Unburdening Young America: Stimulus Through Student Debt Relief
How solving a crisis decades in the making can help the nation rebound from 2020
The Federal government has failed to provide sufficient funding to backstop ongoing and ever worsening economic fallout produced by the business restrictions vital in reducing the spread of Covid-19. President Elect Joe Biden is actively pressuring congress for a $3 trillion stimulus deal. that is unlikely to pass after months of failed compromise. Nevertheless he is promising major government action upon his inauguration. Certainly, this will be too late for the millions facing immediate financial repercussions during the interim months, but this plan will prove crucial in inducing any recovery in the future. With in mind, a debate emerged this week, not on small business bailouts, stimulus checks, or enhanced unemployment, but on student debt relief.
The inclusion of Student Debt Relief in President Elect Joe Biden's platform embodied a major win for progressives. An issue initially absent from his platform, Biden incorporated this position only after the success of Bernie Sanders and Elizabeth Warren during the campaign. Flash forward a few months, Biden’s promise to forgive $10,000 of federally held student debt may have been the only clearly articulated and exact dollar figure of any position he presented on the national debate stage. Now, after securing the white house, it is among the most pressing issues for the future administration.
Senator Elizabeth Warren has led the charge in holding Biden accountable on this issue, fighting to extend relief to $50,000. Warren's $50,000 figure has received moderate support, including an endorsement from senate minority leader Chuck Schumer. Sensing the momentum, the progressive wing has pressed for more with the squad adamantly pressing to completely forgive the entirety of federally held student loans
As one would expect, conservatives scoff at the idea of any additional government spending, even amid a crisis. However, conservatives have incorporated new complaints centered on appealing to their new “working class” brand. Perhaps best encapsulated in a tweet by former republican governor of South Carolina Nikki Haley stating, “Liberals' idea of ‘fairness, in relieving student debt is giving graduates of elite institutions a taxpayer-funded handout. What about the 64% of Americans who didn’t go to college who are trying to make ends meet? What about those who worked hard to pay off their loans?” Which is worth noting, not because she is entirely wrong, but only partially.
Where is she wrong?
Haley does not at all acknowledge the extent of damage already done by student loans and the financial state that those borrowers are in. The Student Debt crisis has loomed over the nation for sometime now, yet next to nothing has been done to curb it. Student loan debt has been the second largest household debt class in the United States for 2 years passing a grand total of $1.6 trillion at the start of the year with over 44 million individual borrowers who on average over $36,000 in debt. While, Haley cites only 35% percent Americans have a college education, among those 35 and under, that figure is nearly 46%.
Haley’s assertion that student debt relief targets the affluent is unfounded, in fact, plenty of evidence would suggest the opposite. A 2018 nationwide study on the Student Debt Crisis, by the Summer organization “Buried in Debt,” (12) found shocking realities that student debtors face: a majority of those in debt held less than 1,000 dollars in their bank accounts, have faced reduced credit scores, and who’s monthly loan payments are routinely higher than their food budgets and health insurance payments. The economic reality student borrowers face has played a major part in a generational decline in financial well-being. America’s youngest have drastically set back lifelong milestones . The average age of first time home buyer is now at an all time high of 33. Coinciding, the average age to start a family has reached an all time high with the average first time mother now 26 years old, and father, 31. The average millennial net worth is now short of $8,000 (11) by far the lowest in modern American history, and prospects are no better for rising gen Z’ers.
But, Where is she right?
Haley is correct in pointing out that student loan forgiveness targets a specific population of the American workforce. However, she doesn’t note, those most in favor of student debt relief are also in favor of a large stimulus package targeting the whole of the American workforce and aiming at a holistic recovery across sectors of the economy. Student Debt relief and Economic Stimulus can not be an, “either, or” but a “both, and.” The Covid-19 Pandemic has battered the American economy.
There are few winners to be found in 2020 outside of major corporations. And it cannot not go without saying that America’s youngest are facing some of the most dire circumstances. At the peak unemployment period during the past spring and early summer 35% of those under 30 had faced unemployment and with the economic situation worsening on a daily basis we are likely to see similar effects in the near future.
Pragmatically, the extent the incoming Biden administration will have in reducing student debt is limited by congressional make up in January. Likely, stuck with a divided government, fulfilling his $10,000 campaign promise should be considered a win for Biden and progressives alike. Surely such a measure would signal the first major step in a long fight to curtail the untenable circumstances challenging American higher education. And as the nation reels in the face of an economic disaster, a government interested in promoting a post-pandemic rebound must take keen interest in improving the financial turmoil young adults face, and in doing so, must consider Student Debt relief as a real substantial economic stimulus for a generation much in need
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