Is Student Debt Forgiveness Fair? 5 Experts Weigh In

On the campaign trial, Joe Biden repeatedly pledged to take action to cancel at least $10,000 of student debt per borrower.

But frustration grew as his administration failed to take immediate action to ease the financial burden on tens of millions of Americans—and progressive Democrats and other advocates called for Biden to cancel at least $50,000 of student debt per borrower.

The Washington Post on Friday reported that the Biden administration's current plan is to cancel $10,000 in student debt per borrower, but limit the relief based on income.

The latest plan calls for limiting debt forgiveness to those who earned less than $150,000 in the previous year, and $300,000 for married couples, The Post reported, citing people familiar with the discussions.

Biden had hoped to make an announcement at the weekend, according to the newspaper, but the mass shooting at an elementary school in Uvalde, Texas, forced the White House to change its timing.

And it isn't known whether the administration will require federal student loan payments to resume at the end of August when the current moratorium is scheduled to expire. The White House has been contacted for comment.

As Americans await an announcement that could ease a significant financial burden for many, Newsweek asked several experts: Is student loan debt forgiveness fair?

Diana Furchtgott-Roth, adjunct professor of economics at George Washington University and former chief economist for the Department of Labor

"The fundamental unfairness is that the government makes unconstrained large loans to students who will not be able to pay back the money. Schools know this, and hike tuition. Graduates should sign up for an Education Department repayment program, pay a low share of their income for 10 years, and qualify for total loan forgiveness if they choose certain jobs.

"Forgiving student loans is unfair to students who have paid off their loans; unfair to students who have chosen less expensive community college options; unfair to taxpayers whose dollars are paying off the loans and who have no college education; and it will not rescue students from large amounts of debt."

Jason Furman, Harvard economist and top economic adviser during the Obama administration

"The perpetual deferral of interest on student loans is just about the worst policy. It is costly, unjustified, and has added to inflation.

"Some targeted forgiveness of student loans while resuming interest payments for everyone else would be a less bad policy that would at least help ensure that the biggest beneficiaries of college and graduate school are paying the cost of the likely very beneficial investment they made in higher education."

Miles Kimball, professor of economics at the University of Colorado

"Most Americans would view blanket student loan forgiveness as unfair to those who sacrificed to pay off their loans. And the vast majority of college students come from the upper half of the income distribution. We already have a system for loan forgiveness for those who are in dire financial trouble: it is called bankruptcy court. We should make student loans eligible to be discharged or modified in bankruptcy on the same basis as other loans. As it is now, they can't be discharged in bankruptcy.

"Part of the problem students have in paying off loans is not the loans themselves, or even the high cost of college more generally, but that often students aren't getting a good education, or aren't given a true picture of their financial prospects after different majors. Colleges and universities need to have their feet held to the fire to collect data and do honest reporting about the quality of their education and the financial prospects of students who follow different tracks."

David McClough, professor of economics at Ohio Northern University's James F. Dicke College of Business Administration

"Debt forgiveness is not fair, but more importantly, it is bad policy. It distorts incentives and encourages behavior that contributed to the "problem" that it seeks to address. The policy is pure political opportunism that is destined worsen the situation.

"It is not fair to the generations of students that borrowed and repaid. It is not fair to the future generations that will pay the interest on the debt in perpetuity who derive no benefit. It is not fair to the students who will borrow even more with the expectation of forgiveness in the future.

"Studies show that, on average, graduates earn more. A college education does not guarantee that all people will earn more. Government involvement has encouraged many to borrow to attend college despite limited interest in educational experiences. Expanding government participation will worsen the situation as more students borrow even more to finance the higher cost of college that is inevitable when demand increases. The most insidious part of the proposal is how the effects will harm those most vulnerable the most with minimal benefit to others individually or society as a whole."

Rebecca Neumann, professor of economics at the University of Wisconsin-Milwaukee

"The question of whether student loan forgiveness is fair is a political hot button topic that cannot have a single answer—it depends on where individuals believe our tax dollars should be going.

"I worry about the incentives of simply wiping out a certain amount of student loan debt across the board. Students sign contracts to take out loans to further their education. Simply eliminating a particular balance can be seen by some as unfairly advantaging those who have gone to college at the expense of those who have not.

"Programs to eliminate student loan debt for those that went to for-profit institutions that were dubious may be an appropriate use of taxpayer funding that can level the playing field. Eliminating a flat amount of undergraduate student loan debt may also be a short-term boost that allows these students to focus on other current spending or to save for the future. But this also sends a signal to future students that they could take on more debt with the expectation that those amounts may be eliminated in the future."

Student loan borrowers gather near White House
Student loan borrowers gather near the White House to tell President Biden to cancel student debt on May 12, 2020 in Washington, DC. Joe Biden may now be poised to act. Paul Morigi/Getty Images for We, The 45 Million