Student Loan Debt Climbs Higher as Biden Weighs Debt Forgiveness
Currently, more than forty-three million borrowers hold $1.75 trillion in federal student loan debt.
As President Joe Biden considers using executive action to cancel some federal student loan debt, the financial burden on today’s students continues to rise.
According to the College Board, which tracks trends in college pricing and student aid, average tuition and fees for the 2021-2022 academic year jumped higher by 1.6 percent to $10,740 for in-state students at four-year public colleges. Meanwhile, at four-year private institutions, tuition climbed by 2.1 percent to $38,070.
As reported by CNBC, many of today’s students have to borrow sizable amounts to cover the cost. Currently, more than forty-three million borrowers hold $1.75 trillion in federal student loan debt, according to the Department of Education. In addition, roughly a quarter of student loan borrowers, or ten million individuals, are believed to be in delinquency or default.
“This year’s incoming freshman class will rely on loans even more in pursuit of a degree at a public college or university,” the business news outlet notes.
According to data from the Institute for College Access & Success, about 70 percent of college seniors typically graduate in the red—owing nearly $30,000 per borrower. Furthermore, the average high school graduate this year could potentially take on as much as $39,500 in student loans, according to a NerdWallet analysis of data from the National Center for Education Statistics. Last year, the amount was $38,147.
It is in this context that the Biden administration is looking to make a decision on student loan forgiveness within weeks.
“I am considering dealing with some [student] debt reduction,” Biden said. “I am not considering $50,000 in debt reduction. But I’m in the process of taking a hard look at whether or not there will be additional debt forgiveness.”
According to a study by the Federal Reserve Bank of New York, a decision to wipe clean $50,000 for all student loan borrowers would cost about $900 billion and leave 80 percent of all federal student loan holders with no debt. If Biden decides on $10,000 per borrower, that would cost $321 billion and eliminate the entire loan balance of about twelve million people. However, 70 percent of borrowers would still be saddled with some debt.
Still, as reported by Yahoo Finance, there are some Americans who are expressing frustration over a policy they see as unfair.
“While some may view this debt forgiveness as a slap in the face to people who were responsible and paid off their student loans, this is a bigger slap in the face to those Americans who never went to college,” Will Bach, a financial advisor based in Ohio, told the news outlet.
“How can we honestly ask people who did not go to college to subsidize the lives of those who did decide to go to college? To my knowledge, everyone with student loans voluntarily took them. Every instance of a student loan was a voluntary choice that person made,” he continued.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.