Here’s why student loans should not be canceled.
Here is what you need to know.
Should student loans be canceled? That question is on the minds of 45 million student creditors, some members of Congress, the president and other stakeholders. There are many reasons to cancel student loans. (You can read Part 1 of this two part series on student debt cancellation here: 5 Reasons to Cancel Student Loans). In order to make a more informed decision, the purpose of this series is to present some key arguments on both sides of this important issue. Some members of Congress and President Joe Biden want to cancel large-scale student loans. However, they are different how much Sorry for the student loan. Binding Congress wants $ 10,000 to cancel student loans, Senate Majority Leader Chuck Schumer (DNA) and Senate Elizabeth Warren (DMA) want to cancel $ 50,000 student loans by executive order. Binden said he did not support the cancellation of 50,000 student loans. It is important to understand the arguments that come from all sides, whether they support student loans or not.
Here are 5 reasons not to cancel student loans
1. The cancellation of student loans is well planned
Who benefits from student loan forgiveness? Opponents have always benefited rich student loan borrowers who are focused on poor student loans and do not want their student loans canceled. For example, post-graduate school debt accounts for more than 40% of all student loans. This includes medical school, dental school, business school and law school student loans. Of course, student loan borrowers at these schools can also struggle with student loans, and not all have high incomes. That said, the worry is that many high-income student loan lenders can get student loans even if they can pay off student loans. Schumer and Warren said only borrowers with less than $ 125,000 will be eligible. Opponents believe that the limit is too high and that student loans should be limited to low-income borrowers.
2. Cancellation of student loans will forget all those who did not go to college
Recent Student Debt Statistics show that 45 million borrowers owe $ 1.7 trillion in student debt. Although 45 million is a relatively large number, it is less than 20% of the estimated 250 million adults in the United States. However, most adults no longer have or do not know student loans. This includes individuals who are unable to attend or who are not in college, who are at risk of financial hardship, and who have been severely affected by the HIV-19 epidemic. So, the question of policy is this – is it appropriate to cancel student loans for one group of people, and not give the same amount of financial relief to the majority of the population with different financial problems? The “well-intentioned” debate has also spread to other types of loans, such as credit card debt, affecting millions of young people with high interest rates. In addition, mortgage debt is the highest consumer debt in the United States, and the cancellation of millions of American mortgages could benefit many borrowers.
3. Cancellation of student loans does not stimulate the economy
Warren said canceling student loans of up to $ 50,000 could cost $ 600 billion to taxpayers. However, that does not mean that $ 600 billion will return to the economy today. $ 600 billion does not go into the pockets of student creditors, so they can spend money to buy a home or support local businesses. According to the responsible Federal Budget Committee, the cancellation of all student loans will result in only $ 90 billion in cash in 2021 and only $ 450 billion over the next five years. why? At the same time, a borrower saves money on the principal and interest payments (their full student loan balance), which can save hundreds of dollars a month, on average. While that is a financial benefit, it is different from getting a full student loan account in cash. Opponents of student loans say stimulus checks and unemployment benefits are the best way to stimulate the economy. If Congress wants to revive the economy, it would be better for Congress to give stimulus checks to every American and encourage them to spend money in the economy.
4. Cancellation of student loans does not solve the high cost of college education
Opponents of student loan cancellation say the one-time student loan waiver is a band’s support for a much larger, intangible problem: the cost of college tuition is rising. College education is becoming more and more expensive. Cancellation of student loans helps borrowers who are in debt, but it is a one-time solution. In terms of college costs, there are many student loan borrowers who face the problem of student loans – unless you get the benefit of a student loan cancellation. Instead of canceling student loans, Congress can find solutions to reduce the cost of higher education for all Americans. For example, Biden plans to free two-year and four-year public colleges and universities free of charge.
5. Cancellation of student loans is unfair to borrowers who have paid student loans
As the saying goes, life is unfair. Borrowers who have recently repaid student loans will not be able to benefit from their current proposal. You might call it a bad luck. However, many of these borrowers are in dire financial straits and are unable to repay student loans. Many have found or married families, have worked hard, have not bought a home, and have made other financial sacrifices to pay off student loans and show financial responsibility. This does not mean that borrowers who paid off student loans 30 years ago should receive compensation. However, he said that if Congress repeals student loans for some debtors, the legislature should compensate those who have recently repayed student loans so that they do not feel marginalized.
Repay student loans
Student Credit Cancellation The next steps are to consider whether you can cancel student loans with an executive order. However, he acknowledged that he did not have such authority. That means Congress must cancel student loans. However, Congress did not change the binary solution that other members of Congress could support. In the meantime, student loans may no longer be available for student loans. Given this, what is the best way to repay student loans? Here are some options you can consider
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