The Battle for Student Debt Relief in America 2024

Student Debt Relief in America: Over the past two decades, student loan debt in America has ballooned into a crisis. Currently, about 45 million Americans hold over $1.7 trillion in student debt. The average student loan debt for graduates in 2021 was around $30,000. This massive debt burden is hindering millions of Americans from buying homes, getting married, having children, or starting new businesses.

Calls for broad student debt relief have grown louder in recent years, but the issue remains highly controversial and divisive. Advocates argue that bold government action is needed to stimulate the economy and provide relief to suffering borrowers. Opponents counter that mass loan forgiveness would be prohibitively expensive and unfair to taxpayers. As the debate rages on, let’s examine the key arguments around student debt relief and the current state of reform proposals.

The Origins and Growth of the Student Debt Crisis

To understand the calls for reform today, we must first understand how the student debt crisis arose in the first place. For generations, college was seen as an affordable path to the middle class. But starting in the 1980s, states began disinvesting from public universities and federal grant aid fell. As costs rose, students turned to loans to pay for college.

The problem accelerated in the 1990s and 2000s. College tuition grew far faster than inflation, even as median wages stagnated. To fill the gap, private lenders expanded student loans aggressively, capitalizing on guarantees and protections offered by the federal government. Students took on more and more debt, believing it would pay off with higher salaries after graduation.

By 2012, student loan debt surpassed $1 trillion. Today it stands at $1.7 trillion, more than double credit card debt or car loans. Nearly one in five American adults now have student loans. The crippling debt levels have sparked a growing sense of crisis and demands for reform.

Who Owes All This Student Debt?

While student debt burdens Americans of all backgrounds, it disproportionately impacts certain demographics. Women hold nearly two-thirds of all student debt, owing on average $31,000 compared to $30,000 for men. Debt also weighs more heavily on Black students, due in part to the generational impacts of discrimination and the racial wealth gap.

About 92% of student debt is owed directly to the federal government. The rest is comprised of private student loans. Among borrowers with the highest debt loads, graduate students make up a significant portion. Those who pursue advanced degrees like medicine, law, and business take on more debt but also see income boosts which help them repay. Undergraduate debt is generally lower but comes with higher delinquency rates.

Geographically, the Midwest and South have higher student debt levels, while coastal states fare better. Rural students tend to borrow more than urban ones. For-profit college attendees also take on disproportionate debt burdens and frequently default. Student debt amplifies existing inequalities rather than alleviating them.

The Harms of Massive Student Debt

Advocates argue that mass student debt is not just an individual burden but also inflicts damage on the wider economy. Saddled with loans, millions of younger Americans are unable to invest, purchase homes, start businesses, or fully participate in consumer spending. This drag on growth directly impacts overall GDP and job creation.

Heavy student debt can also shape career decisions and deter highly educated workers from entering lower-paying but vital fields like teaching, social work, and public service. Disparities in intergenerational wealth transfers are worsened as families divert resources to paying down loans rather than saving or owning assets. Education, long seen as a ladder up, has become a financial anchor holding down economic mobility for many.

At the individual level, the daily stress of carrying this debt causes measurable declines in health, life satisfaction, and performance. Defaulting on loans mars credit reports, precipitating a cycle of debt that prevents borrowers from full participation in the financial system. Advocates argue broad student debt relief can help counteract these harms.

The Argument for Broad Student Debt Relief

Progressive activists have coalesced around calls for significant government intervention, up to and including mass student debt cancellation. The hoisting point for this argument is the sheer scale of the $1.7 trillion crisis, which advocate groups like the Debt Collective dub “a policy-induced disaster.”

In their view, broad debt relief would provide an immediate stimulus, putting billions of dollars back in the pockets of consumers who would then spend in their local economies. They also argue it is the fair and moral remedy for decades of problematic education policies that steered students toward unaffordable debt. Wiping the slate clean would allow a fresh start.

Freeing hundreds of thousands from loan payments would also encourage entrepreneurship, investment, and risk-taking. Younger Americans could shift finances toward buying homes and raising families, strengthening conditions for growth. There are even potential fiscal benefits if new unencumbered consumers expand the tax base through earnings and property taxes.

To activists calling for mass debt cancellation, $1.7 trillion is a political choice, not an economic inevitability. They point to relief programs during recessions and crises like the pandemic payment pause as evidence that political will could eliminate this burden once and for all.

Who Is Calling for Debt Relief?

Much of the momentum behind debt relief comes from progressive think tanks like the Roosevelt Institute as well as grassroots debtor advocacy groups. Prominent elected Democrats have taken up the cause, most notably Senators Elizabeth Warren and Chuck Schumer along with Congresswoman Alexandria Ocasio-Cortez.

