Forgiving Student Loans Won’t Fix the Root Cause of the Student Debt Crisis

President-elect Joe Biden recently came out in support of legislation for COVID relief that would include forgiving $10,000 in student loan debt for qualifying Americans.

 “We need a comprehensive solution that looks forwards and backwards at the same time.” – Matthew Chingos, Urban Institute Center on Education Data & Policy.

Student loans are a big and costly problem for millions of Americans. But is simple loan forgiveness really the right relief? Or is there more we ought to be doing to prevent student debt from piling up in the first place? 

Listen: Stephen Henderson speaks with experts and people affected by crushing student debt about what real relief would mean

Guests

Kevin Carey is the director of the education policy program at New America. He recently wrote an op-ed in the New York Times about the importance of addressing the causes of student loan debt.

“People just keep borrowing because they have to,” Carey tells Stephen Henderson on Detroit Today. “Even though people don’t have more money, colleges demand more money from parents.”

“It is the underlying increase in higher education prices that really is driving the student loan debt crisis,” says Carey. “We’ve added a trillion dollars in student loan debt outstanding in a little over eleven years.”

Marie Muhammad graduated from Wayne State University in 2017 with more than $50,000 in student loan debt. She was making less than $15 an hour after graduation as a lab technician at Wayne State. 

“It can definitely be crippling,” says Muhammad. “I’m thinking nothing I put towards it is going to put a dent in the repayment. So it’s like, why bother?”

Matthew Chingos is the director of the Urban Institute’s Center on Education Data & Policy. He’s also the co-author of the book “Game of Loans: The Rhetoric and Reality of Student Debt.” 

On what canceling student loan debt would mean for the economy in the short-term, Chingos says “Right now, I think the short answer is it wouldn’t do much,” noting that there’s currently a freeze on student loan payments. But he says that doesn’t mean structural reform isn’t needed.

“We need to do something about the student debt issue,” he says. “We need a comprehensive solution that looks forward and backward at the same time.”