Home > 2011 > Students > Should All Student Loans Be Forgiven?

Should All Student Loans Be Forgiven?

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Liberal blogger Robert Applebaum has an interesting idea: Let’s forgive everybody’s student loan debt. All of it. According to a petition that Applebaum recently sent via the MoveOn activist network, erasing student loan debt would do a lot more to stimulate the economy than further tax cuts to corporations and billionaires.

“How do we ever expect the housing market to improve when the very people we rely upon to buy houses are already strapped with so much debt?” Applebaum said in a recent interview. “How are they going to afford a house?”

[Related Article: Student Loan Defaults On the Rise]

Is this proposal a mite bit utopian? Yes. Dead on arrival? Most definitely. But as the total student loan debt in America creeps towards $1 trillion, one wonders if such a radical idea could someday gain a little traction.

And as Applebaum points out on the website he created to promote the idea, we’ve already spent $787 billion on stimulus packages and another $700 billion to bail out troubled investments, which may have prevented utter collapse of our financial system but did little to provoke a sustained recovery.

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“The Wall Street financial institutions, auto manufacturers, insurance companies and countless other irresponsible actors have now received TRILLIONS of taxpayer dollars…to bail them out of their self-created mess,” Applebaum writes on the site. “This, too, does nothing to stimulate the economy. It merely rewards bad behavior and does nothing to encourage institutional change.”

On the other hand, if the government pays off everyone’s student debt, “Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy now,” Applebaum says.

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While a broad federal program to forgive all student loan debt appears unlikely to pass any time soon, many universities and some states do offer forgiveness programs. In 2008 Harvard University’s law school began forgiving some student loans for people who work in public service law and earn below a certain income threshold for a certain number of years after graduation. Various states offer to forgive loans for graduates who go into public service careers including nursing and social work.

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  • axt113

    I’d love to pay off my loans, but even though I graduated recently summa cum laude, I can’t find a job, and am living with my parents, so no money means no ability to pay, I’d love to see my loans forgiven and not have to worry about them hanging over my head..

    • nameless

      There’s programs in place to help you with that debt. Income based repayment, deferments. Talk to your loan company.

    • Wiseowl

      Hi,
      Some ideas for those of you in student loan debt:
      1)Get any job you can. If you must live with your parents due to student loans,you’ve got all the “forgiveness’ you’re going to get. Take advantage of your rent-free situation and work like you’re truly motivated to get out of mom and dad’s house.

      2)Do Your Best for WalMart. Ok, so you didn’t go to college to work at WalMart but WalMart is where you make money to pay the bills. For starters: Do an excellent job for WalMart. Work there like it’s your dream job. Put every positive effort into your attitude. Take advantage of every and any opportunity to learn something new, move around the store, and be the first to sigh up for any training, learning, or advancement you are offered. Volunteer to work on projects, join teams, develop solutions to problems. While you’re busy getting a paycheck you’ll also be building a valuable resume, references, and perhaps discovering you can do something you never thought you wanted to do. Your ATTITUDE will be your springboard.

      3)Make your Opportunity: I took an hourly job at JCPenney right out of grad school. Retail wasn’t my first love but I needed money to pay bills. Instead of joining the complainers in the breakroom, I used my breaks and lunches to do some research. I wanted to use my marketing expertise and show the managers at JCP they had more than a warm body to cover a shift. So, I scouted the store and took note of what merchandise seemed to move slower, etc. I asked the associates in those departments why they thought it was slow, what they’d change, what would motivate them to come to work every day. I developed a proposal for improving the sales in those departments. I introduced myself to the store manager and asked if I could present my ideas. I found myself presenting to the store manager AND all the department managers within the week. Now, I didn’t get any extra pay for this venture nor did everyone welcome my advice with open arms. What I got was two things: I viable portfolio for my job hunt and a well-respected reference. When I went job hunting potential employers were impressed with the effort I made while an hourly employee. I haven’t earned less than $45K since those days and every day I’m glad I made the effort. I also discovered I really liked retail but decided not to pursue it as a career due to my opportunities to use my education.

