Avery M. D. Davis is a Ph.D.
student at the Johns Ηopkins University – University school of education
The Sunday Times July 4, 2021
Trillions of dollars have Jemerged from recent US stimulus packages and budget proposals, but student loan forgiveness has yet to be addressed. Still, the American people have not forgotten their new president’s campaign promises to solve the disaster of spiraling student debt.
Some small steps have already been taken in light of the pandemic and ensuing economic problems, which saw the federal government pause student loan repayment. and interest accrual through this September. This sticking plaster has happily resurfaced the debate on how to address the US’ $1.7 trillion (£1.2 trillion) in student loan debt, which has left millions unable to buy homes and start families.
President Biden has long campaigned for $10,000 in student loan forgiveness, while the more progressive wing of the Democratic Party has called for at least $50,000. Republicans are holding firm with no forgiveness or, at least, grandstanding to that effect during negotiations. But all these positions fail to address the root cause of the problem: each day, we issue thousands of new loans to students in response to rising higher education costs and decreased funding for public post-secondary education.
That is why Covid-19 must be the catalyst for financing higher education in a way that is not just morally right but politically practical. After all, we have seemingly spent $5 trillion over the past year in stimulus; a previous package even included a provision that student loans are forgiven. ness would be tax-free, signaling imminent executive action. Yet while student loan forgiveness might be sexy, it’s not a sustainable solution. Don’t get me wrong, as a former tuition-paying student, I would love forgiveness personally but it’s bad public policy. A one-time fix via executive order – which, theoretically, could be overturned by the next administration – fails both future students and taxpayers. There are three effective actions that the federal government can take to begin to heal the catastrophe it created.
First, freezing interest accumulation for current borrowers and reducing rates for future undergraduates to 0.5 percent (and 1 percent for graduate students) would lower the compounded dollars over time. This is significantly lower than our current rates, starting at 3.73 percent. The government should aim to cover costs, not book $1.2 trillion in student loan receivables under assets.
That still leaves the problem of how graduates can repay the capital. The first step here is to completely re-engineer Public Service Loan Forgiveness (PSLF), which allows federal, state, or local gov. government employees to pay back their student debt at a fraction of the actual cost within a decade.
I balk at the current form of this program, which is limited to less than 1 percent of all borrowers. We are all part of the public good. Those gaining higher education experiences better engage in civic duties, understand climate challenges and pay it forward. So, place everyone in a reformed Public (Good) Loan Forgiveness program, starting with an income-based 10-year repayment plan. To incentivize continued participation, each person making one payment within a year could have 10 percent of their balance forgiven. Ultimately, those making 20 payments within a decade could have their debt relieved. his reconciles the narrative that personal responsibility requires people to pay back their loans with the recognition that higher education serves a public purpose since everyone in society benefits from the presence of highly educated people
The final step to making debt easy to repay is to make it easier to discharge student loans in bankruptcy( like other types of debt). This moves the forgiveness limit beyond amounts proposed by liberals to the total borrowed and accounts for the consequences in a way that might favor well with fiscal conservatives, as this would be in the borrower’s credit port.
These federal-level strategies are only a start. States and schools must So work on creative solutions. For instance, let’s look at three-year grees, frozen tuition models that ep costs the same for each class, students-retention programs to crease completion rates, lifelong. warning interventions, and better accountability measures for schools. Using Covid-19 to enact enduring change in our post-secondary stem’s principal calamity is crucial. If President Biden and congress continuously squabble over forgiveness limits, student bt will ceaselessly amass. There is a better way.