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Is it fair to forgive student loans? Examining 3 of the arguments of a heated debate

Scott Horsley

Student loan borrowers stage a rally in front of The White House on Aug. 25 to celebrate President Biden cancelling student debt. The plan has sparked heated debate, including about its economic fairness. Paul Morigi/Getty Images for We the 45m hide caption

President Biden's plan to forgive hundreds of billions of dollars in student debt is sparking heated debate.

Biden last week announced plans to forgive up to $20,000 in federal student loan debt for Pell Grant recipients and up to $10,000 for others who qualify.

The news will provide relief for borrowers at a time when the cost of higher education has surged.

Student loan forgiveness is politically popular. But not all Democrats are on board

But critics are questioning the fairness of the plan and warn about the potential impact on inflation should the students with the forgiven loans increase their spending.

Here are three key arguments – for and against the wisdom of Biden's decision.

Raising living standards or adding fuel to inflation?

Undoubtedly, student debt is a big burden for a lot of people.

Under Biden's plan, 43 million people stand to have their loan payments reduced, while 20 million would have their debt forgiven altogether.

People whose payments are cut or eliminated should have more money to spend elsewhere – maybe to buy a car, put a down payment on a house or even put money aside for their own kids' college savings plan. So the debt forgiveness has the potential to raise the living standard for tens of millions of people.

Critics, however, say that additional spending power would just pour more gasoline on the inflationary fire in an economy where businesses are already struggling to keep up with consumer demand.

Inflation remains near its highest rate in 40 years and the Federal Reserve is moving to aggressively raise interest rates in hopes of bringing prices back under control.

Not all economists believe the debt forgiveness will do much to fuel inflation.

Debt forgiveness is not like the $1200 relief checks the government sent out last year, which some experts say added to inflationary pressure. Borrowers won't suddenly have $20,000 deposited in their bank accounts. Instead, they'll be relieved of making loan payments over many years.

President Biden announces student loan relief in the Roosevelt Room of the White House in Washington, D.C. on Aug. 24. Olivier Douliery/AFP via Getty Images hide caption

President Biden announces student loan relief in the Roosevelt Room of the White House in Washington, D.C. on Aug. 24.

Because the relief is dribbled out slowly, Ali Bustamante, who's with left-leaning Roosevelt Institute says Biden's move won't move the needle on inflation very much.

"It's just really a drop in the bucket when it come to just the massive level of consumer spending in our very service- and consumer-driven economy," he says.

The White House also notes that borrowers who still have outstanding student debt will have to start making payments again next year. Those payments have been on hold throughout the pandemic.

Restarting them will take money out of borrower's pockets, offsetting some of the additional spending power that comes from loan forgiveness.

Helping lower income Americans or a sop to the rich?

Another big point of contention has to do with fairness.

Forgiving loans would would effectively transfer hundreds of billions of dollars in debt from individuals and families to the federal government, and ultimately, the taxpayers.

Some believe that transfer effectively penalizes people who scrimped and saved to pay for college, as well as the majority of Americans who don't go to college.

They might not mind subsidizing a newly minted social worker, making $25,000 a year. But they might bristle at underwriting debt relief for a business school graduate who's about to go to Wall Street and earn six figures.

Students from George Washington University wear their graduation gowns outside of the White House in Washington, D.C, on May 18. Economists worry President Biden's plan to forgive student loans could encourage more people to take on debt in the hopes of also being forgiven. Stefani Reynolds/AFP via Getty Images hide caption

The White House estimates 90% of the debt relief would go to people making under $75,000 a year. Lower-income borrowers who qualified for Pell Grants in college are eligible for twice as much debt forgiveness as other borrowers.

But individuals making as much as $125,000 and couples making up to $250,000 are eligible for some debt forgiveness. Subsidizing college for those upper-income borrowers might rub people the wrong way.

"I still think a lot of this benefit is going to go to doctors, lawyers, MBAs, other graduates that have very high earnings potential and may even have very high earnings this year already," says Marc Goldwein senior policy director at the Committee for a Responsible Federal Budget.

Helping those in need or making college tuition worse?

Goldwein also complains that the loan forgiveness doesn't address the larger problem of soaring college tuition costs.

In fact, he suggests, it might make that problem worse — like a Band-Aid that masks a more serious infection underneath.

For years, the cost of college education has risen much faster than inflation, which is one reason student debt has exploded.

And now what? The question that follows Biden's student loan forgiveness plan

By forgiving some of that debt, the government will provide relief to current and former students.

But Goldwein says the government might encourage future students to take on even more debt, while doing little to instill cost discipline at schools.

"People are going to assume there's a likelihood that debt is canceled again and again," Goldwein says. "And if you assume there's a likelihood it's canceled, you're going to be more likely to take out more debt up front. That's going to give colleges more pricing power to raise tuition without pressure and to offer more low-value degrees."

The old rule in economics is when the government subsidizes something, you tend to get more of it. And that includes high tuition and college debt.

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Effects of Student Loan Debt

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Published: Mar 5, 2024

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Student Loans I: Yes, Something Is Wrong

By Karen Gross

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The student loan problem seems clear enough on the surface: students are incurring oversized student debt, and they are defaulting on that debt and threatening their ability to access future credit. The approaches to student loan debt collection are fraught with problems, including improper recovery tactics and informational asymmetry regarding repayment options.

But the current public policy conversations miss key issues that contribute to the debt mess, leading to proffered solutions that also miss their mark.

Start with these key facts about student loans:

The reported student debt loans represent averages, yet the amounts owed can differ dramatically from student to student. That is why solutions like the mandated debt calculator on college websites or the current College Scorecard do not resolve the issues; the disclosure of generic information does not impact student choice meaningfully.

Another View on Loans

The appropriate level of student loan debt and default for a college's graduates depends heavily on an institution's students and mission, write Jacob Gross and Nicholas Hillman.

Many of the problematic student loans are held by individuals who left college before graduation , meaning they have incurred “debt without diploma.” This reality distorts default statistics, making their indicia of school quality misleading. The cost of education is not necessarily commensurate with the quality of the education received, meaning some students pay more and get less , and we do not have an adequate system for measuring educational quality other than accreditation, which is a deeply flawed process.

Finally, students and their families are woefully unaware of the myriad repayment options, and therefore forgo existing benefits or are taken advantage of by loan servicers. This occurs because we de-link conversations of “front-end” costs of higher education from “back-end” repayment options and opportunities; students and their families are scared off by the front end without knowing that there is meaningful back-end relief.

Given these facts, it becomes clearer why some of the current government reform suggestions are misguided. Two illustrations:

First, evaluating colleges on a rating system based on the earning levels of their graduates assumes the overwhelming majority of students graduate and that the employment chosen will be high-paying. But we know that not to be true, and for good reason: some students proudly enter public service or other low-paying but publicly beneficial employment. And, in today’s economy, not all students can find employment directly correlated to their field of study.

We also know that those from high-income families have greater networking opportunities, given family connections. Yes, some schools offer degrees with little or no value, but the solution to student loan indebtedness does not rest on an earnings threshold.

Second, looking at loan default rates as a measure of the success of a college misses that many colleges welcome students from lower income quartiles, and these students have less collegiate success – understandably, although obviously many are working to improve these statistics. The fact that some of these students do not progress to a degree is not a sign of institutional failure any more than student success at elite institutions is a guarantee of those institutions’ quality. One approach to consider is linking default rates with the types of students being served by an institution. But one thing that should not change, to the dismay of some : many of the government student loans should not be based on credit worthiness.

Not that many years ago, private lenders dominated both the student lending and home mortgage markets. This created obvious parallels between lending in these two spheres. Lenders overpriced for risk, provided monies to borrowers who were not credit-worthy , and had loan products with troubling features like sizable front-end fees, high default interest rates and aggressive debt collection practices.

In both markets, there was an embedded assumption: real estate values would continue to rise and well-paying employment opportunities would be plentiful for college graduates.

Then several things happened. The federal government took over the student loan market, cutting out the private lender as the middleman on government loans on both the front and back end. The economy took a nosedive that led to diminished home values and lower employment opportunities. And, when the proverbial bubble burst in the home lending markets, lenders sought to foreclose, only to find that their collateral had diminished in value.

For student loans, the bubble has not burst and, despite hyperbole to the contrary, it is unlikely to burst because the government -- not the private sector -- is the lender. Indeed, this market is intentionally not focused on credit worthiness; if anything, it awards more dollars to those who have weak credit, specifically to enable educational opportunity.

And while Congress can debate the interest rates charged on student loans, the size of Pell Grants and the growing default rates, it is highly improbable that the student loan market will be privatized any time soon.

But, for the record, there are already signs that private lenders and venture capitalists have re-entered or are ready to re-enter this market, for better or worse. And if the government’s financial aid offerings are or become less beneficial than those in the open market, we will see a resurgence of private lending offered to students and their families. One caution: history tells us that the risks of the private student loan market are substantial; all one has to do is look at lending improprieties before and since the government became the lender-in-chief and the non-student loan predatory lending that targets our least financially stable borrowers.

