The Journal Gazette
 
 
Monday, February 22, 2021 1:00 am

'Top of the hill'

Loan forgiveness will help more reach it

David Placher

President Joe Biden must cancel at least $10,000, if not all, of student loan borrowers' federal student debt because it is now a financial crisis.

There are around 45 million borrowers who owe a combined total of $1.6 trillion in student loans, according to Education Department data. It is the second-largest category of consumer debt; first is mortgage debt.

Student-loan debt is holding back a large percentage of the population from spending and saving, thus causing a problem for the U.S. economy by weighing down the country's true economic growth.

The public recognizes that student-loan debt is a problem, and it wants a solution. A January Morning Consult survey found that 56% of U.S. adults support $10,000 in federal student loan forgiveness. Although the same poll shows public support dwindles for loan forgiveness for amounts greater than $10,000, elected officials must listen to the public and enact a plan to help student loan borrowers because student debt continues to pile up.

The student loan crisis is similar to the subprime mortgage crisis that occurred a little over a decade ago, when the federal government rescued many financial institutions and consumers. The mortgage crisis was partly triggered by the government's failure to stem the tide of no-questions-asked lending by banks to consumers. When the housing bubble popped, home prices plunged and mortgage delinquencies and foreclosures skyrocketed, forcing the federal government to bail out banks and require banks to renegotiate many consumers' mortgages.

The student loan crisis is also partly caused by loans being issued without factoring in a borrower's income, ability to repay or future job prospects. But it's hard to base lending on students' current financial circumstances and future job prospects, especially when students are often broke when they borrow and they won't enter the job market for a few years.

The total amount a student borrows often resembles a mortgage, but unlike paying on a mortgage, paying on student loans doesn't keep you from being homeless.

The student loan crisis is also caused by the breakdown of families and economic disparities between regions in this country. Schoolchildren will or will not learn to read and write depending on whether they are taught by their teachers and prodded by their families.

A child who doesn't have full support at home or attends struggling primary or secondary schools is likely to enter college intellectually behind peers. This increases the cost of college because students who are behind when entering college are often required to take developmental courses before enrolling in courses that count toward a degree.

A child who attends a public school in Massachusetts, a state that ranks high for its public school system, will more than likely be prepared for college, accepted to better universities, and receive scholarships than a student that attends a public school in New Mexico, which doesn't rank very high for its public school system.

Unfavorable home environments and geographic locations are factors students have little control over, so they shouldn't be penalized with student debt to escape unfavorable factors that are no fault of their own.

The U.S. economy is built on the belief that if you work hard you can succeed. But if you finish college with student loan debt, you may be unable to fully participate in the economy.

It's like being in a four-wheel-drive Jeep, slipping and sliding up a small, yet insurmountable muddy hill. You can see the top, but no matter how much you maneuver, you can't make it.

If student loan borrowers' debt were reduced or even eliminated, it would be the push many need to make it to the top of the hill. 

David Placher is an attorney and Fort Wayne resident.


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