Why Do Some People Oppose Student Loan Cancellation?

Does everyone want to cancel student loans? Not necessarily.

Here’s what you need to know.

Student Loans

Based on the most recent student loan headlines, it seems that just about everyone, in some form, is calling for student loan cancellation:

However, while Democrats control Congress and the White House, it’s not a foregone conclusion that there will be any student loan cancellation. Why not? Supporters say cancelling student loans will stimulate the economy, reduce disparities, encourage saving for retirement, increase home purchasing, increase family formation, and help save a generation from financial ruin. To supporters, it seems like a no-brainer to cancel student loans, and it should have been done yesterday.

So, what’s the hold up? Here’s what the other side — and there are opponents of student loans cancellation — say about forgiving student loans now:

1. Student loan cancellation is unfair

One principal argument against student loan cancellation is that it’s fundamentally unfair. The argument goes something like this:

  • “I paid off my student loans. Why do I have to pay off your student loans?”
  • “I worked to pay off my student loans and made other financial sacrifices. Why can’t you do the same?”
  • “If you borrowed student loan debt, it’s your responsibility to pay it back.”

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You may believe these arguments are reasonable. You may find them spiteful. The underlying sentiment, however, is based on personal responsibility and sacrifice. Some opponents of student loan cancellation believe that each borrower is responsible to pay back the loan they borrowed, whether it’s a student loan, mortgage or credit card debt. While the Covid-19 pandemic is unprecedented and adversely impacted tens of millions of Americans, student loan cancellation opponents say they’ve also made financial sacrifices to pay student loans, including not saving for retirement or their own children’s college funds. In their view, no one should get a free lunch.


2. Student loan cancellation helps the wealthy

A corollary to the fairness argument says that student loan cancellation will disproportionately help wealthier Americans. Almost half of outstanding student loan debt is for graduate school. That means doctors, lawyers and dentists — many of whom are high-income earners — would get student loan forgiveness alongside low income earners. Opponents argue this is one reason why not everyone should get student loan cancellation. Supporters of student loan forgiveness say that even if some higher income earners get their student loans cancelled, this isn’t a reason to prevent others who are struggling financially from get student loan cancellation.


3. Most people don’t have student loans

Student loans are a financial burden for millions of Americans, from recent college graduates with federal student loans to senior citizens with Parent PLUS Loans. The latest student loan debt statistics show that there are 45 million borrowers who collectively owe $1.7 trillion of student loan debt. However, most Americans either don’t have student loans or didn’t go to college. There are approximately 200 million adult Americans, so approximately 150 million adult Americans either have no student loan debt or didn’t go to college. This includes Americans who may have already paid off student loan debt. The question for opponents of student loan cancellation is whether the majority of taxpayers (with no student loans) should subsidize the minority of taxpayers (with student loans). Supporters of student loan cancellation say the federal government gives tax breaks to select special interest groups that don’t benefit all Americans. So, they ask why not help student loan borrowers too? Opponents claim student loan cancellation is another example of wealth distribution.


4. Student loan cancellation could cost $400 billion

The federal government has spent trillions of dollars in financial stimulus to combat the Covid-19 pandemic. Biden proposed a $1.9 trillion stimulus package that includes stimulus checks and unemployment insurance. Congress may cancel student loans in the next stimulus package, but currently, it’s not in the proposed stimulus package. If Congress cancels $10,000 of student loan debt for every borrower, the estimated price tag would be $400 – $450 billion. Supporters say Congress spends trillions of dollars on all types of economic priorities, and student loan cancellation should be no different. They argue it’s a relatively small investment to save a generation from financial shackles. Opponents, namely fiscal conservatives, want to curtail government spending. Some Senate Republicans such as Sen. Mitt Romney (R-UT) have questioned whether additional financial stimulus is necessary. That’s why $2,000 stimulus checks may spell bad news for student loan cancellation.


5. Student loan cancellation or cancel other types of debt

Some opponents of student loan cancellation also question: Why student loans? Student loans impact 45 million Americans, but student loans are the second highest type of consumer debt (mortgage are first). There are other types of consumer debt that millions of Americans would like to be forgiven. From mortgage debt to credit card debt and auto loans to personal loans, every borrower may have a different perspective on which type of financial debt keeps them up at night. The argument goes something like this: Why not cancel $10,000 of mortgage debt? How about wiping out $10,000 of credit card debt? If Congress wants to pass debt cancellation, maybe Americans should choose which debt they want to pay off?


How to pay off student loans faster

What’s the best way to pay off student loans? Supporters of student loan forgiveness may object to all of these reasons not to cancel student loans. In their view, millions of student loan borrowers are struggling economically and need student loan relief now. If Congress supports student loan cancellation, Congress still will have to reconcile disparate proposals, determine who qualifies, and decide how much student loan forgiveness to grant. However, there’s no guarantee that Congress will cancel your student loans, even with Democratic control of Congress and the White House. So, make sure you are prepared and have a game plan for your student loans, particularly when student loan relief ends. Start with these three options, all of which have no fees:


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Congress may cancel student loans in new stimulus package

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