Report: Student Loan Forgiveness Would Positively Impact The Commonwealth
A left-leaning public policy group in Kentucky says a student loan debt plan from President Biden would have a huge impact on the state’s college graduates.
A new analysis from the Kentucky Center for Economic Policy finds that 80 percent of Kentucky student loan borrowers could have all of their loans forgiven if a plan becomes a reality.
Student loan forgiveness has been on Biden’s agenda since announcing his presidential bid. Because of the increased attention to the student debt crisis, the president is reportedly working to clarify his power to cancel up to $50,000 in student loan debt. Originally, his goal was to cancel $10,000 in student loan debt.
The policy group found that if $10,000 dollars was forgiven, 34 percent or 209,400 Kentuckians would have total loan forgiveness, but if $50,000 was forgiven, that number jumps up to 80 percent or 489,800 Kentucky borrowers.
Ashley Spalding, research director with the Kentucky Center for Economic Policy, says relieving the financial toll from student debt will have a major impact on the state.
“Student loan forgiveness could mean that these individuals are able to make important investments, like buying a home and in some cases, purchasing a car that'll be reliable transportation to a job,” Spalding explained. “Those dollars are then circulating in the economy.”
All demographic groups would benefit from loan forgiveness, according to the analysis. Black Kentuckians and those with low incomes are more likely to take on debt and struggle to pay it back.
Spalding said a large number of Kentucky student loan borrowers have not earned a degree yet, making it harder to start repayment.
“This would free folks up to be able to, in some cases, return to school, free them up to purchase homes to better support their families to make ends meet," she said.
On average, Kentucky borrowers owe around 18,000 in student loans.
Spalding says freezing student loan payments during the pandemic was critical for Kentuckians to get by, but addressing the long-term student debt crisis is key for economic recovery.
Some GOP lawmakers say the universities themselves must be held more accountable for the degrees they offer and the jobs their graduates acquire.
Spalding said working with public higher education institutions to bring down the cost of attendance and increase support will help students reach their potential.