Student loan debt is on the rise, and is now the second-largest source of consumer debt in the U.S. In spite of the mounting financial burden they face, college graduates can reduce or, in some cases, completely eliminate this debt. Plans like the Public Service Loan Forgiveness Program and Teacher Loan Forgiveness Program provide pathways for college grads to apply their professional experience towards the discharge of qualified loans.
While only certain jobs and only federal loans qualify, these exemptions can significantly improve the financial standing of those eligible within a few years of graduation. Income-Based Repayment and Pay-As-You-Earn plans also provide flexible repayment options and loan forgiveness for borrowers who meet the relevant qualifications.
A chart that references each of the ways graduates could apply for partial of full loan forgiveness can be found here:
Student loan forgiveness is a controversial topic. Among other things, opponents argue that loan forgiveness plans exacerbate an already overrun federal budget, with U.S. taxpayers ultimately footing the bill.
However, could the expansion of student loan forgiveness programs be considered a form of stimulus to the U.S. economy? With partial or complete student loan forgiveness, would borrowers instead be able to drive economic growth and stability through increased consumer spending or more robust savings and investment profiles?
In particular, students from lower-income backgrounds, or those who are first in their family to attend and graduate from college, could stand to benefit most -- multiplying the well-documented fact that a college degree already significantly increases their chance to move up the income distribution. Student loan forgiveness could provide a shot of adrenaline to this process, ensuring an even greater opportunity for lower-income students to achieve success for themselves and their families.