President Biden Student Loan Forgiveness: The Pros and Cons of Plan

President Biden’s Student Loan Forgiveness: Student loan debt is an issue plaguing millions of Americans, who collectively owe $1.7 trillion in federal and private loans. President Joe Biden proposed a plan that could forgive up to $10,000 of student loan debt per borrower under federal student loan repayment plans – potentially eliminating loans for 16 million borrowers – though his plan has come under criticism due to issues like its fairness, cost effectiveness and impact. We will explore some pros and cons associated with Biden’s student loan forgiveness plan here.

Pro: It would provide relief to many borrowers and boost the economy

One major argument in favor of student loan forgiveness is its potential relief to those struggling to repay their loans, especially during the COVID-19 pandemic. A September 2019 report found that 11% of borrowers were delinquent or default on their student debt; forgiving debt would ease financial stress for these borrowers and enable them to focus their energy and focus on other goals such as buying a home, starting a business or saving for retirement.

Additionally, economists contend that student loan forgiveness would boost the economy through increased consumer spending and demand. A 2018 study by Levy Economics Institute estimated that canceling all student debt would boost GDP by $86 billion to $108 billion per year and create between 1.2 and 1.5 million new jobs – even partial cancellation of $10,000 would have an impressively positive effect, according to this research.

Con: It would be unfair, costly, and regressive

One of the main arguments against President Biden Student Loan Forgiveness is that it would be unfair to those who have already paid back their loans or did not attend college at all. By forgiving student debt, forgiving would effectively reward those who borrowed more than they could afford or who chose more expensive or less rewarding degrees, while penalizing those who made more responsible or frugal choices. It could also create a moral hazard where future borrowers expect their debts would also be forgiven, leading them to borrow even more recklessly in future loans.

Student loan forgiveness would also cost the government and taxpayers, and add to national debt. According to the Congressional Budget Office, forgiving $10,000 per borrower over 10 years would cost about $207 billion; these resources could be better utilized on priorities like health care, infrastructure or education.

Critics also argue that student loan forgiveness would be regressive, meaning it would disproportionately benefit wealthier households more than poorer ones. This is due to higher-income households having more student debt but also possessing greater earnings potential and net worth. According to an Urban Institute analysis from 2020, top 40% income earners would receive roughly 66% of benefits from cancellation of $10,000 debt while the bottom 20% would only receive around 4%; hence widening income and wealth inequality across America.

Conclusion

President Biden Student Loan Forgiveness is an arduous and contentious issue with both benefits and drawbacks. President Biden’s plan of forgiving up to $10,000 of federal student loan debt per borrower may provide relief and stimulate the economy, but also has some disadvantages such as being unfair, costly, and regressive. Ultimately, whether such an initiative should be implemented depends on political and social considerations of Americans as expressed through their elected representatives.