Student Loan Debt Crisis in the US
- Over 43 million Americans have student loans totaling $1.7 trillion in debt.
- The student loan program has expanded significantly over the years, with key expansions by presidents such as LBJ, Nixon, and Clinton.
- The cost of college has steadily increased, with the average net cost of attendance for in-state students at public schools now around $20,000 per year.
- States have been slashing funding for public colleges and universities, leading to increased tuition and fees.
- Many public universities have responded by ramping up spending on amenities to lure out-of-state and international students, who pay higher tuition rates.
Consequences of Student Loan Debt
- Many students take on large amounts of debt without fully understanding the consequences.
- Student loans can make it difficult to plan for the future, such as having children.
- The burden of student debt disproportionately affects certain groups, such as those from low-income families and borrowers with smaller debt amounts.
- Parent PLUS loans allow parents to take out student loans on their child's behalf, but these loans are risky and can lead to retirees being saddled with debt.
- Student loans are extremely difficult to discharge through bankruptcy.
- Student loan services often make it difficult for borrowers to navigate the system and access programs that can ease the burden of debt.
Student Loan Forgiveness and Relief Efforts
- The student loan forgiveness program has a 99% denial rate due to complicated mechanics and servicers steering borrowers into forbearance instead.
- A whistleblower revealed that Navient employees were graded on how quickly they could get customers off the phone, not on how helpful they were.
- The Biden administration has managed to get meaningful solutions through by tweaking existing programs, forgiving nearly $12 billion for borrowers with disabilities and $56 billion for public service loan forgiveness borrowers.
- The SAVE plan, a retooled version of income-driven repayment, lowers eligibility requirements and ensures that debts would be wiped clean after 10 years of payments for those who borrowed less than $122,000.
- The Biden administration has relieved a total of $138 billion in student loans for 3.9 million people in just three years, more than any president in history.
Addressing the Student Loan Debt Crisis
- Addressing the giant pile of debt and the absurd cost of college are crucial, with proposals ranging from holding colleges responsible for a portion of the debt to making college tuition-free.
