President Joe Biden’s repeated debt repayment freezes and more recent willingness to attempt debt forgiveness for some have left student borrowers puzzled about their own financial futures. Students in debt must decide whether to wait for a blanket debt forgiveness or make the most of Biden’s payment pause — and what to do if or when those payments start up again. As more and more students rely on this increasingly complex system of government, private and institutional financial aid to meet GW’s rising tuition fees, the University can and should educate student borrowers on student loans through online courses and public forums to ensure that current and potential students understand the true cost of student loans.
Government-backed loans can make college more accessible, especially for first-generation, minority, and low-income students who might otherwise lack the financial resources to attend college. Yet these loans can put students in debt. The average student debt balance can reach nearly $40,000, and the average GW student graduated with $33,305 in debt in 2018. Federal action to address student debt could only do complicate their individual situation – who can expect what relief and when? Canceling or freezing student loan debt can ease the financial burden on student borrowers, but it does not make it easier to understand the student loan process. Borrowers who don’t know the basics of the student loan process need help that goes beyond relief — they need information about student loans in general.
Biden and Education Secretary Miguel Cardona have already made progress in addressing the $1.7 trillion student loan debt problem facing more than 40 million student borrowers. The fight against student loans was part of Biden’s presidential campaign, and he wrote off the debts of disabled borrowers and those who attended fraudulent for-profit colleges since his election. While the measures have been fairly narrowly tailored to certain groups of borrowers, Biden has also supported more widespread solutions to student debt. He extended the repayment freeze his predecessor began in March 2020 six times in April, saving nearly 37 million borrowers about $195 billion in canceled payments. But unlike forgiveness, this freeze still leaves students with the same levels of debt.
Rather than continued repayment breaks, progressives favored sweeping loan forgiveness. Calls for the unilateral cancellation of all student loan debt by executive order became widespread in the 2020 election after Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., released proposals to forgive up to $50,000 in debt and all student debt, respectively. Moderates and conservatives who favor any form of student debt relief argue that students’ income or amount of debt should determine potential debt cancellation. This stricter or ‘means-tested’ approach ultimately caps relief for those above a certain income level. Between this ideological impasse and questions about whether Biden has the legal authority to unilaterally cancel student debt by executive order, government action that goes beyond freezing payments to settle student debt seems unlikely. It’s always worth pushing for some form of debt relief, but it probably won’t be enough to relieve students of their debt.
The trillion-dollar student debt problem stems as much from students’ lack of knowledge as it does from predatory loan companies or out-of-control tuition fees. Teens borrowing for the first time may make a significant financial commitment without understanding how serious their decision is – the costs and benefits of student loans aren’t for everyone. But combined with societal pressure to attend college, especially at prestigious universities like GW, and the normalization of student debt, taking out student loans is almost a right of passage, even a financial necessity for many students.
This is not to say that students do not take their loans seriously, but rather that student loans are extremely complicated. In turn, students need help to understand them. The estimated cost of attending GW next year is over $80,000 for most undergraduates, and a likely corresponding increase in student financial aid needs means the University should explain the terms and terms of this aid.
As in 2020, the University is expected to host a series of virtual and in-person town halls to address questions and concerns from students and their families about the financial aid changes. Beyond these question-and-answer sessions, a simplified crash course in student loan basics would help student borrowers make an informed decision about whether underwriting student loans is right for them. The Office of Student Financial Aid already provides an overview of the financial aid process, and students can visit the Student Services Center at the University’s Student Center for assistance and answers to their questions, including those concerning student loans. But these resources are not useful if students are unaware of them or when the information they provide is no longer relevant to changing federal policies. Beyond GW, students looking for more information can visit the Federal Student Aid website directly to learn the basics of the federal student loan process.
With changes to federal student loan policies on the horizon, the University should equip students with the tools to learn about their individual student loans. While such loans can make education accessible, direct, effective, and consistent communication about them can help new borrowers avoid the trillion-dollar problem of student debt. With GW’s support, its students can confidently navigate the pros and cons of such a life-changing financial decision.
The Editorial Board is made up of Hatchet staff members and operates separately from the Newsroom. This week’s staff op-ed was written by opinion writer Ethan Benn and contributing opinion writer Riley Goodfellow, based on discussions with research assistant Zachary Bestwick, sports editor Nuria Diaz, the managing editor Jaden DiMauro, cultural editor Clara Duhon, managing editor Grace Miller and social media contribution. director Ethan Valliath.