Professional Documents
Culture Documents
Proposal
Proposal
Jennifer Newhouse
English 112
20 November 2021
Student Loan Debt has been an ongoing issue for centuries and many citizens both young
and old still struggle to repay their debt even after years of continuous payment. Student Loans
have caused mass poverty nationwide and left students of all ages in crippling debt for most of
their lives. As a result, the reason the United States Government should intervene and begin
forgiving student loan debt because it stunts economic growth, prevents extra spending on
essentials such as houses, cars, etc., and it would have a meaningful anti-poverty effect in the
economy.
The image above provided by educationdata.org demonstrates how the Student Loan
Crisis has impacted the economy for decades now and has since left many students in crippling
debt that must be paid over a majority of their lives. According to the Federal Reserve forty-three
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percent of all adults who attended college has student loan debt (Tritina). After the 2008
recession student loan debt has skyrocketed reaching one-point-seven trillion dollars. According
to an article found in the CQ Researcher that is discussing the issue of higher education, “Cuts in
state higher-education funding have led public colleges and universities to sharply raise tuition
and fees, which in turn has helped push student debt to more than $1.5 trillion and put college
out of reach for millions.”(Greenblatt) This is troubling due to education costs continue to rise
while society’s wages and incomes have remained the same over time. Loans have affected
many students in various ways and restricts most from achieving some pretty large goals in life.
Students who are in loan debt have little to no breathing room or extra spending when regarding
nonessentials such as travelling and entertainment, which can be a major problem sometimes.
Loans also have not only just affected the younger students, they have affected students of all
ages and a majority of students struggle to maintain payments due to COVID 19 and the current
economic recession.
Regarding the crisis of Student Loan Debt, although it is very troubling, there are several
possible solutions to forgiving debt in general. The first option, sponsored by Senator Elizabeth
Warren, is the Loan Forgiveness Act, which proposes to tie interest rates to the federal reserve
discount window rate. Students are currently paying nine times higher than the banks are able to
borrow for (Roseth). This plan will also offer its targeted audience a full loan repayment plan,
which limits the payment on student loans to ten percent of discretionary income. To even
further these mentioned benefits, the Loan Forgiveness Act would allow students a year to
convert their private loans into federal loans if they qualify. Now, the next possible solution
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regarding the forgiveness of loan debt would be the idea of Free College. According to an 2016
A majority of college graduates are leaving school owing more than $25,000, and nearly 7 million have
defaulted on their student loans. Student debt nationwide totals almost $1.3 trillion — up 350 percent since
2005. Many experts say the rise is due partly to growth in enrollment, expanded eligibility for federal loans
and predatory lending. But others say student debt is growing mainly because of skyrocketing tuition.
Officials at public colleges blame tuition hikes on declining state support, which fell by about 20 percent
Due to ongoing crisis, many have began debating whether or not college should be free and
without tuition. However, this was truly talked about and brought to a major light when Senator
Bernie Sanders had made it apart of his campaign running for president. This idea offers free
tuition at public colleges and universities while eliminating the governments profit off of loans
(Roseth). This concept would also provide students with low income to be able to cover rooms,
books, board, and living expenses. With free college students nationwide would be able to
pursue their dreams without the limitations of crippling debt from the loans affecting them for
countless years.
Although Loan Debt has been an ongoing issue for decades, there would be many
positives of forgiveness if the government decides to do so. Some of these positives would
economic growth. Speaking of Expense availability, this would allow students to possibly afford
major purchases such ass houses and other major purchases that would otherwise be questionable
with the continuous payment of loans. If most of these payments were ceased overnight, students
may actually have the freedom of paying for nonessentials. With these positive outlooks of loan
forgiveness in mind, the cancellation of these loan would also encourage an antipoverty mindset,
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which without the burden of loans, students would have the option to move forward with life
changing decisions like starting a family or etc. This mindset or social construct would allow
lower income students to thrive in society without the constant anxiety of paying off loan debt.
Another positive about loan forgiveness would be the surplus of economic growth nationwide.
Cancellation of these student loans would offer a powerful stimulus effect by boosting Gross
Domestic Product (GDP) and give rise to one-point-five million job openings for the economy
states that the United States real GDP could be boosted by eighty-six billion to one-hundred-six
However, with many benefiting factors of forgiving student loans, there are also other
arguments that showcase the downsides to forgiveness. Although Loan Forgiveness is a major
plus one of the couple downsides to this act would be increased tax spending resulting in society
maybe having to pay off debt by paying “Income” taxes. This would give rise to the possibly
serious issue that the cancelled debt would turn into a taxable event, causing students to owe a
massive amount of tax that if not paid all at once, could lead to serious penalties in their futures.
The other downside to the government forgiving student loans is that it benefits students with
higher incomes because any forgiveness policy would give a majority of money to upper income
individuals. Students who have an upper class standing use the same rate as those classified in
low income standing meaning that students who would normally take out loans twice the value
would have it all returned thus keeping the given money in a metaphorical pool.
In conclusion, the reasons the government should help with the overall cancellation of
student loan debt will benefit the economy by increasing economic growth, allowing students the
freedom to purchase nonessential goods such as traveling, and forgiveness would encourage an
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antipoverty economy nationwide. Although there are several downsides to the governments
involvement in the forgiveness of loans, the positive impact outweighs said negative impacts
mentioned before. With that being said, many students across the nation, especially in lower
income standings, would benefit greatly with this cancellation of debt giving rise to more
available jobs and an economic surplus causing the nation to grow exponentially. Overall, Loan
Debt has been a constant issue for many students for decades and it is time for the government to
save those who are drowning in crippling debt to pursue their ambitious dreams and relieve the
Works Cited:
1. “Student Loan Debt Forgiveness & Elimination - Top 4 Pros and Cons.” ProCon.org, 12
discharge-in-bankruptcy-top-3-pros-cons/
2. Banerjee, Asha. “Ten Reasons to Cancel Student Loan Debt - Ed.” Ten Reasons To
3. Tretina, Kat. “Mass Student Loan Forgiveness Pros, Cons, & Economic Impact.”
forgiveness-would-impact-the-economy/
4. Roseth, Bob. “Student Debt Crisis and Possible Solutions.” UW Retirement Association,
possible-solutions/
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2018, https://library.cqpress.com/cqresearcher/document.php?
id=cqresrre2018102600&type=hitlist&num=6
https://library.cqpress.com/cqresearcher/document.php?id=cqresrre2016111800
7. Hanson, Melanie. “Student Loan Debt Statistics [2021]: Average + Total Debt.”
Education Data Initiative, 17 Nov. 2021, https://educationdata.org/student-loan-debt-
statistics