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Student Debt: Forgiven, For Now (Editorial)

2 min read

Some 43 million Americans — including 125,000 Arkansans — could see their student loan debt reduced, or in some cases eliminated, under President Joe Biden’s historic loan forgiveness plan announced Wednesday.

Biden’s plan will erase $10,000 in federal student loan debt for individuals with incomes below $125,000 a year, or households that earn less than $250,000. He will also cancel $10,000 more for those who received federal Pell Grants to attend college.

The Democrat’s plan drew criticism from all sides. There are Democrats like U.S. Sen. Elizabeth Warren of Massachusetts who think it doesn’t go far enough; she had urged Biden to forgive up to $50,000 a person. And there are Republicans like U.S. Sen. Tom Cotton of Arkansas who question the basic fairness of the idea; he called the plan “a bailout” paid for by Americans who never went to college or who “responsibly paid off their debts.”

We’re critical on two fronts: 

First, Biden’s one-time debt cancellation does nothing to address the skyrocketing costs of higher education, costs that prompt millions of students to take out expensive loans that haunt them well into their careers. U.S. Sen. Michael Bennet, D-Colo., put it this way: “… We need to reform the system that got us here in the first place with solutions to bring down the absurd cost of college. We cannot continue to trap another generation of Americans in this cruel cycle.”

Second, we’d like to see troubled borrowers be able to discharge their student loan debt in bankruptcy court, something that, in all but the most extreme of cases, is prohibited by law. No one wants to file bankruptcy, but bankruptcy court provides a venue to orderly dispense debt and provide the best possible outcome for creditors. Student loans should be part of that process.

Biden’s plan will provide a significant boost to some Americans over the next year. But without long-lasting solutions, student loan debt will continue to accrue and hold too many of us back.

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