Student loan forbearance from the federal government during COVID-19 has meant borrowers don’t need to make payments until Dec. 31 and, perhaps most importantly, has stopped interest on the loans. This was only for federal student loans, not private ones.
CNBC said about 11 percent of borrowers have continued to make payments, or 4.6 million people, even though they didn’t have to.
There are plenty of stories about the benefits millennials have realized during this time as a result of the forbearance — the ability to save more money, pay off credit card debt and even put down payments on homes. Still, critics say someone needs to pay the $1.6 trillion (and growing) student debt.
Q: Should student loan relief continue into 2021?
Norm Miller, University of San Diego
YES: But these extensions should be temporary, and we need to overhaul the pricing (interest rate charged) of student debt to reflect the true risk of default. Students should be informed of the true placement statistics from each educational entity. Loans for institutions and majors that provide few or poor prospects of employment should be priced very high or not provided at all. Mispriced student debt has resulted in excess demand, a yellow brick road of false hopes.
Jamie Moraga, IntelliSolutions
NO: If you commit to a loan, then you are obligated to repay it. Students need to understand the terms of the loan, the return on investment for their educational choices, and have a plan to repay the loan. This should drive decisions regarding areas of study, resulting degrees, career choices, and whether the educational cost is worth the long-term financial cost. With student loan debt skyrocketing, we must increase financial literacy and better regulate student loan lending.
David Ely, San Diego State University
YES: The employment conditions that supported the federal government’s decision to offer loan relief in March 2020 will still exist in early 2021. Those individuals who lost their jobs and income will still be unable to resume making loan payments. Concerns of the critics of forbearance could be addressed by extending loan relief into 2021 with less generous terms. This would motivate borrowers who were not financially impacted by the pandemic to resume loan payments.
Ray Major, SANDAG
NO: Although the cost of higher education is unconscionable, students who take out loans are obligated to repay them, just like home buyers must repay their mortgages. It was not a gift. The 89 percent of people with eligible student loans who chose to accept the government’s forbearance of payment until Dec. 31 should resume payments on Jan. 1, 2021.
Reginald Jones, Jacobs Center for Neighborhood Innovation
YES: With the economy still stagnant, extending student loan relief is prudent. However, a solution to relieve the debt burdening many of the estimated 42 million borrowers is necessary. It is time for Congress to act. Any future legislation should not allow anyone to be unjustly enriched but provide an equitable basis for forgiveness. This must come with a reasonable provision to fund the amount that would be shaved off the government’s $1.6 trillion-dollar (and growing) tab.
Lynn Reaser, Point Loma Nazarene University
NO: Student loan relief has helped many low-income individuals and others left jobless by COVID-19. It has also benefited holders of student debt remaining in high-paying jobs. The average jobless rate for those holding at least a bachelor’s degree is just 4.8 percent compared with 10.6 percent for the total population. As the economy improves in 2021, relief should be more directly targeted towards those owing student debt with the lowest incomes and highest joblessness.
Kelly Cunningham, San Diego Institute for Economic Research
NO: Government backing student loans resulted in higher education prices rising eight times faster than wages over the past 40 years. Postponing payment of already existing debt, with new debt continuing to compound, delays inevitable reckoning. We need to reassess the flaws of government taking over the student loan market. Forgiving student debt forces people who do not go to college to pay for those who did, while punishing prudent, frugal choices and rewarding the opposite.
Gary London, London Moeder Advisors
YES: If you owe money you are responsible for paying it back. But current circumstances require extraordinary measures, which include forbearance, change of terms and perhaps some forgiveness. Student debt is a drag on our economy, and certainly on many persons’ lives. But the focus needs to shift to a comprehensive package to achieve reform in higher education, its cost and ultimately in how it is delivered. The pandemic, including the switch to online education, is an opportunity for real reform.
Alan Gin, University of San Diego
YES: The economy has still not recovered from the fallout of the pandemic, and many experts are predicting another wave over the winter. That will cause further economic turmoil well into 2021, which will put a lot of stress on those trying to repay their student loans. Recent graduates in particular may need relief, as they entered the job market in the middle of this crisis, which will probably set back their earnings for a considerable length of time.
Bob Rauch, R.A. Rauch & Associates
NO: I would love to see certain individuals get relief as needed, even if it includes 2021. Those who are unemployed or enduring hardship should be eligible for some type of continued forbearance or even forgiveness but others need to live within their means. Young people must learn that rent, mortgage payments, car payments and student loan debt add up. Throw credit cards in and some people are living way beyond their means.
Austin Neudecker, Weave Growth
YES: Recent grads are one population impacted by the recent jolt in unemployment. We should enable them to get a solid start. Yet, ultimately, forbearance only serves as a temporary relief to rapid inflation within education. While the average graduate has greater than $30K in debt, professional degree holders often have $100-500K. This debt delays buying a home, starting a company and investing. The economic impacts of saddling a generation with giant debts are immeasurable.
James Hamilton, UC San Diego
NO: The student loan program has put both taxpayers and many of the loan recipients in lots of trouble. The longer it continues, the bigger the problems for both become. Our objective should be to make no new loans and instead use outright grants, where we make an upfront decision on how much federal money we’re willing to contribute to the effort. For existing loans, we should move to income-based and time-based repayment plans.
Chris Van Gorder, Scripps Health
YES: I think it is reasonable to provide some level of forbearance through the duration of the pandemic. Then we need to agree on how to make student loans and the payback of the debt more reasonable. Perhaps it would help to allow refinancing at these historically low interest rates. While I don’t like to see anyone hurt economically by loans, I also don’t want to see the taxpayers burdened by that debt.
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