Opinion | Forgiving student loan debt is a no-brainer, and Biden could do it tomorrow if he wanted to. By crgibs. Business Insider tells the global tech, finance, markets, media, healthcare, and strategy stories you want to know.
Samuel Corum/Getty Images45 million Americans owe $1.7 trillion in student debt, and 93% of that debt is federally owned.Forgiving student debt would generate more than $1 trillion of economic activity and create millions of jobs.The Biden administration could forgive all federal student loan debt tomorrow without Congress.
Carl Gibson is a freelance journalist and columnist from Kentucky.This is an opinion column. The thoughts expressed are those of the author.See more stories on Insider’s business page.President Biden took office facing down both a once-in-a-century pandemic and the economic fallout it created.
But with Democrats having unified control of both chambers of Congress for the first time in more than a decade, Biden has a once-in-a-generation opportunity to effectively tackle those twin crises and significantly improve the lives of tens of millions of Americans.
One of the biggest ways to combat the economic crisis and ease the hardship faced by more than 45 million student borrowers would be to forgive all federal student debt on the US Department of Education’s balance sheet. In 2018, Bard College’s Levy Institute of Economics estimatedthat full debt forgiveness would boost GDP by anywhere from $86 billion to $108 billion per year.
The economists who authored the study also projected the creation of 1.2 million to 1.5 million new jobs every year, in the first few years following the elimination of federal student debt. This would lower the unemployment rate by anywhere from 0.22 to 0.36 percentage points over a 10-year period.
No brainermost recent figuresfrom EducationData.org (which compiles data from the National Center on Education Statistics and the World Bank), 92.6% of the approximately $1.7 trillion in existing student debt is federally owned, and the average borrower owes more than $36,000 in federal loan debt.
Because the Higher Education Act of 1965granted broad power to the US Secretary of Education to oversee the financing of higher education (including federal student loans), the executive branch has the unilateral authority to write down, release, or waive any right, claim, lien, title, or demand associated with federal loans.
Debt forgiveness wouldn’t require spending any tax dollars — just forgoing repayment. It would also mean students wouldn’t have to spend money paying down the tens of thousands of dollars in debt following them around for the bulk of their adult lives. It’d be like loaning a friend $100, then getting hired at your dream job, and telling your friend they can just keep the $100 instead of paying you back.
Aside from the financial and moral arguments, forgiving student debt is also a political slam-dunk, as it has bipartisan support from constituents. A September 2020 poll conducted by Student Defense, the Defend Students Action Fund, and Data for Progress found that more than two-thirds of Americans(and 58% of Republicans) support some form of student debt forgiveness. Democrats should aggressively pursue it if they want to hold onto and expand their Congressional majorities in the midterms.