Is Student Loan Debt Is Forgiveness the Answer?

The U.S. student debt crisis impacts over 40 million Americans, with $1.7 trillion in student loans still owed, most to the federal government. The Biden administration has forgiven $127 billion in debt through programs like public service loan forgiveness, income-driven repayment plans, and aid for students defrauded by private colleges. Concerns arise about loan forgiveness fairness and its impact on personal responsibility. Proposed solutions include ending federal student loans and creating merit-based scholarships for STEM fields. These reforms aim to reduce student debt, promote responsible borrowing, and prepare graduates for high-demand careers, easing the financial strain on younger generations.

How do you think the Trump Administration will handle the issue of rising student loan debt?

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ABOUT COMMON SENSE FOR AMERICA:
Common Sense For America brings history and facts together to inspire non-partisan, common sense solutions to America's biggest challenges. Inspired by Common Sense a pamphlet written by Thomas Paine, 1776, Bruce Rutherford, political commentator and educator, dissects U.S. history, American finance, and global affairs, and shares insights in everyday language.

Thomas Paine's Common Sense argues that concentrated political power, whether in a monarchy or elite class, is unjust and undermines democracy. Like with Common Sense, we advocate for a government accountable to the people, emphasizing transparency, representation, and checks on power.

Transcript

Welcome Patriots to Common Sense for America. I’m Bruce Rutherford. I’m your host and commentator for Common Sense for America.

Today we're going to talk about something that affects more than 40 million Americans... student debt and student debt forgiveness. 

Let me share some numbers that might shock you. 

The Biden Administration has forgiven about 127 billion dollars in student debt. Think about that number for a moment. That's more than NASA's entire yearly budget. 

Now, some debt forgiveness has happened through programs Congress already approved. These are things like income-driven repayment plans that forgive loans after 10 years of payments for low-income borrowers. There's also a program for public service employees to have their loans forgiven. And yes, Congress has stepped in where private colleges went bankrupt or were caught defrauding students or being less than completely honest about their loan programs. That all makes sense, and Congress has already approved those. 

But still, the numbers get staggering... 

Even after all this forgiveness, Americans still owe one-point-seven trillion dollars in student loans. That's trillion... with a T. Nearly 43 million Americans are carrying this burden. Most of it - about one-point-six trillion - is owed directly to our federal government. The average borrower? They owe almost 38 thousand dollars. 

Here's something interesting... 2024 is the first year we've ever seen total student loan balances go down. But it's not because people are paying them off - it's because they're being forgiven. 

This raises some serious questions we need to think about. 

Should the federal government be making student loans in the first place? And if they do make these loans, should they be forgiving them - even for the poorest borrowers? 

What do we say to the nurse who worked double shifts to pay off her loans? Or to the parents who sacrificed everything to put their kids through college? What do we say to the student who chose a cheaper state school to avoid debt or has already paid off his or her debt? 

Let me share a personal example. My son has a degree in Cultural Anthropology from a prestigious university. He's fortunate - he has no student debt. But he works in a field completely unrelated to his degree. Now imagine if he had borrowed heavily for that degree. He'd be in serious financial trouble. 

The Department of Labor tells us something very troubling... 41 percent of recent college graduates are working in jobs that don't even require their degree- just like my son.

What message does loan forgiveness send? That your signature on a loan document doesn't matter? Does it say that someone else will always pick up the tab? That you’re not responsible?

Common sense tells us we need to end these federal student loan programs. But - and this is important - we still want to encourage education in fields our country desperately needs. 

Here's what we should do instead... 

Create merit-based scholarship program for STEM degrees - science, technology, engineering, and math. Take the top 10 percent of SAT and ACT scores. Give them full scholarships. No loans needed. Just one catch - they need to maintain their grades and stay in those critical fields. They can even change majors, as long as it’s to another STEM majors.

Let's look at why this makes financial sense... 

Right now, we're spending 102 billion dollars a year on student loans. Our scholarship program would cost about 24 billion. That's a savings of 78 billion dollars every year. By the way, that 24 billion could be funded by the repayments of existing student loans that we want to see repaid. And we're producing graduates in fields of Science, Technology, Engineering, and Math, where America needs them most. 

Now you might ask - what about the arts? What about humanities? They're important too. I agree completely. That's why we should explore using the National Endowment for the Arts to provide scholarships for truly talented students in those fields. It needs more thought, I haven’t figured this out yet, and I don’t know what to suggest to you, but it's very much worth exploring. 

Here's something else to consider... 

The Federal Reserve tells us that student debt is crushing an entire generation:

- They can't buy homes

- They're putting off marriage

- They're not starting businesses

- They're not saving for retirement

None of this helps America grow stronger. None of this helps one of our primary objectives for the nation, which is the Pursuit of Happiness.

We need a system that rewards merit and hard work and academic achievement. One that connects education to real jobs. One that promotes personal responsibility (our fourth principle for government is self-reliance and personal responsibility) while giving real opportunities to our best and brightest. 

Please discuss these ideas with your friends and colleagues. We need to hear your thoughts on this. We’d love to hear from you. How do we maintain educational opportunities while promoting self-reliance and responsibility within our young people? 

Join us next time. Until then, God Bless You and God Bless America.

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Key Sources: 

- Federal Student Aid Data Center

- U.S. Department of Education

- Federal Reserve

- Bureau of Labor Statistics

- Department of Labor