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2020 has been difficult for everyone on a financial level. Businesses have closed, millions of people have lost their jobs, and consumer debt is shooting up. People are struggling just to put food on the table.
Unfortunately, this is all in addition to some serious systemic debt issues in America. Most Americans were already in debt, and now simply cannot pay off these debts. This is especially true for the tens of millions of people with student debt. A full 15% of the population is currently paying off student loans.
In addition to the stimulus packages already provided by the government in 2020, a new package is currently being debated. House Democrats are trying to push through student loan forgiveness as part of this new package.
But are graduates better off with a package that includes student loan forgiveness or should they be hoping for a regular stimulus package?
Here are the things to consider in deciding stimulus package vs student loan forgiveness.
Is it necessary?
Many people are asking whether student loan forgiveness is necessary right now. The reality is that any stimulus package will put a hold on payments through the crisis. Furthermore, these loans won’t garner interest during this time. There is also the argument that graduates are in a better position to earn money.
On the other hand, student loans are seen as one of the biggest obstacles to financial freedom even in normal times. Many people pay student loans into their late thirties. Plenty of individuals and politicians have been arguing for student loan forgiveness (and subsidization) for years.
Nonetheless, student loan forgiveness right now is not going to make the lives of average Americans easier through the crisis, considering the likelihood that payments will continue to be put on hold.
And there are reasons student loan forgiveness might not be attractive to those with student loans right now.
The cost
Estimates are that student loan forgiveness would cost the government $450 billion. This is money that could, at the moment, be used for further stimulus checks. The whole country is struggling at the moment, not just the 15% of people who have student loans.
Of course, it is not a case of one or the other here. The Heroes act being pushed by Democrats aims to provide student loan forgiveness and other benefits in addition to basic stimulus checks. They are advocating for a $3.4 trillion package in contrast to the $1 trillion to 1.5 trillion Republicans are proposing.
The Heroes act is not all about student forgiveness, either. There are plenty of other benefits being promised, including help with health care during the crisis.
The conclusion?
Ultimately, student loan forgiveness will be a relief to anyone with student loan debt. That does not necessarily mean it is a good idea. But whether you think it is a good idea or not largely depends on your economic opinions.
It’s impossible to say just how this next package will impact the average Americans, especially considering there is no end in sight to the crisis. Hopefully, everyone will get the relief they need soon.
