The pros and cons of student loan forgiveness

Examining some of the key arguments on either side of this contentious debate

A college graduate.
(Image credit: Illustrated | iStock)

The Supreme Court has heard arguments both for and against President Biden's controversial student loan forgiveness plan, which, if allowed to proceed, would absolve borrowers of up to $20,000 in federal debt if they earn less than $125,000 a year. Here are some of the key points on either side of this contentious debate:

Con: Forgiving debt isn't fair to people who've already made their payments

Forgiving student debt would be a "great gift" to graduates, argues the Boston Herald editorial board — but so would having your "mortgages, car loans, and … credit card debt" forgiven. "That's not on the table" though, because "adults who assume debt are supposed to be responsible and pay for the things they purchase." For that reason, others have called debt forgiveness a "slap in the face to all who sacrificed and worked extra jobs to pay off their student loans."

Pro: Debt forgiveness is the empathetic solution

But "the argument that 'this is how it was for me, so why should it be any easier for you' is a lazy interpretation of — and solution for — a crisis decades in the making," writes Christina Wyman for NBC News. In fact, harboring such resentment is just "another sinister layer in our country's long-standing problem with empathy." Ben Burgis puts the counterargument another way to Jacobin: "If a monster lives at the edge of town and makes a regular practice of eating bits and pieces of passersby, and after this goes on for years before the town finally brings in a monster hunter to put an end to it, do the people walking around with missing fingers because of past monster attacks have a legitimate complaint? ... It's not unfair that they're finally taking care of the problem."

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Con: Student loan forgiveness could worsen inflation

While student loan forgiveness might have "seemed like a good idea" in November 2020, that time has passed, Matt Yglesias argues at Bloomberg. The "supercharged" demand from the $900 billion stimulus package and the American Rescue Plan was "superdupercharged" due to the sanctions — and resulting high oil prices — following Russia's invasion of Ukraine, meaning the economy "no longer needs stimulus — in fact, it needs to restrain demand." Since a "majority of the public" doesn't have student debt, Yglesias writes, and higher-income individuals tend to be the ones who owe money, restarting collections would come largely at the "expense of a disproportionately high-income minority of the population" while also helping to "reduce the volume of customer demand in the economy," rather than further increase it.

Pro: An imperfect solution is better than nothing

Unburdening student loan borrowers with the sweep of his pen "might not be the best form of stimulus available" to Biden, admits Annie Lowrey in The Atlantic. "Nor would it fix the country's crushing student-loan crisis, or rationalize its higher-education financing structure." But even if debt forgiveness won't instantly solve America's problems with access to higher education, financial equality, or stimulating the economy, "this is a yes-and situation, not an either/or one." While student loan debt would benefit the wealthy too, "giving money to rich people does not erode the benefits of giving money to poor people." People shouldn't get too hung up on the policy being "ideally progressive," either, Lowrey adds, because "the principle matters here too. The fact that higher education should be a public good matters."

Con: Many with student loan debt don't actually need help paying it off

Proponents of canceling student debt say it would help relieve the financial burden on lower-income students who sought higher education. Yet "in 2019, the average graduate of a four-year, non-profit college who took on loans left school with only about $29,000 in debt" while "the average four-year degree holder makes six to seven figures more during their life than someone" who only went to high school, Neal McCluskey, the director of Cato's Center for Educational Freedom, writes. "Student debt is not only often manageable, for many, it is quite profitable." Indeed, "students from families earning more than $114,000 a year borrow at the same rate as the lowest-income students — and they take out loans nearly twice as large," argues Emma Ayers for USA Today, adding that "those who decided to sign 10 years of their future paychecks away on the dotted line at the loan office shouldn't get the most reprieve simply because they spent the most."

Pro: This isn't your father's student loan crisis

People who attended college in the 1968-69 school year paid $1,545 a year, adjusted for inflation, for tuition, fees, room, and board at a public four-year college, Elise Hammond notes at CNN. "If education costs remained in line with inflation, that number would be around $12,000 per year" today — instead of the $29,033 it actually cost in 2020-21. There are students today who cover those costs with loans and manage to pay them after leaving college, "even without starting salaries so high that they invite nosebleed," Erik Sherman writes at Forbes. "Then again, there are people who can run a four-minute mile" and "memorize the first hundred digits of pi." For all the "finger-wagging" about student debt, it's worth remembering that "what was once possible — 'Oh, I put myself through college working for $100 a week during the summer when gas-powered streetlights lit the sidewalks, so why can't kids today?' — no longer is for many, if not most. To pretend that it is becomes a different form of gaslighting."

Update March 2, 2023: This article has been updated throughout to reflect recent developments.

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