- 12.9% of the American population have student loan debt.
- Half of student loan debt in the U.S. is for graduate school.
Five U.S. senators, including North Carolina’s Richard Burr and Thom Tillis, proposed a bill in late May that would restrict President Biden from forgiving student loan debt. The Student Loan Accountability Act will not restrict pre-existing federal student loan forgiveness programs like Teacher Loan Forgiveness and Public Service Loan forgiveness.
The bill comes as the Biden Administration announced this week that it will cancel $5.8 billion in student loan debt for 56,000 students who attended the now-defunct for-profit Corinthian colleges. In 2015, Corinthian collapsed after investigations into “deceptive advertising and recruitment practices.” Students who already paid off their loan will not be eligible for assistance.
Around 42.9 million Americans have student loan debt. That’s about 12.9% of the American population, according to 2020 census data. Total outstanding student debt totals around $1.59 trillion, amounting to about $37,000 per debtor.
The bill language says that forgiving student loan debt will cause higher inflation rates and contribute up to $1.7 trillion to the growing national debt. The senators also believe forgiving student loans would incentivize academic institutions to raise tuition.
“Working Americans are struggling to afford essentials like gas and groceries under the worst inflation in 40 years, but that won’t stop the Biden Administration from pushing more inflationary policies that primarily benefit the highest earner,” said Burr in the release.
The sponsors say that canceling all student loans would primarily benefit the wealthiest 20% of people, who hold one-third of the total student loans debt while the bottom 20 percent only owes eight percent of the debt. The senators believe that canceling student loans could increase inflation between 4% and 20%, and they urge people to be aware of those numbers during a time of historic inflation.
A poll done by the Harvard Kennedy School in April says only 38% of people support total cancellation of student debt. Support for cancellation has gone up five percentage points since 2020, while support for government helping with repayment of student loans has gone down eight points.
The main arguments backing cancellation of student loans from the Center for Law and Social Policy is that it would promote equity amongst both gender and race because women hold over two-thirds of all student debt and black people average higher levels of student debt. Supporters of loan forgiveness also believe student loans are preventing people from making significant steps in their life, like starting a family or buying a house. CLASP says that forgiving student loan debt would provide a stimulus effect to the economy, boosting the GDP by billions of dollars and adding up to 1.5 million new jobs into the workforce.
“Student debt cancellation is a targeted, progressive policy that would benefit those struggling the most,” says CLASP on their website. “While wealthier borrowers make larger monthly payments outright, student debt as a share of income is higher for lower income borrowers.”
“It just looks like a loser issue for the party that is trying to win back the working class,” said Bill Maher on Real Time with Bill Maher on May 6. “13% of people have college debt, that’s not a lot of people. 65% don’t go to college at all.”
“What I would much rather see democrats do is go back to their roots. Earn it. We’re the party that created the G.I. Bill,” said Paul Begala, former chief strategist for Bill Clinton in 1992, on Real Time with Bill Maher, “The guys who got the G.I. Bill earned it. Give two years of service and you will have earned that [college education].”
Without majorities in either chamber of Congress, it is unlikely a bill aiming to block part of the Democratic president’s agenda will make its way through the Democratic House and Senate and to that president’s desk.