After yesterday’s article indicated that there might be increased pressure from Democrats to get President Biden to cancel some of all of the outstanding student loan debt across the country, a published report concluded that the success of the economy in the two years since student loan payments were paused is proof that the economy is “more than fine” without them.
Not having to pay student loans has given people more flexibility with which to start side hustles or to quit their jobs in search of better ones, according to economists and professors who were quoted in the article.
Individuals with outstanding federal student loans were told to stop making payments when the COVID-19 pandemic hit the United States in March 2020. The federal government was aiming to restart payments on February 1, but announced in December that it was pushing that back 90 days. Extending the moratorium is helping 41 million individuals save $5 billion every month by not having to make student loan payments, according to the Department of Education.
“If we cancel student debt, what that really means is the federal government is choosing not to collect payments from debtors on the debt that’s already issued,” said Marshall Steinbaum, senior fellow at the Jain Family Institute and economics professor at the University of Utah. “Can the federal government afford that reduction in revenue of, say, $100 billion a year or some number like that every year, indefinitely? I think there’s no doubt the answer to that question is yes.”
While critics of the idea say that a low unemployment rate and the regressive nature of debt cancellation — it tends to benefit wealthier individuals more — are reasons not to cancel student loan debt, there is anecdotal evidence to suggest that not having to repay their student loans is allowing people to put that money to good use. Data suggests that carrying student loan debt makes people less interested in trying to buy a house.
Derrick Johnson, the President of the NAACP, had an interesting take on the debate, saying, “If you can afford to pause student loan payments over and over again, you can afford to cancel it.”
