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Former education secretary says all student loans should be forgiven, but these are the 3 main issues

This former US Secretary of Education says all student loans must be forgiven. However, the large-scale cancellation of student loans concerns 3 issues.

Here’s what you need to know — and what it means for your student loans.

Student loans

Former US Education Secretary John King urges President Joe Biden to cancel all student loan debt. This includes all of $1.7 trillion in student debt, including private and federal student loans. King, who served under President Barack Obama and is running for governor of Maryland, is also calling for free community college and increased investment in Pell Grants. Sen. Bernie Sanders (I-VT) has made student loan forgiveness and free college a centerpiece of his presidential campaigns. Given this push for full student loan forgiveness, it is important to highlight 3 major issues that are central to any discussion of student loan forgiveness.

1. Canceling student loans helps current borrowers, but hurts future borrowers

Student loan forgiveness for current student borrowers would be welcomed with open arms by those who hold student debt. The idea of ​​canceling all your student loans is a path to financial freedom. (Biden could cancel student loan and suspend student loan payment). The major student loan forgiveness offers all include a one-time student loan forgiveness. This means that if you have student loan debt on the day the student loans are hypothetically forgiven, you win. If you borrow student loans the next day, you’re out of luck. What is the solution for tomorrow’s student borrowers? Will student loan cancellation only be once? Will there be a student loan cancellation every year? Proponents of student loan forgiveness have not answered these questions. However, if the goal is to help reduce growing student debt, it is essential to look at the bigger picture. Some would argue that canceling student loans today isn’t a perfect solution, but at least it will bring immediate financial relief to current student borrowers. It’s true. Tomorrow’s student borrowers are just as important, and they too deserve a solution.

(Here’s who won’t qualify for $6.2 billion in student loan forgiveness)

2. Free college is tied to student loan cancellation

Canceling a student loan cannot be viewed in a vacuum. If the goal is to address student debt, then policymakers must determine who pays for higher education. Any discussion of student loan forgiveness should include a commitment to free college. That doesn’t mean there should be full-scale student loan forgiveness or free college. This means that policy makers should explicitly state the purpose of student loan forgiveness. Is student loan forgiveness only meant to help current student borrowers? Is this ongoing student loan relief? Or is it just half of a larger plan to reshape who pays for higher education in America? While the government subsidizes public colleges and universities, many Americans pay for their education by borrowing student loans. (Biden canceled $15 billion in student loans). As King notes, should the government increase funding for the Pell Grants? Should public colleges and universities, including community colleges, be free through federal government grants? Biden floated that idea, as did Sanders and Sen. Elizabeth Warren (D-MA). If policymakers decide to cancel student loans, the real question is who will pay for college in the future? If the plan is for the government to provide free higher education to all Americans, policymakers should discuss student loan cancellation and free college as a combined plan to ensure transparency. If there is no support for this plan in Congress, which appears to be the case, policymakers should find alternative ways to fund the cost of college.

(The new proposal would extend the student loan payment pause and cancel student loans

3. The real problem is the cost of higher education, not student loans

It’s easy to blame student loans as the culprit. However, the cost of higher education is the underlying problem. Student loans are simply the means that borrowers often use to finance an expensive product. (Student borrowers saved $200 billion from the Covid-19 student loan payment pause). What are policymakers doing to address the cost of higher education? Americans are burdened with student loan debt because college and higher education are expensive. Federal student loan debt is widely available to virtually anyone who wants a student loan. The aim is to create educational opportunities for all and to reduce disparities, two essential objectives. At the same time, many 17-year-olds who take student loans to attend college will not understand their future monthly student loan payments or their ability to repay their student loans. What are policy makers doing to address these issues? Anyone who wants an education should have the opportunity to pursue one. At the same time, they should not be placed in a situation where their lives are burdened with substantial debt that they cannot afford to repay. However, that is how the current system works.

(Biden could extend student loan payment break indefinitely)

Student loans: next steps

Canceling a student loan is not just about canceling a student loan. There are related and underlying issues around the cost of higher education, who pays for a college education, and how future student borrowers will be dealt with. Collectively, these issues should be tied to any student loan forgiveness plan. Congress and the United States Department of Education should evaluate these issues holistically to develop a plan that takes into account the political and financial implications. Sometimes problems warrant a temporary fix. However, the cost of higher education requires a permanent one.

Federal student loan repayments are expected to resume after May 1, 2022. Are you ready? Here are some smart strategies for paying off your student loans and saving money:

Student Loans: Related Reading

Here’s who won’t qualify for $6.2 billion in student loan forgiveness

New proposal would extend student loan payment break and cancel student loans

Biden could extend student loan payment break indefinitely

Student loan refinance rates have gotten ridiculously low

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