There are things that can and should be done to improve the government-run student-lending market to encourage our most vulnerable students to pursue higher education at institutions that will serve them well. Here are five timely and doable suggestions worth considering now:

(1) Lower the interest rates on government-issued subsidized Stafford loans. The government is making considerable profit on student loans, and we need to encourage quality, market-sensitive, fiscally wise borrowing, most particularly among vulnerable students. Student loans to our most financially risky students should remain without regard to credit worthiness (the worthiness of the academic institution is point 2). Otherwise, we will be left with educational opportunity available only for the rich.

(2) Improve the accreditation process so that accreditors assess more thoughtfully and fairly the institutions they govern, whether that accreditation is regional or national. Currently, there are vastly too many idiosyncrasies in the process, including favoritism, violation of due process and fair dealing, and questionable competency of some of the accreditors. And the government has not been sufficiently proactive in recognizing accreditors, despite clear authority to do so.

(3) Simplify (as was done successfully with the FAFSA) the repayment options. There are too many options and too many opportunities for students to err in their selection. We know that income-based repayment is under-utilized, and students become ostriches rather than unraveling and working through the options actually available. Mandated exit interviews are not a “teachable moment” for this information; we need to inform students more smartly. Consideration should be given to information at the time repayment kicks in --- usually six months post-graduation.

(4) Incentivize college and universities to work on post-graduation default rates (and repayment options) by establishing programs where they (the educational institutions) proactively reach out to their graduates to address repayment options, an initiative we will be trying on our own campus. Improvement in institutional default rates could be structured to enable increased institutional access to federal monies for work-study or SEOG, the greater the improvement, the greater the increase.

The suggestion, then, is contrary to the proffered government approach: taking away benefits . The suggestion proffered here uses a carrot, not a stick – offering more aid rather than threatening to take away aid. Importantly, we cannot mandate a meaningful minimum default rate because default rates are clearly correlated to the vulnerability of the student population, and we do not want to disincentivize institutions from serving first-generation, underrepresented minority and low-income students.

(5) Create a new financial product for parents/guardians/family members/friends who want to borrow to assist their children (or those whom they are raising or supporting even if not biological or step children) in progressing through higher education, replacing the current Parent Plus Loan. The current Parent Plus loan product is too expensive (both at initiation and in terms of interest rates) and more recently too keyed to credit worthiness . The individuals who most need this product are those who are more vulnerable. And the definition of “parent” is vastly too narrow given the contours of American families today.

Home ownership and education are both part of the American dream. Both benefit the individuals and larger society. How we foster both is, however, vastly different. We need to stop shouting about the shared crisis and see how we can truly help students and their families access higher education rather than making them run for the proverbial hills.

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How to Write a Thesis Statement | 4 Steps & Examples

How to Write a Thesis Statement | 4 Steps & Examples

Published on January 11, 2019 by Shona McCombes . Revised on August 15, 2023 by Eoghan Ryan.

A thesis statement is a sentence that sums up the central point of your paper or essay . It usually comes near the end of your introduction .

Your thesis will look a bit different depending on the type of essay you’re writing. But the thesis statement should always clearly state the main idea you want to get across. Everything else in your essay should relate back to this idea.

You can write your thesis statement by following four simple steps:

Start with a question
Write your initial answer
Develop your answer
Refine your thesis statement

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What is a thesis statement, placement of the thesis statement, step 1: start with a question, step 2: write your initial answer, step 3: develop your answer, step 4: refine your thesis statement, types of thesis statements, other interesting articles, frequently asked questions about thesis statements.

A thesis statement summarizes the central points of your essay. It is a signpost telling the reader what the essay will argue and why.

The best thesis statements are:

Concise: A good thesis statement is short and sweet—don’t use more words than necessary. State your point clearly and directly in one or two sentences.
Contentious: Your thesis shouldn’t be a simple statement of fact that everyone already knows. A good thesis statement is a claim that requires further evidence or analysis to back it up.
Coherent: Everything mentioned in your thesis statement must be supported and explained in the rest of your paper.

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The thesis statement generally appears at the end of your essay introduction or research paper introduction .

The spread of the internet has had a world-changing effect, not least on the world of education. The use of the internet in academic contexts and among young people more generally is hotly debated. For many who did not grow up with this technology, its effects seem alarming and potentially harmful. This concern, while understandable, is misguided. The negatives of internet use are outweighed by its many benefits for education: the internet facilitates easier access to information, exposure to different perspectives, and a flexible learning environment for both students and teachers.

You should come up with an initial thesis, sometimes called a working thesis , early in the writing process . As soon as you’ve decided on your essay topic , you need to work out what you want to say about it—a clear thesis will give your essay direction and structure.

You might already have a question in your assignment, but if not, try to come up with your own. What would you like to find out or decide about your topic?

For example, you might ask:

After some initial research, you can formulate a tentative answer to this question. At this stage it can be simple, and it should guide the research process and writing process .

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Now you need to consider why this is your answer and how you will convince your reader to agree with you. As you read more about your topic and begin writing, your answer should get more detailed.

In your essay about the internet and education, the thesis states your position and sketches out the key arguments you’ll use to support it.

The negatives of internet use are outweighed by its many benefits for education because it facilitates easier access to information.

In your essay about braille, the thesis statement summarizes the key historical development that you’ll explain.

The invention of braille in the 19th century transformed the lives of blind people, allowing them to participate more actively in public life.

A strong thesis statement should tell the reader:

Why you hold this position
What they’ll learn from your essay
The key points of your argument or narrative

The final thesis statement doesn’t just state your position, but summarizes your overall argument or the entire topic you’re going to explain. To strengthen a weak thesis statement, it can help to consider the broader context of your topic.

These examples are more specific and show that you’ll explore your topic in depth.

Your thesis statement should match the goals of your essay, which vary depending on the type of essay you’re writing:

In an argumentative essay , your thesis statement should take a strong position. Your aim in the essay is to convince your reader of this thesis based on evidence and logical reasoning.
In an expository essay , you’ll aim to explain the facts of a topic or process. Your thesis statement doesn’t have to include a strong opinion in this case, but it should clearly state the central point you want to make, and mention the key elements you’ll explain.

If you want to know more about AI tools , college essays , or fallacies make sure to check out some of our other articles with explanations and examples or go directly to our tools!

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A thesis statement is a sentence that sums up the central point of your paper or essay . Everything else you write should relate to this key idea.

The thesis statement is essential in any academic essay or research paper for two main reasons:

It gives your writing direction and focus.
It gives the reader a concise summary of your main point.

Without a clear thesis statement, an essay can end up rambling and unfocused, leaving your reader unsure of exactly what you want to say.

Follow these four steps to come up with a thesis statement :

Ask a question about your topic .
Write your initial answer.
Develop your answer by including reasons.
Refine your answer, adding more detail and nuance.

The thesis statement should be placed at the end of your essay introduction .

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How to Write an Essay About Student Debt

Understanding the issue of student debt.

Before writing an essay about student debt, it's essential to understand the extent and implications of this issue. Student debt refers to the money borrowed to finance higher education, which can include tuition, room and board, and other related expenses. Begin your essay by outlining the current state of student debt, including the average amount of debt per student and the total debt nationwide. Discuss the factors that have contributed to the rise in student debt, such as the increasing cost of college tuition, changes in government funding for education, and the broader economic context. It's also important to understand the impact of student debt on individuals, including its effects on financial stability, career choices, and mental health.

Developing a Thesis Statement

A strong essay on student debt should be centered around a clear, concise thesis statement. This statement should present a specific viewpoint or argument about student debt. For example, you might explore the socioeconomic implications of student debt, analyze the effectiveness of current loan forgiveness programs, or argue for a particular policy solution to address the student debt crisis. Your thesis will guide the direction of your essay and provide a structured approach to your topic.

Gathering Supporting Evidence

To support your thesis, gather evidence from various sources, such as economic studies, government reports, and personal testimonies. This might include data on the long-term financial impact of student debt, analysis of the demographic disparities in student debt, or case studies of individuals or communities particularly affected by it. Use this evidence to support your thesis and build a persuasive argument. Be sure to consider different perspectives and address potential counterarguments.

Analyzing the Impact of Student Debt

Dedicate a section of your essay to analyzing the impact of student debt. Discuss how it affects individual choices and opportunities, including career decisions, homeownership, and family planning. Consider the broader economic and social implications, such as the potential for student debt to exacerbate income inequality or influence economic growth. Also, explore the psychological effects of carrying large amounts of debt over a prolonged period.

Concluding the Essay

Conclude your essay by summarizing the main points of your discussion and restating your thesis in light of the evidence provided. Your conclusion should tie together your analysis and emphasize the importance of addressing student debt as a significant issue facing society. You might also want to suggest areas for future research, policy changes, or action steps to mitigate the impact of student debt.

Reviewing and Refining Your Essay

After completing your essay, review and refine it for clarity and coherence. Ensure that your arguments are well-structured and supported by evidence. Check for grammatical accuracy and ensure that your essay flows logically from one point to the next. Consider seeking feedback from peers, educators, or financial experts to further improve your essay. A well-written essay on student debt will not only demonstrate your understanding of the issue but also your ability to engage with complex economic and social topics.

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Developing Strong Thesis Statements

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The thesis statement or main claim must be debatable

An argumentative or persuasive piece of writing must begin with a debatable thesis or claim. In other words, the thesis must be something that people could reasonably have differing opinions on. If your thesis is something that is generally agreed upon or accepted as fact then there is no reason to try to persuade people.

