A proposal for Joe Biden to forgive a portion of student loans — perhaps up to $50,000 per person — has been gaining ground since the election. I’m all for it, so long as we include those who have already paid off their loans. Here’s why.
The notion behind forgiving loans, long advocated by Elizabeth Warren, is not that loans are per se bad. It’s that education in America has gotten so expensive that in order to make huge loan payments, former students are putting off other economic goods, such as spending their loan payments in the economy at large, getting married, buying a home, and putting money away for retirement.
And in fact, that’s what happened to me. I went to a state school with the express purpose of minimizing the cost to me and my parents (I also got into the University of Chicago, and turned it down because of the high tuition). But I wanted to go to a good law and graduate school, and it cost me a pretty penny, even 35 years ago. Tuition at Georgetown was $15,000 per year, and I ended up with $60,000 in student loans that I paid off over 15 years. (I had classmates at the time whose combined undergrad and grad loans totalled $120,000.) Each month, I’d pay $650 to my landlord, and another $650 to my student loan overlords, while earning $32,000/year as a Senate aide. I finally paid off my loans at age 40, having paid $120,000 total, including interest. I saved for another five years, and then bought a one-bedroom condo at age 45. As for my retirement, I didn’t even begin contributing to it until I was in my 30s because I just didn’t have the money to spare. And anyone with expertise in retirement planning will tell you that losing those early ten years was a huge mistake.
That’s just an example of how high student loan debt can set back your investment in your economic future…
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