.DrBethAkers, a labor economist and a critical voice on the student-debt crisis, answered some of our questions about Joe Biden's debt cancellation plan. Her biggest concern? 'We’re encouraging institutions to raise prices.'
in federal student loans for people earning less than $125,000 and couples earning less than $250,000.Advocates praise the plan as unburdening some — or all — of the debt for some federal student loan borrowers. An application for debt cancellation is scheduled to be posted on the Department of Education website by mid-October.
Akers told The Inquirer that she doesn’t think the plan is fair and that it doesn’t address college costs. Below are her observations, which have been edited for clarity and brevity.Without more systemic reform, [the government cancellation would help] some people who really did need help but we’ve also given a lot of money away to people who didn’t need the help. And we’ve exacerbated the problem for future students. Because we’ll be encouraging more borrowing.
I’d love to see us move to a system of accountability for colleges ... if you want to stay in the [federal] student loan program, you need to prove your graduates are earning money after they graduate, and they are able to pay back the loans that they’re getting through this program.What I’m proposing is, essentially, some underwriting on these loans. If you look at how mortgages are handed out, or auto loans are handed out, the lender assesses whether the loan is affordable and can be repaid.
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