Example of a non-debatable thesis statement:

This thesis statement is not debatable. First, the word pollution implies that something is bad or negative in some way. Furthermore, all studies agree that pollution is a problem; they simply disagree on the impact it will have or the scope of the problem. No one could reasonably argue that pollution is unambiguously good.

Example of a debatable thesis statement:

This is an example of a debatable thesis because reasonable people could disagree with it. Some people might think that this is how we should spend the nation's money. Others might feel that we should be spending more money on education. Still others could argue that corporations, not the government, should be paying to limit pollution.

Another example of a debatable thesis statement:

In this example there is also room for disagreement between rational individuals. Some citizens might think focusing on recycling programs rather than private automobiles is the most effective strategy.

The thesis needs to be narrow

Although the scope of your paper might seem overwhelming at the start, generally the narrower the thesis the more effective your argument will be. Your thesis or claim must be supported by evidence. The broader your claim is, the more evidence you will need to convince readers that your position is right.

Example of a thesis that is too broad:

There are several reasons this statement is too broad to argue. First, what is included in the category "drugs"? Is the author talking about illegal drug use, recreational drug use (which might include alcohol and cigarettes), or all uses of medication in general? Second, in what ways are drugs detrimental? Is drug use causing deaths (and is the author equating deaths from overdoses and deaths from drug related violence)? Is drug use changing the moral climate or causing the economy to decline? Finally, what does the author mean by "society"? Is the author referring only to America or to the global population? Does the author make any distinction between the effects on children and adults? There are just too many questions that the claim leaves open. The author could not cover all of the topics listed above, yet the generality of the claim leaves all of these possibilities open to debate.

Example of a narrow or focused thesis:

In this example the topic of drugs has been narrowed down to illegal drugs and the detriment has been narrowed down to gang violence. This is a much more manageable topic.

We could narrow each debatable thesis from the previous examples in the following way:

Narrowed debatable thesis 1:

This thesis narrows the scope of the argument by specifying not just the amount of money used but also how the money could actually help to control pollution.

Narrowed debatable thesis 2:

This thesis narrows the scope of the argument by specifying not just what the focus of a national anti-pollution campaign should be but also why this is the appropriate focus.

Qualifiers such as " typically ," " generally ," " usually ," or " on average " also help to limit the scope of your claim by allowing for the almost inevitable exception to the rule.

Types of claims

Claims typically fall into one of four categories. Thinking about how you want to approach your topic, or, in other words, what type of claim you want to make, is one way to focus your thesis on one particular aspect of your broader topic.

Claims of fact or definition: These claims argue about what the definition of something is or whether something is a settled fact. Example:

Claims of cause and effect: These claims argue that one person, thing, or event caused another thing or event to occur. Example:

Claims about value: These are claims made of what something is worth, whether we value it or not, how we would rate or categorize something. Example:

Claims about solutions or policies: These are claims that argue for or against a certain solution or policy approach to a problem. Example:

Which type of claim is right for your argument? Which type of thesis or claim you use for your argument will depend on your position and knowledge of the topic, your audience, and the context of your paper. You might want to think about where you imagine your audience to be on this topic and pinpoint where you think the biggest difference in viewpoints might be. Even if you start with one type of claim you probably will be using several within the paper. Regardless of the type of claim you choose to utilize it is key to identify the controversy or debate you are addressing and to define your position early on in the paper.

The future of the middle class depends on student loan forgiveness

Canceling debt is what’s needed to ensure a solid, equitable middle class.

by Anne Helen Petersen

Illustrations by Eliana Rodgers

Three students in graduation caps and gowns stand in front of a college building rendered in dollar bills and coins.

Pieces like this almost always start with someone’s student debt story. Here’s a person who wanted to go to college — they’d always dreamed of a career that required it, or they had just internalized the idea that college was the only route to success. Their parents hadn’t saved enough to cover the costs, but when they filled out their FAFSA, a solution to their problems presented itself: an abundance of student loans, no questions asked. It was a no-brainer! College was the way to a better future, and student loans were what you needed for college.

That’s the first act of the story. In the second act, the student has graduated from college. Maybe they struggled to find a job, and convinced themselves that the real route was grad school. They took out more loans for law school, or med school, or architecture school; maybe they figured out they wanted to teach, and needed to get a master’s degree to do so. Someone might have told them about the Public Service Loan Forgiveness program : If they spent a decade, post-graduation, working in a field that qualified as public service and made regular, income-based repayments on their loans, the rest of the balance would be forgiven.

Then there’s the third act, which sets in anywhere from two to 10 years after graduation, when the enormity of their accumulated student debt becomes clear. Maybe they’re on an income-driven repayment plan, but the calculation doesn’t take cost of living into account and they’re struggling to cover their bills, even while living with friends or a partner. Their debt eats their ability to save: for retirement, for a down payment on a house, for their kids’ college, for potential catastrophe.

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Maybe they get laid off and are forced to go into forbearance, with their payments on pause, but the interest just keeps accruing. They try to sort out their various loans and how to start paying a bit more, but every call to the loan servicer is another nightmare. They’re embarrassed and ashamed and don’t feel like they can talk to their friends or parents about it, so they spend hours on Reddit reading stories of people who’ve been paying off their loans for years and somehow still owe the same amount as when they graduated, if not more. They get up the courage to really study the details of their own payments and realize the same is true for them. They’ve spent five years scraping and struggling and the number’s somehow only gone up.

Maybe in 25 years, if they’re still on an income-driven repayment plan , the remainder of their debt will be forgiven. But even that might not happen. 2019 was the first year borrowers who enrolled in an income-driven plan in the 1990s became eligible to apply for forgiveness. A recent FOIA request showed that as of November 2019, fewer than 20 people had received forgiveness . (The number was recently revised to 32 .) Every day, they feel more and more like their loans will be with them forever.

When the problem remains individual, so too do the solutions

Usually, these stories are fleshed out with specific details: where the person grew up, what they studied, the job they’ve found today, quotes that attempt to describe the disillusionment, regret, and anxiety that have accumulated around their student debt. That’s exactly what I did the last time I wrote about student debt. It’s a common journalistic technique, with good reason. It encourages readers to relate and sympathize; it makes them care about something they might not otherwise, or allows them to see their own experience as a shared one.

This device is most effective when people are first learning about a societal problem, or the problem itself is new. In the past year alone, it’s been the way that the effects of Covid-19 — on the body , on the family , on children , on the most vulnerable — have become vivid, despite our enforced distance from each other. But there comes a point when these stories, no matter how affecting, inadvertently keep the struggle in the realm of the individual. The problem presents as personal, instead of a societal failure that demands redress.

When the problem remains individual, so too do the solutions. Examine someone’s student loan journey from the outside, and you can find numerous places where you’d have advised them to take a different turn. To anyone with student debt, all of these arguments will be familiar: You should’ve read the fine print. You should’ve picked a different major. You should’ve looked up the graduation rates of that college. You should have consolidated. You shouldn’t have consolidated. You should’ve understood compounding interest. You shouldn’t have gone to grad school. You should’ve called your loan servicer and sat on hold for an hour every day until you got this sorted out. You should have survived on rice and beans. You should’ve taken a second, or third, or fourth job. You should’ve lived a completely different life, and made completely different decisions. Maybe then you wouldn’t have this debt.

You might hear these arguments on Twitter, from your friend’s dad who has thought about the issue for 10 minutes before arriving at an immovable position, and from politicians who use them as the explicit and implicit rationale for not granting loan forgiveness . Sometimes they’re cloaked in policy language of means testing and “fairness”; often they conjure an imaginary college graduate who would benefit from forgiveness but shouldn’t. Which is precisely what happened last week, when President Joe Biden rejected a town hall attendee’s call for $50,000 or more in debt forgiveness, stating that he was unwilling to grant relief “for people who have gone to Harvard and Yale and Penn.” (An estimated 0.3 percent of borrowers attended Ivy League colleges.)

Biden would like public colleges to be tuition-free for families making $125,000 or less, and community colleges to be free for all. Those are admirable beginnings of a holistic plan for affordable college moving forward, but his proposal to forgive just $10,000 in student debt — and try to repair income-driven repayment programs, particularly for those in public service — reproduces the same fundamental misunderstanding of the problem.

“We’re drowning in the technical details and neglecting the core moral argument,” Frederick Wherry, a professor of sociology at Princeton University and the director of the Dignity and Debt Network, told me. Student loans have failed to serve their original function, instead working to hollow out the middle class or prevent access to it altogether. Substantive — if not wholescale — student loan cancellation offers an opportunity to not only acknowledge how the program has misled millions of Americans but to begin the long process of restoring access, solidity, and racial equity to the middle class. None of that can happen if we keep focusing on individual scenarios.

“There are so many dead-end conversations that we can continue to have about student debt,” Louise Seamster, a sociologist at the University of Iowa who studies race and inequity, explains. “So we have to ask ourselves, how can we talk about this differently?”

