Bandage on a bullet hole; How student loan debt policies affect everyone
Photo via: U.S. Army Heraldry Directorate Seal/Public domain/Wikimedia Commons
As voters get ready to cast their ballots, it is important to review economic issues such as student loan debt, one of the wounds damaging our country.
There are many types of loans (the main two being subsidized and unsubsidized), each of which has nuances through the Free Application for Federal Student Aid (FAFSA) that should be examined personally.
To put in perspective why these loans matter to students who have borrowed money and even to those who have not, some 2024 statistics regarding loan debt in the US according to the Education Data Initiative are as follows:
The outstanding federal loan balance in the United States is $1.620 trillion, with 48.2 million borrowers still having active debt.
The average federal student loan debt balance is $37,853, with the average public university student borrowing $32,362 to attain a bachelor’s degree.
These are not small numbers, and depending on the policies of the next administration, the manipulation of these not-so-small numbers could affect the economy, making this an important factor no matter what a student’s debt status may be.
As of 2023, loan debt has been on the decline, but it is still necessary to take a closer look at what the candidates have in store for their future possible presidencies and what that could mean for students and citizens alike.
The Biden-Harris administration tried for widespread student loan forgiveness in 2023, which would forgive up to $10,000 of student loan debt for eligible borrowers, but that was ultimately struck down by the Supreme Court. However, the Biden-Harris administration did not want to stop there, and they planned to continue pushing for even more debt abolishment.
It is believed that, if elected, Vice President Kamala Harris will continue to build on these policies deeply rooted in loan forgiveness. In a speech in July, Harris stated “We see a future where every student has the support and the resources they need to thrive, and a future where no teacher has to struggle with the burden of student loan debt.”
In theory, this sounds like a win-win for all parties involved. Who wouldn’t want their debts forgiven? However, in order to accomplish that, the government would have to pull money from elsewhere, potentially leading to adverse effects such as higher taxes or inflation.
According to economists, most debt holders fall in the upper-to-middle class, meaning that the people with the most debt are more likely to pay it off in the future with less trouble than those struggling financially. This means eliminating all debt will disproportionately help those who don’t actually need it, and the strain it could cause on the economy would adversely end up hurting the same people the forgiveness program aimed to benefit. It could also open a can of worms that would allow for borrowers to abuse the loan forgiveness system which could encourage universities to increase tuition, leading to similar dilemmas.
While some view total forgiveness as putting a Band-Aid on a bullet hole, there are pros to this system. For example, student loan debt harms African American students disproportionately more, so forgiveness would help combat racial inequality. Loan debt has also slowed down many Americans' ability to enjoy socially constructive acts such as getting married, saving for retirement and making bigger purchases. Therefore, debt forgiveness could help foster an environment that encourages these human experiences, increasing quality of life.
On the contrary, former president Donald Trump does not agree that loan forgiveness is the answer and, if elected, will most likely repeal or ban the policies his predecessor put in place. He spent his time as president setting stricter limits on student aid programs and calling for the elimination of several types of subsidized federal student loans.
So far during his campaign, Trump has not made mention of any plans for revoking specific student loan policies, but has been fairly vocal about his feelings regarding Biden’s debt forgiveness, calling it "not legal" and “vile,” according to Kiplinger.
However, the successful repeal of these programs is heavily dependent on whether Congress is ruled by a Republican majority. The most that conservatives have commented on the issue is through a set of policy proposals called Project 25 (developed by a group called The Heritage Foundation) which calls for significant changes to how student loans are managed. While the former president has denied any connection to this, many of his closest advisers are heavily involved with the project.
Trump’s current Vice President nominee, JD Vance, also denies any connection to the group. However, Vance has a relationship with the foundation's leader, Kevin Roberts, and has been quoted endorsing aspects of the project, saying that “there are some good ideas in there and there are some things I disagree with,” in an interview with Newsmax.
It is a fair assumption to say that Vance stands with Trump on the issue of student debt forgiveness, tweeting in 2022 that “Republicans must fight this with every ounce of our energy and power” in relation to calls for debt forgiveness.
As a country, having a high student loan balance can negatively impact economic growth, causing fewer businesses to open and less consumer spending. So while total loan forgiveness may be a poor, makeshift bandage in some circles of thought, leaving the wound open will only allow it to expand further.
It is still too early to know for certain how the election might impact student loan debt, but experts agree that relying on forgiveness should not be in your 2025 income plan. Borrowers should plan to pay back loans and factor in debts before making any long-term purchases.