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Josh Escamilla
Professor Lehar
English 1B
09 May 2022
Student Loan Forgiveness
In this day and age student debt has become a volatile subject ever since the forgiveness
of student loans and debt has surfaced into the media. The nation's total student debt is nearly
$1.75 trillion. Why can’t the nation just forgive these debts? Does abolosing these debts mean
that people will no longer ask for loans? Or does it help the economy? The nation can not just
forgive these debts because it is an abuse of the loan system, what about these people that made
them so special that their debt is being forgiven. Forgiving these debts does not mean people will
stop asking or applying for loans. Furthermore, people will probably ask for more loans since
they know that these loans can just be forgiven. The forgiveness of student loans does not help
the economy whatsoever, it will only increase the country’s total debt. The idea of forgiving
$1.75 trillion worth of student debt will bring chaos to the country and will horribly affect the
economy. Since there are about 250 million adults in the United States, forgiving student loans is
unjustifiable to the majority of adult Americans who have never had student debt because they
worked hard to avoid requesting loans in the first place, and to those that have already paid their
debts. The abolishment of the student loans will only increase taxes for the taxpayers since this is
where the money is gonna come. I will be creating a business letter about my stance on this
issue. My letter is the best way to get my message across since it will address the issue and help
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people understand why forgiving student debt is a regression instead of a progression in our
country. My goal is to persuade people that instead of asking for forgiveness on these loans they
should work hard and use the degree that they got using these loans to pay off their debts.
Forgiving student loans does not actually mean that it will be forgiven. The taxpayers are
going to be the ones that will pay off these debts. Bookings.edu claims, “For many years, federal
budget forecasters expected the student loan program to earn a profit—until recently. In its latest
estimates, the Congressional Budget Office expects the program to cost taxpayers $31 billion for
new loans issued over the next decades. And that figure uses an arcane and unrealistic
accounting method required by federal law. Using an accounting method that calculates the
subsidy to borrowers from getting loans from the government at rates well below those they’d be
charged in the private sector, the cost to taxpayers is $307 billion. And that largely excludes the
cumulative losses already anticipated on loans issued prior to 2019.” This illustrates the
taxpayers will be the ones that have to carry the burden of paying off the student debts.
Furthermore, this also proves that forgiving student loans does not earn any profit since the total
student loan debt is too vast. An article by newsnation argues, “Taxpayers would likely, in turn,
also feel some pressure depending on the amount of loans forgiven…. Taxpayers are already on
the hook when existing student loans default. The Bipartisan Policy Center released a 2021
report suggesting the cost to the average taxpayer would be exponentially higher over time than
the cost of existing defaults if widespread forgiveness is granted….Forgiving student loan debt
for 40,000 borrowers earlier this week has an estimated cost to taxpayers of $3 billion, according
to a Thursday statement from the House Budget Committee Republican Leader Jason Smith of
Missouri.” Considering that most taxpayers already do not want to pay taxes due to the high rate,
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this proves that even forgiving a small portion of the nation's total debt increases taxation.
Moreover, taxpayers have enough trouble with taxes already, they do not need a forgiveness
program that will only cause them more financial trouble. It is unjustifiable that the taxpayers
have to carry the burden of paying off the debts of college students especially if it was never
theirs.
College graduates are a typical group that we know that have high incomes. Forgiving
student loans does not aid anyone since most of the debts comes from the financially secured
college students and graduates. Procon.org asserts, “Moreover, as Adam Looney, PhD,
Nonresident Senior Fellow at the Brookings Institute, pointed out, student loan forgiveness only
benefits people who went to college: “More than 90 percent of children from the highest-income
families have attended college by age 22 versus 35 percent from the lowest-income families.
Workers with bachelor’s degrees earn about $500,000 more over the course of their careers than
individuals with high school diplomas That’s why about 34 percent of all student debt is owed by
borrowers in the top quartile of the income distribution and only 12 percent owed by the bottom
25 percent. Indeed, the majority of all student debt is owed by borrowers with graduate degrees.”
In other words most of the debts come from the people that are well off and have decided to get
degrees that are able to pay off their debts. Moreover, the abolishment of student debts only
benefits the people that are already well off or statistically projected to have greater income and
able to pay off these loans. Procon.org further argues, “People who borrowed for masters degrees
and PhDs hold 56% of student loan debt, according to Brookings Institute estimates. Holding a
masters or doctorate degree is also correlated to higher incomes. People with master’s degrees
earn about $2.7 million over a lifetime, more than twice what those with high school diplomas
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earn ($1.3 million). PhD holders earn $3.3 million more over a lifetime.” In other words the
group of people that are proven to be wealthy holds most of the debts. Furthermore, this group
are the major beneficiaries from abolishing student loans and are the ones that need it the least.
