Student loan forgiveness is completely unfair to these people

Student loan forgiveness is totally unfair to these student borrowers.

Here’s what you need to know — and what it means for your student loans.

Student loans

Cancellation of student loans will have clear winners and losers. If President Joe Biden proceeds with large-scale student loan forgiveness, the most likely beneficiaries could be federal borrowers earning up to $150,000 a year. The White House says the president hasn’t made a final decision on whether or not to forgive student loans, so that framework could change. That said, if there is a student loan forgiveness, here is who could be excluded. Simply put, canceling student loans will be completely unfair to these people.

1. People who don’t have a student loan

If you don’t have student loans, you might be wondering why the federal government would spend money to subsidize student borrowers. Without student loan debt, student loan forgiveness may not make sense. You may have a mortgage and wonder, “Will the government pay my mortgage?” For this group of Americans, you may also be wondering if large-scale student loan forgiveness is the best use of government money, especially in the run-up to a recession. Proponents of blanket student loan relief argue that this policy will stimulate the economy, increase home purchases and lead to the creation of new businesses.

2. People who never went to college

If you’ve never been to college, you might be wondering why you subsidize Americans who were lucky enough to go to college. For many, the large-scale cancellation of student loans looks like not only a distribution of wealth, but also a slap in the face to hard-working Americans who are also struggling financially. For others, they include targeted student loan forgiveness, including student loan forgiveness in exchange for government work. (Biden has forgiven over $17 billion in student loans using targeted student loan forgiveness). The latest student debt statistics show that 45 million student borrowers collectively owe $1.7 trillion in student debt. Since there are approximately 250 million American adults, this means that approximately 80% of borrowers do not have a student loan or have never had a student loan. Some Americans who hadn’t gone to college simply couldn’t afford it. Therefore, they see the general student loan forgiveness as a gift to the wealthiest Americans.

3. People who have paid off their student loans

If you’ve paid off your student loans, it must be extremely frustrating to learn that student loan debt could be forgiven. It’s like buying a Christmas gift only to find out later that you could have gotten that same gift at a huge discount. However, there are no returns, store credits or price matches. For Americans who have paid off their student loans, many have also struggled financially. They worked three jobs, sacrificed savings for retirement, didn’t buy a house and skipped vacations. They honored their financial commitments — even if they couldn’t “afford” to do so. Now these Americans are wondering if they will get a refund, credit or compensation. The short answer: Neither the president nor members of Congress have expressed any indication that former student borrowers will be compensated. So even if you paid off student loans last week and Biden announces student loan forgiveness next week, you’re out of luck.

4. People Who Chose Community College

Some Americans have chosen community college over more expensive public or private colleges and universities. Like many student borrowers, these community college students and graduates are struggling financially. While this latter group may not have significant student debt, they would also like financial relief. Had they known of the possibility of large-scale student loan forgiveness, they might have chosen to attend college or university for four years.

5. People with private student debt

If you have private student debt, you likely won’t qualify for Biden’s student loan forgiveness. Why? Student loan forgiveness will likely be limited to federal student loan debt held by the US Department of Education. This includes direct loans, for example, but will not include most FFELP or Perkins loans. Student borrowers with private student debt have also been unable to access temporary Covid-19 student loan relief, including the student loan payment pause. They also cannot access income-tested reimbursement plans through the federal government.

6. People with large student loan debt

If you have significant student loan debt, a large-scale student loan forgiveness might have minimal impact on your student loan balance. Biden has backed $10,000 in student loan forgiveness for student borrowers. Additionally, the president said he isn’t considering a plan to write off $50,000 in student loan debt. If you have a relatively low student loan balance, a $10,000 student loan forgiveness could eliminate most or all of your student loans. However, if you have $100,000 in student loan debt, then $10,000 in student loan forgiveness would have less impact. If these student borrowers are struggling financially, the best they can hope for might include a fresh start for their student loans.

7. Future student borrowers

Large-scale student loan cancellation could be unfair to future student borrowers. Why? First, Biden’s student loan forgiveness will likely be a one-time student loan forgiveness. Simply put, if you have student loan debt on the day student loans are forgiven, you’re in luck. If you borrow a student loan the next day, you are excluded from student loan forgiveness. Second, prospective student borrowers who expect to get student loan forgiveness but won’t are also at risk. These student borrowers can borrow more student loans and then hope that future policy makers will cancel student debt. However, if there is a large student loan forgiveness, there is no guarantee that there will be future student loan forgiveness.

Injustice is a term that comes up often in education, public policy and politics. Proponents also say student loans are unfair, trap young people, create disparities, limit financial freedom and are prohibitively expensive. After years of inaction, supporters say large-scale student loan cancellation is the single most important policy initiative Biden can implement at this time in history. Regardless of your position on student loan forgiveness, it is imperative to know that temporary student loan relief will end on August 31, 2022. You should be prepared to start student loan payments again. Here are some helpful ways to save money and pay off student loans faster:

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