Why student loan debt is a bigger issue than you think
Less than 11% of people with federal student loans are currently paying them back.
If you’re going to college, there’s a good chance that you’ve taken out a loan in order to earn a degree. There’s also a good chance that after graduating, you’ll owe more than $30,000. After all, the average student loan debt for college graduates in 2019 nationwide was $30,062.
According to a recent report by the Institute for College Access and Success, Connecticut four-year college graduates in 2019 had the third-highest average student debt, at $38,546.
Student loan debt nationwide adds up to $1.6 trillion, according to US News & World Report. This is in part due the increasing price of college tuition over the past 20 years. The cost of a college education may rise even higher if universities can’t find a way to offset losses caused by the pandemic.
That debt poses problems for the economy as a whole, as well as for the college graduates struggling to pay it off.
“I think it’s a pretty big problem. It’s a problem for the economy in general, as it means people can put less money in the economy,” said UConn Political Science Professor Thomas Hayes. “I’m 8 years out from my Ph.D. and I’m still paying. It’s a significant portion of people’s budget.”
Student loan debt can slow down how fast people start families and purchase homes, negatively affect the growth of small businesses and prevent young people from saving up for retirement, according to Forbes.
What do college students and graduates think of student loan debt?
“No one should be financially brutalized for attending higher-level education that betters themselves and the country. Forgiveness of student loan debt would be a worthwhile investment in the younger generations,” said UConn senior Jared Cote, a geography major.
UConn alumna Anna Holden ‘20 said she is strongly against students having such large amounts of debt. “Student loan debt is a way to keep the working and lower class from progressing,” she said.
Are the candidates planning to do anything about it?
Student loan debt has been brought up throughout this election cycle. During the primaries, former candidate Bernie Sanders offered a plan in which all student loan debt would be erased, releasing 45 million Americans from payments. Elizabeth Warren, another former candidate, proposed a plan that would erase up to $50,000 in student loan debt for 42 million Americans.
Democratic presidential candidate Biden does not offer an extreme plan in regards to erasing student loan debt. However, he intends to forgive up to $10,000 in student loan debt for individuals. According to his campaign website, Biden also plans to make two years of community college free, make public colleges and universities free for families who make under $125,000, and eliminate loan payments for those who make under $25,000 a year. People who make over $25,000 would still have to pay 5% of their income in an income-based repayment plan.
President Trump has much less to say on the subject of student loan forgiveness. He supports income-driven repayment plans but does not have a set plan for forgiving student loan debt. Trump has enacted some student loan forgiveness though through COVID-19 relief legislation. He allowed people who have federal loans to defer payments through December 31 and his current $1.8 trillion stimulus package proposal sets aside $25 billion for student loan forgiveness. That puts a small dent into the grand total of $1.6 trillion that American college graduates currently face.
Currently, less than 11% of people with federal student loans are paying them back.
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