      3)Stop blaming others for your poor choices. If you’re 20something get over yourself. If you’re older then get practical. A good budget, a hard look at how you are spending the money you have, and some reordered priorities will help you get out of your student loan debt and on with life.
      Good luck. It takes effort to whine and moan and point fingers; put all that energy into paying off your bills and you’ll be miles ahead.
      Wiseowl, Head of Financial Services for a Major Not For Profit.

  • Kate

    While it’d be illogical to forgive ALL student loan debt, the system could definitely be a little more forgiving. No one can find a job, and university tuition is skyrocketing, regardless of the value of the degree. Almost everyone I know is at least $30,000 in debt, they can’t own a car or house, and the only jobs available pay way less than what would be required to pay off their loans in a reasonable amount of time. Many of these people will be paying off that debt until they’re 50 years old. It’s kind of absurd.

  • Talula

    I’d be happy paying what I borrowed minus the tens of thousands that have been tacked on from interest and the number of times its been sold. I owe almost 3 times what I borrowed. I am in my mid-40s have ZERO saved for retirement and will never pay off my student loan debt unless I win the lotto. Ten percent of my salary a month won’t even cover the interest that’s accumulating.

  • Bob1234

    “Dead on arrival? Most definitely.”

    I am puzzled as to why you mistakenly believe that a resolution, now moving through a committee in the House of Representatives, and fueled by a petition with over 312,000+ signatures (and growing) is “dead on arrival?” Apparently, it gained enough traction for you to write about didn’t it?

    I think the Senate would pass a similar bill, and the President would sign any resulting legislation. The House body would be the toughest sell, but with enough support it is possible. Up or down, this movement is far from “dead on arrival.”

  • NH

    I think it would be absolutely wonderful to forgive ALL student loan debt, but I know that is never going to happen. For me, I owe over $100K (1/3 is interest alone) and right now, all I can afford to pay is the interest. I have been out of school for 5 years, have had a full time job since graduating, but due to this horrible economy, I have not gotten a raise in the last 3 years, but yet the cost of everything else if going up. And I fortunately locked in at a great rate with my federal loans (those payments are very managable for me.) Its the private loans that are a problem. I think the govt. should really take a look at regulating companies like Sallie Mae and make them have more realistic payment options available for people who have private student loan debt. Your options are either forbearance (2 years max. Had to do this when I graduated because my first job paid squat) or there are other graduated repayment methods (some up to 30 years), but there should really be one based on income like there is for federal loans. For me, my income is pretty low, but I still manage to pay $450 a month (1/3 of my salary) to Sallie Mae, on time, but its only going towards interest, as I said before. It would be nice to see some of that go towards the principal as well so I could at least feel like Im making a dent in the balance. Im figuring im going to be paying these off for the rest of my life (unless by some miracle of god, I can find a better paying job (im looking), I win the lottery or get a sweet inheritance from an unknown rich relative) It’s really sad, and while I made the decision to go to school, my parents did not have the $$ to help me out so my entire education was through student loans. It’s a huge weight on my shoulders. If the govt. can give all this money to these greedy bankers, they should be able to do something to help the average middle class graduate as well.

  • Dan

    I too am one of the countless who are at the suffering of a student debt. I have been unemployed and unable to acquire a job related to my field. I do think the forgiveness is a good idea, granted I would like to see a good portion of my loan gone, specially since I have it through Sallie Mae a mistake that was.

  • Mike

    This is the biggest load of crap I have heard in a long time. You are not “at the suffering of student debt”. You made a conscious decision to accept the debt and go to college in a field that has no jobs.

    You weren’t tricked by creditors or predatory lending practices, you made a poor decision. If I run I 30 grand in credit card debt its my stupid fault and I have to pay it back. I don’t expect Congress to decide it would be better for me to piss away 30K more rather than repay my creditors when I made the decision to saddle myself with debt.

    • Dan

      Yeah and I bet you are currently working as well Mike, there are some however that are not, despite our efforts on getting a job.

