Breaking Down Student Loan Debt by Income
After reading this article, let us know if you support the plan to cancel $50,000 in student debt.
Senators Elizabeth Warren and Chuck Schumer are calling upon Biden to cancel $50k in federal student loan debt per borrower, costing roughly $1 trillion. This is no surprise as federal student loan debt is approaching a whopping $1.5 trillion, becoming the second largest source of consumer debt behind mortgages. Biden, alternatively, is pushing for a smaller loan cancelation of $10,000 per borrower, still costing roughly $370 billion. All debt forgiveness would apply to families who are earning less than $125,000.
Not only is there a LOT of debt, but tuition continues to rise as well. According to Business Insider, college tuition is up 439% from 1980. The average tuition in 1980 was around $9000, now, it's pushing $25,000. This increase in tuition isn't met by an increase in wages either, Forbes explains that wages have only increased by 0.3% since 1989.
Unfortunately, the disproportionate increase in student loans has also led families to borrow more money as well. Business Insider continues, that because of college tuition increases, families are borrowing 62% more than in 1980.
This is clearly an issue that needs to be remedied before student debt reaches its breaking point. However, let's take a look at Sen. Schumer and Sen. Warren's plan.
How does Student Loan Debt Break Down?
The majority of student loan debt is actually held by the upper middle class. According to the People's Policy Project, for every $3 in student loan debt held by the top 1/5 of income earners, the bottom 1/5 holds $1. In other terms, the top earners hold 60% of the student loan debt in the US. However, the Brookings Institute explains that the bottom 60% of households are only receiving 34% of the benefit.
This shows that students coming from higher earning families are borrowing more to have their students sent to school. Even further, students coming from wealthier background also tend to choose more expensive, private universities.
So what do you think? Is this plan fair for students? Should we be looking at if students are actively and aggressively trying to pay off their student debt, or enact blanket policies for everyone? Let us know.