My children never had a vacation, nor did they get birthday presents, many Christmas gifts or any extras growing up as we saved money every month and put it in a 529 for them. It was an enormous sacrifice and our children were well aware they did not have things that many other children their age did. I worked two jobs and cleaned houses and office buildings nights and weekends. My spouse continues to work two jobs. We did without so that our children could be without college debt. When they went to school and saw their friends worried and full of anxiety over student loans they were thankful and grateful. We were thankful and grateful that both of them worked hard to earn scholarships to help stretch their 529. We are a blue collar 2nd generation American family. You do not have to be rich to save for college you just have to be willing to do without. Most people are not willing to make sacrifices. The mention of hard work and doing without offends most Americans and they try to shame anyone that implies that hard work pays off. I know it can be done ..... we did it.
I can’t tell you the number of women who have told me they can’t afford to send their kids to state schools in Florida, while they were holding a $5 cup of coffee and wearing $250 sunglasses. Florida is amongst the cheapest in the nation AND they have state subsidized programs. If you have a 2.5 in high school and modest test scores, community college is already free with a stipend and books included.
The student loan gig is a great example of how the Democratic Party has set up a mutually supporting infrastructure inside and outside of government to fleece the government checkbook. Granted, both parties do it. What’s despicable is that they knew it would disproportionately impact their supporters long term, but it polled well. Boomers wanted to send all their kids to school and die thinking they were better off than their parents and did more for them than the WWII generation. So the Dem machine said “Vote for us and your kids will live the American Dream” and America bought it. And Republican bankers were all too eager to oblige.
To answer lawpoke’s question, this is a simplified answer, but the US government holds the actual note or in very limited cases, the obligation to pay the debt. They are engaged in a business activity not government function. Under federal law, supported by constitutional concepts, business activities are the domain of the executive, subject to oversight and funding of Congress. No appropriation is necessary in this case. It’s simply a business decision not to collect the debt. Your lender could send you a satisfaction on your house at any time if it was in their best interests. The theory is that people who aren’t paying student loan debt would have more money to invest, spend, and hire other workers at their small businesses. (It sounds like trickle down to me that they criticize, but whatever.)
For the reasons you cite and the concerns about equity mentioned by others above, total loan forgiveness is out of the question, but will likely happen in the final days of this or the next Dem administration.
One potential solution that the IRS poo poos as “doctor and lawyer welfare” would be to amend Section 125 of the Internal Revenue Code to allow you to divert pre-tax dollars to repayment plans much like a 401K let’s you do that with retirement savings. I pay one third of my dollars in taxes, then the government takes another five or so percent in my loan payment from what’s left. That makes no sense. For most people, you’d pay the debt off quicker that way than loan forgiveness work through public service. For a growing number of Americans, they will never save for retirement or buy a house. They can’t afford it. So this would make sense, rather than tax credits on a home or a 401K. But the construction and investment broker lobby wants you to divert your money to them, not the government.
so there’s resistance inside and outside the government. The IRS doesn’t want to administer that. The loan forgiveness programs want a reason to exist.
There’s lots of moving parts.