Is Student Loan Forgiveness A Good Idea?
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 13 January 2021
⏱️ 28 minutes
🔗️ Recording | iTunes | RSS
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Summary
Should the U.S. cancel $10,000 or more of student loan debt per borrower? What would be the economic and financial impact? Why the student loan system is broken and how to fix it.
Topics covered include:
- How large and what is the growth rate of U.S. student loan balances
- What are the projections for student loan losses
- What are the pros and cons of forgiving student loans
- What would be the impact on federal finances of canceling student loans
- Why the U.S. government is already technically insolvent
- How student loan programs should be restructured
Thanks to LinkedIn and Policygenius for sponsoring the episode.
For more information on this episode click here.
Show Notes
Student Loans Owned and Securitized, Outstanding—Federal Reserve Bank of St. Louise
Senate majority gives Biden path to student loan forgiveness by Sylvan Lane—The Hill
Financial Report of the United States Government FY 2019
Warren makes case to Fed chair for canceling student loan debt by Naomi Jagoda—The Hill
Average Student Loan Debt at Graduation by Mark Kantrowitz—Savingforcollege.com
Forgiving Student Debt Isn’t a Great Stimulus Plan by Noah Smith—Bloomberg
NACE Salary Survey Winter 2020—National Associations of Colleges and Employers
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Transcript
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| 0:00.0 | Welcome to Money for the rest of us. This is a personal finance show on money, how it works, how to |
| 0:07.4 | invest it, how to live without worrying about it. I'm your host David Stein. Today is |
| 0:12.2 | episode 327. It's titled, |
| 0:15.0 | Is Student Loan Forgiveness a Good Idea? |
| 0:21.0 | Last week, see NBC reported that President-elect Joe Biden will ask Congress to cancel $10,000 in student debt for each borrower and to extend the payment pause that's been in place since April. |
| 0:39.0 | Borrowers of student loans haven't had to make any payments and interest has not been accruing. |
| 0:47.0 | That provision put in place by the Trump administration expires at the end of January 2021. |
| 0:54.0 | Biden is going to extend that, |
| 0:56.0 | and apparently going to ask Congress to cancel $10,000 of debt |
| 1:01.0 | per student borrower. |
| 1:04.4 | And there are some reports that he will cancel all of the debt of those who attended a public |
| 1:09.9 | university or a historically black college or university and is |
| 1:14.8 | earning less than $125,000 per year. |
| 1:19.0 | There is a lot of student debt outstanding in the US. |
| 1:22.3 | 1.7 trillion. It's been growing at a 9.1% annual |
| 1:28.9 | rate since 2006. 44 million Americans owe the US government about 1.5 trillion dollars in student loan debt. |
| 1:40.3 | The remainder is private student loans. |
| 1:44.0 | One reason student loan debt is increasing at a 9% annual rate is there are more students going to school and borrowing money. |
| 1:52.0 | If Biden went through with this debt forgiveness plan, it would |
| 1:58.0 | reduce the student loan balance by about one third. So $560 billion. Just the $10,000 per borrower piece would |
| 2:09.0 | reduce that $1.7 trillion amount by $440 billion. |
| 2:15.0 | And this is according to higher education expert Mark Cantorwitz. |
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