“the Ethics Of Student Lending: Examining Industry Practices”

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“the Ethics Of Student Lending: Examining Industry Practices”

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American Voters’ Perceptions Of Student Loan Forgiveness

George Washington University student Kai Nielsen and other student loan activists hold a rally outside the White House a day after President Biden announced a plan to write off $10,000 student loan debt for those earning less than $125,000 a year in Washington DC. August 25, 2022. Photo by Craig Hudson for The Washington Post via Getty Images.

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President Joe Biden came up with an answer in late August – he would write off up to $20,000 of student debt for federal borrowers with incomes of less than $125,000. His announcement followed months of debate with lawmakers and supporters on both sides of the aisle. how much student debt to cancel and whether anything needs to be canceled at all.

On one side were Democratic lawmakers who said writing off student debt would benefit the economy, help narrow the racial wealth gap and allow borrowers to recover from the pandemic. But on the other side were Republican lawmakers who argued that a broad write-off of student debt would harm taxpayers, benefit the wealthy, and be an unfair policy since many Americans had already paid off the debt they had agreed to take on.

A Degree Or A Debt Sentence?

While two lawsuits have so far blocked loan forgiveness — his fate currently rests with the Supreme Court — Biden and his Department of Education have long argued that his policies are both legal and correct to help millions of low-income borrowers.

“Our student debt relief program will help borrowers most at risk of delinquency or default due to the pandemic get back on their feet,” Education Minister Miguel Cardona tweeted. “@POTUS and I will continue to fight attempts to deprive middle class families of the help they need and deserve.”

But the fairness argument persists. Senate Minority Leader Mitch McConnell said in August that Biden’s plan to write off student debt was “strikingly unfair.”

“President Biden’s student loan socialism is a slap in the face for every family that donated to save up for college, every graduate who paid off their debt, and every American who chose a particular career path or volunteered to serve in our military to avoid running into debt. ‘ McConnell said.

Student Loan Forgiveness Red Flags Scammers Don’t Want You To Know

Dr. Kate Padgett Walsh, an associate professor of philosophy at Iowa State University who studies the ethics of debt, told Insider that the fairness debate isn’t all that dry when it comes to student debt.

“They think about their own experiences, not what a 20-year-old is facing today,” Walsh said. “They think too narrowly about justice because we need to think about how students get into this position. And is it fair from the very beginning?

The difference between today and a few decades ago is that college is much more expensive, and if students want to graduate, they often have no choice but to take out a loan, Walsh said.

“This is starting to look like a pretty big exception to our usual rule of making people keep their promises,” Walsh said.

Who Benefits From Student Debt Cancellation?

“Usually the fact that when I promise something, it imposes an obligation on me as a person, as an honest person, to see it through. But it seems like a really exceptional case…these young people agree to something, yes, but they don’t really have many other options,” Walsh continued.

Over the past 20 years, tuition and fees at private universities have increased by 134%, while state tuition and fees have increased by 175% over the same time period, according to US News. Adjusted for inflation, going to school is simply more expensive today than it was when lawmakers like McConnell were graduating—when he attended the University of Louisville in 1964, an annual tuition there cost $330.

The state of the economy today is also different: the cost of living is rising, while wages remain the same. Signing on the dotted line when a student is 18 to take on debt is “not so much a promise as a forced move,” Walsh said, because paying full tuition without financial assistance is becoming increasingly unattainable.

When former President Lyndon B. Johnson signed the Higher Education Act of 1965 into law, his goal was to provide student loans to millions of Americans to give everyone an equal chance of achieving the American dream.

Will Student Loans Be Forgiven? The Moral Case For Debt Forgiveness

But as Insider previously reported, banks began raising student loan rates shortly after the legislation was passed, and the student loan industry grew rapidly, prioritizing profits to lenders at the expense of borrowers, contributing to the nation’s $1.7 trillion student debt crisis. sees today.

While Biden put student loan payments on hold for the duration of the pandemic and waived interest, many borrowers were trapped in a repayment cycle before COVID-19 because high interest rates kept them paying much more than they originally did. agreed to borrow.

“The structure itself is unfair,” Walsh said. “Funding for higher education is so disrupted right now that we need to think about these issues of fairness and fairness.”

“If we had a society where people don’t keep their promises, that’s bad for the society,” Walsh continued. “But if we look at this particular case, I think we’re at a point where it’s very clear that the way we fund higher education is not good for society.” She noted that the high cost of college education reduces incentives to research and study, causing long-term negative economic impacts.

The Ethics Of Student Debt Cancellation: Thinking Through Its Fairness

Student loan forgiveness is a short-term solution, Walsh said, but it’s not permanent, and to truly create a fairer education structure, the government needs to implement more sustainable fixes. Republican lawmakers opposed to student debt introduced legislation last year called the REAL Reform Act, which they say will help borrowers most in need by limiting borrowing and limiting interest accumulation.

But being more candid about the cost of college, as well as taking action such as increasing the maximum Pell Grant amount for low-income students and increasing public investment in public universities, will help prevent further increases in student debt.

“We need to not just stick to what we had and where things are, but what could we have? How could it be more fair?” Walsh said. “What would a world be like where we didn’t have to forgive student loans? And it would be a world where students would have more opportunities, and they would receive public support in trying to get an education and help become a more educated society. What, if anything, to do with Americans’ $1.6 trillion in federal student loan debt? Political debate has been fueled for years. But after a pandemic-era moratorium on student loan repayments that has already disrupted the status quo, talk of student debt relief has gained momentum. It now seems increasingly likely that US President Joe Biden will announce a plan to write off student loans this summer, according to the Wall Street Journal. Insiders say that under Biden’s most likely course of action, people with annual incomes below $125,000 will be eligible for a $10,000 deduction from their student loan balance.

Some argue that a $10,000 debt write-off is not enough. The US Department of Education estimates that even if this amount were forgiven, about 67% of the 45 million Americans with federal student loan debt would still owe money. Most of those who support debt relief also say it will only be effective when combined with a broader set of reforms around the cost and financing of higher education.

New Documents Undermine Supreme Court Student Debt Case

Meanwhile, opponents of debt relief cite a number of concerns, including not only economic but also ethical and moral considerations. “Writing off student debt would also be a flagrant injustice to Americans who have worked hard for years to pay off their loans,” Republican Senator John Thune of South Dakota told CBS News last month.

Another common stance is that it is wrong to use low-income and working-class tax dollars to bail out college graduates who are comparatively well off. Conservative politician J.D. Vance, who is running for the U.S. Senate from Ohio, referred to the idea when he called loan forgiveness “a huge windfall for the rich, for the highly educated, and, above all, for America’s corrupt university administrators.”

So is debt forgiveness fundamentally unfair—or is student loan debt in the first place unfair? Quartz looked at what

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