The U.S. student debt crisis has reached staggering proportions, with over 45 million borrowers owing a collective $1.7 trillion in student loans. The average student loan debt per borrower is over $37,000, a burden that weighs heavily on many graduates for decades after college. The recent announcement by Vice President Kamala Harris of $5.8 billion in student loan forgiveness for 560,000 former Corinthian Colleges students provides some relief but also highlights the need for more widespread action to address the student debt crisis.
Corinthian Colleges was a for-profit college chain that engaged in deceptive and predatory practices, misleading students about job prospects and program quality. As California attorney general, Vice President Harris sued Corinthian and won a $1.2 billion judgment against the company for false advertising. Now as vice president, Harris announced that the federal government will automatically forgive all remaining federal student loan debt for former Corinthian students, totaling $5.8 billion.
While this loan forgiveness will provide life-changing relief for tens of thousands of borrowers victimized by Corinthian’s practices, it only helps a small fraction of the millions struggling with student debt. Many argue that broader loan forgiveness is needed to truly address the student debt crisis and help stimulate the economy. Proposals include forgiving $10,000 or $50,000 in student loans per borrower, or even canceling all federal student debt.
Supporters of broader loan forgiveness point to the crushing impact of student debt on borrowers’ lives. Many graduates are unable to buy homes, start businesses, or save for retirement due to their loan payments. The debt disproportionately impacts minority communities and low-income students who took on the most loans. Loan forgiveness could help boost economic mobility, entrepreneurship, homeownership and consumer spending.
Critics argue that broad loan forgiveness is unfair to those who already paid off their loans or chose not to take any. There are also concerns about the potential costs, though some economists believe the economic stimulus could offset much of the expense. There are also questions about how to structure any loan forgiveness to target relief at those who need it most.
While the Biden administration has provided some targeted student loan relief, it has been hesitant to embrace broad-based cancellation. The Corinthian loan discharge shows that the government has the power to provide meaningful relief, but more will likely be needed to truly address the student debt crisis. The announcement provides an opportunity to renew the debate on how to structure and fund broader loan forgiveness that could help lift the burden of debt from millions of student loan borrowers across the country.
In summary, Vice President Harris’ announcement of $5.8 billion in loan forgiveness for former Corinthian College students is a step in the right direction but also highlights the need for a more comprehensive solution to the wider student debt crisis. Targeted relief for victims of predatory colleges is justified, but many argue that broader loan forgiveness is required to truly provide relief commensurate with the scale of the $1.7 trillion student debt problem and its impact on borrowers, the economy and society as a whole.