A Wyoming economist and attorney are at odds over whether the cancellation of the nation’s $1.6 trillion in student loan debt would be a good thing.
In late February, the former U.S. Secretary of Education John B. King called on President Joe Biden to cancel the student loan debt that hangs over the heads of about 42 million.
The average student loan debt is around $36,000. The federal government issues and owns about 92% of the nation’s student loan debt.
Economist and state Sen. Cale Case, R-Lander, told Cowboy State Daily earlier this month that if Biden were to cancel student loan debt, it could set a troubling example.
“It’s kind of a bad precedent to think you can go to college, borrow lots of money and expect it to be forgiven,” he said. “From an economic point of view, this would probably lead you to over-borrow and buy too much education, if you have the expectation that it’s going to be forgiven.”
Case added that people who go into debt might have the expectation that other loans might be forgiven, such as credit card or mortgage debt.
“It strikes me that people need to make better decisions about education,” Case said. “It’s really expensive and it’s not for everybody. I think a lot of people underestimate what a university education is going to cost compared to what it’s really worth to them.”
Case also questioned if Biden had the authority to make a move such as canceling student loan debt.
During the 2020 presidential campaign and early in his presidency, Biden said he would be open to eliminating at least $10,000 in student debt per borrower. According to The Hill, other prominent lawmakers have called on him to act on this promise, as well as increase the limit up to $50,000 per borrower.
Laramie attorney and former legislator Charles Pelkey told Cowboy State Daily on Thursday that by canceling even some student debt, the impact on the economy will be positive.
“Look at what’s happened with the student loan payment deferral, families have been able to buy homes or help with daycare costs,” he said. “These are people who were paying anywhere from 10% to 20% of their monthly income on student loan debt beforehand.”
While he understood Case’s concerns about the precedent student loan debt cancellation could set, Pelkey thought the idea of limiting the cancellation only to student loans and capping the amount, as proposed, was a good one.
Pelkey said he believes education should be free, but in the same way fire services and public roads are technically free.
“It’s not free, but it’s a cost we should all bear in society, because we do benefit from having an educated workforce,” he said.
A moratorium on student loan payments was enacted during former President Donald Trump’s administration after the coronavireus pandemic hit and it has been extended several times since Biden took office.
Biden has canceled some student loan debt, although his actions were aimed largely at marginalized populations such as people with disabilities, those who work in public service and people who were defrauded by their institutions, particularly those who enrolled in for-profit colleges.