The federal student loans program was conceptualized as an equalizer, a way to allow people without financial stability to take out small amounts with low-interest or even subsidized loans, to get their foot in the door of the American dream. For millions of Americans, it made college not just accessible but imaginable. The idea was simple, and not unlike an investment in, say, a home. Whatever money you took out to cover the cost of college, whatever interest you ended up paying on the loan as you paid it off, all of it would be eclipsed by a so-called diploma bump. Sure, you were paying off debt. But you were also making a lot more money than you would have without that degree.

For years, this has been the animating theory of American student loans. They’re not a shortcut to the middle class or a cheat code, but a high-stakes workaround, a back route, a way to give yourself the bootstraps so you can actually pull yourself up by them. A half-century into this student debt experiment, we need to face a new reality. For millions of Americans, the back route has led them far, far astray.

A girl in a graduation cap and gown stands at the beginning of a winding path littered with loans

Part of the problem, according to Seamster, is that the student loan program was intended as a wealth-building program. Like previous wealth-building programs — the mortgage assistance programs in the 1930s and the GI Bill — its beneficiaries were primarily white. Over the course of the postwar period, the white middle class expanded and solidified in part through attendance at robustly funded public institutions, with federally backed loans helping to cover the still relatively low tuition.

This path to the middle class was in place just long enough for it to seem secure: get into college, get a job, buy a house, watch your wealth grow, and then pass it along to your kids. But this was only really a safe bet if you were a white man, and when women and people of color began down the path in greater numbers, the government and taxpayers essentially stopped paying for its maintenance.

“For generations, people went to college and got the benefit of a middle-class lifestyle without paying a tax on getting there,” Seth Frotman, the executive director of the Student Borrower Protection Center, told me. “But we put that notion away when the people who started going to school stopped looking like me, a white guy.”

Students were still encouraged to take out loans, but massive cuts to public higher education — and skyrocketing tuition costs at public and private institutions competing to provide the “ college experience ” — meant that students have to take out more and more of them. We’ve lost sight of public institutions, Seamster says, and the very idea that we all deserve them. For decades, these institutions were venerated and well-funded, but as soon as women and people of color gained more access — even took over as the majority of those accessing those institutions — we began to devalue them, or defund them altogether, shifting the cost burden onto the individual.

But it’s not just the toll to get on the path to the middle class that’s changed. The destination did as well. When accounting for inflation, wages are stagnant or even down, yet student loan burdens keep increasing. An undergraduate degree is no longer enough to distinguish yourself, so it’s easy to be convinced that the real advantage is, yet again, right over there, within your reach, at the end of grad school — and you take out even more loans. But the pay bump doesn’t always materialize, and the loan amount keeps accumulating.

“It’s like the ball keeps moving under a different cup,” Seamster says. “We convince ourselves that it’s fine, because not all the people are having problems repaying, but that’s because they’re repaying over longer periods of time. Or we say that it’ll be okay because they’ll eventually have their loans forgiven, but that’s not happening either — not with Public Service Loan Forgiveness, and it’s very unclear what’s going to happen with income-driven repayment.”

In other words: The solutions are broken, too. For the past 10 years, the “solution” to the problem has been to try to fix the existing system. Get people onto payment plans they can afford, enroll them in Public Service Loan Forgiveness, do more to regulate predatory for-profit colleges. Those attempts are simply no match for the enormity of the problem.

“We only have one set of financial literacy advice, one set of basic financial advice, one supposedly stable understanding of how money works — and it’s a white understanding”

In 2017, for example, only 1 percent of applicants for public service loan forgiveness were approved; as of November 2020 , after dozens of articles concerning the way the program had actively misled its participants and mishandled applications, 6,493 out of 269,611 applications had been approved. That’s 2.4 percent. Persis Yu, the director of the Student Loan Borrower Assistance Project who filed the FOIA request to release data on the number of borrowers who’d received forgiveness under an IDR plan, sees the “shockingly low rate of cancellation” as “emblematic of the failure of the Department’s IDR programs to deliver the relief Congress intended for struggling borrowers.”

It’s hard to internalize just how badly these programs have failed when so many voices keep telling you that they’re the only path to future stability. The US government has spent decades selling its citizens on the idea that debt — whether in the form of a house or a college degree — always produces a positive return. That accepted wisdom is simply not true for everyone. “A lot of people have used debt as a way to gamble on your future,” Seamster explains. “They don’t understand that you’re so much more likely to succeed in that gamble if you’re white. We only have one set of financial literacy advice, one set of basic financial advice, one supposedly stable understanding of how money works — and it’s a white understanding.”

“It’s one thing when you finish school and you can see your debt going down,” Wherry told me. “It’s quite another when you finish and the interest and your ability to pay means that it just keeps going up. Those are the realities that no one tells you about as a senior in college. And they definitely don’t say, ‘Hey, for our Black students here, about five years after you graduate, you’re going to owe $50,000, even though you finished with $26,000, and that’s going to be half of what your white counterparts owe.’”

Over the past 30 years, more and more Black, Latino, and Indigenous people have attempted to get on that student-loan-facilitated path to the middle class. When they struggle to reap the same wealth-building function from their loans as previous generations of students, the blame and debt load falls on the individual. Instead of closing the racial wealth gap, student loans are in fact exacerbating it — and have been doing so for some time.

In the most recent, comprehensive study looking at debt and race, 90 percent of Black students and 72 percent of Latino students finish their four-year undergraduate programs with debt, compared with 66 percent of white students. Even when you account for degree, college GPA, job, and salary after college, Black borrowers are still 11 percent more likely to default on their loans than white borrowers. In 2018 , 41 percent of Native borrowers had defaulted on their loans, compared to 22 percent of white borrowers. And in 2019, the default rate for student loans was 13 percent in Latino-majority zip codes , compared to 9 percent in white-majority zip codes. (Asian American students from low- and moderate-income homes are 40 percent less likely than white students to take out loans, and are less likely than white borrowers to default on their loans.)

Middle-class salaries simply do not go as far as they once did, in part because of the debt loads now necessary for many to achieve them

For some borrowers, student loans have made middle-class salaries more accessible, but middle-class salaries simply do not go as far as they once did , in part because of the debt loads now necessary for many to achieve them. For others, the legacy of their student loans has been to shut them out of the middle class entirely, miring them or their extended family in the financial quagmire of default and its long-reaching consequences. This is especially true for students of for-profit colleges , which at their peak in 2010 were attracting more than 2.4 million students a year. In 2017, when public and private nonprofit colleges were enrolling twice as many white students as students of color, they made up more than half of the enrollment at for-profits.

That statistic could be framed as potentially heartening, if not for the fact that for-profit colleges leave so many of its attendees on significantly worse financial footing than before they enrolled.

As Tressie McMillan Cottom, author of Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy , explains , these institutions “target and thrive off inequality.” The overall for-profit retention rate is only 25 percent, which means that many students take out loans for degrees they never complete. Almost 60 percent of Black students who took out loans to attend a for-profit college in 2004 had defaulted by 2016. One 2016 study from the National Bureau of Economic Research found that graduates of for-profit colleges ultimately fare worse economically than if they hadn’t gone to college at all.

The promise of what higher education can offer is broken. Even if you personally have paid off your loans, or your child or friend didn’t have to take them out, that does not change the fundamental truth. You cannot look at the statistic that nearly 45 million Americans now have student debt — with an average debt of $36,214 — and think otherwise.

The only solution is student loan forgiveness , which could theoretically be achieved through executive action or legislative resolution. (You can find a detailed overview of how it could take place, and to what extent, here ). A Vox/Data for Progress poll asked likely voters about their support for forgiving $50,000 of debt for people making less than $125,000 a year. Just 43 percent of those without student debt supported forgiveness, but that grew to 71 percent of those with less than $50,000 in debt and 90 percent of those with more than $50,000 in debt. You might interpret the rising support in a simplistic way; of course people with debt would like it to go away. Or you might realize that those with student debt understand the extent, and weight, of the crisis in a way that those without debt simply cannot.

Part of the problem is how much of the struggle around student debt remains invisible — due, at least in part, to the shameful connotations of unmanageable debt and default, combined with the compunction to outwardly perform or aspire to middle-class stability. We often conceive of student debt as a singular burden, but it is always combined with all the other costs of American life: housing, child care, elder care, medical costs, lingering credit card debt. Whether it’s a $4,000 loan taken out to cover living expenses during a summer internship that balloons into $20,000, or $200,000 in total law school debt for a pair of nonprofit attorneys, the student loan payment is one of several escalating costs that make it harder and harder to make ends meet.

“Student loan people are always trying to think about how we can make the loans easier to pay,” Frotman, of the Student Borrower Protection Center, told me. “They’re not thinking about how those loans intersect with all the other bills and all these different financial responsibilities that the borrowers of this generation have been asked to bear.” They’re not thinking of the monthly payment, in other words, in concert with the massive shifts in retirement plans, or the escalating costs of child care, or the way that individuals have been asked to shoulder more of the premiums and copays for medical care.

“People can claw and scrape by and kind of make it work, as long as literally everything goes fine in their lives,” Frotman says. “They can cobble together the child care costs, enough to cover the routine medical debt and the rent. But if anything happens — if you lose your job, if you have a child with special needs, if you go through a natural disaster, if there’s a pandemic — that’s where, for millions of Americans, it all starts to spiral out of control. The student loan debt, it just pushes them over the top.” That’s especially true, Frotman says, for people with private student loan debt. (Public loans are loans made by the federal government and make up around 90 percent of all student loans; they have fixed interest rates and the ability to enroll in income-driven repayment plans. Private loans are made through banks, credit unions, or individual schools, are often at higher rates, and are more difficult to defer.)

