Views expressed in opinion columns are the author’s own.
All this talk about Biden’s plan to reduce the federal student loan debt has me thinking about how we can attack this crisis before it turns into a problem we’re unable to handle.
One thing we should start with is making all student loans subsidized loans.
A subsidized loan is one that the U.S. Department of Education pays interest on while a student is in college and up to the first six months after they’ve graduated. This six-month grace period is helpful because it gives time for recently graduated students to find their footing and make a plan for how they will be able to pay off the loans they’ve borrowed.
This type of grace period should be offered to everyone. Unfortunately, those who only have the option to take out an unsubsidized loan are not given these niceties. With an unsubsidized loan, the borrower will start to be charged for interest the second they take the loan out — which is problematic.
The reason a person takes out a loan in the first place is because they do not have the financial ability to pay for the college education they are working toward achieving. It’s not fair that borrowers are expected to pay interest while still in college, and it’s not fair that they are charged for interest when they don’t yet have a full time job that would allow them to pay their loans.
And if a student pursues graduate school, it will be even harder to pay their loans during all their years of schooling. More schooling will lead to loans accumulating over time, potentially turning into astronomical amounts that might end up being too much to handle.
This is a basic concept to understand. Asking someone to do something they’re unable to do and when they fail to do it, adding more money to their pile, is just unethical.
Federal Student Aid decides who qualifies for each type of loan based on financial need. Though this seems fair at first glance, it actually just screws over the middle class. The middle class doesn’t get a large enough income to qualify for subsidized loans, but many are still not able to comfortably pay the interest rates on unsubsidized loans. Getting rid of unsubsidized loans would be of great help to the middle class.
If the government does get rid of unsubsidized loans, that would mean the education department would have to make up the funds to pay for a lot more interest. And although some might argue this would be a terrible use of money, it is cheaper to pay some of the interest on these loans now than it would be to give up to $20,000 to up to 40 million people, which is one of the plans in President Joe Biden’s student debt relief initiative.
According to the education department, Biden’s plan would cost $379 billion over 30 years. The average amount of federal debt per borrower is $37,574. And the interest rate for unsubsidized undergraduate loans is 4.99 percent. So the average interest per year per person would be $1,875. There are about 34 million people who take out direct federal loans, so the total amount the government would be responsible for per year for interest would be about $64 billion.
I’m not saying the people who are victims of the student loan debt crisis don’t matter. And I’m not saying Biden’s student debt relief is useless. The president’s plan will help immensely and the Supreme Court should approve Biden’s plan, but it will be more beneficial in the long run to attack the fundamental issues and make it easier for students to pay off their own debt before it gets out of hand. Helping the current students would be amazing, but it would also leave those in the future helpless, and the best way to make sure this problem doesn’t keep nagging the U.S. is to focus more on preventing more people from becoming victims to the crisis.
Biden’s plan would only help current Americans in debt without alleviating this problem for future students. Subsidizing all loans considers students in the future. Biden’s plan would only help those approved for his debt relief program. Future students will still suffer if they aren’t approved for a government relief program like Biden’s. Subsidizing all loans helps address the root issue.
The least the federal government can do for students is give us time to prepare for the war of paying off student loan debt. Making us pay off our loans while we’re still in college is like throwing a soldier into a battle without any training — completely useless at best and very harmful at worst.
A great way to fix current problems is by working on preventative measures to keep the problem from getting any bigger and to lessen the severity of the problem in the future. Making all student loans subsidized is a preventative measure we need to take to thoroughly address the student debt crisis.
Medhanit Desta is a freshman engineering major. She can be reached at email@example.com.