Why cancelling student debt is good?
Asked by: Prof. Kasandra Lubowitz II | Last update: July 16, 2025Score: 4.9/5 (71 votes)
Cancelling student loan debt may reduce unemployment by adding up to 1.5 million new jobs. Federal student loans represent 90.8% of all student loan debt, public and privately held ($1.77 trillion total).
Why is canceling student debt a good idea?
Student loan debt cancellation is essential to the financial wellness of millions of Americans. With student debt cancellations, people will be able to pay off other debts, purchase homes, and invest in their communities, futures, and the American economy.
What are the positive effects of student loan forgiveness?
Student loan debt slows new business growth and limits consumer spending. Broad student loan debt forgiveness may help boost the national economy by making it more affordable for borrowers to participate in it.
Is cancelling student debt good for the economy?
The researchers' model posits that cancelling student loan debt won't cause an astronomical amount of inflation. To be specific, there would be a very modest uptick as a result, perhaps 1.8-1.9 percent. In fact, the policy of debt cancellation could boost the GDP by an average of $86 billion to $106 billion per year.
Why should student loans be abolished?
Ditching federally funded loans won't just benefit taxpayers; it will change incentives in ways that benefit the students who rely on loans to attend college. Most people burned by huge student loan balances got there because they either didn't graduate or enrolled in a low-value program.
What Everyone's Getting Wrong About Student Loans
Who benefits from student loan cancellation?
Those who had their debt canceled in 2022 and 2023 had a median income of $108,000, while borrowers who repaid their debt in those years had a median income of $147,000. The borrowers who benefited from debt relief were also more likely to have graduated from school during or shortly after the 2007-09 recession.
What are the benefits of no student debt?
When debt burdens are lifted, student borrowers can start new businesses and in turn, create job opportunities for others. They can buy homes for the first time in their lives, pay down other debts such as their credit card bills, and have less reliance on social safety net programs.
What happens when student debt is cancelled?
If you qualify for forgiveness, cancellation, or discharge of the full amount of your loan, you won't have to make any more payments on that loan. If you qualify for forgiveness, cancellation, or discharge of a part of your loan, you'll need to pay back the remaining balance.
Which race has the most student loan debt?
Who has the most student loan debt by race? Black adults are more likely to have student loan debt than those in other racial or ethnic groups. They are more likely than white adults to hold student debt at every level of educational attainment.
Why is student debt not worth it?
Student debt will not be worth it in every situation. Borrowing a large sum and entering a low-paying career will either not pay off financially or take a painfully long time to do so.
Who is hurt by student loan forgiveness?
It's estimated Black and Hispanic women are expected to experience some of the largest reductions in the percentage with any student loans from the $10,000 relief plan: 5.4 and 4.7 percentage points, respectively. White men are expected to experience among the smallest reductions (2.4 percentage points).
What are the cons of forgiving student debt?
- Con: Forgiving debt is not fair to people who have already made their payments. ...
- Pro: Debt forgiveness is the empathetic solution. ...
- Con: Student loan forgiveness does not address the root problem and could even exacerbate it. ...
- Pro: Debt cancellation could improve economic equity.
What are the pros and cons of student loans?
- Pro: Student Loans Can Fund Your Dream School. ...
- Con: Student Loans Create Post-College Debt. ...
- Pro: Student Loans Help You Enjoy a Better College Experience. ...
- Con: Student Loan Debt Can Get in the Way of Lifestyle Goals. ...
- Pro: Student Loans Can Help You Build Credit.
Why is student loan forgiveness a good idea?
Pro 1: Student loan debt is slowing the national economy. Forgiveness would boost the economy, benefiting everyone. When everyone can't participate in the economy, the whole economy suffers.
Who holds the most student debt?
Black women owe a disproportionate amount of student debt. They hold 43% more undergraduate debt and nearly 99% more graduate school debt than their white woman counterparts 12 months after graduation, according to an April 2022 study by the nonprofit organization The Education Trust.
Should the government pay for college?
The benefits of free college include greater educational access for underserved students, a healthier economy, and reduced loan debt. Drawbacks include higher taxes, possible overcrowding, and the threat of quality reduction.
Who suffers the most from student loan debt?
By the numbers: Borrowers between 35 and 49 years old owe the most in federal student loans, according to Federal Student Aid data. Details: Women typically borrow more for college than men, according to NerdWallet, a personal finance company.
What race has the most credit card debt?
Average credit card debt by race
White Americans have average credit card debt of $6,930 and a median credit card balance of $3,000, the most of any racial identity/ethnicity.
Which race gets the most financial aid?
Higher percentages of Black (88 percent) and American Indian/Alaska Native (87 percent) students received grants than students who were of Two or more races (79 percent), White (74 percent), and Asian (66 percent).
Who benefits from cancelling student debt?
8 Therefore, lower income borrowers, especially Black borrowers, would benefit immensely from debt cancellation. Student loan debt does not just harm young millennials or college graduates. It is a multi-generational problem, and one that hurts people who faced insurmountable barriers to completing their degree.
Would cancelling student debt help the economy?
Cancelling student loan debt may reduce unemployment by adding up to 1.5 million new jobs. Federal student loans represent 90.8% of all student loan debt, public and privately held ($1.77 trillion total).
Why is student debt so bad?
Carrying student debt can affect your ability to buy a home if your debt-to-income ratio is too high. If you have too much student loan debt, you won't be able to save as much for retirement. Student loan debt can lower your credit score, especially if you fail to make on-time payments.
What if all student debt was forgiven?
Approximately 8 million borrowers are enrolled in the Saving on a Valuable Education (SAVE) plan, which is proposed to cancel their student debt after a certain amount of time. Canceling all student loan debt in the U.S. would cost approximately $1.6 trillion.
What happens if you refuse to pay student debt?
If you are delinquent on your student loan payment for 90 days or more, your loan servicer will report the delinquency to the national credit bureaus, which can negatively impact your credit rating. If you continue to be delinquent, you risk your loan going into default.