For the majority of borrowers with federal loans, the “pause” on loan payments and interest over the past year has been essential. It’s allowed those who were laid off to avoid forbearance or default, provided excess funds to cover unanticipated pandemic-related costs, and helped save the economy from free fall. But the pause has just kicked the can further down the road. Previous data shows that “restarts” after loan pauses for natural disasters — like, say, after a hurricane — lead to spikes in delinquencies and defaults. The problem will only continue to metastasize. “We cannot ask 40 million people to go back into the system that was there last March,” Frotman says. “What more and more people are realizing is that you cannot create a functioning student loan system unless you cancel very real amounts of debt. The Biden people know this, or they will know this very soon.”

The effects spread far beyond monthly bills. For so many borrowers, striving to maintain the precarious balance and avoid catastrophe has a high, but often hidden, cost. “You thought the debt was a resource, but the debt starts driving you,” Seamster explains. The actual payment amount ultimately matters less than what it pushes out of reach: the money you’re unable to save, the jobs and business ideas you’re unable to pursue, the health care you’re unable to seek, the risks you’re unable to take. Millennials are starting far fewer businesses than previous generations, have far less in savings , and are moving less . In 2014, 39 percent of people over the age of 60 with student loan debt — often taken out for their children or grandchildren — reported forgoing necessary medical care .

That’s the reality of student debt. It’s most often associated with millennials, but debt loads are absorbed up and down families, across generations and communities. In 2018, “Parent PLUS” loans made up about 6 percent of all public student loans; between 1990 and 2014, the average amount parents borrowed increased threefold, to $16,100 a year. A JPMorgan Chase study of nearly 4 million “primary” accounts making regular student loan payments found that the typical family’s student loan payment is 5.5 percent of their take-home pay, but one in four families allocate more than 11 percent of their take-home income to student loan payments.

“People can claw and scrape by and kind of make it work, as long as literally everything goes fine in their lives”

Those loans could be funding the education of the account’s primary owners, but they might also be helping to cover the loans of a child, a sibling, or even a parent. Bit by bit, student loans draw on a family’s “reservoir” of available funds — and, for low-income families, often drain it altogether. This not only makes it more difficult for the family, as a whole, to accumulate wealth, but also creates scenarios that demand even more debt. If a family has to stop payments on a loan, it keeps acquiring interest; if they don’t have a reservoir to cover an emergency medical expense or car problem, they resort to credit cards or payday loans, often with astronomical interest rates. And saving for the next generation’s college costs is out of the question. The education that promised to lift a generation into the middle class instead weighs down the entire extended family.

You can see how this cycle continues. Families and communities with high rates of debt and default remain just as indebted, and just as constrained by their debt, if not more so, while those without it create scenarios that allow their children to graduate without debt as well. The middle class as a stable, lived reality will continue to disappear, as those without student debt set the mortar for their family’s future financial health, while those locked in the cycle of student debt scramble to put together new sticks for the roof every season. This trajectory is by no means race-neutral. The statistics are clear: There are myriad reasons white families have a median net worth nearly eight times that of Black families and five times that of Latinx families, but one of the reasons the racial wealth gap persists is the disproportionate burden of student loans on Black and Latinx borrowers.

If your first response to full cancellation is that it would help some people who “don’t need it,” start thinking of who’d actually benefit most: the Black, Latino, and Indigenous borrowers whose debt burden eclipses that of their white classmates. We often use the word “disproportionate” to describe something unfair. But in this case, the disproportionate benefit would be a form of repair, a correction, a rebalancing of wealth toward fairness for the communities who’ve been implicitly and explicitly excluded from it.

If we don’t act, the racial inequalities will only get worse. “We have these debates about racial equity,” Wherry told me. “But we’re not taking the time to ask, if we care about this set of outcomes, then how do we actually change those outcomes? People say to themselves, ‘Well, this isn’t how it’s supposed to be, and that’s not how I think it should be, and that’s not how my friends think it should be.’ It’s beyond their comprehension that you can not actively be racist and still contribute to these systems.”

When you insist on not seeing the student loan system in its current iteration as a driver of race-based economic inequality, you are perpetuating it. “People still have this assumption that things are getting better and better when it comes to inequality, and that narrative is more powerful than the actual facts,” Seamster says. “If you look at the actual facts, instead of this myth of what America is, we would have a very different picture of the racial hierarchy in this country.”

In order to correct that racial hierarchy, we need to be honest about its causes, including the notion of personally funded higher education as a means of wealth building. And after we cancel student debt, we need to start thinking about the ways to prevent the debt from simply re-accumulating with a new generation of borrowers. Part of that work is, yet again, refusing to see the situation as the result of personal decisions or failings. “The question cannot be how are individual students going to pay for college, but how we, as a society, are going to fund public education,” Seamster says. “It cannot be who is paying for this person to attend, but who is paying for the school.”

We cannot punish borrowers for buying into a dream when no one dared admit its promises had expired. This must be the drumbeat of the call to erase student debt: It’s not about my loans, or your loans, or your lack thereof. It’s not about your personal stories or anyone else’s. It’s about restoring the path from education to financial stability and wealth building — and, this time, actually maintaining it, no matter who decides to start the journey.

If you’d like to share your experience as part of the hollow middle class with The Goods, email [email protected] or fill out this form .

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Is Rising Student Debt Harming the U.S. Economy?

Advocates of student loan forgiveness protest outside the Supreme Court.

For decades, the U.S. government has helped students finance their higher education to bolster the country’s economic competitiveness and national security.
U.S. student loan debt has ballooned in recent years, outpacing most other forms of consumer borrowing.
P resident Joe Biden has launched several plans to provide student debt relief, but they have sparked intense opposition and legal challenges.

Introduction

Student loan debt in the United States has grown enormously in recent years and is now one of the largest forms of consumer borrowing in the country. Though the benefits of a college education outweigh the costs in most cases, many graduates are concerned about entering a weak job market and worry that lingering debt could hinder their financial futures.

Most economists see student loan programs as a sound investment in U.S. workers and essential for maintaining the country’s competitive edge, but questions remain about the appropriate level of federal involvement. A debate has also emerged over whether the government should forgive student loan debt and, if so, how much it should forgive. The Joe Biden administration has introduced several student debt forgiveness plans, but its most sweeping proposal was struck down by the Supreme Court.

How much student debt is there?

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Competitiveness

Student debt has more than doubled over the last two decades. As of September 2023, forty-three million U.S. borrowers collectively owed more than $1.6 trillion in federal student loans. Adding private loans brings that amount above $1.7 trillion, so that total student debt exceeds debt from auto loans and credit cards. Only home mortgage debt, at more than $12 trillion , is larger.

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Student debt is growing as more and more students attend college. In the late 1980s and early 1990s, most high schoolers did not enroll at colleges or universities; of those that did, less than half borrowed money to do so. In 2022, almost two-thirds of recent high school graduates were enrolled, and most took out student loans.

The average student is also taking on more debt: the balance per borrower rose 39 percent from 2008 to 2022, according to U.S. News & World Report . Students are generally borrowing more because college tuition has grown many times faster than income. The cost of college—and resulting debt—is higher in the United States than in almost all other wealthy countries, where higher education is often free or heavily subsidized. Meanwhile, U.S. states pulled back funding for public universities and colleges in the wake of the 2008 financial crisis .

Who owes it?

Roughly one in five Americans holds student debt. Most students graduate with around $30,000 in loans, but a small portion of borrowers hold an outsize share of student debt. More than one-third of the total debt is held by the 7 percent of borrowers who owe more than $100,000, according to the Washington Post . However, borrowers with smaller amounts of debt often have a more difficult time repaying their loans, as higher debt from graduate or professional degrees can pay off with much higher incomes. Students who do not complete their degrees often struggle the most ; their default rate is three times higher than those who graduate.

Additionally, the type of institution makes a difference in how much debt is owed. About half of outstanding student debt is held by people who went to private schools, which enrolled just 23 percent of higher education students in 2021.

There is also a racial disparity in student borrowing that many experts say is problematic and the result of decades of systemic discrimination. Black college students generally take on more debt than white students, and they are more likely to struggle with loan repayment after graduating, in part because they typically have lower levels of family wealth. Black, Latinx, and American Indian students are all more likely to default on their loans than white students.

Why do students take on debt?

Most U.S. students have an incentive to borrow because higher education is typically required for the highest-paying jobs. A worker with a bachelor’s degree earns 1.8 times the amount a person with a high school diploma does, while those with doctorates or professional degrees earn more than double, according to the U.S. Bureau of Labor Statistics.

However, analysts caution that the return on investment in terms of future income can vary widely, depending on factors including a student’s major and the institution they attended. A 2019 study [PDF] by Federal Reserve economists found that although a college education still provides a boost in earnings, the increase in wealth a degree provides has declined significantly over the past fifty years, due to the rising cost of college and the increase in other forms of consumer debt.

Why does the government lend to students?