Warren made debt cancellation a signature issue in her presidential campaigns, calling for relief up to $50,000 per borrower. Schumer has proposed the same, and Biden vowed to cancel $10,000 on the campaign trail. Debt relief advocates rallied behind these proposals, staging high-profile campaigns to pressure the administration.

Young voters of all political stripes recognize student debt as a defining challenge of their generation. Polls consistently show approval of forgiveness proposals not just among college graduates, but Americans broadly. Still, there are skeptics across the political spectrum.

Who Objects to Mass Student Debt Relief?

While student debt reform attracts enthusiastic public support in theory, the reality of large-scale government cancellation also prompts strong objections spanning fiscal, economic, ideological, and moral concerns. Opposition to mass relief unites diverse voices from conservative think tanks to moderate Democrats.

One common fiscal argument against mass debt relief is the upfront cost, estimated at over $1 trillion for broad cancellation. Critics argue eliminating loans en masse would either explode the deficit or require tax hikes on the general public. There are also concerns over fairness since debt forgiveness would disproportionately benefit Americans with graduate degrees and higher earning potential.

Moderates like Democrat Senators Joe Manchin and Jon Tester have argued any relief should be targeted to those truly in need. Others oppose involving the government so heavily in individual finances. Libertarians reject debt cancellation as an improper extension of the federal role.

There are concerns over potential inflationary effects if massive relief dumped consumer buying power into the economy. Critics also argue forgiveness could encourage colleges to hike tuition further, knowing loans are politically guaranteed. Some see it as an unfair burden on fiscally responsible students who worked to pay their way.

Where Does Biden Stand on Debt Relief?

As a presidential candidate, Joe Biden expressed support for canceling $10,000 in federal student loans per borrower. This proposal drew wide appeal during campaigning. However, nearly two years into his administration, Biden has yet to enact the forgiveness plan despite mounting pressure.

In April 2022, reports emerged that Biden was considering a $10,000 cancellation by executive order, without going through Congress. This prompted uproar from Republican lawmakers and objections from budget-wary members of his party. Any unilateral move by Biden would likely face lawsuits arguing he lacks authority.

Biden then requested a memo from the Department of Education exploring his legal options. The administration has been mostly silent since, frustrating advocates demanding action. Biden may still go ahead with a smaller forgiveness plan more limited in scope. But mass debt elimination currently appears stalled, lacking support in Congress.

That said, Biden did extend the pandemic payment and interest freeze on federal loans through 2023, effectively implementing temporary relief. He also expanded income-driven repayment and public service loan forgiveness programs. Despite inaction on the campaign pledge so far, student debt remains on Biden’s agenda heading into the midterms.

Other Student Debt Relief Proposals

Beyond one-time debt cancellation, reformers have put forward a range of proposals targeting the student debt crisis:

  • Income-driven repayment– Existing options could be consolidated and improved to make payment affordable based on borrowers’ salaries.
  • Interest rate reductions– Current rates often exceed mortgage loans, proposals would lower rates and prevent capitalization of interest.
  • Loan refinancing– Allow federal and private borrowers to refinance at lower prevailing rates to quickly reduce debt.
  • Public service forgiveness– Expand existing programs that cancel debt for graduates entering teaching, government, non-profits, and other roles.
  • Tuition-free college– Debt relief would be paired with making public colleges tuition-free, as proposed in Bernie Sanders’s College for All Act.
  • Crackdown on for-profit colleges– Advocates argue predatory for-profit institutions relying on federal aid should face tougher standards and limits.
  • Cancel debt from failed colleges– Provide relief for students whose institutions misled them or closed mid-degree through no fault of their own.

Each of these proposals aims to tackle the causes and consequences of the debt crisis. While most require Congressional action, advocates say Biden could enact some executive orders, such as forgiveness for defrauded borrowers.

Student Debt Loan Relief Will There Be Mass Student Debt Cancellation?

Despite enthusiastic activists and growing public support, the ultimate likelihood of billions in debt relief being approved remains in question. The narrowly divided Congress is far short of a consensus on large-scale cancellation. Biden appears hesitant to test the legal uncertainties of acting by executive fiat.

Challenges notwithstanding, the intensifying student debt emergency makes some government intervention both urgent and inevitable. With delinquencies expected to spike after pandemic pauses lift, both political and fiscal pressures will mount. The issue energizes key voting groups Democrats rely on. Any action seems more probable after the midterms produce a governing mandate one way or the other.

Short of mass elimination, significant reforms remain viable through executive actions and tailored legislative proposals. But after years of building, the bold reform vision of wiping the slate clean continues to galvanize a multigenerational movement around the cause of debt justice. With both parties recognizing student loans as a defining issue, policymakers will remain pressed to deliver solutions matching the scale of this crisis.

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