    • VanRoyal

      I totally agree with you…when the timing is right.

      I’m an old school conservative all the way. But…the idea of erasing student load debt is attractive. I’m all for it. Only because of what we’re already into…the govt dishing out billions to whoever whenever for whatever. I do not believe the govt should spend our (the taxpayers) money in any way, shape, or form. But – if it’s already happening, and is damn near unstoppable…might as well give it to the folks that took on debt in an effort to educate and improve themselves.

      I have about $10k left on my student loan, the interest rate is great (under 3%), and I have no difficulty paying the bill each month. But I know that if I had that extra money in my pocket, I’d probably hit the bar a couple more times a month. WHich stimulates the local economy. It’s a no-brainer to me:

      If we cannot stop the federal government from carelessly spending taxpayer money, then we might as well give it to the folks that took on debt with the intention of bettering themselves through higher education.

      Just my $.02

    • Kristen

      “You made a conscious decision to accept the debt and go to college in a field that has no jobs.”

      A. Fields that had jobs 4-20 years ago when current debtors chose to take on the debt, don’t necessarily have them now. Maybe you haven’t heard, but there’s a recession on and jobs are pretty hard to come by. Furthermore, for people who do have jobs, the earning rates are lower than they were for previous generations and even working full time doesn’t ensure loan payments can be reasonably shouldered with rent and other basic living expenses.

      B. As for making the decision to accept the debt, of course we did, after being told our whole lives it was the best way to make sure we’d get a job and be able to responsibly support ourselves as adults. Turns out that’s not really how it works anymore. Also, for the 18-22 year old kids agreeing to take out loans, the amount you’re borrowing is made clear, but the amount you can expect to owe upon completion of your degree in interest most certainly is not. For many, the interest increases the amount owed by double or more. I think most 18 year olds understand they’ll be paying back more than borrowed, but few can reasonably be expected to understand just how much that will be.

    • http://google.com brett

      mike you Dick, They were tricked, most everyone qualifies for federal student loans, but colleges and universities were steering them towards private loans, thats the problem. Read before you post

  • nameless

    Why stop at forgiving all student loan debt? What about the people who have been making payments, the ones who have paid their loans off in full? Refund them their money. Also give new students a free ride. Tuition? Make it a thing of the past. Make college professors work for free, the administrative staff work for free. Lets not stop there. Why stop at student loans? Credit card debt should be forgiven too! Medical bills, car loans, mortgage… its all to stimulate the economy so we can buy more crap. Live within your means people. Yeah, you have a $400 loan payment. Budget accordingly. You people talking about not having a job, being underemployed? There’s plans to help with that. Income based, deferments, lower payment options. These are federal backed loans, if they’re all forgiven its going to affect the entire nation as taxpayers.

  • http://www.stayathomeworker.com sara

    Those of us with student loans have a legal (and ethical) responsibility to make good on the promise we made when we borrowed the funds. What kind of society are we living in when a student can borrow $100,000 for a private education, never pay a dime of principal or interest, and expect the debt to be magically wiped away with a magical congressional wand?

    A post-high school education in this country is a luxury, not a necessity. It is a choice, and it is a privilege. It is a blessing in our country that any one who really wants to receive a college education (or post-graduate education for that matter) has the opportunity and resources available to do that. That doesn’t mean one will receive their education for free, be able to attend any college one desires, or graduate without any ill financial consequences or debt. It just means the opportunity is there, although some will inevitably have to sacrifice for it more than others.

    By taking out student loans, you are investing in your future, believing that the education you receive will provide you with enough income to later in life make good on your loans. That’s how loans work. Someone lends you money today, in exchange for the return of the money (and interest) at a later date. Loans are contracts. Loans are promises to pay. Loans shouldn’t be forgivable.

    I wrote more about it: http://stayathomeworker.com/2011/10/20/new-stimulus-idea-forgive-student-loan-debt-no-way/

  • Wiseowl

    Hi,
    I agree with Sara on this one on several points.
    Bottom line: student loans, like credit card debt, car loans, and home loans, are voluntary debt.