The U.S. government invests in higher education for its people—through need-based tuition grants, student loan programs, veterans’ benefits, and research grants—because an educated and highly skilled workforce promotes national prosperity. Highly educated workers provide greater tax revenues, are generally more productive and civically engaged, and are less reliant on social programs. Moreover, postsecondary education is seen by most experts as fundamental to a dynamic, innovative economy. Major U.S. research universities, such as Duke, Harvard, and Stanford, often anchor regional innovation clusters.

What is the history of U.S. student lending programs?

The federal government began taking a large role in funding higher education after World War II. The Servicemen’s Readjustment Act of 1944, commonly known as the GI Bill, provided tuition assistance and many other benefits, including low-interest home loans, to nearly eight million returning veterans. The program continues to pay tuition for hundreds of thousands of servicemembers and veterans each year.

However, federal student lending did not begin until the Cold War. In response to the Soviet Union’s launch of Sputnik in 1957, Congress passed the National Defense Education Act, sweeping legislation that created federally funded student loan programs and supported national security–related fields, including science, math, and foreign languages. In 1965, the Lyndon B. Johnson administration expanded federal involvement at all levels of education with the Higher Education Act (HEA), which laid the foundation for the current system of federal student lending. Since then, Congress has passed laws that expand loan eligibility and allow parents to borrow on behalf of their children.

The federal government also provides need-based aid in the form of Pell Grants, which were established in 1972 and students do not have to repay. But funding levels for the program have not kept pace with the rising cost of college, resulting in more students turning to loans.

The U.S. government used to guarantee or subsidize private loans through the Federal Family Education Loan (FFEL) program, but critics, including President Barack Obama, argued that this was a handout to commercial lenders, and the program was ended in 2010. All federal student loans have since been issued directly by the Department of Education.

In response to the COVID-19 pandemic, the Donald Trump administration provided tens of millions of student borrowers with temporary relief from making payments on their loans. In one of his first acts in office, President Biden extended the payment moratorium for federal student loan borrowers until October 2021. He also expanded it to include private loans made under the discontinued FFEL program that are in default, closing a loophole that affected more than one million borrowers. The Biden administration extended the freeze multiple times, with the final extension expiring in October 2023. Since then, only half of borrowers have resumed payments; many of the remainder have defaulted or involuntary entered forbearance.

Some education finance experts say the increase in federal student lending is making college less affordable for many by allowing institutions to artificially inflate tuition. William J. Bennett, the secretary of education under President George H.W. Bush, argued in 1987 that federal aid was shielding colleges from market pressures, allowing them to charge ever increasing prices. The so-called Bennett hypothesis continues to be debated by education experts. A 2014 study found that federal aid led to tuition increases only at private, for-profit schools, though other research [PDF] has established a link between aid and rising tuition at public schools as well.

What is the current debate?

Many experts and policymakers agree that both the rising cost of college and the existing volume of loans need to be addressed. They acknowledge that surging student debt is harming younger generations of students by preventing them from reaching their financial goals while exacerbating racial inequality. While older generations were generally able to pay their way through school, or find jobs that enabled them to pay off their debts, that no longer holds true for recent cohorts, they argue. The combination of soaring tuition costs and the recessions caused by the 2008 financial crisis and the COVID-19 pandemic have particularly affected the millennial and subsequent generations. Additionally, student loans are more difficult to discharge in bankruptcy than other forms of consumer debt, such as from credit cards, because borrowers are required to prove “undue hardship” from their loans in court.

However, experts and policymakers differ in their proposals for how to address the problem. The most recent debate has centered on the issue of loan cancellation: some have called for universal loan cancellation in varying amounts, while others say only targeted relief is warranted. Still other experts have proposed system-wide reforms beyond canceling existing debt.

Large-scale debt cancellation. Universal debt relief calls for a blanket cancellation of all existing student loans. Other large-scale plans call for forgiving up to $50,000 for all borrowers. Proponents argue that large-scale debt cancellation would help advance racial and socioeconomic equality and boost the economy. Without the burden of student loans, they say, more people will be able to buy homes, take entrepreneurial risks, or save for retirement. Opponents counter that broad cancellation would be unfair to those who successfully paid off their student loans or who avoided debt altogether. They also say it would disproportionately benefit high-earning Americans, such as doctors and lawyers, who may have large debts but would likely not struggle with their payments. Another concern is who would bear the cost, since the price tag is estimated to be in the hundreds of billions to trillions of dollars.

Targeted debt relief . These plans would forgive most or all debt for borrowers who make under a certain income; supporters of targeted relief often advocate for income-driven repayment (IDR) plans. IDRs allow borrowers to pay an amount proportional to their income, and have their remaining balance cleared after ten years assuming they’ve made all qualifying payments. While proponents argue that targeting the lowest-income borrowers is the fairest approach , critics say that it would do little to stop universities from raising tuition and other costs.

Systemic reforms . A 2020 report by the Aspen Institute proposed system-wide reforms such as limiting tuition rates at public colleges, increasing aid for low-income students, incentivizing employers to offer tuition assistance, and restricting federal-loan-fund distribution to institutions that have a history of low post-graduation employment rates and other poor outcomes for students. Policymakers are now increasing their efforts to treat student loans like any other consumer debt, creating pathways to discharge student debt by filing for bankruptcy . Other experts and lawmakers say public funding should be increased to, for example, make public colleges and universities tuition-free.

Some analysts say the perception that college is the only path to a well-paying job drives up demand and harms students who could be better served by other forms of education. In recent years, politicians from both major parties, including former President Trump, have advocated increasing access to career and technical education (also known as vocational education) as an alternative to college. Indeed, enrollment in trade programs has increased since 2020, even as enrollment at two- and four-year public institutions is yet to recover from the pandemic.

What has Biden proposed?

In 2022, Biden proposed a landmark executive order to cancel close to one-third of the federal government’s student loan holding, worth $441 billion. His plan would have forgiven up to $20,000 in student debt for Pell Grant recipients and up to $10,000 for non–Pell Grant recipients making less than $125,000 per year. The program was expected to help around forty million borrowers, nearly half of whom would have had their entire debt forgiven. The estimated $400 billion outlay [PDF] drew fierce opposition from critics, who viewed the program as an inflationary burden on taxpayers. In June 2023, the Supreme Court struck down the plan in a 6-3 vote, ruling that the president did not have the statutory authority to cancel student loan debt.

In response, Biden introduced a new, scaled-down plan to reduce U.S. student loan debt, which launched in August 2023. Under the so-called SAVE plan, borrowers with undergraduate loans could see their monthly payments cut by as much as half, with loan balances forgiven after ten or twenty years of payments, depending on income level. The White House anticipates that the plan will allow borrowers to repay $0.71 per dollar borrowed, though some analysts expect lower repayment rates. Projections of the program’s cost vary, but some place it even higher than that of the initial debt forgiveness plan. (The Biden administration has estimated that it will cost $138 billion over the next ten years.) Biden has also introduced a new process to forgive student loans outright for more than 30 million borrowers, using authority from the HEA. As of April 2024, Biden has canceled a total of $153 billion in student debt for more than four million borrowers.

Opponents raised concerns about the cost of the SAVE plan, though experts say it stands on stronger legal footing than the previous debt forgiveness program. Critics also say that the new plan still burdens taxpayers and does little to reduce rapidly rising tuition costs. Some progressive lawmakers, while applauding the plan, say that it is not radical enough to fight the spiraling debt crisis. Meanwhile, many analysts point out that any plan that aims to broadly cancel debt relief is likely to face legal challenges , regardless of its legislative origin.

To other experts, student loan forgiveness would fail to address systemic issues. CFR’s Roger W. Ferguson Jr. writes that such programs miss “the fundamental weaknesses of higher education, namely an unacceptably low completion rate, overdependence on loans to attend college, and high and rapidly increasing costs.” He also pushes for upgrades to “modernize” the system used to manage student loans, which he says could expedite both loan forgiveness and repayment, saving borrowers up to $100 billion.

Still, proponents say IDRs such as SAVE are among the best options to reduce student debt. They argue that the Biden administration should now focus on reducing administrative hurdles to signing up for the program. A 2022 study by the Government Accountability Office found that thousands of borrowers who were eligible for forgiveness under existing IDRs were still making payments on their loans, and that the Department of Education “hasn’t done enough to ensure that all eligible borrowers receive the forgiveness to which they are entitled.”

Recommended Resources

CFR expert Roger W. Ferguson Jr. explains how the Biden administration can modernize the federal student loan experience .

The Congressional Research Service explores federal student debt relief [PDF] in the context of the COVID-19 pandemic.

Forbes Advisor breaks down current statistics on student debt.

The College Board examines trends and patterns [PDF] in student borrowing.

The Brookings Institution’s Adam Looney, David Wessel, and Kadija Yilla analyze who owes student debt and who would benefit from debt forgiveness.

The Aspen Institute lays out proposals to mitigate the student debt crisis without canceling loans.

Rhea Basarkar, Noah Berman, Jacqueline Jedrych, Anshu Siripurapu, Mia Speier, and Steven J. Markovich contributed to this Backgrounder.