People that have masters and PhDs are at the top of the percentile and they hold most of the
debts which is why forging student loans will only benefit the group that is already affluent.
Some argue that college is too expensive and should not cost an arm and a leg. During a
debate about student loan forgiveness Robert Applebaum claims, “The Student Loan Forgiveness
Act of 2012 is not a free ride, nor is it a bailout. It’s a recognition that millions of Americans
have grossly overpaid for their educations, due in part to governmental interference in the
marketplace.” I disagree, forgiving student loans is a bailout and a free ride, especially the fact
that forgiving it once means it will be exploited again in the future and people will never pay
their debts off knowing that it can just be forgiven. Furthermore, this is not a recognition of
Americans overpaying for college since degrees that hold most of the debts are the prestigious
degrees that can easily pay off the loans. ProCon.org affirms, “Making it easier to discharge
loans would give people an incentive to take out loans with no intention of paying them back, or
to borrow more than they need. Which, in turn, could cause them to seek bankruptcy without
fully realizing the negative long-term consequences on their credit scores and other aspects of
their lives.” This conveys the idea of borrowing money knowing that you do not have to pay it
back, which can become a hazard since it will affect people's credit scores and their future lives.
This also indirectly will increase college tuition and people will just attend prestigious colleges
that are known to be expensive since it is essentially free due to not having any consequences on
borrowing money. An article by insidesources claims, “But loan forgiveness would affect only
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those who already have a college education; it would be of no assistance to those who haven’t
yet gone to school – unless the government guarantees that future loans will be forgiven as well.
That guarantee, however, would have many bad consequences. For example, it would likely
increase college tuitions. In fact, this is precisely what we’ve observed with current education
subsidies. As these subsidies increased demand for education, they pushed the price upward. In
essence, loan forgiveness would be one giant subsidy, creating perverse incentives for both
schools and students. If schools knew the government would forgive the cost of their students’
education, they’d face no incentive to cut costs to keep tuitions down. If students knew their
loans would disappear, why wouldn’t they attend more expensive private schools rather than
cheaper state schools? By forgiving loans, the government would encourage students to
undertake education that may be a poor investment because they would not face the
consequences of their choices.” This proves that forgiving student loans once means it will be
forgiven again in the future. Furthermore colleges will not think twice about cutting the tuition
knowing that the government will only abolish the loans and they will take all the profit.
Canceling student loan debt will create a moral hazard and an abuse to the loan system as it
encourages people to make poor decisions and have little to zero incentive of paying the loans
back.
All things considered, the business letter is the most efficient and effective way to reach
the leaders of our nation. The letter will be short and easy to read so people with any type of
educational background can understand my stance on the issue. The letter will be debunking the
main arguments on why people are pro student loan debt forgiveness. I desire to persuade the
masses that the proposal of abolishing 1.7 trillion worth of student debt is unjust to all adults in
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our country. Forgiving these loans will only destabilize the country and have disastrous
consequences for the economy. Lastly the main objective is to encourage people to use the
degrees that they obtained with these loans rather than appealing to loan forgiveness.
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Works Cited
Adam Looney, David Wessel, and Kadija Yilla “Who owes all that student debt? And who’d
benefit if it were forgiven” January 28, 2020
https://www.brookings.edu/policy2020/votervital/who-owes-all-that-student-debt-and-wh
od-benefit-if-it-were-forgiven/
Addy Bink, Nexstar Media Wire “Who pays for student loan forgiveness” April 24, 2022
https://www.newsnationnow.com/us-news/draft-who-pays-for-student-loan-forgiveness/
ProCon.org, "Student Loan Debt Forgiveness & Elimination – Top 4 Pros and Cons."
ProCon.org. 6 Apr. 2022,
www.procon.org/headlines/should-student-loan-debt-be-easier-to-discharge-in-bankruptc
y-top-3-pros-cons
Robert Applemaum, Founder, Forgivestudentloandebt.com, “Debate on student loan debt doesn’t
go far enough” May 8, 2012
https://thehill.com/blogs/congress-blog/education/113696-debate-on-student-loan-debt-do
esnt-go-far-enough/
Abigail Hall, “Don’t Forgive Us Our Debts: The Case Against Student Loan Forgiveness”
April 14, 2015
https://insidesources.com/dont-forgive-us-debts-case-student-loan-forgiveness/