Joe Biden’s student loan jubilee

Millions of student ­borrowers, who owe a whopping $1.6 trillion in federal education debt, submitted applications to President Joe Biden’s loan forgiveness program in October. But several lawsuits could stifle their hopes for a clean slate. Biden announced the plan in August, vowing to forgive up to $10,000 for borrowers making less than $125,000 a year. Several Republican-led states have challenged the program. The Congressional Budget Office ­estimates the program will wipe out about $430 billion in student loan debt. Critics note canceling loans doesn’t solve the underlying problem of bloated borrowing. So, how did we get here?

What’s driving all the student debt? College is expensive and costs continue to rise. Over the past 40 years, the average cost of private ­college tuition and fees has grown from $10,686 per year to $32,769, adjusting for inflation. Tuition for public colleges has tripled since 1989 and now averages $12,394 per year.

Wouldn’t higher costs lead to fewer people seeking degrees? You’d think so. But even though education has gotten pricier, more people attend university today than in the 1970s. In 2020, roughly 19 million Americans were enrolled in college, up from 7 million in 1970. The growth is partly because more jobs now require a degree. The fed has also played a role in raising tuition costs and ­student debt. In 1965, President Lyndon B. Johnson signed the Higher Education Act, providing grants for students who could not afford college. The number of ­students qualifying for federal aid has since ballooned.

How often do students seek a loan? As of 2019, 62 percent of new graduates had taken out a loan, and most graduated with more than $20,000 in debt. While some students owe six figures, they make up just 7 percent of borrowers, and most hold graduate degrees. About a third of students who take out a loan never complete their degree.

How long does it take most ­students to pay off their loans? Twenty-one years, on average.

Is a federal or private loan the ­better deal? Federal student loans have low, fixed interest rates and don’t require a co-signer. (Also, Direct PLUS Loans allow parents to offset their child’s tuition.) By contrast, private loans offer fixed or variable rates, and interest starts accruing while the student is in school. After President Barack Obama nixed student loan subsidies to private banks, federal loans became the better bargain. Now 92 percent of student loans come directly from the federal government—which is to say, taxpayers.