After years of unlimited federal student loan making, student loan debt now totals more than $1 trillion. This tremendous debt load saddles many new graduates with large monthly payments in a tough job market. Many students hope that Uncle Sam will soon forgive their loans. Student loan forgiveness is popular among recent grads and even among some politicians, though the loans will never be forgiven, says Andrew Heaton of the Foundation of Economic Education.
- H.R. 1330, The Student Loan Fairness Act, proposes that recent graduates pay one-tenth of their disposable income for 10 years, after which their debt would be forgiven.
- Other graduates joke that President Obama will simply write off their loans altogether.
The problem with “debt forgiveness” is that the term means that someone else is paying your debt for you, not that the debt is wiped away entirely. Because the federal government is funded by taxpayers, student loan debt forgiveness would mean that taxpayers would be picking up the tab for a large portion of total student debt.