2020 is a presidential election year and that means there are a lot of politicians talking about, well, a lot of things. One of the topics of debate, particularly in the Democratic primaries, is the issue of student loan forgiveness. This recent article in USA Today talks about the issue.
At Addition Financial, we spend a lot of time talking to high schoolers and their parents about how to pay for college. While the debate goes on in the political arena, here’s what you need to know about the question of student loan forgiveness and our take on this article.
How Bad is the Student Debt Crisis?
The severity of the student debt crisis is a matter of perception. It’s undeniable that student loan debt is crippling to some young people, affecting their ability to get married, buy a home and even affecting their decision to have children.
The total student loan debt in the US is $1.5 trillion as of March 2019, and fully one-third of all Americans under the age of 30 have at least some student loan debt. The median debt for adults with a bachelor’s degree is $25,000, and the number jumps to $45,000 for those with advanced degrees.
According to a Politico poll, though, only 29% of people surveyed believe the student debt crisis is a critical threat to the US economy, with another 38% labeling it an “important but not critical” threat. Only 6% of the respondents said that student loan reform was their top voting issue.
How Likely is Nationwide Student Debt Forgiveness?
Given that only a small percentage of voters name student debt forgiveness as a top priority, our belief is that it is unlikely any sort of comprehensive loan forgiveness program will be put into place. Politicians tend to respond to their constituents’ priorities and, for now at least, student debt forgiveness is not as pressing an issue as health care reform or the economy.
It’s possible that there could be legislation that alters the way we pay for college or relieves some students of their debt. Student loan forgiveness and cancelation are already options for people whose financial circumstances warrant it. Our inclination is to say that if anything is done, it is likely to be an incremental step rather than the sweeping change preferred by some candidates.
How Does the Debate Affect You?
Our advice to our high school members and their parents is that the smartest thing to do regarding college is to figure out how to pay for tuition with as little borrowing as possible. If you don’t borrow huge amounts to finance your education, you can be certain you won’t be saddled with crippling debt after you graduate.
Here are some pointers to help you avoid taking out student loans:
- Seek out and apply for as many scholarships as possible
- Apply for work/study programs (or get a job and attend school part-time)
- Attend a state school instead of a private university
- Commute from home instead of living in the dorm
- Or, live in an off-campus apartment and split rent and expenses with roommates
- Buy used books (or rent books if you can)
By taking steps to minimize your borrowing now, you’ll put yourself in the best possible position after you graduate – and you won’t be dependent on politicians for a solution. We recognize that there’s a prestige factor with attending a well-known university, but you can get a great education at a less expensive school, graduate with little or no debt and start your adult life without the burden of monthly student loan payments.
Paying for college without loans requires careful planning – and it all starts with the right bank account. Click here to learn about Addition Financial’s student accounts.
