Democracy cannot succeed unless those who express their choice are prepared to choose wisely. The real safeguard of democracy, therefore, is education.
Franklin D. Roosevelt
Last week, President Biden announced that federal student loan borrowers will be able to apply for student debt cancellation this fall. Biden said he would cancel up to $10,000 in federal student loan debt for borrowers who earn less than $125,000 per year, (or less than $250,000 for married couples), those individuals who received Pell Grants, and those lower-income students who received federal could see up to $20,000 in loan forgiveness.
I have two grown children who are still paying off college loans, and both make well under $125K per year. They are thrilled with loan forgiveness (and so am I). Even with college degrees, my two daughters essentially live paycheck to paycheck. Their income barely covers the cost of rent, utilities, car insurance, and health insurance premiums, not to mention groceries and gas. As with many young people today, their saving power is little to none, so student loan forgiveness is a huge thing for them.
My daughters received generous scholarships and grants, help from mom and dad, and worked various jobs to help pay for school. However, the funds were never enough to cover rising tuition costs, so they turned to low-interest federal student loan programs and Pell grants.
As a boomer, I took out a few federal loans, but my debt pales against those of today’s graduates. I’ve worked with many young professionals who are saddled with debt from $100-$200K, yet making no more than $60K per year.
Today, around 44 million Americans owe a total of $1.7 trillion for their education. Since 2006, the total national student loan debt balance has increased by 248.19%, and since 2000, the federal student loan debt balance has increased by 583.84%. Student loans are the second largest slice of household debt after mortgages, and bigger than credit card debt.
How could someone be saddled with six-figure student debt for an undergraduate or graduate degree?
There are several reasons. First, tuition costs have more than doubled in the past ten years at both public and private colleges. Although several government programs such as the GI Bill and the Higher Education Act of 1965 have made it easier for students to pay for college, over the years, deep cuts in state funding for higher education have led to significant tuition increases and put the costs of college onto students.
Just a few decades ago, tuition provided about a quarter of school revenue and state and local governments picked up the rest of the tab. Today, tuition accounts for half of public college revenue, while state and local governments provide the other half.
Second, more people are attending college now, and third, the federal government has changed the rules to make loans cheaper and more broadly available to borrowers. According to the Brookings Institute, borrowing for for-profit schools has increased, as well as borrowing for graduate schools. Also, parents have borrowed more to send their kids to school: The average annual borrowing by parents has more than tripled over the last 25 years.
Many have said Biden’s program is not enough, some say it’s too much and others say it’s unfair. However, it is a start, and the key to a successful and functioning democracy is an educated electorate.