I’m really not trying to start a debate, I just want to understand why there is a dilemma, and how exactly it would work if passed.
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It would be possible, but the government would probably have to spend a lot of money to do it.
Student loan debt in the US is tricky for a number of reasons. Firstly only some of it is actually owned by the US government (which the president could theoretically forgive overnight but then they’d have a lot less money), the rest is owned by large banks and the government would have to actually spend money to immediately pay off all that debt. (As opposed to forgiving its own debts which would stop the money payments coming in from the debts).
So if the government were to forgive all student debt right now, it would be relatively easy to forgive all federal student debt (but then the government wouldn’t get that money they were counting on). To forgive all private student debt as well, the government would have to buy all the debt from the banks who lent it. So the government would go from getting payments from debt they loaned out to now having a large debt they’re making payments on. The government would then either have to make spending cuts, or increase revenue (through increased taxes).
The large issue is that forgiving all student debt wouldn’t address the underlying systemic issue of students having to take on large debts with high interest rates in the first place. So the lucky few who had debts would be better off, but those who are about to go to school (and those who already paid it off) would be left out.
The main issue is that we have a lot of people with high student debts they had to take on to get a higher education, and it would be an injustice to; only forgive the current debts and leave the broken system, to fix the system but screw over the current debt holders, only forgive those who took out federal loans, or to do nothing. It’s a bit of a catch-22 although some options are better than others.
The best (and most expensive) option would be to; fix the current system so very little debt has to be taken out from now on, forgive all (or most) current student debts, fully (or partially) pay back those who paid their debt off recently.
However this would cost a lot of money, and would most likely take bipartisan support, which makes it quite unlikely.
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