loan system more manageable for working families,” a statement said. the White House.
Brint said a degree from private universities like GW gives a boost to post-graduate employment, but due to the competitive job market, some students might struggle to find jobs within five to 10 years after college. He said income levels should determine the allocation of loan repayment programs to accommodate graduates who may not immediately find employment.
“There are going to be people who will appreciate it, and there are definitely people who will benefit from it and get it back on their feet,” Brint said.
Robert Toutkoushian, a professor of higher education at the University of Georgia, said the government should automatically determine who is eligible for the program and prioritize soft loans for borrowers who did not graduate because their income tend to be lower than those of university graduates.
“This is a thorny and debatable question,” Toutkoushian said in an email. “There is no doubt that student borrowers will benefit from this program. People will always prefer not to pay for something.
He said the student loan forgiveness program will place the responsibility for loan repayment on the public rather than on students taking out loans, because the program will use funds from federal tax revenues. He said taxpayers could possibly criticize the program for investing their tax money in the debt of a student who chose to go to an expensive university like GW.
But he said Biden’s plan would also improve the economy because students will be able to more easily buy goods and spend the money they would otherwise use to pay off their loans.
He said applying for and repaying loans can be confusing for some students, and even with the debt forgiven, the federal loan process will continue to pose challenges for students enrolling in higher education.
“Many students don’t understand how loans and interest work and what the financial implications of borrowing to pay for their education are,” Toutkoushian said.
In 2019, prior to the student loan repayment moratorium, around 2% of GW students who took out student loans were unable to repay them in FY 2016, putting the rate of GW student loan default – the percentage of student borrowers who have loans outstanding within three years of starting repayment – well below the national average of 10.1%.
David Schultz, professor of political science at Hamline University and professor of law at the University of Minnesota, said colleges and universities could use the pardon program to market their school‘s affordability and potentially attract students. who couldn’t pay their tuition, because growing debt will be a lesser obstacle.
“I think maybe that’s one of the things that higher education hopes for is that the students who haven’t finished because of the affordability issue or the people that they would like to attract to college but can’t because of student loans or costs, maybe bringing back more students at this point,” he said. “But that remains to be seen.”
Schultz said many borrowers will need to continue making regular January 2023 payments for their student debt after the Dec. 31 moratorium expires, which could make it difficult to transition to a regular payment plan. He said the government could allow borrowers to discharge their debt when declaring bankruptcy to ease the burden of resuming loan repayments.
“If we look at it from a broader perspective, say, trying to fix the cost of higher education, it doesn’t solve anything,” Schultz said. “It’s kind of like the band-aid on a much bigger problem that has yet to be solved in our society.”