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Cedar Rapids, Iowa 52401
Student loan forgiveness is all the rage, as President Biden announced his Student Loan Forgiveness Plan on August 24. Unsurprisingly, such a plan for forgiveness has been a major point of contention among politicians and economists—despite the fact that a majority of Americans support forgiveness and the people who actually suffer from immense higher education debt are overwhelmingly in support of Biden’s plan, according to the think tank Data for Progress. As a result, Gov. Kim Reynolds and 22 other Republican governors wrote a letter to Biden on Monday, opposing the president’s plan on a fundamental level, claiming it forces “American taxpayers to pay off the student loan debt of an elite few.”
Now, access to affordable higher education has been a problem in recent history, as tuition continues to soar alongside inflation—both concerns the aforementioned governors pointed out. But, Biden’s forgiveness plan is geared towards those who need relief the most: low- to middle-income borrowers who individually make less than $125,000 or have a household income less than $250,000. Not the elite few, as Reynolds and others claim. While student loan balances correlate positively with income in dollar terms statistically, that does not mean student loan forgiveness is regressive. In fact, “loan levels are growing rapidly, and student debt as a share of income is highest—and growing fastest—in the lowest-income areas,” according to research from the think tank Brookings Institution.
Over half of Iowa residents with student loan debt are under the age of 35, federal data shows. And while 13.6 percent of state residents have student loan debt, averaging out to $30,848 per borrower or $13.2 billion statewide, Iowa is the state with one of the lowest debts for student loans in the nation. For those low- to middle-income borrowers, a loan cancellation of up to $20,000 would put a big dent in their debt and alleviate stress and increase their ability to afford basic needs instead of living paycheck to paycheck.
Reynolds’ heart might be in the right place, as her and others’ claim that, “Borrowers with the most debt, such as $50,000 or more, almost exclusively have graduate degrees, meaning hourly workers will pay off the master’s and doctorate degrees of high salaried lawyers, doctors, and professors,” the governors said in the letter. “… Simply put, your plan rewards the rich and punishes the poor.” But, the facts are she’s only putting more students at risk of suffering from an unsustainable borrowing system in her opposition to the president’s forgiveness plan. This White House chart, which pulls data from the U.S. Department of Education, shows 87 percent of the debt cancellation benefits from Biden’s plan would go to those who make $75,000 or less each year, in addition to the $125,000 income cap, meaning the program will overwhelmingly help low- and middle-class Americans.
Opposing such a plan, as Reynolds has done, is disappointing, to say the least, and reflects where her priorities lie: preserving the status quo and enabling the vicious cycle of poverty. As young adults, Americans hear the only way to be successful and move up in life is higher education. For many, college is ridiculously expensive despite being one of the only options the average American can advance their future—hence student loans. In recent years, rising costs of tuition plus the societal push for education have left borrowers in a deeper hole than what they can reasonably pay off.
Combine student loan debt with skyrocketing inflation, and we have a recipe for a never ending struggle for low- to middle-income families who can barely keep their heads above water. And while inflation is one of the concerns Gov. Reynolds rightfully pointed out to POTUS, student loan forgiveness’ immediate impact will only have a small impact, percentage-point wise, on inflation, Forbes reports. What’s more: forgiveness is not going to generate large consumer spending, which could be a factor to inflated prices, as the net factor of repayment and forgiveness combined “is largely a wash” on inflation, tweeted Mark Zandi, chief economist for Moody’s Analytics.
As someone who does not have any student loan debt, this is not an issue that directly affects me, but it does affect a large portion of my fellow Iowans—and Americans at large. We have to take care of each other—look out for one another. Because if leaders like Reynolds keep pushing to enable a broken and unsustainable system, it will just be the people of this great state who suffer unnecessarily just because someone does not want to change the way things have been done traditionally.