We Need To Have An Honest Conversation About Debt Relief And The Future Of Student Loans

The Biden Administration’s decision to relieve student loan debt, specifically $10,000 for those that make less than $125,000 in annual income, and $20,000 for Pell Grant recipients, has kicked off a massive debate about the fairness of relieving debt for people that contractually agreed to pay it back. Much of the noise came from those on the political right, and which resulted in a tit-for-tat back and forth between United States Congressmen and the official Twitter account for the White House.

We need to cut through the partisan noise and have an honest conversation about debt relief and the future of student loans.

Two things are true

1) People should pay their debts.

2) People should be protected from predatory lending practices.

An in-state degree, and let’s use an education degree as an example, can easily run a student well over $100,000 when you factor in tuition, room, board, books, transportation, and an unpaid student teaching period.

Let’s assume that the student in this scenario accumulated $40,000 in government-backed student debt over this 4-5 year period. Assuming the average starting salary of a teacher is around $40,000, if that student is on a 10-year repayment plan, the monthly minimum payments are going to exceed 20% of that teacher’s monthly pre-tax income.

If this hypothetical student is able to make every minimum payment over the 10 years in order to repay that debt, they will have paid back over $80,000 to the government, and likely surrendered one fifth of their income over the course of a decade (assuming they’re still able to stomach a teacher’s salary into their early 30’s in the face of needing housing, family planning, inflation, etc).

That same student that was able to secure $40,000 in student loans was probably early enough in their credit history that opening a bank-backed bankruptcy-protected line of credit for a few hundred dollars would have been harder than securing an unprotected, previously unforgivable loan for tens of thousands of dollars.

When banks don’t think you’re a good bet to recoup a few hundred bucks, why should education lenders think you’re a good bet to saddle with exponentially more unforgivable debt in an economy where wages stagnate in comparison to inflation and housing?

I totally get the frustration of people that went through the pain of full repayment looking at people that have yet to complete that process and feeling as if it is unfair. But what we can’t do is pretend that the government doesn’t have a history of targeted bailouts that benefit one group over another.‪

American taxpayers bailed out the banks, the auto industry, the farming industry, and most recently, businesses struggling to meet payroll during Covid through PPP… We also perpetually help subsidize mega corporations that fuel the creation of bazillionaires.

We even, and this is absolutely true, spend hundreds of millions making sure that free penis pumps are available to men who are unable to attain an erection under natural circumstances.

So why is it, that when the topic of addressing a student debt crisis born out of college tuition rising between 4-8% annually, outpacing inflation nearly five times over, so many people start decrying and mocking the generation of people who took out those loans in hopes they’d be qualified to fill available jobs and live with the same quality of life as previous generations? If millennials are drowning in debt at a never before seen rate, and wages aren’t increasing to assist in making sure that debt is resolvable, then without relief, the people that truly suffer are anyone and everyone producing any type of good or service that is dependent on expendable income.

In other words, if we don’t have any money left over at the end of the month, you can’t have any of it.

I sympathize with anyone that views those receiving loan forgiveness as rewarding irresponsible individuals, and as an endemic symptom of a “gimme generation.” But does your definition of “gimme generation” include the soybean and corn farmers of America? What about the subprime-mortgage writing baby boomers that drove the 2009 financial and housing crisis? Or the restaurant owners that needed a grant to retain employees through the worst pandemic in 100 years? Or the millions of people and businesses that benefit from bankruptcy protections?

What about those suffering from erectile dysfunction?

At the end of the day- colleges are bloated, charging too much, and not being responsible in the area of helping students understand the employment landscape in relation to the debt they accrue.

Companies are doing all they can to show investors ever-increasing profit margins at the expense of wage stagnation for a generation that is forced to accrue more debt than ever to even participate in many entry-level positions.$10,000 in loan forgiveness is nice… but colleges are going to keep billing students according to what the government will allow an 18-year-old to borrow, and knowingly sending them into fields that don’t pay a wage commensurate with the ability to both live and honor their commitment as a borrower.

The entire system needs an overhaul, but that’s not going to happen if we’re all busy bickering over who deserves this helping hand.

The only reason our entire economy hasn’t collapsed while fuel prices, food costs, and housing expenses run wild is that at the moment, tens of millions of Americans haven’t had to surrender 10%+ of their income to student loan repayment over the last two years. When those payments restart, times are going to be very tight. And the people that are upset that there are Americans benefitting from loan forgiveness right now, are going to be forced to realize that our economy is entirely interdependent on the spending power of its middle class.

Like it or not, we’re in this together, and the income that remains in the hands of people that were previously indebted to the government for loans they accrued at an age when a financial institution would have scoffed at even a $300 line of credit, is going to find its way into the economy, and potentially your pocket.

Instead of fighting, let’s be thankful that we get to hit the snooze button on our complete financial demise as a society to another day, and rally around making the changes necessary to ensure that people are using the collegiate system more judiciously, and being trained for the jobs that are going to keep us afloat for decades to come.