Student loan forgiveness is a band-aid. What will really solve the problem?
When President Biden finally announced his student loan forgiveness plan, millions of borrowers breathed a sigh of relief. But while it's projected to wipe the slate clean for , it's a drop in the bucket for many others.
The student loan crisis has been a big talking point for the media and politicians over the last decade. As a result, today's students are desperate to avoid debt, even if it means not going to college.
"We have an incredibly important problem on how we pay for higher ed," said Katherine Lucas McKay, Associate Director at the . "The solution we tried a generation ago was to really load up families with student loan debt hoping it would pay off - It didn't work."
Instead of solving the problem, this strategy burdened an entire generation with levels of debt we just haven't seen before. It's preventing many Americans from contributing to their retirement savings or buying houses, and Lucas McKay says it's not uncommon for people to be paying their student loans until they retire.
The reality is that student loan forgiveness is a very necessary stop-gap solution for a problem that will persist unless meaningful changes are made at the federal, state, and institutional levels.
So what will prevent the student loan crisis from continuing to balloon? We asked experts to weigh in on potential solutions.
Increase Public Funding
For most students from low and middle-income families, financial aid comes from the federal and state governments and the colleges they attend. Two big pools of federal aid include the Pell Grant, which mostly goes to families who make less than $60,000 per year, and work-study funding. States also use tax dollars to keep tuition down at public schools so local students have affordable options.
However, state funding has actually dropped in most states over the past decade, and federal programs like the Pell Grant haven't kept up with the rising cost of college and living expenses. Families are left to pick up more and more of the bill, often through loans. Here are a few policy options that advocates are pushing for to change that.
Double the Pell Grant
When students from lower-income families first used the Pell Grant to pay for college in the early 1970s, it covered , student parents, and other groups.
"College costs are an issue across higher education, but the student debt crisis is focused squarely on two groups of students: those who do not complete college, and those who complete degrees or earn credentials that have little to no value in the labor market," Alana Dunagan of the