Student loan debt has ballooned into a pressing economic and social issue in the United States affecting millions of borrowers and hindering economic mobility. The Federal Reserve reported in 2023 that outstanding student loan debt exceeded $1.7 trillion and impacted more than 45 million Americans. The burden extends far beyond individual households, influencing broader economic health and societal well-being.
The current student loan crisis has deep roots in the rising costs of higher education and the burden placed on individuals seeking to improve their prospects through education. According to 2013 research by Susan Dynarski and Judith Scott-Clayton, skyrocketing tuition fees coupled with stagnant wage growth have made it increasingly challenging for students to finance their education without resorting to loans. Consequently, many graduates find themselves entering the workforce burdened with substantial debt, limiting their ability to invest in homes, start businesses or save for retirement.
Critics of government intervention in student loan debt argue against moral hazard, asserting that forgiving loans would incentivize future borrowers to take on excessive debt without consequences. However, research suggests that student loan forgiveness can have positive economic effects, stimulating consumer spending and boosting economic growth. A 2017 study by Marshall Steinbaum and Kavya Vaghul found that canceling student debt would lead to an increase in GDP and create more than 1 million jobs over a decade.
Moreover, addressing student loan debt aligns with principles of social justice and economic equity. According to a 2017 study conducted by Mark Huelsman and Jason Delisle, students from low-income families, who are more likely to borrow to finance their education, are disproportionately burdened by student loan debt. By alleviating this burden, the government can promote greater equality of opportunity and ensure that higher education remains accessible to all, regardless of socioeconomic background.
In addition to forgiveness, policymakers should consider reforms to the student loan system to prevent future debt crises. This includes expanding access to income-driven repayment plans, which cap monthly payments based on borrowers’ income levels, thereby making loan repayment more manageable.
Critics of student loan forgiveness often raise concerns about the fiscal impact and fairness to taxpayers. However, according to Steinbaum and Vaghul, studies suggest that the economic benefits of forgiveness could outweigh the costs, particularly if targeted to those most in need. Furthermore, the federal government already bears significant costs associated with student loan defaults and income-driven repayment plans, underscoring the need for comprehensive reform.
In conclusion, the government plays a crucial role in addressing the student loan debt crisis through a combination of forgiveness, reform and equitable policy measures. By tackling this issue head-on, policymakers can promote economic growth, reduce inequality and reaffirm higher education as a pathway to prosperity for all Americans. This action should include exploring avenues for widespread forgiveness, implementing fairer repayment options and ensuring that higher education remains accessible and affordable for all. By doing so, we not only fulfill a moral obligation to our citizens but also lay the foundation for a more equitable and prosperous society.
Darry Powell-Young, Ph.D., is a faculty member in the Department of Political Science, History and International Studies at Hampton University. He holds a doctorate in political science, with specializations in urban politics, public policy and public administration, from Wayne State University in Detroit; a dual master of public administration and public policy from Roosevelt University in Chicago; and a master of arts in political science from Wayne State.
