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Here are my my thoughts on cancelling $50,000 of student loan debt. Right now, over 45 million people in America owe 1.6 trillion dollars worth of student loan debt with the average loan per student at $32,731. The median, which is probably closer to most people is lower at $17,000 with the average monthly payment between 2 to 3 hundred dollars per month. Regardless of how we look at it, we’re closer than we’ve ever been to having all that debt, cancelled.
President elect Joe Biden is being advised by his democratic team that’s led by Elizabeth Warren and Chuck Schumer to issue an executive order to cancel up to $50,000 of student loan debt per person. So let’s take a look at what’s going on, what this potentially means and how it affects us, as well as the odds of this potentially happening. Mr Schumer and Ms Warren want to create a resolution in Congress that would give the power to the president to issue an executive order to cancel that debt. Here’s what the proposed resolution includes.
1. It asks to forgive federal student loan debt, not private student loans
2. The second thing it asks for is for this loan forgiveness to be excluded from any income taxes.
3. It asks for the payments and interest of the current loans to be put on pause throughout the duration of the pandemic because the current student loan forgiveness program expires on December 31st of 2020.
One of the ways they want to make sure this happens is using something called the Higher Education Act of 1965 which gives financial aid like subsidized grants and student loans to qualified college students. It also gives money to help school programs, libraries, and scholarships. It’s argued that this act gives power to the government to create and remove this debt. So the strategy would be for President Joe Biden to direct the secretary of education cancel up to $50,000 worth of debt.
Here are reasons why people support cancelling college debt:
1. The argument for doing this is that it’s an easy way for the president to go around congress while it’s still debating and bickering what to do about the stimulus.
2. It’s an easy way to deposit $200-$400 dollars almost immediately in the pockets of 45 million people.
3. It’s argued that it would help close the wealth gap for the latino and African American college students which have historically needed to borrow money more often than their counterparts.
Here are arguments against cancelling student loan debt.
1. It doesn’t help people without student loans. In fact, that excludes roughly 80% of people in the US or 205 million people.
2. The second reason against it is that it really only helps wealthier people in that it’s precisely those people with loans that are more likely to have careers that are more on the higher pay scale.
3. By forgiving student loans, you’re also forgiving wealthy student loans, meaning students that come from wealthy parents that easily have the means to pay back those loans themselves without actual help from the government.
4. It doesn’t address our current problem with the economy let alone the education system. It potentially promotes irresponsible borrowing.
5. The last reason against it is more of an ethical question as far as what happens to people that never took out student loans at all specifically because they didn’t want that debt? Or worse, people that did take out loans but paid them back in full, how do we compensate those people who may need stimulus help the most?
Under section 432(a) of the Higher Education Act, there’s a clause that gives the secretary of education the power to “modify compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.’’ It can be argued that this is possible but not without a long legal battle in Congress.
*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.