Debt Cancellation Will Mainly Help Debtors
Canceling student debt seems like a great way to help people; damn it, I would also like my debts to be written off (“The Biden administration must cancel student loan debt” Conclusion, 12 July). But does it really help?
Nathaniel Hendren, professor of economics at Harvard and co-director of the Opportunity Insights Institute, compared student debt relief against a number of other social programs that help economically disadvantaged people in terms of return on investment, and found that debt relief was not very beneficial. for the rest of society.
IN video discussing his researchHendren said: “Forgiving a student loan can be of great benefit to people who are heavily indebted. … … but in the end, the returns from these policies will not come anywhere close to the high returns for money we see for other public safety nets.
Using a measure called the marginal value of public funds, Hendren and co-author Ben Sprung-Keizer, analyzed the economic benefits of 133 government policies, looking for policy solutions that will lift families out of poverty and achieve better results in life. He would not recommend erasing student debt.
We need to count before recommending to forgive student loans. There are other proven ways to help the poor. Debt forgiveness is not one of them.
Payments are on hold, but a large bill is expected
Three copyright responses dated July 12 – “The Biden administration must cancel student loan debt” “A Really Progressive Student Loan Policy” as well as “Low-income students need bold decisions to get to and graduate from college.” – took it for granted that the current student loan system worked. To be honest, this is not the case.
Students have not had to pay their federal loans since the start of the pandemic. The suspension of payments was supposed to be short-term, but it has been extended several times and will likely continue until Congress comes together to reform college funding.
The White House may turn down calls for debt forgiveness from those on the president’s left when no one is being forced to repay their loans. But is the Biden administration ready to spend political capital on a draft budget that already amounts to trillions to hundreds of billions to write off student debt? This is not yet known.
The Department of Education should be concerned that non-compliance will skyrocket if abstinence is terminated. The longer students do not pay, the harder it is for them to return to the habit of paying again. This portion of their budget goes to food, rent, and other necessities.
Great plans, such as total debt forgiveness, are often brought to life by changing reality. This could be the case in the event of student debt reform, and the meter will still be ticking in the coming months.
The writer co-founded several nonprofit organizations working to make the college accessible to low-income students, including the Hildreth Institute.