Is Forgiving Student Debt Even Possible?*

America’s student loan debt is more than $1.73 trillion. This is how much young students have borrowed because they could not afford tuition. The problem affects 43 million people. The average amount of debt per person after a bachelor’s degree is $30,000. For many years, there has been talk about the need to forgive at least a part of these loan obligations. President Joe Biden promised to do so, and has even begun to take small steps to implement loan forgiveness. But is such a large debt relief program even possible? Student loans were introduced in America in 1958 after the war. During this time, wealth significantly increased, and the middle class expanded. It became normal to aspire to college. Initially, the process worked brilliantly. Strong and steady income from college graduates more than covered loan payments, and few loans remained outstanding. The situation changed in the 1980s, an obvious response to a changed economic model. A diploma no longer guaranteed a good job. At the same time, the cost of tuition continued to increase, and so did the amount of student debt.

In the 21st century — after the 2008 financial crisis that temporarily increased unemployment, the country could no longer sweep matters under the carpet. The total amount of student debt rose from 3.5% of the U.S. gross domestic product in 2006 to 8% in 2020. Taking a look at the universities with the highest share of student loan debt, you can get the gist of the problem. This list includes schools such as the University of Phoenix, Walden University, Nova Southeastern University and Capella University. Indeed, Harvard University, Yale University, Princeton University and other prestigious Ivy League colleges are not on this list. These are third-tier institutions, schools chosen by students less well-prepared and less wealthy. These students are the ones who took out the loans while wealthy parents paid the costs for Harvard and Yale students. What a life. In 2018, the Brookings Institution estimated that the percentage of unpaid student loans for 2004 would reach approximately 40%. Among African American students, the figure rises to 62%.

The growing problem has made it a political subject recently. This especially true on the left, where Bernie Sanders has been the main advocate for student debt relief. But Sanders lost in the 2020 presidential primaries, and Joe Biden won the presidency. And Biden did what Biden did: He announced a program for great student debt relief. Subsequently, there were four rounds of student loan forgiveness, amounting to only about 1% of the student who owed on their loans. The program started by forgiving loans from people with disabilities. Then the program forgave loans from those who were defrauded and became indebted to some of the most suspect universities. The diplomas issued by these universities were worthless and were not recognized. In addition, the loan forgiveness program was extended to public sector employees who have a good history of paying back loans. The upper limit of debt forgiveness was set at $10,000, although it was originally set at $30,000. And that’s how it looks at the moment. Biden’s supporters say: Wait, Krakow (pardon me; I mean Washington) was not built in a day. Critics are saying that at this rate, debt relief for students who graduate after 2000 will occur somewhere around 2080. America knows it has a serious problem — but it is not eager to forgive its debts.

*Editor’s note: The original Polish version of this article is available with a paid subscription.