The coronavirus pandemic has caused irreparable damage, namely the loss of more than 100,000 American lives. That being said, the collateral from the virus has largely manifested as an economic downturn that will take years to recover from: More than 40 million Americans have filed for unemployment since the beginning of the crisis, and more than 100,000 small enterprises have gone out of business since March.
The majority of Americans have been negatively affected by the financial fallout from the pandemic. This economic distress has prompted unprecedented monetary and fiscal action from the federal government, especially compared to its response to the financial crisis of 2008.
Congress’ three stimulus packages thus far have consisted of expanded unemployment benefits, direct cash payments to Americans and loan programs for both major industries and small businesses, totaling trillions of dollars.
Meanwhile, the Federal Reserve has bolstered the response by cutting interest rates to zero as well as buying securities to inject money into the economy. The Fed has also ventured into previously uncharted waters by creating loan programs separate from Congress’ to help get money directly to businesses.
The federal government has been doing a lot to help individuals, businesses and entire industries financially survive this crisis, begging the question of where students fit into the landscape of economic relief.
So far, benefits passed in the relief bills directed toward students have included cash grants given to universities, continuation of federal work-study payments and a short-term suspension of payments on federal student loans.
Although certainly helpful, these provisions are far from adequate. Even in a strong and flourishing economy, many college students enter the workforce in a difficult financial position due to the extreme cost of education and the debt that often comes as a result. The current economic damage will only lower salaries and make it more difficult for new graduates to find a job.
Alumni may enter the workforce with high student debt — which amounts to $32,731 per person, on average — yet still be unable to make payments due to a lack of job opportunities. Outstanding student debt in a harsh economy will not only affect recent graduates, though — Americans already in the labor force who are still holding student debt will be deeply penalized if they are laid off and cannot find a job in due time. Student debt is already a major issue, as it takes over 21 years on average for a graduate to pay off student loans, and that time frame will only get longer if Congress does not take action.
To help ease the burden, Congress should pass provisions in its next stimulus bill to create a program extending student debt forgiveness to borrowers. The amount of forgiveness could be decided based on a number of factors, including financial aid, amount of debt and family income.
If legislated, the program will be of most help to college-aged Americans, who make up the future of the country’s economy. It will help ensure that the upcoming generation of workers does not get buried under financial pressure before it even gets the chance to find its footing.
If young Americans are drowning in debt on the backend of this pandemic, they may never be able to reinvest and spend in the economy and will inevitably find themselves stuck trying to catch up their entire lives. Thus, student debt forgiveness will not only act as an investment in individuals but also as an investment in the posterity of America.