WASHINGTON — For millions of Americans, President Joe Biden’s student loan cancellation offers a life-changing chance to escape the burden of debt. But for future generations of students, it doesn’t fix the underlying reason for the crisis: the rising cost of college.
The specter of heavy debt will still loom over current high school seniors — and everyone after them — since the debt cancellation only applies to those who took out federal student loans before July 1.
Among the main causes is rising college tuition: Today’s four-year universities charge an average of nearly $17,000 a year in tuition and mandatory fees, more than double the inflation-adjusted average from 30 years ago, according to federal data.
Biden’s failure to tackle the broader problem drew reproach from Republicans along with some of his fellow Democrats.
Sen. Catherine Cortez Masto, D-Nev., said the loan cancellation “doesn’t address the root problems that make college unaffordable.”
Instead she called for expanded Pell Grants reserved for low-income students, and targeted forgiveness for borrowers in need. Other critics included Sen. Michael Bennet, D-Colo., who said the forgiveness should have been joined by action to address the “absurd” cost of college.
“We cannot continue to trap another generation of Americans in this cruel cycle,” Bennet said.
The issue is top of mind for 17-year-old Ariel Wolfe. The high-school senior in Borden, Indiana, has older siblings who qualify for forgiveness, but she won’t.
Wolfe has saved about $2,000 for college and hopes to avoid loans, but she doesn’t know if she can.
She wishes Biden’s debt plan, or something like it, would be available to her and her peers, saying it would be “an incentive to have more people go to college.”
In Olathe, Kansas, high-school senior Natalie Ren said it’s frustrating that today’s college students will get relief but her class, less than a year away from college, won’t.
“So to me, it’s just like, Well, why are they getting the $10,000 taken off of their student loan debt?” said Ren, 17. “Meanwhile, we’re still going to have to take on that full responsibility.”
There’s no doubt that Biden’s debt forgiveness plan has a big upside for many Americans, if it survives the court challenges that are likely coming. More than 20 million will be eligible to get their federal student debt erased entirely, and 23 million more could get it reduced, the administration said.
The plan cancels $10,000 per borrower and another $10,000 for Pell Grant recipients, for those who earn less than $125,000 a year or $250,000 per household.
Biden also extended a pandemic-era pause on federal student loan payments for what he called the “final time.” Payments are now expected to restart in January.
But without broader action, the nation’s federal student loan debt will return to today’s levels — $1.6 trillion — within five years of the cancellation, according to the Committee for a Responsible Federal Budget, a nonprofit that advocates for lower deficits.
“This doesn’t fundamentally solve the student debt problem,” said Marc Goldwein, the budget group’s senior policy director. “It will be a one-time clean slate that wipes a bunch of people off the rolls. But they’re just going to be replaced by new borrowers.”
It also creates an expectation that future presidents may forgive some share of student debt, which could make borrowers feel safer taking on debt and in turn encourage colleges to raise prices further, Goldwein said.
“This has the potential to worsen college affordability,” he said.