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Student Loan Debt Thesis Statement

Student loan debt has become a major issue in recent years, as the cost of university education has risen and more students have been forced to take out loans to cover their costs. The average student loan debt in the United States is now over $37,000, and the total amount of outstanding student loan debt is estimated to be over $1 trillion. This has led to a number of problems for both individuals and the economy as a whole.

Individuals with high levels of student loan debt often find it difficult to make ends meet, as they are struggling to repay their loans while also covering other living expenses. This can lead to financial difficulties and even default on their loans, which can damage their credit score and make it difficult to get access to other forms of credit. Student loan debt can also lead to stress and anxiety, as borrowers worry about how they will ever be able to repay their loans.

The high level of student loan debt in the United States has also had a range of macroeconomic impacts. For example, it is thought to be one of the reasons why young people are delaying buying homes, as they simply cannot afford to take on additional debt. This has knock-on effects for the housing market and the economy as a whole. Student loan debt is also thought to be one of the reasons why many graduates are choosing to work in lower-paid jobs, as they need to earn enough money to make their loan repayments. This can have an impact on productivity and economic growth.

The student loan debt crisis is a complex issue with no easy solutions. However, there are a number of things that can be done to try and alleviate the problem. For example, universities could work to reduce the cost of attendance, so that fewer students need to take out loans in the first place. Alternatively, government policy could focus on making it easier for borrowers to repay their loans, for example by introducing income-based repayment plans.

Going to college is often advised as the next step in education after high school, but is it really that simple? The most significant issue for students today is money. Nowadays, receiving a scholarship would be the greatest method to go through college without accumulating student loan debt later on. Even though financial aid is available for those seeking higher education, not all of them will qualify for financial assistance.

The answer to this money issue is to have a scholarship. According to Student Debt Relief, “In 2019, the average student loan debt was $30,063.88” ( Student Debt Relief). This amount of debt can be a tremendous amount for someone just starting out in college or even after they have graduated. The number of students with debt is also increasing every year.

Student Debt Relief states that “67% of bachelor’s degree recipients from public and nonprofit colleges had student loan debt in 2018” ( Student Debt Relief). This percentage has increased over the years, which means more and more students are struggling with finding ways to pay off their loans. Scholarships can help with this problem because they do not have to be paid back.

There are many scholarships available for students, but they can be hard to find. Scholarships.com is a website that “maintains the largest database of private and external scholarships on the Internet” ( Scholarships.com). This website can help connect students with different scholarship opportunities. Another way to find scholarships is by talking to your guidance counselor at school. They will have information on local scholarships that may be available to you. There are also many websites and books that list different scholarships that may be a fit for you.

It is important to start looking for scholarships as early as possible so you do not miss any deadlines. It is also important to read all of the instructions carefully and make sure you are eligible for the scholarship before you apply. Once you have found a scholarship or multiple scholarships that you are eligible for, the next step is to fill out the application.

The application process can be time-consuming, but it is important to take your time and fill it out correctly. Make sure you answer all of the questions truthfully and completely. Some scholarships may require an essay, so make sure you follow all of the instructions and format your essay correctly.

After you have submitted your application, all you can do is wait to see if you have been awarded the scholarship. If you are not awarded the scholarship, do not be discouraged. There are many other scholarships available, and you can always reapply for the same scholarship next year.

Receiving a scholarship can take a load off of your shoulders financially, and it can also help you focus more on your studies. If you are struggling to find ways to pay for college, look into scholarships as soon as possible. There are many different scholarships available, so you are sure to find one that is a fit for you.

Do not let the burden of student loan debt hold you back from getting a college education. Scholarships can help you achieve your dreams of going to college without the worry of how you will pay for it.

It puts them in a bind since they will not be able to meet the requirements. As a result, they must take out student loans to cover their education costs. It is the start of a long road that leads to student loan debt difficulties because they have no other option but to borrow money through Sallie Mae. Today, the most popular loan provider is Sallie Mae, which was formed as a private firm in 1972 and became publicly listed in 2004.

Student loan debt has been on the rise in America over the past few decades. In 1987, outstanding student loan debt was around $40 billion. By 2006, it had increased to nearly $200 billion. Student loan debt is now the second-largest type of consumer debt in the United States, after mortgage debt. The average student loan borrower owes more than $28,000. More than 40 million Americans have student loan debt.

Student loan debt affects not just borrowers, but also their families and the economy as a whole. Student loan debtors are less likely to buy homes and cars, and they are also more likely to default on their loans. This can have a ripple effect on the economy, as fewer people buying homes means fewer construction jobs and fewer people buying cars means fewer jobs in the auto industry.

The problem of student loan debt is compounded by the fact that many graduates are unable to find jobs that pay enough to allow them to make their loan payments. In fact, nearly half of all recent college graduates are unemployed or underemployed. And of those who are employed, many are working in jobs that do not require a college degree.

The combination of high unemployment and low-paying jobs has led to an increase in student loan defaults. In 2009, more than 6 percent of student loan borrowers defaulted on their loans. This is the highest default rate since 1998.

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Writing a Paper: Thesis Statements

Basics of thesis statements.

The thesis statement is the brief articulation of your paper's central argument and purpose. You might hear it referred to as simply a "thesis." Every scholarly paper should have a thesis statement, and strong thesis statements are concise, specific, and arguable. Concise means the thesis is short: perhaps one or two sentences for a shorter paper. Specific means the thesis deals with a narrow and focused topic, appropriate to the paper's length. Arguable means that a scholar in your field could disagree (or perhaps already has!).

Strong thesis statements address specific intellectual questions, have clear positions, and use a structure that reflects the overall structure of the paper. Read on to learn more about constructing a strong thesis statement.

Being Specific

This thesis statement has no specific argument:

Needs Improvement: In this essay, I will examine two scholarly articles to find similarities and differences.

This statement is concise, but it is neither specific nor arguable—a reader might wonder, "Which scholarly articles? What is the topic of this paper? What field is the author writing in?" Additionally, the purpose of the paper—to "examine…to find similarities and differences" is not of a scholarly level. Identifying similarities and differences is a good first step, but strong academic argument goes further, analyzing what those similarities and differences might mean or imply.

Better: In this essay, I will argue that Bowler's (2003) autocratic management style, when coupled with Smith's (2007) theory of social cognition, can reduce the expenses associated with employee turnover.

The new revision here is still concise, as well as specific and arguable. We can see that it is specific because the writer is mentioning (a) concrete ideas and (b) exact authors. We can also gather the field (business) and the topic (management and employee turnover). The statement is arguable because the student goes beyond merely comparing; he or she draws conclusions from that comparison ("can reduce the expenses associated with employee turnover").

Making a Unique Argument

This thesis draft repeats the language of the writing prompt without making a unique argument:

Needs Improvement: The purpose of this essay is to monitor, assess, and evaluate an educational program for its strengths and weaknesses. Then, I will provide suggestions for improvement.

You can see here that the student has simply stated the paper's assignment, without articulating specifically how he or she will address it. The student can correct this error simply by phrasing the thesis statement as a specific answer to the assignment prompt.

Better: Through a series of student interviews, I found that Kennedy High School's antibullying program was ineffective. In order to address issues of conflict between students, I argue that Kennedy High School should embrace policies outlined by the California Department of Education (2010).

Words like "ineffective" and "argue" show here that the student has clearly thought through the assignment and analyzed the material; he or she is putting forth a specific and debatable position. The concrete information ("student interviews," "antibullying") further prepares the reader for the body of the paper and demonstrates how the student has addressed the assignment prompt without just restating that language.

Creating a Debate

This thesis statement includes only obvious fact or plot summary instead of argument:

Needs Improvement: Leadership is an important quality in nurse educators.

A good strategy to determine if your thesis statement is too broad (and therefore, not arguable) is to ask yourself, "Would a scholar in my field disagree with this point?" Here, we can see easily that no scholar is likely to argue that leadership is an unimportant quality in nurse educators. The student needs to come up with a more arguable claim, and probably a narrower one; remember that a short paper needs a more focused topic than a dissertation.

Better: Roderick's (2009) theory of participatory leadership is particularly appropriate to nurse educators working within the emergency medicine field, where students benefit most from collegial and kinesthetic learning.

Here, the student has identified a particular type of leadership ("participatory leadership"), narrowing the topic, and has made an arguable claim (this type of leadership is "appropriate" to a specific type of nurse educator). Conceivably, a scholar in the nursing field might disagree with this approach. The student's paper can now proceed, providing specific pieces of evidence to support the arguable central claim.

Choosing the Right Words

This thesis statement uses large or scholarly-sounding words that have no real substance:

Needs Improvement: Scholars should work to seize metacognitive outcomes by harnessing discipline-based networks to empower collaborative infrastructures.

There are many words in this sentence that may be buzzwords in the student's field or key terms taken from other texts, but together they do not communicate a clear, specific meaning. Sometimes students think scholarly writing means constructing complex sentences using special language, but actually it's usually a stronger choice to write clear, simple sentences. When in doubt, remember that your ideas should be complex, not your sentence structure.

Better: Ecologists should work to educate the U.S. public on conservation methods by making use of local and national green organizations to create a widespread communication plan.

Notice in the revision that the field is now clear (ecology), and the language has been made much more field-specific ("conservation methods," "green organizations"), so the reader is able to see concretely the ideas the student is communicating.

