As of the second quarter of 2018, the student loan debt has risen again. This time it has reached $1.53 trillion with no slow down in sight. It’s on pace to break the $1.6 trillion mark by next year. And rather than standing behind students and offering a means of protection, President Trump is against student loan forgiveness.
That’s right, the president has no plans for forgiving any student loan debt. “We would like people to repay their debts,” Director of the Office of Management and Budget Mick Mulvaney said. “We think that’s a fair thing to do.”
Yet, it’s no surprise to Mulvaney that student loan debt has risen to high. The federal government is the largest originator of these student loans. Why would the government give students a free pass when they will make money from these loans? That is, if you pay them back. They’ll make thousands on interest alone, per student.
When you consider there are 44 million Americans with student loan debt, that’s a lot of extra cheese. Of course, the government doesn’t want to spend a dime helping students. Nor do they want to just forgive the debt and miss out on a huge payday. According to Mulvaney, the government would rather educate young people when it comes to taking out loans.
“It’s like, look if you’re going to borrow this money make sure you’re using it to get an education that can get you a job that helps you pay it back,” said Mulvaney.
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Student Loan Debt is Destroying Lives
Federal Reserve Chairman Jerome Powell has a different view of student loan debt. He knows that this type of debt is derailing lives for millions of Americans. It’s this derailing that can impact the economy in more ways than one. In fact, NeighborWorks America has released a survey that indicates 59% of millennials know someone who put off buying a home.
Why did they put off buying a home? Because of their student loan debt. This extends into every other part of life. Millennials are delaying all sorts of life decisions because their debt is too high. Credit scores are dropping, hindering every aspect of a young person’s economic life. It can take anywhere between 10 and 25 years to pay back a student loan.
While Powell believes Congress should stand up and face the problem head-on, Mulvaney disagrees. Why should the government force taxpayers to pay for student loans people willingly apply for?
“Face it: If you’re borrowing money right now to go to school, you’re borrowing from the taxpayers,” he said. “And if you ask for loan forgiveness, what that really means is you want other taxpayers to give you money to go to school and that’s not part of our program.”
The Battle Between Democrats and Republicans
The current government doesn’t seem to want to help students overcome their debt. But, does Mulvaney have a point? Should taxpayers foot the bill and pay for other people’s student loan debt? The battle will continue to rage on between Democrats and Republicans. Many Democratic lawmakers, like Bernie Sanders, hopes to make college education free.
Some states, like New York, are already experimenting with free college options. Still, the federal budget $21 trillion in the hole. Should the government add another $1.53 trillion worth of debt to the deficit? It’s an expense that would assuredly raise taxes and take a massive bite out of economic growth.