Student loan forgiveness has come up every few months for the past couple of years. It’s a battle mired in politics and perception, but its impact hits home with normal folks in one way or another. Another round just came and went, so let’s see what happened.
Here are Five Fast Facts on the latest student loan forgiveness plan:
- 📝 Recapping - Back in 2022, the Biden administration launched the SAVE (Saving on a Valuable Education) program. The idea was to cancel up to $20k in student loan debt for millions of Americans. They took applications and started issuing cancellations, and opponents sued to stop the program. In other words, it was typical legislation.
- 🚫 The Numbers - SAVE would have cost taxpayers around $430 billion by the time it was finished. After about $5.5 billion, the legal battle finally reached the Supreme Court, where they smacked it down in a 6-3 verdict. The Biden administration changed direction and tried again. And again…and again.
- 👨⚖️ The Chopping Block - Multiple states sued, claiming that the program was unconstitutional because the government cannot simply invalidate contracts entered into by private individuals and companies, and force other taxpayers to cover the costs. Court after court agreed, as pieces of the SAVE program were stopped, one chunk at a time.
- 🤝❤️ Helping Helpers - The latest iteration was to cancel the student loan debt of public service workers – teachers, nurses, firefighters, and so on. This last attempt was also stopped, this time by the 8th U.S. Circuit Court of Appeals. At some point they’ll run out of courts…
- 🤔 Why There’s Pushback - Again, this is a lovely idea! The problem is that there are a couple of major problems with it. First, it would have cost every taxpayer $2000! Second, those with student loans being forgiven tend to be higher income earners – doctors, lawyers, high tech workers – and those who tend to get their taxes raised to pay for it were lower- or middle-income workers. Wait, what?!
🔥Bottom line: Those who have had their student loans forgiven – and those who might yet in the future – obviously will gain a substantial benefit, so it’s great for them. Buuuuut…is this really the right thing to do for most people? Most Americans don’t have any student loan debt at all, so being forced to pay for things they never agreed to pay for – especially on behalf of those who are likely to end up with higher income in the end – seems to be crossing some questionable lines.
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