Leaving Room for Discussion

This thesis statement is not capable of development or advancement in the paper:

Needs Improvement: There are always alternatives to illegal drug use.

This sample thesis statement makes a claim, but it is not a claim that will sustain extended discussion. This claim is the type of claim that might be appropriate for the conclusion of a paper, but in the beginning of the paper, the student is left with nowhere to go. What further points can be made? If there are "always alternatives" to the problem the student is identifying, then why bother developing a paper around that claim? Ideally, a thesis statement should be complex enough to explore over the length of the entire paper.

Better: The most effective treatment plan for methamphetamine addiction may be a combination of pharmacological and cognitive therapy, as argued by Baker (2008), Smith (2009), and Xavier (2011).

In the revised thesis, you can see the student make a specific, debatable claim that has the potential to generate several pages' worth of discussion. When drafting a thesis statement, think about the questions your thesis statement will generate: What follow-up inquiries might a reader have? In the first example, there are almost no additional questions implied, but the revised example allows for a good deal more exploration.

Thesis Mad Libs

If you are having trouble getting started, try using the models below to generate a rough model of a thesis statement! These models are intended for drafting purposes only and should not appear in your final work.

In this essay, I argue ____, using ______ to assert _____.
While scholars have often argued ______, I argue______, because_______.
Through an analysis of ______, I argue ______, which is important because_______.

Words to Avoid and to Embrace

When drafting your thesis statement, avoid words like explore, investigate, learn, compile, summarize , and explain to describe the main purpose of your paper. These words imply a paper that summarizes or "reports," rather than synthesizing and analyzing.

Instead of the terms above, try words like argue, critique, question , and interrogate . These more analytical words may help you begin strongly, by articulating a specific, critical, scholarly position.

Read Kayla's blog post for tips on taking a stand in a well-crafted thesis statement.

Related Resources

Didn't find what you need? Email us at [email protected] .

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Kreyòl Ayisyen

CFPB Bans Navient from Federal Student Loan Servicing and Orders the Company to Pay $120 Million for Wide-Ranging Student Lending Failures

Order would put an end to Navient’s years of abuse of students and taxpayers in the federal student loan program

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) filed a proposed order against the student loan servicer Navient for its years of failures and lawbreaking. If entered by the court, the proposed order would permanently ban the company from servicing federal Direct Loans and would forbid the company from directly servicing or acquiring most loans under the Federal Family Education Loan Program . These bans would largely remove Navient from a market where it, among other illegal actions, steered numerous student loan borrowers into costly repayment options. Navient also illegally deprived student borrowers of opportunities to enroll in more affordable income-driven repayment plans and forced them to pay much more than they should have. Under the terms of the order, Navient would have to pay a $20 million penalty and provide $100 million in redress for harmed borrowers.

“For years, Navient’s top executives profited handsomely by exploiting students and taxpayers,” said CFPB Director Rohit Chopra. “By banning the notorious student loan giant from federal student loan servicing and ensuring the winddown of these operations, the CFPB will finally put an end to the years of abuse.”

“I applaud the CFPB for obtaining concrete relief for borrowers and deterring similar failures in the future,” said U.S. Under Secretary of Education James Kvaal. “Today’s action builds on the Biden-Harris Administration’s work to hold loan servicers accountable and protect borrowers, including more than 1 million borrowers who have received debt relief by fixing past failures to properly track progress toward forgiveness, such as correcting harms from forbearance steering.”

The CFPB’s investigation of Navient kicked off a series of efforts by state and federal agencies to examine forbearance steering and other breakdowns in the income-driven repayment program. Those efforts have resulted in more than $50 billion in debt relief for more than 1 million borrowers who were wrongly steered into forbearance, as well as those who had payments miscounted. Today’s order complements actions already taken by the Department of Education and state attorneys general to provide redress to borrowers harmed by Navient.

Navient (NASDAQ: NAVI) is headquartered in Herndon, Virginia, and was formerly known as Sallie Mae. At the time of the CFPB’s lawsuit in 2017, Navient was the largest student loan servicer in the United States. It serviced student loans of more than 12 million borrowers, including more than 6 million accounts under its contract with the Department of Education. Altogether, it serviced more than $300 billion in federal and private student loans. During the period covering the CFPB’s lawsuit, the company was led by CEO Jack Remondi. Remondi orchestrated the launch of Navient out of Sallie Mae. Since the launch of Navient, the company’s performance has lagged others in the industry. Last year, Navient’s board of directors replaced Remondi and began to transition the company away from its sordid history.

The CFPB sued Navient for failing borrowers at every stage of repayment. The lawsuit alleges that Navient steered borrowers who may have qualified for income-driven repayment plans into forbearance instead. This practice was cheaper and simpler for Navient, but detrimental to borrowers. By steering struggling borrowers into forbearance – where interest continues to accrue and capitalize – Navient’s illegal actions led numerous borrowers to pay additional interest charges.

Navient is a repeat offender with a long history of regulatory violations. After a referral from the CFPB, in 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and its predecessor, Sallie Mae, to pay almost $100 million for illegally overcharging nearly 78,000 servicemembers. In 2021, the Department of Education ordered Navient to return more than $22 million in overcharges. In 2022, 39 state attorneys general announced a $1.85 billion settlement with Navient for originating predatory student loans in addition to its forbearance steering practices.

In 2021, Navient’s contract with the Department of Education to service Direct Loans finally ended. Navient announced in early 2024 that it intended to transfer the servicing of its remaining loans to another servicer. The CFPB’s order would ensure that Navient can never harm federal student loan borrowers at scale by getting back into the business of directly servicing federal student loans or growing its Federal Family Education Loan Program loan portfolio.

Navient violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, and the Fair Debt Collection Practices Act. In addition to its unlawful steering activities, the CFPB alleges Navient harmed student loan borrowers by:

Misleading borrowers about income-driven repayment plans: Navient failed to adequately notify borrowers who enrolled in income-driven repayment plans about the requirement to annually recertify their enrollment. Borrowers were not properly notified that submitting an incorrect or incomplete application to recertify their enrollment could lead to an increase in their monthly payments and delay loan cancellation.
Botching payment processing: Many borrowers had multiple student loans with varying interest rates and monthly payments. When borrowers made payments meant to cover multiple loans, Navient misallocated payments. Navient also misapplied payments made to a particular loan. These errors resulted in late fees, interest accrual, and negative credit reporting.
Harming the credit of disabled borrowers, including severely injured veterans: Navient tarnished the credit reports of borrowers who had received a discharge on their federal student loans due to a total and permanent disability.
Deceiving borrowers about Navient’s requirements for cosigner release: Navient made representations to private loan borrowers that if they paid down their loans in a certain way, they could apply for their cosigners to be released. But Navient did not honor those representations for some borrowers.
Misleading borrowers about improving credit scores and the consequences of federal student loan rehabilitation: For federal student loan borrowers whose loans went into default, Navient’s debt collection arm promised credit reporting relief to borrowers if they completed a rehabilitation program. Navient failed to deliver on all of the promised relief.

Enforcement Action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including engaging in unfair, deceptive, or abusive acts or practices.

If entered by the court, the CFPB’s order bans Navient from most federal student loan activities. Navient would no longer be able to service federal Direct Loans and, with certain limited exceptions, no longer be able to acquire Federal Family Education Loan Program loans. Navient would also be banned from conducting consumer-facing servicing activities for the Federal Family Education Loan Program. Where Navient is the master servicer for any remaining Federal Family Education Loan Program loans, the order requires Navient to take a series of steps to help ensure borrowers’ rights are protected, including the right to enroll in more affordable repayment plans.

The order also requires Navient to:

Pay $100 million redress to consumers: Navient will be required to provide $100 million in redress for affected consumers.
Pay a $20 million penalty: Navient will pay $20 million into the CFPB’s victims relief fund .

Read the proposed order .

Borrower Relief

The CFPB will mail checks to consumers who are eligible to obtain redress under the settlement. Consumers do not need to do anything to obtain redress and should be aware of scammers that may try to use CFPB employees’ names and imagery to try to steal money or private information. The CFPB will never require consumers to pay money to obtain redress, nor will we ask for additional information before consumers can cash a redress check that we’ve issued. On the CFPB’s webpage, consumers can obtain general information about CFPB redress checks and more information about how to avoid potential scams .

Since 2013, the CFPB has supervised the student loan market for risks to consumers. In addition to the Navient enforcement action, the CFPB has engaged in a range of supervisory work on the failures in the income-driven repayment system, in partnership with the Department of Education, state enforcement agencies, and banking regulators. This work has identified the shoddy student loan servicing that has derailed borrowers from making progress toward loan cancellation under existing federal programs, including income-driven repayment. This work was instrumental to a 2022 announcement by the Department of Education to implement a fix to correct the failures of servicers and to help borrowers receive or move closer to loan cancellation.

Learn more about the information and resources the CFPB has available for consumers considering student loans and for consumers with student loans.

Read consumer complaints about Navient.

Read consumer complaints about student loan servicing.

Consumers can submit complaints about financial products and services, including student loans and student servicing, by visiting the CFPB’s website or by calling (855) 411-CFPB (2372) .

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to [email protected] . To learn more about reporting potential industry misconduct, visit the CFPB’s website .

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov .

COMMENTS

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