Student loan forgiveness won’t solve the college debt problem

The Biden administration on Wednesday cancellation of student loan debt for hundreds of thousands of students who attended the now defunct for-profit university system, the Corinthian Colleges, while the president studies a broader student loan forgiveness for millions of borrowers.

The university chain collapsed in 2015 when Vice President Kamala Harris was Attorney General of the State of California and sued the company for misleading practices. Debt cancellation applies to everyone who attended Corinthian, and the relief will be automatic.

Most Americans admit some kind of forgiveness of loans for college students who also attended legitimate colleges and universities. Still others argue that a major reform is needed so that future generations do not end up also stopped by the loans they contracted to pursue university and postgraduate studies.

“If the cancellation is not accompanied by major systemic reforms, we will almost certainly get back to this past,” financial columnist Helaine Olen recently wrote in a Washington Post opinion piece. student loan debt “a hell of a problem.” “

Forgiveness is not a comprehensive solution to a problem that affects not only individual borrowers, but the economy in general, and only “lifts the bucket down the road,” Olen argued.

Instead, solutions should focus on why college is so expensive in the first place and how the U.S. can help make it more affordable.

Immediate relief for borrowers is necessary but not enough.

Why is college so expensive?

“If we don’t take this as a systemic problem, in terms of asking why college costs so much, what we can do to reduce the cost, and how we can manage these loans for people who need to pay for college, it’s almost certain that we will return to this step, there is no doubt, “Olen told CBS News.

Currently, more than 40 million Americans have a combined total of $ 1.7 trillion in student debt, a large enough amount to affect the U.S. economy as it forces debt holders to delay major purchases. and prevents them from fully contributing to the economy.

“That money comes from people’s salaries, many of which are starting to work,” Olen said.

People with student loan debt are also less likely to buy a home or start a small business, he added.

It even affects their decisions to raise families.

“All of this is costing the economy money,” Olen said. “This money is an investment not only in individual students, but in all of our economic futures.”