Should student loans be forgiven?
If so, how much? Those are questions facing Congress and the Biden administration, but a strong majority of Americans believe at least a portion of college debt should be forgiven.
Pursuing a higher education degree is supposed to be a pathway to unlocking a steady career path and increased earning potential, but for many that college degree also carries the crushing burden of student loan debt.
For a young professional just starting out and making an entry-level salary, the cost of student loans can be crippling. Even more established professionals struggle beneath the weight of student loan payments, especially if they’ve gone on to pursue a graduate degree.
Student loan forgiveness has become a popular and also controversial issue in recent years as the cost of college tuition has risen, and it’s made its way into presidential politics most recently with calls for President Joe Biden to do something to ease the debt pressure facing many working Americans that was only exacerbated by the COVID-19 pandemic.
Upon his inauguration, Biden signed an executive order extending a federal student loan payment freeze by another eight months, a policy originally implemented when the CARES Act was passed in March 2020. But many in Biden’s own party have demanded he do more, with some outlier Democrats calling for outright cancellation of all student loan debt and many more asking for up to $50,000 of student loan debt to be eliminated. The president meanwhile has so far stood firm on his stance of only cancelling up to $10,000 of student loan debt.
Recently, Invisibly, a data analytics firm, conducted a poll of 1,141 Americans regarding their feelings on student loan forgiveness and found people fall into one of three camps: offer $10,000 of loan forgiveness, offer up to $50,000 of loan forgiveness, or don’t offer student loan debt forgiveness at all.
The results of the poll show that most people, whether they have student loans or not, favor some amount of loan forgiveness. That’s good because the average college debt among student loan borrowers in America is $32,731, according to the Federal Reserve. Nearly two-thirds of people currently with student loans are waiting for loan forgiveness to pass to pay down their debt. Relief can’t come soon enough for those folks, even if student loan forgiveness faces an uphill battle in Congress.
Among the results from the poll, 66% of respondents reported never having student loan debt compared to 34% who either currently do or have had student loans in the past. That jives with data from the U.S. Census Bureau that shows roughly 36% of Americans have a bachelor’s degree or higher.
When asked whether the Biden administration should provide student loan forgiveness, 60% were outright in favor, with an additional 22% saying it depended on whether the loans were subsidized or not. Only 19% said they are not in favor of any amount of loan forgiveness.
When Invisibly analyzed the data and looked at responses based on whether people currently have student loans or not, 83% of those currently with student loans favor forgiveness: 70% favor up to $50,000 in loan forgiveness with an additional 13% favoring up to $10,000 in forgiveness. Only 10% of people currently with student loans don’t support any form of loan forgiveness.
Sixty-four percent of people who had prior loans favor loan forgiveness, but are split in the amount with 28% falling in the up to $10,000 category and only 36% believing that up to $50,000 should be forgiven. Nineteen percent with prior loans don’t believe there should be any form of loan forgiveness.
When asked about how people will approach paying their loans this year, 66% of those with current loans plan to wait for loan forgiveness to pass, compared to 24% that plan to pay off their loans regardless. Only 10% said they would make interest-only payments.
The majority of respondents with current or past loans are in the 18–24 year old age range, and surprisingly it is also the group with the largest number of people (65%) who said they have never had student loans. Millennials and Gen X apparently split the lion’s share of student loans, with only 7% and 8%, respectively, saying they have never had student loan debt.
Forty-seven percent of respondents have an income between $0–$30,000 a year, with only 29% reporting an income of over $100,000 a year. Forty-seven percent of those currently saddled with student loan debt are in the $0–$30,000 a year income bracket, compared to 23% that make over $100,000 a year.
Interestingly, Invisibly learned that student loan debt doesn’t only apply to high income earners or recent grads, as many people think: it affects people of all ages and income levels. Those in the lowest income bracket were shown to have more current and previous student loan debt than their higher income-earning counterparts. Surprisingly, 20% of people over age 55 reported they still have student loan debt, further highlighting why this is an issue for the Biden administration. It’s clear from this report that many people, regardless of age, are not financially equipped to pay off their student loans in a timely fashion.
State help could be on the way
While federal lawmakers debate whether to forgive a portion of federal student loan debt and how much, the state of Wisconsin last August released a final report on student debt from the Governor’s Task Force on Student Debt that outlined eight recommendations for how Wisconsin can provide relief, education, and protection to its student debtholders now and in the future.
It’s not a guarantee of immediate help for Badger State borrowers, but it signals an understanding that states may have to do the work to help fix the student debt problem if the federal government can’t or won’t.
After months of research, listening sessions, consultation with external experts and colleagues in other states, the Governor’s Task Force on Student Debt finalized its 120-page report on Aug. 12, 2020. The electronic report includes 37 proposed solutions and eight recommendations approved by the task force during previous meetings. Due to the COVID-19 pandemic, the task force convened and completed its work virtually. The task force was chaired by the Wisconsin Department of Financial Institutions (DFI) Secretary Kathy Blumenfeld.
“While student loan debt is a large and complex issue, the task force aimed to address what can be done by the state of Wisconsin to assist borrowers with their student debt, provide clear and useful information, and suggest proactive measures to combat student debt,” DFI Secretary Blumenfeld said. “In forming the final eight recommendations, the task force considered solutions to help borrowers before they borrow, while they are enrolled in a postsecondary
program, and after they graduate or leave their program. The final eight recommendations provide a multifaceted and multigenerational approach to solving Wisconsin’s student debt problem.”
The task force submitted the following eight recommendations to Gov. Evers for consideration:
- Create a Borrower Bill of Rights and Student Loan Ombudsman;
- Enhance proprietary school regulations and reinstate the Educational Approval Board;
- Improve financial literacy education;
- Increase need-based, targeted aid for postsecondary education and create a statewide promise program;
- Strengthen student loan counseling;
- Consider targeted loan forgiveness programs;
- Promote refinancing opportunities with other states; and
- Create a state student debt relief tax credit.
More information on the Governor’s Task Force on Student Debt can be found here.
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