Before the pandemic, we were already watching the barrel of the coming student loan crisis. In recent years, total student loan debt has grown to over $ 1.5 trillion, overtaking credit card debt and making it the second-largest form of debt after mortgages. Young graduates are now starting their adulthood with more debt than any previous generation, with recent estimates suggesting that student debt has increased by more than 107% in this decade alone. It doesn’t take an expert to look at these shocking numbers to realize that this level of growth is not sustainable.
Students assume this monumental debt believing that it will open the doors to a better life. Many see it as their only route to the middle class. But with the debt burden increasing every year, these opportunities often fail to materialize. Student debt has fallen behind when graduates decide to buy homes, start small businesses, and have led a quarter of all borrowers to default on their loans. Long-term investments like homeownership have traditionally been the way to build generational wealth, but it increasingly seems like a far-fetched dream for graduates. When an entire generation of Americans is in debt from a young age, it prevents them from fully participating in the economy, and it hurts everyone.
In our consumer-driven economy, we rely heavily on spending to drive growth. So, if the typical young American is facing monthly payments of more than $ 200, their economic potential is severely limited. That’s hundreds of dollars a month not being spent in the local economy, saving for a house or the principal for a business loan (if they even qualify) and when you multiply that by the number of graduates academics, you have the recipe for disaster. Both graduates and local business owners would be much better off if that $ 200 and more were spent in our economy rather than going back to government. Canceling some of the student debt would not only improve opportunities for those in debt, but it would create the kind of economic growth, a rising tide, that we desperately need to lift all boats.
I might be student loan debt free now, but I can speak as a business owner and former student in debt myself – forgiving these loans will be amortized a thousand times over thanks to the number of opportunities it opens up. for an entire generation.
I already hear the naysayers argue that giving a block loan forgiveness would unfairly benefit the wealthy and those studying in high-income fields like law or engineering. If the last year has taught us anything, it’s that means-tested aid overly complicates policy and ends up depriving large numbers of vulnerable people of the help they need. Sometimes the best solution is to just sign the checks.
However, if you care about giving handouts to the rich, rest assured that over the course of their lucrative careers, they will pay back what they owe, and more, through taxes.
During the election campaign, Joe Biden promised to write off up to $ 10,000 in student loan debt for borrowers who earn less than $ 125,000 a year. If we are to ensure lasting economic relief for an entire generation of Americans, President Biden must maintain this position as the starting point for negotiations. No need to push back the deadline with postponements, and no need to tinker around the edges of the problem. We must resolve this crisis once and for all and give graduates and our economy the stimulus that will catapult us out of this COVID crisis.
Kristin Luck is the founder of three marketing analytics firms that she led to successful exits backed by private capital. Now she’s an investment banker, dog mom and patriotic millionaire.