For the past thirty years, students have been expected to pay for college out of their future wages. While student loans have enabled millions of people to get an education; they could go to any school. Over twenty-five,
major schools do not let their students use loans at all.
The problem is student debt is economically choking millions of people. It’s time to start forgiving student loans. You cannot declare bankruptcy on your student loans, unlike most forms of debt and it’s much harder to get permission to pause paying your student loans.
It doesn’t make sense or seem fair to lump massive amounts of debt onto your youngest population, but those who lend that include the federal government, banks, and other organizations seem more intent on being repaid than make it possible for the next generation to have a full life – buying homes, sending their own children to college, and having a sustainable living.
Here’s what it would cost:
Canceling all loans for persons over age 65…………..$5 billion a year
Canceling loans from those who have been defrauded by for-profit colleges …..$3 billion a year. There are approximately 157,000 “Borrower Defense” fraud complaints in process at the Department of Education.
No income taxes on forgiven debt…………………………$10 billion a year
No loan payments due from borrowers who earn less than $40,000 a year….$18 billion a year
Easier standards for discharging student loans in bankruptcy……$5 billion a year
Expanding Pell Grants to $10,000 a year, and for far more Americans…..$55 billion a year
Additional federal funding for Community Colleges and vocational schools…..$12 billion a year
The total amount owed is approximately $90 billion.
Nearly 40 percent of federal student loan borrowers age 65 and older are in default. By contrast, 29 percent of federal student loan borrowers age 50 to 64 are in default, and 17 percent of federal student loan borrowers age 49 and under are in default. These are all horrible statistics, but they are worst for the oldest debtors.)
Over 114,000 seniors have had their Social Security benefits offset because of unpaid student loans. Social Security benefits may be their only source of regular retirement income. This means that benefit offsets impose a serious financial hardship. People deserve a financially untroubled retirement.
Forgiveness for seniors will not be complicated. The over-65 debtor can request forgiveness with proof of age, and their loan can be canceled.For any private loans that are forgiven, the government will have to compensate the lenders
People who had paid off their student loans don’t always think others should not have to pay.
Extending the Social Security tax to all incomes is one way to pay these costs and better yet is to replace student debt as the way to finance college education. Another type of solution might be instead of tuition, students can pay for their education once they receive a job with a $50,000 annual salary. Once students get a job that meets the salary minimum, graduates pay back 17 percent of their salary over a period of two years (with the maximum payment capped at $30,000).
Over time, debt forgiveness will make the nation better off. The greater spending of ex-debtors will eventually produce more tax revenue than the loans ever did.
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