There are no easy answers on canceling student debt

[DonViejo]

From mental health to home-buying, there are myriad ways education loans can affect lives. That’s why it’s so difficult to find a one-size-fits-all solution, economists say.

By Emily Stewart [e-mail] Updated Mar 25, 2021, 9:00am EDT

Alexandria McCurtis, a truck driver in Detroit, would really like to fix the roof of her Detroit home. Standing between her and the $30,000 it would take: her student debt. Lifting that burden would make a meaningful difference in her life.

For Robert Kelly of Seattle, forgiveness of his student debts would mean a release from guilt that he worries affects his wife, Natalie. The suicidal thoughts he’s had over it have slowed since their son was born several years ago.

For Michelle (a pseudonym), being released from student debt would have meant not having to turn to sex work to pay for school, and for loans during and after college. She lost her virginity to a 63-year-old when she was 19.

Millions of people could tell stories like these: Nearly 45 million Americans now owe a total of $1.7 trillion in federal and private student loans, for educations finished and unfinished. The scale of the problem, and its effect on lives, has made student debt forgiveness a much more salient conversation in mainstream politics. But as the argument for cancellation has been fleshed out, so has an argument against it — that both economically and as a way of truly addressing equity, wiping clean the debt for borrowers on a broad scale may not be the way to go.

more
https://www.vox.com/the-highlight/22324143/student-debt-forgiveness-loan-cancelation-economy

[ret5hd]

1. A big hurdle is the feelings of:

"I had to go through chemotherapy and radiation for cancer...it would be unfair to find a cure now!"

[Johnny2X2X]

2. 5% cap of adjusted income on pay as you earn!

I will repeat it in every one of these threads.

When Joe ran for President, he had on his website to change the % of income you could pay on the PAYE payback option. It is currently 10%, reducing it to 5% would half people's payments. This would help the worst off borrowers tremendously.

JOE SAID HE WANTED TO DO THIS! He needs to do it right away, would not take Congress.

As it is, the PAYE payback option is 10% of your adjusted income, the adjusted income takes gross earnings and subtracts 1.5 times the poverty rate.

An example would be someone earning $59K a year, less poverty times 1.5 would mean they pay 10% of $40K or $4000 a year or $333 a month. Going with Joe's plan reduces that person's payment to $167 a month. That is life changing. Joe also talked about increasing the poverty adjustment from 1.5 times. If it was 2 times that would make the person's payment $140 a month.

This would be life changing. You can do some forgiveness too. But doing this would be huge and could be done right now.

[Freddie]

4. And stop the interest clock

Ideally make the loans 0% interest, or very minimal (1% or less). The problem with the % of income payment plans is they can be so low they don’t pay any principal. If we can’t forgive the debt, eliminate or drastically reduce the interest.

[Johnny2X2X]

7. 0% interest would be another option

All interest past, present, and future is deducted from your balance. So if you've paid $10K in interest, your balance is reduced by that.

This could lower payments significantly too.

[KPN]

3. It's sickening to know that in the world's wealthiest nation, 45 million people are saddled with an

average of $22,200 in debt because they wanted to better themselves and went to college; many to a public university no less. Especially since I had to pay for every bit of my education because my working class parents, who had younger children to feed, could not afford to help me out with one dime. In spring 1981 I completed my grad degree with a total government-subsidized debt load for 6 years of public higher education of a measly $1,000 -- at 2% interest no less.

Granted, I borrowed the money in about 1977 or 78, but what has happened since 1981?

Not surprisingly, Ronald Reagan became President in January of that year.

I don't buy the "there isn't an easy answer" premise of this story. There are plenty of easy answers, starting with the one suggested by Johnny2X2X in post #2 above. Stop fleecing the working class and start recovering the wealth that has been fleeced from them the past 40+ years.

[Orangepeel]

5. forgive all the interest

people who didn't borrow money get upset at the idea that those who did borrow won't have to pay it back, making debt forgiveness a hard sell. But people get loans at different rates, sometimes 0%, and refinance all the time so it doesn't feel as unfair.

[dclarston13]

6. Abolish the social security wage cap

It does not make sense to me that you stop paying in to SS when your earnings exceed 142K Think of the impact if high earners had to kick in 6.2% of their total earnings. I think it would pay for student debt and medicare for all.