    Some ideas for those of you in student loan debt:
    1)Get any job you can. If you must live with your parents due to student loans,you’ve got all the “forgiveness’ you’re going to get. Take advantage of your rent-free situation and work like you’re truly motivated to get out of mom and dad’s house.

    2)Do Your Best for WalMart. Ok, so you didn’t go to college to work at WalMart but WalMart is where you make money to pay the bills. For starters: Do an excellent job for WalMart. Work there like it’s your dream job. Put every positive effort into your attitude. Take advantage of every and any opportunity to learn something new, move around the store, and be the first to sigh up for any training, learning, or advancement you are offered. Volunteer to work on projects, join teams, develop solutions to problems. While you’re busy getting a paycheck you’ll also be building a valuable resume, references, and perhaps discovering you can do something you never thought you wanted to do. Your ATTITUDE will be your springboard.

    3)Make your Opportunity: I took an hourly job at JCPenney right out of grad school. Retail wasn’t my first love but I needed money to pay bills. Instead of joining the complainers in the breakroom, I used my breaks and lunches to do some research. I wanted to use my marketing expertise and show the managers at JCP they had more than a warm body to cover a shift. So, I scouted the store and took note of what merchandise seemed to move slower, etc. I asked the associates in those departments why they thought it was slow, what they’d change, what would motivate them to come to work every day. I developed a proposal for improving the sales in those departments. I introduced myself to the store manager and asked if I could present my ideas. I found myself presenting to the store manager AND all the department managers within the week. Now, I didn’t get any extra pay for this venture nor did everyone welcome my advice with open arms. What I got was two things: I viable portfolio for my job hunt and a well-respected reference. When I went job hunting potential employers were impressed with the effort I made while an hourly employee. I haven’t earned less than $45K since those days and every day I’m glad I made the effort. I also discovered I really liked retail but decided not to pursue it as a career due to my opportunities to use my education.

    3)Stop blaming others for your poor choices. If you’re 20something get over yourself. If you’re older then get practical. A good budget, a hard look at how you are spending the money you have, and some reordered priorities will help you get out of your student loan debt and on with life.
    Good luck. It takes effort to whine and moan and point fingers; put all that energy into paying off your bills and you’ll be miles ahead.
    Wiseowl, Head of Financial Services for a Major Not For Profit.

  • April

    I certainly agree with the movement to cancell student debt for all. I’ve been looking into existing forgiveness programs. One of the options is made available to those in public service. However, the definition of public service does not include caregivers of children placed by the courts with relatives. A conservative estimate has been made stating that relative caregivers save more than $6.5 million annually in Federal Foster Care costs. I’ve created a petition to include Relative Cargivers into the definition of “Public Service”. Please sign this petition and pass it on to others. We only need 150 votes to make this petition available to the public and 25,000 for white house review.

    Dear friends,

    I wanted to let you know about a new petition I created on We the People,
    a new feature on WhiteHouse.gov, and ask for your support. Will you add your
    name to mine? If this petition gets 25,000 signatures by January 20, 2012,
    the White House will review it and respond!

    We the People allows anyone to create and sign petitions asking the Obama
    Administration to take action on a range of issues. If a petition gets
    enough support, the Obama Administration will issue an official response.

    You can view and sign the petition here:

    http://wh.gov/DFz

    Here’s some more information about this petition:

    Forgive Student Debt of Relative Caregivers in Custody of
    Long-term Court Ordered Placement of Children.
    Relatives that care for children placed by the courts are often referred
    to as Relative Caregivers and provide one of the greatest public services to
    these children, their communities and society as a whole. Student loan
    forgiveness of those in public service should be redefined to include
    Relative Caregivers. When a child is removed from a home that is not safe
    they may end up in the foster care system. Another option that social
    services and courts promote is placement with a relative. After a child is
    adjudicated dependent an approved Relative Caregiver may gain long-term
    permanent custody which in turn removes this child from the system and
    alleviates a huge financial burden on society. Relative Caregivers give of
    themselves with no promise or expectation of financial gain.

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