Biden is forgiving student loans: is it a good idea?

Joe Biden has continued to forgive student loans worth billions of dollars, months after the Supreme Court ruled that his $400 billion plan was unconstitutional. 

The most recent student loan forgiveness plan came out on Friday morning when the Department of Education (DoE) said that it would forgive student loans worth over $7.4 billion. Over 277k borrowers will benefit from this plan.

The new student loan forgiveness will bring the total amount of loans that have been wiped out by the Biden administration to $153 billion, according to CNBC.

Liberals prefer student loan cancellation

The US is divided about the benefits and cons of student loan forgiveness. Liberals believe that the government should do more to erase these debts, which total over $1.6 trillion. 

They argue that this forgiveness will help boost the American economy by improving consumer spending, the biggest component of the country’s GDP.

Liberals also believe that the cancellation will help the poor, especially the people of colour who hold substantial amounts of debt.

Most notably, they argue that the US already spends billions of dollars in corporate welfare. For example, the government provided over $700 billion in funds to bail out Wall Street banks during the global financial crisis.

Most recently, the Biden administration handed out billions of dollars to Intel and Taiwan Semiconductor as part of the CHIPS Act. These are giant corporations that could raise funds from the stock market to make these investments.

The US government also handed out billions in giveaways to corporations during the Covid-19 pandemic. These funds went to giant companies like airlines and in the pharmaceutical industry.

As such, liberals believe that forgiving student loans would be a way of investing in the poor people in the country.

Conservatives abhor student loan forgiveness

Republicans and conservatives, on the other hand, abhor student loan forgiveness, citing several factors.

First, they argue that this forgiveness should not rely on the executive branch of the US government. Instead, it should move from the legislative branch, which is made up of elected officials.

Second, conservatives argue that the forgiveness plan disadvantages people who have worked hard for decades and cleared the loans. Besides, these people will never receive compensation for their payments.

Third, they argue that student loan forgiveness is unfair to people who did not go to college or university. This is notable since studies show that people who have attended college tend to earn more money than those who did not.

Further, conservatives note that student loan forgiveness will worsen the college affordability crisis. Data shows that the average cost of a four-year degree has jumped from less than $20,000 in the 1970s to over $50,000 today.

By forgiving student loans, it will push more students to take loans and colleges to increase fees. Besides, if Biden forgave loans this year, another liberal president will do the same many years to come.

Additionally, the US is already too much in debt. As I have written before, the total public debt has soared to over $34 trillion and is growing by $1 trillion every 100 days. 

The bottom line

Student loan forgiveness is a divisive thing in the United States. I believe that the government should not forgive these loans without the authority of the legislative branch.

For example, if Biden can forgive loans to students, what will prevent the Trump administration from forgiving companies in the oil and gas industry?

Also, forgiving loans without fixing the core problem of the higher cost of tuition will not solve the crisis.