The Wall_Spring 2023_Issue 9

Student loans allow students to pay for their studies by giving them access to funds with a low monthly repayment. It is estimated that almost £20 billion is loaned to over 1.5 million students per year.The reason that they are so beneficial is that they allow students to pay for their tuition and the cost of living with low interest rates and income-driven repayment options. The entire concept seems so simple and organised, take out a loan, get a job and slowly pay it back over years. What happens when, even years after graduation, your income is insufficient to pay off your loan? By Nov. 2021, the Education Data Initiative estimated 43.2 million student borrowers owed an average of £33,883 each.This is where the idea of student loan debt elimination comes in. If, after a specified period, you can provide evidence of an inability to pay-off the balance on your student loan, this scheme allows for any further payments to be forgiven. Student loan debt is a global issue and, according to the Federal Reserve, in December 2020,Americans owed a collective $1.71 trillion in student loan debt. Student loan debt is slowing the national economy. Forgiveness would boost the economy, benefiting everyone. Imagine; a student is struggling in the world of work, adapting to the responsibility of financial independence. They have the stress of cost of living to cope with and on top of that the burden of a huge debt to repay.What if they can never repay it? The students will become overly conscious about spending money Evelina Kitsantas, (she/her), LVI, debates whether it’s time to remove the expiry date on student loans.

on anything other than necessities and will, instead, save money to help decrease their huge debt. For those 43.2 million students owing over £30,000, whose average income is £31,400, it would take over ten years to repay their debt, at a rate of 10% of gross income, per annum. Underspending by these indebted groups inevitably slows the economy. Fewer people spend, which has inevitable consequences so far as businesses and employment are concerned.This, too, has an impact upon the labour market, leading to a spiral of decline which impacts upon the economy.The Federal Reserve Bank found “a significant and economically meaningful negative correlation,” between student loan debt and the falling rates of new small businesses.This concept makes it clear that student loan debt forgiveness would benefit the economy and therefore benefit all. Is Student Loan Forgiveness an abuse of the loan system? It can be argued that people must be held responsible for their personal economic choices and that taking out a loan is a choice, and personal responsibility. Many

would also agree that students should not be supported by the taxpayer. 42% of UK graduates leave university with no student debt, so is it fair to offer relief to people who have over-stretched their financial capabilities to go to university, whilst those who do not have loans may still struggle financially? This abuse of the system may also encourage universities to increase their tuition fees. Making it easier to discharge loans would give people an incentive to take out loans with no intention of paying them back, or to borrow more than they need. If universities know that the government may forgive the cost of student education, they might feel less obliged to keep costs of tuition down or even raise them as an opportunity, knowing students will still be willing to pay for it. There are several other arguments against student loan debt forgiveness; the idea that discharging student loan debt would only be a temporary bandage for the much larger problem of inflated student costs. However, debt forgiveness has many positive benefits both in terms of the economy and the future lives of the individuals concerned.

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